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|Judgments - Taylor and Others v. Director of the Serious Fraud Office and Others
LORD LLOYD OF BERWICK
I would decide this appeal on the first of the two principles discussed by my noble and learned friend Lord Hoffmann. This was the ground on which Sir Michael Davies decided the case, correctly in my view. He was following the closely reasoned judgment of Brooke J. in Mahon v. Rahn  Q.B. 424. Unfortunately Brooke J.'s judgment was reversed on appeal. This provided Mr. Leolin Price Q.C. with the ammunition which he needed.
The Court of Appeal  4 All E.R. 887 in the present case held that it was bound by its previous decision in Mahon v. Rahn. So they could not decide against the plaintiff on the preferred ground of an implied undertaking. Instead they turned with relief (see per Millett L.J. at p. 905) to an alternative ground not argued before them. They held that the absolute immunity which attaches to witnesses and potential witnesses should be extended to all those taking part in a criminal investigation with a view to a prosecution or possible prosecution. Since the point was not argued, it may be that if it had not been for Mahon v. Rahn it would never have been decided.
Whereas the implied undertaking is a clear cut and relatively straightforward point, the absolute immunity raises issues of far reaching importance on which I would for my part have wished to hear fuller argument. In Watson v. M'Ewan  A.C. 480 the House extended the original absolute privilege attaching to a witness's statement in court to his statements in preparation for court proceedings. This was a natural, necessary and indeed obvious extension of the principle. But I am not persuaded that it is obvious or necessary to extend the principle to those who are not witnesses or potential witnesses at all, but whose only function is to investigate and prosecute crime, such as the Serious Fraud Office, the Crown Prosecution Service and the police.
The new rules on disclosure of unused material, to which my noble and learned friend Lord Hope attaches importance, do not seem to me to justify the extension of absolute privilege to a different class of beneficiary. Nor can I see any logical reason for doing so. Indeed logic would seem to point in the other direction. If the immunity is absolute, how is it to be reconciled with proceedings against the police for malicious prosecution? If there is to be an exception for malice, is this not more consistent with qualified privilege rather than absolute privilege? It is said that qualified privilege is insufficient protection for the reasons stated by Fry L.J. in Munster v. Lamb (1883) 11 Q.B.D. 588, 601. But the same could be said of every case in which the law allows qualified but not absolute privilege.
It is said that the absolute privilege or immunity will not apply unless what is said or done is "fairly part" of the investigation process. But the absolute privilege of the judge and advocate are not subject to that qualification. The privilege applies even though what is said is gratuitous and irrelevant to every issue in the trial: Munster v. Lamb. Does this mean that there is now to be an intermediate level of privilege lying somewhere between absolute privilege on the one hand and qualified privilege on the other?
Reliance was placed on a dictum of Drake J. in Evans v. London Hospital and Others  1 W.L.R. 184. But I do not see how that case helps. The third and fourth defendants in that case were clearly potential witnesses. This is how Drake J. approached the case at page 191-192. This is how Lord Browne-Wilkinson understood the case in X (Minors) v. Bedfordshire County Council  2 A.C. 633, 755. In that case, too, the psychiatrist was clearly a potential witness. This is confirmed by Mr. Caldecott Q.C.'s own treatment of the decision in paragraph 3.3 of his written case. The passage in Drake J.'s judgment, at p. 192 on which particular reliance is placed begins with the words "The protection exists only where the statement or conduct is such that it can fairly be said to be part of the process of investigating a crime. . . ." But this passage is prefaced by the words "I would alter it [i.e. the test suggested in Rees v. Sinclair  1 N.Z.L.R. 180, 187] to apply it to the immunity attaching to a witness or possible witness in a criminal investigation." There is nothing in these decisions which would extend absolute immunity to the Crown Prosecution Service, the Serious Fraud Office or the police.
The merit of deciding the case on the first ground is that it allows a degree of flexibility. It enables the court to keep control of the material in question. This was regarded by Brooke J. and Sir Michael Davies as a factor of importance. I agree with them. There will be little if any flexibility, and little if any control by the courts, if the police are to enjoy absolute immunity in the course of their investigations. Instead of investigating complaints by members of the public whose rights have been infringed, the courts will presumably be met in every case with an application to strike out. I am bound to say that I regard this development with some alarm. But, as your Lordships take a different view, I say no more about it.
On the first ground I am in complete agreement with the speech of my noble and learned friend Lord Hoffmann. I would dismiss the appeal on that ground, but leave the second ground undecided.
LORD GOFF OF CHIEVELEY
I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hoffmann. For the reasons which he gives I would dismiss the appeal.
1. The Facts
In 1994 the Serious Fraud Office ("S.F.O.") was investigating a fraud involving US $8 million alleged to have been committed by James Fuller, John Savage and a London solicitor named Charles Deacon. The money which they obtained from the victim had passed through the hands of the first appellant, Mr. Taylor, who was a solicitor practising in the Isle of Man, or the second appellant, a company with which he was connected called Monarch Assurance plc. By a letter dated 4 May 1994, Katherine McKenzie, a lawyer employed by the S.F.O., made a formal request to the Attorney-General for the Isle of Man, asking for his assistance in the investigation of the fraud. She requested the Attorney-General to exercise his powers under section 24 of the Criminal Justice Act 1990 (Isle of Man) by summoning Mr. Taylor for an interview about the transactions. This section, so far as material, provides as follows:
(a) on reasonable grounds that there is a suspected offence involving serious or complex fraud, wherever committed; and
(b) that there is good reason to do so for the purpose of investigating the affairs, or any aspect of the affairs, of any person.
(2) The Attorney-General may by notice in writing require the person whose affairs are to be investigated ('the person under investigation') or any other person whom he has reason to believe has relevant information to attend before the Attorney-General at a specified time and place to answer questions or otherwise furnish information with respect to any matter relevant to the investigation.
. . .
(10) The Attorney-General may authorise any person to exercise on his behalf all or any of the powers conferred by this section but no such authority shall be granted except for the purpose of investigating the affairs, or any aspect of the affairs, of a person specified in the authority."
Ms McKenzie's letter presented the facts as they appeared to the S.F.O. They depicted Mr. Taylor's part in the transaction in such a way as to suggest that the S.F.O. suspected him to have been a party to the fraud. The letter concluded with a statement that by reason of the facts stated, the S.F.O. had reason to believe that the use of the powers contained in section 24 was justified and desirable. It invited the Attorney-General to authorise Ms McKenzie and a police officer to exercise those powers on his behalf by interviewing Mr. Taylor.
On 3 June 1994 the Attorney-General sent Mr. Taylor a formal notice requiring him to attend for an interview but owing to illness he was unable to do so. Meanwhile Ms McKenzie had been pursuing her inquiries and on 17 May 1994 she and a colleague called upon a Mr. Rogerson, who worked for the Law Society in the administration of the solicitors' compensation fund, to talk about the transaction, which had given rise to a claim by the victim against the fund. She made a file note of the interview, recording among other things Mr. Rogerson's view that Mr. Taylor should be struck off as a solicitor and her own contention that Mr. Taylor was a co-conspirator.
Mr. Fuller and Mr. Deacon were indicted on charges of conspiracy to defraud and eventually convicted. Mr. Savage was in the United States and died before an application for extradition had run its course. Mr. Taylor, despite the suspicions I have recorded, was not charged. Mr. Fuller's solicitors asked him to give evidence on his behalf. Before meeting him to discuss the case, they gave him a file of documents which had been disclosed to them by the S.F.O. as unused material in accordance with the principles stated by the Court of Appeal (Criminal Division) in Regina v. Ward (Judith)  1 W.L.R. 619, 679-81 and Regina v. Keane  1 W.L.R. 746. It included a copy of the letter of 4 May 1994 to the Attorney-General of the Isle of Man and the file note of the meeting with Mr. Rogerson on 17 May 1994.
2. The Litigation
Mr. Taylor commenced an action for libel. He alleged that the letter contained a libel published by the S.F.O. and Ms McKenzie to the Attorney-General and that the file note contained a libel published by the S.F.O. and Ms McKenzie to Mr. Rogerson as well as a libel published by Mr. Rogerson to Ms McKenzie. He also relied upon a publication by Ms McKenzie of both documents by their disclosure to Mr. Fuller's solicitors.
All four defendants took out summonses to strike out the action as an abuse of process. On 26 July 1996 they were heard by Sir Michael Davies, sitting as a High Court judge. He struck out the action on the ground that the disclosure of the two documents to Mr. Fuller's solicitors had been subject to an implied undertaking, similar to that which applies to documents produced on discovery in civil proceedings, that they would not be used for any purpose other than Mr. Fuller's defence. It followed that they could not be used as the basis of a libel action by Mr. Taylor without the leave of the court.
Mr. Taylor appealed. Shortly before the appeal was heard in June 1997 by a Court of Appeal consisting of Kennedy and Millett L.JJ. and Sir Brian Neill, the case of Mahon v. Rahn  Q.B. 424 had been decided by a differently constituted Court of Appeal. The holding, according to the headnote, was that:
I shall examine this case in more detail later, but the Court of Appeal regarded it as a binding authority which obliged it to hold that the ground upon which Sir Michael Davies had struck out the action could not be sustained. But the court invited argument on whether the striking out could be affirmed for a different reason, namely that the documents were immune from suit because they were brought into existence for the purposes of a criminal investigation. The court accepted this alternative submission and dismissed the appeal. Mr. Taylor appeals to your Lordships' House on the ground that the Court of Appeal extended the principle of immunity from suit beyond its proper sphere. The respondents, on the other hand, say that Mahon v. Rahn  Q.B. 424 was wrongly decided and that the judgment ought also to be upheld on the ground upon which they succeeded before Sir Michael Davies.
3. The Two Principles
The two principles in debate are each well established and the question before your Lordships is the extent of their reach. The concept of an implied undertaking originated in the law of discovery in civil proceedings. A solicitor or litigant who receives documents by way of discovery is treated as if he had given an undertaking not to use them for any purpose other than the conduct of the litigation. As Hobhouse J. pointed out in Prudential Assurance Co. Ltd. v. Fountain Page Ltd.  1 W.L.R. 756,764 the undertaking is in reality an obligation imposed by operation of law by virtue of the circumstances in which the document or information is obtained. The reasons for imposing such an obligation were explained by Lord Keith of Kinkel in Home Office v. Harman  1 A.C. 280, 308:
The question in this appeal is whether the public interest in the administration of justice requires the application of an analogous principle to documents disclosed by the prosecution to the defence in criminal proceedings.
Likewise, the core of the principle of immunity from suit is not in doubt. By the end of the nineteenth century it was settled that persons taking part in a trial - the judge, the advocates, the witnesses - could not be sued for anything written or spoken in the course of the proceedings. The immunity was absolute and could not be defeated even by proof of malice. The reason for the immunity was explained by Fry L.J. in a well-known passage in Munster v. Lamb (1883) 11 Q.B.D. 588, 607:
In Watson v. M'Ewan  A.C. 480 the House of Lords extended the immunity to statements made by the witness to a party and his legal advisers with a view to giving evidence. The question in this case is whether the immunity extends more generally to statements made to or by investigators for the purposes of a criminal investigation.
It will be noticed that although both principles are concerned with public policy in securing the proper administration of justice, the interests which they are intended to protect are somewhat different and this is reflected in differences in their scope. The implied undertaking in civil proceedings is designed to limit the invasion of privacy and confidentiality caused by compulsory disclosure of documents in litigation. It is generated by the circumstances in which the documents have been disclosed, irrespective of their contents. It excludes all collateral use, whether in other litigation or by way of publication to others. On the other hand, the undertaking may be varied or released by the courts if the interests of justice so require and, unless the court otherwise orders, ceases to apply when the documents have been read to or by the court, or referred to, in proceedings in open court: Rules of the Supreme Court, Ord. 24, r. 14A.
The immunity from suit, on the other hand. is designed to encourage freedom of speech and communication in judicial proceedings by relieving persons who take part in the judicial process from the fear of being sued for something they say. It is generated by the circumstances in which the statement was made and it is not concerned with its use for any purpose other than as a cause of action. In this respect, however, the immunity is absolute and cannot be removed by the court or affected by subsequent publication of the statement.
While therefore the effect of the two principles may occasionally overlap, it is easy to think of cases in which one would apply but not the other. For example, a statement protected by the immunity may be disclosed on discovery and subsequently read out in court. The implied undertaking would cease to apply and anyone would be free to publish the statement but it still could not form the basis of a cause of action.
Nevertheless, there is some degree of interaction between the two principles. The implied undertaking prevents, so far as possible, the publication or dissemination of disclosed documents and therefore restricts the extent to which damage can be caused by defamatory statements which they may contain. In this sense, the injustice which may be caused by the fact that such defamatory statements are protected by the immunity is reduced.
It is now time to make a separate examination of the scope of the two principles. I shall begin with the implied undertaking.
4. The Implied Undertaking
We are concerned in this appeal with whether an implied undertaking is created by the disclosure of documents pursuant to the prosecution's duty at common law, in accordance with the principles most recently discussed by Lord Hope of Craighead in Regina v. Brown (Winston)  A.C. 367, 374-77. Since the trial of Fuller and Deacon took place, the law of disclosure has been put on a statutory basis by the Criminal Procedure and Investigations Act 1996. Section 17 imposes obligations of confidentiality in relation to disclosed material, but I do not think that the statute is of any assistance in deciding whether such obligations existed at common law.
Until recently there was no authority on the subject. The reason, I suspect, is that the perception by prosecuting authorities of their disclosure obligations was substantially widened by the decisions of the Court of Appeal in Regina v. Ward (Judith)  1. W.L.R. 619 and Regina v. Keane  1. W.L.R. 746. Under the earlier Attorney-General's Guidelines (Practice Note (Criminal Evidence: Unused Material)  1 All E.R. 734), the documents disclosed would almost invariably have fallen within the immunity principle as extended in Watson v. M'Ewan  A.C. 480. We were told that the disclosure of internal memoranda made by investigators or letters passing between investigators is a relatively new practice.
The matter was however discussed by the Court of Appeal in Ex parte Coventry Newspapers Ltd.  Q.B. 278. The case was unusual in a number of respects and did not involve normal disclosure by the prosecution in advance of the trial. The documents in question were in fact disclosed by the Police Complaints Authority pursuant to an order of the Court of Appeal for the purposes of an appeal against conviction. They related to an investigation of the conduct of police officers who had given evidence against the appellant. As a result of the information contained in the documents, his appeal was allowed. A newspaper which was being sued for libel by the same police officers applied to the court for the accused to be given leave to allow it to use the documents in its defence. Both sides proceeded on the assumption that there had been an implied undertaking which it was necessary to vary. Lord Taylor of Gosforth C.J. endorsed this assumption. He said, at p. 285:
The court went on to hold that the interests of justice required the undertaking to be varied so as to allow the appellant in the criminal proceedings to hand over the documents to the newspaper upon its undertaking to use them only for the purposes of its defence.
At first instance in Mahon v. Rahn (unreported), 19 June 1996, Brooke J. held that counsel in Ex parte Coventry Newspapers Ltd.  Q.B. 278 had been right to concede the existence of an implied undertaking. The case concerned a libel action brought by two directors of a London firm of stockbrokers against two Swiss bankers. The alleged libel was contained in a document provided by the bankers to The Securities Association and the Serious Fraud Office in connection with an investigation which led to a prosecution of the plaintiffs on charges of conspiracy to defraud. The document was disclosed to the plaintiffs as an exhibit to a witness statement before the trial and subsequently read in open court. At the end of the prosecution case the plaintiffs successfully submitted that there was no case to answer and were acquitted.
Brooke J. said that in his view the general principle was that the use of documents disclosed for the purpose of legal proceedings should remain under the control of the court. The undertaking could always be varied in an appropriate case but the court should retain control. It was a necessary tool for preventing its process from being abused. He also held that the undertaking applied to material disclosed by the prosecution as intended to be used at the trial as well as to unused material and that it survived the use of the document in open court.
In the Court of Appeal  Q.B. 424 his decision was reversed. Otton L.J. said that he could find "no basis for an implied undertaking in criminal proceedings on the grounds of privacy and confidentiality." The reason, as I understand it, was that it was foreseeable that the information, if acted upon, would be made public. It is true that in Mahon v. Rahn the letter had actually been made public by use in open court. But that raised the separate and subsequent question of whether the undertaking, if it exists, should survive publication in open court. In the case of information which has not been made public, like the letter and file note in this case, the fact that publication may have been foreseeable as a possibility at the time when the documents were written does not mean that privacy and confidentiality should not be preserved so far as it is possible to do so. It is equally foreseeable that documents disclosed in civil discovery will be published in open court but that does not mean that there is no point in the court retaining control over the use of documents which have not been published or even, for some purposes, over those which have.
Otton L.J. went on to say that he saw no analogy between the position of the Crown in a criminal case and that of a party in civil proceedings. It could not be said that the Crown would be deterred from complying with its obligations of disclosure, whether at common law or now under statute, by concern that the accused might use the documents for some ulterior purpose.
I am not sure that it is right to treat the implied undertaking in civil proceedings merely as an inducement to a litigant to disclose documents which he might otherwise have been inclined to conceal. I think that it more a matter of justice and fairness, to ensure that his privacy and confidentiality are not invaded more than is absolutely necessary for the purposes of justice. But I readily accept that these considerations do not apply to the Crown as prosecutor with the same force as they apply to an individual litigant. In the case of material disclosed by the prosecution, the main interest in privacy and confidentiality lies at one or sometimes two removes: in the persons who provided the information and in the persons to whom the information refers.
Otton L.J. said that the most impressive argument in favour of an implied undertaking was the need to protect informers close to criminals. But in his view sufficient protection was already provided by public interest immunity, which entitled the prosecution to apply for leave to withhold documents which would disclose the identity of a police informer, and by the immunity from suit accorded to statements made for the purpose of litigation, which I shall consider in more detail later.
In my view, this takes too narrow a view of the interests which require protection and too broad a view of the other rules which may be available for that purpose. Many people give assistance to the police and other investigatory agencies, either voluntarily or under compulsion, without coming within the category of informers whose identity can be concealed on grounds of public interest. They will be moved or obliged to give the information because they or the law consider that the interests of justice so require. They must naturally accept that the interests of justice may in the end require the publication of the information or at any rate its disclosure to the accused for the purposes of enabling him to conduct his defence. But there seems to me no reason why the law should not encourage their assistance by offering them the assurance that, subject to these overriding requirements, their privacy and confidentiality will be respected.
One must also consider the interests of persons who are mentioned in the statements. Information given to the police or investigatory authorities will frequently contain defamatory or at least hurtful allegations about other people. That is to be expected in a criminal investigation. Such people may never be charged or know that they were under suspicion or that anything untoward was said about them. If such allegations are given publicity during the course of the proceedings, they will have to suffer the consequences because of the public interest in open justice. Even then, the judge will often be able to prevent the introduction of allegations about third parties which are not relevant to the issues in the case. But there seems to me no reason why the accused should be free, outside court, to publish such statements to the world at large. The possibility of a defamation action is for most people too expensive and impractical to amount to an adequate remedy.
Otton L.J. thought that the rules of public interest immunity, immunity from suit and qualified privilege should be sufficient protection for people who might be adversely affected by collateral use of disclosed documents. But the first two of these rules are not designed to protect the same interests as those protected by the implied undertaking and can therefore offer only accidental protection. Public interest immunity, in a criminal trial, involves weighing the public interest in confidentiality against the interests of justice - usually, the interests of the accused in being able to establish his defence. But the interests at stake when a question of collateral use arises are quite different. One is, by definition, no longer concerned with the use of the information for the purposes of establishing a defence at the trial. The interests to be weighed are, on the one hand, the public interest in allowing the collateral use (as in Ex parte Coventry Newspapers Ltd.  Q.B. 278) and, on the other hand, the public interest in avoiding unnecessary invasion of the privacy and confidentiality of the maker of the statement and anyone to whom it refers. There may be occasions on which the answers produced by these two exercises will coincide but that will be accidental.
Likewise, as I mentioned earlier, the interests protected by the immunity rule are different. The immunity rule, for example, offers no protection of the privacy or reputations of people mentioned in the statement. On the contrary, it makes their position worse, since they cannot even clear their names by bringing a libel action against the maker. In the present case, the plaintiff might have taken some comfort from the fact that the documents which showed that he had been under suspicion could go no further than the files of the S.F.O. and Mr. Fuller's solicitors. They could not have damaged his reputation in the outside world. Instead, he chose to bring libel proceedings and (apparently due to the thoughtlessness of his solicitors) put the statements into the public domain by quoting them in extenso on a specially indorsed writ.
In addition, the immunity rule, at its widest, protects only statements made for the purposes of the investigation. It offers no protection for documents in existence at the time when the investigation commences and which are given to the police or investigators for the purposes of the prosecution. But these documents too would have been disclosed only because the interests of justice so required and there seems no reason why that should justify their collateral use.
Finally, qualified privilege also seems to me an inadequate answer, both for the reasons given by Fry L.J. in Munster v. Lamb (1883) 11 Q.B.D. 588, 607 and because it does nothing to protect the privacy of persons mentioned in the statements.
In my opinion, therefore, the disclosure of documents by the prosecution as unused material under its common law obligations did generate an implied undertaking not to use them for any collateral purpose. I agree with the reasoning of Brooke J. on this point in Mahon v. Rahn and I think that Sir Michael Davies was right to strike out the action for the reasons which he gave.
I do not propose to express a view on the further points which arose in of Mahon v. Rahn  Q.B. 424, namely whether the undertaking applies also to used materials and whether it survives the publication of the statement in open court. I do not do so because these questions may well have been overtaken by the express provisions of the 1996 Act. But I would draw attention to the comments of Brooke J. in Mahon v. Rahn on the question of whether the provisions of Ord. 24, r. 14A (which was introduced in response to a decision of the European Court of Human Rights holding that the previous law unduly limited freedom of expression) and, by parity of reasoning, section 17(3)(b) of the 1996 Act, are not too widely drawn. There seems to me much force in his view that the court should nevertheless retain control over certain collateral uses of the documents, including the bringing of libel proceedings.
5. Immunity from Suit
In view of the opinion I have expressed on the implied undertaking, it is not strictly necessary for me to consider the ground upon which the Court of Appeal dismissed the appeal, namely immunity from suit. Nevertheless, the question was fully argued before your Lordships and I think it is right to deal with it. It could easily have happened that, as in Mahon v. Rahn, the documents were read in open court. I think it would be right for your Lordships to decide whether in that case the plaintiff would have been entitled to rely upon them for the purposes of an action in libel.
I have already described the evolution of the principle of immunity from suit in respect of statements made in the course of litigation and its extension in Watson v. M'Ewan  A.C. 480 to statements made before the proceedings. In that case, a wife who had brought matrimonial proceedings in Scotland claimed that a doctor (who had examined her) had made defamatory statements in the course of giving evidence for her husband. This was held to be subject to absolute immunity, but she relied also upon the publication of the same statements before trial to her husband and his lawyers. In the House of Lords, Lord Halsbury L.C. said that the earlier statements were subject to the same immunity. He said, at p. 487: