Serious Organised Crime Agency v Namli & Anor

This is an appeal by the defendant appellants from the order dated 17 May 2011 made by Openshaw J varying the order for disclosure of documents that had been made by Master Leslie on 27 May 2011. It raises issues as to the scope of CPR Part 33.6 and the relationship between that provision, Part 31.5(2) and Part 31.19, and the exercise of the powers conferred on the Court by Part 31.5(2) and Part 31.19.

The facts material to this appeal may be shortly stated. The Serious Organised Crime Agency (“SOCA”) has brought proceedings against the appellant defendants under sections 243 and 266 of the Proceeds of Crime Act 2002 (“POCA”) seeking a recovery order in relation to some $6 million in a bank account in the name of the second defendant, Topinvest Holdings International Ltd (“Topinvest”). SOCA’s case is that the moneys standing to the credit of that bank account are the proceeds of crime. Its claim is disputed by the defendants. The first defendant, Hakan Yaman Namli (Mr Namli), is the sole beneficial owner of Topinvest. For the purposes of this appeal, it is common ground that there are no possible issues in these proceedings between Mr Namli and Topinvest.

At a case management conference on 12 January 2011 Master Leslie made a directions order. Paragraph 2 required the parties to give standard disclosure of documents by list and by category by 4 March 2011, and made provision for inspection, for the service of witness statements, and for expert evidence. Paragraph 6 of his order provided for a further case management conference to be held on 27 April 2011. Paragraph 7 required the parties to apply to the Clerk of the Lists for fixing a trial date, with a time estimate of 3 to 4 days. Paragraph 8 gave permission to restore in the meantime.

Following the making of the disclosure order, SOCA conducted its disclosure exercise. In the first witness statement relied upon by it, that of Ambrose King (Mr King) dated 12 April 2011, reference was made to the fact that it receives communications from other UK intelligence and crime prevention agencies and from foreign intelligence and crime prevention agencies, and from the private sector, that are highly confidential. Mr King said that in the course of conducting its disclosure exercise it had established that it had such documents on which it did not wish to rely in these proceedings. He said that this material was caught by CPR Part 31.6(b)(ii) and “therefore prima facie falls within the ambit of standard disclosure”. However, this material was only relevant as adversely affecting the defendants’ case; it did not adversely affect SOCA’s case. He said that withholding such material from disclosure would not prejudice the defendants. However, if disclosure was not limited under CPR Part 31.5, SOCA would have to make an application under Part 31.19. Mr King said:

In his second witness statement, Mr King elaborated on the classes of documents in question. The first class to which he referred are Suspicious Activity Reports (known as SARs), made pursuant to section 330 of POCA by persons who know or suspect that another person is involved in money laundering, where the information leading to the suspicion came to the person making the report in the course of business in the regulated sector (banks and credit institutions). He exhibited Home Office Circular 53/2005, entitled “Money Laundering: the Confidentiality and Sensitivity of Suspicious Activity Reports (SARs) and the Identity of those who make them”. Paragraphs 19 and 20 of the Circular are as follows:

The second class consists of reports from the Egmont Group of Financial Intelligence Units (“FIUs”), an international group that includes SOCA. The statement of the principles of the Group includes the following:

SOCA applied to the judge, under CPR Part 31.5, for an order limiting its disclosure. The appellants opposed the application. The contentions of the parties before the judge were essentially the same as those before us, and I shall refer to them later in this judgment.

Part 31.5 provides:

CPR Part 31.6 is as follows:

Disclosure is to be contrasted with inspection. CPR Part 31.3 confers on a party a qualified right to inspect a document disclosed by another party;

Part 31.19 is concerned with both withholding disclosure and withholding inspection of documents that have been disclosed:

Part 31.21 is also relevant. It is headed “Consequences of failure to disclose documents or permit inspection”, and provides:

Lastly, Part 3.1(7) is as follows:

Before the judge, SOCA contended:

CPR Part 31.6(b)(ii) is restricted to documents that adversely affect the case of a party other than the disclosing party against another party. It makes no sense to impose an obligation on a party to disclose documents that do not adversely affect its own case, do not advance the case of the opposing party, and only adversely affect the case of its opponent, if the disclosing party does not wish to rely on those documents. A purposive interpretation of that paragraph should be applied with that result.

The Court had jurisdiction under Part 31.5 to limit SOCA’s obligation of disclosure, and should do so, if necessary under the power granted by CPR Part 3.1(7).

It would be disproportionate to require it to seek an order under CPR Part 31.19 permitting it to withhold disclosure of documents on which it did not wish to rely in the proceedings where non-disclosure would not prejudice the defendants’ case or cause any unfairness to it.

The defendants contended:

The obligation of disclosure in Part 31.6(b)(ii) is unqualified, and includes documents that adversely affect an opponent’s case, even if there are only two parties to the proceedings.

The power under Part 31.5(2) to limit standard disclosure is only exercisable when the order for disclosure is made.

The power of the Court to vary or to revoke an order is exercisable in limited circumstances, as held by this Court in Collier v Williams [2006] EWCA Civ 20, [2006] 1 WLR 1945, approving the statement of Patten J (as he then was) in Lloyds Investment (Scandinavia) Ltd v Ager-Hanssen [2003] EWHC 1740 (Ch). None of those circumstances existed in this case.

In any event, the order sought by SOCA involved side-stepping the constitutional principles established in Conway v Rimmer [1968] AC 910 that form the basis of Part 36.19. Such an order, if granted, would circumvent the important safeguards in that provision.

The judge accepted SOCA’s submission as to the scope of Part 31.6. In addition, he held that the Court had power, under Part 31.5 and Part 3.7, to vary the order made by Master Leslie in the circumstances of this case, in which SOCA had not realised that it had in its possession confidential and sensitive material adverse to the defendants on which it did not wish to rely until it conducted the disclosure exercise required by Master Leslie’s order. There was no conceivable prejudice to the defendants in limiting SOCA’s disclosure. He therefore acceded to the application, and made the order that is the subject of this appeal, varying paragraph 2 of Master Leslie’s order so as to read:

Before us, the parties essentially repeated the submissions they had made to the judge. They are sufficiently summarised above.

It is perhaps not immediately obvious why a party in a two-party case should be required to disclose documents that it does not seek to rely upon if their only relevance is adverse to the case of the disclosing party. Such documents were not included in the scope of standard disclosure recommended by Lord Woolf in his Access to Justice – Final Report of July 1996, which preceded the introduction of the CPR and on which it was based. The reason for the inclusion of subparagraph (ii) in Part 31.6(b) is unclear. Under the Rules of the Supreme Court, it had been unclear whether, in a multi-party case, party A was under a duty to disclose documents the only relevance of which was that they were adverse to the case of party B against party C: see Documentary Evidence by Charles Hollander QC, 10^th edition, at paragraph 7-29, and Disclosure by Paul Matthews and Hodge Malek QC at paragraph 4.12. It may be that CPR Part 31.6(b)(ii) was intended to make clear the extent of A’s duty of disclosure in such circumstances. It is also possible that the object of the unqualified obligation imposed by Part 31.6(b)(ii) is to enable those advising the party to whom disclosure is made and inspection is given to make the most reliable assessment possible of the strength and weaknesses of their case. However, I think it unlikely that those formulating the rule would have had in mind that the possibility that a party might not want to rely on documents adverse to his opponent’s case.

Be that as it may, I do not think that Part 31.6 is open to the interpretation put forward by SOCA. The wording of paragraph (b) is unqualified. Whereas paragraph (a) expressly uses the formula “on which [the disclosing party] relies”, no such words appear in either Part 31.6(b)(i) or (ii). I do not think it possible to read into Part 31.6(b)(ii) the words “as against another party”, so as to limit the obligation to documents which adversely affect another party’s case as against some other party. To do so is simply to add words that are not there. Moreover, the power conferred on the Court by Part 31.5 to limit disclosure renders any contrived or forced or purposive interpretation of Part 31.6 unnecessary.

I would however reject the defendants’ contention in their skeleton argument that the object of the unqualified disclosure obligation in Part 31.6(b)(ii) is to prevent the disclosing party from relying at a later stage, and in particular at trial, on documents that he has not disclosed. In my judgment, Part 31.21 prohibits a disclosing party from doing so without the permission of the Court. “Fails to disclose” in that paragraph must mean “fails duly to disclose”. Disclosure at trial, for example, cannot be disclosure for the purposes of that paragraph, since if it was the rule would be devoid of effect. Mr Trollope QC, for the appellants, accepted that this is the effect of Part 31.21.

I consider these provisions of the CPR together since the effect of an order under Part 3.1(7) in the present case is, to use the words of Part 31.5, to limit standard disclosure; conversely, the effect of an order under Part 31.5 limiting standard disclosure is, to use the words of Part 3.1(7), to vary the order made under Part 31.6. Moreover, if there were no express power conferred within the CPR to limit standard disclosure, I do not think that the general power in Part 3.1(7) could be used for that purpose.

I do not see any reason to confine the power conferred by Part 31.5(2) to the same occasion as that on which an order for disclosure is made under Part 31.5(1). If anything, the wording suggests that separate orders are envisaged, that under paragraph (1) being a direction and that under paragraph (2) being an order dispensing with or limiting standard disclosure.

Whether, in the exercise of the power conferred by Part 31.5(2), an order should be made limiting disclosure when the Court has already ordered unlimited standard disclosure is a different question. Being the exercise of a discretion, in order to succeed on this appeal the appellants have to show that the judge erred in law or in principle or made an order that could not properly be made in the exercise of that discretion.

I can see no real difference between the circumstances in which an order may be varied under Part 3.1(7) and those in which an order may be made limiting disclosure that has previously been ordered in unlimited terms. In both cases, the Court is modifying a previous order.

In Lloyds Investment (Scandinavia) Ltd v Ager-Hanssen [2003] EWHC 1740 (Ch), Patten J said, at paragraph 7:

In Collier v Williams, giving the judgment of the Court, Dyson LJ (as he then was) said:

In Roult v North West Strategic Health Authority [2009] EWCA Civ 444, Hughes LJ, giving a judgment with which the other members of the Court agreed, said:

We were also referred to the judgments in this Court in Shah v HSBC [2011] EWCA Civ 1154 and the judgment of the Divisional Court in Windsor and ors v Bristol Crown Court and the Commissioners for HM Revenue and Customs [2011] EWHC 1899 (Admin). In W.L. Gore & Associates GmbH v Geox SPA [2008] EWHC 462 (Pat), Lewison J, as he then was, refused to vary a consent order concerning the date of trial, on the basis that there had been no change of circumstances since the order had been agreed and made, and that there was no good reason to expedite the trial, which would lead to other litigants’ trials being postponed. His dictum requiring a change of circumstances was approved by the Divisional Court in Alexander Windsor and ors v Bristol Crown Court [2011] EWHC 1899 (Admin), in which the Court refused to vary a final order that had been extensively discussed.

It is, I think, important not to treat any of these judgments as if they were statutes. Patten J made clear in the Lloyds Investment case that he was not seeking to lay down a comprehensive and exclusive definition of the circumstances in which the Court may vary a previous order, and this was emphasised by Hughes LJ in Roult. In my judgment, the exercise of the discretion must depend on the type and provisions of the order it is sought to vary or revoke and the circumstances in which it was made. It is one thing to seek to vary or to revoke, at one extreme, an order for summary judgment under Part 24, made after a disputed hearing, and at the other extreme a very different thing to apply to vary an order for the service of witness statements so as to extend time for compliance, in circumstances in which the delay in their service will have no effect on the trial date or otherwise prejudice the other parties. Final substantive orders must be distinguished from case management orders. Consent orders (which are not the same as orders made without argument that are uncontroversial when made), such as that considered in W.L. Gore & Associates GmbH v Geox SPA require special consideration. There is a spectrum, and stronger grounds, indeed exceptional circumstances, will be required at one end and relatively little at the other end. Part 52.17 may be regarded as a codification of the stringent requirements at one end of the spectrum in relation to orders made by the Court of Appeal.

The essential difference, however, is between an appeal, when the material before the first instance judge is revisited, and an application for variation or revocation, when in general in relation to an order determining a controversy between the parties it is normally necessary to show at the very least a change in the circumstances assumed or found by the Court.

In the present case, there was no controversy concerning paragraph 2 of Master Leslie’s order when he made it. It did not resolve any dispute between the parties when made. It was because the order was an interlocutory case management order that it expressly permitted the parties to restore the application. The judge found that those responsible for the claim on behalf of SOCA were not aware of the problem that his order would cause, because they had not carried out their disclosure exercise. Having done so, they appreciated that it raised a problem not previously considered by the Court. Given the context, i.e., disclosure, and this background, in my judgment, subject to the contentions of the appellant in relation to CPR Part 31.19, the judge was right to consider that he had a discretion to vary Master Leslie’s order by limiting disclosure.

It is at this point that I think it necessary to address the reasons put forward by the defendants for disclosure to them of the documents in question. No such reasons were given to the judge. Before us, Mr Trollope QC has put forward four.

First, it was submitted that SOCA has been judge in its own cause in determining whether the documents in question are relevant only as adversely affecting the defendants’ case, and not otherwise impacting on the case of SOCA. That is true. However, that is the way disclosure works under our procedural rules. The assessment made by a litigant as to relevance (by which I mean in the present case whether the document is such as to be within the scope of standard disclosure) is determinative, unless and until another party puts evidence before the Court demonstrating that that assessment has been wrong or unreliable. Normally, the party seeking further disclosure will in such circumstances make an application for specific disclosure under Part 31.12.

In the present case, no evidence has been put forward by the defendants to suggest that SOCA’s evidence that the documents in question are solely relevant as adverse to the defendants’ case is unreliable or wrong. It follows that I do not think that the defendants have any right to have the Court assess whether SOCA’s determination of the relevance of the documents is or is not correct.

The second reason put forward to require disclosure in the absence of an application under Part 31.19 is that the documents if disclosed might lead to a train of inquiry that may lead to information or documents helpful to the defendants’ case. This reason too is unsustainable. Documents that are only relevant in that sense are not within the scope of standard disclosure, as is apparent from its clear words, and was pointed out by this Court in Shah v HSBC.

The third reason is that without disclosure, the defendants will not be able fully to assess the strength and weaknesses of their case. However, we are concerned with the fairness of the trial. If the documents are not to be relied upon at trial, the fairness of the trial from the point of view of the defendants will be unaffected. Their legal advisers can advise them as to the strength and weakness of their case on the basis of the evidence that will be before the trial judge. The non-disclosure of documents adversely affecting the defendants’ case is helpful to them, not prejudicial.

The fourth reason put forward is that in the absence of an order under Part 31.19 the defendants have been deprived of their right to disclosure of documents that SOCA is under a duty to disclose. However, this assumes that SOCA is under such a duty. Once the Court exercises its power under Part 31.5 to limit disclosure by excluding the obligation to disclose the documents in question, SOCA is under no such duty.

Thus the crucial question on this appeal is whether the judge could not properly have exercised his discretion as he did because there was a public interest ground for non-disclosure, and so he should have required SOCA to make its application under CPR Part 31.19. This is, I think, an important question of principle.

It is necessary to consider what interest of the defendants would be advanced by requiring an application under CPR Part 31.19. In the ordinary way, public interest immunity applications are concerned with the desire of a public authority to withhold from disclosure or inspection documents that may damage its case or assist the case of other parties. In such a case, the Court must weigh up the public interest in non-disclosure (or withholding a document from inspection) against the other party’s right to a fair trial. The more prejudicial a document to the case of the disclosing authority, the more likely it is that the Court will refuse to accede to the application. However, if the document in question is adverse to the case of the other party, and supportive of the case of the disclosing authority, there is no weighing up to do. The Court will, in such circumstances, be bound to accede to the application, provided it is properly made.

The case was argued below on the undisputed basis that an application under Part 31.19 would be burdensome in management time, legal costs and court time. In his first witness statement, Mr King said:

On this basis, I see no good reason why SOCA should be required to make its application under Part 31.19, since to do so would not promote any legitimate interest of the defendants, for reasons I have set out above. Part 31.5 is not either expressly or implicitly limited by reference to Part 31.19. It was open to SOCA to apply under either rule, and it was open to the judge to make the order he did in the exercise of his discretion, having regard to the overriding objective, and including the saving of expense and the need to not involve unnecessary court resources.

It follows that in my judgment it has not been shown that the judge was in error in exercising his discretion as he did.

If my Lords agree, this appeal will be dismissed. However, its dismissal should not be taken as diminishing the importance of applications under CPR Part 31.19, which I accept reflects an important constitutional principle. If SOCA was seeking to withhold from disclosure any document that materially adversely affects its case, or which was materially adverse to the case of one defendant against the other, I should unhesitatingly have required an application to be made under Part 31.19, and would reject an application under Part 31.5. In that event, the evidence required would in all likelihood have been more extensive, and the Court might well require the matter to have been considered at a higher level within SOCA or the Home Office. The Court might exercise the powers conferred by paragraph (6) to require production of the document or documents or sample of them to the Court for it to consider, or to invite representations. But that is not this case.

I agree.

I also agree.