Metropolitan Housing Trust Ltd v Tominey

The applications before me include applications for continuation of freezing orders which, as between the claimant and what I may refer to broadly as the Tominey defendants, are now agreed subject to one point.

By way of essential background, the claimant, which is a housing association in receipt of public funds, though itself privately owned and managed, alleges that Mr. Tominey, one of its employees, received bribes, in return for the placement of favourable contracts, from a company called Commark Ltd. and (indirectly) from another company called Business Phones and Networks Ltd.. The bribes were allegedly paid either to Mr. Tominey, his wife or a company (being a vehicle for himself) Procurematrix Ltd. His son, Jack Tominey, has also been joined but, having received next to nothing from the transactions, has not been made the subject of a freezing order.

Before the freezing orders were made the claimant, upon the basis of such material as it had, sought and obtained disclosure orders on 29^th August and 28^th September of this year. Information from various banks revealed the alleged complicity of Commark Ltd. and its associates, Business Phones and Network Ltd. and its associates, and the other defendants. Following receipt of that information freezing orders were obtained on 30^th October and 7^th November of this year.

The claimant as a housing trust is a regulated body. It wishes to do two things. It wishes to report the matters which have emerged to the Police. It is said that the undertakings they have given preclude them from doing that, as they are expressly precluded from making use of the material save for the purpose of these proceedings. A report to the Police would not be for the purpose of these proceedings. There appears to be no pressing need to report to the Police but the claimant considers it would be appropriate to do so, especially given its position as a recipient of public funds. It is not for me to judge whether it is appropriate for the claimant to report these matters to the Police. It is for me only to determine whether they should be entitled to do so using information obtained under the court’s previous orders. In addition, the claimant wishes to provide information to its Regulator, the Homes and Communities Agency, in accordance with the obligations referred to in a publication entitled “The Regulatory Framework for Social Housing in England from April 2012”. Under that framework there are provisions for regulating what are called “economic standards”. Paragraph 1.6 explains:

“The purpose of economic regulation is to protect historic government subsidy, promote access to private finance, and help address the lack of competitive pressures on providers which might otherwise put pressure on service quality and efficiency.

1.7.

The regulator will proactively assure itself that private registered providers are well-governed and financially viable.”

I need not read any further. Thus as Mr. Tominey was the claimant’s former employee the allegations of bribery, if made good, are of obvious relevance to the Regulator in considering to what extent private registered providers, of which the claimant is one, are well governed and financially viable. Economic standards are referred to again at pp.11 to 12 of the document. In para.1.3, under the heading “Governance” on p.12, it is provided:

“Registered providers shall provide accurate and timely returns to the regulator, including an annual report on any losses from fraudulent activity, in a form determined by the regulator.”

I have not been shown, and it may be that there is not, any form yet prescribed, but one can see the gist of what is required, namely proper reporting to the Regulator in relation to fraudulent activities and any losses occasioned thereby. In addition, at p.32 of the document there is the following general provision under the paragraph heading “Information requirements for providers”, of which the claimant is one. 4.13 reads:

“Providers are expected to be open and transparent in their relationship with the regulator. They must provide timely and relevant information to the regulator, including on significant events that relate to current or future non-compliance with the economic standards. If providers fail to do this, the regulator will regard that failure as a relevant factor in its opinion of the governance of the organisation.”

I need read no further.

Those general obligations to keep the Regulator informed openly and transparently are reflected in statutory obligations in the Housing and Regeneration Act 2008. Under s.107 it is provided that the Regulator may, for a purpose connected with its functions, require a person to provide documents or information which it has reason to believe is or may be in the person’s possession and which relates to, amongst other things, the financial or other affairs of a registered provider. Thus if the Regulator comes to know that the claimant has obtained documents in the course of these proceedings that the claimant is not in a position to provide the Regulator can, on the face of it, require their production. If the claimant does not provide the information in question on the ground that it is unable to provide it then under s.107(2) the requirement may be imposed on persons other than the claimant, which could be (for example) the individual defendants. That would be subject to s.108, which would entitle a person not to disclose anything which would be subject to legal professional privilege in proceedings in the High Court. That does not arise here. Additionally, under s.108(2) a banker cannot be required to breach a duty of confidentiality owed to a person who is not a registered provider or a subsidiary or associate of a registered provider. That would mean that the Regulator could not go to the banks but could go to the defendants if the claimant was not released by the order now sought from its obligations only to use the information obtained for the purpose of these proceedings.

It seems clear to me that the Regulator has a legitimate interest, as the framework document in para.4.13 particularly makes clear, to be provided with open and transparent, timely and relevant information. Given that the Regulator is concerned with issues of corporate governance of the service provider and its economic viability that must include, in my judgment, material which may be derived from matters which have come from the banks or from the defendants in response to the freezing orders. In those circumstances, I am inclined to the view that it would be appropriate, unless the authorities indicate otherwise, for me to grant permission to the claimant to make disclosure to the Regulator.

The Regulator may also wish, as does the claimant, to refer matters to the Police. It seems to me that that is not an objection to the order sought. Any offence with which the Police would be concerned would be either an offence of bribery or a related offence of conspiracy to defraud, each of which would be covered by s.13 of the Fraud Act 2006, which may have some relevance by analogy. Under that section a person is not to be excused from answering any questions put to him in proceedings relating to property or complying with any order made in proceedings relating to property on the ground that doing so may incriminate him of an offence under the Act or any related offence. Had the information been ordered against the defendants directly, then, where the Fraud Act applies (as here) a statement of admission made by the person affected in complying with such an order is not admissible in evidence against him. That would prevent the defendant therefore from refusing to give the information relying upon the privilege against self-incrimination. He would, however, be protected against its subsequent use in criminal proceedings against him. That is not immediately relevant here, except as regards information derived from the defendants themselves, as part of the disclosure ordered under the freezing orders. As regards information from the banks (which appears to be where the most important information is derived from) we are not concerned with statements made by any defendant in complying with an order. We are concerned with information coming from various banks, unaffected by any notion of “self”-incrimination. No privilege against self-incrimination would, therefore, be violated, even if the evidence came to be used for the purpose of a criminal prosecution against the bank’s customer. I do need to consider, however, whether this potential use of the material would be inappropriate, for example on the grounds of oppression or unfairness.

It seems to me that it would not be oppressive, unfair or otherwise inappropriate, in this case, to make an order which might have the effect, if I accede fully to the orders sought by the claimant, of entitling the claimant to disclose to the Police material which may lead to a criminal prosecution. That is partly because the material in question is not protected by any privilege against self-incrimination. In addition, the claimant is entitled to complain to the Police, who could then make investigations of their own and obtain under its own statutory powers all the material that the claimant has obtained. It seems to me right in those circumstances for the claimant to be allowed to go the Police with all the information now at its disposal. In addition the claimant ought, as I have said, to be able to disclose to the Regulator what it has obtained in order to be open, transparent and accurate in its dealings with the Regulator. The Regulator might in turn pass that information over to the Police. It seems to me that no one can complain that their legitimate interests have been violated in the context of an undertaking not to disclose without the permission of the court if the court now gives permission for the Regulator to carry out its regulatory functions and for the claimant to be permitted, as it wishes to do, to bring its concerns to the attention of the Police on a fully-informed basis.

I was referred to Bank of Crete v. Koskotas [1992] 1 W.L.R.919. In that case Millett J considered generally what was required in order to overcome (in that case) an implied undertaking restricting the use to which documents obtained under legal compulsion could be put. He held at p.924 F-G, basing himself upon the observations of Lord Oliver of Aylemerton in Crest Homes v. March [1987] A.C.829 at p.853ff, that the court would do so only (1) in special circumstances, and (2) where the release or modification would not occasion injustice to the person giving the discovery. That, however, was all subject to (3), the overriding requirement that each case must turn on its own individual facts. Millett J made an order permitting disclosure to the regulator of the Bank of Crete even though that would in turn have the result of material being passed on to an investigating magistrate in Greece as required by Greek law. The bank was bound to report to its regulator and make full and proper reports, not misleading or worthless reports. Precisely how its obligation was to be performed was a matter for the bank but the court ought not to place any obstacle in the way of the proper performance by the bank of its obligations under Greek law. Millett J accordingly made what appears to have been an entirely general order authorising disclosure.

In my judgment, the approach of Millett J is not limited to a case where some foreign system of law is under consideration, but applies as much here where the claimant housing trust is obliged under its regulatory framework to be full and frank with its Regulator. It is said that the Regulator’s primary concern is to receive a report as to losses and that that could be done without reference to the stigmatised material. In my judgment, the full picture emerging from the history of allegedly illicit payments, the identity of the recipients, and the amounts received may be needed to test the true level of ultimate loss and potential recoverability. All of this comes from the disclosed material. At all events, it seems to me that in this case, as in the Bank of Crete case, the court ought not to inhibit the claimant from giving full and frank information, but should leave it to the claimant to be the judge of what it needs to disclose. I note also that the Regulator is not concerned solely with the extent of losses but with the quality of governance within the claimant Housing Trust concerning its senior employee, Mr. Tominey. Full information is desirable so that the Regulator can consider, both in the case of this Trust and others in a like position, what steps, if any, may be required in the future to protect the public purse.

In those circumstances, it seems to me that the Bank of Crete reasoning applies. In that case, Millett J further observed, at p.926 E:

“The fact that a party which seeks the assistance of the English court obtained material for the purpose of an English action may find itself under a legally enforceable obligation in another jurisdiction to disclose the material for some other purpose is no doubt a factor to be taken into account by the court when considering whether to give such assistance. Unless the material is of only marginal relevance in an English action it ought not normally to preclude the court from assisting the applicant to obtain the material it needs for the successful prosecution of the action.”

That passage goes to the question of whether or not to order disclosure, but plainly recognises (as does the result in Bank of Crete) that an obligation by law to disclose to third parties should not be a reason for withholding either disclosure, or permission to disclose to the relevant third party in accordance with that obligation. In my judgment, that applies here, with the necessary modifications in respect of the obligations of the claimant under the regulatory framework, not under some foreign law, to be full and frank with its Regulator.

In the circumstances, I accede to the application as sought, and I will leave it to counsel to prepare a form of order which can no doubt be agreed.