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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Real Estate Opportunities Ltd v Aberdeen Asset Managers Jersey Ltd & Ors [2006] EWHC 3249 (Ch) (15 December 2006) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2006/3249.html Cite as: [2006] EWHC 3249 (Ch) |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
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Real Estate Opportunities Limited |
Claimant |
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- and - |
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Aberdeen Asset Managers Jersey Limited Aberdeen Asset Managers Limited UBS Limited (formerly UBS Warburg Limited) |
Defendants |
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Mark Howard QC, Simon Salzedo and David Scannell (instructed by CMS Cameron Mckenna LLP) for the 1st and 2nd Defendants
Iain Milligan QC and Adrian Beltrami (instructed by Mayer, Brown, Rowe & Maw LLP) for the 3rd Defendant
Hearing dates: 1 and 2 November 2006
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Crown Copyright ©
The Honourable Mr Justice David Richards :
"Documents comprising confidential information received by the Financial Services Authority for the purposes and in the discharge of the FSA's functions and obtained by the Third Defendant and its legal advisers from the FSA in the course of the FSA investigation into the split capital investment trust market, including transcripts of interviews held by the FSA with the employees of the Third Defendant."
1) Confidential information must not be disclosed by a primary recipient, or by any person obtaining the information directly or indirectly from a primary recipient, without the consent of:
a) the person from whom the primary recipient obtained the information; and
b) if different, the person to whom it relates.
2) In this Part "confidential information" means information which:
a) relates to the business or other affairs of any person
b) was received by the primary recipient for the purposes of, or in the discharge of, any functions of the Authority, the competent authority for the purposes of Part VI or the Secretary of State under any provision made by or under this Act; and
c) is not prevented from being confidential information by subsection (4)
3) It is immaterial for the purposes of subsection (2) whether or not the information was received:
a) by virtue of a requirement to provide it imposed by or under this Act;
b) for other purposes as well as purposes mentioned in that subsection
4) Information is not confidential information if –
a) it has been made available to the public by virtue of being disclosed in any circumstances in which, or for the purposes for which, disclosure is not precluded by this section; or
b) it is in the form of a summary or collection of information so framed that it is not possible to ascertain from it information relating to any particular person.
5) Each of the following is a primary recipient for the purposes of this Part –
a) the Authority...
It is common ground that in this case the "primary recipient" was the FSA. It is convenient to refer to the recipients of information from the FSA, such as Aberdeen and UBS, as secondary recipients.
"no information obtained pursuant to any exercise of powers under Lloyd's Acts 1871 to 1982 (or any byelaw or regulation made thereunder) shall be disclosed without the consent of (a) the person from whom it was received; and (b) (if different) the person whom it concerns."
"If, however my doubts are unfounded and the prohibition in the byelaw does affect the obligation of discovery in a civil action, in my judgment it only applies to information which the member has obtained as the result of the exercise of powers under the Lloyd's Acts. It does not apply to information which he already had before those powers were invoked. That was the Judge's view, and I agree with it. It meets the mischief which the byelaw was no doubt intended to prevent; people should not be required or allowed to disclose that which they learn by the exercise of Lloyd's powers. So the members of the Neill Committee would not be allowed to disclose the transcripts. But there is no prohibition on the members agents doing so.
The members agents in the present case already had the information which was encapsulated in their evidence to the loss review committee. It is true that the proceedings of that committee placed it in a convenient package - the transcript produced by the shorthand writers. That is a bonus for the Names, who might otherwise have had to extract it from the members' agents by a most laborious collection of interrogatories, if at all. But I can see no reason to deny them that bonus."
"The starting point in both cases is that section 82 places an embargo on information (oral or in writing) obtained by Norton Rose so far as it was communicated to Hambros and the interviewees. Nothing in section 82 prevents Hambros and the interviewees from disclosing to the liquidator without the need for any consent what they already knew and all underlying documents in their possession relating to the bid. What they must however be most careful to avoid is disclosure of any supplement to that knowledge furnished by Norton Rose.
I shall consider first the position of Hambros. It is clear that the report and the transcripts contain a considerable amount of fresh information previously unknown to Norton Rose (and so far as it is relevant to Hambros) relating to the business and other affairs of others beyond those of Galileo. Such information is clearly not disclosable to the liquidator in the absence of the required consents of Norton Rose and the informants and those to whom it relates (including Hambros) and it is common ground that these have not been forthcoming. The only issue can accordingly be whether the report and the transcripts can and should be redacted so as to edit out from the report and transcripts the embargoed material. Section 82 creates no bar against this exercise being undertaken. Whether or not this should be ordered is a question to be decided in exercising the jurisdiction under section 236 of the Act of 1986.
I turn next to the position of the interviewees. If and so far as the transcripts merely record the information communicated by the interviewees to Norton Rose, I can see no obstacle created by section 82 of the Act of 1987 to disclosure of them by the interviewees. What they already knew when they were interviewed and a record of such disclosures by them (as opposed to disclosures by Norton Rose or Hambros) would not constitute disclosure of information "received" or "obtained" under the section by them…
I therefore conclude that section 82 precludes any disclosure by Hambros of the entire report or transcripts which they have retained; at most it allows for disclosure of redacted versions."
"The maintenance of confidentiality under Pt V of the 1987 Act for information provided to the Bank is plainly of great importance. Protecting those who provide information to the Bank encourages voluntary disclosure from institutions, third parties and whistle blowers, any of whom might otherwise be unwilling to divulge material. The Bank is of the view that, absent such protection, it would be deprived of the raw material it requires for effective supervision."
In In re Galileo Ltd, Lightman J said at p 110:
"The maintenance of confidentiality as provided in section 82 is of vital importance to the discharge by the bank of its supervisory responsibilities under the Act of 1987. Confidentiality is vitally important to encourage the maximum free flow of information from supervised institutions and third parties whether such disclosure is obligatory or voluntary."
"It is a task of some complexity even to identify all the information which may be contained in any given question and each interview contains a large number of such questions."
"41. I have considered whether it would be possible to redact the interview transcripts so as to permit inspection of relevant parts which do not contain confidential information within the meaning of section 348…
42. My firm has undertaken a review of the interview transcripts for relevance, which has involved my assistants and myself in reviewing these documents in detail. Having been through this exercise, I have given considerable thought to whether a further exercise of redaction could be carried out, but I have reached the very clear conclusion that it would be well nigh impossible and certainly not possible within any sensible limits as to time and cost and without taking some risk of accidentally disclosing protected information.
43. The reasons why I have formed the view that redaction would not be possible include the following:
a. The length of the transcripts. Each interview transcript ranges from approximately 75 to 180 pages in length. The total number of pages of all interview transcripts is in the region of 3000;
b. The complexity and difficulty of the task of identifying what information is included in each part of each document;
c. The need to identify the persons that each piece of information (a) relates to and (b) come from;
d. In relation to information which may belong to or concern employees of Aberdeen, or REO, or UBSW, it may be very difficult to establish whether a particular piece of information known to an individual was known to him in his capacity as agent for another trust. Furthermore, it may not have been obtained by the FSA from Aberdeen or REO in those circumstances;
e. The complexity of working out which parts of the documents are relevant to the pleaded issues is, of course, overlayed onto the foregoing difficulties;
f. The fact that a single mistake in all of the literally thousands of decisions set out above would result in potential criminal liability, both for Aberdeen and for the lawyers involved; and
g. In many cases, the finally redacted document would contain nothing, or not very much, of any value, because the amount of redaction necessary would render it meaningless or positively misleading.
44. In particular, as I have mentioned above, the disputed documents contain information which related not only to the business or other affairs of Aberdeen, but to the affairs of a considerable number of individuals and entities going far beyond Aberdeen. This number includes, of course, the interviewees themselves. I have considered by way of illustration a five-page sample from an interview transcript of a former Aberdeen employee. In this sample, the questions and answers refer to the business or other affairs of some twenty four (24) individuals, partnerships, corporations and corporate groups, not including Aberdeen or REO."
"I should first say a few words on redaction. The jurisdiction of the court under section 236 to order disclosure of facts or documents is subject to the limitations imposed by the need to comply with section 82 of the Banking Act 1987. Speaking quite generally I have no doubt that the court has jurisdiction to order, and in appropriate cases has ordered, production of documents subject to redaction of material whose disclosure for any of a multitude of reasons may be unnecessary or undesirable or unlawful. Accordingly, I have jurisdiction to order Hambros and the interviewees to provide redacted copies of the report and the transcripts which exclude information whose disclosure is objectionable under section 82 of the Act of 1987. But in a case such as the present, concerned with information embargoed by section 82 of the Act of 1987, that is a jurisdiction to be exercised with the greatest caution. There must be taken into account a number of factors of some importance, for example: (1) the making of such an order may be seen as undermining the protection afforded by section 82; the possibility of this exercise being required or undertaken may prejudice the free flow of information to the bank; (2) the difficulty of the exercise. The exercise can only be undertaken by a person with lawful access to the embargoed information. For this reason the liquidator assigns the task in respect of the report and transcripts in Hambros' possession to Hambros. But Hambros may well need the assistance of Norton Rose and the interviewees to identify the supplemental information disclosed by Norton Rose. Likewise the interviewees will in all likelihood require the assistance of Norton Rose to redact their copies. The required assistance may not be provided readily or at all; (3) the risk that an erroneous omission to edit out a passage may constitute a criminal offence; (4) the danger that the redacted document (by reason of the excisions) may prove misleading; and (5) the problems which may be created by such disclosure, e.g. for a witness at a trial or on an examination by the liquidator faced with a truncated document and required to answer questions on it, yet barred from explaining his answers by reference to the passages omitted. In short the process may be time consuming, complicated, expensive and (on occasion) impracticable, and the end product may be of dubious value."
"An offence is, then, only committed if the person alleged to have committed the offence had knowledge of the circumstances which mean that the information is information to which section 82(1) applies."
The position as regards a breach of section 348 is that disclosure of information in contravention of section 348 is an offence (section 352(1)) but it is a defence for the accused to prove that he took all reasonable precautions and exercised all due diligence to avoid committing the offence (section 352 (6)(b)). If Aberdeen and UBS apply the approach set out in this judgement, it appears to me that they will not commit an offence.