2000-(099)-COMPCAS -0434 -CD Companies Act Judgements



February 8, 9, 10; March 11, 1999.


Reprinted by kind permission of the Incorporated Council of Law Reporting for England and Wales, London.


([1999] 3 W.L.R. 583)

The facts are stated in the judgment.

Lord Neill of Bladen Q.C. and Jack Beatson Q.C. and Nicholas Peacock for the inspectors.

The respondent in person.

Philip Heslop Q.C. and Philip Sales for the Secretary of State.

Cur. adv. vult.

11 March. SIR RICHARD SCOTT V. – C. handed down the following judgment.

The problem Part XIV of the Companies Act 1985 enables the Secretary of State for Trade and Industry to appoint inspectors to investigate the affairs of a company. Section 432 contains a power commonly used for that purpose. There are other empowering sections as well. Section 434 (1) and (2) places an obligation on, among others, directors of the company (including ex-directors) to attend before the inspectors when requested to do so and “to give the inspectors all assistance in connection with the investigation which they are reasonably able to give.”

Section 436 provides a remedy and sanction in the event that a person fails to comply with the obligations imposed on him by section 434. Sub-section (1) enables the inspectors to certify in writing to the court the fact of the person’s failure or failures in question. Subsection (3) empowers the court to “inquire into the case” and, after doing so, to “punish the offender in like manner as if he had been guilty of contempt of the court.” This is a potentially heavy sanction.

In the case now before me inspectors have referred to the court the refusal of an ex-director to answer their questions and his refusal to enter into a confidentiality undertaking not to disclose information which, in the course of their questioning, they put to him. The ex-director’s excuse and explanation for his refusal to answer the questions is that the particular circumstances of the case have rendered the questioning of him by the inspectors unfair and oppressive. As to the confidentiality undertaking, he says that the inspectors have no right to require him to give it. In these circumstances, the ex-director contends, his refusal to cooperate with the inspectors is justified and should not be visited by any sanction. I must decide whether that is correct. The facts

The ex-director is Mr. Kelvin Maxwell. The company of which inspectors were appointed is Mirror Group Newspapers Plc. (“MGN”). The story, much of which is well known, starts with the death of his father, Mr. Robert Maxwell, on 5 November 1991. Mr. Maxwell had been a tycoon much in the public eye. He had controlled MGN, a public company, as well as a number of private companies. Shortly after his death it was discovered that he, or his private companies, had been the recipients of very substantial loans from banks and other finance houses and appeared to have given, as security for the repayment of these loans, assets forming part of the MGN pension fund.

These discoveries, and the absence of assets to repay the loans, produced, on the one hand, a public furore and, on the other hand, a clutch of administration and winding up orders in respect of the private companies that Mr. Robert Maxwell had controlled. They led, also, on 8 June 1992 to the Secretary of State appointing inspectors of MGN. The appointment was made under

section 432 and section 442 of the Act of 1985. The inspectors were Mr. John Thomas Q.C. (now Sir John Thomas and a High Court judge) and Mr. Raymond Turner. They were asked to investigate the affairs of MGN (and to have particular regard to the flotation of MGN which had taken place in April 1991) and also to investigate the membership of MGN for the purpose of determining those persons interested in its success or failure.

The inspectors set about their task, interviewing witnesses, obtaining written evidence from, others and obtaining information and documents from a number of banks and financial institutions. The ex-directors of MGN whom the inspectors desired to interview included Mr. Kelvin Maxwell, his brother, Mr. Ian Maxwell, and Mr. Larry Trachtenberg. As to Mr. Kelvin Maxwell, the inspectors’ belief is that “at all times material to the consideration of [MGN] by the inspectors he played a leading role, particularly in the flotation of the company :” paragraph 15 of the affidavit of Mr. Glyn Williams, one of the joint secretaries to the inspectors. But the questioning of these three directors was, for several years, not possible. The reason is that criminal proceedings relating to the Maxwell group of companies were on foot against them.

Mr. Kelvin Maxwell was arrested on 18 June 1992 and charged with a number of offences. His co-defendants included, among others, Mr. Ian Maxwell and Mr. Trachtenberg. The events covered by or relevant to the criminal charges overlapped to a considerable extent the events that the inspectors were appointed to investigate. The decision was taken by the inspectors to hold off questioning the defendants until the criminal proceedings against them had come to a conclusion. Nevertheless by May 1995 the inspectors had interviewed 171 witnesses, had obtained written evidence from 105 other persons and had obtained information from 44 banks and financial institutions.

In March 1993 the Secretary of State asked the inspectors to produce a memorandum setting out the facts that they had so far found. This request was made under section 437 (1A) of the Act. In May 1995 the inspectors submitted to the Secretary of State a factual narrative some 270 pages in length. This narrative was accompanied by a separate volume consisting of 17 appendices containing details of matters of particular interest and concern. The narrative became known as the information memorandum. Its contents were, in the absence for the time being of any evidence from Mr. Kelvin Maxwell, Mr. Ian Maxwell or Mr. Trachtenberg, necessarily incomplete and provisional.

The inspectors’ forbearance from questioning Mr. Kelvin Maxwell (I need not concern myself with his two co-defendants) does not mean that he was not questioned at all. In his affidavit sworn on 6 December 1998 he has recorded that, beginning in December 1991 he has been interrogated under sections 235 and 236 of the Insolvency Act 1986 by :

(i) Arthur Anderson, on behalf of the administrators of the Robert Maxwell group of companies;

(ii) Price Waterhouse, on behalf of the administrators of Maxwell Communications Corporation;

(iii) Deloitte & Touche, on behalf of the liquidators of First Tokyo Trust; and

(iv) Robson Rhodes, on behalf of the liquidators of Bishopsgate Investment Management. His questioning by these office-holders took a total of 28 days. There are transcripts of the interrogations. In addition, after his arrest on 18 June 1992 he was interrogated under section 2 of the Criminal Justice Act 1987 by officers of the Serious Fraud Office (“SFO”). There is, of course, a record of this interrogation.

On 3 September 1992 following civil judgment for a very substantial sum being obtained against him, Mr. Maxwell was made bankrupt. He then had to undergo interrogation by his trustees in bankruptcy.

On 31 May 1995 his, and his co-defendant’s trial at the Old Bailey began. It lasted 131 days. Mr. Maxwell gave evidence and was in the witness box for 21 days. The 21 days, on his estimation, brought the cumulative duration of the interrogations he had undergone to 61 days. This, on any view, is a massive total.

On 19 January 1996 Mr. Maxwell and his co-defendants were acquitted of all charges. That was not, however, the end of the criminal proceedings against him. The SFO and the Attorney-General took the decision to proceed with further charges against him and Mr. Trachtenberg. An application was made on his behalf to have all proceedings on the further charges stayed on the ground that further proceedings would amount to an abuse of process. Buckley J. agreed. He said :

“I have reached a very clear view that these proceedings serve no further public interest. To pursue them in the face of the jury’s unanimous verdict in the first trial would test the public’s confidence and the integrity of the system … to launch another long trial at enormous expense would, in my judgment, run a grave risk of suggesting to the public that the authorities did not accept the verdict of a jury.”

These remarks of Buckley J. must be kept in mind. It is one of Mr. Kelvin Maxwell’s concerns that the questioning of him by the inspectors on matters in respect of which he has been acquitted by the jury of any dishonesty may tend to undermine that acquittal.

Buckley J.’s judgment brought to an end the criminal proceedings. So gm the inspectors, in order to complete their report to the Secretary of State, tried to make arrangements to interview and question the three ex-directors. Mr. Ian Maxwell was interviewed on 2 December 1996 and Mr. Trachtenberg on 10 and 11 March 1997. Mr. Ian Maxwell was accompanied by legal representatives; Mr. Trachtenberg was not. He, Mr. Trachtenberg, made, at the commencement of his interview, an objection based on the lack of legal representation. Sir John Thomas responded by saying to him :

“we are conscious very much of the fact that you are without legal representation and are in a special situation in that you have been a defendant in long and protracted criminal proceedings. Our questions, therefore, will solely be of a factual nature, and please feel absolutely free at any stage to raise with me any view that you might have about a question or area. Please feel free not to answer any questions if you think it touches on any area you prefer not to go into.”

On this basis the interview proceeded. There is nothing to suggest that it did not proceed satisfactorily both to the inspectors and to Mr. Trachtenberg.

All that remained for the inspectors to do was to interview and question Mr. Kelvin Maxwell and then to complete their report.

On 23 September 1996 the inspectors wrote to the solicitors, Peters & Peters, who had acted for Mr. Maxwell in the criminal proceedings. In those proceedings Mr. Maxwell had had the advantage of legal aid. But legal aid is not available to assist individuals involved in a Companies Act inquiry by inspectors. Mr. Maxwell was not able, or not willing, himself to fund his legal representation, so he became, for the purposes of the inquiry, a person without legal representation. But he regarded legal representation for the purposes of the inquiry as essential if his interests were to be properly protected. So, on 30 October 1996 he made a request to the inspectors to fund his legal representation. The inspectors have no funds at their disposal for that sort of purpose and advised him to direct his request to the Department of Trade and Industry (“DTI”). Mr.Maxwell did so, but the DTI turned him down. The first DTI refusal was in November 1996 but the issue was kept alive by repeated insistence from Mr. Maxwell that without legal representation he could not be expected to deal with the inspectors’ questions.

In March 1997 the DTI again refused to provide funds for Mr. Maxwell to be legally represented. Mr. Maxwell has continued to insist that unless he has legal representatives to advise him it is unfair to require him to submit to questioning. His main point is that he is at risk, when questioned on topics on which he has previously been questioned, of giving, through inadvertence or failure of recollection, answers that are inconsistent with answers he has previously given. He fears that inconsistent answers may be used against him in subsequent civil or criminal proceedings.

This has become an issue for me to determine. Is it unfair to require Mr. Maxwell to answer the inspectors’ questions without the benefit of legal representation ?

Let me, however, continue the narrative. By a letter to Mr. Maxwell dated 29 May 1997 the inspectors made a formal request to interview him and said that they had set aside Monday, 23 June to Wednesday, 25 June for that purpose. They warned that “it may be necessary for the interview to continue on additional days if all matters are not dealt with in that time.” They then referred to the information memorandum. A copy of this, in accordance with the disclosure rules applicable to criminal proceedings, had been supplied to Mr. Maxwell for the purpose of those proceedings. Use by Mr. Maxwell of the copy supplied to him otherwise than for the purpose of the criminal proceedings would not have been permissible. I am not clear whether by May 1997 Mr. Maxwell still retained that copy. However, the letter of 29 May 1997 continued :

“In order to assist you, the inspectors will provide a further copy of the information memorandum upon receipt of an appropriate confidentiality undertaking. A copy of the confidentiality under-taking required is enclosed and I should be grateful if you would kindly complete this and return it to me straightaway. To assist you further in preparing for the interview, I enclose a schedule setting out the topics on which the inspectors wish to obtain your assistance. This schedule is cross-referenced to the relevant paragraphs in the information memorandum . . .”

The letter asked for “confirmation by return” that Mr. Maxwell would make himself available for interview on the dates indicated.

Two important points arise out of this letter. First, there is the confidentiality undertaking. The undertaking annexed to the letter was :

“I acknowledge that all matters relating to your investigation are strictly confidential and that such matters include (but are not limited to)

(a) all documents provided by the inspectors,

(b) all memoranda provided by the inspectors,

(c) all transcripts of evidence before the inspectors and

(d) all information contained in or derived from such documents, memoranda, or transcripts not otherwise in my possession. I undertake that except with the prior written consent of the inspectors, I shall not disclose any such matters, nor refer to them in any communication (whether written or oral), to anyone else except those who have provided similar confidentiality undertakings.”

I understand from Mr. Heslop, for the Secretary of State, that it is a common practice of inspectors in all Companies Act inquiries to demand of the witnesses who appear before them signed confidentiality undertakings. I also understand that, save for the present case, there is no record of any witness having refused to sign.

Second, there is the schedule setting out the topics on which the inspectors intended to question Mr. Maxwell. The schedule runs to nine pages. It lists topics under 14 headings. There are, in total, 131 topics. Some of these have subdivisions. They all relate to events or transactions which took place before November 1991. The scale of the questioning that appears to be envisaged is awesome. Mr. Maxwell took me through the topics in order to indicate those on which he had already been questioned either in the section 236 interrogations or by the SFO or at the trial. He indicated some 85 or 86 topics.

Mr. Maxwell responded by a letter of 4 June 1997. He said that he was prepared to give the inspectors “all assistance in connection with the investigation which I am reasonably able to give.” He asked for a list of the actual questions the inspectors proposed to ask. He said that he would be “severely hampered” by having no legal representation. He said that to question him again on subjects on which he had already been questioned would constitute “obvious and unacceptable oppression” and that many of the listed topics fell into that category. He declined to sign the confidentially undertaking, pointing out that, in the absence of legal representation, he might need to consult others before giving answers to questions put to him. He suggested that the inspectors use the evidence he had already given in the various interrogations that he had undergone. In a response dated 11 June 1997 the inspectors repeated their requirement that Mr. Maxwell sign the confidentiality undertaking.

There followed some months of correspondence, with Mr. Maxwell repeating his contentions about the unfair and oppressive nature of the proposed questioning and remaining adamant in his refusal to sign the confidentiality undertaking. On none of these issues did he receive responses from the inspectors that he regarded as satisfactory.

I can, I think, jump forward to a letter dated 5, February 1998 from the inspectors to Mr. Maxwell. In this letter the inspectors fixed 12 March 1998 as a firm date on which they required Mr. Maxwell to attend before them for the purpose of being questioned. They warned him that, if he did not attend, they would use their powers under section 436. They enclosed documents relevant to the topics on which they proposed to ask questions, but stated that the documents were sent to him “on the basis of confidentiality.” The letter explained the confidentiality :

“The confidential nature of the investigation does not prevent you from seeking legal or other advice concerning the investigation and your role in it, or obtaining documents you may need from others, or seeking information from others, provided you do not disclose confidential information relating to the inspection. The confidential nature does, however, prevent you from disclosing any matters relating to the investigation (or from referring to any such matters in any communication, whether written or oral) to any third party other than a legal or other adviser. A legal or other adviser would of course also be subject to the same obligations of confidentiality.”

Mr. Maxwell’s response on 10 February 1998 rejected the confidentiality restrictions for which the inspectors were stipulating. He added :

“I fail to see how there can be any grounds for suggesting that failure to consider the papers in files delivered to me on terms of confidentiality which the inspectors seek to impose on me unilaterally and without any power so to do … can constitute a failure to give the inspectors all the assistance to which they are entitled.”

The inspectors’ next letter, dated 17 February 1998 confirmed the 12 March interview date and warned that if Mr. Maxwell did not attend “prepared to be interviewed” they would exercise their section 436 powers. The letter went on, however, to place a limit on the topics on which Mr. Maxwell would, on 12 March at least, be questioned. It said :

“The central issue of this inquiry and the first two topics the inspectors wish to deal with focus on the background to aspects of the flotation of MGN. The previous interviews of you that the inspectors have seen do not focus on these key issues. Once this issue has been completed it may, depending on what emerges, be possible for the inspectors to conduct the rest of the matters they wish to raise with you more briefly.”

The inspectors still declined, however, to provide Mr. Maxwell with a list of the questions they proposed to ask. It is convenient to note that in the schedule supplied with the letter of 29 May 1997 there are listed, under the heading “Flotation of MGN,” some 40 topics, of which 18 were identified by Mr. Maxwell as being topics on which he had already been questioned. Many other of the headings, too, might well cover topics that could be regarded as “background to flotation.” So the particular issue identified by the inspectors as that to which their questions on 12 March would be directed still presented Mr. Maxwell with a formidable range of documents and material he would need to review in order to prepare himself for the questions. But the confidentiality problem still remained. Copies of the relevant documents were sent by the inspectors to Mr.Maxwell on terms that he submit to the confidentiality regime that they had formulated. He took the view, and reasonably took the view, that, if he accepted the documents and read them, he would be taken to be accepting the confidentiality regime. He was not prepared to accept that regime; so he refused to accept the documents. He was, therefore, unable properly to prepare himself for the interview.

In a letter to the inspectors of 3 March 1998 Mr. Maxwell listed seven matters of complaint about the procedures the inspectors were adopting for the purposes of interviewing him.

(1) He complained that their requirement that he prepare himself for the interview by perusing the bundle of documents that had been sent to him was “an unlawful demand by the inspectors for [him] to perform forced or compulsive labour under menace of penalty.” He referred to article 4(2) of the European Convention for the Protection of Human Rights and Fundamental Freedoms (1953) (Cmd. 8969) and to the length of time he would have to devote to the task.

(2) He repeated his contention that the inspectors had no right to insist that he submit himself to their confidentiality regime. He objected to having to give the inspectors prior notice of the individuals whom he might wish to approach for assistance.

(3) He categorised as “unfair and oppressive” the inspectors’ refusal to provide him with a list of questions in advance of the interview.

(4) He complained of the inspectors’ “unfair refusal” to confirm that they would not question him on matters already covered in his previous interrogations.

(5) He asked for assurances about the use to which his answers to the inspectors’ questions might be put. In particular, he wanted to know if his evidence would be made available to any regulatory or prosecuting authority.

(6) He made a point about the need for the inspectors to be independent of the judiciary.

(7) And, finally, he repeated his point about his lack of legal representation. He said :

“I believe it is manifestly unfair on me not to have access to legal representation for the inspection in the light of statements made both by the inspectors and the DTI that expressly indicate I may face proceedings with legal sanctions arising from the inspection.”

The inspectors made no concessions on these points. They did, however, say in a letter dated 6 March that :

“the inspectors will raise no objection to you providing an answer subject to the possibility of later correction or, indeed, providing an answer which you subsequently amend in toto . . . you will be perfectly free (without any adverse comment or inference being made) to amend or alter any of your evidence on [the] transcript in the light of subsequent reflection on your part.”

Mr. Maxwell had sent the DTI a copy of his letter of 3 March. The DTI responded on 9 March repeating its refusal to fund legal representation for him.

12 March 1998 interview

On 12 March 1998 Mr. Maxwell attended before the inspectors Sir John made some opening remarks which included remarks about confidentiality. On that topic he said :

“What occurs here today is, and must remain, confidential, including the recordings made of this interview. The confidentiality also applies to the transcript when you receive it. It must not be imparted to anyone other than any legal adviser you may in due course choose to employ …”

Sir John went on to make clear that it was open to the inspectors to use for the purposes of the inquiry any evidence Mr. Maxwell might give. He also rehearsed the procedure that the inspectors would use. He told Mr. Maxwell that documents relevant to questions the inspectors wanted to ask had been prepared in a new bundle to which Mr. Maxwell could refer. And he added :

“if you wish to seek assistance from other persons to enable you to answer questions or clarify any matters, please let us know and we will defer an answer until you have had that opportunity. If you wish to impart to that person any confidential information then we will wish to ensure that confidentiality is respected by him. Can I just emphasise that when we go through these matters do please feel that you are under no constraint to give us an answer now, and feel absolutely free to amend your transcript in any way you like at any subsequent stage. That is what we propose to do today.”

Mr. Maxwell then read a prepared statement repeating, in summary terms, points he had made in his letter of 3 March and concluding by saying :

“having given the matter serious consideration I take the view that the proper course of action is to decline to answer any questions at this stage of the proceedings and to invite the inspectors to refer my complaints to the Companies Court under the provisions of section 436 (2) of the Companies Act 1985 in order that the Companies Court can determine the reasonableness of the conduct of the inspectors and the inspection process in my particular case.”

The inspectors did not immediately take up that invitation but told Mr. Maxwell that they proposed to give him time to reflect on the matter and to study the transcript of what Sir John Thomas had said. On that footing the interview was, after further discussion to which I need not refer, brought to an end.

The transcript of the interview was sent to Mr. Maxwell and, on 16 March, he wrote to the inspectors taking up an offer made to him by Sir John Thomas on 12 March to go through some of the proposed questions with him and to show him some of the relevant documents as, so to speak, a dummy run. The intended purpose of the dummy run was to give Mr. Maxwell a practical understanding of the procedures the inspectors proposed to employ.

The 8 April 1998 dummy run 8 April was fixed for the dummy run. Mr. Maxwell attended before the inspectors, was referred to paragraphs of the information memorandum, and was told that the inspectors wanted to ask him, first, about “The role of Mr. Stoney and the finance director” of MGN and, secondly, about arrangements prior to the flotation “about a treasury for MGN.” He was referred to a number of documents relating to the two topics and given an indication of the type of questions arising out of those documents that the inspectors wanted to ask him. This process took about an hour. It was arranged that Mr. Max-well would be given the opportunity to study the transcript and return a few days later to the inspectors and tell them whether or not he was prepared to answer their questions.

On 21 April, having received and studied the transcript of the dummy run on 8 April, Mr. Maxwell wrote a careful letter to the inspectors giving his views as to “whether the procedures now proposed to be adopted by the inspectors satisfy my natural rights and desire not to suffer unfairness or oppression in the inspection.”

He made a number of points.

(1) He referred to his lack of legal representation. He expressed the belief, first, that the inspectors’ selection of relevant documents had been “unintentionally selective and . . . unlikely to constitute by any means the whole of the relevant documentation,” and, secondly, that in view of the possibility of further proceedings, civil or criminal, based on his answers being brought against him it was ‘manifestly unfair” for him to have to deal with the inspectors’ questions without legal representation.

(2) He acknowledged that the inspectors’ proposed procedures met his request for advance information about the questions they proposed to ask, but pointed out that he would need a considerable period of time in order to prepare himself to give a considered answer to the questions. He asked again for an assurance that the inspectors would not ask questions on matters on which he had already been questioned in other compulsory interrogations.

(3) As to confidentially, he asked the inspectors to draft a document setting out the undertaking they now required him to give and the mechanism they had in mind whereby he could consult others about material covered by the undertaking.

(4) He renewed his request for funding from the DTI for legal representation. Mr. Maxwell asked for a copy of his letter to be sent to the Secretary of State.

The inspector’s response, in a letter dated 24 April, was, first, to assure Mr. Maxwell that “they would give serious and fair consideration to any submission by you that a particular question or questions unnecessarily duplicate a matter that has been adequately covered in the interviews by others” and, secondly, to enclose a revised form of confidentiality undertaking to be signed by Mr. Maxwell.

This revised form of confidentiality undertaking is important. It starts with an acknowledgment that (a) the information memorandum and its contents and (b) the documents provided by the inspectors to Mr. Maxwell and their contents were confidential. It then, subject to two conditions, allows Mr. Maxwell to disclose the material to persons from whom he reasonably considers he requires assistance in order to prepare to answer the inspectors’ questions. The two conditions are, first, that within 48 hours after disclosing the material he notify the inspectors in writing of the identity of the person to whom the disclosure has been made and of the nature and extent of the disclosure, and, second, that within the same 48 hours he deliver to the inspectors a confidentiality undertaking signed by that person. Finally, the undertaking is expressed to bar Mr. Maxwell, except with the prior written consent of the inspectors, from disclosing any of the material to anyone else except those who have already given confidentiality undertakings to the inspectors.

Mr. Maxwell did not give the inspectors a substantive answer to their 24 April letter until 24 June. In the meantime he received a letter dated 15 May from the DTI responding to his letter of 21 April. The DTI told him that the Secretary of State was not in a position to give assurances that civil or criminal proceedings would not be based on answers he gave to the inspectors’ questions. In relation to civil proceedings, the letter said that consideration would be given to whether further action should be taken in the light of the inspectors’s report. The letter presumably had disqualification proceedings under the Company Directors Disqualification Act 1986 in mind. As to criminal proceedings, the letter said that the acquittal and the ruling and reasoning of Buckley J. would be taken fully into account.

Mr. Maxwell’s letter to the inspectors of 24 June 1998 expressed the view that in the circumstances he would suffer unfairness and oppression if their questioning of him were to proceed. He said that he would attend for interview but would decline to answer any questions. He said that he would not sign the revised confidentiality undertaking. He positively invited the inspectors, as he had done before, to refer his refusal to the court. He wanted the court to intervene “in order to review the unreasonableness of the Secretary of State’s decisions and to protect [him] from oppression and unfairness in the inspection.”

There followed a further flurry of correspondence but, essentially, the stage was set for Mr. Maxwell’s next appearance before the inspectors, 19 August 1998 was the date fixed.

19 August 1998 interview

Mr. Maxwell made clear that he was present under compulsion and that he considered “this entire procedure to be unfair, and oppressive in the extreme”. He was, however, formally sworn and the procedure, in accordance with that used on the dummy run occasion, was set in motion. Sir John Thomas told him that he would be asked questions about the role in M.G.N. of Mr. Stoney and Mr. Guest. He referred Mr. Maxwell to documents relating to a decision as to whether Mr. Stoney or Mr. Guest should be the finance director of M.G.N. and put to Mr. Maxwell the following :

“The question we wanted to ask you is this. What were your concerns and why you thought Mr. Stoney would be the better person to be the finance director ?”

Mr. Maxwell asked to be taken to additional relevant documents and to be given an opportunity to consider them. He was told that the additional documents were those he had been taken through on the previous occasion. He still had the transcript of that occasion. Sir John agreed that he could come back on a later date and, having refreshed his memory about the contents of those documents, then deal with the question. 10 September, was agreed upon as the date.

Sir John then turned to other documents, took Mr. Maxwell through them and said :

“Now it looks by this point that it has been decided that Mr. Guest was to be the finance director, but no role for Mr. Stoney, or what he was precisely to do, had been worked out. What we wanted to ask you was what was it envisaged that Mr. Stoney would do ?”

Sir John offered Mr. Maxwell an opportunity to go through the documents on his own and, provided, he would sign the confidentiality undertaking, take them away with him. Mr. Maxwell repeated his unwillingness to sign the confidentiality undertaking. He made the point that it was impracticable to expect him to impose confidentiality undertakings on every person whom he might wish to approach for assistance.

10 September 1998

On 10 September the parties met again. Mr. Maxwell bad had the transcript of the 10 August occasion. He told the inspectors that he had reflected on the nature of their questions and on the procedures they were adopting. He referred to his “real and serious fear of civil and criminal prosecution arising from answers I may give in the course of interviews in the absence of legal representation”. He expressed the following conclusion :

“It is unreasonable to insist on my answering questions in the light of the procedures that have been proposed, and, in the absence of legal representation, I will decline the questions that you put to me on the last occasion for those reasons.”

Sir John Thomas then formally repeated to Mr. Maxwell the question as to his concerns in November 1990 about Mr. Guest and why he thought Mr. Stoney would be the better person to be the finance director and asked : “Is your position that you decline to answer that question Mr.Maxwell replied that it was.

The certification and the proceedings

On 7 October 1998 the inspectors, in accordance with section 436 of the Act, certified to the court that Mr. Maxwell had refused to answer questions put to him by them for the purposes of their investigation and had refused to give an undertaking of confidentiality. On 8 October the inspectors commenced proceedings asking the court to inquire into Mr. Maxwell’s refusal to answer their questions and his refusal to give an undertaking of confidentiality, and inviting the court to punish Mr. Maxwell as if he had been guilty of contempt of court.

The respondent to the proceedings was, of course, Mr. Maxwell. However, on 23 October 1998 the Secretary of State applied to be joined as a party and Neuberger J., by an order made on 2 November 1998 granted the application.

The case came on before me on Monday, 8 February. First, however, I dealt with an application by Mr. Maxwell for leave to bring judicial review proceedings challenging the Secretary of State’s refusal to fund legal representation for him. I refused the application for leave.

Mr. Maxwell, both on the judicial review application and on the inspectors’ application, has appeared in person. He has represented himself and defended his position with vigour, clarity, courtesy and economy of time. He has, I judge, a clear understanding of the issues raised by this case and, save for the time he has had to spend in preparing his submissions, and for the emotional pressure that a litigant in person is almost always under, he has not, in my opinion, suffered any disadvantage from his lack of legal representation before me.

The issues

There are two issues in this case. First, there is the issue of confidentiality. Are inspectors who have been appointed under Part XIV of the Companies Act 1985 entitled to demand of a person who is placed under a statutory obligation to attend before them and answer their questions that the person enter into an undertaking of confidentiality on the lines of that which Mr. Maxwell was asked to sign or, indeed, any confidentiality undertaking at all ?

This issue is one of general importance. As I have said, it appears to be the general practice of inspectors to insist on being given confidentiality undertakings. Are those who appear before them obliged to comply ?

Second, there is an issue as to what, if any, limits there are on the right of inspectors to require officers and agents of a company under investigation to attend before them and assist them in their investigation. Is there a point at which the demands made by the inspectors become so onerous that a witness’s refusal to co-operate becomes excusable ? If there is such a point, has it been reached in the present case ? Although the last of these two questions must depend upon the particular, and perhaps unique circumstances of this case, this issue as a whole is, in my view, also one of general importance.

The confidentiality issue

As Mr. Maxwell pointed out more than once in the course of the correspondence and in his submissions to me, Part XIV of the Act of 1985 confers no express power on inspectors to demand that those who appear before them under the statutory obligation imposed by section 434 should sign confidentiality undertakings. Sub-sections (1)(c) and (2)(c) impose on a person such as Mr. Maxwell the obligation to give the inspectors “all assistance in connection with the investigation which he is reasonably able to give”. The inspectors’ case, therefore, presented to me by Lord Neill and supported by Mr. Heslop on behalf of the Secretary of State, has been, and has had to be, that the signing of the confidentiality undertaking represents assistance in connection with the investigation that Mr. Maxwell is reasonably able to give.

The backcloth to this proposition is that Part XIV company inspections are essentially private proceedings. In In re Pergamon Press Ltd. [1971] Ch. 388, which involved the investigation by inspectors of a company run by Mr. Maxwell’s father, Mr. Robert Maxwell, Lord Denning M.R. said, at page 399, that the

“proceedings are not judicial proceedings . . . They are not even quasi-judicial, for they decide nothing; they determine nothing. They only investigate and report. They sit in private and are not entitled to admit the public to their meetings ….”

He went on to say that the only positive procedural duty which lay on the inspectors was that they “must act fairly”.

The proposition that inspectors “are not entitled to admit the public to their meetings” derives from Hearts of Oak Assurance Co. Ltd. v. Attorney General [1932] A.C. 392. The case arose out of an inspection under section 17 of the Industrial Assurance Act, 1923. The inspector proposed to conduct the inspection and examine witnesses in public. The assurance company under investigation objected to that and commenced proceedings for a declaration that the inspector was not entitled to conduct the inspection in public. The Attorney-General was made the defendant and endeavoured to uphold the propriety of the course the inspector was following. The first instance judge and the Court of Appeal [1931] 2 Ch. 370 took the view that the inspector had a discretion whether to sit in private or in public. The House of Lords disagreed. Lord Macmillan noted, at pp. 402-403, that in providing for the inspection of assurance companies Parliament had followed the terms in which it had provided for investigations into the affairs of joint stock companies. He said, at page 403 :

“This system of inspection has thus been in existence for some 70 years. Your Lordships have been informed that such inspections under the Companies Acts have from the inception of this legislation been invariably in practice conducted in private.”

The House of Lords made a declaration that :

“an inspector appointed … for the purpose of examining and reporting on the affairs of the plaintiffs is not entitled to conduct the inspection in public, but this shall not prevent him from admitting from time to time any persons the presence of whom is reasonably necessary to enable him properly to carry out his duty under the statute : and that an inspector so appointed for the said purpose is not entitled to make public the information gained by him in the course of such examination or the exercise of the powers conferred upon him … or otherwise to make use of such information save for the purposes of carrying out his examination and of preparing his report on the affairs of the plaintiffs and for purposes ancillary thereto :” see page 406.

The terms of the declaration are instructive. Apart from settling the main point of the case, namely, that the inspector was not entitled to conduct the inspection in public, the declaration made clear that the inspector was entitled to make use for the purposes of his investigation of information he obtained in the course of the investigation. He could, for example, communicate the information to other witnesses in order to obtain their comment on it or to lay the ground for questions that he wanted to put to them.

The reasoning behind the decision in the Hearts of Oak Assurance case was not simply that previous practice had been to hold examinations in private. It was also, perhaps mainly, that otherwise very great damage might be done to individuals and companies. Lord Thankerton, at page 397, referred to the risk that “unfavourable opinions as to the financial position of the society or company might be prematurely and wrongly formed in the minds of the public or the policyholders . . .” Lord Macmillan, at page 403, referred to the possibility that “irreparable harm might unjustly be done to the reputation of a company and much anxiety unnecessarily occasioned to its policyholders by giving publicity to such preliminary investigations”.

The case stands as clear authority that Part XIV company inspections must be conducted in private and that the inspectors should not make public the information disclosed to them in the course of the investigation. But the case does not impose, indeed the declaration expressly refrained from imposing, any other limitation on the way in which inspectors, sitting in private, conduct their investigation. This point was made by Crossman J. in In re, Gaumont-British Picture Group Corporation Ltd. [1940] Ch. 506. The managing director of the company under investigation refused to answer the inspector’s questions on the ground that a short-hand writer was present. Crossman J., after referring to the Hearts of Oak Assurance case [1932] A.C. 392 said, at page 512 :

“The presence of a shorthand writer … is, in my view, reasonably necessary to enable the inspector properly to carry out his duty under the statute. In these circumstances it seems to me there is no more to be said in the matter.”

Lord Neill referred me, also, to Soden v. Burns [1996] 1 W.L.R. 1512, a case in which Robert Walker J. had to consider the confidential character of information and documents supplied to inspectors and what, if any, use for purposes other than those of the investigation could lawfully be made of the information and documents. Robert Walker J. said, at page 1522 :

“When an official or an official body of any sort obtains information under compulsory powers for public purposes, a qualified obligation of confidence arises, though it may be overridden where transmission of confidential information is required in the public interest.”

I readily accept that that is so, and that a balancing exercise is required where a use of the information otherwise than for the purposes for which it was compulsorily given is proposed. It was a problem of that character that Robert Walker J. was dealing with. That is not the problem in the present case. The inspectors owe to those from whom they have obtained information or documents no duty that might inhibit them in the use of that information or those documents for the purposes of their statutory inquiry. They are, in my judgment, under no duty to those from whom they have obtained information or documents that precludes them from putting the information or documents to Mr. Maxwell in order to ask him questions about them. They do not owe a duty that requires them, as a condition precedent, to extract a confidentiality undertaking from Mr.Maxwell. The inspectors are certainly entitled, as a matter of discretion, to ask Mr. Maxwell to sign a confidentiality undertaking. But it does not follow that his refusal to comply can be categorised as a failure to give them “all reasonable assistance”. How does it assist them to have him sign the undertaking ? They can put the information or documents to him whether or not he signs the undertaking.

Moreover, some of the matters covered by the proposed undertaking would not have been subject to obligations of confidence at all-except perhaps obligations owed to Mr. Maxwell himself. Questions by the, inspectors to Mr. Maxwell which related exclusively to Mr. Maxwell’s activities and role in M. G. N. would fall into that category. So would his answers. The inspectors would not be entitled to make public these questions and answers (see the Hearts of Oak Assurance case [1932] A.C. 392) and would owe Mr. Maxwell obligations of confidence in respect of information contained in his answers. But why should Mr. Maxwell, if he chose to do so, not make public the questions and answers ? The cloak of confidentiality is imposed by law on the questions and answers for the benefit of the individual who is supplying the information; not in order to shackle him in the use to which he may desire to put the information. In Soden v. Burns [1996] 1 W.L.R. 1512 the individual who had supplied the information to the inspectors could, if he had wished to do so, have made it public or have communicated it to anyone he liked. The managing director in In re, Gaumont-British Picture Group Corporation Ltd. [1940] Ch. 506 could, if he had wanted to, have sent a transcript of his evidence to “The Times”. Similarly, in the Hearts of Oak Assurance case [1932] A.C. 392 the restriction, on making public the information acquired by the inspectors applied to them, not to the assurance company.

What about confidential information or documents obtained by the inspectors from others that they want to put before a new witness, e.g., Mr.Maxwell ? Lord Neill urged upon me that it was reasonable for the inspectors to want to preserve and protect the confidentiality and that to require the new witness to sign a confidentiality undertaking was a reasonable way of achieving that desirable end. The inspectors owed it, he suggested, to those from whom the information or documents had been obtained to do so.

For reasons I have already explained, I do not accept that the inspectors have any legal obligation to those from whom they obtain information or documents to insist on confidentiality, undertakings being given by others before whom, for the purposes of their inquiry, they wish to put the information or documents. If they wish to preserve and protect the confidentiality of the information and documents, they need do no more than make sure that every person to whom the information is communicated, or before whom the documents are put, is on notice of their confidential character. Such a person would not be inhibited by being given such notice from making use of the information and documents for the purpose of answering the inspectors’ questions. He could take advice from lawyers and others. He could consult others who had been involved, in order to cheek his recollection or remedy his lack of recollection. In doing so he would not, in my judgment, be in breach of any duty owed either to those from whom the information and documents had originated or to the inspectors. If, on the other hand, the new witness were to disclose the contents of the documents or information for a purpose not connected with the purposes for which they had been supplied to him, he would, in my view, prima facie commit a breach of duty to those from whom the information or documents had been obtained. In a particular case, of course, there might be some exculpatory feature, some higher public interest, that would justify the disclosure.

I have so far been concentrating on documents and information which have a confidential character because the inspectors have obtained them from others under compulsion.

The information memorandum is slightly different. Partly it records information and documents to which confidentiality attaches. But partly, also, or so I assume – I have not been referred to its contents in any detail it contains preliminary conclusions and expresses preliminary criticisms of individuals. So long as the information memorandum remains preliminary it plainly should not be made public. Publication of criticisms that the inspectors are currently minded to make but may eventually, when all the evidence is in, decide not to make would be unfair to the individuals involved. But, here too, I can see no reason why the inspectors should insist on a new witness, to whom they desire to put particular paragraphs, signing a confidentiality undertaking. The witness can be put on notice that the paragraphs are confidential, are being shown to him simply for the purpose of obtaining his answers to questions and that any use of the material otherwise than for the purpose of answering the question would be a breach of the confidential character of the paragraphs. A witness to whom confidential material were put in that way could not, in my judgment, escape the restrictions which the law would impose on the use he could lawfully make of the material. His refusal to sign a confidentiality undertaking would not make any difference.

In my judgment, therefore, the signing by a proposed witness of a confidentiality undertaking is not a prerequisite for the protection of confidential material placed before him by inspectors, provided always that he is put on notice of its confidential character. Whether material placed before a witness does infact have a confidential character cannot be answered in the abstract. Telling the witness that it does cannot elevate material that is not confidential into material that is.

In any event, in the present case, the confidentiality undertaking that the inspectors required Mr. Maxwell to sign went, in my opinion, a good deal further than was either reasonable or necessary.

(1) It was not, in my view, reasonable or necessary to require Mr. Maxwell to inform the inspectors of the identity of every person to whom he had disclosed material in order to obtain assistance in answering the inspectors’ questions.

(2) Nor was it reasonable or necessary to insist that each of these persons sign a confidentiality undertaking. Mr. Maxwell was, in my judgment, entitled to regard these conditions as constituting an unjustified impediment hindering him in attempting to prepare himself to deal with the inspectors’ questions. Provided Mr. Maxwell restricts himself to disclosing confidential material supplied to him by the inspectors in order to enable himself to deal as fully and efficiently as possible with the inspectors’ questions, or in order to take advice about the questions and his answers, or, later, for the purpose of defending himself against criticisms of him made by the inspectors or by the Secretary of State, he will not, in my judgment, be in breach of any duty of confidentiality owing to the originators of the material or to the inspectors.

(3) The undertaking required Mr. Maxwell to acknowledge the confidentiality of everything in the information memorandum and everything in every document supplied to him by the inspectors. This is indiscriminate and disproportionate. The insistence by inspectors on extracting confidentiality undertakings from witnesses-presumably undertakings in the more rigorous form originally required of Mr. Maxwell-demonstrates how indiscriminate and disproportionate inspectors’ practice has become.

In my judgment, inspectors can and should, in relation to genuinely confidential material, draw the attention of new witnesses to its confidential character, explain the limitations on the use that the witnesses can properly make of this material, and the consequences that may follow if they make any other use of it. Inspectors cannot, in my judgment, insist on being told, either in advance or after the event, the identity of the persons to whom a new witness proposes to show, or has shown, the material in order to obtain assistance in answering their questions.

For these reasons I do not regard Mr. Maxwell’s refusal to sign the revised form of confidentiality undertaking as representing a failure on his part to give the inspectors any assistance he was reasonably able to give. That being so, no question arises of his refusal being dealt with as a contempt of court.

Unfairness and oppression

The starting point is the statutory obligation of persons such as Mr. Maxwell to answer relevant questions put to them by the Companies Act inspectors. The purpose of Part XIV inspections, where there are grounds that suggest some irregularity or impropriety in the conduct of the affairs of a company has occurred, is to discover what has happened. The Secretary of State needs to know so that he can decide what, if anything, should be done about it. As Lord Denning M.R. pointed out in In re, Pergamon Press Ltd. [1971] Ch. 388, 399, the inspectors are not there to decide what should be done : their role is inquisitorial; they are there to find out what has happened. It is in the public interest that they should be able to do so. So everyone who knows anything about the events in question must answer their questions. The importance of this is clear and strong.

None the less, the assistance that those on whom the statutory obligation is placed must give is not unlimited. They must give the assistance that they are “reasonably able to give”. The word “reasonably” limits the extent of their obligation. To put the point another way, the inspectors cannot place demands on them that are unreasonable, whether as to the time they must expend or the expense they must incur in preparation for the questions or in any other respect. Inspectors must bear in mind that those summoned before them are not being remunerated for their assistance and will often, perhaps usually, have to take time off their normal business of earning a living in order to provide the requisite assistance. In some cases inspectors will have reason to believe that those they summon to appear before them have committed misfeasances of one sort or another towards the company whose affairs are being investigated. That circumstance does not, in my judgment, justify any more onerous demands than would be reasonable to make of a person under no similar cloud. The reasonableness and proportionality of inspectors’ demands may depend upon the purpose of the inquiry and the nature of the office in the company held by the particular witness. Inspectors appointed, for example, to inquire into what has become of company assets that have gone missing can reasonably, in my view, place a heavy burden of assistance on directors of the company whose duty it was to manage and preserve those assets. All the circumstances must, in my judgment, be taken into account in deciding whether or not assistance which a person is, in an absolute sense, able to give is also assistance which he is reasonably able to give. But, if, in all the circumstances, the demands made on the person go beyond what he is reasonably able to give, his failure to comply with the demands will not be a breach of his statutory duty and should not be treated as a contempt of court.

Mr. Maxwell has relied on a number of points as excusing his refusal to answer the inspectors’ questions. I shall deal with them one by one but, in the end, it is their cumulative effect that I must consider. Mr. Maxwell made very clear in his submissions to me that the unfairness and oppression he complains of results from the cumulative effect of several factors.

Previous interrogations

Mr. Maxwell has, as I have described, undergone interrogations of one sort or another over a total of 61 days on matters which are the same as many of those the inspectors want to question him about. Why, he asks, cannot the inspectors make use of the transcripts of those interrogations ? Why does he have to be subjected to a further lengthy interrogation, answering questions to which he has already given his answers ? This seems to me to be a very fair point so far as it goes. The inspectors’ response is to say that, so far as possible, they win try to avoid asking him questions to which he has already given the answers and that, if he thinks their questions are overlapping previous interrogations, he should draw their attention to the overlap. But, they emphasise, the questions in other interrogations will have been asked for purposes different to their own purposes. The purpose for which a question is asked influences the formulation of the question. And every answer must be read in the light of the question to which it responds. So the inspectors may need to ask their own questions notwithstanding that the subject is one on which Mr. Maxwell has already been questioned. In many cases this would, I think, be an acceptable response. But in the present case I am not sure it takes sufficient account of Mr. Maxwell’s difficult position.

His anxiety about the possibility of being drawn into giving answers inconsistent with previous answers is, in my view, understandable. The events in question took place eight or nine years ago. He will have a natural difficulty in reconstructing his state of mind at the time, excluding aspects of the events or explanations for them that have come to his attention subsequently. To do himself justice, if he is to be asked questions relating to matters on which he has already given answers, he needs to have his attention drawn to those answers.

It is, in my opinion, unreasonable to expect Mr. Maxwell, unrepresented and with his living to earn, to do the research necessary if he is to keep in mind, while answering the inspectors’ questions, previous answers he has given on the topic. The inspectors, on the other hand, have staff at their disposal. They are in a position to have a trawl done through the transcripts of previous interrogations so as to be able to draw Mr. Maxwell’s attention to any relevant previous answers he has given on the topics they wish to question him about. I imagine they have already done a trawl through the transcripts of the section 236 interrogations, the S.F.O.’s interrogation and Mr. Maxwell’s evidence given at the trial.

In my opinion, the inspectors should do their best to avoid questioning Mr. Maxwell on topics on which he has been questioned before. They should, so far as possible, rely on the answers he has given in previous interrogations. Mr. Maxwell has asked them to do so there is no Soden v. Burns [1996] 1 W.L.R. 1512 problem.

I accept that there will be occasions when the inspectors will wish to frame their own questions to Mr. Maxwell, although he may have been asked about the subject before. In that case, before putting their questions to him, they should, in my opinion, draw his attention to previous answers on the topic that he has given. The inspectors have at their disposal all the transcripts of the previous interrogations. It is they, in my view, who should be doing the trawl. I do not think it is reasonable to leave it to Mr. Maxwell to do. Nor can he reasonably be expected to have an accurate recollection of which subjects he has previously been questioned on, or when or what his precise answers were.

Use of Mr. Maxwell’s answers in subsequent civil or criminal proceedings

Mr. Maxwell submitted that it was unfair to expect him to answer the inspectors’ questions unless he received assurances that his answers would not be used as the basis of any future civil or criminal proceedings. The inspectors could not give those assurances. The D.T.I. partly could not and partly would not. There is, in my view, nothing unreasonable in that.

As to criminal proceedings, it is, in my opinion, unlikely in the extreme that either the S.F.O. or the Crown Prosecution Service would try and construct new criminal charges against Mr. Maxwell. The terms of Buckley J.’s judgment stand in the way. If a criminal offence unconnected with any of the charges previously made were to emerge, I suppose it is possible that new charges might escape the Buckley J. judgment. But I regard this as a theoretical possibility only. In any event, the possibility of self-incrimination is not a justification for refusing to answer company inspectors’ questions : see Saunders v. United Kingdom [1996] 23 E.H.R.R. 313.

As to civil proceedings, the only possible future civil proceedings that were discussed before me were proceedings by the Secretary of State for a disqualification order against Mr. Maxwell under the Company Directors Disqualification Act 1986. The possibility of disqualification proceedings being brought against one or more directors of a company under a Part XIV investigation is always present. Indeed one of the common grounds for appointing inspectors is so that the Secretary of State can decide whether or not disqualification proceedings ought to be brought. The refusal of the Secretary of State to give assurances that disqualification proceedings would not be brought cannot possibly justify the refusal of an ex-director to answer inspectors’ questions. I quite accept that the possibility of expensive and possibly lengthy disqualification proceedings may, on top of the criminal proceedings he has already had to endure, seem to Mr. Maxwell to render any further questioning of him by the inspectors unfair and oppressive. It does not, in my judgment, however, justify his refusal to answer their questions.

Undermining his acquittal

Mr. Maxwell has expressed the fear that, if he is questioned on matters that relate to the criminal charges that were brought against him, his answers may be used to undermine and cast doubt on his acquittal. An alternative way of putting the same point is that the formulation by the inspectors of some of their questions may suggest to Mr. Maxwell that the inspectors are trying to go behind the acquittal. The inspectors have made clear that they have no such intention and there is no reason to doubt that that is so. Mr. Maxwell’s fear cannot, in my view, justify him in refusing to answer any questions at all. In the circumstances of this case, Mr. Maxwell having endured a 131-day trial and having been acquitted by a unanimous jury of the dishonesty of which he was charged, it would, in my view, be oppressive if questions put to him by the inspectors tended to suggest that he had in fact been guilty of dishonesty in respect of the matters with which he was charged or any associated matters. But, in the face of the inspectors’ assurances, Mr. Maxwell cannot justify a blanket refusal to answer any of their questions.

Lack of legal representation

Underpinning each and every one of these complaints is Mr. Maxwell’s complaint that he has no funding for legal representation ‘The point has been presented to me on the footing that he cannot afford to pay for legal representation from his own pocket. There is no evidence before me as to whether or not that is so, but I do not think the point is dependent on the depth or shallowness of Mr. Maxwell’s pocket. Legal representation for him in connection with the questions the inspectors want to ask him would be expensive. Most expenditure, even for relatively rich people, involves choices. The question to my mind is not whether Mr. Maxwell is rich or poor, or how rich or how poor. There is no relevant difference, in my view, between the position in which he is unable to fund his legal representation and the position in which he is not willing to do so, preferring to keep his money for other things. The fact of the matter is that he has no legal representation, the D.T.I. having declined to pay for it. The absence of legal representation has an impact on all his other matters of complaint. If he had legal representation, his own advisers might be expected to trawl the interrogation transcripts and draw his attention where necessary to previous answers. If he had legal representation, his advisers would be able to advise which questions might tend to probe behind his acquittal. If he had legal representation a good deal of the burden of preparation for the inspectors’ questions could be shifted to them. If he had legal representation, his advisers could keep an eye on the extent to which his answers might expose him to further criminal proceedings or to civil proceedings. The matters he complains about must be considered and weighed, individually and together, on the factual footing that he has no legal representation. It is not a self-standing ground of complaint,

The demands on Mr. Maxwell’s time

The inspectors have moved a great distance from the procedures they originally proposed to employ to those they employed at the time of the dummy run and at the interviews of 19 August and 10 September. Mr. Maxwell acknowledged that that was so while none the less maintaining his position that overall the proposed questioning remained oppressive and unfair. He noted that the dummy run procedure would, if repeated in respect of all the topics listed in the schedule that accompanied the 29 May 1997 letter, extend the questioning over many months, if not years. He drew attention to the fact that the inspectors have never abandoned their expressed intention to question him about all these topics. The only concession was that first he would be questioned on limited topics with a decision taken later as to what else would be needed. Mr. Maxwell stressed his need to earn his living in order to support himself and his family. The scope of the proposed questioning would, he submitted, place demands on his time that would be excessive and would unreasonably interfere with his ability to earn his living.

The cumulative complaints

This is, I am persuaded, a highly unusual case. The potential burden that the questioning May place on Mr. Maxwell does seem to me at risk of going beyond that which an unrepresented individual can reasonably be required to accept. There are two matters in particular that concern me; both relate to the previous interrogations. As I have said, the inspectors have the transcripts. They obtained the transcripts of the section 236 interrogations, and an order of the court allowing them to use the transcripts, relatively recently. I am not at all clear that sufficient consideration has yet been given to them. No amendment, in the light of the contents of these transcripts, to the topics on which they may wish to question Mr. Maxwell as listed in the schedule has been made.

In my view the questioning of Mr. Maxwell, in the circumstances of this unusual case, should be kept to a minimum, I think the inspectors should amend the schedule of topics in the light of the contents of the transcripts. It is difficult to believe that the contents of 61 days of interrogation does not adequately cover a large number of the listed topics. Mr. Maxwell should be supplied with an amended list of topics on which they want to question him. Then, for the purposes of the questions that the inspectors still need to ask, they should, in my view, identify any answers in the transcripts that fairness to Mr. Maxwell requires to be drawn to his attention. Further, if and to the extent that the topics on which they want to question Mr. Maxwell are topics on which he has already, in’ previous interrogations, been questioned and given his answers, the inspectors should, in my view, explain to him why further questioning is, in their view, necessary and, in so far as it is practicable, tell him in advance the questions they want to put to him.

I have no power, and do not presume, to direct the inspectors to do these things. If they do not do so, however, I would regard the burden they are placing on Mr. Maxwell as going beyond what he can reasonably be asked to accept.

I must emphasise that I regard this as a special case. The steps I have suggested the inspectors should take in order to reduce the burden on Mr. Maxwell of dealing with their questions should not be regarded as a precedent for other inquiries. The facts of the present case and, in particular, the extent of the interrogations that Mr. Maxwell has already undergone are probably unique.

Subject to those steps being taken, however, Mr. Maxwell is not, in my judgment, entitled to refuse to answer the inspectors’ questions. If the steps I have described are taken, and if the procedures that Mr. Maxwell himself proposed are followed, I would regard any further refusal as likely to constitute a breach of his statutory obligations under section 434.

For the moment, however, having inquired into the refusals certified by the inspectors, I am not prepared to make any order under section 436.

Application refused with costs. Leave to appeal.

Solicitors : Treasury Solicitor.

[Reported by CAROLYN TOULMIN, Barrister]

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