R (AL) v Serious Fraud Office [2018] EWHC 856 (Admin), [2018] 2 Cr App R 13, [2018] 1 WLR 4557
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R (AL) v Serious Fraud Office [2018] EWHC 856 (Admin) was a challenge by a defendant in criminal proceedings to the Serious Fraud Office’s refusal to compel a company, party to a Deferred Prosecution Agreement, to disclose full interview notes from an internal investigation; the Divisional Court dismissed the claim on the ground that the Crown Court was the proper forum for such disclosure disputes.
The claimant, AL, was charged with conspiracy to corrupt and conspiracy to bribe, together with two other defendants (MS and DJ), arising from alleged corrupt payments to foreign agents made whilst all were employees of XYZ Ltd between 2004 and 2012. XYZ Ltd had self‑reported to the SFO in October 2012 following an internal investigation conducted by external solicitors ABC LLP, during which four senior executives were interviewed by lawyers who took detailed notes but did not create verbatim transcripts. XYZ Ltd subsequently entered into a DPA under which the SFO agreed to suspend a draft indictment against the company in return for, among other things, XYZ Ltd’s total cooperation with the SFO’s investigation and prosecution of former employees. One condition of the DPA required XYZ Ltd to disclose all information and material in its possession, custody or control not protected by a valid claim of legal professional privilege concerning the matters described in the draft indictment and the statement of facts.
During its investigation the SFO sought the full interview notes from XYZ Ltd. XYZ Ltd, through ABC LLP, refused, asserting legal professional privilege. After negotiation XYZ Ltd agreed to provide an “oral proffer” under which ABC LLP read out (but did not hand over) summaries of the four interviews. The SFO recorded and transcribed these summaries, which ran to between three and six pages per interviewee. One of the four interviewees, AL, was ultimately charged and the summaries were disclosed to the defendants as unused material. The SFO sought the full interview notes but XYZ Ltd again refused. AL applied to HHJ Testar in the Crown Court for specific disclosure of the full notes under section 8 of the Criminal Procedure and Investigations Act 1996. The judge refused the application on the ground that the notes were not in the SFO’s “possession” and therefore fell outside the section 8 obligation, though the judge expressed “misgivings” about the situation.
Following that ruling the SFO wrote to XYZ Ltd on 13 September 2017 inviting reconsideration of the privilege claim in light of recent case law including SFO v Eurasian Natural Resources Ltd [2017] EWHC 1017 (QB), which, the SFO said, rendered any claim to privilege over first interview notes unlikely to succeed. ABC LLP responded by letter dated 19 September 2017 maintaining the claim for privilege, distinguishing the present facts from those in ENRC and arguing that the interviews had been conducted in contemplation of prosecution and that some advice was given during them. On 13 October 2017 the SFO wrote to AL’s solicitors stating it would take no further steps to obtain the full notes, that it was not under an absolute obligation to obtain them or to litigate privilege, and that cooperation under the DPA did not require a waiver of privilege. The SFO suggested that the defendants could themselves apply for a witness summons under section 2 of the Criminal Procedure (Attendance of Witnesses) Act 1965.
AL issued judicial review proceedings on 3 January 2018 challenging the SFO’s decision not to enforce the duty of cooperation under the DPA. Permission was granted by Supperstone J on 30 January 2018 and the claim was expedited. The SFO served a defence and witness statement from Ms Emma Luxton, a case controller, which advanced new reasons for the decision not pursued in the earlier correspondence: that XYZ Ltd’s assertion of privilege was not obviously invalid in light of ENRC; that the SFO had tested the accuracy and completeness of the oral proffers against other material in the case and was satisfied they contained all relevant material; and that it would be impracticable to revisit disclosure obligations under the DPA in light of subsequent legal developments.
AL advanced three grounds: first, that adequate alternative remedies existed in the Crown Court, including further applications under section 8 CPIA 1996, a witness summons under section 2 CPAW 1965 or a stay for abuse of process; second, that the claim constituted impermissible satellite litigation and an improper challenge to prosecutorial discretion; and third, that the SFO’s decision was irrational and unlawful because there was further relevant material in the interview notes, the claim for privilege was objectively flawed, and there was no proper basis for refusing to pursue disclosure.
The court addressed first the issue of alternative remedies. It emphasised that Parliament had created a regime centring all disclosure disputes on the Crown Court. Section 3 of the CPIA 1996 required the prosecutor to disclose material capable of undermining the prosecution or assisting the defence but applied only to material in the prosecutor’s possession. Where material was held by a third party section 2 of the CPAW 1965 empowered the Crown Court to compel production on application by a party to criminal proceedings if the material was likely to be material evidence in the case. The Crown Court also had inherent power to stay proceedings for abuse of process. Paragraph 9 of Schedule 17 to the Crime and Courts Act 2013 provided that where the SFO believed a party to a DPA had breached its terms it might make an application to the Crown Court for a finding of breach. The Crown Court was therefore equipped to regulate DPAs and disclosure arising from them. The court held that it was not the intention of Parliament that such disputes be resolved by judicial review. The court rejected the claimant’s submission that the threshold for abuse of process was too high or that section 2 was inadequate. The facts of the present case were highly unusual: the material was not peripheral, the company was subject to a continuing contractual duty of cooperation and was itself a suspended defendant on the same conduct, and the SFO accepted the relevance of the material but refused to pursue it on the basis of a legal argument it did not accept. The court concluded that the Crown Court was better placed than the High Court to determine the matter, particularly as XYZ Ltd was merely an interested party in the judicial review but could be compelled to attend court with documents under section 2 CPAW 1965.
The court turned in the alternative to the merits. On Issue II it rejected the SFO’s submission that its decision was a broad prosecutorial judgment call attracting a wide margin of appreciation. The court distinguished the present case from cases concerning the decision whether or not to prosecute, emphasising that once a defendant was charged the prosecutor’s duty was to ensure a fair trial. That duty was constrained by Article 6 ECHR, the common law right to a fair trial and the Attorney General’s Guidelines on Disclosure (2013). Paragraphs 56 to 58 of those Guidelines required prosecutors to take reasonable steps to obtain material from third parties where it appeared such material existed and might be relevant, and stated that “the matter should not be left” if the third party declined. The Guidelines also provided that it was the SFO, not the defendant, that should bring a witness summons application if necessary. The court held that the SFO had failed to address the Guidelines. It also rejected the SFO’s argument that the interests of XYZ Ltd’s shareholders in finality carried weight, emphasising that the duty of cooperation under the DPA was ongoing and was part of the contractual consideration for suspension of the indictment.
On Issue III the court was critical of the reasons given for the decision. The court rejected the SFO’s submission that it had tested the oral proffers against other material in the case and could therefore be satisfied they were complete and accurate. The court could not understand how any horizontal comparison with other material could reliably establish that nothing in lengthy interview notes had been omitted. The court accepted the claimant’s submission that the summaries were extremely short, that significant detail had been stripped out, and that a number of specific examples showed a real possibility of incremental relevant material. The court emphasised that the most compelling test would have been direct comparison of the summaries against the full notes but this had not been done. The court considered that the SFO had not articulated with any particularity the exercise it had undertaken and that its conclusion was not soundly based.
On the issue of privilege the court held that the law was settled. Following Three Rivers District Council v Governor and Company of the Bank of England (No 6) [2004] UKHL 48, RBS Rights Issue Litigation [2016] EWHC 3161 (Ch) and ENRC, communications with lawyers for the purpose of deciding whether to self-report were not privileged because the decision whether to report was too remote from adversarial litigation. The court rejected ABC LLP’s arguments that the interviews were conducted in contemplation of prosecution or that inclusion of advice or reference to civil proceedings clothed the whole in privilege. The court held that the SFO had never properly analysed the merits of the privilege claim and that its adoption of a test of “not obviously invalid” was inadequate, as something not obviously wrong might still be thoroughly wrong. The court further held that the SFO had failed entirely to address the question of waiver. The court considered that waiver was to be determined objectively and that the provision of summaries containing privileged material constituted a waiver of privilege over that material. Even if the waiver was for a limited purpose it was difficult to see how that purpose did not include transmission to the defendants, since at the time the proffers were made prosecution of the defendants was a real possibility and disclosure was squarely in contemplation. The court also held that the SFO had failed to consider its own policy, expressed in the Deferred Prosecution Agreements Code of Practice and public statements by senior officials, that waiver of privilege over first witness accounts was a significant mark of cooperation. The court rejected the SFO’s argument that it would be impracticable to revisit disclosure obligations in light of developments in the law, emphasising that there had been no relevant development and that the duty to keep disclosure under review was continuing.
The court concluded that the SFO had failed to address relevant considerations, taken into account irrelevant matters, provided inconsistent and inadequate reasons, and applied an incorrect approach to the law. These errors were material. However the court held that the High Court was not the appropriate forum for resolution of the dispute and that there were adequate alternative remedies in the Crown Court. It emphasised that its views on the public law issues did not bind a Crown Court judge who might be called upon to determine the matter on different criteria using statutory and common law powers. The court expressed real reservations about the position adopted by the SFO and stated that had it concluded that the High Court was the proper forum it would have quashed the decision and remitted the issue for reconsideration.
In short, the claim was dismissed because the Crown Court was the proper forum in which the disclosure dispute could and should be resolved, notwithstanding the court’s view that the SFO had made multiple public law errors in deciding not to compel disclosure of the full interview notes.
Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd [2017] EWHC 1017 (QB)
Glencore Energy UK Ltd. v Revenue and Customs Commissioners [2017] EWHC 1476
Director of Public Prosecution Ex Parte Kebeline [2000] 2 AC 326
R (on the application of Privacy International) v The Commissioner for HM Revenue & Customs [2014] EWHC 1475 (Admin)
Director of Public Prosecutions ex parte Joseph [2001] Crim LR 489
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R (Health And Safety Executive) v Jukes [2018] EWCA Crim 176
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Three Rivers District Council & Ors v Governor and Company of the Bank of England [2004] UKHL 48
Re: the RBS Rights Issue Litigation [2016] EWHC 3161 (Ch)