Kensington International Ltd v Republic of Congo & Ors

Before the court are three appeals arising out of various proceedings brought by Kensington International Limited (“Kensington”) in support of its attempt to execute a number of judgments obtained in the Commercial Court against the Republic of Congo (“the Congo”). The first in time is an appeal against an order made by Cresswell J. on 26^th May 2006 dismissing an application by the first two appellants, Vitol Services Limited and Vitol Broking Limited, to discharge an order made by Gloster J. on 10^th April 2006 restraining them from making any payments to the Congo under or pursuant to contracts for the purchase of petroleum or petroleum products entered into between 1^st January and 10^th April 2006. For convenience I shall refer to Vitol Services Limited and Vitol Broking Limited as “the UK Vitol companies”. The injunction was granted under section 25 of the Civil Jurisdiction and Judgments Act 1982 in support of proceedings in Geneva by Kensington against Vitol S.A., the parent of the UK Vitol companies, seeking to attach in execution of the English judgments certain debts alleged to be owed by it to the Congo.

The second appeal is against an order made by Field J. on 26^th July 2006 in the exercise of the court’s Norwich Pharmacal jurisdiction requiring the UK Vitol companies and two of their employees, Mr. Gilles Chautard and Mr. Shlomo (“Sam”) Lambroza, to disclose certain information about two cargoes of oil which had been, or were about to be, shipped from the loading terminal at Pointe Noire.

The third appeal is against an order made by Gross J. on 13^th July 2007, also in the exercise of the court’s Norwich Pharmacal jurisdiction, requiring the UK Vitol companies and Mr. Chautard and Mr. Lambroza to disclose certain information relating to payments said to have been made in Hong Kong by or on behalf of Vitol S.A. to employees or representatives of the Congo by way of bribes.

For present purposes the essential background to these proceedings can be described quite shortly. Kensington is a financial institution which acquired, no doubt at a significant discount, sovereign debt on which the Congo had defaulted with a view to recovering the outstanding sums by legal action. Between 20^th December 2002 and 23^rd January 2003 it obtained four judgments in the Commercial Court for over US$110 million which the Congo has ignored and which Kensington has since been attempting to enforce. The Congo is now a significant producer of crude oil which it sells on the world market under contracts with independent oil traders such as the Vitol group, but it does not maintain substantial assets abroad that are amenable to execution. Kensington has therefore tried to execute the judgments by attaching debts due to the Congo before payment has been made. Although part of the judgment debt has been recovered, about US$93 million is still outstanding.

In various proceedings judges of the Commercial Court have found that the Congo has been taking elaborate steps to conceal its oil trading activities in order to prevent Kensington from identifying any resulting assets that might be seized in execution. They have also found that it is strongly arguable that Vitol S.A. and companies within the Vitol group have co-operated with the Congo in order to assist it to achieve its purpose. It is unnecessary for present purposes to describe these activities in any detail; if necessary, reference may be made to the judgment of Cooke J. in Kensington International Ltd v Republic of Congo (The ‘Nordic Hawk’) [2005] EWHC 2684 (Comm) and to the judgments of Cresswell J. and Field J. in the present proceedings.

On 3^rd April 2006 Kensington applied to the Court of First Instance in Geneva for an interim attachment of debts said to be owed by Vitol S.A. to the Congo arising from the sale and purchase of crude oil. That was the first step in proceedings designed to enforce the English judgments. The contracts under which the debts in question were said to have arisen had been made by Global Oil Trader Mauritius (“GOTM”), a company incorporated by Vitol S.A. in Mauritius for the purposes of trading with the Congo. GOTM is a wholly-owned member of the Vitol group whose ultimate parent is Vitol S.A. In the Swiss proceedings Kensington contends that GOTM is merely a mask (“faux nez”) for Vitol S.A. and that accordingly any debts owed by GOTM to the Congo should be treated as debts owed by Vitol S.A. and amenable to attachment.

On 4^th April 2006 the Court of First Instance granted an interim attachment order preventing Vitol S.A. from making payment to the Congo of

“tous avoirs, créances, actifs en compte, compte courant”,

which, according to the translation provided to us, means “any property, debts, assets on account, checking account”. However, the Swiss lawyers who have given expert evidence in the proceedings do not agree about the precise scope of the order.

The UK Vitol companies provide various commercial services exclusively to the Vitol group in connection with its oil trading and related activities. These include arranging for the shipment and carriage of cargoes and paying for oil purchased from third parties. The interim attachment order made by the Court of First Instance is not directed to those two companies and Kensington was therefore concerned that they might discharge debts owed by GOTM to the Congo by making payments to it or to others on its behalf and thereby frustrate the attempt to enforce the judgments in Geneva. In order to prevent them from doing so Kensington applied to join the UK Vitol companies to its actions against the Congo for the purposes of obtaining an order restraining them from making any such payments. It also sought wide-ranging disclosure of both information and documents.

The application came before Gloster J. without notice on 5^th April 2006. The judge granted an order restraining the UK Vitol companies until further order from making payments to a range of Congolese parties on behalf of companies in the Vitol group, including GOTM and Vitol S.A., under the transactions identified in the schedule to the order. These included transactions relating to specific cargoes identified by the name of the carrying vessel and two groups of transactions between Vitol parties and Congolese parties identified simply by date. These were

“3.

Every Transaction other than those identified in paragraph 2 above, in the period from 1 January 2006 to 10 April 2006.

4.

Every Transaction on or after Tuesday 11 April 2006.”

The judge also granted orders for disclosure of information relating to those transactions.

On 7^th April the UK Vitol companies applied to discharge the judge’s order insofar as it related to cargoes carried on the ‘New Vision’ and the ‘Elizabeth Angelikossi’. After hearing extensive argument Gloster J. dismissed that application on 10^th April and refused permission to appeal. However, Kensington agreed to a variation of the order restraining the UK Vitol companies from making payments under or in relation to the transactions referred to in paragraph 4 of the schedule.

On 26^th May 2006 the matter came before Cresswell J. on the application of the UK Vitol companies to discharge the order of Gloster J. in its entirety on the grounds that it had been wrongly granted and for an order that Kensington should pay damages pursuant to the cross-undertaking which is routinely required of a party who seeks interim relief of this kind. They also sought a declaration that the Vitol group was free to buy oil from the Congo on any terms it thought fit, provided the sale was not at an under value. For present purposes it is necessary to refer to only two aspects of those proceedings, namely, (i) the application to set aside that part of the order which required the UK Vitol companies to provide details of any future shipments of oil from the Congo as soon as the information became available to them (what was described in argument as the order for “rolling disclosure”) and (ii) an application (made as an alternative to the application to set aside altogether the order restraining payment to the Congolese parties) to limit the scope of the injunction expressly to “debts due or accruing due”. The latter application may seem a little surprising at first sight, but it was part of the UK Vitol companies’ case that any payments made to the Congo by way of pre-payments for oil to be purchased in the future were loans rather than debts and as such were not amenable to execution under the third party debt order procedure set out in CPR Part 72 or the equivalent procedure in Geneva.

Shortly before the hearing Kensington came to the view that the order for rolling disclosure was likely to operate against its interests by dissuading the Vitol group from entering into further contracts with the Congolese parties and thus preventing the creation of further debts which might be seized in execution. It therefore consented to the deletion from the order of paragraph 4, although, as counsel indicated to the judge, it still intended to seek disclosure in relation to contracts for the sale of specific cargoes as and when it learned of their existence.

After hearing argument the judge came to the conclusion that the rest of the order made by Gloster J. should remain substantially in its original form. Although examples of the contracts between Vitol companies and Congolese parties were not put before this court, the UK Vitol companies do not appear to have made any attempt to conceal the fact that the pre-payments which they had in mind would not be made gratuitously or in the mere expectation of future supplies of oil, but pursuant to contractual arrangements under which the Congo was entitled to call for such payments at its discretion. Having regard to the findings made by Gloster J. and Cooke J. in the earlier proceedings, the judge was understandably reluctant to accept the UK Vitol companies’ description of these arrangements without full and careful investigation. Indeed, he said that he would only be prepared to decide whether there was at any time a debt due or accruing due to the Congo at a trial after full disclosure and cross-examination of the material witnesses. In the end he was satisfied that it was appropriate to continue the order granted by Gloster J. restraining the UK Vitol companies from making any payments to the Congo under contracts for the purchase and sale of oil made between 1^st January 2006 and 10^th April 2006. This order is the subject of the first appeal.

In or about July 2006 Kensington obtained information which suggested that two cargoes of oil were about to be shipped from the Congo on the vessels ‘Ti Topaz’ and ‘Oliva’ under contracts with companies in the Vitol group. It therefore applied to the Court of First Instance in Geneva for a second interim attachment order against Vitol S.A. in respect of the price of those cargoes and applied to the Commercial Court for Norwich Pharmacal relief requiring the UK Vitol companies, Mr. Chautard and Mr. Lambroza to provide information about the circumstances of those shipments. On 26th July 2006 Field J. made an order in the terms sought by Kensington, despite the defendants’ objections that the application was an abuse of process having regard to its earlier agreement that the order for rolling disclosure made by Gloster J. should be discharged. This order is the subject of the second appeal.

In or about January 2007 Kensington obtained information which suggested that payments had been made in Hong Kong by or on behalf of one or more of the Vitol companies to employees or representatives of the Congo by way of bribes. It reasoned that, if any such payments had been made, the funds in question should be regarded in law as the property of the Congo and could be seized in execution of its outstanding judgments. Kensington therefore commenced proceedings in this country seeking Norwich Pharmacal relief against the UK Vitol companies, Mr. Chautard and Mr. Lambroza, requiring them to disclose certain information relating to any such payments. On 13^th July 2007 Gross J. made an order to that effect, rejecting the defendants’ submissions that they were entitled to claim privilege against self-incrimination and to withhold the information on that ground. That order is the subject of the third appeal.

Although the appeal against the order of Gross J. raises issues of greater substance and difficulty than either of the other two appeals, it is convenient to deal with the three appeals in chronological order.

The judge’s order prohibited the UK Vitol companies from (among other things) paying, causing to be paid or assisting any other person to pay the Congo “any sum of money” in payment for, or in respect of, the six cargoes of petroleum products specifically identified in paragraph 2 of the order or any other transaction entered into with the Congo during the period from 1^st January to 10^th April 2006. The principal submission made by Mr. Gruder Q.C. on behalf of the appellants was that the judge had no jurisdiction to make an order restraining them from making payments in general to the Congo; the most he could do was to restrain them from making payments in respect of debts due or accruing due at the time the order was made. Moreover, insofar as the matter lay in the judge’s discretion, he was wrong to make an order, the effect of which was to prevent the Vitol group from performing existing commercial contracts (with the consequence that it inevitably incurred liability to third parties), and from trading with the Congo in the future.

In my view it is unfortunate that the grounds of appeal were framed in terms of the court’s jurisdiction. As Lord Scott of Foscott observed in paragraph 25 of his speech in Fourie v Le Roux [2007] UKHL 1, [2007] 1 W.L.R. 320, “jurisdiction” is a word of some ambiguity. In my view it would be preferable to confine its use in this context to the existence of power to deal with the relevant application and make a valid order. Since the UK Vitol companies are incorporated in and resident within the jurisdiction, it was not suggested that the court did not have power under section 25 of the Civil Jurisdiction and Judgments Act 1982 to hear Kensington’s application and to grant an injunction against them in support of the proceedings in Geneva. The real complaint was that the judge had exercised that power in a manner contrary to settled practice. Accordingly, although the appeal is expressed in terms of the court’s jurisdiction, it is really directed to the manner in which the judge exercised his discretion. That became all the more apparent when Mr. Gruder embarked on submissions as to the propriety of granting an injunction which effectively prevented his clients from honouring existing contracts. Mr. Nash Q.C. on behalf of Kensington objected to what he described as an attempt by the appellants to broaden the scope of the appeal, but I do not think that his client can have been in any doubt about the issues which the appellants intended to raise and which were in the event fully argued. I would not, therefore, hold them to a narrow meaning of the word jurisdiction so as preclude them from advancing any of their arguments.

Mr. Gruder’s main argument proceeded as follows: that when exercising its jurisdiction under section 25 of the Civil Jurisdiction and Judgments Act 1982 the court should first consider whether the facts would warrant the relief sought if the substantive proceedings had been brought in this country: see Refco Inc. v Eastern Trading Company [1999] 1 Lloyd’s Rep. 159, 170-171 per Morritt L.J.; that where proceedings are brought in this country by way of an application for a third party debt order the court can properly restrain payment by the third party of debts due and accruing due at the date of the order, but cannot properly restrain the third party from making payments of any other kind to the judgment debtor; that, insofar as the order made by Cresswell J. extends beyond debts due and accruing due, it would not have been warranted if substantive proceedings had been had been brought in this country and should therefore not have been made.

The assumption underlying that argument is that a payment to the Congo as an advance in respect of the price of oil to be purchased at a later date is to be characterised as a loan rather than a debt and would not therefore fall within the scope of an order restraining the payment of debts due or accruing due. In my view it is unnecessary for the purposes of this appeal to decide whether that is correct, but, as May L.J. observed in the course of the hearing, it is at least arguable that a debt is created as soon as an obligation to pay money comes into existence, regardless of the purpose for which the payment is to be made. The argument is flawed, however, for other, more fundamental, reasons, since it fails to take adequate account of the fact that the order was made in support of the proceedings in Geneva.

Section 25 of the Civil Jurisdiction and Judgments Act 1982 gives the court power to grant interim relief in support of substantive proceedings in other jurisdictions. In deciding the proper scope of any interim relief it is necessary, therefore, to have regard to the nature of the substantive proceedings and their possible outcome if one is to ensure that an order made in this country will be effective to achieve its purpose. In Refco v Eastern Trading Company Morritt L.J. expressly recognised that there might be differences between the remedies available in this jurisdiction and those available in the jurisdiction where the substantive proceedings are pending, but pointed out that the principle which underpins section 25 is that the court should be willing to assist the courts of other jurisdictions by providing such interim relief as would be available if it were itself seised of the substantive proceedings. It follows (as indeed I think is clear from the language he used) that the first of the two principles proceeds on the assumption that substantive proceedings of the same kind leading to the same potential outcome are pending in this country. Mr. Gruder’s argument assumes that the substantive proceedings are an application for a third party debt order under CPR Part 72, but they are not, and it may be the case that the eventual outcome of the proceedings in Geneva will not be the same in all respects as that of an application under Part 72. It may also be the case that the scope of the interim attachment order already made in those proceedings is more extensive than the relief that it would normally be appropriate to grant in support of an application for a third party debt order in this country.

In order to illustrate the point it is necessary to refer briefly to certain issues that have arisen in the Swiss proceedings. One concerns the scope and effect of the interim attachment order. That is a matter on which the Swiss lawyers who have given evidence in the present proceedings differ. Mr. Michel, who has made statements on behalf of Kensington, says that the order is apt to cover debts falling due in the future, whereas Mr. Gautier, who has made a statement on behalf of the UK Vitol companies, says that it is not. There is also a dispute, as I understand it, in the context of the Swiss proceedings whether an obligation to make a pre-payment to the Congo in respect of the price of oil to be purchased in the future gives rise to a debt falling within the interim attachment order. Depending on how those issues are resolved, the interim attachment order, and perhaps any final attachment order that may in due course be made, may be more extensive in its effect than a third party debt order in this country.

These and other issues fall to be resolved in the Swiss proceedings. It is sufficient for present purposes, as the judge observed, that it is at least arguable that contracts for the purchase of oil which provide for pre-payments of part of the price, even if only at the request of the Congo, are capable of giving rise to obligations which fall within the scope of the interim attachment order and of any final attachment order that may be made in due course. That being so, it is necessary for the interim relief granted in this country to be no less extensive, if it is to provide effective support for the proceedings in Geneva. That was the basis on which the judge reached his decision and in my view he was clearly right.

Mr. Gruder’s second argument raises an issue which even more clearly goes to the exercise of discretion. Whether it is right to make an order which prevents a commercial organisation from performing contracts to which it has already become bound, or which effectively prevents it from trading with a particular partner in the future, must depend on the circumstances of the particular case. No doubt it is unusual to make an order which has either of those effects, but it cannot be said that it is never right to do so.

The circumstances of this case are very unusual. In paragraphs 10 to 12 of his judgment Cresswell J. set out the background to the proceedings before him and referred to the findings made by Cooke J. in The ‘Nordic Hawk’. It is unnecessary to recite the facts at length. In summary, he found that there was strong evidence that the Vitol group had collaborated with the Congo to enable it to export oil in ways that ensured as far as possible that it had no assets abroad that might be amenable to execution. The methods employed for that purpose included the use of front companies by both the Congo and the Vitol group to disguise the true identity of the parties to the transactions and the structuring of contractual arrangements in ways designed to ensure that no debts or other financial benefits accrued to the Congo. For the sake of clarity Cresswell J. decided to add to the order of 10^th April a new paragraph 8(a) restraining the UK Vitol companies from making payments of sums due or accruing due in respect of the transactions identified in paragraphs 2 and 3 of the schedule. Having done so, he decided in the light of what he described as “the extraordinary history of transactions involving the Congo” to retain paragraphs 8(a) and (b) of the original order to prevent them from circumventing the new paragraph 8(a).

Mr. Gruder submitted that the judge should have limited the scope of the injunction to debts due or accruing due, leaving it to the appellants to decide for themselves whether the order covered pre-payments to the Congo in respect of the price of oil to be sold and delivered at a later date. Moreover, he candidly admitted that, if the judge had done so, his clients would have made the payments at the risk of acting in breach of the order and being required to make a second payment to Kensington.

In my view this calculating attitude is to be deplored. The court’s orders are to be obeyed and those who choose to disregard them should not assume that the consequences will be limited to making good any loss to the claimant or a third party. If the order had been limited to debts due and accruing due and there had been any uncertainty about its scope or effect, it would have been the appellants’ duty to apply to the court for clarification. In fact, however, it appears that the attitude of the UK Vitol companies, intimated to the judge at the hearing and dictated no doubt by their parent company, was one of pursuing their commercial interests if any plausible justification could be found for doing so. In those circumstances I do not think they can be heard to say that the judge was wrong not to make an order that would have allowed them to act in that way.

In my judgment Cresswell J. was entitled to take the course he did in the light of the determined efforts made by the Congo to avoid complying with the judgments against it and the willingness of companies in the Vitol group to assist it in achieving its ends. Faced, as he was, with the Vitol group’s clear intention to circumvent, if at all possible, the more limited order in his new paragraph 8(a) and with it the interim attachment order in Geneva, he was in my view fully justified in making the wider order in what then became paragraph 8(b). For all these reasons I would dismiss the appeal against his order. In those circumstances no question arises of enforcing the cross-undertaking in damages.

Mr. Gruder’s argument in support of the appeal against the order of Field J. was short and simple. He submitted that, having conceded that the appellants should be under no obligation to disclose information relating to cargoes purchased by companies in the Vitol group after 10^th April 2006, it was an abuse of the process for Kensington to seek an order in July 2006 for disclosure of information relating to the cargoes about to be loaded on the ‘Ti Topaz’ and ‘Oliva’, thereby obtaining the same relief by a different route. He relied on the decision of this court in Chanel Ltd v F.W. Woolworth & Co Ltd [1981] 1 W.L.R. 485 and Di Placito v Slater [2003] EWCA Civ 1863, [2004] 1 W.L.R. 1605 in support of the proposition that in even interlocutory matters it is not permissible to reopen an issue that has been decided unless there has been a significant change of circumstances of an unforeseen kind.

The judge was not impressed by that argument. He considered that the situation in the present case was quite different from that with which the court was faced in Chanel v Woolworth, in part because Kensington had made it clear at the time that it intended to take steps to attach any debts that might arise in the future and, by implication, to seek such disclosure as might be necessary to enable it to do so.

It is quite true that all parties to the hearing before Cresswell J. envisaged that companies in the Vitol group would continue to trade with the Congo insofar as they were able do so, so it cannot be said that the fact that shipments of oil were about to be made for their benefit was unexpected. However, in my view the judge was right to distinguish the present case from Chanel v Woolworth. That case involved an attempt by a respondent to re-open an interlocutory application, previously disposed of by consent, on the grounds that a subsequent decision of this court had undermined the applicant’s case. In Di Placito v Slater (which was not cited to the judge) a party to an application which had been disposed of by consent on the basis of certain undertakings applied to be relieved from one of those undertakings. It is not surprising that in each case the court dismissed the application, but in my view those cases are not at all comparable to the present. There is a clear difference between Gloster J.’s continuing order for disclosure, which required the appellants to provide without the need for any further intervention by Kensington information about all future shipments from the Congo in which companies in the Vitol group were concerned, and orders for disclosure of information relating to specific shipments made on the basis of such evidence as might be placed before the court on each occasion. Not only is the burden on the appellants significantly different, but applications for disclosure of information relating to specific shipments depend on Kensington’s obtaining sufficient evidence to support them. They are therefore different orders made in different circumstances on the basis of different evidence. In my view the judge’s decision was correct and I would dismiss the appeal against his order.

The main ground of appeal against the order of Gross J. is that the judge was wrong to hold that section 13 of the Fraud Act 2006, which came into force on 15^th January 2007, deprives the UK Vitol companies of the right to claim privilege against self-incrimination in relation to the disclosure of the information to which the order refers. A subsidiary ground is that the judge was wrong to hold that disclosure of certain categories of information and documents, which he described in paragraph 37 of the judgment and which he regarded as lying at the periphery of the case, would not give rise to a reasonable apprehension on the part of the appellants that they would be exposed to a risk of prosecution.

It is convenient to dispose of this latter argument first. It was common ground that it is for a person claiming privilege on the grounds of self-incrimination to satisfy the court that there are real grounds for thinking that the information he is being asked to provide, or the documents he is being asked to disclose, are such as would tend to incriminate him. The three categories of information and documents in respect of which the judge rejected the claim for privilege were drawn in such a way as to exclude any risk that disclosure would incriminate the appellants and on the face of it they are not such as would be likely to expose any of the appellants to a risk of prosecution. One is entitled to ask, therefore, what it is that gives rise to such a risk. The real difficulty facing Mr. Gruder in this case, as he recognised, is that there is no evidence before the court capable of supporting that conclusion. The appellants were well placed to put forward any material that might have supported an argument of that kind, but they have not attempted to do so and a claim to privilege cannot be advanced on the basis of mere assertion. As a result there is no material before the court which would justify it in setting aside the judge’s decision and upholding the claim in relation to these categories of information and documents. In those circumstances it is unnecessary to enter into a debate about the nature and degree of risk that will enable a claim for privilege against self-incrimination to be made.

Section 13 of the Fraud Act 2006 provides as follows:

13 Evidence

(1)

A person is not to be excused from–

(a)

answering any question put to him in proceedings relating to property, or

(b)

complying with any order made in proceedings relating to property,

on the ground that doing so may incriminate him . . . . . of an offence under this Act or a related offence.

(2)

But, in proceedings for an offence under this Act or a related offence, a statement or admission made by the person in–

(a)

answering such a question, or

(b)

complying with such an order,

is not admissible in evidence against him . . . . . .

(3)

“Proceedings relating to property” means any proceedings for–

(a)

the recovery or administration of any property,

(b)

the execution of a trust, or

(c)

an account of any property or dealings with property,

and “property” means money or other property whether real or personal (including things in action and other intangible property).

(4)

“Related offence” means–

(a)

conspiracy to defraud;

(b)

any other offence involving any form of fraudulent conduct or purpose.”

Mr. Gruder’s submissions can be broadly summarised as follows:

The judge accepted that any provision that removes or restricts the privilege against self-incrimination must be strictly construed: see Sociedade Nacional de Combustiveis de Angola U.E.E. v Lundqvist (‘Sonangol’) [1991] 2 Q.B. 310, 337 per Beldam L.J. However, as he observed, it is quite clear that section 13 of the Fraud Act does remove the privilege in the context in which it applies. If there is any uncertainty, it is only in relation to the precise range of proceedings to which it applies. However, the loss of privilege is largely, if not entirely, balanced by rendering information disclosed pursuant to the section inadmissible in proceedings for an offence under the Fraud Act itself or a related offence. That reflects a balance of competing interests set by Parliament and since it must be taken to have thought that balance to be in the overall interests of society, I do not think that the court should be astute to construe the section restrictively.

Section 13 of the Fraud Act follows closely the provisions of section 31(1) of the Theft Act 1968 which removed the privilege against self-incrimination of offences under that Act when answering questions or complying with orders made in proceedings for the recovery or administration of any property, for the execution of any trust or for an account of any property or dealings with property. In the Sonangol case Sir Nicolas Browne-Wilkinson V.-C. pointed at page 338 to the desirability of a general extension of those provisions to all civil claims relating to property, including claims for damages. In the event his call has not been heeded; instead Parliament has preferred to deal with the matter on a more piecemeal basis. However, it has been willing to abrogate the privilege in proceedings relating to property in relation to information which may give rise to a risk of incrimination of an offence under the Fraud Act itself or a related offence.

Section 31 of the Theft Act does not use the expression “proceedings relating to property”, but it does use the expression “proceedings for the recovery or administration of any property, for the execution of any trust or for an account of any property or dealings with property” which corresponds precisely to the language of section 13(3) of the Fraud Act and “property” is defined in the same way in both statutes. I think it is clear, therefore, that the introduction of the expression “proceedings relating to property” reflects nothing more than a change in drafting style and that the two provisions are directed to proceedings of the same kind.

Mr. Gruder submitted that the language of section 13(3), with its references to the recovery or administration of property, the execution of a trust and an account of property or dealings with property, naturally contemplates that the subject matter of the proceedings is specific property of which the claimant has been deprived by fraud. An example might be a claim to recover a chattel which the claimant has been tricked into handing over to a fraudster. He submitted that it does not extend to a simple claim for damages for deceit, nor to a claim to recover property which the claimant may have lost otherwise than as a result of fraud.

Notwithstanding the importance of the privilege against self-incrimination, I am reluctant for reasons explained earlier to construe section 13 in a way that would limit its scope more than must inevitably be the case in giving a fair interpretation to the language Parliament has chosen to use. The beneficial effects of a provision of this kind make it undesirable to do so. The limitations imposed by the section itself are that the proceedings in which disclosure is sought must be proceedings in relation to property and that the risk must be of incrimination of an offence involving fraudulent conduct or a fraudulent purpose. Although Parliament no doubt contemplated that most proceedings in relation to property would have as their object making good a loss resulting from an offence of fraud under the Act, section 13 does not limit the range of proceedings to which it applies in that way. Indeed, it would be surprising if it did, because the court would then have to determine whether an offence under the Act had been committed in relation to the property in question in order to decide whether the person to whom the order was directed was entitled to claim privilege. In my view section 13(1) applies, as its terms suggest, to any proceedings relating to property falling within the terms of subsection (3).

That still leaves two further questions to be considered under this head: whether the relevant proceedings are simply the Norwich Pharmacal application made against the appellants or include the underlying proceedings against the Congo to which they are ancillary; and, if they include the underlying proceedings, whether those proceedings as a whole are proceedings for the recovery of property within the meaning of section 13(3).

Mr. Gruder submitted that Norwich Pharmacal proceedings are properly to be regarded as an action for disclosure and as such are independent of the proceedings that they are intended to support. Accordingly, the proceedings against the appellants, which are the only proceedings in which they have been ordered to provide information or documents, are to be regarded as separate and distinct from Kensington’s proceedings against the Congo, notwithstanding that the appellants have been joined as parties to the actions for that limited purpose. For Kensington Mr. Nash Q.C. submitted that the statute requires one to take a broader view of the matter by taking into account the underlying proceedings which provide both the context and the purpose of the application for disclosure. Alternatively, he submitted that any proceedings having as their ultimate object the recovery of property fall within the scope of section 13(1). That would include, for example, Norwich Pharmacal proceedings prior to the issue of a claim for substantive relief as well as an application for disclosure before proceedings under CPR 31.16 and an application for third party disclosure under CPR 31.17.

The court’s jurisdiction to make orders for disclosure in what are now commonly referred to as Norwich Pharmacal proceedings is derived from the former jurisdiction of the Court of Chancery to compel disclosure in aid of proceedings pending or in contemplation: see Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] A.C. 133 per Lord Reid at page 173 and Lord Cross at pages 191-193. Such an application, whether made by way of a separate claim or by joining the person against whom relief is sought as a defendant to existing proceedings in order to make the application by notice under Part 23, can be regarded in some senses as independent of the substantive claim which it is designed to support. However, it does not necessarily follow that the expression “proceedings relating to property” in section 13(1) is intended to refer only to the immediate proceedings between the applicant and the person from whom disclosure is sought, at any rate where they are merely ancillary to other, substantive, proceedings. There is a danger, in my view, in fastening upon those particular words and construing them in isolation from the rest of the section.

For present purposes the expression that has to be interpreted is

“A person is not to be excused from complying with any order made in proceedings relating to property . . . .” (emphasis added).

Taken as a whole it is quite capable of referring to proceedings in the wider sense and thus as including the substantive claim. The fact that the procedure for making the application may take the form of an independent action does not in my view affect the matter. One might just as well say that a witness summons issued at the request of a party to proceedings to compel a person to attend court to produce documents or give evidence gives rise to independent proceedings against the witness, but I have little doubt that a witness who is summoned to give evidence or produce documents is required to comply with an order made in the substantive proceedings within the meaning of section 13(1)(b). I find it more difficult, however, to accept Mr. Nash’s submission that proceedings of any kind which have as their ultimate object the recovery of property can be regarded as falling within the scope of section 13(1); to construe section 13(1)(3) in that way seems to me to be stretching its language too far. I share the judge’s concern that an application for pre-action disclosure under CPR rule 31.16 or a Norwich Pharmacal application made before substantive proceedings have been commenced should not fall within the section, but I doubt whether the difficulty can be resolved by taking into account the nature of the intended proceedings at a time when they are not, and may never be, in existence.

In the present case, however, these problems do not arise. Substantive proceedings have been brought to recover the amounts owed by the Congo and in those circumstances I think that the expression “proceedings relating to property” extends to the proceedings viewed as a whole and so includes the substantive proceedings for the purposes of which the information or documents in question are being sought. I would therefore reject this limb of Mr. Gruder’s argument.

However, that is not the end of the matter because Mr. Gruder also submitted that section 13(1) extends only to proceedings by which the claimant seeks to recover property of which he has been wrongfully deprived and does not include a claim to obtain payment of a debt.

At first sight there is something to be said for this point. If one ignores for a moment the word “recovery”, paragraphs (a), (b) and (c) of subsection (3) all appear to be directed to claims for relief in relation to, or to dealings with, property of some identifiable kind. They are not directed to claims for breach of duty or wrongdoing, although relief in the form of an account may disclose wrongdoing and may lead to an order for restitution or compensation. In that context there is force in the argument that the expression “proceedings for the recovery of any property” is also directed to proceedings which have as their object the recovery of property taken from the claimant. Although property includes money (and also debts, being choses in action), it is no answer to say that a claim for payment of a debt is a claim “relating to property” in the broader sense because section 13(3) contains a complete definition of what is meant by “proceedings relating to property”.

However, as Mr. Gruder was prepared to recognise, the argument is in danger of proving too much where the property of which the claimant was originally deprived was money. It is not difficult to think of situations in which the misappropriation of money may give rise to a claim in restitution as well as a claim for damages and perhaps other remedies as well. Are the proceedings to be regarded as “relating to property” if the money can be traced into the hands of the defendant but not if a claim is made in restitution or for damages? Mr. Gruder was not prepared to argue that a claim in restitution falls outside the section, nor was he prepared to submit that the nature of the remedy sought makes any difference, but the logic of his argument is that in a case of this kind only a claim to recover the very funds of which the claimant was deprived can be regarded as proceedings for the recovery of property. I find that difficult to accept.

A person who lends money to another naturally speaks of “recovering” his money when he brings an action to enforce the debt, despite the fact that he does not expect to recover the coins or banknotes used to make the loan, if indeed that loan was made in that form. More commonly nowadays it is made by making available a chose in action in the form of a bank credit or financial instrument and repayment takes a corresponding form. Since “property” in section 13(1) includes “money”, I think the expression “any proceedings for the recovery of [money]” must be understood as including proceedings to recover a debt by suing on the chose in action.

This conclusion, which in my view follows from the language of section 13 itself, is reinforced by the decision of this court in Bank of England v Riley [1992] Ch. 475. Mrs. Riley obtained money from members of the public in circumstances which led to her being charged with obtaining money by deception and theft. The Bank brought proceedings seeking injunctions restraining her from contravening section 3 of the Banking Act 1987 (which prohibits the acceptance of deposits in the course of a deposit-taking business without the authority of the Bank), from disposing of her assets and for orders for the repayment of the deposits or the appointment of a receiver. On an application by the Bank the judge ordered Mrs. Riley to give disclosure of information and documents relating to her assets. She claimed privilege against self-incrimination, but the judge held that the privilege had been abrogated by the Banking Act and in the exercise of his discretion he ordered disclosure to be made. One factor that he took into account was that, in his view, information or documents disclosed pursuant to his order would not be admissible in evidence in support of the prosecution.

On appeal Mrs. Riley submitted that the expression “proceedings for the recovery of any property” was limited to proceedings by a person to recover property of which he had been wrongly deprived, but the court rejected that argument. In a brief passage in his judgment Ralph Gibson L.J. (with whom Dillon L.J. agreed) said (at page 485H):

“I agree with his view that the proceedings were within section 31 of the Theft Act 1968, as concerns the argument that they were not to be regarded as proceedings for the recovery of property. I consider that he was right to hold that they were, because the bank, amongst other relief, was seeking the return of the deposit.”

(iii)

“Proceedings for . . . . . a related offence”

Since section 13(1) applies only to the risk of incrimination of an offence under the Fraud Act itself or a related offence, it is not surprising that the protection provided by subsection (2) is subject to a corresponding limitation. To the extent that there is a risk of incrimination of some other offence, the privilege remains available, provided that there is a sufficient risk of prosecution for that offence. In the present case the judge found that the appellants were at risk of incriminating themselves of offences under other statutory provisions and at common law, but that the offences in question were all “related offences”. There is no appeal against the judge’s finding about the risk of self-incrimination, but Mr. Gruder submitted that he was wrong to hold that the offences were related offences because none of them involved any form of fraudulent conduct or purpose as required by section 13(4).

The three offences of which the judge found the appellants risked incriminating themselves were (i) an offence under section 1 of the Public Bodies Corrupt Practices Act 1889, involving corruption in public office; (ii) an offence under s.1 of the Prevention of Corruption Act 1906 relating to bribes obtained by or given to agents; and (iii) the common law offence of bribery. Mr. Gruder also submitted that the appellants risked incriminating themselves of an offence under section 328 of the Proceeds of Crime Act 2002, but the judge thought that was no more than speculative. He did not find it necessary to deal with the argument in any detail.

Section 1(2) of the Public Bodies Corrupt Practices Act 1889 (“the 1889 Act”) provides as follows:

“Every person who shall by himself or by or in conjunction with any other person corruptly give, promise, or offer any gift, loan, fee, reward, or advantage whatsoever to any person, whether for the benefit of that person or of another person, as an inducement to or reward for or otherwise on account of any member, officer, or servant of any public body as in this Act defined, doing or forbearing to do anything in respect of any matter or transaction whatsoever, actual or proposed, in which such public body as aforesaid is concerned, shall be guilty of [an offence].”

Section 1 of the Prevention of Corruption Act 1906 (“the 1906 Act”) provides as follows:

“. . . . . If any person corruptly gives or agrees to give or offers any gift or consideration to any agent as an inducement or reward for doing or forbearing to do, or for having after the passing of this Act done or forborne to do, any act in relation to his principal’s affairs or business, or for showing or forbearing to show favour or disfavour to any person in relation to his principal’s affairs or business . . . . . he shall be guilty of [an offence] . . . . . ”

Making a gift to the agent of another person or to a person holding a public office in order to induce him to act or refrain from acting in a particular way is an offence at common law. For present purposes the essential character of the common law offence of bribery is the same as that of the statutory offences to which I have referred. All these offences are capable of being committed in relation to agents and public officials abroad and by United Kingdom nationals abroad by virtue of sections 108 and 109 of the Anti-Terrorism, Crime and Security Act 2001.

Although these offences all involve corruption in one form or another, Mr. Gruder submitted that they do not involve any form of fraudulent conduct or purpose because none of them requires proof of dishonesty, which he said is an essential ingredient of fraud.

In R v Smith [1960] 2 Q.B. 423 the defendant was charged with an offence under section 1 of the 1889 Act. He admitted offering a gift to a public officer as an inducement to show favour, but said that he did so only to expose corruption and that he would have reported the matter to the police had the gift been accepted. He submitted that since he had not acted dishonestly or with the intention of procuring favour, he had not committed any offence. The court rejected that argument, holding that “corruptly” means no more than purposely doing an act which the law forbids as tending to corrupt, applying the advice given to the House of Lords by a majority of the judges in the case of Cooper v Slade (1858) 6 H.L. Cas. 746. Similar arguments were put forward and rejected in relation to the 1906 Act in R v Wellburn (1979) 69 Cr.App.R. 254 and R v Harvey [1999] Crim. L.R. 70. The decision in R v Smith was approved and applied by the Privy Council in Singh v State of Trinidad and Tobago [2006] 1 W.L.R. 146.

The judge recognised the force of the argument, but held that bribery of a public official or another person’s agent inevitably involves fraud, basing himself on various cases in which judges have described bribery in those terms. These included Panama and South Pacific Telegraph Company v India Rubber (1875) L.R. 10 Ch. App. 515, Mahesan v Malaysia Housing Society [1979] A.C. 374 and Petrotrade v Smith [2000] 1 Lloyd’s Rep. 486. For my own part I agree with Mr. Nash that it does not necessarily follow from the fact that offences under the 1889 and 1906 Acts do not require proof of dishonesty that they are not offences involving any form of fraudulent conduct or purpose. Dishonesty may, as Mr. Gruder submitted, be an inevitable accompaniment of fraud, but the fact that an offence does not require proof by the Crown of dishonesty does not necessarily mean that the conduct it involves can be committed without dishonesty of any kind. In my view the starting point of the enquiry should not be dishonesty but fraudulent conduct or purpose as that expression is used in section 13(4)(b) of the Fraud Act.

The Fraud Act does not contain a simple definition of fraud or fraudulent conduct; rather, it defines the statutory offence of fraud by reference to a breach of sections 2, 3 and 4, each of which contains a description of conduct which amounts to a breach of that section. In addition, section 9 makes it an offence knowingly to be a party to the carrying on of a business with intent to defraud creditors or for any other fraudulent purpose. Against that background I think that the expression “any fraudulent conduct or purpose” in section 13 must be intended to refer to conduct, or to a purpose, that is fraudulent in the sense that it partakes of the essential characteristics of fraud as described in sections 2, 3 and 4.

For my own part I think that the essence of fraud is deception of one kind or another coupled with injury or an intention to expose another to a risk of injury by means of that deception. That broadly coincides with the view expressed by Stephen in his History of Criminal Law quoted in paragraph 7.8 of the Law Commission’s Report on Fraud (Law Com. No. 276) (Cm 5560). Both misrepresentation and the wrongful withholding of information, when knowing and deliberate, amount to calculated deception and even abuse of position of the kind falling within section 4 can be described as deception of a kind since the wrongdoer deliberately deceives the person whose interests he is bound to safeguard by allowing him to believe in his trustworthiness while actively falsifying that belief. Although I find it difficult to see how fraud of any kind properly so called can be committed without dishonesty, dishonesty is not the critical distinguishing mark of fraud. These considerations lead me to the conclusion that in order for an offence to involve some form of fraudulent conduct or purpose it must involve an element of deception in the sense mentioned earlier.

The allegation in this case is that payments were made by or on behalf of Vitol S.A. to an agent of the Congolese government in return for favours in connection with contracts for the purchase and sale of oil. Those parts of section 1 of the 1906 Act which are material for present purposes, therefore, provide as follows:

“If any person corruptly gives . . . . . any gift . . . . . to any agent as an inducement or reward for doing or forbearing to do . . . . . any act in relation to his principal’s affairs or business . . . . . he shall be guilty of [an offence].”

Although dishonesty as such need not be proved, the word “corruptly” signifies that the circumstances in which the gift was given were such that it had a tendency to corrupt, that is, to suborn the agent to disregard his duty and act contrary to the interests of his principal, thereby causing him harm. If the agent is moved by the gift to act contrary to his principal’s interests, his conduct is of the same quality as that covered by section 4 and does in my view involve deception. It is for that reason, I think, that one finds in the authorities references to fraud in the context of bribery. Thus in Panama and South Pacific Telegraph Company v India Rubber (1875) L.R. 10 Ch. App. 515, at page 526, James L.J. said:

“ . . . . . I take it to be clear that any surreptitious dealing between one principal and the agent of the other principal is a fraud on such other principal . . . . .”

and in Mahesan v Malaysia Housing Society [1979] A.C. 374 the Privy Council confirmed the right of a person whose agent has acted upon a bribe to recover damages for fraud from the agent or the person giving the bribe.

I have no doubt, therefore, that offering a bribe with the intention that it be accepted and acted upon involves a form of fraudulent conduct, or at any rate of fraudulent purpose. Mr. Gruder has to argue, therefore, that fraud is not a necessary or inevitable characteristic of corruption offences, so that if a person who offers or gives the bribe does not intend it to be acted upon (for example, because he intends to expose the recipient’s corrupt nature by reporting the matter to the police, as in R v Smith), there is no fraudulent conduct or purpose of any kind. If he were right, corruption offences would not in my view be “related offences” within the meaning of section 13(4)(b) since I agree that the matter has to be judged by reference to the essential character of the offence rather than one particular manner of committing it.

In my view, however, Mr. Gruder’s argument fails to take account of two matters. The first is the fact that the only purpose of offering or giving a bribe is to undermine the agent’s loyalty to his principal and persuade him to abandon his duty. That is the essence of the corruption and therefore any offer of a bribe can only be intended to have that corrupting effect. It also involves deception in the sense described earlier. The second is the fact that a bribe necessarily exposes the principal (or, in the case of bribery of a public official, the public) to the risk of harm, even if it does not lead to actual harm. In my view, therefore, offering or giving a bribe necessarily involves a form of fraudulent conduct or purpose within the meaning of section 13(4)(b).

Mr. Gruder placed less emphasis on the risk of prosecution under section 328 of the Proceeds of Crime Act 2002. I think he was right to do so.

Section 328(1) of the Act provides (so far as is material for present purposes) as follows:

“A person commits an offence if he enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person.”

“Criminal conduct” and “criminal property” are defined in section 340 as follows:

“(2)

Criminal conduct is conduct which—

(a)

constitutes an offence in any part of the United Kingdom, or

(b)

would constitute an offence in any part of the United Kingdom if it occurred there.

(3)

Property is criminal property if—

(a)

it constitutes a person’s benefit from criminal conduct . . . . . and

(b)

the alleged offender knows or suspects that it constitutes . . . . . such a benefit.

. . . . . . . . . .

(5)

A person benefits from conduct if he obtains property as a result of or in connection with the conduct.”

Mr. Gruder submitted that by giving a bribe a person necessarily enters into an arrangement which he knows facilitates the acquisition of criminal property by the recipient, since the bribe, once received, constitutes the latter’s benefit from criminal conduct. I accept that section 328 is of broad application, but in my view that seeks to stretch its scope too far. As section 340(3)(b) makes clear, the mental element of the offence includes knowledge or suspicion on the part of the defendant that the property in question is criminal property, but that cannot be the case until it has been acquired by means of criminal conduct. In order for an offence under section 328 to be committed, therefore, the arrangement into which the defendant enters, or in which he becomes involved, must be one which facilitates the acquisition, retention, use or control by another of property which has already become criminal property at the time when it becomes operative. That requirement is not satisfied if the only arrangement into which he enters is one by which the property in question first acquires its criminal character. A person who gives a bribe may know that it will constitute criminal property in the hands of the recipient, but that does not make him guilty of entering into an arrangement which facilitates the acquisition of what is already criminal property. Quite apart from that, however, I agree with Mr. Nash’s submission that it is fanciful to suppose that any of the appellants is at risk of being prosecuted for a doubtful offence under section 328 of the Proceeds of Crime Act 2002 in respect of conduct which, if proved, so clearly falls within the scope of the statutory provisions dealing with corruption. Any risk of prosecution under the Proceeds of Crime Act can therefore properly be disregarded: see Renworth Ltd v Stephansen [1996] 3 All E.R. 244.

Section 13 itself is worded in general terms. In the absence of some words of limitation, therefore, either in section 13 itself or in transitional provisions, it would naturally be interpreted as applying to events occurring before it came into force as well as after. Mr. Gruder submitted, however, that the section should not be construed as abrogating the privilege against self-incrimination as regards information concerning events that took place before the Act came into force on 15^th January 2007 on the grounds that to do so would remove protection that had existed prior to that date. Put another way, the Act should not be construed in a manner that would require a person to disclose information about incriminating matters which, prior to 15^th January 2007, he would have been entitled to keep secret.

The judge rejected that submission and in my view he was right to do so. It is interesting to note that a similar submission relating to the change in the law brought about by section 80(5) of the Police and Criminal Evidence Act 1984, which renders a person competent and compellable as a witness against a former husband or wife, was rejected in R v Cruttenden [1991] 2 Q.B. 66. Despite certain doubts, the court in that case appears to have regarded the change as essentially procedural in nature. The presumption against retrospectivity applies in relation to penal statutes because it is considered offensive to impose a penalty for conduct that did not constitute a criminal offence at the time it was committed. That is not the case with section 13, however, since it is not concerned with penalising conduct of any kind. As the judge pointed out, it is a purely evidential provision.

The argument against what is described as “retrospective effect” assumes the existence of an accrued right to withhold information which existed immediately prior to the date on which the Fraud Act came into force. That can only be because the information was incriminating at that date, but that need not be so. Given the nature of the offence covered by section 2 (fraud by misrepresentation) it is quite possible for a person to make a deliberately false statement after the Act came into force about an entirely innocent matter (such as his date of birth) that occurred before the Act came into force. At the earlier date there could be no privilege against self-incrimination; the information only becomes incriminating as a result of acts committed later. In such a case section 13 does not criminalise the earlier conduct; it merely requires disclosure of a matter that establishes the later offence. In my view it is wrong to characterise section 13 as ‘retrospective’. It is not. It changes the law in relation to future proceedings, albeit that change may relate to the proof of events that occurred before it came into effect. Moreover, insofar as broader considerations of fairness are relevant, I agree with the judge that it is fanciful to suppose that anyone, including these appellants, is likely to have conducted himself in the conscious belief he would not be required to disclose incriminating information or documents in any proceedings in which he might, for whatever reason, later be caught up.

However, Mr. Gruder had a second string to his bow. The transitional provisions in paragraph 3 of schedule 2 of the Fraud Act provide that the Act does not affect liability, proceedings or penalty for any offence partly committed before its commencement. That led him to submit that section 13 of the Act likewise applies only to information relating to events occurring after the commencement of the Act and that information relating to events occurring at an earlier date was covered by the common law, by section 14 of the Civil Evidence Act 1968 and by section 31 of the Theft Act, the provisions of which apply only to information which may incriminate a person of an offence under that Act.

As Mr. Gruder accepted, that submission proceeds on the assumption that section 31 of the Theft Act and section 13 of the Fraud Act occupy mutually exclusive territory, but I can see no reason to think that that is what Parliament intended, since in all other respects their provisions are in substance the same. I can find nothing in the Act to indicate that section 13 was not intended to apply in cases where a related offence is an offence under the Theft Act. In my view, therefore, in proceedings relating to property which take place after the commencement of the Fraud Act both section 31 and section 13 apply if a person is required to provide information or documents which tend to incriminate him of an offence of obtaining property by deception under section 15 of the Theft Act.

The appellants submitted that Mr. Chautard and Mr. Lambroza as employees of the UK Vitol companies could not be required to disclose information or documents in their possession belonging to the companies if to do so would deprive the companies of a right to claim privilege that would otherwise be available to them. As the judge observed, this raises an interesting question on which there is no binding authority. However, he came to the conclusion that the question did not need to be answered in this case because the personal entitlement of Mr. Chautard and Mr. Lambroza to claim privilege against self-incrimination was for all practical purposes co-extensive with that of the companies themselves. He therefore did no more than express a provisional view on the point. In view of the conclusions to which I have come on the other issues raised by this appeal it is unnecessary to decide it and in the circumstances I prefer to express no view on the matter.

For these reasons I would dismiss this appeal also.

I agree that all three appeals should be dismissed. In respect of the appeals against the orders of Cresswell J and Field J, I have nothing to add to the reasoning of Moore-Bick LJ with which I agree entirely.

The third appeal has caused me more difficulty, with regard in particular to what I will call the “privilege exclusion” under section 13 of the Fraud Act 2006. As will be seen I agree generally with the conclusions of Moore-Bick LJ. However, having been party to the Law Commission report (Fraud Law Com 276) which was the precursor to the Act, I will add a brief comment of my own.

The Law Commission’s report was the culmination of a project which had begun in 1998, following a reference by the Home Secretary, designed to simplify and modernise the law of fraud. The Commission recommended the creation of two new statutory offences, one of fraud and one of obtaining services dishonestly. The recommendations were embodied in a draft Bill attached to the report. Clause 1 created the offence of “fraud”, consisting of breach of any of the following clauses: 2 (fraud by false representation), 3 (fraud by wrongfully failing to disclose information), and 4 (fraud by abuse of position). Clause 6 created the separate offence of obtaining services dishonestly. The new offences would replace a number of offences of deception created by the Theft Act 1968-1996, and also the common law crime of conspiracy to defraud (report para 1.7; Bill cl 9).

Clause 8 (“Evidence”) reproduced the substance of the privilege exclusion, taken from section 31(1) of the Theft Act 1968. In line with that precedent, clause 8 referred only to self-incrimination in respect of “an offence under this Act”; there was no reference to “related offences”. Section 31(1) itself followed a proposal of the 8^th report of the Criminal Law Review Committee, which led to the 1968 Act, to which I will return. The scope of the privilege exclusion was not considered in detail by the Commission in its recent report. The explanatory note to the draft Bill observed simply that clause 8 “repeated the effect” of section 31(1).

The Commission’s failure to address this subject may seem surprising in retrospect, particularly having regard to the judicial calls for extension of the privilege exclusion (referred to by Moore-Bick LJ: see para 37 above). The explanation may lie in the emphasis of the 1998 reference, which was on substantive, rather than procedural law. In any event, at some stage between the publication of the Commission’s report, and the presentation of the Bill to Parliament, the issue must have attracted attention, leading to the inclusion of “related offences” by what is now section 13. We were not given any information on the background to this change. The Explanatory Notes to the 2006 Act provide no assistance.

The concept of a “related offence” was a novelty, as compared with the Commission’s proposals. The change may initially have arisen from the Government’s decision (contrary to the Commission’s recommendation) to retain the common law offence of conspiracy to defraud. It would have been anomalous for the privilege exclusion to be applied to statutory, but not common law, fraud. Section 13 was applied in terms to conspiracy to defraud, in the first part of the definition of “related offence” (s 13(4)(a)). Further, the Law Commission’s report had also referred to a number of statutory offences “which could be described as frauds”, including, for example, tax evasion and fraudulent trading (para 2.26). The second part of the definition of “related offence” appears to be directed to such offences, at least, on the basis that they “involve” forms of “fraudulent conduct or purpose” (s 13(4)(b)).

We were referred to the House of Commons Standing Committee debate on the clause. It had been suggested that the term “related offence” should be clarified by giving the Secretary of State power to prescribe the offences within the definition. This was resisted by the Solicitor-General, on the grounds that such a list might create confusion and leave gaps:

“At the stage when someone is giving answers, the matter of whether an answer or a document discloses a fraud under the Bill, or some other type of fraud, may not be clear. It is likely that it will only be clear that his answers might show that some form of fraud has taken place. That might be a fraud that could be prosecuted under the Bill, or possibly under section 458 of the Companies Act, VAT legislation or tax law. We should not tie the law to a specific list of offences which might leave gaps in which a person who does not want to answer questions, might say that it may or may not fit into a particular list. We want any form of fraudulent purpose or conduct to be covered by that provision…” (22 June 2006, col 62-3)

This confirms what is apparent from the wording of the section: that the intention was provide a broad definition which would avoid detailed arguments about the scope of particular offences.

As has been explained, we are faced with two issues on the construction of section 13:

On the first issue, I have little to add to the reasoning of Moore-Bick LJ, with which I agree.

Although we were not referred to the full legislative background, it is of interest to note the comments on this issue in the 8^th report of the Criminal Law Review Committee, which preceded the Theft Act 1968. Paragraph 200 summarised the policy of what became section 31(1) (and of its more restrictive predecessors in the Larceny Acts of 1861 and 1916):

“… on balance the public interest requires that persons in possession of property on behalf of others should be compelled to give information about their dealings with the property in order to protect the interests of those entitled to it, notwithstanding that this involves departing from the general rule that a witness need not incriminate himself.”

There is nothing to suggest an intention to limit the scope of the provision to proceedings for the recovery of misappropriated property, as Mr Gruder suggests.

Moore-Bick LJ has outlined the relevant bribery offences (statutory and common law). Mr Gruder’s argument can, I think, be reduced to a simple and apparently attractive syllogism: dishonesty is an inherent feature of offences of fraud under the 2006 Act; it is not a necessary element of the offence of bribery; accordingly bribery is not an offence involving of fraud.

That dishonesty as such is not an essential element of offences of bribery is clearly established. The essential feature is “corruption”. Willes J words, in the leading case of Cooper v Slade (1858) 6 HLC 746, 773 (on a statute relating to the bribery of voters) have been often cited in different contexts:

“I think the word 'corruptly' in this statute means not 'dishonestly', but in purposely doing an act which the law forbids as tending to corrupt voters, whether it be to give a pecuniary inducement to vote, or a reward for having voted in any particular manner. Both the giver and the receiver in such a case may be said to act 'corruptly'.”

A more modern application of the principle can be seen in R v Smith [1960] 2 QB 423. The defendant was charged with “corruptly” offering a gift to the borough mayor, to gain his support within the council. The defendant asserted that there was no dishonesty on his part, because the offer had been made solely for the purpose of exposing corruption, and he did not intend to benefit from it. This was held to be no defence. Following Willes J, Lord Parker CJ said that the word “corruptly” in this context does not imply dishonesty on the part of the offeror, but –

“… that the person making the offer does so deliberately and with the intention that the person to whom it is addressed should enter into a corrupt bargain.” (p 428):

That approach was approved by the Privy Council in Singh v Trinidad [2006] 1 WLR 146.

I confess that, even with this guidance, I do not find “honest corruption” an easy concept. Although the line of reasoning is well-entrenched in the law, it might be thought to owe more to expediency than principle. However, the logic seems to be that the inherently corrupt nature of the offer, viewed from the point of view of the offeree, infects the whole transaction, regardless of the motives of the offeror. On that analysis, bribery, seen objectively, can properly be categorised as an offence which “involves” dishonesty, albeit not necessarily on the part of the defendant.

Turning to the 2006 Act, there is no definition of “fraud” or “fraudulent”. It is notable that “dishonesty” is a common feature of all three versions of the new fraud offence (ss 2,3,4). Also relevant may be the new offence under section 9, designed to extend to non-corporate traders the criminal sanctions applying to companies under section 458 of the Companies Act 1985 (see Explanatory Notes para 29). This refers to a business carried on with intent to defraud creditors or “for any other fraudulent purpose”; “fraudulent purpose” has the same meaning as in section 458 (s 9(2)(b)),(5)). The Explanatory Notes (para 30) refer to the effect of case-law under section 458, which has established (inter alia) that “dishonesty is an essential ingredient of the offence”.

On the other hand, the statute does not, as it might have done, make any direct link between the section 13 and the specific elements of the substantive offences created by Act. In other words, the offences to which that section refers are related to, but not necessarily limited by, the scope of the earlier sections. The words “involving fraudulent conduct or purpose” must be read in their ordinary meaning, and with regard to the objectives of the statute. Adopting that approach, and also in line with the various authorities referred to by Moore-Bick LJ, I would hold that any offence involving deception or surreptitious dealing is a “related offence” within section 13, and that bribery is such an offence.

I agree that the appeals should be dismissed for the reasons given by Moore-Bick LJ.