AFFIDAVITS, COMPULSION, EXHIBITS AND THE IMPLIED DUTY NOT TO DISCLOSE TO THIRD PARTIES: HIGH COURT DECISION

I am grateful to barrister Sarah Walker for sending me a copy of the judgment of Deputy Insolvencies and Companies Court Judge Kyriakides in the Official Receiver -v- Skeene & Bowers [2020] EWHC 1252. It concerned the issue of whether or not affidavits made in the course of court proceedings  are subject to the “implied undertaking” not to be disclosed to third parties without the court’s permission.  Final Judgment OR v Andrew Skeene and Anor (002)

 

THE CASE

The defendants made affidavits in the course of proceedings to disqualify them as directors.  Those proceedings did not proceed to a hearing as the defendants both accepted their conduct had been unfit and gave disqualification undertakings for a period of 10 years.

THE SERIOUS FRAUD OFFICE

The Serious Fraud Office were considering the matter and in the course of its investigations made a Data Protection Application to the Official Receiver for documents relating to the Disqualification Proceedings.   The Official Receiver disclosed some documents but not the two affidavits and an exhibit as it was believed that they could not be disclosed without the permission of the court.  The SFO the charged each of the defendants  with a number of criminal offences arising out of their running of the company and a criminal trial is due to take place in 2021.

The Official Receiver made an application in relation to disclosure of the affidavits.

THE LACUNA IN THE RULES

There is a lacuna in the rules.  The CPR expressly allow the court to give permission in relation to witness statements served. There is no provision in relation to affidavits.

The issue was posed by the judge.

Whether permission is required in respect of the First Affidavit 15. CPR 32.12 states as follows:

“(1) Except as provided by this rule, a witness statement may be used only for the purpose of the proceedings of the proceedings in which it is served.

(2) Paragraph (1) does not apply if and to the extent that –

(a) the witness gives consent in writing to some other use of it;
(b) the court gives permission for some other use; or
(c) the witness statement has been put in evidence at a hearing held in public”.

16. CPR 32.15 governs affidavits. Unlike CPR 32.12, CPR 32.15 contains no express provision regarding the use of affidavits.

DID THE UNDERTAKING NOT TO DISCLOSE STILL EXIST FOLLOWING THE INTRODUCTION OF THE CPR?

The judge considered the cases that considered this issue.   The claimant argued that the CPR was a “complete code”, the absence of a specific rule meant that there was no barrier to the disclosure of affidavits.  The defendants argued that the rule as to the implied undertaking not to disclose affidavits without the court’s permission survived the introduction of the CPR.

THE ISSUES THE JUDGE HAD TO DECIDE

17. Two issues, therefore, arise for consideration:

17.1. first, whether the effect of there being no express provision is that the use of affidavits is not restricted to the proceedings in which they are served;
17.2. secondly, if there is some restriction regarding the use of affidavits, what that restriction is and whether it applies to this case.

THE JUDGE’S DECISION

The judge preferred the argument for the defendants on this issue of whether an affidavit produced “under compulsion” is subject to the implied undertaking not to disclose.  However an affidavit not made “under compulsion” is not subject to the implied undertaking.

27. In my judgment, the Undertaking, insofar as it relates to an affidavit produced under compulsion, has not been extinguished by the CPR and continues to apply. My reasons for reaching this conclusion are twofold.

28. First, Aldous LJ’s comments about the CPR being a complete code are restricted to the provisions of CPR 31, although, no doubt, he would have said the same thing had there been an application before him relating to CPR 32.12. However, the Court of Appeal in that case was not required to, and did not, consider what the position would have been had the application related to the use of an affidavit.

29. Secondly, if the CPR is a complete code, it would follow that the whole rationale behind the implication of the Undertaking in cases of compulsion no longer applies. In the absence of any restrictions, affidavits produced under compulsion could, therefore, be used for any purpose, even though such use would be a breach of the deponent’s privacy. This could not have been the intention of the drafters of the CPR. In my judgment, the rationale behind the implication of the Undertaking is as relevant today as it was prior to the CPR and is a compelling reason why the Undertaking has survived the implementation of the CPR in relation to affidavits produced under compulsion.

THE AFFIDAVIT WAS NOT MADE UNDER COMPULSION AND THEREFORE NOT SUBJECT TO THE IMPLIED UNDERTAKING

The judge reviewed the authorities and held that the affidavits were not made under compulsion and therefore not subject to the implied undertaking.

34. In my judgment, having regard to the above authorities, the First Affidavit was not provided under compulsion. I do not think that the case of Lubrizol Corp v Esso Petroleum Co (No. 2) (supra) assists the Defendant as it appears to be confined to its own particular facts where the context was that agreements regarding the confidentiality of disclosed documents had already been made between the parties to the litigation, save for applicants, who had just been joined as parties to the litigation and were seeking an order discharging the joinder order.

35. In this case, a directions’ order was made in the Disqualification Proceedings for the service of evidence. If the Defendants wished to defend the case by adducing oral evidence at the trial, then they were required to serve affidavits. However, it was their choice whether such affidavits were served and, if served, what information was included within them. They chose to serve such affidavit evidence. Accordingly, having regard to the above authorities, the First Affidavit was, in my judgment, made voluntarily by the First Defendant and the Undertaking does not apply to it. It may, therefore, be disclosed by the Claimant to the SFO.

EXERCISE OF DISCRETION IN RELATION TO DOCUMENTS DISCLOSED AS AN EXHIBIT TO AN AFFIDAVIT

It was common ground that permission was needed to disclose the documents in an exhibit to one of the affidavits.   The judge decided to exercise his discretion in favour of disclosure.

THE JUDGMENT ON THIS ISSUE

The judge came firmly down on the side of disclosure of the exhibit.
45. Having regard to the facts before me and the arguments of both parties, I have reached the conclusion that my discretion should be exercised in favour of disclosing the First Exhibit to the SFO. My reasons are as set out below.

46. First, the Defendants have been charged with very serious offences of fraud, forgery and perjury. There is clearly a public interest to ensure that the criminal proceedings against them are conducted properly and that all relevant evidence is before the court.

47. Secondly, the documents in the First Exhibit are highly likely to be relevant to the criminal proceedings. The First Exhibit was produced in response to the allegations made in the Disqualification Proceedings, the subject matter of which is the same as in the criminal proceedings.

48. Thirdly, the First Exhibit is requested as part of the SFO’s continuing duty to investigate the subject-matter of the criminal proceedings against the Defendants. This duty is reflected in a Code of Practice produced by the Secretary of State pursuant to CPIA, Part II, section 23. CPIA ss 22 and 26 make it clear that CPIA Part II, and therefore, the Code of Practice, applies to investigations conducted by police officers and persons other than police officers with a duty to investigate with a view to it being ascertained: (a) whether a person should be charged with an offence; or (b) whether a person charged with an offence is guilty of it. Paragraph 3.5 of the Code of Practice provides that in conducting a criminal investigation, the investigator should pursue all reasonable lines of inquiry, whether these point towards or away from the suspect. As shown by CPIA section 22 and 26, this duty applies both before a person is charged with an offence and after he has been charged.

49. Fourthly, the disclosure of the First Exhibit will not, in my judgment, circumvent the criminal rules as submitted by Mr Qureshi. In this respect, it is to be noted that the documents were first sought expressly in a letter dated 17 April 2019, prior to
the Defendants being charged. Further, this Application was made as long ago on 19 August 2019 and has only been delayed, because of difficulties that the Defendants have had concerning legal aid. I have not been told when in 2019 initial disclosure by the prosecution in the criminal proceedings was completed. However, if the hearing of this Application had taken place before that date, as I understand Mr Qureshi’s submissions, because initial disclosure would then still have had to have been made, it is unlikely that he would have advanced the argument concerning the circumvention of the criminal rules, as even he accepts that the SFO was under a duty to conduct all reasonable lines of inquiry. If disclosure would have been ordered at that stage (which I believe would have been the case) and such documents revealed possible defences of the Defendants, I cannot see why it should make any difference that, as a result of pure happenstance, the hearing of this application is taking place after initial disclosure has been completed.

50. Fifthly, the documents were produced by the Defendants voluntarily as part of an exhibit to the First Affidavit. The Defendants, therefore, took the risk that they might be sought for a purpose other than the Disqualification Proceedings.

51. Sixthly, in view of my finding that there is no restriction against the Claimant supplying the SFO with the First Affidavit, which is the document where any defence is likely to be set out, the production of documents in support of what is said in the affidavit is likely to be less prejudicial than would have been the case had the Claimant not been so entitled;

52. Finally, whilst my decision is that the First Exhibit should be provided to the SFO, it does not mean that any of the documents in the exhibit will be used in evidence in the criminal proceedings. This is a matter for the criminal court, not this court, to decide. Further, section 20 of the Companies Directors Disqualification Act 1986 provides that the First Affidavit (which must, in my view, mean both the affidavit itself and the documents exhibited to it) cannot be used in criminal proceedings unless evidence relating to it is adduced, or a question relating to it is asked, in the proceedings by or on behalf of the accused or the offence with which the accused is charged is one of the offences specified in s 20(3), which includes  the offence of perjury under section 5 of the Perjury Act 1911. Thus, whilst under these provisions documents relevant to the perjury charges could be used in the criminal proceedings, subject to any contrary ruling of the Crown Court judge, none of the other documents may be admitted in evidence unless the accused himself relies upon the same.

53. In all the circumstances, in my judgment, the grant of permission would not cause any injustice to the Defendants and for all of the above reasons, the balance lies in favour of the grant of permission.