LAW REPORT 24 July 1997: Absolute immunity prevented plaintiff taking action in defamation

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Taylor and anor v Serious Fraud Office and ors; Court of Appeal (Lord Justice Kennedy, Lord Justice Millett and Sir Brian Neill) 22 July 1997

A plaintiff was barred, by absolute immunity, from mounting an action for defamation based on material which formed part of a criminal investigation.

The Court of Appeal dismissed the plaintiffs' appeal from a decision of Sir Michael Davies, sitting as a judge of the Queen's Bench Division, ordering that the plaintiffs' action for defamation be struck out against the defendants, the Serious Fraud Office, Katherine McKenzie, the Law Society and Neil Rogerson.

In 1994 the Serious Fraud Office was investigating the activities of three men who were alleged to have committed a serious and complex fraud. During the course of the investigations Ms McKenzie, an investigating lawyer employed by the SFO, wrote to the Attorney General of the Isle of Man, proposing that the first appellant, a solicitor in the Isle of Man, be interviewed. It had apparently emerged that he had invested clients' money with the alleged fraudsters.

Also as part of the investigation Ms McKenzie and a police officer went to see Neil Rogerson, a Law Society employee, at the Solicitors Complaints Bureau. He explained how the Compensation Fund worked, and its application to the fraud inquiry. A file note was made. Criminal proceedings had by then been begun against two of the men, and the SFO disclosed to their solicitors "unused material" which included the letter to the Attorney General and the file note.

The first appellant was later asked by counsel for one of the men if he would be prepared to assist and he was shown, amongst other documents, the letter and the file note. He and the second plaintiff, a company of which he was managing director, commenced the action against the respondents alleging that the letter and file note were defamatory.

Leolin Price QC and Julian Knowles (Jeffrey Green Russell) for the appellants; Andrew Caldecott QC and Catrin Evans (Treasury Solicitor) for the first and second respondents and (Crockers) for the third and fourth respondents.

Lord Justice Kennedy said that the judge had found that when the appellant had been shown the documents he had been subject to an implied undertaking to the court, and that it would be a breach of that undertaking to use them for the purposes of the present action.

Five propositions could be extracted from an examination of the authorities. Whatever the form of action it would be barred if it was founded upon what a witness had said in the witness box, or upon what had been said or done in preparing the evidence for a trial. That immunity was not, like absolute privilege, limited to actions alleging defamation, but applied in criminal cases to any form of parasitic litigation where the statement or conduct relied upon was part of the process of investigating a crime with a view to prosecution.

Documents seized by the police or other prosecuting authority during a criminal investigation must be treated as confidential, their owners being entitled to expect that they would only be used for the specific purpose for which they had been seized.

In civil proceedings a party who obtained discovery was required in return to give an implied undertaking to the court not to use material supplied in the course of discovery or allow it to be used for any purpose other than the proper conduct of the action in which discovery was obtained.

When the prosecution disclosed material to the defence in the course of a criminal prosecution, whether it were used or unused material, the authorities prior to Mahon v Rahn (unreported, 23 May 1997) were silent as to whether that gave rise to an implied undertaking of the kind just referred to.

The first and second propositions would be determinative of the appeal unless there were anything in the Criminal Procedure and Investigations Act 1996 or Mahon v Rahn which led to a different view. The Act did not have direct application to the present case because the material parts had not come into force until April 1997. Mahon v Rahn was not decisive either, because it did not address the issue of absolute immunity.

In conformity with the decision in Mahon v Rahn, however, the judge's finding as to the existence of and breach of an implied undertaking could not now be sustained, but for the reasons given that had no effect on the outcome of the appeal. The appeal was dismissed.

Kate O'Hanlon, Barrister