High Court decides not every material breach of the duty of candour justifies the setting aside of a summons and/or amounts to an abuse of process; it is a fact-sensitive process and the finding of materiality does not determine the outcome of the application to set aside.
Mini-summary
The High Court [Popplewell LJ and Garnham J] quashed the decision of a District Judge to set aside a summons he had previously granted, and to stay the proceedings, on the grounds of material non-disclosure by the private prosecutors in their ex parte application for the summons.
The Court’s reasoning provides useful guidance on (i) the circumstances in which a failure by a private prosecutor to discharge its duty of candour in such an application should, in itself, lead to the summons then being set aside and (ii) the basis for proceedings to be stayed.
To the extent that there had developed a practice of setting aside summonses simply because a disclosure failure could be found, this case makes it clear that, without more, that is an incorrect approach.
It also highlights (i) the importance of proper scrutiny of settlement agreements between common parties to a civil claim and to a prospective private prosecution; an agreement that compromises ‘claims’ is unlikely, without more, to act so as to preclude a party to it from bringing criminal proceedings against the other; and (ii) the need for proper construction of documents said to amount to a bar to prosecution.
What are the practical implications of the case
The case appears to be the only reported instance in which the High Court has been asked to rule on the gravity, as opposed to just the materiality, of a breach of the prosecutor’s duty of candour that is sufficient, without more, to justify the setting aside of a summons. The case therefore supplements R (on the application of Kay) v. Leeds Magistrates’ Court [2018] EWHC 1233 (Admin) and adds to the jurisprudence in this field. The finding of material non-disclosure does not of itself lead to the summons being set aside but is the starting point for consideration whether the summons should be set aside, which is decided on factual impact, culpability in respect of the failure and familiar abuse principle.
Although the decision does not refer to the approach taken by the civil courts to applications to set aside orders obtained without notice on the basis of material non-disclosure, the approach taken by the High Court (Administrative Court) in this case is consistent with that approach. The case also touches upon, albeit on an obiter basis, the meaning of the word ‘claim’ in a settlement agreement and whether it was objectively intended by the parties to encompass criminal proceedings.
What was the background
The claimants Asim and Raed Siddiqui allege they were defrauded by Mr. Abbasi, to whom and to whose company (New Global Investments UK Ltd) they paid over approximately £4m for the purposes of investments. The Siddiquis say they transferred the money in reliance on false representations made by Mr. Abbasi, who did not apply the funds for investments, and that he subsequently misled them, using forged documents, as to the reason their funds were not returned. Upon discovery of the fraud, they commenced High Court proceedings which were ultimately compromised by a settlement agreement. The settlement of those proceedings and connected proceedings in Dubai was, by virtue of that agreement, subject to the payment by Mr. Abbasi of an agreed sum within a specified period. The agreement was, importantly, stated to be:
“in full and final settlement of:
1.1 All claims Asim and Raed have against Mr Abbasi and/or New Global in relation to monies loaned/advanced to Mr Abbasi / New Global.”
Mr. Abbasi did not pay the settlement sum within the period specified and then entered bankruptcy.
The Siddiquis would in due course argue that the settlement agreement, and clause 1.1 in particular, did not encompass criminal proceedings in this jurisdiction. They would also argue that, even if it did, Mr. Abbasi repudiated the agreement by failing to pay the settlement sum and/or by entering bankruptcy. Therefore, it was argued, the Siddiquis were not precluded by the settlement agreement from bringing criminal proceedings by way of a private prosecution in England against Mr. Abbasi.
The Siddiquis instructed solicitors with a view to a private prosecution and immediately provided to those solicitors the settlement agreement. Acting through these former solicitors, they successfully applied for a summons against Mr. Abbasi, alleging offences of fraud and forgery. In making that application, the Siddiquis’ then legal team did not disclose to the Court the settlement agreement that had been provided to them by the Siddiquis. The settlement agreement was at all times also held by the defendant as he was one of the parties to it. It was accepted by the Siddiquis in the High Court proceedings that the settlement agreement should have been disclosed to the Magistrates’ Court by their then solicitors when applying without notice for a summons. This duty was the subject of considerable analysis in the case of Kay, a case which also involved a settlement agreement, among other matters.
Upon the application of Mr. Abbasi, the same District Judge who had granted the application for the summons set it aside and stayed the proceedings, on the basis that the failure to disclose the settlement agreement amounted to a material breach of a duty of candour.
The judge found as a fact that he would not have granted the summons without notice had the settlement agreement been disclosed to him.
He did not make a finding that, as a matter of construction, the settlement agreement precluded a private prosecution, although he said that proposition was “not fanciful”. He declined to make any finding that the agreement had been repudiated.
The judge found that the failure to disclose the settlement was “fundamental” although he did not make any findings as to the circumstances in which the failure had come about. On the basis of that “fundamental” breach of the duty of candour alone, the summons was set aside and the proceedings stayed.
With new solicitors and counsel, the Siddiquis applied for judicial review of the District Judge’s decision. They argued that the judge erred in law in his interpretation or construction of the settlement agreement, that the failure to disclose it did not justify setting aside the summons and that there was insufficient justification for the exceptional remedy of staying the proceedings.
What the court decided
Mr. Justice Garnham, giving the lead judgment with which Popplewell LJ agreed, upheld all three of the Siddiquis’ grounds of challenge to the District Judge’s decision. At the heart of the High Court’s decision was its criticism of the lack of scrutiny that the lower court had given to the proper construction and effect of the settlement agreement.
At paragraph [42], Garnham J held:
“In my judgment, on the application to set aside the summons in circumstances such as the present, the District Judge ought to discharge the summons in any of three situations. First, where the settlement agreement, on its proper construction, precluded a private prosecution; second where the breach of the duty of candour was so serious that that breach in itself required the quashing of the summons; and third, where that breach amounts to an abuse of process.”
The Settlement Agreement
The High Court did not have to resolve the actual legal effect of the settlement agreement because the District Judge’s approach to that question amounted to an error of law sufficient to vitiate his decision on the effect of the agreement. The judge’s error was to proceed on the basis that the construction of the settlement agreement contended for by Mr. Abbasi was merely arguable. The judge said further said that he was “ill-equipped” to reach a conclusion whether the agreement had been repudiated. The effect of the settlement agreement was either to preclude a private prosecution or it was not, and the judge should have grappled with the document’s true construction.
Although not required to resolve the issue, Garnham J made the point that, “[a] private prosecution is not happily described as a “claim””. We would observe that there is authority that a ‘claim’ is an assertion of a cause of action (Shordiche-Churchward v. Cordle [1959] 1 W.L.R. 351). A cause of action is, in turn, the fact or combination of facts giving rise to a right to sue (Jowitt’s Dictionary of English Law). The term ‘claim’ is, we would therefore suggest, inapt to describe a criminal prosecution. By contrast, the settlement agreement in Kay was expressed in terms that encompassed a “claim of whatsoever (either civil or criminal law) nature”.
The gravity of the non-disclosure
The most significant point to arise from this case is, however, the approach that the High Court took to the proper effect of the admitted failure to disclose. It should be remembered that the District Judge had found as a fact that the settlement agreement would have affected his decision to grant the summons ex parte. Accordingly, the High Court was not tasked with resolving the divergent approaches taken in the reported cases as to the correct test that a District Judge should apply when asked to set aside a summons on the basis of non-disclosure. As recognised in Kay, at paragraph [27], one line of cases suggests that the judge should ask whether the undisclosed matter ‘would have’ made a difference to the (i.e. their own) decision to grant the summons, whereas another is to the effect that it suffices if the putative defendant is able to show that the matter ‘might have’ made a difference. In Siddiqui the High Court was faced with the District Judge’s finding that it would have made a difference to his decision and so the High Court approached the matter by asking the question whether it should have made a difference.
The District Judge took the view that the failure to disclose the settlement agreement was “fundamental”. The High Court took issue with the basis for that conclusion and what precisely was meant by it; the court did not expressly adopt the term “fundamental” as being the benchmark level of gravity of non-disclosure to justify the setting aside of the summons. The High Court observed the distinction between (any) failure of the duty of candour, which can always be said to be fundamental to the observance of that duty, and the importance of what was not disclosed and whether its disclosure was fundamental to the fairness of the proceedings.
As to the first, the High Court’s test, taken from [42] of the judgment was whether the “breach of the duty of candour was so serious that that breach in itself required the quashing of the summons”. There does not appear to be any clear prior dicta in any of the reported cases concerning the level of gravity of the breach of the duty of candour by a private prosecutor that justifies, without more, the setting aside of a summons. This particular issue was not addressed in Kay, which focused on materiality, rather than gravity. Indeed, apart from Kay itself, there do not appear to be any reported cases in which material non-disclosure alone justified the setting aside of the summons. In R. v Grays Justices, ex parte Low (1989) 88 Cr. App. R. 291 the failure to disclose the fact of a previous summons was not the only reason the summons ought to have been set aside, albeit it may have been the predominant reason. A case cited in Low as authority for the course adopted (R. v Bury Justices Ex p. Anderton [1987] Crim. L.R. 638) does not say that a material failure to disclose will in every case justify the setting aside of a summons. Rather, that case held:
“…it is now established that the withholding of material information is in itself a critical factor in determining whether a summons should be set aside as an abuse of the process of the court”
In Anderton the failure to disclose was but one of a number of bases upon which the summonses were required to be set aside in that case.
The High Court observed [51] that central to this issue is the question of how that breach has occurred: was it deliberate failure to avoid disclosure or was it oversight or poor advice; that required a court to make findings to guide its conclusions and not the other way round. In this case, the Siddiquis, who were not themselves lawyers, had provided the document to their former lawyers. It could not even be asserted there was an attempt to conceal since the defendant was a party to the settlement agreement and at all times had his own copy and could at later stages have deployed it.
This brings the approach in criminal law closer to that adopted in respect of breaches of the duty of candour in ex parte applications in civil proceedings. The duty of candour is an overarching concept that applies to ‘without notice’ applications in both criminal and civil courts (see In re Stanford International Bank Ltd [2011] Ch. 33). It is well recognised that not every material breach of the duty of candour justifies the discharge of, for example, a search order. A passage in the judgment of Sir Thomas Bingham MR (as he then was) in the case of Fitzgerald & Ors v. Williams & Ors [1996] QB 657 at p.667-668 applies equally, we would suggest, to the issue facing the District Judge in this case:
“In seeking ex parte relief an applicant must disclose to the judge any fact known to him which might affect the judge’s decision whether to grant relief or what relief to grant. It is no answer for an applicant who falls down on his duty to show that his breach of duty was committed in good faith and inadvertently, or to show that the relief would have been granted even had he complied with his duty. The courts have traditionally insisted on strict compliance with this rule, as affording essential protection to an absent defendant, and as applications for ex parte relief have multiplied so the importance of complying with this duty has grown. The law does not however require a judge to whom an application for discharge is made to grant that relief on proof that there was material which should have been but had not been disclosed to the original judge. The later judge has then to exercise his own judgment whether, in all the circumstances, the interests of justice are best served by discharging, or maintaining, or varying the original order. In making this judgment he will have regard to the importance of securing compliance with the fundamental principle, but he will have regard also to the significance in the context of the particular case of the facts which had not been disclosed when they should have been.”
In Brink’s Mat Ltd. v. Elcombe and Others [1988] 1 W.L.R. 1350 at 1357, cited to the Court in Fitzgerald v. Williams, the Court of Appeal held:
“(5) If material non-disclosure is established the court will be “astute to ensure that a plaintiff who obtains [an ex parte injunction] without full disclosure … is deprived of any advantage he may have derived by that breach of duty:” see per Donaldson L.J. in Bank Mellat v. Nikpour , at p. 91, citing Warrington L.J. in the Kensington Income Tax Commissioners’; case [1917] 1 K.B. 486 , 509.
(6) Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues which were to be decided by the judge on the application. The answer to the question whether the non-disclosure was innocent, in the sense that the fact was not known to the applicant or that its relevance was not perceived, is an important consideration but not decisive by reason of the duty on the applicant to make all proper inquiries and to give careful consideration to the case being presented.
(7) Finally, it “is not for every omission that the injunction will be automatically discharged. A locus poenitentiae may sometimes be afforded:” per Lord Denning M.R. in Bank Mellat v. Nikpour [1985] F.S.R. 87, 90. The court has a discretion, notwithstanding proof of material non-disclosure which justifies or requires the immediate discharge of the ex parte order, nevertheless to continue the order, or to make a new order on terms.
“when the whole of the facts, including that of the original non-disclosure, are before [the court, it] may well grant … a second injunction if the original non-disclosure was innocent and if an injunction could properly be granted even had the facts been disclosed:” per Glidewell L.J. in Lloyds Bowmaker Ltd. v. Britannia Arrow Holdings Plc. , ante, pp. 1343H–1344A.”
It may be ‘no answer’, as Lord Bingham said, that the breach of the duty of candour was ‘innocent’ but, as the Brinks Mat case and authorities referred to therein make clear, that fact would be relevant to whether the order obtained ex parte should be set aside; it goes to the fairness of the proceedings.
Materiality
In the Siddiqui case, the District Judge did not find (and could not reasonably have found) that the failure to disclose was an attempt to suppress the evidence. Nor did the failure to disclose undermine the fairness of the proceedings, not least because the settlement agreement was a document already in the hands of Mr. Abbasi. Accordingly, the judge’s conclusion that the failure to disclose alone was of sufficient gravity to justify setting aside the summons was legally flawed. Indeed, leading counsel for Mr. Abbasi at one point in argument conceded that that matter alone could not justify setting aside the summons, before withdrawing that concession.
The test proposed by Garnham J at [42] of the judgment in respect of the effect of a material non-disclosure is entirely consistent with the approach taken in the civil courts and summarised by Lord Bingham above.
Abuse of process
It is axiomatic that a prosecutor should have a reasonable opportunity to present her or his case at a trial, and that a court may only prevent the case being determined on its merits in exceptional circumstances, where the defendant could not fairly be tried or to protect the integrity of the court’s own processes.
There was no basis for staying the proceedings on the first basis; the failure to disclose the document could not possibly have an impact on the fairness of the eventual trial.
The High Court bore in mind that the allegations of fraud were serious and that there was an obvious public interest in having them tried. Based on the lack of a positive finding that the failure to disclose the settlement agreement was an attempt to suppress evidence, sending the defendant for trial would not offend the Court’s sense of justice and propriety and ‘a stay was a wholly disproportionate response to the failure to disclose.’
There was therefore no proper basis for the District Judge’s decision to stay the proceedings.
Case details
• Court: High Court (Queen’s Bench Division, Administrative Court)
• Judge: Popplewell LJ, Garnham J
• Date of judgment: 17 June 2021
Andrew Marshall, Jack Walsh and Fani Gamon of Edmonds Marshall McMahon acted for the Siddiquis in the High Court and instructed David Perry QC and Victoria Ailes, both of 6KBW College Hill.
