Greenleaf, Graham --- "Hamilton and others Naviede (On appeal from In re Arrows Ltd (No.4))" [1995] PrivLawPRpr 58; (1995) 2(5) Privacy Law & Policy Reporter 91

---

Hamilton and others v Naviede (On appeal from In re Arrows Ltd (No 4))

House of Lords [1994] 3 All ER 814; [1994] 3 WLR 656, 25 July 1994

Compulsory acquisition of information - privilege against self-incrimination - breach of confidence - public interest immunity

N was examined by liquidators of a company in which he was involved, under s 236 of the Insolvency Act 1986 (UK). The Serious Fraud Office (SFO) acted under powers conferred by the Criminal Justice Act 1987 (UK) s 2(3) to require the liquidators to produce the transcripts so that they could be used as evidence in criminal proceedings against N.

On appeal by the liquidators, a judge of the Companies Court directed that the transcripts should not be handed over to the SFO except upon an undertaking not to use the transcripts in evidence in criminal proceedings. The Court of Appeal reversed the judge's decision, and the liquidators then appealed to the House of Lords.

Lord Browne-Wilkinson (with whom Lords Keith, Jauncey, Lloyd and Nolan agreed) explained how this case related to recent English cases dealing with the impact of statutory provisions on the privilege against self-incrimination. In Bishopsgate Investment Management v Maxwell [1993] Ch 1 the Court of Appeal held that the statutory provisions of the Insolvency Act 1986 impliedly overrode the privilege against self-incrimination. As a result, a person examined under s 236 can be required to give self-incriminatory answers which are admissible against him in criminal proceedings.

In Reg v Director of Serious Fraud Office; Ex parte Smith [1993] AC 1 it was held that the privilege against self-incrimination was impliedly overridden by the Criminal Justice Act 1987, so that a person to whom the SFO puts questions under s 2(2) can be required to give self-incriminatory answers. However, by s 2(8), the answers can only be used in evidence against him or her in criminal proceedings if he or she elects to give evidence and in doing so makes a statement inconsistent with the answers previously given.

In this case, the SFO exercised a different special power under s 2(3), to obtain documents from any person (the liquidators) who can furnish information relevant to an investigation. The protective provision in s 2(8) does not apply to documents obtained under s 2(3). Therefore, unless the court has some discretion to restrict the use to which s 236 transcripts can be put, the SFO can obtain under s 2(3) self-incriminatory answers gathered under s 236 which will be admissible in further criminal proceedings, whereas if the SFO had asked the same questions itself under s 2(2), it could only use the answers in the restricted circumstances set out in s 2(8). 'The question is whether the statutory machinery permits this further erosion [of the privilege against self-incrimination] to take place.' Three arguments to support the judge's discretion were raised. The third reason related to the UK Insolvency Rules, but the other reasons are of general import.

Confidentiality of compulsorily-acquired information

Where information is extracted from a person under statutory powers, such information can only be used for the purposes for which those powers were conferred, enforceable by a private law duty of confidentiality (Marcel v Commissioner of Police of the Metropolis [1992] Ch 225).

Lord Browne-Wilkinson held that s 3(3) of the 1987 Act expressly overrides any duty of confidence 'imposed by or under' other legislation, and therefore overrides any Marcel duty. Further, s 2(9) and s 2(10) expressly preserves two specific duties of confidence (legal professional privilege and banking confidence), implying that other duties are overridden.

Public interest immunity

The liquidators submitted that, quite apart from any private rights to confidentiality that N might have, there was also a public interest immunity attaching to the transcripts. This immunity was argued to be based on a public interest in ensuring that information extracted by compulsory powers is only used for the purposes for which the power was conferred (Conway v Rimmer [1968] UKHL 2; [1968] AC 910) or alternatively on a public interest in ensuring that those who provide essential information to liquidators and the like can be assured of confidentiality, so as to facilitate the proper winding up of a company's affairs. Lord Browne-Wilkinson accepted that such immunities can arise (without being precise as to which), and that while s 3(3) overrode statutory obligations of secrecy 'it does not override obligations arising under the general law on grounds of policy'. However, the nature of s 236 examinations was such that no such immunity arose in this case.

Comment

This decision is not inconsistent with the High Court's decision in Johns v ASC ( 1 PLPR 10), which the House of Lords did not mention. The House of Lords has not rejected the implied statutory duty of confidence supported by both Marcel and Johns. It has only held that s 3(3) of the 1987 UK Act overrode any such statutory duty of confidence. In Johns there was no such provision expressly overriding duties of confidence.

Graham Greenleaf