High Court not forum for dispute linked to deferred prosecution agreement

Quinton Newcomb examines a decision by the High Court that the Crown Court, not itself, was the appropriate forum to decide whether the Serious Fraud Office (SFO), having concluded a deferred prosecution agreement (DPA) with a company which had self-reported wrong doing by its employees, owed a duty to an employee who was a defendant in criminal proceedings brought by the SFO to obtain and disclose to him documents from the company.

R (on the application of AL) v Serious Fraud Office [2018] EWHC 856 (Admin), [2018] All ER (D) 80 (Apr)

What are the practical implications of the judgment?

The claimant in these judicial review proceedings was a defendant in criminal proceedings commenced by the SFO after it had concluded a DPA with the company for which he had worked. In short, despite the claimant’s repeated requests, and a court application, for specific disclosure of interview memoranda created by the company’s lawyers during an internal investigation and self-referral process with the SFO, the latter refused to take sufficient steps to acquire those notes from the lawyers. The claimant applied for judicial review.

The court refused the application for judicial review, but took the relatively unusual step of setting out in some detail its ‘real reservations’ as to the position adopted by the SFO and identifying ‘public law errors’ made by the SFO. Whilst the court expressly stated that the views in its judgment did not bind a Crown Court judge, the practical reality is that it would be very suprising if, in the event the SFO did not take appropriate steps in light of the judgment, a Crown Court judge were to go behind the court’s findings (for example, when hearing an application for a witness summons against the company).

This judgment betrays an extremely concerning and continuing level of inconsistency on the part of the SFO across its caseload, particularly in its approach to the application of legal professional privilege. Despite the well-known rhetoric of the director and other senior officers of the SFO and the robust approach the SFO took in Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd [2017] EWHC 1017 (QB), [2017] All ER (D) 50 (May) to the company’s claims to privilege in relation to interview memoranda, in this case the SFO was prepared to accept as ‘not obviously wrong’ the company’s claim to privilege in respect of lawyers’ notes produced in similar circumstances.

The only material difference would appear to be that the company in this case was co-operating with the SFO in moving towards a DPA and, as such, the SFO’s decision appears to have been not founded in principle but on a more sympathetic attitude towards a co-operating company. The result, as was made plain in the judgment, was the real risk that the SFO could jeopardise an individual’s right to a fair trial due to an inability or unwillingness to pursue with vigour its disclosure obligations.

What was the background?

The company had identified and investigated evidence of corruption within its business, and then self-reported to the SFO in October 2012. This was followed in January 2013 by a 41-page submission written by the company’s lawyers as to the nature of the criminality that had been uncovered and the company’s position in relation to the suitability of its case for a DPA. Sir Brian Leveson PQBD, who approved the SFO’s application for the DPA, explained in those proceedings:

‘During the period June 2004 to June 2012, [the company], through a small but important group of its employees and agents, was involved in the systematic offer and/or payment of bribes to secure contracts in foreign jurisdictions … In total, of 74 contracts which were ultimately examined, 28 are said to be “implicated” … The way in which these offences were committed was for intermediary agents within a particular jurisdiction to offer or to place bribes with those thought to exert influence or control over the awarding of contracts; this was done on behalf of [the company’s] employees and ultimately the company.’

The lawyers’ written submission relied, in part, upon the content of interview summaries for four employees whose interviews formed the subject of the judicial review. Once the SFO had accepted the case for criminal investigation, there was correspondence in 2013 and 2014 in which the SFO sought the lawyers’ notes of these four interviews. The lawyers asserted legal professional privilege over the notes but instead agreed to what was referred to as a ‘proffer session’ where the law firm’s partner provided the SFO with very short oral summaries of the interviews, which the SFO recorded and transcribed.

Notwithstanding the gravity of the offending, a DPA was agreed between the SFO and the company and approved by Sir Brian Leveson on 11 July 2016. One of the requirements of the SFO was for the company to disclose to the SFO all information and material not protected by a valid claim of legal professional privilege.

A criminal investigation continued in relation to three defendants: the claimant in these judicial review proceedings, and the third and fourth interested parties. After being charged for corruption offences, the claimant made a disclosure request which was broad enough to encompass the lawyers’ interview notes. His defence statement made it clear that the contents of the notes would be relevant to issues at trial. When the SFO did not disclose the notes, the claimant applied to the Crown Court for specific disclosure but the judge found that the fact that the notes were not in the SFO’s possession (that being part of the relevant test under section 8 of the Criminal Procedure and Investigation Act 1996) was an end to the matter, albeit that he expressed misgivings over the SFO’s stance, and he noted that the SFO appeared not to be making responsible submissions as prosecutor so much as speaking for the company.

The SFO made another attempt to seek disclosure of the notes from the company but when its lawyers refused, the SFO wrote again to the claimant’s lawyers stating that it had taken reasonable steps to obtain the notes and that it was not under an absolute duty to retain them nor litigate their status. In response, the claimant applied for judicial review asserting that the SFO’s stance was endangering his right to a fair trial. The SFO raised a number of points in reply, including that the company’s assertion of privilege was ‘not obviously wrong’; the decision not to prosecute the company was a complicated one; there was no basis for not accepting the assurances of the company’s lawyers to the effect that there was no additional disclosable material in their interview notes as compared with the notes of the oral proffer; and taking further steps to obtain the notes would have been impracticable and contrary to the interests of finality.

The court identified three relevant issues:

  • whether it was appropriate for the High Court to exercise jurisdiction in light of the alternative remedies available
  • whether, in any event, the claim should fail because it amounted to satellite litigation and was a challenge to the exercise of legitimate prosecutorial discretion
  • whether, in any event, the claim had to fail because there was no further relevant material in the interview notes, and/or the company had asserted privilege over the material in light of the Eurasian Natural Resources Corporation judgment and this was not obviously invalid, and/or it was impracticable for the SFO to review the disclosure obligations in the light of developments in the law

What did the court decide?

The first issue

The court dismissed the application for judicial review because alternative remedies were available, including the witness summons regime, the possibility of the SFO pursuing the company for a breach of the DPA due to its failure to co-operate in handing over the lawyers’ interview notes and, if such routes were not adequate remedies, an application to stay the criminal proceedings as an abuse of process.

The second issue

The court did not accept the SFO’s suggestion that, on the facts of this case, it had a very broad discretion as to whether to pursue the company for disclosure of the notes. The margin of appreciation that the prosecutor enjoys in relation to disclosure is circumscribed by Article 6 of the European Convention on Human Rights, the common law right to a fair trial and the Attorney General’s guidelines on disclosure. The reasonable practicability test in those guidelines was to be read as referring to a persistent prosecutor who did not readily accept ‘no’ for an answer and who was prepared to take the initiative to apply to the court to enforce disclosure obligations. There was no evidence that the SFO had squarely addressed its obligations under the guidelines. Insofar as the SFO gave weight to the interests of the company’s shareholders, it had failed to address relevant considerations and/or had taken irrelevant considerations into account. Importantly, the court concluded that, but for its conclusion on the first issue, it would have quashed the SFO’s decision and remitted the issue for reconsideration.

The third issue

The court rejected the SFO’s argument that its supposed ‘testing’ exercise (which consisted of looking at other evidence in its possession) was sufficient in reaching the conclusion that the notes would not have contained additional disclosable material over and above the notes of the oral proffer. The court observed that the purpose of the interviews was to enable the company to decide whether or not to self-report – they were not part of an evidence-gathering process taking place after the decision to self-report had been taken. The obvious significance of this fact, as noted by the court, was what this meant for the company’s argument as to whether, at that stage, the all-important reasonable contemplation of a prosecution was present (which after Eurasian Natural Resources Corporation, until overturned, will generally be the threshold in criminal matters). Having reviewed the relevant authorities, the court dismissed as ‘untenable’ the argument that the law on the status of relevant interview memoranda was uncertain, stressing: ‘There now exists two High Court judgments, one of the Court of Appeal and one of the House of Lords. These bind the Crown Court. They represent the law as it stands today. In any dispute the judge would simply follow those authorities.’

Further, the court was scornful of the SFO’s application of a ‘not obviously invalid’ test, observing: ‘Regulatory decision-making cannot proceed upon the basis of cursory tests of obviousness. Something that is not “obviously” wrong may still be thoroughly wrong on proper, detailed, analysis by a competent lawyer or by independent counsel.’ There was criticism too for the singular failure on the part of the SFO to consider whether the oral proffer had led to a waiver of any privilege that had existed in the notes, even if it was wrong in relation to the substantive claim for privilege.

Moreover, in both the Deferred Prosecution Agreements Code of Practice and in public statements made by the SFO’s director and general counsel, it was made clear that the SFO would acknowledge that the disclosure of interview notes (and, hence, in appropriate circumstances a waiver of privilege) would represent evidence of the sort of co-operation the SFO would expect if it was to consider a DPA and, indeed, had suggested that lack of access to the first accounts given by witnesses might affect its ability to assess witness credibility ‘to the extent that we might not be able to call them as witnesses’; the SFO would, it had stated, be prepared to litigate exaggerated claims of privilege.

The court gave short shrift to the SFO’s argument that obtaining the documents would be impracticable. The SFO had asserted that it was not obliged to retrospectively apply developments in the law when considering possible breaches of a DPA, and also that any such action would be ‘contrary to the interest of finality’. The court stated that in this case the law on privilege had been settled at the time that the SFO was considering the status of the notes, in any event the duty of disclosure was a continuing duty, and the suggestion that a desire for finality trumped the defendant’s right to a fair trial was plainly wrong.

Overall conclusion

The court found: ‘The SFO failed to address relevant considerations, took into account irrelevant matters, provided inconsistent and inadequate reasons for its decisions, and applied an incorrect approach to the law. These public law errors were material.’

This article is the result of an interview between Quinton Newcomb and Robert Matthews of LexisNexis and was first published by LexisPSL on 25 April 2018

 

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