Wallace Smith Trust Company Ltd v Eloitte Haskins & Sells [QBD]
| Jurisdiction | England & Wales |
| Judge | Carnwath J. |
| Judgment Date | 21 December 1994 |
| Court | Queen's Bench Division |
| Date | 21 December 1994 |
Queen's Bench Division
Carnwath J.
Philip Sales (instructed by Men & Overy) for the plaintiffs.
Ian Croxford QC and Andrew Onslow (instructed by Barlow Lyde & Gilbert) for the defendants.
The following cases were referred to in the judgment:
Arrows Ltd, Re (No. 4). Hamilton NaviedeUNK [1994] BCC 641; [1995] 2 AC 75.
Compagnie Financiére et Commerciale du Pacifique Peruvian Guano CoELR (1883) 11 QBD 55.
Conway v Rimmer & AnorELR [1968] AC 910.
Dolling-Baker v Merrett & AnorWLR [1990] 1 WLR 1205.
Dubai Bank Ltd Galadari & OrsELR [1990] Ch 98.
Hamilton & Ors v Naviede (Arrows Ltd (No. 4)UNK [1994] BCC 641; [1994] 3 WLR 656.
Lonrho plc v Fayed & Ors (No. 4)ELR [1994] QB 775.
Macmillan Inc v Bishopsgate Investment Trust plc & OrsWLR [1993] 1 WLR 1372.
Palermo, TheELR (1884) 9 PD 6.
R v Chief Constable of West Midlands Police, ex parte WileyELR [1995] 1 AC 274.
Discovery — Public interest immunity — Interviews by Serious Fraud Office investigating fraud against bank — Conviction of managing director — Action by bank's liquidators against auditors — Application for disclosure of interviews by SFO held by auditors — Whether documents subject of public interest immunity — Whether statutory bar against disclosure — Whether relevant and necessary for fairly disposing of cause — Criminal Justice Act 1987, s. 3 — Rules of the Supreme Court, O. 24, r. 13.
This was a summons heard in chambers under RSC, O. 24, r. 13 for discovery and production of interviews by the Serious Fraud Office (“SFO”), which were resisted on the ground, inter alia, of public interest immunity.
The liquidators of the plaintiff bank, which collapsed in 1990, brought an action against their former auditors for £90m in respect of audits from 1984-85 to 1990. The bank's former chairman and managing director was convicted in February 1994 of fraudulent trading using financial instruments in the bank's possession. An appeal was pending. The action against the auditors, who were alleged to have held themselves out as having special expertise in the field of banking, was based on their failure to detect the fraud at an earlier stage by checking the use of the financial instruments.
The plaintiffs sought discovery and production of documents which was resisted by the auditors on the ground, inter alia, of public interest immunity. The documents primarily in issue were interviews by the SFO. The plaintiffs applied for an order for disclosure under O.24, r. 13, to which the SFO did not object.
Held, dismissing the plaintiffs' summons:
1. Although the documents in question came into existence solely for the purpose of the Criminal Justice Act 1987, under which the SFO was established, confidentiality in the documents was limited by s. 3 of the 1987 Act; Public interest immunity did not attach to documents in private hands, and since they had been made available for unrestricted use to the defence in the criminal prosecution and the SFO did not object to the disclosure, the issue was of private rather than public concern. Accordingly the claim to public interest immunity failed.
2. Section 2(8) of the 1987 Act, which restricted the use of a statement made by a person under investigation under s. 2 to “use in evidence against” that person, applied only to use by the prosecution in criminal proceedings against the person concerned. It followed that s. 2(8) was inapplicable to a person who was not a party to any civil or criminal proceedings but merely a witness. The statement made by a party to the action who was not a defendant in the criminal proceedings was accordingly outside the scope of s. 2(8).
3. The documents were relevant to the action, but considering that they had come into existence under statutory compulsion, and that they were subsequent reconstructions of the facts by professional witnesses who would rely at trial on their own contemporary notes and other documents, production of the documents in questions was not necessary for the fair disposal of the cause within O.24, r. 13.
Carnwath J:
These matters arise in an action by the liquidators of the plaintiffs against their former auditors, the total claim being of the order of £90m. The action concerns audits of the plaintiffs going back to 1984-85 until its collapse in late 1990. The plaintiff was a bank operating in highly specialised forms of investment. The former chairman and managing director was convicted in February 1994 of fraudulent trading, that being subject to appeal. The fraud largely related to the use of financial instruments in the possession of the bank used to raise funds for a parallel group, as it has been called, in Canada. The first writ in this case was issued in July 1992. The case against the auditors in the consolidated statement of claim relies on their failure to detect the fraud at an earlier stage, in particular their failure to check adequately the use being made of the financial instruments. Under para. 11 and 12 of the statement of claim, it is alleged that the auditors held themselves out as having special expertise in the field of banking.
The issues before me concern the discovery and production of documents and there are now three live issues. The first and the one which has been the subject of most argument concerns the plaintiffs' request for production of documents relating to interviews by the Serious Fraud Office. The documents in question were identified in a letter from the defendants' solicitors dated 18 August 1994. In that letter they identify the statements, tapes of interviews and transcripts of interviews in respect of which they maintain public interest immunity attached; and there is a schedule which sets them out. The ones which are now in issue before me are items 3,4, 8 and 9 in that list, that is, the tapes of an interview with Mr G Davies on 13 February 1992 and the transcript of that interview and the tapes of an interview with Mr W Ginsberg on the same day and the transcript of that interview.
The other documents referred to in the schedule are statements which were used, as I understand it, in the criminal proceedings against the former chairman and, since they have already been used in open court, it has been accepted that there is no practical purpose in maintaining a claim to immunity in respect of them.
The genesis of these documents is described in the affidavit of Mr Konsta, the solicitor for the defendants. He refers to and exhibits the notices under s. 2 of the Criminal Justice Act which were served on Mr Davies and Mr Ginsberg. Mr Davies is and was a partner of the defendants and Mr Ginsberg was an employee manager, and they were both concerned in the relevant audits.
The notices served by the Serious Fraud Office sought information for “the purpose of investigating the affairs of” the plaintiff company. They first of all required various documents to be produced and also audit working papers and other documents.
Pursuant to that, the interviews took place in February 1992.1 have been supplied with relevant correspondence with the Serious Fraud Office. In a letter of 10 January 1992, the defendants' solicitors referred to the work that had been done in collating documents:
“This was done partly to assist them in undertaking internal reviews of their own work and partly to facilitate inspection by members of the SFO in due course.”
That letter asked for confirmation that the liquidators of the bank “have not been shown or...
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...Egdell [1990] Ch 359, [1990] 1 All ER 835, [1990] 2 WLR 471, CA. Wallace Smith Trust Co Ltd (in liq) v Deloitte Haskins & Sells (a firm) [1995] CLC 223; rvsd [1996] 4 All ER 403, [1997] 1 WLR 257, Waugh v British Railways Board [1980] AC 521, [1979] 2 All ER 1169, [1979] 3 WLR 150, HL. Worr......