England and Wales Court of Appeal (Criminal Division) Decisions
You are here:
England and Wales Court of Appeal (Criminal Division) Decisions >>
K, R. v  EWCA Crim 1640 (28 July 2009)
 1 Cr App R 3,
 3 FCR 341,
 Fam Law 1136,
 2 WLR 905,
 1 Cr App Rep 3,
 STC 2553,
 QB 343,
 STI 2197,
 EWCA Crim 1640,
 Lloyd's Rep FC 644,
 1 QB 343
[View without highlighting]
[Printable RTF version]
[Buy ICLR report:  QB 343]
[Buy ICLR report:  2 WLR 905]
[Buy ICLR report:  1 QB 343]
||Neutral Citation Number:  EWCA Crim 1640
||Case No: 20091356/B5 & 200901357/B5
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM THE CROWN COURT AT BLACKFRIARS
His Honour Judge Karsten Q.C.
Indictment No. T20077560
||Royal Courts of Justice
Strand, London, WC2A 2LL
||28 July 2009
B e f o r e :
LORD JUSTICE MOORE-BICK
MR JUSTICE HOLMAN
MRS JUSTICE RAFFERTY DBE
|| THE QUEEN
||- and -
Mr. Ian Winter Q.C. and Miss Clare Sibson (instructed by BCL Burton Copeland) for the appellant
Miss Miranda Moore Q.C. and Mr. Cairns Nelson (instructed by the Revenue and Customs Prosecutions Office) for the respondent
Hearing dates : 11th June 2009
HTML VERSION OF JUDGMENT
Crown Copyright ©
Lord Justice Moore-Bick :
- This is an appeal against a number of rulings made by His Honour Judge Karsten Q.C. in the course of a preparatory hearing held pursuant to section 29(1) of the Criminal Procedure and Investigations Act 1996. The appellant, K, was originally charged on an indictment containing four counts of cheating the public revenue. The Crown now accepts that it does not have sufficient evidence to proceed on counts 1 and 2, which are therefore no longer being pursued. Counts 3 and 4 charge K with failing to account for income tax and capital gains tax in relation to income received in and gains accruing upon funds held in various banks in Switzerland and Liechtenstein.
- In February 1978 K married his wife S. Unfortunately, the marriage broke down, the parties separated in January 2000 and in July that year Mrs. K petitioned for divorce. Each party was represented by solicitors who were highly experienced in family proceedings: K by Mr. Raymond Tooth of Sears Tooth and Mrs. K by Mr. Richard Parry of Farrer & Co. On 31st January 2001 Mrs. K gave notice of her intention to proceed with her application for ancillary relief, thereby giving rise to an obligation on both parties to give disclosure of their financial means.
- After some delay K served his Form E on 29th October 2001. In it he disclosed the existence of various accounts and investment portfolios in Switzerland and Liechtenstein, including an account at Cantrade Private Bank, Zurich into which he had received payments described as "commission". It was clear from some of the entries in his Form E that the information it contained was not complete. Later that day there was a meeting between the solicitors at the offices of Farrer & Co. at which K was present. The purpose of that meeting and the basis on which it was conducted are in dispute and it will be necessary to examine both questions in greater detail later in this judgment. For the moment it is sufficient to say that, although it is common ground that part of the meeting was held on a "without prejudice" basis, the Crown contends that part was not and that in the course of what we shall call the "open" part of the meeting K made admissions that it seeks to adduce in evidence against him at the trial. In the course of a meeting on 29th April 2002, which the judge found (and the Crown accepts) was held on a "without prejudice" basis, he made further admissions which tended to implicate him in tax evasion upon which the Crown also seeks to rely.
- On 27th February and 4th July 2002 Sears Tooth on the instructions of K provided written answers to various questions raised by Mrs. K on the contents of his Form E. In doing so K made various statements about his assets that tend to show that he had failed to account for tax over a period of some years. Copies of K's Form E and answers to the questionnaires were supplied to the Revenue by an informer and now form a significant part of the evidence that the Crown wishes to adduce against him at the trial. Indeed, we were told by Miss Miranda Moore Q.C. for the Crown that without the admissions made by K in his Form E and answers to the questionnaires the Crown has insufficient evidence to pursue the case.
- In the course of a preparatory hearing before Judge Karsten Q.C. in January 2009 K argued, among other things, that when swearing his Form E and providing the answers and information in response to the questionnaire received from Mrs. K he was unable to invoke privilege against self-incrimination and so was compelled to disclose information that exposed him to a risk of prosecution. In those circumstances he submits that if his admissions were to be adduced in evidence against him he would be denied the fair trial to which he is entitled by Article 6 of the European Convention on Human Rights. Accordingly, that evidence should be excluded from the trial in accordance with the principle in Saunders v United Kingdom (1997) 23 EHRR 313. He also submitted that the admissions made in the course of the meetings on 29th October 2001 and 29th April 2002 were made in the course of "without prejudice" discussions and therefore could not be adduced in evidence against him at the trial.
- Judge Karsten Q.C. held that K had been entitled to invoke privilege against self-incrimination in the ancillary relief proceedings and that accordingly the information he provided was not obtained under compulsion. It did not therefore fall within what the judge described as the "Saunders exclusionary rule". He based his decision principally on a passage in the judgment of Charles J. in A v A; B v B  1 FLR 701 and the decision of this court in Den Norske Bank ASA v Antonatos  QB 271. However, he expressed the view that if the information had been obtained by compulsion it would be unfair to allow it to be adduced at the trial and that he would have exercised his discretion in favour excluding it. He held that the first part of the meeting on 29th October 2001 was not held on a "without prejudice" basis and that therefore admissions made by K in the course of it were not protected. However, he held that statements made in the course of the "without prejudice" part of the meeting and in the course of the meeting of 29th April 2002 were inadmissible at the trial.
- The judge gave K leave to appeal in relation to the issue of privilege against self incrimination in matrimonial ancillary relief proceedings and the Crown leave to appeal in relation to the question of the admissibility of statements made in the course of "without prejudice" negotiations. He refused K's application for leave to appeal on the issue relating to the nature of the first part of the meeting on 29th October 2001 which he considered to raise a question of fact rather than law. Having heard full argument on that issue we consider it appropriate to give leave to appeal in respect of it.
- Five issues therefore fall to be decided:
(i) whether K was entitled to invoke privilege against self-incrimination in the ancillary relief proceedings to withhold information about income and assets which he had unlawfully failed to disclose to the Inland Revenue;
(ii) if not, whether the information he provided is admissible against him at the trial;
(iii) whether the statements he made during the meeting on 29th October 2001 about his failure to account for tax on his assets abroad were made in the course of "without prejudice" discussions; if not,
(iv) whether they are admissible against him at the trial;
(v) whether the statements he made in the course of the admittedly "without prejudice" discussions on 29th April 2002 are admissible against him at the trial.
(i) Was K entitled to claim privilege against self-incrimination in the ancillary relief proceedings?
- It is convenient first consider Miss Moore's submission that the disclosure in Form E of the existence of an account at a foreign bank was not of itself incriminating since the form speaks at the date on which it is verified and not as to the past. On that basis she argued that the existence at that date of the account at Cantrade Private Bank did not indicate one way or the other how long it had been held.
- In Rio Tinto Zinc Corpn v Westinghouse Electric Corpn  A.C. 547 at page 574 Lord Denning described the position as follows:
". . . once it appears that a witness is at risk, then "great latitude should be allowed to him in judging for himself the effect of any particular question": see Reg. v. Boyes (1861) 1 B. & S. 311, 330. It may only be one link in the chain, or only corroborative of existing material, but still he is not bound to answer if he believes on reasonable grounds that it could be used against him. It is not necessary for him to show that proceedings are likely to be taken against him, or would probably be taken against him. It may be improbable that they will be taken, but nevertheless, if there is some risk of their being taken - a real and appreciable risk - as distinct from a remote or insubstantial risk, then he should not be made to answer or to disclose the documents."
- In Rank Film Distributors Ltd v Video Information Centre  A.C. 380 Lord Wilberforce said at page 443D:
". . . whatever direct use may or may not be made of information given, or material disclosed, under the compulsory process of the court, it must not be overlooked that, quite apart from that, its provision or disclosure may set in train a process which may lead to incrimination or may lead to the discovery of real evidence of an incriminating character. In the present case, this cannot be discounted as unlikely: it is not only a possible but probably the intended result. The party from whom disclosure is asked is entitled, on established law, to be protected from these consequences."
- The same issue arose for consideration in Socieda Nacional de Combustiveis de Angola UEE v Lundqvist  2 Q.B. 310. Staughton L.J., having considered a number of earlier authorities, including Rio Tinto v Westinghouse and Rank Film Distributors Ltd v Video Information Centre, said:
"The substance of the test is thus that there must be grounds to apprehend danger to the witness, and those grounds must be reasonable, rather than fanciful. "
- In the same case Beldam L.J., commenting on the provisions of section 14 of the Civil Evidence Act 1968 said:
"It is significant that Parliament referred to a "tendency to expose" and to proceedings and not merely to conviction. Thus, in my judgment, it is sufficient to support a claim to privilege against self-incrimination that the answers sought might lead to a line of inquiry which would or might form a significant step in the chain of evidence required for a prosecution. I find support for this view in the judgments in the Westinghouse case  A.C. 547 and in Rank Film Distributors Ltd. v. Video Information Centre  A.C. 380."
- In Den Norske Bank v Antonatos the bank had obtained a freezing injunction against Mr. Antonatos which included an order for disclosure of his assets. Some disclosure was given, but the bank had reason to think that the order had not been fully complied with and obtained leave to cross-examine him. As the cross-examination progressed Mr. Antonatos declined to answer certain questions on the grounds that to do so would incriminate him. The question for this court was whether he was entitled to invoke privilege against self-incrimination to avoid answering those questions, or whether he was already so exposed that to require him to answer would not make matters materially worse. In the course of his judgment Waller L.J. summarised the principles governing what is meant in this context by "self-incrimination" as follows:
"Thus, it is not simply the risk of prosecution. A witness is entitled to claim the privilege in relation to any piece of information or evidence on which the prosecution might wish to rely in establishing guilt. And, as it seems to me, it also applies to any piece of information or evidence on which the prosecution would wish to rely in making its decision whether to prosecute or not."
- Although we see the force of Miss Moore's argument that information provided by K in his Form E did not go beyond disclosing the then existence of an account at Bank Cantrade, in the light of these authorities we are unable to accept that such information did not tend to incriminate him in the sense in which that phrase has been understood in the authorities. Once the Revenue became aware of the existence of the account it was likely to want to know how long it had been in existence. That was information which it might or might not have been able to obtain with any ease, but, having obtained it, it would then be an easy matter to determine whether interest or other payments relating to the account had been accounted for in tax returns for earlier years. In our view the disclosure of that information might well have set in train a process leading to incrimination or to the discovery of other evidence of an incriminating character. That is even more clearly the case in respect of the answers given and documents disclosed in answer to Mrs. K's questionnaires which included copies of his bank statements and the information that he had been receiving commission from Bank Cantrade for about ten years. We are left in no doubt, therefore, that if he was entitled to invoke privilege against self-incrimination, this was information which K was entitled to withhold.
- In Bishopsgate Investment Management Ltd v Maxwell  Ch. 1 it was necessary for the court to decide whether a person who is required to provide information under sections 235 and 236 of the Insolvency Act 1986 can invoke the privilege against self-incrimination. The origins of the privilege are described by Dillon L.J. at page 17 and it is apparent from the various observations in the decided cases to which he refers how deeply that privilege is embedded in the common law. Nonetheless, it has been recognised that it can be abrogated by Parliament, either by the use of express words or by clear implication. As an example of the latter Dillon L.J. cited the following passage from the speech of Lord Reid in Commissioners of Customs and Excise v Harz  1 A.C. 760 relating to certain statutory provisions under which traders were required to provide information and documents in relation to the purchase or importation of goods:
"Some statutes expressly provide that incriminating answers may be used against the person who gives them and some statutes expressly provide that they may not. Where, as here, there is no such express provision the question whether such answers are admissible evidence must depend on the proper construction of the particular statute. Although I need not decide the point, it seems to me to be reasonably clear that incriminating answers to a proper demand under this section must be admissible if the statutory provision is to achieve its obvious purpose."
- Having referred to the decisions in In re London United Investments Plc  Ch. 578 and Bank of England v Riley  Ch. 475 Dillon L.J. said at page 20:
"The essence of both decisions is that if Parliament, in the public interest, sets up by statute special investigatory procedures to find out if the affairs of a company have been conducted fraudulently, with the possibility of special remedies in the light of an inspector's report, or to find out if there have been infringements of certain sections of the Banking Act 1987 which have been enacted for the protection of members of the public who make deposits, Parliament cannot have intended that anyone questioned under those procedures should be entitled to rely on the privilege against self-incrimination, since that would stultify the procedures and prevent them achieving their obvious purpose."
- Stuart-Smith L.J. observed that somewhat different approaches had been taken by the courts to ascertaining whether Parliament intended to abrogate the privilege against self-incrimination, being what he described as the 'linguistic approach' and the 'purposive approach'. Having considered the authorities, in particular those relating to the examination of bankrupts, which in his view were in many respects analogous to the case then before the court, he said at page 44:
". . . both in public and private examination in bankruptcy the debtor cannot rely on the privilege against incrimination. This is because he is under a duty to disclose his assets, the purpose of the Act being to secure a full and complete examination and disclosure of the facts, including the whereabouts of the assets, not only in the interests of the creditors but also the public. It does not depend upon the precise language used in any particular section but upon the fact that the purpose of the Act would be defeated if the privilege can be claimed by the debtor."
He considered that the decided cases supported the conclusion that the purposive approach is to be preferred. Mann L.J. was of the same opinion.
- The privilege against self-incrimination remains an important protection against oppression and it is not lightly to be inferred that Parliament has chosen to abrogate it, especially where it has not made its intention clear by the use of express language. Accordingly, where Parliament has not expressed itself in clear terms, the court should be cautious in reaching the conclusion that it intended to abrogate the privilege. Only in cases where the purpose of the statute would otherwise be frustrated is that conclusion likely to be justified.
- Mr. Ian Winter Q.C. on behalf of K drew our attention to a large number of cases in which statutory provisions have been held to abrogate by implication the privilege against self-incrimination. In each of those cases, however, the statute expressly provided that the person in question should provide information or disclose documents, as the case may be. The only question for determination, therefore, was whether the obligation was or was not subject to the privilege.
- The court's jurisdiction to make financial provision and property adjustment orders in divorce proceedings is derived from sections 23 and 24 of the Matrimonial Causes Act 1973. Section 25, which sets out the basis on which the court is to exercise its powers, provides as follows:
"(1) It shall be the duty of the court in deciding whether to exercise its powers under section 23, 24 . . . above and, if so, in what manner, to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.
(2) As regards the exercise of the powers of the court … in relation to a party to the marriage, the court shall in particular have regard to the following matters—
(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future …"
- Mr. Winter submitted that this section imposes a duty on the court when making ancillary relief orders to take into account the whole of the parties' financial resources, a duty which it would be impossible for it to discharge if the parties did not provide a full and frank account of all their assets. If a party could decline to give evidence of assets held abroad or under an assumed name on the grounds that to do so might expose him or her to a risk of prosecution or the imposition of a penalty, the court would be prevented from carrying out its duty or from exercising its powers in a rational manner and would in effect be reduced to speculating about the nature and value of assets whose very existence might be uncertain. Accordingly, Parliament must have intended to abrogate the privilege against self-incrimination in proceedings under that section. He submitted that the dicta of Charles J. in A v A; B v B were obiter and wrong and that the decision in Den Norske Bank v Antonatos did not bear on the point that arises in this case.
- In A v A; B v B the court was concerned with applications for ancillary relief in connection with two petitions for divorce that had been ordered to be tried together because the husbands of the petitioners were in business together. In each case the information disclosed by the husband included evidence of unlawful conduct, including the evasion or non-payment of tax. Having persisted for a time in denying any interest in two companies, the husbands subsequently admitted that they were the beneficial owners of the companies and that they had used them to hide the true extent of their assets. They gave full disclosure to the petitioners and their accountants, which led to the proceedings being concluded by consent orders. The judge indicated that he was minded, subject to hearing the parties, to disclose the papers to the Revenue and as a result the respondents themselves made full voluntary disclosure. The judge nonetheless decided that he should deliver judgment on the question since the matter was of general importance, although he recognised that it had become academic and obiter.
- Had the respondents in that case not made voluntary disclosure to the Revenue, the judge would have had to decide whether he should disclose the material himself. That depended in turn on balancing the public interest in maintaining the confidentiality of the proceedings in general and of information and documents produced under compulsion for the purposes of the proceedings against the interests of the public in the prosecution of crime. In that context one factor which the judge thought it important to take into account was the privilege against self-incrimination which he dealt with in the following brief passage at page 721A-B:
"In my judgment correctly it was not argued before me that the privilege against self-incrimination had been removed in respect of proceedings for ancillary relief, and it follows, that, as is generally the case in relation to disclosure of material in civil actions and notwithstanding the duty to make full and frank disclosure therein (see again Jenkins v Livesey  1 AC 424), parties to ancillary relief proceedings can assert the privilege. If this was not the case it would be a factor in the decision-making process as to further disclosure."
- Since the matter had not been the subject of any argument, it is perhaps not surprising that the judge did not enter into a discussion of the competing merits of the arguments, such as they might be, in favour of or against the conclusion that a party to ancillary relief proceedings is entitled to claim privilege against self-incrimination. Be that as it may, we do not think that his observations can be regarded as more than an indication of what he assumed to be the case. For this reason we do not find them to be of great assistance.
- The other authority relied on by Judge Karsten Q.C. was Den Norske Bank v Antonatos. We have already described the nature of the issues that arose in that case which in our view does not bear on the question now under consideration. Nothing in that case provides any assistance in deciding whether the privilege has been abrogated in the particular context with which we are concerned.
- The nature of the court's function when dealing with ancillary relief proceedings was considered by the House of Lords in Jenkins v Livesey  AC 424. In that case ancillary relief proceedings were disposed of by a consent order under which the husband was to convey his half-share in the matrimonial home to the wife. About two weeks before the order was made the wife became engaged to be married to L, but failed to disclose the fact to the husband or the court. The husband duly performed his obligation under the consent order to convey his share of the home to the wife, but on learning of the marriage he applied to set aside the order. Lord Brandon, with whom the other members of the House agreed, pointed out that the court's jurisdiction to make orders for financial provision and property adjustment following a divorce are derived entirely from statute. Having referred to section 25 of the Matrimonial Causes Act 1973 he said at page 436:
"My Lords, the terms of section 25(1) of the Act of 1973 which I have set out above are, in my opinion, of crucial importance in relation to the questions raised by this appeal. The scheme which the legislature enacted by sections 23, 24 and 25 of the Act of 1973 was a scheme under which the court would be bound, before deciding whether to exercise its powers under sections 23 and 24, and, if so, in what manner to have regard to all the circumstances of the case, including, inter alia, the particular matters specified in paragraphs (a) and (b) of section 25(1). It follows that, in proceedings in which parties invoke the exercise of the court's powers under sections 23 and 24, they must provide the court with information about all the circumstances of the case, including, inter alia, the particular matters so specified. Unless they do so, directly or indirectly, and ensure that the information provided is correct, complete and up to date, the court is not equipped to exercise, and cannot therefore lawfully and properly exercise, its discretion in the manner ordained by section 25(1)."
- Lord Brandon then pointed out that in contested cases relating to the exercise of the court's powers under sections 23 and 24 the requirement that it should have the prescribed information is met by rules of court with which both parties must comply. He then said at page 437:
"I stated earlier that, unless a court is provided with correct, complete and up-to-date information on the matters to which, under section 25(1), it is required to have regard, it cannot lawfully or properly exercise its discretion in the manner ordained by that subsection. It follows necessarily from this that each party concerned in claims for financial provision and property adjustment (or other forms of ancillary relief not material in the present case) owes a duty to the court to make full and frank disclosure of all material facts to the other party and the court. This principle of full and frank disclosure in proceedings of this kind has long been recognised and enforced as a matter of practice. The legal basis of that principle, and the justification for it, are to be found in the statutory provisions to which I have referred.
My Lords, once it is accepted that this principle of full and frank disclosure exists, it is obvious that it must apply not only to contested proceedings heard with full evidence adduced before the court, but also to exchanges of information between parties and their solicitors leading to the making of consent orders without further inquiry by the court. If that were not so, it would be impossible for a court to have any assurance that the requirements of section 25(1) were complied with before it made such consent orders."
- The House held that the wife was under a duty to disclose the fact of her engagement as soon as it occurred and that her failure to do so undermined the whole basis on which the consent order had been made. The order was therefore set aside and the matter remitted to the High Court for re-hearing.
- No question of privilege against self-incrimination arose in Jenkins v Livesey, but the decision is of importance for the present case because of the emphasis which their Lordships laid on the duty of the court to have regard to all the circumstances of the case and the corresponding duty on the parties to give full and frank disclosure. The passages in Lord Brandon's speech to which we have referred, particularly that at page 437, suggest that the court cannot lawfully exercise it powers under sections 23 or 24 of the Matrimonial Causes Act unless it does consider all the circumstances of the case, but it must be recognised that it is entirely dependent on the parties for the information required to discharge that duty. Although the Act itself, unlike most statutes which have been held to abrogate the privilege against self-incrimination, does not itself require the parties to ancillary relief proceedings to provide information about their financial resources, or for that matter other relevant information, the Family Proceedings Rules 1991, which are the successors to the Matrimonial Causes Rules 1977 in force at the time of the decision in Jenkins v Livesey, do impose such a duty. In particular, rules 2.61A-F require disclosure of financial resources using Form E. The rubric at the head of Form E states:
"You have a duty to the court to give a full, frank and clear disclosure of all your financial and other relevant financial circumstances. A failure to give full and accurate disclosure may result in any order the court makes being set aside. If you are found to have been deliberately untruthful, criminal proceedings for perjury may be taken against you."
- The fact that a party is compelled by rules of court to disclose information and documents does not of itself abrogate the privilege against self-incrimination. On the contrary, a party to civil proceedings who is required to give disclosure pursuant to CPR Part 31 is entitled on that ground to withhold production of documents that tend to incriminate him. Moreover, the Family Proceedings Rules do not expressly exclude the privilege, so in the absence of other considerations it would be difficult to argue that they had achieved such a significant result. The argument in the present case, however, is, and must be, that the rules, which are contained in secondary legislation and have the approval of Parliament, must have been intended to have abrogated the privilege, since the court could not discharge the duty imposed on it by section 25 unless the parties were required to disclose all relevant information, even if tending to incriminate them.
- In our view that argument is well-founded. As the facts of this case and of other cases such as A v A; B v B demonstrate, it would be impossible for the court to discharge its duty under section 25 of the Act if it were deprived of the information on which it is required to act. As Lord Brandon pointed out in Jenkins v Livesey, the requirement that the court should have the full and frank disclosure which it must have in order to discharge its duty is met by rules of court, and those rules must be construed against that legislative background. In our view the purpose of the legislation would be frustrated if parties could withhold from the court relevant information, whether relating to their financial affairs or other matters, on the grounds that to disclose it would tend to incriminate them. For these reasons we are satisfied that parties to such proceedings are not entitled to invoke privilege against self-incrimination in order to withhold information. It follows that in our view the information contained in K's Form E and his answers to Mrs. K's questionnaires was obtained under compulsion. In those circumstances it is unnecessary to consider Mr. Winter's alternative submission that, even if he was entitled to claim privilege against self-incrimination, K was for all practical purposes compelled to disclose incriminating information by virtue of the penal notice attached to the order made by District Judge White on 24th October fixing 29th October as the last date for filing and serving the Form E.
(ii) Can the information be used against K in criminal proceedings?
- The statements made by K on which the Crown wishes to rely at trial all take the form of admissions and as such are prima facie admissible against him under section 118(1) of the Criminal Justice Act 2003. Mr. Winter submitted, however, that, having been obtained under compulsion, their admission would render the trial unfair in accordance with the principles set out in Saunders v United Kingdom.
- Mr. Saunders had been a director and chief executive of Guinness Plc at the time when it was engaged in a take-over battle for control of Distillers Company Plc. In order to maintain the share price of Guinness at an attractive level an unlawful share support operation was carried out resulting in a sharp fall in the value of the company's shares immediately following the completion of the take-over. In December 1986 the Secretary of State for Trade and Industry appointed inspectors under the Companies Act 1985 to investigate the affairs of Guinness and Mr. Saunders was among those whom they questioned. In due course the transcripts of his interviews were passed to the police and were later admitted in evidence at the trial of Mr. Saunders and others. Mr. Saunders was convicted and made a complaint to the European Court of Human Rights that his right to a fair trial had been infringed.
- The court upheld Mr. Saunders' complaint. In paragraphs 68-69 of its judgment it held that:
"68. . . . the right to silence and the right not to incriminate oneself, are generally recognised international standards which lie at the heart of the notion of a fair procedure under Article 6. Their rationale lies, inter alia , in the protection of the accused against improper compulsion by the authorities thereby contributing to the avoidance of miscarriages of justice and to the fulfilment of the aims of Article 6. . . .
69. . . . In the present case the Court is only called upon to decide whether the use made by the prosecution of the statements obtained from the applicant by the Inspectors amounted to an unjustifiable infringement of the right. This question must be examined by the Court in the light of all the circumstances of the case. In particular, it must be determined whether the applicant has been subject to compulsion to give evidence and whether the use made of the resulting testimony at his trial offended the basic principles of a fair procedure inherent in Article 6(1) of which the right not to incriminate oneself is a constituent element."
- The use of the transcripts of his answers in a manner which sought to incriminate Mr. Saunders was held to have infringed his right to a fair trial. It followed that, in the view of the European Court, the trial judge ought to have exercised his discretion to exclude that evidence.
- What the judge in the present case called the "Saunders exclusionary principle" was considered in a rather different context by the Privy Council in Brown v Stott  1 AC 681. The case raised the question whether it would be incompatible with the right to a fair hearing under article 6(1) of the European Convention on Human Rights for the prosecution to rely at trial on an admission by the accused obtained by compulsion under section 172(2)(a) of the Road Traffic Act 1988 that she was the driver of a motor vehicle at the time when there was evidence that an offence had been committed in relation to it. The Board held that it would not. Having considered the judgment of the European Court of Human Rights in Saunders v United Kingdom and three decisions of the Commission in broadly similar cases, Lord Bingham said at page 704:
"The jurisprudence of the European court very clearly establishes that while the overall fairness of a criminal trial cannot be compromised, the constituent rights comprised, whether expressly or implicitly, within article 6 are not themselves absolute. Limited qualification of these rights is acceptable if reasonably directed by national authorities towards a clear and proper public objective and if representing no greater qualification than the situation calls for. . . . The court has also recognised the need for a fair balance between the general interest of the community and the personal rights of the individual, the search for which balance has been described as inherent in the whole of the Convention: see Sporrong and Lönnroth v Sweden (1982) 5 EHRR 35, 52, para 69; Sheffield and Horsham v United Kingdom (1998) 27 EHRR 163, 191, para 52."
- Lord Bingham concluded that, since there was a clear public interest in enforcement of road traffic legislation, the crucial question in that case was whether section 172 represented a disproportionate response to a social problem, or one that undermined the defendant's right to a fair trial, if an admission of being the driver were relied on at trial. He concluded for various reasons that it did not, in part because the nature of the questioning and the sanction for failure to answer were both moderate and in part because he did not consider that the legislation involved a disproportionate response to the problem of maintaining road safety or involved striking an unfair balance between the interests of the individual and those of the community. He concluded by saying that the High Court of Justiciary had interpreted the decision in Saunders v United Kingdom as laying down a more absolute standard than the European Court had intended.
- Lord Steyn also expressed the opinion that the European Court did not rule that the privilege against self-incrimination is absolute and noted the use of the expression "improper compulsion" in paragraph 68 of its judgment. He also noted that the court framed the question for its decision in careful terms which took into account the circumstances of the case and the use to which the material had been put. Lord Hope similarly held that the right not to incriminate oneself is not absolute and is therefore open to modification or restriction so long as the relevant principles which apply to that exercise are satisfied. He also concluded that the limited modification which section 172(2)(a) made, in pursuance of a legitimate aim in the public interest, to the right not to incriminate oneself was compatible with the right of the accused to a fair trial and that a fair balance had been achieved between those competing interests. The decision was subsequently considered and applied by this court in R v Kearns  EWCA Crim 748,  1 Cr App R 7 and their Lordships' analysis of the nature of the right not to incriminate oneself as an aspect of the right to receive a fair trial has since been approved and adopted by the European Court of Human Rights itself in O'Halloran and Francis v The United Kingdom (2008) 46 E.H.H.R. 21.
- Mr. Winter submitted that three conditions must be satisfied before evidence obtained from the accused under compulsion can properly be admitted in evidence in support of a prosecution against him: first, the evidence must be rendered admissible by virtue of a statutory provision; second, that provision must respond to a pressing social need; and third, it must represent a proportionate response to that social need. Miss Moore, on the other hand, submitted that it was a matter for the judge in each case to decide, having regard to the nature of the admission, the nature of the compulsion under which it was obtained, the interests of society which its admission is intended to serve and the potential effects of admitting it, whether its admission would infringe the defendant's right to a fair trial.
- It is true that evidence obtained from the accused under section 172(2) of the Road Traffic Act 1988 is admissible in evidence against him by virtue of the statutory provision contained in section 12 of the Road Traffic Offenders Act 1988, but that does not appear to have been an important element of the reasoning in Brown v Stott, much less an essential one. The essential principle to be derived from their Lordships' decision is that a restriction of an accused person's right not to incriminate himself will not infringe his right to a fair trial provided that the compulsion under which the information is obtained is of a moderate nature and the use of the evidence obtained by it represents a proportionate response to a pressing social need. That is consistent with the conclusion reached by this court in R v Kearns at paragraph 53(6). It is therefore necessary to consider the nature of the compulsion applied, the nature of the evidence obtained by means of it and the social need which the admission of such evidence at a subsequent trial is intended to meet.
- A wilful refusal to comply with an order for disclosure will amount to a contempt of court which may attract the not insignificant sanction of imprisonment. The nature of the compulsion that may be applied to enforce compliance with the obligation to disclose information that is of an incriminating nature is therefore severe. The social purpose for which the Crown seeks to adduce the evidence in criminal proceedings is the suppression of tax evasion. No doubt the protection of the public revenue is an important social objective, but the question is whether the admission of evidence obtained from the accused under threat of imprisonment is a reasonable and proportionate response to that social need. In our view it is not. This is an unusual case in as much as the Crown accepts that without the admissions made by K it has insufficient evidence to maintain a case against him. In many cases information obtained by way of disclosure in ancillary relief proceedings will provide leads that enable the Crown to obtain evidence from other sources that is sufficient to support a prosecution and in such cases there will be no need to rely on evidence obtained from the accused himself. That has not been possible in this case, but even so, we do not think that the need to punish and deter tax evasion is sufficient to justify such an infringement of the right of the accused not to incriminate himself.
- For these reasons, although we would not agree with Judge Karsten insofar as he might be taken to suggest that the question is simply one of judicial discretion, we agree that the use of the admissions made by K in the ancillary relief proceedings would deprive K of the fair trial to which he is entitled under Article 6 of the Convention and must therefore be excluded by the judge in the exercise of his powers under section 78 of the Police and Criminal Evidence Act 1984.
(iii) Were the admissions made by K during the meeting on 29th October 2001 made during without prejudice negotiations?
- The meeting on 29th October 2001 followed the service earlier that day of K's Form E in which he disclosed the existence of investment portfolios in Switzerland and Liechtenstein and an account at Cantrade Private Bank into which various sums had been paid by way of commission. The solicitors acting for Mr. and Mrs. K both made notes of the meeting, but since they appear to have attached importance to different parts of the discussion, it is not always easy to correlate them. The note made by Sears Tooth records that at the outset of the meeting it was agreed that it was to be "without prejudice" apart from certain matters that were to be on the record. However, no reference to any discussion of that kind is to be found at the beginning of Farrers' note.
- The Sears Tooth note then reflects a discussion about certain trust funds which they were saying did not form part of K's assets. According to that note it had been expressly stipulated that that part of the discussion should be on the record. Farrers' note reflects the discussion, but not the fact that it was on the record. The next paragraph of Sears Tooth's note records that Mr. Parry then asked what K had inherited from his father. The note does not record that this part of the discussion was on the record, but the following paragraphs tend to suggest that in the eyes of Sears Tooth, at any rate, it was. The note records that other requests for information followed before there was a brief discussion about conduct. Although, as we have said, the notes do not coincide in detail, one can trace the same discussions in Farrers' note.
- The next paragraph in the Sears Tooth note begins with the words "We then turned to without prejudice discussions" and Farrers' states "RT [Mr. Tooth] then asked to speak without prejudice". It is clear from what follows in each case that a proposal for compromising Mrs. K's claim was made and discussed. Each of the notes continues at some length, but it is unnecessary to describe them any farther because K made the key statement on which the Crown seeks to rely when he was answering questions about his inheritance from his father. He openly acknowledged that he had received a large sum of money from Switzerland which he had not declared for tax purposes.
- The judge did not hear evidence from any of those who had been at the meeting and therefore had to decide the question simply by reference to the notes. He concluded that the first half of the meeting, which included the part during which K had made the admission of tax evasion, was on the record.
- Mr. Winter submitted that the judge was wrong to reach that conclusion. The whole of the discussion was aimed at exploring the possibility of a compromise and it would be wrong to seek to treat some parts as without prejudice and others as open. In support of that argument he drew our attention to the case of Unilever Plc v The Proctor & Gamble Co.  1 WLR 2436, in which Robert Walker L.J. said at page 2448 that it would be wrong to dissect out identifiable admissions and withhold protection from the rest of "without prejudice" communications, since parties need to be free to make admissions for the purposes of achieving the basis of a compromise without running the risk that the admission will be used against them if the negotiations are unsuccessful.
- We accept that if parties to a dispute have entered into "without prejudice" communications with a view to compromising their differences, the protection which normally attaches to such communications covers whatever is said in the course of them, including admissions, and that it is not permissible to isolate some parts and treat them as falling outside that protection. However, that is not this case. There is nothing to prevent parties from expressly agreeing that some communications are "on the record" – that is, unprotected – and others are not. The question the judge had to decide was whether the first part of the meeting on 29th October 2002 was or was not held under the cloak of without prejudice protection. Although the notes could be clearer in some respects, we are left in no doubt that it was understood by all present that the first part of the meeting was intended to be "on the record", in the sense that there were to be no restrictions on the subsequent use that either party could make of what was said, and that the "without prejudice" protection was invoked immediately before Sears Tooth put forward initial proposals with a view to reaching a compromise. We therefore agree with the judge that the first part of the meeting was not held on a "without prejudice" basis.
(iv) Are admissions made during the open part of the meeting on 29th October 2001 admissible against K in criminal proceedings?
- The fact that the first part of the meeting on 29th October 2001 was held "on the record" would normally mean that evidence could be given in subsequent criminal proceedings of any incriminating statements made by K during the course of it. In this case, however, it is necessary to consider more closely the particular nature and purpose of that part of the meeting. The Form E served by K that morning prompted many questions to which answers were required before a clear picture of his financial resources could be obtained and in our view a fair reading of the solicitors' notes of the discussions makes it reasonably clear that the purpose of the first stage of meeting was to elicit further information about his assets. In effect, therefore, K was being asked to provide orally information that he would otherwise be compelled to provide in written form in answers to questionnaires served on him by Mrs. K. Such information would not be protected as between the parties from subsequent use in the proceedings; on the contrary, the whole purpose of obtaining it was to provide the court with the information that it would require in order to enable it properly to exercise its statutory powers. It necessarily follows, however, that the information was provided under the compulsion of the requirement to make full and frank disclosure.
- It might be argued that a distinction can be drawn for this purpose between information relating to K's current assets and his admission that he had failed to account for tax on the money he had inherited from his father, but we do not think that it can. His failure to account for tax is an important aspect of his overall financial position which the court would have to take into consideration when exercising its powers, not only because of the outstanding liability itself, but also because it exposes him to the risk of an additional penalty. For these reasons we are satisfied that that admission must also be regarded as having been made under the compulsion of the proceedings.
(v) Admissions made during the meeting on 29th April 2002
- In the course of the meeting on 29th April 2002, which the judge found was held on a "without prejudice" basis, K made further admissions on which the Crown wishes to rely in support of its case against him. In the course of a relatively long attendance note the relevant passage reads as follows:
"We said that you [Mrs. K] were determined to go on with the proceedings, unless there was a satisfactory settlement. He [K] said that he was not prepared to be blackmailed. He accepted that he had a major tax problem and there was a real chance that he could go to jail. It would be a very bad situation for him but he also thought the proceedings would be a bad idea for you."
- It does not appear that K's admissions about his tax position during that meeting added anything of substance to what he had already disclosed, so they cannot be regarded as having been made pursuant to his duty to make full and frank disclosure. However, since what he had said at the meeting in October cannot be used against him, the statements he made in the course of these later discussions are to be regarded as incriminating insofar as they increase the risk of his being prosecuted or having a penalty imposed on him. The question arises, therefore, whether statements made in the course of "without prejudice" communications are admissible against the maker in subsequent criminal proceedings. The judge accepted the submission made by Mr. Winter on behalf of K that the public interest in encouraging litigants to compromise their disputes outweighs the public interest in prosecuting and convicting those who are guilty of serious crime and held that they are not.
- In order to answer the question posed by the Crown's cross-appeal it is necessary to consider the nature of "without prejudice" privilege. The nature of the "without prejudice" marking on correspondence was described by Lindley L.J. in Walker v. Wilsher (1889) 23 Q.B.D. 335 at page 337 as follows:
"What is the meaning of the words 'without prejudice'? I think they mean without prejudice to the position of the writer of the letter if the terms he proposes are not accepted. "
and in Cutts v Head  Ch 290 Oliver L.J., described the position as follows:
"That the rule rests, at least in part, upon public policy is clear from many authorities, and the convenient starting point of the inquiry is the nature of the underlying policy. It is that parties should be encouraged so far as possible to settle their disputes without resort to litigation and should not be discouraged by the knowledge that anything that is said in the course of such negotiations (and that includes, of course, as much the failure to reply to an offer as an actual reply) may be used to their prejudice in the course of the proceedings. "
These observations suggest that the scope of the protection afforded by the rule is limited to preventing either party from bringing what was said to the attention of the court in order to undermine the position of the other in relation to the subject matter of the dispute or the proceedings relating to it.
- In Rush & Tompkins Ltd v Greater London Council  AC 1280 the plaintiff had entered into a contract with the defendant for the construction of a housing development and had engaged the second defendant as a sub-contractor. A dispute arose between the plaintiff and the second defendant as a result of which the plaintiff made a claim against the first defendant for a declaration that it was entitled to be indemnified against any liability it might have to the second defendant. The plaintiff reached a compromise with the first defendant in the course of "without prejudice" correspondence and discontinued the action against it. The second defendant sought disclosure of the correspondence, which the plaintiff resisted on the grounds that it was privileged. The House of Lords held that the second defendant was not entitled to disclosure of the correspondence on the grounds that in general the "without prejudice" rule renders inadmissible in any subsequent litigation connected with the same subject matter proof of any admissions made by either party with a genuine intention to reach a settlement; and that admissions made to reach settlement with a different party within the same litigation are also inadmissible. The public interest in promoting settlements was considered to override the public interest in full discovery between parties to litigation (page 1300).
- The headnote to the report suggests that the policy which applies to protect statements made in the course of genuine negotiations from being admissible in evidence also applies to protect them from being disclosed to third parties generally, but a careful reading of the speech of Lord Griffiths, with whom the other members of the Appellate Committee agreed, makes it clear that he was considering only the question of disclosure to third parties to the negotiations who are also parties to the litigation or a related dispute. On one view of the matter, therefore, the decision supports the view that the protection extends only to the use of the communications in relation to the proceedings in connection with which they were made. However, the question whether disclosure may be withheld from an opposing party in unrelated litigation did not arise for consideration.
- In Muller v Linsley & Mortimer  PNLR 74 the first plaintiff, who was a director and shareholder of a company, was concerned that the board might dismiss him and operate a provision in the company's articles which required a person leaving its employment to sell his shares at a fair value. His solicitors advised him to transfer the shares to his wife in order to put them beyond the reach of this provision, but they failed to submit a properly stamped transfer to the board. The plaintiff was dismissed and was forced to sell his shares, which subsequently rose substantially in value. The plaintiff and his wife sued the other shareholders and entered into negotiations which led to a compromise. They then brought an action against the solicitors for damages for negligence in which they contended that the compromise was a reasonable attempt to mitigate their loss. The solicitors applied for discovery of the documents relating to the compromise, which the plaintiffs resisted. The Master and the judge both refused to order disclosure of the documents, but the order was overturned on appeal. Hoffmann L.J. discussed the nature and basis of the "without prejudice" rule, pointing out that it has justifications: public policy to encourage parties to settle disputes by excluding from evidence any admissions made in negotiations; and implied agreement about what are commonly understood to be the consequences of negotiating "without prejudice". He expressed the view that the public policy justification is not directed to statements which are relevant independently of the truth of the facts alleged to have been admitted. In the present case, however, the Crown wishes to rely on K's admissions as evidence of the truth of what he said.
- In Unilever v Proctor & Gamble the plaintiff alleged that in the course of a without prejudice meeting held in an attempt to resolve a number of disputes between them representatives of the defendant had threatened to bring an action against the plaintiff for infringement of its patent. Relying on what had been said at the meeting, the plaintiff started proceedings under section 70 of the Patents Act 1977 for threatening it with proceedings for infringement of the patent. The judge struck out the claim on the grounds that the meeting had been intended as an occasion for both sides to speak freely and that it was an abuse of process for the plaintiff to seek to base a claim on what had been said during the course of it. His decision was upheld on appeal. The importance of the decision for present purposes lies in the discussion which is to be found in the judgments of the nature of without prejudice privilege.
- Having referred to the speech of Lord Griffiths in Rush & Tompkins v Greater London Council, Robert Walker L.J. pointed out at page 2242 that although the rule is based in part on public policy, its other foundation is to be found in the express or implied agreement of the parties that communications in the course of negotiations should not be admissible in evidence if a contested hearing ensues. He then cited at length a passage from the judgment of Hoffmann L.J. in Muller v Linsley & Mortimer before referring to some important examples of circumstances in which the rule does not prevent evidence being given of what was said by one or other party. He expressed his conclusions as follows at page 2448:
"In those circumstances I consider that this court should, in determining this appeal, give effect to the principles stated in the modern cases, especially Cutts v Head, Rush & Tompkins v Greater London Council and Muller v. Linsley & Mortimer. Whatever difficulties there are in a complete reconciliation of those cases, they make clear that the without prejudice rule is founded partly in public policy and partly in the agreement of the parties. They show that the protection of admissions against interest is the most important practical effect of the rule. But to dissect out identifiable admissions and withhold protection from the rest of without prejudice communications (except for a special reason) would not only create huge practical difficulties but would be contrary to the underlying objective of giving protection to the parties, in the words of Lord Griffiths in the Rush & Tompkins case  AC 1280, 1300: " to speak freely about all issues in the litigation both factual and legal when seeking compromise and, for the purpose of establishing a basis of compromise, admitting certain facts." Parties cannot speak freely at a without prejudice meeting if they must constantly monitor every sentence, with lawyers or patent agents sitting at their shoulders as minders."
- Later, when explaining his conclusion that an attempt to bring proceedings was an abuse of the process, he said at page 2449:
"In my judgment the judge was right to conclude that it would be an abuse of process for Unilever to be allowed to plead anything that was said at the meeting either as a threat or as a claim of right. The circumstances were such that each side was entitled to expect to be able to speak freely, and their agreement to the meeting being arranged evinces that common intention. I would, if necessary, base my conclusion on the parties' agreement to extend the normal ambit of the rule based on public policy. But I do not think it is necessary to go that far. The Frankfurt meeting was undoubtedly an occasion covered by the normal rule based on public policy, and the pleading of the threat (or claim of right) has not been shown to come within any recognised exception."
- The decision in Unilever v Proctor & Gamble is authority for the view that the protection afforded by the "without prejudice" rule is somewhat wider than had been recognised in the earlier cases and prevents any use by either party of the protected communications in a manner that would adversely affect the interests of the other. However, none of the decided cases deals directly with the point we have to decide, namely, whether a third party into whose hands evidence of damaging admissions made in the course of "without prejudice" communications have fallen is entitled to rely on those admissions in subsequent proceedings against the party who made them. For example, if a waiter bringing in the coffee at a "without prejudice" meeting overhears a damaging admission, can he be called as a witness by a third party in subsequent unrelated proceedings to give evidence of it?
- Mr. Winter submitted that the public policy of encouraging uninhibited negotiation with a view to the settlement of disputes points strongly in favour of prohibiting any use whatsoever in subsequent proceedings of statements made in "without prejudice" communications without the consent of the parties to them. If he is right, the parties enjoy complete immunity in respect of anything they may say, at least insofar as their statements are to be treated as evidence of the truth of what was said. Miss Moore, however, submitted that the public interest in the prosecution of serious crime is even greater and that therefore the rule should not operate to prevent the Crown from adducing evidence of admissions made in the course of such discussions if that evidence would otherwise be admissible. She might also have submitted that there is an important public interest in ensuring that parties to civil proceedings are able to adduce whatever evidence will promote a full understanding of the facts surrounding the dispute.
- The Crown is a third party to the negotiations between Mr. and Mrs. K and therefore the question whether the "without prejudice" rule applies to prevent admissions made by K in the course of those negotiations being used as evidence against him in criminal proceedings cannot depend on the express or implied agreement of the parties but must depend entirely on considerations of public policy. The modern cases have repeatedly emphasised both the general importance of the rule itself and the fact that the policy on which it rests is likely to be significantly undermined if parties are unable to be confident that statements made in the course of "without prejudice" negotiations cannot subsequently be used against them. Although the rule may originally have been limited to the use of admissions in the proceedings then pending between the parties, its scope has broadened as greater recognition has been given to its purpose and rationale. However warnings have been sounded about the need to apply the "without prejudice" rule "with restraint and only in cases to which the public interests underlying the rule are plainly applicable": see The Prudential Insurance Company of America v The Prudential Assurance Company Ltd  EWHC 2809 per Sir Andrew Morritt V-C; and one factor to bear in mind when considering the limits of the rule is that it involves an encroachment on the principle that trials should be conducted on the basis of a full understanding by both parties and the court of the facts relevant to the issues in dispute: per Chadwick L.J. in the same case at  EWCA 1154,  E.T.M.R. 29, paragraph 23.
- We have some sympathy for the proposition that in general the public interest in promoting settlements requires that statements made in the course of negotiations should be inadmissible against the maker as evidence of the truth of their contents in any subsequent proceedings. However, it is unnecessary in this case for us to determine the outer limits of the "without prejudice" rule as it applies in subsequent civil proceedings since we are concerned with the use of admissions in subsequent criminal proceedings in relation to which different considerations apply.
- It is clear from the judgments in Muller v Linsley & Mortimer and Unilever v Proctor & Gamble, that, even if the precise scope of the exception is uncertain, the rule will not be allowed to operate as a cloak for crime or other unambiguous impropriety. However, the authorities support the view that that exception is to be applied with considerable caution and only where the person making the statement has abused the protected nature of the occasion, for example by making threats. Thus, in Savings & Investment Bank (In liquidation) v Fincken  EWCA Civ 1630,  1 WLR 667 this court held that the exception did not extend it to a simple admission of complicity in an earlier fraud. Rix L.J., with whom Carnwath L.J. agreed said at page 684:
"It is not the mere inconsistency between an admission and a pleaded case or a stated position, with the mere possibility that such a case or position, if persisted in, may lead to perjury, that loses the admitting party the protection of the privilege: see the first holding in Fazil-Alizadeh v Nikbin 25 February 1993 , described in para 47 above. It is the fact that the privilege is itself abused that does so. It is not an abuse of the privilege to tell the truth, even where the truth is contrary to one's case. That, after all, is what the without prejudice rule is all about, to encourage parties to speak frankly to one another in aid of reaching a settlement: and the public interest in that rule is very great and not to be sacrificed save in truly exceptional and needy circumstances."
- However, none of those cases was concerned with the question whether statements made in "without prejudice" communications are admissible in criminal proceedings if they have fallen into the hands of the prosecuting authorities. Indeed, we have been unable to discover any decided case in which this question has been considered. We start therefore from the principle that admissibility depends on relevance. In Kuruma v R  AC 197 Lord Goddard C.J. said at page 203:
"In their Lordships' opinion the test to be applied in considering whether evidence is admissible is whether it is relevant to the matters in issue. If it is, it is admissible and the court is not concerned with how the evidence was obtained."
The principle has been approved and applied in subsequent cases, including R v Sang  AC 402 (evidence obtained through activities of an alleged agent provocateur) and R v Khan  AC 558 (evidence obtained by covert means). It is right to say, however, that there is nothing in the present case to suggest that the evidence of the statements made by K came into the Crown's hands as a result of any impropriety on its part.
- If evidence of statements made in the course of "without prejudice" discussions is not admissible, therefore, it must be because there exists a rule of law to that effect. The argument for the existence of such a rule is that public policy requires that statements made in the course of negotiations with a view to resolving disputes should not be capable of being used against the maker in proceedings of any kind. If that were not the case, it is said, no one would be willing to negotiate frankly and openly for fear that what he said might be used against him on another occasion. That would be particularly so in circumstances such as the present where wealthy men and women who have assets abroad which have not been declared for tax purposes would be inhibited from speaking freely about their financial affairs by the fear that their spouse might provide the information to the police.
- The need to be able to speak freely in the expectation that what is said will remain confidential is also the basis for legal professional privilege and the importance attached to it in law is demonstrated most strikingly by the well-known case of R v Derby Magistrates' Court ex parte B  AC 487. In that case Lord Taylor of Gosforth C.J. said at page 507:
"The principle which runs through all these cases, and the many other cases which were cited, is that a man must be able to consult his lawyer in confidence, since otherwise he might hold back half the truth. The client must be sure that what he tells his lawyer in confidence will never be revealed without his consent. Legal professional privilege is thus much more than an ordinary rule of evidence, limited in its application to the facts of a particular case. It is a fundamental condition on which the administration of justice as a whole rests."
- Even so, it has been recognised that legal professional privilege is concerned with disclosure and not with admissibility and that if evidence of a privileged communication has fallen into the prosecution's hands, use may be made of it. In Butler v Board of Trade  Ch. 680 a copy of a letter written to the claimant by his solicitor warning him of the consequences of certain actions was inadvertently passed to the Official Receiver in his capacity as liquidator of a company with which the claimant had been involved. The Board of Trade intended to adduce it in evidence in criminal proceedings against the claimant and accordingly he sought an injunction to prevent it from doing so. The basis of his application was that the original communication, of which it was a copy, was covered by legal professional privilege and that the copy was confidential. Goff J. held that it would not be right to grant an injunction to prevent the document being adduced in evidence. He said:
". . . in such a case there are two conflicting principles, the private right of the individual and the interest of the state to apprehend and prosecute criminals: see per Lord Denning M.R. in Chic Fashions (West Wales) Ltd. v. Jones  2 QB 299, 313 and in Ghani v. Jones  1 Q.B. 693, 708.
In my judgment it would not be a right or permissible exercise of the equitable jurisdiction in confidence to make a declaration at the suit of the accused in a public prosecution in effect restraining the Crown from adducing admissible evidence relevant to the crime with which he is charged."
- In R v Tompkins 67 Cr.App.R. 181 a note given by the defendant to his counsel was found on the floor of the court and passed to counsel for the prosecution. Although the note was privileged and the defendant could have refused to disclose it, it was held to be admissible in evidence once it had fallen into the hands of the prosecution. Giving the judgment of the court Ormrod L.J. said:
"Privilege, in this context, relates only to production of a document; it does not determine its admissibility in evidence. The note, though clearly privileged from production, was admissible in evidence once it was in the possession of the prosecution: Butler v Board of Trade  Ch. 680. Admissibility depends essentially on the relevance of the document; the method by which it has been obtained is irrelevant: Kuruma, Son of Kanui v R  AC 197, per Lord Goddard C.J. at p. 203."
- Butler v Board of Trade and R v Tompkins were followed and applied in R v Cottrill  Crim.L.R. 56. In that case the defendant had given his solicitor a written account of events leading up to his arrest which the solicitor had disclosed to the prosecution in an attempt to persuade it to drop the case. The account differed significantly from the case the defendant was advancing at trial. It was held that the prosecution was entitled to adduce the note in evidence, although the defendant could have refused to disclose it on the grounds of legal professional privilege.
- As Goff J. recognised in Butler v Board of Trade, there is a strong public interest in the investigation and prosecution of crime and it is one that must be taken into account when deciding whether the public interest in promoting settlements is sufficient to render "without prejudice" communications inadmissible in subsequent criminal proceedings. Given that the law has not afforded such far-reaching protection to confidential communications between lawyer and client, we find it difficult to accept that, if evidence of an incriminating admission falls into the hands of the prosecuting authorities, it is rendered inadmissible against the maker at a subsequent criminal trial on public policy grounds simply by reason of the fact that it was made in the course of "without prejudice" discussions. The immediate purpose of the "without prejudice" rule is to enable parties to negotiate freely without compromising their positions in relation to their current dispute and although it may be justifiable to extend the scope of protection to subsequent proceedings involving either of the parties to the original negotiations, the public interest in preserving confidentiality becomes weaker the more remote the subject matter of those proceedings becomes from the subject of the original negotiations. Criminal proceedings involve different parties and are of a different nature. To that extent they are necessarily at one remove from the dispute that gave rise to the negotiations. In those circumstances we consider that the public interest in prosecuting crime is sufficient to outweigh the public interest in the settlement of disputes and therefore that admissions made in the course of "without prejudice" negotiations are not inadmissible simply by virtue of the circumstances in which they were made.
- If the trial judge were of the view that for some reason the admission of the evidence would render the trial unfair, it would be his duty to exclude it in the exercise of his discretion under section 78 of the Police and Criminal Evidence Act 1984. Evidence improperly obtained may in some circumstances be excluded by the judge in the exercise of his power under that section, but it has not been suggested to us that any such basis for doing so exists in this case.
- We can therefore summarise our conclusions as follows:
(i) K was not entitled to claim privilege against self-incrimination in the ancillary relief proceedings;
(ii) statements made by K in his Form E and his answers to Mrs. K's questionnaires relating to income or assets which had not been declared for tax are not admissible against him at the trial;
(iii) statements made by K during the meeting on 29th October 2001 relating to income or assets which had not been declared for tax were not made in the course of without prejudice discussions;
(iv) however, those statements are not admissible against him at the trial;
(v) statements made by K during the meeting on 29th April 2002 relating to his tax position are not inadmissible by virtue of the circumstances in which they were made.
- Accordingly, to the extent we have indicated the appeal and cross-appeal must both be allowed.
Copyright Policy |
Donate to BAILII