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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Omers Administration Corporation & Ors v Tesco Plc  EWHC 109 (Ch) (25 January 2019)
Cite as:  EWHC 109 (Ch)
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
FINANCIAL LIST (ChD
B e f o r e :
| OMERS ADMINISTRATION CORPORATION & ORS
(the "SL Claimants")
|(1) MANNING & NAPIER FUND, INC.
(a company incorporated in the United States of America)
("the SL Claimants")
(2) EXETER TRUST COMPANY
(a company incorporated in the United States of America)
("the MLB Claimants")Claimants
Mr Peter de Verneuil Smith and Mr Dominic Kennelly (instructed by Morgan Lewis & Bockius UK LLP) appeared on behalf of the MLB Claimants
Ms Victoria Wakefield and Ms Emma Mockford (instructed by the Government Legal Department) appeared on behalf of the Serious Fraud Office
Mr Michael Watkins (instructed by Freshfields Bruckhaus Deringer LLP) appeared on behalf of the Defendant
Crown Copyright ©
MR JUSTICE HILDYARD:
Nature of the Issues to be considered
Structure of this judgment
(1) The context in which these issues arise and the nature of the SFO Documents in question.
(2) The circumstances in which the SFO (a) obtained the SFO Documents from third parties (including the TPOs) and (b) thereafter disclosed them to the Defendant.
(3) The process preceding this hearing to enable the issues to be adjudicated on notice to potential objectors.
(4) The nature of the TPOs' various objections to being permitted or directed to disclose the documentation onwards to the Claimants.
(5) The debate as to the applicable legal principles, and my views in that regard.
(6) The application of the legal principles as I perceive them to be to the objections.
(7) The question whether, and if so what, further restrictions should be imposed in respect of any disclosure directed.
(8) Summary of Conclusions.
(1) Context of the issues arising and nature of the SFO Documents
"The SFO investigation concerned how the [alleged] fraud was carried out, by whom and who knew about it. The material is therefore not merely relevant to these proceedings, it goes to the very heart of the Claimants' pleaded case against Tesco under section 90A of FSMA."
(2) The circumstances in which the SFO (a) obtained the SFO Documents from third parties (including the TPOs) and (b) thereafter disclosed them to the Defendant
(1) Under section 2(2) CJA 1987, the Director of the SFO may:
"by notice in writing require the person whose affairs are to be investigated … or any other person whom he has reason to believe has relevant information to answer questions or otherwise furnish information with respect to any matter relevant to an investigation at a specified place and either at a specified time or forthwith".
Interviews conducted by the SFO pursuant to section 2(2) CJA 1987 are referred to below as "section 2 interviews".
(2) Under section 2(3) CJA 1987, the Director of the SFO may:
"by notice in writing require the person under investigation or any other person to produce … any specified documents which appear to the Director to relate to any matter relevant to the investigation or any documents of a specified description which appear to him to so relate".
(3) Unlawful non-compliance with a section 2 notice is a criminal offence. By section 2(13) CJA 1987 it is provided that:
"Any person who without reasonable excuse fails to comply with a requirement imposed on him under this section shall be guilty of an offence and liable on summary conviction for a term not exceeding six months or a fine not exceeding level 5 on the standard scale or to both."
(1) One individual was interviewed on a voluntary basis (TPO14).
(2) The three objectors who were defendants in the criminal proceedings ongoing at the time of the hearing and now concluded (two of whom are currently on trial in the Crown Court) were all interviewed under caution as suspects in the criminal investigation in accordance with the Police and Criminal Evidence Act 1984 and its Code of Practice (rather than pursuant to section 2 CJA 1987).
"NOTE: Any document or information obtained by the Serious Fraud Office (SFO) under Section 2 of the Criminal Justice Act 1987 may be disclosed by the SFO for the purposes of any criminal investigation or criminal proceeding or for any other permitted purpose. The SFO's principal gateway for disclosing information is Section 3(5) of the Criminal Justice Act 1987. Notice of any disclosure will not necessarily be given to the provider of the document or information or to any other person."
"Subject to subsections (1) and (3) above and to any provision of an agreement for the supply of information which restricts the disclosure of the information supplied, information obtained by any person in his capacity as a member of the Serious Fraud Office may be disclosed by any member of that Office designated by the Director for the purposes of this subsection—
(a)to any government department or Northern Ireland department or other authority or body discharging its functions on behalf of the Crown (including the Crown in right of Her Majesty's Government in Northern Ireland);
(b)to any competent authority;
(c)for the purposes of any prosecution in England and Wales, Northern Ireland or elsewhere; and
(d)for the purposes of assisting any public or other authority for the time being designated for the purposes of this paragraph by an order made by the Secretary of State to discharge any functions which are specified in the order."
The advance disclosure material is provided to the legal representatives of Tesco PLC in confidence for the purpose only of providing legal advice in relation to the criminal investigation being conducted by the UK Serious Fraud Office. The material must under no circumstances be disclosed voluntarily to any third party for use in any civil, disciplinary, employment or ancillary proceedings of whatever nature. If Tesco PLC becomes aware that it is, or may be, compelled by law or Court order to disclose the documents to a third party, it will promptly give the SFO written notice so as to enable the SFO to make representations or intervene prior to disclosure."
(3) The process preceding this hearing to enable the issues to be adjudicated on notice to potential objectors
"The Court would be particularly assisted if objectors were to set out precisely what, as a matter of fact, they would wish the Judge to weigh in the balance against disclosure. For example, you might wish to draw the Court's attention to specific personal concerns to you, or to some particular prejudice to you that you anticipate or fear might result from disclosure".
(4) The nature of the TPO's objections
"…most of the third party objectors who have (to date) set out their position in any detail, appear to be objecting to the disclosure of their documents on principle, taking into account the fact that the information and/or documents in question were provided under compulsion and in the reasonable expectation that they would be kept confidential."
(a) TPOs 1, 8, 13 and 22 are all represented by Linklaters and advanced common arguments.
(b) TPO 2 is represented by Jenner & Block.
(c) TPOs 3 and 20 are both represented by Osborne Clarke and advanced common arguments.
(d) TPO 5 is represented by Brown Rudnick.
(e) TPO 6 is unrepresented.
(f) TPO 10 is represented by Barnfather Solicitors.
(g) TPO 12 was represented by Skadden Arps but is now unrepresented.
(h) TPO 18 is represented by Stephenson Harwood.
(i) TPOs 4, 11, 14 and 21 are all represented by White & Case and made common arguments.
(j) TPOs 9, 7, 15 and 16 are all represented by Herbert Smith Freehills and made a number of common (plus some individual) arguments.
(k) TPOs 17 and 19 are represented by CMS and make common arguments.
(l) Three others (TPOs 23, 24 and 25) are also represented but neither TPOs 23 nor 24 advanced any particular position.
(1) Category 1 comprised individuals who: (i) "neither consent nor object" to disclosure/inspection in these proceedings; (ii) have raised objections that are not supported by any reasons, or that raise objections that are wrong in principle; or (iii) have objected to disclosure/inspection on the basis that they provided information and documents to the SFO under compulsion and with an expectation of confidentiality, but without raising any specific concerns about privacy/confidentiality or the relevance of the SFO Documents.
(2) Category 2 comprises individuals whose objections raised concerns (i) about privacy / confidentiality that are specific to that individual and/or (ii) as to the relevance of the SFO Documents.
"The notification letter shall invite the third parties in question to state by 14 September 2018 whether they object to disclosure and inspection of the relevant SFO Document(s) and, if so, to set out the grounds for that objection in writing."
"As soon as reasonably practicable following receipt of the Third Party Notice, and in any event by 12 October 2018, Tesco shall provide disclosure to the SL Claimants and the MLB Claimants (and shall permit simultaneous inspection, subject to appropriate redactions for irrelevance and/or privilege) of all SFO Documents … in respect of which no third party objections have been received pursuant to paragraphs 3D and 3E above."
(5) Submissions on the applicable legal principles
(1) "Public interest confidentiality" refers to the public interest in maintaining the confidentiality of individuals who provide information under compulsion to prosecuting authorities such as the SFO;
(2) "Private interest confidentiality" refers to the private interest of individuals in maintaining the confidentiality of information related to them in the SFO Documents and their right to privacy and family life pursuant to Article 8 of the European Convention on Human Rights ("the Human Rights Convention").
(1) Where (as here, in respect of the SFO Documents) an order for standard disclosure has been made, CPR 31.6 stipulates that documents in the control of a party (as defined in CPR 31.8) are to be disclosed (that is, both listed and, subject to any claim of privilege, produced for inspection).
(2) However, the Court is also and has always concerned itself with the protection of other rights, including confidences, where such protection is possible without compromising the objective of disclosure, being to make available the documentation necessary for a full and fair trial and its fair disposition. CPR 31.19 recognises such a right and sets out how it may be asserted (CPR 31.19(3) and (4)) and challenged (CPR 31.19(5)).
(3) CPR 31.12 provides that the Court may make an order for specific disclosure or for specific inspection. CPR 31.12, unlike CPR 31.17 (see below), and unlike the RSC Order 24 rule 13 which preceded it, does not specify the test to be applied: in particular, it does not expressly state, as did RSC Order 24 rule 13, that no order for production of any documents could be made unless the Court was of the opinion that the order was "necessary for disposing fairly of the [claim][matter] or for saving costs".
(4) In the case of documents which are not in the control of a party to the proceedings, but rather are in the control of a third party, CPR 31.17 provides for a party to make an application requiring that third party to disclose and produce such of the documents as are identified by the applicant as being 'necessary' in order to fairly dispose of the case or to save costs (see CPR 31.17(3)(b)). Again, the Court is always concerned to protect legitimate third-party rights insofar as it is able to do so without compromising the objective of a fair trial.
(5) CPR 31.22 (which, as I explain later, is invoked by certain of the TPOs) stipulates that documents disclosed in proceedings may be used only for the purpose of such proceedings and not for any collateral purpose, unless (a) the documents have been read in or referred to in open court (CPR 31.22(1)(a)); or (b) the Court gives permission (CPR 31.22(1)(b)); or (c) the party who disclosed the document and the person to whom it belongs both agree (CPR 31.22(1)(c)). As I elaborate upon later, but as was common ground, the Court is for obvious reasons (and not least the promotion of full disclosure) vigilant to prevent misuse of disclosure; and the authorities in the context of CPR 31.22, suggest that the burden on the applicant is a heavy one which can be discharged only by "special circumstances which constitute a cogent reason for permitting collateral use" (see Rawlinson & Hunter Trustees v SFO  EWCA Civ 1409 ("Tchenguiz No 2") at ).
(6) The specific wording of these rules is supplemented, however, by "the overriding objective" as adumbrated in CPR 1.1(1) and (2).
(1) Where production is sought of documents accepted to be relevant, but obtained through or pursuant to the exercise of powers of compulsion and held subject to obligations of confidentiality or restrictions as to their use the Court must conduct a balancing exercise.
(2) On the one hand, weighing against disclosure, the Court should take into account:
(a) The public interest in maintaining the confidentiality of those who provide information to the police or the SFO (or any other body with a criminal investigatory function). This confidentiality arises by virtue of the relationship between the individual (or body) providing the information and the criminal investigatory authority, and is not dependent on the particular sensitivity of the information given. It is class-wide. (It is this type of confidentiality which the SFO referred to as "public interest confidentiality".)
(b) Any particular fact-specific privacy, confidentiality or sensitivity concerns raised by the affected third party. This will necessarily vary between objectors. (The SFO referred to this as "private interest confidentiality".)
(3) On the other hand, weighing in favour of disclosure, the Court should take into account the public interest of ensuring that, as far as possible, civil trials are conducted on the basis of all relevant material and the private rights of the parties to the civil proceedings to a fair trial. Assessing the weight that should be attributed to this consideration will (it was suggested) depend on an assessment of each document (or part of a document), including not only how probative it is, or appears to be, but also the extent to which its contents would otherwise be available (for example, through non-confidential documents).
(4) When it comes to the balancing exercise, the cases are, unsurprisingly, heavily influenced by the test for disclosure in each particular case; and according to which of the CPR rules referred to above is applicable.
(5) In striking the balance, and in the event of disclosure being thought appropriate, any measures which might either avoid or limit the extent of the disclosure of confidential or sensitive information should be taken, although the public interest in open and transparent justice must also be taken into account. Such measures might include making redactions before disclosure or imposing restrictions on the use of the information in the proceedings (for example, a requirement that no reference be made to it in open court) if disclosure is required.
SL and MLB Claimants' submissions
(1) Since the SFO Documents are in Tesco's possession and control, and have been identified by Tesco as disclosable in accordance with the test for standard disclosure under CPR 31.6, the starting point is that such documents must be listed and should be disclosed and made available for inspection in these proceedings.
(2) That said, and though not of itself a ground for protection, the Court has recognised that confidences, particularly of and asserted by third parties, "ought, if possible, in the interests of justice, to be respected…" (see per Lord Wilberforce in Science Research Council v Nassé  AC 1028 at 1067B-C). In addition to confidences, there are a number of other matters which the Court must take into account in exercising its discretion in respect of production/inspection, and which may weigh against it. These include the following:
(a) The public interest in maintaining the confidentiality of those who provide information to the SFO and other prosecuting authorities, which has been recognised by a line of authority commencing with Marcel v Commissioner of Police of the Metropolis  Ch 225 and Taylor v SFO  2 AC 177;
(b) The right of third parties to respect for their private and family life under Article 8 of the Human Rights Convention.
(3) Thus, mere relevance of the documents in question, according to the broad test ordinarily applicable, will not of itself be sufficient to warrant their disclosure in breach of an obligation of confidence (see ibid.); and the Court or tribunal always has a discretion (ibid.) to refuse production.
(4) Sometimes it will appear that the information in a document, or even another version of the document itself, may be available from another non-confidential and unrestricted source. In such circumstances, production may not be 'necessary'. But unless that, or some strong reason to suppose that disclosure would (for example, because of the sheer volume of documentation) be so oppressive as to outweigh any litigious advantage, is demonstrated (the onus being on the party from whom disclosure of the relevant documentation is sought) neither public nor private interest confidentiality, nor any private right, would exempt disclosure which a party to the proceedings would otherwise be required to give of documents assessed to be not merely relevant but necessary for the fair disposition of those proceedings (see again the Nassé case at 1065 to 1066 (per Lord Wilberforce) and 1071 (per Lord Salmon)).
(5) In that regard, there is no requirement that the documents of which production is sought should be "potentially critical": Scott Baker LJ in Frankson was simply describing the position in that case, not laying down a standard.
(6) Rather, the test is that prescribed by Lord Bingham MR in Taylor v Anderton  1 WLR 447 at 462 as follows:
"The crucial consideration is, in my judgment, the meaning of the expression "disposing fairly of the cause or matter". These words direct attention to the question whether inspection is necessary for the fair determination of the matter, whether by trial or otherwise. The purpose of the rule is to ensure that one party does not enjoy an unfair advantage or suffer an unfair disadvantage in the litigation as a result of a document not being produced for inspection. It is, I think, of no importance that a party is curious about the contents of a document or would like to know the contents of it if he suffers no litigious disadvantage by not seeing it and would gain no litigious advantage by seeing it. That, in my judgment, is the test."
(7) Mr Kitchener also cited the Court of Appeal decision in Wallace Smith Trust Co Ltd v Deloitte Haskins & Sells  1 WLR 257 ("the Wallace Smith case"), where Simon Brown LJ (as he then was), went on (at page 272D) to emphasise that the test renders wholly unnecessary or inappropriate a:
"weighing of loss of confidentiality on the one hand against litigious disadvantage on the other [which] is, obviously, difficult enough at the best of times: these are wholly disparate interests not readily matched against one another. Such a task is, of course, necessary if and when a prima facie claim to public interest immunity is made out. It is not, however, desirable to introduce this difficulty in some diluted form into the present type of rule 13 proceedings…"
(8) Although, in the case of confidential or restricted documentation the court will consider whether some form of other restriction or protective measure, such as redaction, confidentiality ring, anonymity, or limits on publicity or collateral use, may be available, the interests of justice in there being available in evidence any documentation which may adversely affect one side or benefit another must prevail; and see Marcel v Commissioner of Police of the Metropolis  Ch 225 per Sir Christopher Slade at 265 F-G and 266 D-F. The right to a fair trial under Article 6 of the Human Rights Convention is also relevant in this context.
(9) Even in gauging protective measures with a view to protecting confidences so far as is may be done, there is Court of Appeal authority to the effect that the burden, which is a heavy one, is on the party claiming exemption from disclosure, which can be discharged only by showing that the exemption, or if practical a limitation or restriction is "strictly necessary": see Dunn v Durham County Council  1 WLR 2305 at .
(10) The Court accepts the consequence that, as Lord Wilberforce put it in the Nassé case at 1067B:
"confidences, except between lawyer and client, may have to be broken however intimate they may be."
"…it was not argued before us and there is nothing to suggest that the RSC approach to confidentiality has changed under the CPR…Accordingly, while disclosure and inspection cannot be refused by reason of the confidentiality of the document in question alone, confidentiality (where it is asserted) is a relevant factor to be taken into account by the court in determining whether or not to order inspection. The court's task is to strike a just balance between the competing interest involved – those of the party asserting an entitlement to inspect the documents and those of the party claiming confidentiality in the documents. In striking that balance in the exercise of its discretion, the court may properly have regard to the question of whether inspection of the documents is necessary for disposing fairly of the proceedings in question: see…[the Nassé case]…
…differing from the judge, I am not persuaded that that there is some freestanding "necessity" case which needs to be satisfied before permitting inspection where CPR 31.14 is otherwise satisfied. In this regard, the CPR differ from the previous regime contained in RSC Order 24, though, as already demonstrated, the question of whether inspection is "necessary to dispose fairly" of the application or case is not rendered irrelevant – and may well arise in the context of proportionality or that of confidentiality. On this analysis "necessity" is or may be (depending on the facts) a relevant factor in striking the just balance; it is not a free-standing hurdle to be considered and surmounted in isolation before inspection may be permitted."
(1) The importance and magnitude of the claims, and the broader public interest underlying them: £490 million being claimed by the SL Claimants and £364 million by the MLB Claimants, together with interest, further to the admitted overstatement of profit by a leading supermarket in which a very large number of shareholders were adversely affected;
(2) The nature of the SFO's investigation in the criminal proceedings and the substantial (and unusual) overlap with the factual inquiry required by this civil case;
(3) The enhanced likelihood that the interviews conducted in the latter would be very relevant in the former, and likely to assist in determining the issue of fraud which is central to the civil case: especially contemporaneous evidence on issues as to the inner workings of the Defendant, the mindset of and relationships between its directors and managers, and the pressures to present a rosy picture of its financial position;
(4) The inequality of arms between the Claimants and the Defendant (which already has them) if the documents are not disclosed: the documents may well confer a strategic advantage on the Defendant (including, for example, in helping it to decide what witnesses to call, or who may be called against it, and to assess the weight of both): and only disclosure can level the playing field.
Wallace Smith and two following cases
My conclusions as to the applicable legal principles
(1) CPR Part 31 addresses at least three very different circumstances: (a) the position as between parties to the litigation (see especially CPR 31.6, 31.12); (b) the position as regards third parties holding relevant documents (see especially CPR 31.17); and (c) the position as to the use of documents disclosed in the litigation otherwise than in the litigation itself (CPR 31.22).
(2) Of these, CPR 31.22 is rather different in nature from the others. The collateral purpose rule which CPR 31.22 now in effect codifies relates to documents already disclosed and produced, not to the preceding process of disclosure and production, and is based on different policy considerations. CPR 31.22 is a regime and restriction which is intended to promote compliance with the disclosure obligation and prevent its abuse; and to which all litigants are taken to subscribe as the price of disclosure. As emphasised at  in Jackson LJ's judgment in Tchenguiz No 2 (see paragraph 51(5) above), the:
"collateral purpose rule exists for sound and long established policy reasons. The court will only grant permission…if there are special circumstances which constitute a cogent reason for permitting collateral use."
(3) CPR 31.17's express test of necessity reflects the fact that third parties, being strangers to the suit, can have no expectation of reciprocal advantage from the usual rule that all relevant documents must be disclosed; and, as the word 'only' in CPR 31.17(3) serves to emphasise, ordering disclosure against non-parties is the exception rather than the rule: see Frankson at . CPR 31.17(3) stipulates that not only must the documents sought be likely to "have a potentially relevant bearing on one or more live issues in the case" (per Scott Baker LJ in that paragraph in Frankson) but also that their disclosure is "necessary" for the defined purposes of disposing fairly of the claim or to save costs. In determining that, the Court must bear in mind that the order sought, being against a non-party, is unusual, and that a degree of caution is accordingly appropriate; and the more so according to the "weight" of the public or private interest in maintaining confidentiality which disclosure would negate.
(4) Where, as in this case, applicant and respondent are both parties (a "party/party case"), relevance is the prima facie test. The rules as to the process and obligations in respect of disclosure and production as between parties are based on the premise that such disclosure and production is a fundamental feature of the way contentious litigation is conducted in this jurisdiction and is of reciprocal advantage to all parties. That does not mean that in such a case the public interest or a special private interest in maintaining confidentiality are not to be taken into account: just as confidentiality is not of itself a ground for protection, relevance is not of itself enough to override other interests, public or private, whether under the Human Rights Convention, or by reference to the public and/or private interest in maintaining confidentiality, and confidentiality must always be assessed when considering an application for production of documents in respect of which a duty of confidentiality to a third party is owed. Nothing in the CPR overrides or dilutes the Court's obligation to consider fairly what in the Nassé case Lord Wilberforce (at page 1067B-D) described as:
"the strength and value of the interest in preserving confidentiality and the damage which may be caused by breaking it".
But as Lord Wilberforce also made clear in the same passage of his speech, confidentiality of itself offers no ground for protection: and in a party/party case such a fundamental feature and pre-condition is only ordinarily to be restricted in its application in circumstances where its rigorous and/or unadjusted application is not required in order to deal with the case justly and at proportionate cost. Put another way, in this context the question becomes whether the overriding objective of dealing with the case justly and at proportionate cost can be secured without production of the relevant documents.
(5) As was made clear in the Abacha case (see paragraph 65 above), in answering that question the court may properly have regard to the test of necessity, though that is no longer in this context a free-standing or exclusively determinative test. The Court must consider whether the same information is available from another source; it must consider also whether a restricted form of disclosure will suffice. But if production of a document would be likely to be of litigious advantage to the applicant, or if its non-disclosure would result in the applicant being potentially at a litigious disadvantage, that may well outweigh or take precedence over other considerations: indeed, at least where the confidentiality asserted is purely private and engages no wider considerations as to the public interest, it is almost certain to do so, subject to devising suitable protections to minimise the intrusion: Counsel were unable to identify any case where it had not.
(6) The position where there is a wider public interest in the maintenance of confidentiality is not as clear or predictable. That is especially so in a case where the documentation of which production is sought was initially obtained or produced pursuant to the exercise of powers of compulsion where confidentiality has been promised or is implicit. Important policy objectives are in play in the context of the use that may be made of documents obtained pursuant to the exercise by the relevant authorised body of powers of compulsion for the purpose of a regulatory investigation and/or criminal prosecution. As noted in Tchenguiz No 2:
"There is a strong public interest in preserving the integrity of criminal investigations and protecting those who provide information to prosecuting authorities from any wider dissemination of the information otherwise than in the resultant prosecution."
(7) In the Real Estate case (supra), Arden LJ posed and answered the question as to the object of that protection and its basis in the public interest in the similar context of an investigation by the FSA (at ), though it is to be noted that under the relevant section 348 FSMA the consent of the information provider is required unless a gateway is available:
"What is the apparent object of preserving confidentiality in information provided to the FSA? The preservation of confidentiality appears to serve a number of purposes. First, it ensures respect for the private life of the person who was the subject of information…Secondly, restrictions on the disclosure of confidential information…are likely to assist in the process of regulation because of the encouragement that it is likely to give…to disclose timeously information which may be of importance to the regulator for the purpose of exercising its regulatory functions."
(8) The Court may, I would say must, in such a context take into account those considerations, and the impact beyond the particular case of giving primacy to the interests of the parties to the litigation. It may also take into account factors such as the following:
(a) even though CPR 31.22 is not itself engaged, where the documents in question have been obtained for one purpose (a criminal investigation and use in any subsequent criminal trial) but, if produced by a party in civil proceedings into whose possession they have come, are likely to be deployed for another, there are obvious possible echoes of or analogies with the collateral purpose rule;
(b) where the document is an interview or statement prepared in consequence of a section 2 notice (or some other process of compulsion) and but for the promise of confidentiality the document would probably not exist at all, or at least would not be in the possession and control of the person from whom production of the document is sought;
(9) What weight should be given to such factors depends on all the circumstances, and involves a difficult exercise in judicial judgment. Lord Wilberforce's explanation of the position in his speech in Nassé (at page 1067B-D) seems to me still to be the true guide in assessing the judgment to be made where confidentiality is asserted:
"…there are many examples of cases where the courts have recognised that confidences, especially those of third persons ought, if possible, in the interests of justice [and, I would interpolate, in order to safeguard in a regulatory context the objects for which it was promised], to be respected…
It is sometimes said that in taking this element into account, the court has to perform a balancing process. The metaphor is one well worn in the law, but I doubt if it is more than a rough metaphor. Balancing can only take place between commensurables. But here the process is to consider fairly the strength and value of the interest in preserving confidentiality and the damage which may be caused by breaking it; then to consider whether the objective – to dispose fairly of the case – can be achieved without doing so, and only in the last resort to order discovery, subject if need be to protective measures. This is a more complex process than merely using the scales: it is an exercise in judicial judgment."
(10) The aversion to the weighing of factors which are not really commensurable has had to yield in some ways to the balancing of different interests so often required under the Human Rights Convention. However, the point that the balance is a judgment still remains. The fact that it is an exercise of judicial judgment that is required also clarifies that the Court must approach the matter by reference to all the circumstances of the case and without any presumptions one way or the other. In that context, I do not accept the argument floated by the SFO that Frankson should be read as suggesting that to outweigh the public interest in maintaining the confidentiality of statements made (in that case, to the police) in the course of a criminal investigation the statements or transcripts in question should be assessed to be "potentially critical evidence". Nor does Article 8 of the Human Rights Convention require any different or separate balance to be struck or judgment made either, although Convention jurisprudence has (as Munby LJ, as he then was, put it (at ) in Dunn v Durham County Council) served to emphasise that:
"…disclosure is never a simply binary question: yes or no. There may be circumstances…where a proper evaluation and weighing of the various interests will lead to the conclusion that (i) there should be disclosure but (ii) the disclosure needs to be subject to safeguards."
(11) Nevertheless, the trend of the decisions confirms that it is probably only in circumstances where the judge is not only persuaded of strong or 'weighty' considerations against disclosure (whether by reference to confidentiality or 'the compulsion principle') but also unpersuaded of there being any litigious advantage to be gained by disclosure which could not be obtained in some other less intrusive way that the Court will refuse production in a party/party case. Furthermore, if provisionally thus unpersuaded, a judge should ordinarily inspect the underlying material to satisfy himself further: and see per Neuberger J in B & C Holdings at page 109 a-b.
(12) Generally, or by way of summary, in the case of an application by a party for production of documents from another party which accepts that the documents are relevant the balance is very likely to favour production, unless the same information is available from another source without disproportionate difficulty; but the Court will seek to impose appropriate protections insofar as compatible with the needs of justice, including the public interest in a transparent and open process, and the interests of litigants in having their disputes conducted on the basis of all relevant materials.
Application of these principles in the present case
(1) The SFO was plainly entitled and in the event obliged to release to the Defendant the documents it had obtained from the TPOs and others by compulsion and on terms of confidentiality. Every TPO must be taken to have accepted that the SFO was entitled to make available such documents through and for purposes within the 'gateways' provided by section 3(5) CJA 1987: negotiations for and then conclusion of the DPA opened such a gateway.
(2) The duty of confidentiality imposed on Tesco in the SFO's letters of 24 and 25 May 2016 (see paragraph 20 above) was expressed to be subject to being compelled by law or Court order to disclose (which I interpret to mean, and I consider would plainly have been taken to mean, disclose and produce). The Defendant gave notice accordingly having regard to its legal obligation to disclose.
(3) The fact that the documents were only brought into existence because of the criminal proceedings, and are only in the possession of the Defendant through what the Solicitors acting for TPOs 7, 9, 15 and 16 have described in correspondence with the GLD as "'windfall' disclosure via the DPA process", does not relevantly impact on the question whether their disclosure is, in the events that have happened, 'necessary' for the fair disposition of the proceedings.
(4) The documents in question undoubtedly are likely to contain material 'necessary for the fair disposal of the action', at the very least in terms of the approved test: the Claimants are likely to gain a litigious advantage by their production, and furthermore, since the Defendant already has the documents in its possession and control the Claimants would suffer an unfair disadvantage if they were denied material documents which the Defendant already has. In particular:
(a) the evidence taken by the SFO from individuals it chose to interview for the purpose of investigating alleged criminal acts committed by the Defendant, TSL and their executives seems likely to include accounts from persons who may not give evidence at the civil trial about meetings of which there are thought to be no contemporaneous notes, and who were key personnel;
(b) a preliminary review of the SFO Documents has suggested that relevant documents may well have been deleted or fabricated as part of the alleged fraud within TSL, in which case it is obviously important that contemporaneous material (such as the SFO Documents also include) be made available to the Claimants and the Court;
(c) in the round the SFO Documents were such as to persuade TSL to enter into the DPA after being warned by the SFO that it considered "that we have sufficient evidence for a realistic prospect of conviction against [them] for the offences set out in the draft indictment";
(d) further, the transcripts of interviews offer a considerably more contemporaneous record than witness statements now can;
(e) it appears from the preliminary review undertaken by the Claimants that many of the exhibits to the witness statements comprised in the SFO Documents consist of internal documents from the relevant period between April 2013 and September 2014. Such documentation is not only likely to be relevant: it is also difficult to see any sustainable basis on which internal Tesco documents should be protected by confidentiality.
(5) I further accept that each of the interviews, witness statements and exhibits in the SFO Documents forms part of an entire investigative process that must be looked at as a whole and may not be capable of being fully and fairly understood in part. As in the Wallace Smith case, the documentation as a whole is "undoubtedly likely to contain material necessary for the fair disposal of the action".
(6) In such circumstances, the public interest in confidentiality, though usually of particular weight in the context of documents obtained by compulsion, must yield to the public interest in ensuring (to quote Scott Baker LJ in Frankson at ) that
"as far as possible the courts try civil claims on the basis of all the relevant material and thus have the best prospect of reaching a fair and just result."
(7) In reaching that judgment, I confirm that I have taken into account not only the weight to be attributed to the fact of compulsion, but also the other arguments put (most cogently perhaps in an Annex to a letter written by the Solicitors to TPOs 7, 9, 15 and 16) as to (a) the expectation of privacy and confidentiality (b) the public interest in encouraging witnesses to cooperate and speak freely and openly to those investigating fraud and other criminal acts (c) the possibility that disclosure leading to use otherwise than by the prosecuting authority such as is proposed may discourage such free and open co-operation and possibly undermine public confidence in the criminal justice system and (d) the enhanced risk of invasion of privacy in a case with so many claimants.
(8) In view of that judgment, there is no need for me to inspect the documents: the general description provided is sufficient for these purposes, and such an exercise would not be useful or warranted.
(9) All this said, I shall require restrictions to protect privacy and confidentiality to the extent practical: I address the details later.
(10) For completeness, I should confirm that, even if (contrary to my own view and analysis) CPR 31.22 were applicable by analogy, the importance of the documents would, in my view, be sufficient to warrant release of the undertaking against collateral use to the extent necessary to enable production in these proceedings, subject to the restrictions later elaborated. In the language of the rule, there are, in the special circumstances of this case, "cogent and persuasive reasons for permitting collateral use of the documents", subject to such restrictions. There is force also in the SFO's observation that in this case, if the Defendant did not currently have the disputed documentation in its possession, the Claimants, being aware of their existence at least as a class, could have sought them from the SFO pursuant to a third party disclosure order under CPR 31.17, and it would be strange if the documents were better protected by dint of their disclosure as part of the DPA process than they would have been were this alternative course to have been taken.
TPOs' particular objections
(1) Certain of the TPOs (1, 4, 5, 8, 11, 13, 14, 21, 22, 23, 24 and 25) have referred to and appear to rely on the possibility that production in the manner envisaged of the SFO Documents could prejudice the continuing criminal proceedings. I do not consider there to be any real likelihood of this. I accept the Claimants' submission that the Additional Confidentiality Club Order (see paragraph 31 above), the purpose of which is to ensure that documents disclosed in these proceedings (including any Third Party Documents as defined in the Additional Confidentiality Club Order) remain confidential and do not enter the public domain until after the conclusion of the criminal proceedings, provides a sufficient barrier against and adequate resolution of these concerns. Further:
(a) the relevant SFO Documents relating to the auditors are relevant, indeed critical, to the fair disposal of the civil proceedings. They give factual and technical evidence going to the false statements and fabricated audit evidence that were allegedly used to hide 'pull forwards' from the audit team. They also explain what they discovered in the course of their investigation of TSL after 22 September 2014;
(b) the vast majority of the SFO Documents that relate to TPOs 1, 8, 13 and 22 are contemporaneous internal Tesco documents that were collected by the auditors in September 2014 as part of their investigation and identified as "super-hot docs". I accept the submission that there is no basis for an assertion of confidentiality in this material, which is a repository of key contemporaneous documents that was collected from Tesco and TSL immediately after the fraud was discovered; and that the disclosure of this material is particularly important in circumstances where the documents allegedly show that there was a practice of deleting and fabricating documents to deceive the auditors and avoid leaving a paper trail;
(c) more particularly, the transcripts of the SFO's interviews with TPOs 23, 24 and 25 (conducted in July 2015), and the witness statement of TPO 25 (in July 2015), are likely to be of central importance: as it was put in the MLB Claimants' skeleton argument, "A key issue in the criminal proceedings is the extent to which those individuals knew that Tesco's profits were overstated. Accordingly, there is an obvious overlap with these proceedings… The transcripts of those interviews, and the witness statement of TPO 25, constitute the most closely contemporaneous witness evidence that is available for events which are at the heart of these civil proceedings, and which was provided by individuals who appear to have been central to those events."
(2) Certain of the TPOs (TPOs 1, 8, 13 and 22) contended that the Defendant should have been required to explain the perceived relevance and materiality of the documents before the Court should be required to rule on the matter: I have rejected this argument previously and would do so again. Relevance has never been in issue.
(3) TPO 5 refers to the fact that the MLB and SL Claimants could approach him to provide evidence on a voluntary basis, and may also be able to obtain his evidence through a witness summons: so there are other ways of obtaining the information without undermining confidentiality. As to this, I accept the MLB Claimants' contention that even if they could obtain evidence in these ways, that would not be an adequate substitute for the SFO's interview transcript, which is the most closely contemporaneous record of TPO 5's evidence that is available.
TPOs 7, 9, 15 and 16
(1) TPO 7 was a direct report of xxxxx and worked as an accountant in the department of Tesco's UK business responsible for negotiating with suppliers (which as noted above is where the majority of the profit overstatement is thought to have arisen). I am told that TPO 7's interview transcript includes evidence regarding: (i) the practice of recording income in the wrong accounting period, and the extent to which this practice was known about within Tesco and (ii) his involvement in the preparation of the legacy paper, which led to the profit overstatements coming to light.
(2) TPO 9 worked in the same team as xxxxx and was also a direct report of xxxxx. TPO 9's evidence concerns, inter alia: (i) the practice of recording income in the wrong accounting period, and the extent to which this practice was known about within Tesco; and (ii) his involvement in the preparation of the legacy paper, which led to the profit overstatements coming to light.
(3) The exhibit to TPO 9's witness statement is a notebook that was referred to in TPO 9's interviews, suggesting that without it the interviews would be incomplete.
(4) TPOs 15 and 16 were xxxxx. Their evidence is to the effect that the practice of pulling forward income (i.e. recognising income in the wrong accounting period so as to inflate profits) was widespread (and was widely discussed) in the department of Tesco's UK business responsible for negotiating with suppliers.
(5) I am told that the interview transcripts for the interviews with TPOs 9, 15 and 16 are voluminous and cover over 650 pages of text: it is apparent on the face of the documents that the interview transcripts are much more expansive than the witness statements, and (given the purpose of the interviews) it is therefore likely that they contain additional detail and nuances that are important to the case.
"generally, contain discursive and in some cases slightly confused evidence, as our client made their best attempts to respond to the SFO's choice of questions in respect of events from years earlier in the context of a compelled interview, with limited documents."
"disclosure of the Transcripts in the Civil Proceedings would therefore represent a wide dissemination of information that was given in confidence and contains private details about the lives of our clients, their thoughts, opinions and feelings."
"If the Court is not minded to order that the Transcripts not be disclosed, we would ask that any sections of the Transcripts which are not directly relevant to the Civil Proceedings be redacted. That is on the basis that the Transcripts are confidential…, and in any balancing act undertaken between the public interest in their continued confidentiality on the one hand, and the public interest in the fullest possible evidence being available in the Civil Proceedings on the other, the former must prevail in respect of any and all information which is not strictly required to be disclosed in the Civil Proceedings."
"It's not the sort of stuff which is a window into their souls or private lives or families or work or anything like that…"
(1) He says that "he had little direct knowledge of the financial side of the business and no knowledge of the alleged practices that form the basis of these claims", and that, accordingly, "a fair trial of the Claims could take place without disclosure [of TPO 10's interview transcript]";
(2) In addition to relying generally on public interest confidentiality, he also refers to the "considerable embarrassment and discomfort which would be caused to [TPO 10] if the fact that he was called to attend a s2 interview and the contents of that interview were to enter the public domain". However, TPO 10 does not explain the reasons for such embarrassment/discomfort, nor does he identify any specific concerns about private or sensitive information in the interview transcript.
(1) TPO 10 refers to awareness at board and audit committee level that commercial income was "an area of risk".
(2) He also refers to awareness at board level during 2014 that if Tesco's profits fell below a certain level, Tesco may lose its credit rating, which would adversely affect Tesco's ability to raise debt funding. The relevance of this is that it provides a potential motive for persons with direct management responsibility ("PDMRs") to permit the publication of untrue or misleading profit information.
(1) In addition to general reliance on public interest confidentiality, and especially his expectation that the information he provided to the SFO would be used only by the SFO and only for the purposes of the criminal investigation, he particularly relies on his status as a whistle-blower.
(2) TPO 18's solicitors (another highly respected firm of City Solicitors) have in that regard especially emphasised (in a letter to the GLD dated 14 September 2018) "the clear public interest in protecting the rights of whistle-blowers" and his "special role".
(3) They have also suggested (in the same letter) that "it is clear that a substantial body of evidence exists in the possession of Tesco which will be duplicative of evidence provided by [him] to the SFO."
(4) He also refers to his human rights, particularly his right to privacy. However, he does not identify any particular information that is said to be private or particularly sensitive, nor does he suggest that disclosure will cause him any specific prejudice.
(1) TPO 18 was the key prosecution witness in the first criminal trial and gave oral evidence over the course of some four weeks. TPO 18's oral evidence was given in open court and to that extent is already in the public domain, albeit that reporting restrictions have been in place pending the conlcuion of the criminal trial which prevented any further dissemination of that evidence. Such restrictions have now fallen away The information in TPO 18's documents is no longer confidential, alternatively, the confidentiality interest is of much less weight than that which applies to, for instance, a business secret.
(2) Moreover, the exhibits to TPO 18's witness statements all appear to be documents that were already in Tesco's possession before they were provided by the SFO, and which have been disclosed as part of Tesco's disclosure.
(3) Even if the information that TPO 18 provided to the SFO does remain confidential, the balancing exercise that the Court is required to undertake favours disclosure, because the vital importance of TPO 18's evidence for these proceedings outweighs the public interest in maintaining that confidentiality.
(4) TPO 18 is not entitled to additional protection by reason of his having acted as a whistle-blower internally within Tesco. His position is the same as that of any other person who provides information to a prosecuting authority, i.e. there is a public interest in maintaining his confidentiality, but that public interest is not immutable, and on the facts of this case it must give way to the public interest in a fair trial on full evidence in these civil proceedings.
(5) TPO 18 does not identify (otherwise than entirely generically) the "duplicative" evidence he has in mind, making it impossible for the Claimants to test this point by reference to specific documents. In any event, the documents in Tesco's possession would not be an adequate substitute for TPO 18's interview transcripts and witness statement, which include oral explanations of documents and are likely to represent the fullest and most closely contemporaneous account of events that is available for TPO 18.
"[He] doesn't fall within particular statutory protection for whistleblowers and so on. We're not aware of any particular case saying that there's any particular body of rights held by a whistleblower. However, your Lordship may well think it relevant that he was a whistleblower, in that he came voluntarily, [and there is] the chilling effects argument that we've been discussing earlier in respect of public interest confidentiality…"
TPOs 17 and 19
(1) There is no privilege in the transcripts, as Counsel for the SFO accepted.
(2) The SFO transcripts were disclosed to the Defendant on terms of confidentiality; but that is outweighed by the factors I have discussed at length above.
(3) Whether or not TPOs 17 and 19 could have been compelled to give such extensive evidence in the civil proceedings is irrelevant. The question is whether or not they have any private interest and/or public interest confidentiality that could potentially override the disclosure of relevant materials in the civil proceedings.
(1) TPO 17 was xxxxxx. He was a direct report to TPO 25, one of the individuals facing criminal charges in relation to that accounting overstatement. He says he also had regular contact with TPO 18 (the whistle-blower) and TPO 23 (the Managing Director of the Defendant's UK business). His transcript describes what the Claimants contend are important communications in which he was involved, and which bear importantly on the issues in the case. TPO 17 did not provide a witness statement in the criminal proceedings and, unless he is called to give evidence, his SFO transcript is the only record of his contemporaneous evidence that is likely to be available in the civil proceedings.
(2) TPO 19 was the xxxxxx. He gives important evidence on the importance Tesco attached to avoiding a credit rating downgrade. TPO 19 gives evidence on a number of what the Claimants consider to be crucial documents in which the "legacy" (i.e. the black hole caused by the manipulation of commercial income through accruals) is alleged to have been reported to senior management within TSL and Tesco. I am told by Tesco that in his evidence he states that he was unaware of the manipulation of commercial income and accepts that, xxxxx, he "should have known" about it because it should have been escalated to him. I understand from the Claimants that he also gives extensive evidence on what other xxxxx knew at the time. As with TPO 17, TPO 19 did not give a witness statement and his SFO transcript is likely to be the only record of his contemporaneous evidence available in the civil proceedings.
(6) Should any further restrictions be imposed?
(1) The documents were to be used solely for the purposes of inspection, drafting of witness statements and preparation for trial;
(2) No one provided with the transcripts was to disclose their content to anyone save for the above purposes;
(3) There was a strict limitation on the persons to whom copies of the transcripts could be provided;
(4) The transcripts were not to be treated as coming into the public domain, and no use was to be made of them that would result in their coming into the public domain without the consent of the interviewees or the court;
(5) The SFO has suggested a further possibility, which is for permission to be given only for review of documents in the first instance, with the parties coming to a view on what they wished to use in the proceedings (over a rather longer time frame than has been possible in preparation for the present hearing) and an application to be made to court to enable such use at the relevant time;
(6) I consider that this is an area on which I need further assistance. I took it to be agreed that any disclosure would be into the Additional Confidentiality Club; and there was some discussion also as to whether any documents shown to be of particular sensitivity might be subject to the additional protections of the Enhanced Confidentiality Club. I should like further assistance as to whether the latter is necessary, and also as to whether now is an appropriate time for any further order pursuant to CPR 31.22(2) (by analogy with the case of Lilly Icos Ltd v Pfizer Ltd (No 2)  1 WLR 2253).
Summary of conclusions
Note 1 To be clear, this is not public interest immunity. No public interest immunity is asserted in this case. [Back]
Note 1 To be clear, this is not public interest immunity. No public interest immunity is asserted in this case. [Back]