Case No: CHANI 1999/1219/A3
 
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM Mr Justice Burton
Royal Courts of Justice
Strand, London, WC2A 2LL

Friday 12 May 2000

B e f o r e :

LORD JUSTICE MORRITT
LORD JUSTICE WALLER
and 
LORD JUSTICE TUCKEY
- - - - - - - - - - - - - - - - - - - - -

	Preston Borough Council	Claimant/
Respondent	
	- and -		
	
McGRATH	Defendant/
Appellant	

- - - - - - - - - - - - - - - - - - - - -
(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 180 Fleet Street
London EC4A 2HD
Tel No: 0171 421 4040,  Fax No:  0171 831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -
E Bartley Jones Esq QC (instructed by Messrs Davies Wallis Foyster for the Respondent)
Michael Supperstone Esq QC; Mr Daniel Janner (instructed by Messrs John Gibbs & Co for the Appellant)
- - - - - - - - - - - - - - - - - - - - -
Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Waller:

Introduction

This is an appeal from the decision of Burton J given on 21 December 1998.  He ruled that prosecuting authorities do not impliedly undertake to the court that they will not use unused material disclosed in criminal proceedings other than for the purposes of the criminal proceedings.  He postponed consideration as to what would have been the effect of ruling that there was such an implied undertaking, and in particular whether the proceedings brought by the Council against Mr McGrath should be struck out on the basis that they were an abuse, and brought in contempt of court. 

Before us Mr Supperstone QC, who appeared for Mr McGrath, appreciated that the appeal raised questions which were much wider than he had asked the judge to consider, and related not simply to whether some implied undertaking was given by the prosecuting authorities in relation to unused material, but whether an undertaking was impliedly given to the court in relation to any material obtained either compulsorily or voluntarily during a criminal investigation, and whether it was disclosed to the defence or not and whether it had been used in open court or not.

Proceedings

On 13 February 1996 Preston Borough Council (The Council) commenced proceedings against Mr McGrath claiming damages for breach of his fiduciary position as a Councillor.  The allegation in the general endorsement on the writ was that Mr McGrath received undisclosed financial benefits from a subsidiary or associated company of Balfour Beatty Limited (Balfour Beatty).  Reference in that regard was made to certain Heads of Agreement alleged to be dated 20 March 1990 but in fact dated 29 March 1990 whereunder it was alleged that Balfour Beatty advanced at least £125,000 to Mr McGrath in respect of the property known as 457 Clifton Drive North, Lytham St Annes, Lancashire.  It seems, albeit we have not in our papers the complete correspondence, that Mr McGrath immediately protested about the reference to the Heads of Agreement being referred to in the writ, he believing that the Council only knew of the existence of the Heads of Agreement as a result of information being disclosed to the Council by the police.  

The Background

The police had carried out investigations known as “Operation Angel” into suspected corruption in relation to officers of the Council, one of whom had been Mr McGrath.  The prosecuting authority indeed sought to prosecute Mr McGrath for corruption but in 1993 the Attorney General refused his consent in respect of such prosecution.  Other charges were brought against Mr McGrath involving allegations of deception of Midland Bank.  But in September 1994 certain of those charges were dismissed at Liverpool Crown Court and in December 1994 the balance was ordered to lie on the file not to be proceeded with without leave of the court.  Thus no criminal proceedings have been prosecuted to trial against Mr McGrath.  
From the affidavit of Mr Wood, sworn on behalf of the Council, the following appears to be the history of the Council’s receipt of information.  Mr Driver was the Town Clerk/Chief Executive of the Council from June 1993 to March 1996.  When Mr Driver joined the Council in June 1993 the Town Hall was rife with rumours that Mr McGrath had received payments from Balfour Beatty while a councillor.  That led to Mr Driver writing to the Chief Constable of Lancashire Police a letter dated 19 January 1994 (which is not in fact with our papers albeit said to be exhibited to Mr McGrath’s affidavit).  That led to disclosure of certain witness statements with the consent of the witnesses to Mr Driver in January 1994.  It seems that in the course of Operation Angel the Lancashire Constabulary had obtained a copy of the Heads of Agreement from Balfour Beatty.  Mr Wood was informed that Balfour Beatty disclosed those Heads of Agreement voluntarily to the police.  A solicitor, Mr Stephen, was then asked by the police to give his opinion on the Heads of Agreement which opinion was reduced to a witness statement.  This was one of the witness statements provided to Mr Driver in January 1994.

On seeing that statement of Mr Stephen the existence and the content of the Heads of Agreement would become known to Mr Driver, and ultimately others acting for the Council.  

History of the proceedings

Once Mr McGrath had protested at the reference to the Heads of Agreement in the original writ, the Council amended the writ taking out any reference to those Heads of Agreement.  The amended writ, endorsed with the statement of claim, was reissued on 21 June 1996.  

A defence was served on 26 July 1996 of an uninformative nature.  The Council sought to obtain further and better particulars from Mr McGrath aimed at obtaining an admission as to receipt of the £125,000 from Balfour Beatty but no such particulars were delivered.  The Council then served a list of documents dated 18 April 1997 and it was in response to that list that solicitors for Mr McGrath once again returned to the attack.  They suggested that the Council had relied on certain witness statements disclosed in that list being the witness statements supplied by the police.  They alleged that the Council were, as a result, in breach of an implied undertaking given to the Crown Court in relation to the use of material obtained during the prosecution of the criminal proceedings.  

That led to the issue of a summons on 11 June 1997 applying to strike out the Council’s amended statement of claim pursuant to Ord.18 r.19 and/or the inherent jurisdiction of the court on the grounds that the Council’s action constituted an abuse of the process of the court.  That summons was supported by an affidavit sworn by Mr McGrath in which he set out the history of attempted criminal prosecutions, so far as he was concerned.  He made clear that the basis of the application for strike out was that the Council were seeking to rely upon information which only became available during the criminal investigation and in relation to the use of which the Council had not obtained the proper authority of a court of competent jurisdiction.  The affidavit also asserted that the actions of the Council were prima facie a contempt of court.  

The affidavit in response was sworn by Mr Wood on behalf of the Council who set out the circumstances in which the Council had learned of the Heads of Agreement of 29 March 1990 as a result of being supplied with the witness statements of Mr Stephen.  Mr Wood further stated that before service of the writ as at 13 May 1996 the decision had been taken that whatever the status of the witness statements there was sufficient information in the public domain to enable the Council to proceed with its action in the form of the amended statement of claim.  Thus, he asserted, there was knowledge in the public domain that Mr McGrath had received £125,000.  He relied inter alia on the fact that in circumstances which are unclear, two reports appeared in Private Eye on 25 February 1994 and 4 March 1994 and a further two reports appeared in the Independent on 18 March 1994 and 3 May 1994 in all of which it was suggested that Balfour Beatty admitted that they had paid Mr McGrath £125,000.  

On 18 February 1998 Mr McGrath amended his defence and pleaded explicitly the Heads of Agreement dated 29 March 1990.  He then swore a further affidavit on 27 February 1998 exhibiting the amended defence and the Heads of Agreement.  He persisted in that affidavit in his objection to the proceedings saying that they were an abuse of the process of the court and a contempt of court relying on the fact that the witness statements had been received, as Mr Wood had explained, and on the fact that, as Mr McGrath asserted, the Council should not have used the statements without obtaining a subpoena for their production from the Lancashire police before a court and giving notice to Balfour Beatty and himself of the application.  

Mr McGrath further disputed the fact that the Heads of Agreement had been handed over voluntarily by Balfour Beatty.  He asserted that they were obtained by the police during the course of the police investigation using powers under the Police and Criminal Evidence Act 1984.  It is not clear what his basis for so suggesting was, and before us I understood Mr Supperstone to accept that Balfour Beatty had handed over the Heads of Agreement voluntarily.  

The basis for a strike out

The argument for persuading the court to strike out the proceedings depends on establishing that the proceedings have been brought making use of material in contempt of court.  It is not argued that if the Council wrongfully obtained evidence in some way, other than in contempt of court, that the remedy of strike out should be available.  That is a recognition of the fact that the remedy in such circumstances would be limited to an application for an injunction to restrain use of such evidence, and the availability of such a remedy would depend on Mr McGrath establishing a cause of action or an equitable entitlement to such remedy; see Marcel v Commissioner of Police of the Metropolis [1992] Ch.225 from 237H to 239A in the Vice-Chancellor’s judgment at first instance.  No injunction has been sought, and for reasons that will appear, nor could it have been.  The argument in this case is thus dependent on establishing that the Council have used documents in breach of an undertaking given to the court or assisted another to breach such undertaking as per the decision of Rimer J in Miller v Scorey [1996] 1 WLR 1122. 

In that case Rimer J struck out an action where proceedings were commenced in reliance on documents produced on discovery in an earlier action, where the consent of the court had not been obtained prior to the commencement of the second action. That decision is the foundation of Mr McGrath’s summons in this case.

The main issue

The critical question is whether the Lancashire Police and/or the Council were bound by any implied undertaking to the court not to use the material obtained from Balfour Beatty for any purpose other than the criminal proceedings, and not to use the witness statement of Mr Stephen for any purpose other than any criminal proceedings that might be pursued. 

The argument begins with the undisputed proposition that in criminal proceedings, compliance by the prosecution with its obligation to disclose generates an implied undertaking on the part of the defendant to the court not to use documents for any purpose other than the conduct of the defence see Taylor v Serious Fraud Office [1999] 2 AC 177.  What lies behind the imposition of this undertaking it is correctly submitted is the need to protect persons who supply information.  Lord Hoffmann put it this way at page 211 B-D:- 

"Many people give assistance to the police and other investigatory agencies, either voluntarily or under compulsion, without coming within the category of informers whose identity can be concealed on grounds of public interest.  They will be moved or obliged to give the information because they or the law consider that the interests of justice so require.  They must naturally accept that the interests of justice may in the end require the publication of the information or at any rate its disclosure to the accused for the purposes of enabling him to conduct his defence.  But there seems to me no reason why the law should not encourage their assistance by offering them the assurance that, subject to these overriding requirements, their privacy and confidentiality will be respected."

Thus, the argument continues, because it is the interest of the witnesses and those that come forward to the police requiring protection against any disclosure by the police which generates the implied undertaking, the prosecution must be subject to the same implied undertaking to the court in relation to any material which the prosecuting authorities gather during the criminal process because the same interests must be protected. 

The argument is however logically flawed.  The fact that the identified mischief generates an implied undertaking to the court when the subject matter is discovery in the course of proceedings in court, does not mean that the same mischief must generate an undertaking to the court where the police are using their powers outside court process.

To put the same point more explicitly.  I accept that there are, as Marcel v Commissioner of Police [1992] Ch.225 demonstrates, constraints placed on the prosecuting authorities.  But once it is appreciated that the contention of Mr McGrath has to be that the constraints which should be placed on the prosecuting authorities arise whether or not proceedings are on foot and whether or not proceedings are ever brought, it can be seen how impossible it is to suggest that constraints are imposed by some form of undertaking to the court.

There are, as I see it, a variety of different strands that must be disentangled one from the other.

There is the duty on the police in relation to material collected during the currency of a criminal investigation.  In Marcel reference was made to Sections 18, 19, 20 and 22 of the Police and Criminal Evidence Act 1984.  Dillon LJ summarised the position helpfully as follows at 253F to 254E:-

"The relevant provisions of the Act of 1984 are as follows.  Section 18 provides by subsection (1) that a constable may enter and search any premises occupied or controlled by a person who is under arrest for an arrestable offence if he has reasonable grounds for suspecting that there is on the premises evidence, other than items subject to legal privilege, that relates to that offence or some connected or similar arrestable offence.  Section 18(2) provides that a constable may seize and retain anything for which he may search under subsection (1).  Section 19 provides by subsections (2) and (3) that a constable who is lawfully on any premises may seize anything which is on the premises if he has reasonable grounds for believing that it has been obtained in consequence of the commission of an offence or if it is evidence in relation to an offence, and if another condition is satisfied.  It is, however, expressly provided by subsection (6) that no power of seizure conferred on a constable is to be taken as authorising the seizure of an item which the constable has reasonable grounds for believing to be subject to legal privilege.

. . . .

Section 22 of the Act of 1984, which has the side heading “Retention,” provides by subsections (1) and (2): 

“(1)  Subject to subsection (4) below, anything which has been seized by a constable or taken away by a constable following a requirement made by virtue of section 19 or 20 above may be retained so long as is necessary in all the circumstances. (2)  Without prejudice to the generality of subsection (1) above  -  (a) anything seized for the purposes of a criminal investigation may be retained, except as provided by subsection (4) below  -  (i) for use as evidence at a trial for an offence; or (ii) for forensic examination or for investigation in connection with an offence; and (b) anything may be retained in order to establish its lawful owner, where there are reasonable grounds for believing that it has been obtained in consequence of the commission of an offence.”

Section 22(4) then provides that nothing may be retained for either of the purposes mentioned in subsection (2)(a) if a photograph or a copy would be sufficient for the purpose.  

Under paragraph B6.9 of Code of Practice B, made by the Secretary of State under section 66 of the Act and brought into operation by an order made by a statutory instrument approved by a resolution of each House of Parliament, the person from whom documents are seized is entitled to be supplied by the police with copies at his own expense, subject to a restriction that is immaterial. "

There was not unanimity in the Court of Appeal as to whether those sections dealt simply with duration or also with the purpose of retention by the police.  Dillon LJ accepted the view of the Vice-Chancellor at first instance that the section was concerned with duration [255F-256E] and Sir Christopher Slade was of the opposite view [262H].  But for present purposes that point matters not, because the court accepted by one route or another that there were constraints on the police, and there was no dissent from the broad proposition of the Vice-Chancellor quoted with approval by Dillon LJ at 255G to 256D in the following terms:- 

"However, there manifestly must be some limitation on the purposes for which seized documents can be used.  Search and seizure under statutory powers constitute fundamental infringements of the individual’s immunity from interference by the state with his property and privacy  -  fundamental human rights.  Where there is a public interest which requires some impairment of those rights, Parliament legislates to permit such impairment.  But, in the absence of clear words, in my judgment Parliament cannot be assumed to have legislated so as to interfere with the basic rights of the individual to a greater extent than is necessary to secure the protection of that public interest.  In the case of this Act, it is plainly necessary to trench upon the individual’s right to his property and privacy for the purpose of permitting the police to investigate and prosecute crime; hence the powers conferred by Part II of the Act.  But in my judgment Parliament should not be taken to have authorised use of seized documents for any purpose the police think fit.  For example could the police provide copies of seized documents to the Press save in cases where publicity is necessary for the pursuit of their criminal investigations? . . . 
“In my judgment, subject to any express statutory provision in other Acts, the police are authorised to seize, retain and use documents only for public purposes related to the investigation and prosecution of crime and the return of stolen property to the true owner.  Those investigations and prosecutions will normally be by the police themselves and involve no communication of documents or information to others.  However, if communication to others is necessary for the purpose of the police investigation and prosecution, it is authorised.  It may also be, though I do not decide, that there are other public authorities to which the documents can properly be disclosed, for example to City and other regulatory authorities or to the security services.  But in my judgment the powers to seize and retain are conferred for the better performance of public functions by public bodies and cannot be used to make information available to private individuals for their private purposes."

All three members of the Court of Appeal however found difficulty in defining with precision the extent of the duty, but were clear (disagreeing with the Vice-Chancellor on this point), that whatever the constraints on the police those constraints did not require the court to set aside a subpoena for the production of documents at the suit of the owners of the documents where the owners would themselves have been bound to produce the same pursuant to a subpoena. 

In Marcel however there were certain documents which had in fact been disclosed by the police without the subpoena being served on the police.  Dillon LJ thought Mr Jaggard should not be prevented by an injunction at the suit of the owners of those documents, from using those documents because the law had not been clarified when the police had disclosed the same; and Nolan LJ thought it was unrealistic to distinguish between the categories of documents (presumably because it was simply an error by the solicitor that he had failed to take the subpoena with him to obtain the first category of documents).  But Sir Christopher Slade spent the greater part of his judgment considering the principles by reference to this first category of documents, and his conclusion was that “this is a case where justice and the proper balancing of the public interest require the disclosure of the documents and information in category 1 (ie this category of documents) for the purpose of the civil proceedings,” a factor being even in this instance that the documents could have been obtained on subpoena from the original owners. In a later passage in the judgment he made clear that he contemplated that the police would not be entitled to remain silent if they appreciated that false evidence was being given at the civil trial. 

It is also of interest that Dillon LJ at page 256E-H, with whom Nolan LJ agreed expressly (page 261 ), said about certain practices of which they had been informed as follows :-

"I am not concerned in this judgment with documents which have been put in evidence in open court in criminal proceedings and whose contents can thus be said to have entered the public domain.  Equally nothing in this judgment or, in my view, in the Vice-Chancellor’s judgment, is to be treated as directed in any way towards suggesting that there is any impropriety in the present practice of the police in any of the following areas which were drawn to our attention by Mr. Gompertz as possible matters of concern, viz.: (i) the supplying  by the police of information and witness statements to interested parties where there is a possibility of civil litigation after a road accident, and in particular the supplying of the names and addresses of parties involved in the accident whom an injured person could well otherwise have difficulty tracing; (ii) conferences with and the supplying of information to the social services and welfare agencies and doctors in relation to the welfare of a minor (even if there has been a decision not to prosecute) where there has been an allegation of child abuse, whether sexual or not; and (iii) the supplying of information to the Criminal Injuries Compensation Board where a victim has claimed compensation and there has been no prosecution because the alleged criminal has died or fled the country."

Thus what in my view Marcel can be said to indicate is (1) that it is to the owner of documents that the police will owe a duty of confidence and who may have a cause of action to prevent that breach of confidence; (2) that duty of confidence is not itself absolute and there will be circumstances in which in the public interest information can and should be disclosed by the police overriding the duty of confidence owed to the owner; (3) unless they can obtain the consent of the true owners, it is best practice for the police to await the receipt of a subpoena before disclosing documents to aid civil proceedings, and best practice to inform the owner before disclosing the same so that the question whether the confidence should be overridden can be considered by the court; and (4) apart from the duty owed to the true owner of the documents the duty of the police is simply a public duty, and any question of acting outside that public duty would be a matter for judicial review.

What is of course of particular interest so far as Marcel is concerned is that there is no suggestion whatever that the constraints on the police in relation to documents seized by them during the currency of a criminal investigation, are enforced by some form of undertaking to the court.  If someone in the position of Mr McGrath ie a person without any proprietorial interest in documents held by the police, were to challenge the police for exceeding their powers, it cannot thus be by an application to strike out an action as an abuse of process.  Furthermore such a person has no private cause of action in confidence or anything of that nature, and thus no remedy by way of an injunction to prevent use of the documents disclosed founded on such a cause of action. Judicial review would be the only appropriate form of challenge. 

To return finally to discovery in criminal proceedings.  Reciprocity has been put forward as the basis for imposing an obligation on the prosecution in relation to unused material reliance being placed on the fact that in civil proceedings implied undertakings are given by both sides.  But the analogy with civil proceedings is false. Reciprocity in the civil context means an undertaking by a defendant not to disclose documents disclosed by compulsion by the claimant, and a corresponding obligation of the claimant not to disclose documents disclosed compulsorily by the defendant.  The fact that the claimant discloses documents to the defendant does not impose an obligation on the claimant not to disclose those same documents to someone else.  The claimant’s rights to disclose to third parties the documents he holds in his power and possession (and must disclose to the defendant as a result) depends entirely on private rights that may exist between him and third parties, and not on any obligation that he owes to the court.

The position in this case

The police obtained the Heads of Agreement from Balfour Beatty.  They obtained a  witness statement from Mr Stephen in relation to it.  Whatever constraints may have been placed on the police as to the use they might make of that document or the witness statement of Mr Stephen, no implied undertaking to any court was generated by obtaining the document or taking the witness statement.  It follows that the foundation for any argument that the action commenced by the Council against Mr McGrath should be struck out as an abuse of process has disappeared.  The disclosure to the Council was not in breach of any undertaking to the court, and was not a contempt, and thus if the Council did use the statement of Mr Stephen and referred to the Heads of Agreement for the purpose of bringing the proceedings, the Council could not be in contempt, or commencing proceedings in abuse of the process of the court.

Mr McGrath should not however feel that I am simply taking a procedural point, and that some other procedure might have been invoked for preventing reliance on the witness statement or the Heads of Agreement.  There is no doubt that the police had a public duty in relation to the use of the heads of agreement, and the witness statement and in my view that existed whether they had obtained the same voluntarily, or under compulsion. They further owed prima facie a private duty to Balfour Beatty and Mr Stephen.  But there could be no possibility of any breach of private or public duty if the police obtained the consent of Mr Stephen (which Mr Wood was told they did) or from Balfour Beatty (about which I accept there must be more doubt, although Balfour Beatty do not appear to have protested). 

If the seizure of the Heads of Agreement had been under compulsory powers or despite Balfour Beatty’s co-operation were to be treated as such, and if Balfour Beatty did not consent to disclosure of the document, the question would arise primarily as between the police and Balfour Beatty but also in considering the extent of the public duty of the police, whether the duty of confidence to Balfour Beatty should be overridden.  In my view, where the police have information that tends to indicate a prima facie case of corruption against a Council, the interests of justice point in favour of the police being entitled to reveal that information to the Council. The distinction between disclosing information as to the existence of a document and its contents and handing over the document itself appears a fine one, but it is a distinction that will exist during the currency of a criminal investigation where the police must be entitled to show a victim the contents of a document such as the Heads of Agreement, but would not be entitled to hand over the document itself.  Furthermore the statutory provisions seem to recognise the duty of the police to return property to its true owner, and it seems to me consistent with that duty to be entitled to inform victims of the existence of a potential claim to the return of money that belongs to the victim. Furthermore the supply of the information which would lead to either the police or the owner of the documents being subpoenaed seems to me to be in accordance with the instances identified by Dillon LJ in Marcel as not to be the subject of criticism.  It seems to me to accord with Nolan LJ’s proposition “only in the public interest and with due regard to the rights of individuals”.  More plainly still it seems to me to be in accordance with the reasoning of Sir Christopher Slade in the same case.

In fact all that the police did in this case was to reveal that information by disclosing Mr Stephen’s statement with his consent.  They did not hand over the Heads of Agreement albeit they disclosed its existence and contents.  Best practice would suggest that they should obtain the consent of the owner of the documents or await a subpoena if the owner refuses his consent before handing over documents, and this appears to have been the practice adopted. 

I would just add for completeness that if the Heads of Agreement were obtained voluntarily from Balfour Beatty and not pursuant to any compulsory powers, depending on the precise circumstances it may even be that no duty of confidence would be owed to Balfour Beatty at all, and in those circumstances the police would be in the same position as any other member of the public who obtained information relating to corruption, and entitled to inform the Council as a possible victim thereof that they had such a document.

It thus seems to me unlikely that any other remedy was ever available to Mr McGrath in relation to the disclosure by the police of the existence of the Heads of Agreement. But now that Mr McGrath has in fact disclosed the Heads of Agreement himself by pleading the same, that is a final and conclusive reason for no remedy being available to Mr McGrath which might prevent the Council relying on the same.

Conclusion

I would dismiss the appeal. 

Lord Justice Tuckey:  I agree.

Lord Justice Morritt:  I also agree. 

Order: Appeal Dismissed; section 18.
(Order does not form part of the approved judgment)