BILL OF SUSPENSION BY (1) HOLMAN FENWICK WILLIAN LLP AND (2) DUFF & PHELPS LTD AGAINST PROCURATOR FISCAL, GLASGOW
APPEAL COURT, HIGH COURT OF JUSTICIARY
[2017] HCJAC 38
HCA/2015/3517/XJ
Lord Justice General
Lady Dorrian
Lord Bracadale
OPINION OF THE COURT
delivered by LORD CARLOWAY,
the LORD JUSTICE GENERAL
in
BILL OF SUSPENSION
by
(1) HOLMAN FENWICK WILLAN LLP and (2) DUFF & PHELPS LTD
Complainers;
against
PROCURATOR FISCAL, GLASGOW
Respondent:
Complainers: Bain QC; Paterson Bell
Respondent: J Keegan QC (sol adv) AD; the Crown Agent
5 February 2016
Introduction
[1] This Bill seeks to suspend a warrant, granted by the sheriff at Glasgow on 4 December 2015, authorising the police to enter the offices of the first complainers, a firm of London solicitors, and to take possession of documents relative to the “acquisition, running, administration and disposal of the assets” of Rangers Football Club. The procedure adopted in obtaining and executing the warrant raises a number of substantial issues in connection with: (1) the scope of the warrant; (2) the proper practice to be adopted when the Crown seek to recover papers likely to be the subject of a claim of legal privilege (confidentiality); (3) the appropriateness of seeking a warrant of this nature from a sheriff after the service of a High Court indictment; (4) the procedures available to enable a person to raise a claim of legal privilege and to have it determined expeditiously; and (5) the application of Article 8 of the European Convention to such a warrant and its execution. Not all of these issues were raised in the Bill as originally presented. They are all, however, of such fundamental importance that, in so far as not included in the Bill, the court has required to raise and deal with them.
Background
[2] The proceedings have, as their background, the events surrounding the collapse of Rangers FC, whose corporate owners were placed into administration on 14 February 2012. A police investigation commenced in June 2012; initially focusing upon the actings of Craig Whyte who had effectively acquired the club from its previous owners, following dealings from late 2010 onwards, in May 2011. The focus was, in due course, to shift and include the administrators themselves, namely two employees of the second complainers, a company of accountants, whose parent is an American Limited Liability Company engaged in global valuation and financial advice.
[3] Mr Whyte engaged Collyer Bristow LLP, another firm of London solicitors, to act for his company in the acquisition of Rangers. These solicitors were subsequently sued by the administrators, represented by Clyde & Co, over the acquisition deal. The action was settled for a multi-million pound sum. In the course of that action, a contribution was sought from the second complainers, who instructed the first complainers to act in the anticipated litigation following upon a pre-action Letter of Claim sent by Clyde & Co on 22 October 2012.
[4] The pre-action letter had prompted James Clibbon, a partner of the first complainers, to compile a chronological bundle of materials, presumably relating to the second complainers’ role in the administration. In August 2013, the police obtained and executed search warrants for the second complainers’ offices relative to the acquisition of Rangers. Although there was no formal legal challenge to the 2013 warrants, the first complainers did raise issues of legal privilege. Prolonged negotiations between Mr Clibbon and the Crown followed. The material was not examined, pending their resolution. Meantime, a revised chronological bundle was prepared, which had the allegedly privileged material removed. Matters still remained unresolved as at November 2014.
[5] On 17 November 2014, Mr Whyte, three employees of the second complainers, and one other person, appeared on a first petition at Paisley Sheriff Court on charges arising out of the acquisition of Rangers. On 15 September 2015 an indictment, citing these accused to a Preliminary Hearing at Glasgow High Court on 16 October 2015, was served. On 2 September 2015 Mr Whyte, two employees of the second complainers and two other persons appeared on a second petition in connection with the administration and sale of Rangers between February and June 2012. A second, more comprehensive, indictment was served on all accused on 2 December 2015.
[6] Meantime, in November 2014, the second complainers instructed a different firm of solicitors, namely DWF, to resolve the legal privilege claim relative to the documents held under the 2013 warrants. Andrew Gregory of DWF took up the reins. Some material, which had been in the original, but not the revised, bundle was released as not covered by legal privilege. This, and other enquiries, suggested (at least to the police) that the material omitted from the revised bundle was of significance in that it related to the fraudulent conspiracy “under investigation”. It was on this basis that the police submitted an application to the procurator fiscal to seek a warrant to recover this missing material, which had by then been passed from the second to the first complainers.
The Warrant Application
[7] The petition for the warrant is dated 4 December 2015. Notwithstanding the prior communings, it was not intimated to either complainer. It narrated that, from information received, it appeared that various named persons were, in the period January 2010 to December 2013, involved in a conspiracy: to acquire Rangers by fraud; to trade in a fraudulent manner so as to bring about the administration; and to defraud the creditors by disposing of the assets at a discounted price. The petition made no mention of the High Court indictments. It averred that there were reasonable grounds for believing that evidence material to the investigation was held in the first complainers’ offices, notably:
“material relating to the acquisition, running, administration and disposal of the assets of [Rangers] and in particular, but without prejudice to the foregoing generality, all material which James Clibbon ... had access to and/or were (sic) reviewed in consequence of which ‘chronological bundles’ of material were produced ...”.
[8] The operative part of the petition craved a warrant for the police to search the first complainers’ offices and to take possession for examination as evidence:
“any material in relation to the acquisition, running, administration and disposal of the assets of [Rangers] ...”.
It continued:
“and all material which James Clibbon ... had access to and/or were (sic) reviewed in consequence of which ‘chronological bundles’ of material were produced ...”.
Notwithstanding that the signature on the warrant was that of a senior procurator fiscal depute and that this procedure was known to, and authorised by, the advocate depute in charge of the High Court prosecution, the circumstances justifying the warrant were described to the sheriff only by a police detective sergeant. The police officer did not, apparently, tell the sheriff of the ongoing High Court proceedings. It was suggested that the sheriff may have been aware of these proceedings. If so, he made no mention of them in his reports.
[9] The sheriff’s first report is in short compass. It was, no doubt, composed as a matter of urgency in response to the Bill which, at that stage, raised only two complaints, viz: that there had been no exclusion clause in the warrant relative to privileged material and no provision for independent scrutiny of the warrant’s execution. The sheriff narrates that the petition was one of several warrant applications which he, and his colleagues, had dealt with over an extended period relative to Rangers. The sheriff was aware of the general background. He was told about the chronological bundles. There was no suggestion that legal privilege might apply. He made no provision for independent supervision of the search because that was not done, in the sheriff’s experience, when granting warrants for solicitors’ files. He did not consider that the warrant would breach the first complainers’ Article 8 right.
[10] The sheriff’s supplementary report is much more comprehensive. Contrary to the terms of the first report, it specifically notes the claim of legal privilege made by the first complainers in respect of the 2013 warrants. It narrates much of the background set out above. The revised chronological bundle had excluded material which the first complainers considered to be protected by legal privilege. The report mentions the arrest of the three employees of the second complainers and the switch of agency to DWF. The sheriff had been told by the police officer that Mr Clibbon’s actions had “impacted on the timescales involved in progressing the criminal investigations”. The application had been made to recover the items edited out of the original bundle.
[11] The warrant was granted. It was accompanied by a request for endorsement by London magistrates in terms of the Summary Jurisdiction (Process) Act 1881. Endorsement followed on 9 December 2015 when, again without any advance notice, the police arrived at the first complainers’ offices and seized 47 boxes of documents, notwithstanding further expressed claims of legal privilege. The first complainers applied to the Administrative Court of the High Court of Justice, Queen’s Bench Division and obtained an injunction prohibiting the police from examining the documents and requiring them to hold the documents in a secure room pending further orders.
[12] At the same time, the first complainers presented this Bill. On 18 December 2015, the court ordered the return of the material to the first complainers’ offices; there to be kept in a secure room and reviewed by “independent counsel”. With commendable speed, the two commissioners reported on the 47 boxes on 12 January 2016. They were able to report that the original bundle had consisted of 23 lever arch files, whilst the revised bundled contained only 11. From the excluded material, 3 lever arch files had been created. They contain the material over which privilege is claimed. The material has been divided into 5 categories; the first of which involves communications between Mr Whyte, and his companies, and Collyer Bristow.
Submissions
Complainers
[13] The written submissions of the complainers did not only mirror the terms of the Bill. They also purported to add certain further grounds. The first of these related to the width of the warrant. It would, it was argued, have been a very simple matter for the warrant to have been limited to the documents removed from the revised chronological bundle. The second new point was that it was said that the information which had been given to the sheriff was inaccurate in so far as it suggested that Mr Clibbon’s conduct had “adversely impacted” on the progress of the police investigation. The sheriff had not been aware of the full background or of other material considerations. In particular, the sheriff was not told that it was highly likely that the warrant would encapsulate significant quantities of legally privileged material. The police officer had failed in his duty to make a full and frank disclosure (McDonagh v Pattison 2008 JC 125 at para 11; R (B) v Huddersfield Magistrates’ Court [2015] WLR 4737 at paras 11, 13 and 20; and Barnes v The Eastenders Cash & Carry [2015] AC 1 at paras 118-124).
[14] Warrants required to exclude legally privileged material expressly (S v McGowan 2009 SLT 922 at paras 1 and 7). It was necessary to set up safeguards to ensure that a warrant was not executed oppressively (Nelson v Black & Morrison (1866) 4 M 328, Lord Ardmillan at 332; Bell v Black (1865) 5 Irv 57, LJC (Inglis) at 64; and McCowan v Wright (1852) 15 D 229, Lord Wood at 237). The general rule was that communications between solicitor and client were confidential and irrecoverable (R v Manchester Stipendiary Magistrates, ex parte Granada Television [2001] 1 AC 300, Lord Hope at 309; R (on the application of Prudential plc) v Special Commissioner of Income Tax [2013] 2 AC 185, Lord Reed at para 108, citing Narden Services v Inverness Retail Business Park 2008 SC 335 at 338). There was an exception where a fraud or other illegality was alleged (Micosta v Shetland Islands Council 1983 SLT 483). It was not suggested, in the warrant or elsewhere, that the first complainers were party to any fraudulent or other illegal transaction, which would trigger the exception.
[15] Upon some probing by the court as to the first complainers’ ability to plead legal privilege, it was accepted that the right to do so lay with the client, not the solicitor. The first complainers then maintained that they had instructions to claim privilege at the instance of the second defenders. A motion to amend the Bill, so that it ran in the name of both complainers, was made.
[16] The warrant was a breach of the first complainers’ Article 8 right of respect for their private life and correspondence (Niemietz v Germany (1992) 16 EHRR 97; Sallinen v Finland (2007) 44 EHRR 18; Wieser v Austria (2008) 46 EHRR 54; and Tamosius v United Kingdom (2002) 35 EHRR CD32). It was essential that there were clear and detailed rules on how claims for legal privilege could be made. The grant and execution of the warrant had not been “in accordance with the law” because legally privileged material had not been excluded from the search. There were no statutory provisions governing the procedure and no Code of Practice on the part of the Crown. Had the warrant been appropriately drafted and provision for independent supervision put in place, the current difficulties would have been avoided. There had been a number of cases where the court had appointed a Commissioner, or where the Crown had agreed to the appointment of such a Commissioner (see Narden Services v Inverness Retail and Business Park (supra) at para 11; HM Advocate v Voudouri [2006] HCJ 4 and S v McGowan 2009 SLT 922).
[17] Under some prompting by the court, the first complainers raised the issue of whether the sheriff, in granting the warrant, had given due consideration to the first complainers’ position.
Respondent
[18] The Crown did not accept that the first complainers, and hence counsel and agents appearing at the hearing, were duly instructed by the second complainers. They accordingly opposed the application to amend the Bill to introduce the second complainers. They also opposed the late inclusion of those points not raised in the original Bill, on the basis that a rigorous approach, akin to that in criminal appeals, should be taken (see eg Strachan v HM Advocate [2011] HCJAC 28 at paras [14] to [16] and McCarthy v HM Advocate 2008 SCCR 902 at para [13]).
[19] It was accepted that the police officer had not told the sheriff that there had been ongoing High Court proceedings. Nevertheless, the obtaining of a warrant in such circumstances had been competent (Frame v Houston 1991 JC 115). It was accepted also that all that the Crown had wanted to obtain were the materials excluded from the revised chronological bundle. It appeared to be conceded, therefore, that the terms of this warrant were unnecessarily wide.
[20] The warrant had been granted on the basis of both the common law and section 134 of the Criminal Procedure (Scotland) Act 1995 and presented in the form prescribed in the Act of Adjournal (Criminal Procedure Rules) 1996, rule 16.4. Section 134 made no distinction between categories of material to be seized under a warrant. Where material over which legal privilege was asserted was seized during the execution of a common law search warrant, there was a recognised procedure to deal with that issue. The party making the assertion could lodge a Bill of Suspension and/or apply to the court for the appointment of an independent Commissioner to review the material. Where an assertion was made, the police would refrain from examining the material further. Legal privilege did not apply where the material was generated in furtherance of a fraud or illegal act, even if the law agent concerned was an innocent party (Kelly v Vannet 1999 SCCR 169 at 177). It had been reasonable for the police to believe that the material would not be subject to legal privilege. Although the material was held by a firm of solicitors for the ostensible purpose of advising on the pre-action letter of claim, the material had been generated by employees of the second complainers in order to further a criminal purpose.
[21] It was accepted that the grant and execution of the warrant engaged the first complainers’ Article 8 right (Niemietz v Germany (supra)). However, there was no breach of that right. The warrant had been sought and granted in terms of the common law and statute. The interference pursued a legitimate aim, namely the prevention of crime. It was necessary in a democratic society in pursuit of that aim. The allegations were of a serious nature. The interference was proportionate because of the availability of procedural safeguards to prevent abuse or arbitrary conduct. The decision on whether to grant a warrant had been a judicial one. It had not been made by the police or the prosecutor. Even if there had been a breach of Article 8, that did not mean that the warrant itself was vitiated.
Decision
[22] Legal privilege is a matter to be asserted by a client. It cannot be asserted by a firm of solicitors in the absence of instructions to do so, assuming there has been time to take such instructions. A preliminary issue for the court was accordingly whether the first complainers, who had raised the original Bill solely in their own name and without instructions from the second complainers, were in a position to assert legal privilege at all. Ultimately, the first complainers accepted that it was not for them to assert such privilege. When it was said that they were acting for the second complainers too, the court appointed the second complainers to state whether the first complainers were duly authorised by them to make such a claim, given that it was said by the Crown that they had instructed alternative agents to do so. After all, their different agents could hardly validly assert two conflicting positions.
[23] This prompted a detailed letter from the second complainers, which the court found difficult to follow, but which ultimately seemed to suggest that it was the new agents, DWF, who alone were instructed on the question of legal privilege. A subsequent email was produced from the second complainers, which appeared to state to the contrary, albeit under reference to an insurance problem which might otherwise arise, that the first complainers were duly instructed to raise legal privilege in the Bill. Although the court has reservations about this matter and considers that a degree of obfuscation may have been present, it will proceed on the basis that the first complainers are duly instructed by the second complainers to maintain a plea of legal privilege in relation to the seized material.
[24] Since the issue of legal privilege is already raised in the Bill, the court will allow the application to amend the Bill to include the second complainers. It will also allow the remaining amendments to introduce the points concerning the scope of the warrant and it being granted without intimation. These points involve readily ascertainable facts which cannot be disputed. They raise issues which the court itself would have been bound to consider. The court will also allow the amendments relative to what the sheriff was told although, as will be seen, it does not, with one exception, consider that significant. The procedure on a Bill of this nature, raised by a third party relative to a prosecution, is not analogous to a criminal appeal.
[25] It is no doubt competent for a sheriff to grant a warrant, notwithstanding the existence of a High Court indictment (Frame v Houston 1991 JC 115, LJC (Ross) at 118-119). This ought, however, to be recognised as an extraordinary procedure, given that, at least in theory, the investigative stage of a case ought normally to have been concluded at the point at which an indictment is served (ibid). That indictment is supposed to contain due notice of all the witnesses and productions to be used in the case against the accused. The fact that there is, in this case, an ongoing procedure for the recovery of evidence after such service must be regarded as a matter of some concern. After all it should not be assumed that the High Court will grant any application, made at first instance under section 67 of the Criminal Procedure (Scotland) Act 1995, to admit new material at the post-indictment stage.
[26] A police officer seeking a warrant from a sheriff must not provide information which he knows to be inaccurate or misleading. He should provide all the relevant information. The reference to “full disclosure” in McDonagh v Pattison 2008 JC 125 (at paras [11] and [12]) should be understood in that context. The duty includes one to disclose the fact that the havers are a firm of solicitors who are maintaining a plea of legal privilege. It was submitted that the information in the petition and given by the police officer on oath to the sheriff, in particular in relation to the likely application of legal privilege, had been inaccurate. This contention was not contained in the original Bill, upon which alone the sheriff has reported. It is a reasonable one, in so far as it is based upon the sheriff’s first report. That report states that there was no suggestion that legal privilege should apply. However, it appears to be contradicted by the second report.
[27] The court will proceed on the basis that the sheriff was aware of the claim of legal privilege. He certainly ought to have been so aware, given that the havers were a firm of solicitors. The other matter upon which it was, without reference in the Bill, said that the sheriff had been misled, was in relation to the degree to which Mr Clibbon had hampered the investigation. It is clear that Mr Clibbon was attempting to prevent the release of certain documents and, in that way, may be said to have been hampering the investigation. However, the sheriff does not suggest that there was anything wrong with Mr Clibbon’s actions. In short, nothing seems to turn on this allegation. What is undoubtedly true, however, is that the petition contains no mention of the High Court proceedings. It was conceded at the hearing that they had not been mentioned before the sheriff, even if he may have been aware of them from media reports.
[28] What is important to note is that the warrant was obtained for material over which there was an ongoing dispute about legal privilege. That dispute was taking place between the Crown, notably the advocate depute, and a firm of London solicitors, namely the first complainers. There is no suggestion that the first complainers were involved in any form of illegality. There was no averment that, in the context of the ongoing dispute, the first complainers would be likely to destroy, or conceal, the relevant material. Indeed the existence of this material had been flagged up in the two chronological bundles prepared by Mr Clibbon. In these circumstances, an application to a sheriff for a warrant to search the first complainers’ premises to recover this material, without intimation, was oppressive. If the course selected by the Crown were to have validity, it was incumbent upon them to have intimated the application for a warrant to the first (and/or second) complainers, so that they could make representations to the sheriff about legal privilege. The sheriff could then have made such appropriate orders, as he deemed fit, to secure proper compliance with the law of privilege in respect of the recovery of the solicitors’ files.
[29] The courts must be careful to protect the important right of legal privilege which generally attaches to communications between a client and his solicitor (Narden Services v Inverness Retail and Business Park 2008 SLT 621 at para [11]). It is essential therefore that due caution is observed when a court is granting an order for the recovery of solicitors’ files. The need for such caution is even greater when a warrant is being granted with a view to its endorsation for execution outwith Scotland.
[30] There is no reason for a warrant to state expressly that materials, ostensibly covered by its terms, are excluded where legal privilege exists. Such privilege may or may not be asserted. If it is capable of being asserted, however, the seizure process must have within it clear, detailed rules on how that assertion can effectively be raised and determined. That is a matter which was stressed in the mid-nineteenth century Scottish cases cited (Bell v Black (1865) 5 Irv 57, LJC (Inglis) at 64; Nelson v Black & Morrison (1866) 4 M 328, LP (McNeill) and Lord Deas at 331, Lord Ardmillan at 332; Lord Wood at 237). It is now reflected in the European jurisprudence (Sallinen v Finland (2007) 44 EHRR 18 at paras 90 and 92; Niemietz v Germany (1992) 16 EHRR 97 at para 37). In a case, such as this one, where it is clear that what is to be searched is a solicitors’ office and that legal privilege is being asserted, any warrant ought either to have provided for independent supervision of the police search by a Commissioner appointed by the court or to have contained a requirement that any material seized should be sealed unread and delivered to the court to enable the sheriff to adjudicate upon the issue (see Wieser v Austria (2008) 46 EHRR 54 at para 57). The ability to raise a Bill in the High Court of Justiciary, designed to suspend the warrant itself, is a procedure for review by an appellate court which, whilst competent, is not straightforward. It does not supply the necessary effective remedy at first instance. If this necessitates a change of practice in connection with the recovery of solicitors’ files, such a change requires to take place.
[31] The sheriff was not bound to grant the warrant. In the situation here, for example, where there were ongoing High Court proceedings, the sheriff would have been entitled to take the view that the appropriate procedure was for the Crown to apply to the High Court for a commission and diligence, or an order for the recovery of precisely described documents. After all, had the sheriff been asked to grant such an order, as distinct from issuing a warrant, in connection with High Court proceedings, he could not have done so (Criminal Procedure (Scotland) Act 1995, s 301A).
[32] It was conceded that all that the Crown were seeking, at the point when the warrant was sought, was the material included in the original, but excluded from the revised, chronological bundle. In these circumstances, the terms of the warrant, which are limitless in date and wide in their description of the potential recoverable material, are too vague to have sustainable validity; hence, presumably, the seizure of 47 boxes. On this basis also, the warrant granted was oppressive.
[33] For these reasons, the court will pass the Bill and suspend the warrant. The remaining issue concerns the first complainers’ Article 8 right to respect for their private life and correspondence. It is not disputed that the first complainers’ Article 8 right was engaged by the events which occurred (Niemietz v Germany (supra) at para 37; Tamosius v United Kingdom (2002) 35 EHRR CD32 at 8; Wieser v Austria (supra) at para 57). If their Article 8 right was breached, it would have been because of the manner in which the warrant was executed without proper safeguards. That may be sound in damages in a civil suit. It would not provide grounds for suspending the warrant itself. Should the point be taken in the context of a criminal trial, the manner of execution could give rise to an objection to the admissibility of the material recovered. That may not succeed, however, given the court’s intervention and the appointment of the independent Commissioner. Given the passing of the Bill, the point does not now arise for determination.