Maxwell, R (on the application of) v Secretary Of State For Trade & Industry & Ors [1999] EWHC Admin 115 (8th February, 1999)

JUDGMENT 1. THE VICE CHANCELLOR: Mr Kevin Maxwell has made an application for leave to seek judicial review of four decisions. The application for leave was made on 28th January and must be dealt with this morning. To read out the formulation in the form 86A of the four decisions that it is said should be judicially reviewed would mean very little without some reference to the background which has led to the application for judicial review. 2. The litigation with which I am concerned has arisen out of the appointment on 8th June 1992 by the Secretary of State for the Department of Trade and Industry of inspectors, appointed under ss 432 and 442 of the Companies Act 1985, to investigate the affairs of Mirror Group Newspapers (MGN) with particular regard to the flotation of MGN on 30th April 1991. They were asked also to investigate the membership of MGN for the purpose of determining who were the persons interested in the success or the failure of the flotation. 3. Section 433 of the 1985 Act refers to the inspectors' powers during the investigation. It says that inspectors appointed under s 432 may, if they think it is necessary for the purpose of their investigation, investigate also the affairs of another company which has been the subsidiary or holding company of the main company whose affairs are to be investigated. Where the company whose affairs are to be investigated is one of a group, these provisions give considerable latitude to inspectors as to the breadth of the investigation that they carry out. The two investigators appointed in the present case, Sir John Thomas and Mr Raymond Turner have, it seems, expanded the area of investigation from the affairs of MGN simply as a company on its own to the affairs of the companies associated with MGN through the interests of the late Mr Robert Maxwell. It can be easily accepted that the ambit of the investigation may become very wide indeed if it is extended in that way. 4. Having been appointed in June 1992, the inspectors set about preparing for the task that they had been instructed to carry out. They interviewed a large number of witnesses, they took written evidence from many others, and they had in mind to interview also Mr Kevin Maxwell, who was a director of MGN and who (they no doubt thought) could assist them in considering the matters on which they have had to report. 5. However, other investigations were taking place as well. In particular, the Serious Fraud Office was investigating matters in connection with the Robert Maxwell group of companies, including MGN. That investigation led to charges being preferred against Mr Kevin Maxwell and others and to extensive questioning of Mr Kevin Maxwell by the SFO. The judge entrusted with the trial of Mr Kevin Maxwell and his co-accused was Phillips J, as he then was. Questions were raised for him to consider as to the extent to which it was possible for the inspectors' inquiry to proceed while the criminal proceedings were still pending. By 1995 the inspectors were in a position to make preliminary findings and send them to some of those affected, as is the normal practice when an inquiry of this sort is being conducted. Phillips J came to the conclusion that that process ought to be put on hold until the criminal trial had run its course, in order to avoid any possible prejudice to the accused, caused either by the communication of questioning of individuals who might, I suppose, have been witnesses, or by the sort of publicity that might arise. So the inspectors' inquiry was put on hold from about 1995. 6. That, from the inspectors' point of view, was unavoidable but unfortunate, because their inquiry was fairly far advanced. At the request of the Secretary of State, they had produced an Information Memorandum setting out their findings (provisional as they had to be in the state of the inquiry at the time) and expressing criticisms (for the same reason provisional) of various individuals who featured in the story. The Information Memorandum is a substantial document. Copies of it were supplied to Mr Maxwell and the other accused for the purposes of the criminal trial under procedures applicable to discovery in criminal proceedings. But it is the law that documents supplied in that way cannot be used by those to whom they are supplied for any purpose other than those of the proceedings in which they have been supplied. 7. On 26th January 1996, after a lengthy trial, Mr Kevin Maxwell was acquitted on all counts by the jury. The trial had taken, I think, some six months and Mr Maxwell had given evidence in the witness box for 21 court days or thereabouts. The dismissal of all charges was not the end of the criminal proceedings against him. The SFO promptly began a second trial, on charges also involving allegations of dishonesty and also relating to the roles played by the various accused in the affairs of the Maxwell companies. An application was made for this second trial to be stayed on the ground that in all the circumstances its prosecution would be an abuse of the process of the court. The application was based on the view, held by Mr Maxwell, that it was unfair and oppressive to subject him to a second trial arising out of the same story in respect of which the charges of dishonest conduct had been rejected by the jury in the first trial. Buckley J, who heard the application, agreed and on 9th September 1996 upheld the submission that it was unfair and oppressive to proceed with the second trial. The second trial thus came to an end. 8. The stage appeared to be set (or perhaps cleared) for the inspectors to conclude the inquiry that had been on hold for over a year under the directions given by Phillips J. They wrote on 23rd September, shortly after the ruling by Buckley J, to the solicitors, Peters & Peters, who had been acting for Mr Kevin Maxwell in the criminal proceedings and asked for dates to be fixed for them to interview him. Mr Maxwell's legal representation in the criminal proceedings had been paid for by legal aid. Shortly after his father's death and the collapse of the Maxwell empire, a substantial civil judgment had been obtained against him, on the basis of which he had been made bankrupt. Mr Maxwell obtained his discharge from bankruptcy in 1995, but since then has had to set about earning his living, supporting his family, as best he can, and he concluded in September 1996 that he could not afford to fund legal representation himself. But legal aid is not available for the purpose of assisting those involved in inquiries under s 432 or related sections of the Companies Act. 9. So Mr Maxwell had to act for himself in his dealings with the inspectors. On 30th October 1996 he requested (I think the request was directed first of all to the inspectors and later to the DTI) funding for the legal expenses that he would incur if he obtained legal representation to assist him in dealing with questions put to him by the inspectors in the course of the inquiry. The inspectors had no funds of their own with which to fund the legal representation that he sought and referred him to the DTI. The DTI refused to agree to contribute to his legal expenses. There was correspondence over some considerable period running from the end of 1996 into the summer of 1997. In the course of that correspondence Mr Kevin Maxwell repeatedly renewed his application for funding to enable him to obtain legal representation. The DTI consistently refused. 10. The inspectors were advised by leading counsel that it would assist the inquiry's progress if Mr Maxwell had legal representation, and also that it would be only fair, given the position in which he found himself, that he should have legal representation. That was advice with which the inspectors agreed, and they made their view known to the DTI. But the DTI remained of the opinion that public funds for Mr Maxwell's legal representation should not be provided. 11. The correspondence between Mr Kevin Maxwell and the inspectors continued, with the inspectors endeavouring to adjust their procedure so as to take account of the undoubted disadvantage to Mr Maxwell of not having legal representation to assist him in dealing with questions they wanted to ask. There were various procedural points highlighted from time to time in the course of this correspondence. I need not go into them now, although I may have to later, but suffice it for the moment to say that a procedure was eventually devised by the inspectors that they regarded as fair to Mr Maxwell in all the circumstances, although it did not involve his having the advantage of legal representation. 12. Eventually, taking the story ahead to August 1998, the inspectors put to Mr Maxwell a number of questions, questions that they had in fact put to him on previous occasions. They gave him time to consider them, but he declined to answer on the ground that without legal representation it was oppressive and unreasonable to require him to answer. There were other reasons put forward in justification of his refusal to answer, but I need not deal with those at the moment. Suffice it to say that Mr Maxwell declined to answer the inspectors' questions. The inspectors' response to that refusal was to refer the refusal to the court under s 436 of the Act. Under that section, if a person has refused to answer questions put to him by inspectors for the purposes of their investigation, they can certify that refusal to the court. The court then has to enquire into the case and, if it concludes that no sufficient reason for the refusal has been put forward, can then treat the refusal as a contempt of court. 13. Directions for the purpose of the hearing of the inspectors' application under s 436 were obtained from Neuberger J in December, and further directions from me a week or two ago when an issue of discovery arose. One of the issues raised when the matter came before me in January was whether an adjournment of the hearing of the inspectors' application would be necessary, in order to enable Mr Maxwell to seek judicial review of the refusal by the DTI to fund his legal representation. I expressed the opinion on that occasion that if he wanted to apply for judicial review there was still time for him to do so, or, at any rate, to make an application for leave, before the hearing of the inspectors' application, which had already been fixed for 8th February, that is to say today. So Mr Maxwell made an application for leave on 28th January, as I have said. 14. The first matter which Mr Maxwell seeks leave to have judicially reviewed is (and I quote from the application): "The decision of the Secretary of State for Trade and Industry to refuse to make any contribution towards the cost of my receiving legal advice and assistance in respect with my compulsory interviewing by Inspectors appointed by him". 15. The second matter in respect of which leave is sought is: "The refusal of the Secretary of State to make a direction to the Inspectors pursuant to Section 437(1B) of the Companies Act." 16. That refusal derives from a request made by Mr Maxwell in a letter dated 4th June 1997 to the inspectors. The inspectors referred the request to the DTI. The request is expressed in the letter as follows: "I now make the following further and personal application to the Secretary of State (a) to direct the inspectors to take no further steps in the investigation in accordance with the provisions of s 437(1B) of the Companies Act or to take only such further steps as are specified in the directions to the inspectors ie for the inspectors to compile their report using the evidence which I have already given to the various persons in authority and/or at my trial". 17. There is then a (b) which refers to the DTI's refusal to fund legal representation. The Secretary of State, in a letter of 17th December 1997, refused to give any such direction as had been requested. 18. The anxiety lying behind Mr Maxwell's requests that these directions be given was, mainly, that, from the time of the collapse of his father's companies, following his father's death, until the end of the first criminal trial, he had been on many occasions subjected to intensive questioning on his role in the Maxwell companies' affairs and about the history of the companies and their fate. Questions have been put to him by administrators or liquidators (sometimes one, sometimes the other). There are four sets of administrators or liquidators who have been appointed to one or other of the Maxwell companies. They have all interrogated him. So have the trustees in bankruptcy who were appointed following his bankruptcy. He has been interrogated by the SFO prior to the criminal trial, and, of course, was questioned during the criminal trial itself. This constitutes a massive volume of questions and answers on the affairs of the companies, including MGN, that has already been compiled. Mr Maxwell's point is that it should be regarded as unnecessary for the inspectors to put further questions to him about the affairs of the companies, and that the Secretary of State should direct the inspectors to desist. Alternatively, he wants the Secretary of State to give directions restricting the extent to which the inspectors can ask him questions which repeat or cover the same ground as questions already asked in one or other of the fora to which I have referred. 19. The third and fourth matters in respect of which Mr Maxwell wants to apply for judicial review are expressed in the application form as follows: "3. The decision of Inspectors appointed by the Secretary of State to require that I attend before them and answer their questions notwithstanding my inability to pay for legal representation and assistance. 4. The requirement of the Inspectors that I submit to confidentiality." 20. I have not mentioned the confidentiality matter until this moment. The inspectors want to put questions to Mr Maxwell based on particular passages in the Information Memorandum that, in 1995, they prepared at the request of the Secretary of State. The contents of the Memorandum are, the inspectors say, confidential, because, first, they are provisional only, secondly, they contain information from others that is confidential, and, thirdly, they contain criticisms of others that ought not to be made public while they remain provisional. So, in asking Mr Maxwell to answer questions based on the Information Memorandum, the inspectors asked him to give certain undertakings as to confidentiality. These undertakings Mr Maxwell has been disinclined to give, and one of the matters of complaint which have been certified by the inspectors to the court relates to his refusal to give the confidentiality undertakings that they have sought. 21. The first and third of the matters in respect of which judicial review is sought relate to the issue of funding for legal representation. As to that, it is I think quite easy to accept that the efficiency of the inquiry would be assisted if Mr Maxwell were legally represented. It goes without saying that it would be an advantage to him to be legally represented. If he were legally represented, he could have sitting next to him a lawyer who could advise him whether the questions being asked were questions which he could properly be asked to answer and whether there were any particular matters he should refer to in answering them. But whether the decision of the Secretary of the State to decline to make any contribution towards the costs of that legal representation can be regarded as tainted by perversity or irrationality or any other vitiating feature is another matter. 22. Although it is for the inspectors to decide on their procedure in the inquiry and they are independent in their conduct of it, the inquiry, in some sense at least, is the Secretary of State's inquiry. It is the Secretary of State who launches it by appointing of the inspectors. It is he who will have to consider what, if any, action to take on the content of the report eventually made to him by the inspectors. It is he who has to pay for the inquiry. He has a plain and close interest in the efficient functioning of the inquiry. But he also has other responsibilities which he must fund out of his Department's budget. As I suppose all Minsters must do, he must strike a balance between the cost of any particular course of action which, if embarked upon, would improve in some respect the efficiency of his department, and the availability of funds and the other demands on funds when considering whether to authorise the expenditure in question. 23. A recent affidavit which I saw this morning, sworn by Mr Burns of the DTI, drew attention to the number and the variety of inquiries broadly under the aegis of the DTI, all of investigatory or inquisitorial nature, at which individuals are required to appear and be questioned about whatever is the subject of the inquiry. In all these inquiries the interests of those being questioned may often be involved; they may have a very real interest in their version of events being accepted by the inspectors, and a very real fear that criticisms of them in the report of the inspectors will lead to consequences adverse to their interests. It is the general practice of the Department not to fund legal representation for witnesses who are called to assist inquiries. The correspondence and the evidence I have seen make it clear that the general practice not to provide funding for legal representation for witnesses is not an invariable practice. One letter referred to "exceptional circumstances which might lead to a different decision being taken in a particular case". The correspondent went on to say that the Secretary of State had concluded, in effect, that Mr Maxwell's case was not one which should be regarded as exceptional so as to justify a departure from the general rule in regard to funding of legal representation for witnesses. 24. For judicial review to succeed, that decision would have to be held to be perverse or irrational. The content of the correspondence and the evidence before me does not indicate any aspect, any relevant circumstance bearing upon the decision, that the Secretary of State has failed to take into account. Mr Maxwell's complaint is that, having had everything relevant put before him, he has come to a decision not to fund Mr Maxwell's legal representation. So if there is to be a judicial review it must, in my opinion, be on the footing that that decision is one of Wednesbury unreasonableness, of perversity, of irrationality. His application for leave has to surmount the hurdle of showing a case where it is at least arguable that that is the position. 25. In my opinion, that hurdle is not surmounted in the present case. Of particular importance is the relationship between the lack of legal representation on the one hand and the complaint that it is unfair or unreasonable for Mr Maxwell to be required to submit to questioning by the inspectors on the other hand. That is a matter on which it is not for me to express a view now. I have not heard the full submissions on it; I will have to express an opinion on it later when the main application is dealt with. But let me suppose that the right conclusion is that there is nothing unfair and unreasonable in the inspectors asking the questions that they have asked of Mr Maxwell, notwithstanding his lack of legal representation. If that is a conclusion which can properly be arrived at on the hearing of the substantive application, it is, in my opinion, impossible to say that the Secretary of State's decision not to provide legal representation is perverse or irrational. In order to categorise the decision as perverse or irrational it would be necessary, in my opinion, at least to conclude that without the legal representation the inspectors, in seeking answers to their questions, were acting unfairly and unreasonably. But if I conclude that that is so, it seems to me that it would follow that Mr Maxwell would be relieved from his obligation to answer. In that case, there would be prejudice to the progress of the inquiry. But that possibility is something that it seems to me quite plain that the Secretary of State has faced. The point has been put plainly enough in the correspondence. So I come back to a point that I have mentioned already. A s 432 inquiry is in a real sense the Secretary of State's inquiry, launched by the Secretary of State and reporting to the Secretary of State. If the result of a funding decision taken by the Secretary of State is that a particular witness cannot be required to answer questions because it would be unfair and unreasonable to require him to do so, then so be it. It is not necessary, in my opinion, in order to protect Mr Maxwell to have a judicial review of the decision to refuse funding. 26. Indeed, what would a judicial review produce in a case such as the present? It could only affect the present situation if the court ordered the Secretary of State to fund the legal representation. But how could the court do that? The court does not know what other demands on the funds of the Department there are, or what budgetary restrictions there are. This is a matter for the Secretary of State. For these reasons it seems to me that this is not a case where leave to apply for judicial review of the Secretary of State's refusal to fund legal representation of Mr Maxwell ought to be granted. A fortiori the decision of the inspectors to require him to attend before them and answer their questions is not, in my view, judicially reviewable. If Mr Maxwell is right in the view he takes, then the inspectors' application under s 436 will founder; but that has yet to be decided. 27. So much for grounds 1 and 3. Ground 2 related, it will be recalled, to the Secretary of State's refusal to make a direction pursuant to s 437(1B). I can deal with that simply by saying that that section does not, in my judgment, apply to the facts of the present case. The section reads: "If it appears to the Secretary of State that matters have come to light in the course of the Secretary's investigations as to whether a criminal offence has been committed, and those matters have been referred to the appropriate prosecuting authority, he may direct the inspectors etc". 28. The condition precedent to the power to give a direction under this provision is that matters have come to light in the course of the inspectors' investigation which suggest that a criminal offence has been committed, and that those matters have been referred to the appropriate prosecuting authority. That has not happened in the present case. The prosecution of Mr Maxwell and the others did not result from matters which came to light in the course of the inspectors' investigation: they came to light from other sources. The matters which have come to light in the course of the inspectors' investigation have not been referred to any prosecuting authority. The provision simply does not apply to the present case. I would refuse leave under that limb as well. 29. Finally, the requirement of the inspectors that Mr Maxwell submit to a confidentiality regime is, fair and square, one of the matters that I have to consider and deal with on the application made by the inspectors under s 436. So in the result I refuse leave to move for judicial review. 30. MR HESLOP: My Lord, is your Lordship going to deal with costs now, by which I mean two o'clock, or in due course? 31. LORD NEILL: I was going to suggest in due course. 32. THE VICE CHANCELLOR: I am inclined to think in due course too. 33. LORD NEILL: When we have finished with the other matters. © 1999 Crown Copyright BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII