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URL: http://www.bailii.org/ew/cases/EWCA/Civ/2016/760.html
Cite as: [2016] WLR(D) 408, [2016] Lloyd's Rep FC 497, [2016] EWCA Civ 760, [2016] CP Rep 43, [2016] WLR 4375

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Neutral Citation Number: [2016] EWCA Civ 760
Case No: C1/2015/0419

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
The Hon. Mrs Justice Laing DBE

[2015] EWHC 357 (Admin)

Royal Courts of Justice
Strand, London, WC2A 2LL
19/07/2016

B e f o r e :

LORD JUSTICE GROSS
LORD JUSTICE HAMBLEN
and
SIR COLIN RIMER

____________________

Between:
BLUE HOLDINGS (1) PTE LIMITED & ANOTHER
Appellants
- and -

NATIONAL CRIME AGENCY
Respondent

____________________

Paul Stanley QC and David Peters (instructed by Byrne and Partners LLP) for the Appellants
Jonathan Hall QC and Alexander Cook (instructed by National Crime Agency) for the Respondent

Hearing dates : 21 June, 2016

____________________

HTML VERSION OF JUDGMENT APPROVED
____________________

Crown Copyright ©

    Lord Justice Gross :

    INTRODUCTION

  1. When considering an application to the Court to prohibit the dealing with or disposal of assets within the jurisdiction made by the National Crime Agency, at the request of the Central Authority of a friendly foreign state by way of Mutual Legal Assistance, what is the just balance to strike between the right of a respondent to such an application to inspect the request forming the jurisdictional basis of the Court's power to grant the order and the general confidentiality of executive state to state communications? That is the central (though not the only) issue before the Court on this appeal.
  2. The appeal is from the judgment of Elisabeth Laing J, dated 21st January, 2015 ("the judgment"), reported at [2015] EWHC 357 (Admin); [2015] Lloyd's Rep (Financial Crime) 411, refusing the Appellants' application for an order under CPR rr. 31.14 and 31.15, requiring the Respondent ("the NCA") to permit inspection of the request for Mutual Legal Assistance ("MLA") from the US Department of Justice ("the Request" and "the DOJ" respectively). The basis for the application was that the Request had been "mentioned" in the first witness statement of Mr David Templeman, dated 27th June, 2014 ("Templeman 1"). Underpinning the Judge's refusal of the application was the consideration that the Request was a confidential state to state communication. For convenience, I refer throughout to "the Request", though it may well be that there were a number of "requests"; the difference is immaterial.
  3. So far as here relevant, CPR rr. 31.14 and 31.15 provide as follows:
  4. "31.14 (1) A party may inspect a document mentioned in –
    (b) a witness statement;
    …..
    31.15 Where a party has a right to inspect a document –
    (a) that party must give the party who disclosed the document written notice of his wish to inspect it;
    (b) the party who disclosed the document must permit inspection not more than 7 days after the date on which he received the notice;
    ….."
  5. As appears from Templeman 1, the DOJ has made the Request for assistance in support of non-conviction based (in rem) asset forfeiture proceedings in the US, in particular in order to preserve assets in the United Kingdom pending the conclusion of those forfeiture proceedings. As there set out:
  6. " 2.1 The Central Authority of the United Kingdom ('UKCA') has received a request for assistance from the Central Authority of the United States pursuant to Part 4A of the 2005 Order.
    2.2 The DOJ has conduct of civil forfeiture proceedings in the United States ….('the US Claim'). The US claim relates to assets alleged to have been corruptly misappropriated by the former president of Nigeria, General Sani Abacha ('General Abacha'), and his associates in the 1990s.
    2.3 The US Claim forms part of the 'Kleptocracy Asset Recovery Initiative ('KARI'), launched by the DOJ in 2010. The aim of KARI is to recover assets acquired through the abuse of public office by corrupt officials and their associates through international co-operation, and return the assets to the affected nations. ….."

    To give an idea of scale, the US Claim concerns hundreds of millions of dollars' worth of assets said to have been derived from large-scale corruption and embezzlement carried out during General Abacha's regime, between 1993 and 1998. Having conducted a tracing exercise, the DOJ claims that a proportion of those assets – with a value of over £100 million – has ended up in England and Wales. The Appellants are said to be offshore trust vehicles owned and/or controlled by a Mr. Bagudu, an associate of General Abacha and his son.

  7. The legal framework may be shortly summarised. The starting point is the Proceeds of Crime Act 2002 ("POCA"). S.444 (1)(a) provides that Her Majesty may, by Order in Council, make provision for a prohibition on dealing with property which is the subject of an "external request". S.447 contains a number of definitions:
  8. " (1) An external request is a request by an overseas authority to prohibit dealing with relevant property which is identified in the request.
    (2) An external order is an order which –
    (a) is made by an overseas court where property is found or believed to have been obtained as a result of or in connection with criminal conduct, and
    (b) is for the recovery of specified property or a specified sum of money.
    ……
    (7) Property is relevant property if there are reasonable grounds to believe that it may be needed to satisfy an external order which has been or which may be made.
    (8) Criminal conduct is conduct which –
    (a) constitutes an offence in any part of the United Kingdom, or
    (b) would constitute an offence in any part of the United Kingdom if it occurred there.
    (11) An overseas authority is an authority which has responsibility in a country or territory outside the United Kingdom –
    (a) for making a request to an authority in another country or territory (including the United Kingdom) to prohibit dealing with relevant property.
    …."
  9. The Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 ("the 2005 Order") was made pursuant to POCA. Part 4A of the 2005 Order gives effect in England and Wales to "External Requests" by means of Civil Proceedings. Art. 141A enables an enforcement authority to obtain from the High Court a prohibition order in relation to "…relevant property in England and Wales…which is the subject of an external request." Art. 141D(1)(a) provides that the High Court may make a prohibition order in relation to property if the High Court is satisfied that –
  10. " it is relevant property identified in an external request…"

    Art. 141D(2) is in these terms:

    " A prohibition order is an order that –
    (a) specifies or describes the property to which it applies, and
    (b) subject to any exclusions …., prohibits any person to whose property the order applies from in any way dealing with the property."
  11. The context is furnished by the Treaty between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the United States of America on Mutual Legal Assistance in Criminal Matters with Exchange of Notes Washington, 6 January 1994 ("the Treaty"). Art. 2 provides that Central Authorities shall be established by both Parties; for the United Kingdom, the Central Authority shall be the Secretary of State for the Home Department or a person or agency designated by him/her – in the event, the NCA. Requests under the Treaty for MLA are to be made by the Central Authority of the Requesting Party to the Central Authority of the Requested Party. Save in urgent circumstances, Art. 4 provides that "Requests shall be submitted in writing…". Art. 7 provides as follows:
  12. " The Requested Party shall, upon request, keep confidential any information which might indicate that a request has been made or responded to. If the request cannot be executed without breaching confidentiality, the Requested Party shall so inform the Requesting Party, which shall then determine the extent to which it wishes the request to be executed."
  13. On the 2nd July, 2014, Foskett J made a Prohibition Order ("the Prohibition Order") against the Appellants on the application of the NCA, on short notice to the solicitors acting for the Appellants, prohibiting the disposal of or dealing with the assets there specified, until (in effect) the matter could be listed for a full inter partes hearing. Without prejudice to their right to apply to discharge the Prohibition Order at a later stage, the Appellants did not oppose the making of the Order at that stage.
  14. On the 21st January, 2015, Elisabeth Laing J continued the Prohibition Order, until further order of the Court. It was on that occasion that the Judge dismissed the Appellants' application to inspect the Request and it is from that ruling that this appeal arises.
  15. Both before the Judge and before this Court, Mr Stanley QC, for the Appellants, submitted that they were entitled to inspect the Request, which triggered the making of the Prohibition Order. As provided by Art. 141D(1)(a), a prohibition order can only be made if the Court is satisfied that the property is relevant property, identified in an external request. The Request thus furnished the jurisdictional basis for the Prohibition Order and, the Request having been mentioned in Templeman 1, the Appellants were entitled to inspect it. Mr. Hall QC, for the NCA, resisted the application before the Judge and this Court, on the grounds (inter alia) that the Request was a confidential state to state communication and, in any event, the Judge had made a decision within the proper ambit of her discretion. We were most grateful to both Mr Stanley and Mr Hall for their assistance.
  16. THE JUDGMENT UNDER APPEAL

  17. The judgment was given ex tempore by the Judge. In a nutshell, the Judge assumed, without deciding, that Templeman 1 had "referred to" the Request; nonetheless, inspection of the Request was not necessary for the fair disposal of the action; accordingly, there were no considerations of justice to "trump" the expectation of confidentiality in communications between states.
  18. The Judge proceeded as follows. She observed (at [37]) that the argument had focused upon whether the property had been specified (i.e., "identified") in the Request and whether it was "relevant property". She said this:
  19. " As I understood Mr Stanley's submissions, he did not really dispute that the property had been specified. The real dispute concerns whether or not the property is 'relevant property'."

    Following what the Judge described (at [38]) as a "mini tracing exercise" based on the material in and exhibited to Templeman 1, the Judge was satisfied (at [39]) both that the property was identified in the Request and that it was relevant property – even though she had not seen the Request. She noted that Mr. Templeman's credibility had not been attacked. She continued as follows:

    " 40. Now, given that I am satisfied of those matters without having seen the letters of request, are Mr Stanley's clients nonetheless entitled to disclosure of the letters of request? Mr Stanley is right in submitting that CPR Part 34.14(1)(b) ….confers on its face the broad entitlement to inspect documents which are referred to in, for example, witness statements."
  20. Next, the Judge assumed (at [41]), without deciding, that the Request had been "referred to" in Templeman 1. On this footing, the Judge accepted that the "normal position" was that such "key documents" were disclosable under CPR 31. However, the Judge went on to accept Mr Hall's submission (ibid) that the right to inspect was not "unfettered". The Judge had earlier (at [24]) made reference to the decision of Morgan J in Danisco A/S v Novozymes A/S (No. 2) [2012] EWHC 389 (Pat), especially at [72] – [73], as authority for the proposition that the court had an inherent jurisdiction to prevent inspection under CPR r. 31.14 if it was not necessary for the fair disposal of the action – though it was for the NCA to displace the "normal rule".
  21. The Judge's key conclusions then followed:
  22. " 42. The question is whether inspection is necessary for the fair disposal of the action. In my judgment the NCA has satisfied me that Mr Stanley's clients have all the material that they need in order to challenge the order, and, in particular, to argue, if they wish to, that the property identified in the letters of request is not relevant property. It is notable, in my judgment, that even with the material that they do have, no such challenge has in fact been made. Mr Hall submits, and I accept, that the expectation based on custom is that communications between foreign states are confidential, presumably for reasons of international comity. It has been confirmed by the DOJ that it wishes to maintain the confidentiality of these particular letters of request. The reason for not ordering disclosure of letters of request, though in some cases it might yield to considerations of justice, is that such letters are confidential. There are no such considerations in this case …precisely because seeing the letters of request is not necessary for the fair disposal of this application….. "

    For these reasons, the Judge dismissed the Appellants' application.

    THE ISSUES ON THE APPEAL

  23. The principal issues on the appeal fall conveniently under the following headings:
  24. i) Does CPR r. 31.14 apply? ("Issue I")

    ii) Assuming the answer to Issue I is "yes", what is the true analysis of the Appellants' right to inspect the Request? ("Issue II")

    iii) What balance ought to be struck between the Appellants' right to inspect the Request and the confidentiality of state to state communications? ("Issue III")

    iv) If the Judge's decision is properly characterised as a discretionary decision, a fortiori, a discretionary case management decision, should this Court intervene? ("Issue IV")

    ISSUE I: DOES CPR r. 31.14 APPLY?

  25. (1) Templeman 1: The NCA relied on Templeman 1 to obtain the Prohibition Order. As already noted, para. 2.1 said this:
  26. "The Central Authority of the United Kingdom … has received a request for assistance from the Central Authority of the United States pursuant to Part 4A of the 2005 Order."

    At para. 2.10, Templeman 1 repeats that "As set out at paragraph 2.1 above, the DOJ requested assistance from the United Kingdom in restraining the assets ….".

  27. At para. 4.1, Templeman 1 turned to the property to be subject to the Prohibition Order. As there expressed:
  28. " The relevant property which is identified in the external request from the DOJ, and to which this application for a prohibition concerns…."

    was the property thereafter set out. Finally, at para. 5.3, Mr. Templeman expressed the belief that the property was "relevant property", "….identified in the external request received from the DOJ….".

  29. (2) The rival cases: For the NCA, Mr. Hall submitted that the Request was not "mentioned" in Templeman 1, so that CPR 31.14 was not applicable; the Appellants' case thus failed at the first hurdle. Templeman 1 had done no more than describe a transaction from which the existence of a document or a category of documents could be inferred. Moreover, an "external request" need not necessarily be in writing; it was, Mr. Hall submitted, possible to identify property in a telephone conversation or other oral communication.
  30. Mr Stanley's riposte was straightforward. The Request itself had been "mentioned" in Templeman 1; the references in the paragraphs of Templeman 1 did not simply comprise some general description of a transaction; it was clear from the NCA's own evidence that the Request was in writing.
  31. (3) Discussion: For my part, I would reject Mr. Hall's submissions on this issue. The Request was mentioned in Templeman 1 and, in my view, plainly so.
  32. First, I address the submission that Templeman 1 did no more than "describe a transaction" from which the existence of a document or a category of documents could be inferred.
  33. The foundation of this submission is to be found in the judgment of Slade LJ in Dubai Bank Ltd v Galadari [1990] 1 WLR 731, a case decided under the "old" RSC O.24, r.10. The test for inspection under that rule was whether "reference is made" to a document in a party's pleadings or affidavits. At p.738, Slade LJ rejected the "broad submission" that, "if an affidavit refers to a transaction which on the balance of probabilities will have been effected by a document, that must involve a reference to such document for the purpose of the rule". Instead, Slade LJ (at p.739) formulated the test in terms of whether the pleading or affidavit "makes direct allusion to the document or class of documents in question".
  34. Rubin v Expandable Ltd [2008] EWCA Civ 59; [2008] 1 WLR 1099 was concerned with the present CPR r. 31.14. At [23] – [24], Rix LJ was content to assume that there was no "effective or substantive" difference between the meanings of the previous and the present rule. The change in language from "reference is made" to "mentioned" underlined two matters: (1) it confirmed the test of "direct allusion" or "specific mention"; (2) the expression "mentioned" was "as general as could be" – it was not intended to be a difficult test.
  35. The short answer to this point is that, on the wording of Templeman 1, set out above, there were a number of direct allusions to the Request. By way of example, it is difficult to see how else para. 4.1 of Templeman 1 could be read. As Rix LJ observed, this was not intended to be a difficult test.
  36. Secondly, what remains is Mr. Hall's contention that the Request was not necessarily in writing. With great respect, this is fanciful and, in any event, belied by the NCA's own evidence. The notion that a Request of this nature involved an official in (say) Washington DC telephoning an official at the NCA and reeling out orally a list of assets to the subject of a Prohibition Order beggars belief. Art. 4 of the Treaty contemplates that Requests will be in writing, save in urgent circumstances, of which there is no evidence here. Thus, without more, I would conclude that the Request in this case was in writing. It is neither here nor there that in other circumstances some state to state requests might be made orally. But matters do not end there. The first witness statement of Ms Angliss of the NCA refers (at para. 17) to letters of request from the US to the UK constituting "confidential state-to-state correspondence" (italics added). It is quite impossible to construe this reference as meaning anything other than that the Request was in writing.
  37. Accordingly, I conclude that the Request was mentioned in Templeman I and turn at once to Issue II.
  38. ISSUE II: WHAT IS THE TRUE ANALYSIS OF THE APPELLANTS' RIGHT TO INSPECT THE REQUEST?

  39. This Issue is prompted by the Judge's reasoning (already set out above). With respect and while agreeing with much of the Judge's approach, I part company with her interposition of an apparently free-standing inquiry as to whether inspection was "necessary for the fair disposal of the application". That is not to say that this "necessity" question is irrelevant; in my view it is relevant but arises for consideration in a somewhat different way from that postulated by the Judge. In my view, the correct analysis is as set out in paragraphs which follow.
  40. First, the mere fact that a document is "mentioned" in one of the documents specified in CPR r. 31.14(1) does not automatically and without more entitle the other party to inspect it. The Court retains a discretionary jurisdiction to refuse inspection.
  41. Secondly, the general rule is clear. Ordinarily, if under CPR r. 31.14(1) a document is "mentioned", inter alia, in a witness statement, the other party has a right to inspect it. The reason was well-stated by Nourse LJ in Rafidain Bank v Agom Sugar [1987] 1 WLR 1606, at pp. 1610-1611:
  42. " The party who refers to the documents does so by choice, usually because they are either an essential part of his cause of action or defence or of significant probative value to him. ….the material provisions were evidently intended to give the other party the same advantage as if the documents referred to had been fully set out in the pleadings…. "

    In CPR terminology, I would accept Mr Stanley's submission that CPR r. 31.14 reflects basic fairness and principle in an adversarial system; in accordance with the overriding objective, the parties are to be on an equal footing.

  43. Thirdly, the right to inspect under CPR r. 31.14 is not, however, unqualified; it is instead subject to CPR rules based limits, which may be invoked by the party resisting inspection - the burden resting on that party to justify displacing the general rule. Thus, "proportionality" is part of the overriding objective CPR r.1.1(2)(c) and, in an appropriate case, it would be open to a party to oppose inspection on the ground that it would be "disproportionate to the issues in the case": CPR r.31(3)(2). In determining any such issue of proportionality, a Court would very likely have regard to whether inspection of the documents was necessary for the fair disposal of the application or action. So too, the mere mention of a privileged document in (for example) a statement of case may not of itself lead to a loss of the privilege; CPR r.31.14 is to be read with and subject to CPR r.31.19(3) and (5): see, Rubin v Expandable Ltd (supra), at [39]; Civil Procedure, Vol. 1, 2016, at 31.14.5 and 31.19.1.1.
  44. Fourthly and further, it was not argued before us and there is nothing to suggest that the RSC approach to confidentiality has changed under the CPR; see, for instance, Civil Procedure, at 31.3.6. Accordingly, while disclosure and inspection cannot be refused by reason of the confidentiality of the documents 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 interests 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, Science Research Council v Nasse [1980] AC 1028, esp. at pp. 1065-1066 (Lord Wilberforce), 1074 (Lord Edmund-Davies) and 1087 - 1088 (Lord Scarman).
  45. Fifthly and differing from the Judge, I am not persuaded that there is some free-standing "necessity" test which needs to be satisfied before permitting inspection where CPR r.31.14 is otherwise satisfied. In this regard, the CPR differ from the previous regime contained in RSC O.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.
  46. For completeness, I deal with two authorities which influenced the Judge's approach in this regard. In Church of Scientology v DHSS [1979] 1 WLR 723, RSC O.24, rr. 9, 11 and 13 provided the foundation for the observations of Brandon LJ (as he then was) at p. 743:
  47. " A party to litigation has a prima facie right of unrestricted inspection of the documents of which discovery has been made by the other party so far as may be necessary to dispose fairly of the case or for saving costs. "
    (See too, at pp. 730 and 746.)

    As it seems to me and as already suggested, the "necessity" issue would today be addressed in terms of proportionality under CPR r 31.3(2). Additionally, the Church of Scientology decision plainly remains good authority for the proposition that the Court has inherent jurisdiction to take precautions against the possibility that disclosure and inspection may be abused (see Civil Procedure, at 31.19.4) – perhaps the real issue in that case.

  48. The decision of Morgan J in Danisco v Novozymes A/S (No.2) [2012] EWHC 389 (Pat) was specifically relied upon by the Judge (at [24], noted above), for the observations at [72] – [73], derived from Church of Scientology (supra), as to inspection not being necessary for the fair disposal of the action. On the facts (see at [64] et seq), I would not seek to quibble with the decision in Danisco to refuse inspection of the regulatory dossier apart from the scientific summary (dealt with separately, see at [77]). Here too, however and with respect, Morgan J's observations at [72] – [73] would be better justified under the CPR in terms of the proportionality provisions (discussed above), rather than by way of the reasoning there stated.
  49. It is time to pull some threads together. I have already concluded that Templeman 1 mentioned the Request, so that CPR r.31.14 is applicable (Issue I). It follows that the Appellants have a right to inspect the Request; the Appellants' entitlement flows, as a matter of fairness, from the importance attached to the Request by Templeman 1. On the facts, there is nothing in the rules based qualifications already mentioned (proportionality and privilege) to displace that qualified right. Having established their case thus far, the Appellants do not need to surmount a further free-standing hurdle of demonstrating, in isolation, that inspection is necessary for the fair disposal of the matter. That said, this analysis leads on to the central issue on the appeal: the balance to be struck between the Appellants' right to inspect the Request and the NCA/ DOJ claim to confidentiality of state to state communications. In that context, the question of whether inspection of the Request is necessary for the fair disposal of the application is a relevant consideration.
  50. ISSUE III: WHAT BALANCE OUGHT TO BE STRUCK BETWEEN THE APPELLANTS' RIGHT TO INSPECT THE REQUEST AND THE CONFIDENTIALITY OF STATE-TO-STATE COMMUNICATIONS?

  51. (1) The case for confidentiality: The importance of MLA is well explained in the Introduction to the Home Office Guidelines for Authorities Outside of the United Kingdom – 2014 (11th ed.), Requests for Mutual Legal Assistance in Criminal Matters ("the Guidelines"):
  52. " …MLA… is the formal way in which countries request and provide assistance in obtaining evidence located in one country to assist in criminal investigations or proceedings in another country. Due to the increasingly global nature of crime MLA is critical to criminal proceedings and ensuring justice for victims of crime. The UK is committed to assisting investigative, prosecuting and judicial authorities in combating international crime and is able to provide a wide range of MLA. "
  53. The Guidelines treat confidentiality as forming part of MLA:
  54. "Confidentiality
    It is usual policy for central or executing authorities to neither confirm nor deny the existence of an MLA request, nor disclose any of its content outside government departments, agencies, the courts or enforcement agencies in the UK without the consent of the requesting authority. Requests are not disclosed further than is necessary to obtain the co-operation of the witness or other person involved.
    …..
    In general, requests are not shown or copied to any witness or other person, nor is any witness informed of the identity of any other witness. In the event that confidentiality requirements make execution of a request difficult or impossible, the central authority will consult the requesting authorities. In cases where disclosure of a request or part thereof is required by UK domestic law in order to execute the request, it will normally be the case that the requesting authority will be given the opportunity to withdraw the request before disclosure to third parties is made."
  55. The confidentiality provisions of Art. 7 of the Treaty, already set out, are to like effect.
  56. The Courts have upheld claims to confidentiality in this area. In an earlier case concerning the investigation of allegations against General Abacha, R (Abacha) v Secretary of State for the Home Department [2001] EWHC Admin 787, the Secretary of State received and acceded to a request for assistance from the Government of Nigeria. In judicial review proceedings, the alleged beneficiaries alleged procedural unfairness, relying (inter alia) on the Secretary of State's refusal to disclose the terms of the request - made pursuant to a treaty providing for the parties to exercise best endeavours to keep a request and its contents confidential. Giving the judgment of the Court, Tuckey LJ rejected the allegations of procedural unfairness. The process was not a trial; it led only to the transmission of evidence to the requesting state where it was to be assumed the criminal defendant would have an opportunity of answering it. Moreover (at [17]):
  57. "…such requests are made by friendly, foreign countries with whom we have treaty or similar obligations of mutual co-operation. The expectation must therefore be that we will comply with the request unless there are compelling reasons for not doing so and that we will do so as quickly as possible. Any requirement for procedural fairness must be fashioned with those considerations firmly in mind."

    In any event, on the facts, the alleged beneficiaries did not appear to have suffered any real prejudice in that they were in a position to make submissions addressing what they believed to be the contents of the letter of request.

  58. In R (Evans) v Director of the Serious Fraud Office [2002] EWHC 2304 (Admin); [2003] 1 WLR 299, the US authorities sent a letter of request to the Secretary of State for mutual assistance in the investigation of a serious fraud. That assistance involved obtaining evidence and information from members of an English firm of accountants, who were not themselves under suspicion. The matter was referred to the Director of the Serious Fraud Office and the solicitors for the accountants sought access to the letter of request. Access was refused, on the basis that it was by treaty a confidential document but the Director provided detailed information as to the US investigation, based on the letter of request. Giving the lead judgment in the Divisional Court, Kennedy LJ said this (at [12]):
  59. "….having regard to the Treaty obligations it is right to start from the position that the letter of request is not a disclosable document, but justice must be done to those who are the subject of a section 2 notice pursuant to a letter of request and the consequential request from the Secretary of State to the Director of the Serious Fraud Office…. The needs of justice can normally be met, as in this case, if when a request is made for disclosure of the letter of request, information is given as to the nature of the criminal investigation, but in some cases the requirements of justice may require more….."
  60. The subsequent case of R (Energy Financing Ltd) v Bow Street Court [2005] EWHC 1626 (Admin); [2006] 1 WLR 1316 concerned a request from abroad for MLA leading to the Director of the Serious Fraud Office applying for a search warrant. The Court observed that the warrant need not reflect precisely the letter of request; the Director had a duty to decide for himself how best to give effect to the request in furtherance of the overall investigation, and if that meant going further than the letter of request he was entitled to do so. In his judgment, Kennedy LJ referred with approval to the earlier Abacha decision (supra) and (at [17]) to his own judgment in Evans (supra) – saying in respect of the latter "That still seems to me to be the right approach."
  61. Building on these foundations, Mr. Hall submitted that the MLA regime did not require disclosure of the Request. The starting point was that the Request was confidential and not disclosable; if Parliament had intended it to be disclosable it would have said so. Parliament could not be taken to have abolished the confidentiality of state to state communications sub silentio.
  62. As to the maintenance of confidentiality in the present case, the DOJ had made it clear, by letter dated 16th January, 2015, that "…we are not prepared to agree to the disclosure of the letters of request".
  63. In the course of the hearing before us, the Court invited Mr. Hall to take further instructions over the short adjournment as to what, if any, objection there was to disclosure of a redacted Request, showing the property "identified" in the Request. We are grateful to Mr. Hall for taking instructions from the NCA (who consulted the DOJ) and for the Note he produced recording those he received ("the Note"). The Note reads as follows:
  64. " 1. ….. The US DOJ does maintain that the document should not be disclosed, even though the factual information regarding the identification of assets is no longer confidential.
    2. The DOJ does not see disclosure of the letter, or any part of the document, as an issue to be decided solely on a case-specific basis, but as requiring consideration of, firstly, the need to safeguard the mechanism of mutual legal assistance generally as it exists around the world and, secondly, the need to protect executive state-to-state communications to the greatest extent possible.
    3. If voluntary disclosure was given by the US – where, on the basis of the facts of this case, no good reason exists – then it creates an uncomfortable precedent for the US, and for other states that use the mechanism.
    4. Therefore, the US is not willing to disclose voluntarily in the circumstances of this case. It therefore remains confidential in the NCA's hands.
    5. Obviously, if the Court….says that disclosure is necessary in this case – then the NCA will have a further conversation with the US. "
  65. (2) The case for inspection: Mr. Stanley's starting point was that as a matter of principle, inspection should be permitted; the entire Request should be disclosed and redaction should only be permitted if necessary. The DOJ, through the NCA, was, in effect, advancing an impermissible "class claim" to confidentiality; a balancing exercise was always required in this sphere. Neither the Court nor the Appellants should be required to make do with the say-so of the NCA, even where the bona fides of the official concerned are (rightly) not in question. Mistakes could be made. In any event, the legislative provisions governing prohibition orders required the Judge, not the NCA, to be satisfied. In contrast to the authorities already referred to (the earlier Abacha case, Evans and Energy Financing, all supra), the application was made directly to the Court; no other authority, such as the Director of the SFO, was interposed. Unless there were good reasons to the contrary – which there were not on the facts of the present case – that meant disclosure and inspection of the Request. Confidentiality in the Request had already gone by virtue of the application to Court and the NCA's reliance on what was said to be the Request's contents.
  66. Mr. Stanley also drew our attention to the "Commentary" by Mr Jonathan Fisher QC, appended to the report of the judgment of Elisabeth Laing J, at p.419. Although, with respect, part of that Commentary is equivocal, Mr Fisher went on to say this:
  67. " … this decision [i.e., the judgment here under appeal] represents the thin end of the wedge for respondents and it should be confined to its particular facts. One asks rhetorically, how is it possible for a respondent to challenge the validity of the NCA assertion that there are reasonable grounds to believe that monies may be needed to satisfy a forfeiture order if the respondent has not had an opportunity to consider the nature or sufficiency of the underlying evidence on which the application for a freezing order is based. In the instant case, the judge was satisfied that the statutory criteria had been established on the basis of the material set out in the NCA officer's witness statement, but this is secondary evidence and reflects no more than the officer's understanding of the underlying evidence set out in the letter of request. In most cases, this will not be satisfactory from the respondent's point of view. Whilst a foreign authority may be keen not to disclose its underlying evidence, where a foreign authority seeks assistance from the UK in a case of this sort, it needs to appreciate that non-disclosure of the underlying evidence should be regarded as the exception rather than the rule. Hopefully, this principle will be recognised in subsequent cases. "
  68. (3) Discussion: General considerations: In my judgment, this appeal requires a careful balance to be struck between the strong and legitimate interest in the confidentiality of the Request and the obvious and fundamental importance of dealing justly with and between the parties in cases before the Court, in accordance with the overriding objective of the CPR. For my part, the correct balance in this case calls for a different answer in respect of the property "identified" in the Request and the question of whether that property is "relevant property". My reasons follow.
  69. I accept that it is right to start from the position that letters of request such as the Request are confidential. Both the Treaty and the Guidelines are clear in this regard. This Court is of course anxious to assist the requests of friendly foreign countries for MLA, both as a matter of comity and on the very practical basis that it is only by furnishing such assistance that international crime and large-scale corruption can be combated. In many cases, there will be very good reasons for maintaining the confidentiality of such requests; examples are readily to hand - such as national security (when it arises), investigations at an early stage, a proper reluctance to disclose what lines of inquiry are being followed and which individuals are under suspicion.
  70. On the other hand, the striking feature of the present case is that assistance is being sought pursuant to a legislative scheme requiring that the Court is satisfied of the jurisdictional basis for making a prohibition order. The matter has thus moved beyond a communication between the executive branches of the friendly foreign state and of the United Kingdom simpliciter; the Court is now involved. It is not the NCA which needs to be satisfied; it has no independent decision-making role, such as the Director of the SFO in the Energy Financing case. Nor is it a situation where no more is required than the obtaining and transmission of evidence for use in proceedings where proper safeguards can be anticipated to be in place, as in the earlier Abacha decision. The Request requires invoking the procedures of this Court for the grant of a prohibition order. One of those procedures involves disclosure and inspection of documents "mentioned" under CPR r 31.14.
  71. Pausing there, I am unable to accept Mr Hall's submission that Parliament's silence on disclosure of letters of request (such as the Request) gives rise to the inference that they are not intended to be disclosable. To the contrary, the natural assumption is that Parliament would have left matters such as this to the CPR; it would have been unusual indeed had Parliament, by a side-wind, sought to alter the regime of the CPR.
  72. Returning to matters of procedure, it seems to me that any party requesting this Court's assistance, could reasonably be taken to accept that it must abide by the procedural regime of the Court. A foreign Central Authority is not in any different position. The Request involves inviting this Court to exercise its jurisdiction to make a prohibition order; the natural corollary is that the DOJ is prepared to place before this Court the materials which satisfy the jurisdictional requirements for making the order. Absent good reason for doing so, invoking the Court's jurisdiction but declining to make available the materials necessary for establishing the claim advanced is neither an attractive nor a tenable position. This can come as no surprise; both the Treaty and the Guidelines contemplate that the point may be reached where disclosure is required under English law, so that the Requesting Party may have to choose between giving disclosure or abandoning the Request.
  73. The property identified in the Request: With respect to the Judge, it is in my view clear that inspection ought to be permitted in this regard, if the DOJ (through the NCA) intends to persevere with the Request. As the Note itself acknowledges, "the factual information regarding the identification of assets is no longer confidential". This is not therefore one of those cases, of which I have given examples, where the assertion of confidentiality is necessary to protect an array of important interests. The existence of the Request is revealed by the commencement of proceedings. Nor could there be confidentiality as to the contents of the Request so far as concerns the property identified therein: unless the NCA evidence accurately matches the property identified in the Request, the application for a prohibition order must fail. It may well be unlikely that the NCA evidence has inaccurately recorded the property identified in the Request. But, mistakes do happen and, as a matter of principle (see the "Commentary" of Mr. Fisher QC, supra), neither the Court nor the Appellants ought to be left to the say-so of the NCA, however well-intentioned. I would accordingly conclude that inspection of the Request for this purpose is necessary for disposing fairly of the application; or, to put it another way, fairness outweighs confidentiality in this regard. That, on a realistic assessment, the Appellants may well be sorely lacking in merit, is neither here nor there. Whatever the allegations, all parties before this Court are entitled to procedural fairness.
  74. In practical terms, this aspect of the matter is straightforward. All that is required is disclosure (and inspection) of a redacted version of the Request showing the property identified therein. That cannot be unduly complex or burdensome.
  75. This was the very matter put to Mr. Hall upon which to take instructions and which generated the Note. I have carefully considered that Note and do not lightly disregard the views there expressed. However, with respect, I am wholly unable to accept that the DOJ's stance is conducive to safeguarding the workings of MLA. Quite the contrary; the DOJ's position is damaging to the very interests it is professing to serve. Comity, of which MLA forms a part, is best served by common sense, flexibility and a readiness to accommodate reasonable requests: see, in this regard, the observations of Kennedy LJ, in Energy Financing (supra), at [24 (10)]. Reasonableness and a readiness to accommodate are hallmarks of strength not weakness.
  76. For my part, the DOJ should now be given the opportunity to reflect on whether to proceed with the Request or not. If the Request is to be maintained, then the requirement should be disclosure and inspection of a redacted version of the Request, identifying the property in question. If indeed the DOJ's opposition related to voluntary disclosure, then the DOJ can now be assured that the Court (if my Lords agree) is minded to order disclosure and inspection so far as necessary to show the property identified in the Request.
  77. Whether the property identified in the Request is "relevant property": In my view and on the particular facts of this case, the just balance here is different and the interest of confidentiality should prevail.
  78. i) Given the scale of the matter, it seems fanciful to suppose that any property located will not be required to satisfy an external order (POCA, s.447(7)).

    ii) As to whether the property in question is "found or believed to have been obtained as a result of or in connection with criminal conduct" (POCA, s.447(2)(a)), the striking feature is that the Appellants have been made fully aware of the assets which the DOJ is seeking to "freeze" and have had every opportunity to challenge the making and continuing of the prohibition order in this regard. The Appellants have effectively not mounted any such challenge and, through the "mini-tracing" exercise conducted before the Judge (judgment, at [38]), have had all the information justice requires (see, Evans, supra, at [12]).

    iii) Reluctant though any Court always is to accede to redaction, I would conclude that confidentiality outweighs the Appellants' interest in a right of inspection with regard to whether the property identified in the Request was "relevant property". As already explained, I do not think that inspection would materially assist the Appellants, so far as the question of "relevant property" is concerned and especially bearing in mind the fairly low threshold for the making of a prohibition order ("reasonable grounds" to believe that the property may be needed to satisfy an external order, POCA, s.447(7) ).

  79. I therefore agree with the Judge's decision on this aspect of the appeal; on any view, this was a decision to which she was entitled to come, albeit I have arrived at the same conclusion by the different route set out under Issue II.
  80. The "concession/s": For completeness, there was some debate before us as to what, if any, "concessions" had been made by Mr Stanley before the Judge. Suffice to say I am not satisfied that Mr Stanley did make any true concessions, certainly none going beyond a realistic and fair appreciation of the Appellants' position if all he had to go on was the evidence from the NCA. In any event and if need be, I would have permitted Mr Stanley to withdraw any concessions made as to points argued before the Judge – as in this case that could have been done without occasioning any prejudice to the NCA. The upshot is that we have dealt with the appeal as a whole on the merits, rather than on the basis of any alleged concessions.
  81. ISSUE IV: IF THE JUDGE'S DECISION IS PROPERLY CHRACTERISED AS A DISCRETIONARY DECISION, A FORTIORI, A DISCRETIONARY CASE MANAGEMENT DECISION, SHOULD THIS COURT INTERVENE?

  82. I am prepared to proceed on the basis that the Judge's decision was a discretionary case management decision. On that footing, this Court should be slow to intervene. However, to my mind and so far as concerns the property identified in the Request, the Judge has, with respect, erred in principle and/or law, as discussed under Issue II. In the circumstances, this Court is entitled to intervene and to exercise its own discretion. Having done so, the outcome is as indicated under Issue III.
  83. OVERALL CONCLUSION

  84. I would be grateful for the assistance of counsel in drawing up the order, to reflect the Court's conclusions: to the extent necessary to show the property identified in the Request, disclosure and inspection should be given if the NCA/ DOJ wishes to pursue it; such disclosure and inspection can be achieved by way of a redacted version of the Request.
  85. Lord Justice Hamblen:

  86. I agree.
  87. Sir Colin Rimer:

  88. I also agree.


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