CASE OF SAUNDERS v. THE UNITED KINGDOM

1. The case was referred to the Court by the European Commission of Human Rights ("the Commission") and by the Government of the United Kingdom of Great Britain and Northern Ireland ("the Government") on 9 and 13 September 1994 respectively, within the three-month period laid down by Article 32 para. 1 and Article 47 (art. 32-1, art. 47) of the Convention for the Protection of Human Rights and Fundamental Freedoms ("the Convention"). It originated in an application (no. 19187/91) against the United Kingdom lodged with the Commission under Article 25 (art. 25) by Mr Ernest Saunders, a British citizen, on 20 July 1988.
The Commission ’ s request referred to Articles 44 and 48 (art. 44, art. 48) and to the declaration whereby the United Kingdom recognised the compulsory jurisdiction of the Court (Article 46) (art. 46). The object of the request and of the Government ’ s application was to obtain a decision as to whether the facts of the case disclosed a breach by the respondent State of its obligations under Article 6 para. 1 of the Convention (art. 6-1).
2. In response to the enquiry made in accordance with Rule 33 para. 3 (d) of Rules of Court A, the applicant stated that he wished to take part in the proceedings and designated the lawyers who would represent him (Rule 30).
3. The Chamber to be constituted included ex officio Sir John Freeland, the elected judge of British nationality (Article 43 of the Convention) (art. 43), and Mr R. Ryssdal, the President of the Court (Rule 21 para. 3 (b)). On 24 September 1994, in the presence of the Registrar, the President drew by lot the names of the other seven members, namely Mr R. Bernhardt, Mr Thór Vilhjálmsson, Mr F. Gölcüklü, Mr J.M. Morenilla, Mr J. Makarczyk, Mr B. Repik and Mr P. Kuris (Article 43 in fine of the Convention and Rule 21 para. 4) (art. 43). Subsequently Mr N. Valticos, substitute judge, replaced Mr Ryssdal, who was unable to take part in the further consideration of the case (Rules 22 para. 1 and 24 para. 1). Mr Bernhardt succeeded Mr Ryssdal as President of the Chamber.
4. As President of the Chamber (Rule 21 para. 5), Mr Bernhardt, acting through the Registrar, consulted the Agent of the Government, the applicant ’ s lawyers and the Delegate of the Commission on the organisation of the proceedings (Rules 37 para. 1 and 38). Pursuant to the order made in consequence, the Registrar received the applicant ’ s memorial on 16 February 1995 and the Government ’ s memorial on 27 February 1995.
5. On 22 March 1995 the President of the Chamber granted permission to Liberty, pursuant to Rule 37 para. 2, to submit written comments on specified aspects of the case. These were received on 31 July 1995. The Government submitted a reply on 3 October.
6. On 28 April 1995 the Chamber, after considering written submissions from the applicant and the Government, granted a request by the Government to adjourn the hearing pending a decision of the Court of Appeal to which the applicant ’ s case had been referred by the Secretary of State (see paragraph 39 below). Following the decision of the Court of Appeal on 27 November 1995 the applicant submitted a further memorial on 3 January 1996. The Government ’ s memorial in reply was received on 23 January.
7. On 25 January 1996 the President refused a request under Rule 37 para. 2 made on behalf of three of the applicant ’ s co-accused to file written comments on the case.
8. In accordance with the President ’ s decision, the hearing took place in public in the Human Rights Building, Strasbourg, on 19 February 1996. The Court had held a preparatory meeting beforehand.
There appeared before the Court:
Mr M. Eaton, Deputy Legal Adviser, Foreign and
Mr J. Eadie, Barrister-at-Law, Counsel,
Ms T. Dunstan, Department of Trade and Industry,
Mr J. Gardner, Department of Trade and Industry,
Ms R. Quick, Department of Trade and Industry,
Mr G. Dickinson, Serious Fraud Office,
Mr L. Leigh, London School of Economics, Advisers;
Mr M. Hunt, Barrister-at-Law, Counsel,
The Court heard addresses by Mr Bratza, Mr Beloff and Mr Kentridge and also replies to its questions.
9. Following deliberations on 23 February 1996 the Chamber decided to relinquish jurisdiction forthwith in favour of a Grand Chamber (Rule 51 para. 1).
10. By virtue of Rule 51 para. 2 (a) and (b), the President and the Vice ‑ President of the Court (Mr Ryssdal and Mr Bernhardt) as well as the other members and the substitute judges (namely, Mr B. Walsh, Mr J. De Meyer, Mr S.K. Martens and Mr D. Gotchev ) of the original Chamber are members of the Grand Chamber.
Since Mr Ryssdal had been unable to take part (see paragraph 3 above), the names of the additional eight judges were drawn by lot by the Vice ‑ President, in the presence of a member of the registry, on 1 March 1996, namely, Mr L.-E. Pettiti, Mr R. Macdonald, Mr A. Spielmann, Mrs E. Palm, Mr R. Pekkanen, Mr A.N. Loizou, Mr L. Wildhaber and Mr G. Mifsud Bonnici (Rule 51 para. 2 (c)). Subsequently, Mr Macdonald was unable to take part in the further consideration of the case.
11. On 6 March 1996 the Government requested permission to file further brief observations in writing, which request was granted by the President of the Grand Chamber on 19 March 1996. These observations were submitted on 4 April and the Delegate ’ s and the applicant ’ s comments in reply were received on 18 April.
12. Having taken note of the opinions of the Agent of the Government, the Delegate of the Commission and the applicant, the Grand Chamber decided on 22 April 1996 that it was not necessary to hold a further hearing following the relinquishment of jurisdiction by the Chamber (Rules 26 and 38, taken together with Rule 51 para. 6).
13. On 8 August 1996 the President admitted to the file an article submitted by the Government.
I. Particular circumstances of the case
A. Factual background leading to the appointment of inspectors
14. The applicant had become a director and chief executive of Guinness PLC ("Guinness") in 1981.
15. In early 1986 Guinness was competing with another public company, Argyll Group PLC ("Argyll"), to take over a third public company, the Distillers Company PLC ("Distillers"). The take-over battle resulted in victory for Guinness. Guinness ’ s offer to Distillers ’ shareholders, like Argyll ’ s, included a substantial share exchange element, and accordingly the respective prices at which Guinness and Argyll shares were quoted on the Stock Exchange was a critical factor for both sides. During the course of the bid the Guinness share price rose dramatically, but once the bid had been declared unconditional it fell significantly.
16. The substantial increase in the quoted Guinness share price during the bid was achieved as a result of an unlawful share-support operation. This involved certain persons ("supporters") purchasing Guinness shares in order to maintain, or inflate, its quoted share price. Supporters were offered secret indemnities against any losses they might incur, and, in some cases, also large success fees, if the Guinness bid was successful. Such inducements were unlawful (1) because they were not disclosed to the market under the City Code on Take-overs and Mergers and (2) because they were paid out of Guinness ’ s own moneys in breach of section 151 of the Companies Act 1985 ("the 1985 Act"), which prohibits a company from giving financial assistance for the purpose of the acquisition of its own shares.
17. Supporters who had purchased shares under the unlawful share ‑ support operation were indemnified and rewarded. In addition, some of those who had helped find supporters were rewarded by the payment of large fees. These too came from Guinness funds. In most cases payments were made using false invoices which concealed the fact that payment was being made in respect of the supporters or other recipients ’ participation in the unlawful share-support operation.
18. Allegations and rumours of misconduct during the course of the bid led the Secretary of State for Trade and Industry to appoint inspectors some months after the events pursuant to sections 432 and 442 of the 1985 Act (see paragraphs 45 and 46 below). The inspectors were empowered to investigate the affairs of Guinness.
B. The inspectors ’ investigation
19. On 10 December 1986, the inspectors began taking oral evidence. Mr Seelig, a director of the merchant bank advisers to Guinness, was the first witness.
20. On 12 January 1987, the inspectors informed the Department of Trade and Industry ("the DTI") that there was concrete evidence of criminal offences having been committed. On the same date the DTI contacted Mr John Wood of the Director of Public Prosecutions ’ office ("the DPP"). It was decided that the proper thing to do was to permit the inspectors to carry on with their inquiry and to pass the transcripts on to the Crown Prosecution Service ("the CPS") which had come into being in September 1986.
21. On 14 January 1987 the applicant was dismissed from Guinness.
22. On 29 January 1987, the Secretary of State required the inspectors to inform him of any matters coming to their knowledge as a result of their investigation pursuant to section 437 (1A) of the 1985 Act. Thereafter the inspectors passed on to the Secretary of State transcripts of their hearings and other documentary material which came into their possession.
23. On 30 January 1987, a meeting was held attended by the inspectors, the solicitor to and other officials of the DTI, Mr John Wood and a representative from the CPS. Amongst other matters, potential accused were identified - including the applicant – possible charges were discussed and it was stated that a decision had to be made as to when to start a criminal investigation. All concerned agreed on the need to work closely together in preparing the way for bringing charges as soon as possible. The inspectors indicated their readiness to cooperate although they reserved the right to conduct their investigations as they thought right.
24. On 5 February 1987 Mr John Wood, who had been appointed head of legal services at the CPS, appointed a team of counsel to advise on the criminal aspects of the investigation. Transcripts and documents from the inspectors were passed on to the team after receipt and consideration by the DTI.
25. The applicant was interviewed by the inspectors on nine occasions: on 10-11, 20 and 26 February, 4-5 March, 6 May and 11-12 June 1987. He was accompanied by his legal representatives throughout these interviews.
26. During the first week of May 1987 the police were formally asked by the DPP ’ s office to carry out a criminal investigation. The transcripts and documents obtained as a result of the inspectors ’ interviews were then passed on to the police.
27. The applicant was subsequently charged with numerous offences relating to the illegal share-support operation and, together with his co ‑ defendants, was arraigned before the Crown Court on 27 April 1989.
In view of the large number of counsel and the number of defendants two separate trials were subsequently ordered by the trial judge in the Crown Court on 21 September 1989.
28. From 6 to 16 November 1989 the court held a voir dire (submissions on a point of law in the absence of the jury) following the application of one of the applicant ’ s co-defendants, Mr Parnes, to rule the DTI transcripts inadmissible. Mr Parnes argued, principally, that the statements obtained during three interviews before the inspectors should be excluded
( i ) pursuant to section 76 of the Police and Criminal Evidence Act 1984 ("PACE") on the basis that they had been obtained by oppression or in circumstances which were likely to render them unreliable;
(ii) pursuant to section 78 of PACE because of the adverse effect the admission of the evidence would have on the fairness of the proceedings having regard to the circumstances in which it was obtained.
In a ruling given on 21 November 1989, the trial judge (Mr Justice Henry) held that the transcripts were admissible. He stated that it was common ground that the interviews were capable of being "confessions" as defined in section 82 (1) of PACE. He found that as a matter of construction of the 1985 Act inspectors could ask witnesses questions that tended to incriminate them, the witnesses were under a duty to answer such questions and the answers were admissible in criminal proceedings. He rejected Mr Parnes ’ s assertion that the inspectors should have given a warning against self-incrimination. He was satisfied that there was no element of oppression involved in the obtaining of the evidence and that the answers were not obtained in consequence of anything said or done which was likely to render them unreliable in all the circumstances existing at the time.
29. From 22 to 24 January 1990 the court held a further voir dire following the application of the applicant to rule inadmissible the DTI transcripts concerning the eighth and ninth interviews on the basis that they should be excluded either as unreliable under section 76 of PACE or pursuant to section 78 of PACE because of the adverse effect the admission of the evidence would have on the fairness of the proceedings having regard to the circumstances in which it was obtained. Reliance was placed on the applicant ’ s alleged ill-health at the time and on the fact that the two interviews in question had taken place after the applicant had been charged.
In his ruling of 29 January 1990 Mr Justice Henry rejected the defence argument as to the applicant ’ s medical condition. He did, however, exercise his discretion pursuant to section 78 to exclude the evidence from the two above-mentioned interviews which had taken place after the applicant had been charged on the grounds that his attendance could not be said to be voluntary. In his view, moreover, it could not be said to be fair to use material obtained by compulsory interrogation after the commencement of the accusatorial process.
30. The applicant was tried together with three co-defendants. The trial involved seventy-five days of evidence, ten days of speeches by counsel and a five-day summing-up to the jury by the trial judge. The applicant faced fifteen counts including, inter alia, eight counts of false accounting contrary to section 17 (1) b of the Theft Act 1968 and two counts of theft and several counts of conspiracy.
In the course of his trial the applicant, who was the only accused to give evidence (days 63-82) - after the reading of the transcripts (see paragraph 31 below) - testified that he knew nothing about the giving of indemnities or the paying of success fees and that he had not been consulted on such matters. He asserted that he had been guilty of no wrongdoing. The Crown relied heavily on the evidence of Mr Roux (Guinness ’ s finance director) who had been granted immunity from prosecution. It also referred to the statements made by the applicant in the course of interviews to the DTI inspectors.
31. The transcripts of the interviews were read to the jury by the prosecution over a three-day period during the trial (days 45-47). They were used in order to establish the state of the applicant ’ s knowledge and to refute evidence given by the applicant to the jury.
For example, counsel for the prosecution used passages from the interviews to demonstrate that Mr Saunders had been aware, inter alia, of the payment to Mr W., who had been allegedly involved in the share ‑ support operation, of more than £5 million, before the inspectors had shown him an invoice for the payment of the money to Mr W. In his answers to the inspectors Mr Saunders had stated that he had agreed on the payment to Mr W. of £5 million as an appropriate success fee. When the inspectors showed him the invoice for the payment of this money to a company (MAC) used by Mr W. to receive fees for work done, he replied that he had not seen the invoice before but had deduced that it related to his agreement to pay Mr W. £5 million.
In his opening speech to the jury, counsel for the prosecution stated as follows:
"Mr Saunders also told [DTI] inspectors why the [£5 million] had been paid. He said that Mr [W.] had performed invaluable service during the bid for Distillers and that Mr [W.] had persuaded him that £5 million was an appropriate fee as a reward. Mr Saunders accepted that there was no documentation to support his decision to pay Mr [W.] £5 million. Mr Saunders admitted to the [inspectors] that he knew that MAC was a company used by Mr [W.] and his associates to receive money."
During the trial Mr Saunders testified that he did not know that the money had been paid to Mr W. prior to being shown the invoice by the inspectors. In his cross-examination of the applicant, counsel for the prosecution referred to the above answers in the transcripts to contradict Mr Saunders ’ s testimony. In his closing speech to the jury he stated:
"But Mr Saunders ’ s ... evidence to the inspectors make it clear that he knew perfectly well ... that Mr [W.] had been paid. You will remember those passages in his ... interviews where he knew all about this payment before he was shown the invoice."
32. Reference was also made to the interview transcripts by counsel for the co-accused [Mr R.] in an attempt to demonstrate that Mr Saunders was not telling the truth. In his answers to the inspectors Mr Saunders had repeatedly stated that he did not recall any conversations with Mr R. concerning the purchase of shares in Guinness or about indemnities against loss in the event of such purchase. However, a letter written by Mr R. to another person stating that such conversations had taken place and generally implicating Mr Saunders in the share-support operation had been previously published in the press.
During cross-examination of Mr Saunders, counsel for Mr R. suggested that Mr Saunders ’ s answers to the inspectors on this point were not believable, that he had "lost his nerve" before them and that this explained his replies that he could not recollect the conversations with Mr R. taking place. He repeatedly asked why Mr Saunders did not take the opportunity to tell the inspectors that Mr R. ’ s accusations in the published letter were a "pack of lies" instead of replying as he did.
33. In his summing-up to the jury, the judge also compared and contrasted what the applicant had said in court with the answers which he had given to the inspectors.
34. On 22 August 1990 the applicant was convicted of twelve counts in respect of conspiracy, false accounting and theft. He received an overall prison sentence of five years.
2. Ruling on "abuse of process" claims
35. In the second set of proceedings concerning the other co-defendants, further challenge was made to the admissibility of the transcripts of the interviews on the ground, inter alia, that there was an abuse of process in that there was misconduct by the inspectors and/or the prosecuting authorities in the use of the inspectors ’ statutory powers for the purpose of constructing a criminal case. In particular, it was alleged by one of the co ‑ defendants, Mr Seelig, that there was a deliberate delay in charging the accused in order that the inspectors could use their powers to obtain confessions.
36. In a ruling given on 10 December 1990 Mr Justice Henry found that there was no prima facie case of abuse by either the inspectors or the prosecuting authorities. He had heard evidence from both the inspectors and the police officer in charge of the criminal investigation. In a ruling given on 14 December 1990 the judge rejected the application for a stay, finding that there had been no abuse of the criminal process in the questioning of the defendants or in the passing of Mr Seelig ’ s depositions to the inspectors to the prosecuting authorities or in their conduct of the prosecution. He saw nothing improper or sinister in the decision by Mr Wood not to involve the police until the beginning of May. He concluded rather that proper use had been made of the statutory powers. The judge also refused an application to exclude the evidence of the interviews under section 78 of PACE as constituting evidence which had such an adverse effect on the fairness of the proceedings that the court ought not to admit it.
37. On appeal the Court of Appeal in a judgment dated 2 May 1991 (R. v. Seelig ) upheld the trial judge ’ s ruling as to the admissibility of the interviews before the inspectors. On 24 July 1991 leave to appeal was refused by the House of Lords.
38. The applicant applied for leave to appeal against conviction and sentence. He argued, inter alia, that the trial judge had misdirected the jury as to the weight to be allowed to the evidence given by Mr Roux, the finance director of Guinness who had been afforded immunity from prosecution.
The applicant was granted leave to appeal against conviction. Following a hearing at which the applicant was represented, the Court of Appeal gave its judgment on 16 May 1991. It held that while there were some blemishes and infelicities in the judge ’ s summing-up, it was in the main a masterly exposition, which left the main issue of dishonesty to the jury. It commented that the applicant ’ s counsel had expressed the possibility that he might wish to address the court as to the admissibility of the transcripts. It stated however that the question had been decided, as far as it was concerned, by the decision given by another division of the Court of Appeal in the case of R. v. Seelig, which had held that such statements were admissible. It went on to reject the applicant ’ s appeal on all but one count: it found that the judge had erred in his direction on one count and quashed that conviction. It reduced his sentence to two and a half years ’ imprisonment.
D. Subsequent reference to the Court of Appeal by the Home Secretary
39. On 22 December 1994 the Home Secretary referred the applicant ’ s case and that of his co-defendants to the Court of Appeal pursuant to section 17 (1) of the Criminal Appeal Act 1968. He did so on the basis of applications by the applicant ’ s co-defendants - but not the applicant himself - who submitted that the prosecution had failed to disclose certain documents at their trial.
40. At the appeal the applicant argued, inter alia, that the use at the trial of answers given to the DTI inspectors automatically rendered the criminal proceedings unfair.
The court rejected this argument, pointing out that Parliament had expressly and unambiguously provided in the 1985 Act that answers given to DTI inspectors may be admitted in evidence in criminal proceedings even though such admittance might override the privilege against self ‑ incrimination.
In its judgment the court noted that the interviews with each of the accused "formed a significant part of the prosecution case".
41. With reference to the allegation that it was unfair that those interviewed by DTI inspectors should be treated less favourably than those interviewed by the police under PACE, the court noted as follows:
"... the unravelling of complex and devious transactions in those fields is particularly difficult and those who enjoy the immunities and privileges afforded by the Bankruptcy Laws and the Companies Acts must accept the need for a regime of stringent scrutiny especially where fraud is suspected ..."
42. In relation to the argument that the difference between the Companies Act and the Criminal Justice Act regimes (see paragraphs 48 and 54 below) was anomalous the court stated:
"... the explanation lies in the very different regime of interviews by DTI inspectors compared with that of interviews either by police or the SFO [Serious Fraud Office]. DTI inspectors are investigators; unlike the police or SFO they are not prosecutors or potential prosecutors. Here, typically, the two inspectors were a Queen ’ s Counsel and a senior accountant. They are bound to act fairly, and to give anyone they propose to condemn or criticise a fair opportunity to answer what is alleged against them ... Usually, the interviewee will be represented by lawyers and he may be informed in advance of the points to be raised."
43. The court also rejected an allegation that there had been an abuse of process in that the DTI inspectors were used wrongly as "evidence gatherers" for the prosecution or that there had been improper or unfair "collusion", as follows:
"We have carefully considered the effect of the events of November 1986 to October 1987 in the light of all the documents. We conclude that to allow the inspectors to continue their inquiry and to bring in the police only in May 1987 was a proper course subject to two essentials.
(1) That the inspectors were left to conduct their inquiries and interviews independently without instruction, briefing or prompting by the prosecuting authority. We are quite satisfied that the inspectors themselves made that clear and abided by it. Counsel also laid down those ground rules correctly and they were observed ...
(2) That the interviews were conducted fairly and unobjectionably. It was not suggested to the trial judge or before us that the inspectors could be criticised on this score. These were carefully structured sessions of proper length in suitable conditions. The appellants, experienced businessmen of high intelligence, were each represented either by counsel (usually Queen ’ s Counsel) or a senior solicitor. The questions were put scrupulously fairly and the Code laid down in the Pergamon case ... was observed."
44. Finally, the court also rejected the allegation that non-disclosure prior to the trial of the material alleged to indicate abuse caused any unfairness to the applicant. It subsequently refused to certify that the case involved a point of public importance and denied leave to appeal to the House of Lords. Following this decision no further avenue of appeal was open to the applicant.
II. Relevant domestic law and practice
45. By section 432 of the Companies Act 1985 (the "1985 Act") the Secretary of State may appoint one or more competent inspectors to investigate the affairs of a company and to report on them in such manner as he may direct. The Secretary of State may make such appointment if it appears that there are circumstances suggesting:
"(a) that the company ’ s affairs are being or have been conducted with intent to defraud its creditors or the creditors of any other person, or otherwise for a fraudulent or unlawful purpose, or in a manner which is unfairly prejudicial to some part of its members, or
(b) that any actual or proposed act or omission of the company (including an act or omission on its behalf) is or would be so prejudicial, or that the company was formed for any fraudulent or unlawful purpose, or
(c) that persons concerned with the company ’ s formation or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards it or towards its members, or
(d) that the company ’ s members have not been given all the information with respect to its affairs which they might reasonably expect." (section 432 (2))
46. The Secretary of State is also empowered to appoint inspectors to:
"... investigate and report on the membership of any company, and otherwise with respect to the company, for the purpose of determining the true persons who are or have been financially interested in the success or failure (real or apparent) of the company or able to control or materially to influence its policy." (section 442 (1))
B. Function and powers of inspectors
47. The function of inspectors is an inquisitorial and not a judicial function. It has been summarised in re Pergamon Press Ltd [1971] Chancery Reports 388, per Sachs LJ at p. 401, as follows:
"The inspectors ’ function is in essence to conduct an investigation designed to discover whether there are facts which may result in others taking action; it is no part of their function to take a decision as to whether action be taken and a fortiori it is not for them finally to determine such issues as may emerge if some action eventuates."
48. Section 434 of the 1985 Act provides:
"(1) When inspectors are appointed under section 431 or 432, it is the duty of all officers and agents of the company ...
(a) to produce to the inspectors all books and documents of or relating to the company ... which are in their custody or power,
(b) to attend before the inspectors when required to do so and,
(c) otherwise to give the inspectors all assistance in connection with the investigation which they are reasonably able to give ...
(3) An inspector may examine on oath the officers and agents of the company or other body corporate, and any such person as is mentioned in subsection (2), in relation to the affairs of the company or other body, and may administer an oath accordingly ...
(5) An answer given by a person to a question put to him in exercise of powers conferred by this section (whether it has effect in relation to an investigation under any of sections 431 to 433, or as applied by any other section in this Part) may be used in evidence against him."
49. Section 436 of the Act provides:
"(1) When inspectors are appointed under section 431 or 432 to investigate the affairs of a company, the following applies in the case of -
(a) any officer or agent of the company,
(b) any officer or agent of another body corporate whose affairs are investigated under section 433 and
(c) any such person as is mentioned in section 434 (2).
Section 434 (4) applies with regard to references in this subsection to an officer or agent.
(a) refuses to produce any book or document which it is his duty under section 434 or 435 to produce, or
(b) refuses to attend before the inspectors when required to do so, or
(c) refuses to answer any question put to him by the inspectors with respect to the affairs of the company or other body corporate (as the case may be) the inspectors may certify the refusal in writing to the court.
(3) The court may thereupon inquire into the case, and, after hearing any witnesses who may be produced against or on behalf of the alleged offender and after hearing any statement which may be offered in defence, the court may punish the offender in like manner as if he had been guilty of contempt of court."
50. Contempt of court in this context may be punished by the imposition of a fine or by committal to prison for a period not exceeding two years.
C. Provisions of the Police and Criminal Evidence Act 1984 and the Criminal Justice Act 1987
51. Section 76 of the Police and Criminal Evidence Act 1984 (PACE) provides as relevant:
"1. In any proceedings a confession made by an accused person may be given in evidence against him in so far as it is relevant to any matter in issue in the proceedings and is not excluded by the court in pursuance of this section.
2. If, in any proceedings where the prosecution proposes to give in evidence a confession made by an accused person, it is represented to the court that the confession was or may have been obtained -
(a) by oppression of the person who made it; or
(b) in consequence of anything said or done which was likely, in the circumstances existing at the time, to render unreliable any confession which might be made by him in consequence thereof, the court shall not allow the confession to be given in evidence against him except in so far as the prosecution proves to the court beyond a reasonable doubt that the confession (notwithstanding that it might be true) was not obtained as aforesaid ..."
52. Section 78 provides as relevant:
"1. In any proceedings the court may refuse to allow the evidence on which the prosecution proposes to rely to be given if it appears to the court that, having regard to all the circumstances, including the circumstances in which the evidence was obtained, the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it."
53. Under section 82 (1) of PACE a" ‘ confession ’ includes any statement wholly or partly adverse to the person who made it, whether made to a person in authority or not and whether made in words or otherwise".
54. The Criminal Justice Act 1987 confers on the Director of the Serious Fraud Office special powers to assist him in the investigation and prosecution of serious fraud. Section 2 (2) requires a person whose affairs are being investigated to answer questions even if by so doing he might incriminate himself. Failure to answer may give rise to criminal sanctions (section 2 (13)). Answers in this context cannot be used in evidence against a suspect unless he is prosecuted for failure, without reasonable excuse, to answer questions or unless he makes a statement in evidence which is inconsistent with a previous answer (section 2 (8)).
PROCEEDINGS BEFORE THE COMMISSION
55. The applicant lodged his application (no. 19187/91) with the Commission on 20 July 1988. He complained that the use at his trial of statements made by him to the DTI inspectors under their compulsory powers deprived him of a fair hearing in violation of Article 6 para. 1 of the Convention (art. 6-1).
56. On 7 December 1993 the Commission declared the applicant ’ s complaint admissible. In its report of 10 May 1994 it expressed the opinion that there had been a violation of Article 6 para. 1 of the Convention (art. 6 ‑ 1) (fourteen votes to one).
The full text of the Commission ’ s opinion and of the two separate opinions contained in the report is reproduced as an annex to this judgment [3]
57. The applicant submitted that the use of the transcripts at the trial was a breach of Article 6 para. 1 (art. 6-1) and that, to the extent that the delay in starting the police investigation was motivated by a desire to obtain those transcripts, the manner of obtaining the evidence was also in violation of this provision (art. 6-1).
58. The Government contended that the mere fact of compulsion could not and did not render the proceedings unfair. Further, that if it was concluded that any of Mr Saunders ’ s answers could properly be described as self-incriminating, it would still be necessary to assess whether the extremely limited use in fact made of those answers rendered the criminal proceedings unfair. In their submission it did not.
I. ALLEGED VIOLATION OF ARTICLE 6 PARA. 1 OF THE CONVENTION (art. 6-1)
59. The applicant contended that he was denied a fair trial in breach of Article 6 para. 1 of the Convention (art. 6-1) which, in so far as relevant, states:
"In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... by an independent and impartial tribunal ..."
The Commission found that there had been such a violation, although this was contested by the Government.
A. The right not to incriminate oneself
1. The arguments of those appearing before the Court
60. The applicant complained of the fact that statements made by him under compulsion to the inspectors appointed by the Department of Trade and Industry (DTI) (see paragraph 18 above) during their investigation were admitted as evidence against him at his subsequent criminal trial (see paragraphs 30-33 above).
He maintained that implicit in the right to a fair trial guaranteed by Article 6 para. 1 (art. 6-1), as the Court had recognised in its judgments in Funke v. France (25 February 1993, Series A no. 256-A, p. 22, para. 44) and John Murray v. the United Kingdom (8 February 1996, Reports of Judgments and Decisions 1996-I, p. 49, para. 45), was the right of an individual not to be compelled to contribute incriminating evidence to be used in a prosecution against him. This principle was closely linked to the presumption of innocence which was expressly guaranteed by Article 6 para. 2 of the Convention (art. 6-2) and had been recognised by the Court of Justice of the European Communities ( Orkem v. Commission, Case 374/87 [1989] European Court Reports 3283) and by the Constitutional Court of South Africa (Ferreira v. Levin and Others, judgment of 6 December 1995) amongst others. It should apply equally to all defendants regardless of the nature of the allegations against them or their level of education and intelligence. It followed that the use made by the prosecution of the transcripts of interviews with the inspectors in subsequent criminal proceedings was contrary to Article 6 (art. 6).
61. Furthermore, the applicant argued that this use of the transcripts was particularly unfair in his case since, in the words of the Court of Appeal, they "formed a significant part of the prosecution case". Three days were spent reading extracts from his interviews with the inspectors to the jury before Mr Saunders decided that he ought to give evidence to explain and expand upon this material. As a result, he was subjected to intensive cross ‑ examination concerning alleged inconsistencies between his oral testimony at trial and his responses to the inspectors ’ questions, to which the trial judge drew attention in his summing-up to the jury. The prosecution ’ s task was thus facilitated when it was able to contrast its own evidence with Mr Saunders ’ s more specific denials in his interviews.
62. The Government submitted that only statements which are self ‑ incriminating can fall within the privilege against self-incrimination. However, exculpatory answers or answers which, if true, are consistent with or would serve to confirm the defence of an accused cannot be properly characterised as self-incriminating. In their submission, neither the applicant nor the Commission had identified at any stage a single answer given by the applicant to the DTI inspectors which was self-incriminating. There cannot be derived from the privilege against self-incrimination a further right not to be confronted with evidence that requires the accused, in order successfully to rebut it, to give evidence himself. That, in effect, was what the applicant was claiming when he alleged that the admission of the transcript "compelled" him to give evidence.
The Government accepted that a defendant in a criminal trial cannot be compelled by the prosecution or by the court to appear as a witness at his own trial or to answer questions put to him in the dock, and that an infringement of this principle would be likely to result in a defendant not having a fair hearing. However, the privilege against self-incrimination was not absolute or immutable. Other jurisdictions ( Norway, Canada, Australia, New Zealand and the United States of America ) permit the compulsory taking of statements during investigation into corporate and financial frauds and their subsequent use in a criminal trial in order to confront the accused ’ s and witnesses ’ oral testimony. Nor does it follow from an acceptance of the privilege that the prosecution is never to be permitted to use in evidence self-incriminating statements, documents or other evidence obtained as a result of the exercise of compulsory powers. Examples of such permitted use include the prosecution ’ s right to obtain documents pursuant to search warrants or samples of breath, blood or urine.
63. In the Government ’ s submission it would be wrong to draw from the Court ’ s Funke judgment (referred to at paragraph 60 above) a broad statement of principle concerning the "right to silence", since the nature of that right was not defined in the judgment. There can be no absolute rule implicit in Article 6 (art. 6) that any use of statements obtained under compulsion automatically rendered criminal proceedings unfair. In this respect it was necessary to have regard to all the facts of the case including the many procedural safeguards inherent in the system. For example, at the stage of the inspectors ’ inquiry, injustice was prevented by the facts that the inspectors were independent and subject to judicial supervision and that the person questioned was entitled to be legally represented before them and provided with a transcript of his responses which he could correct or expand. Moreover, during the course of any subsequent criminal trial, a defendant who had provided answers to the inspectors under compulsion was protected by the judge ’ s powers to exclude such evidence; admissions which might be unreliable or might have been obtained by oppressive means had to be excluded and there was a discretion to exclude other evidence if its admission would have an adverse effect on the fairness of the proceedings (see paragraphs 51-52 above).
64. The Government further emphasised that, whilst the interests of the individual should not be overlooked, there was also a public interest in the honest conduct of companies and in the effective prosecution of those involved in complex corporate fraud. This latter interest required both that those under suspicion should be compelled to respond to the questions of inspectors and that the prosecuting authorities should be able to rely in any subsequent criminal trial on the responses elicited. In this respect a distinction could properly be drawn between corporate fraud and other types of crime, since devices such as complex corporate structures, nominee companies, complicated financial transactions and false accounting records could be used to conceal fraudulent misappropriation of corporate funds or personal responsibility for such misconduct. Frequently the documentary evidence relating to such transactions would be insufficient for a prosecution or incomprehensible without the explanations of the individuals concerned. Furthermore, it had to be remembered that the kind of person questioned by the inspectors was likely to be a sophisticated businessman with access to expert legal advice, who had moreover chosen to take advantage of the benefits afforded by limited liability and separate corporate personality.
65. The Commission considered that the privilege against self ‑ incrimination formed an important element in safeguarding individuals from oppression and coercion, was linked to the principle of the presumption of innocence and should apply equally to all types of accused, including those alleged to have committed complex corporate frauds. In the instant case, the incriminating material, which the applicant was compelled to provide, furnished a not insignificant part of the evidence against him at the trial, since it contained admissions which must have exerted additional pressure on him to take the witness stand. The use of this evidence was therefore oppressive and substantially impaired Mr Saunders ’ s ability to defend himself against the criminal charges he faced, thereby depriving him of a fair trial.
At the hearing before the Court, the Delegate stressed that even steadfast denials of guilt in answer to incriminating questions can be highly incriminating and very damaging to a defendant. This was so in the present case as the answers were used against him both in the opening and closing speeches and in cross-examination to establish that the answers given to the inspectors could not be believed and that the applicant was dishonest.
66. Liberty, with reference to various international human rights treaties and the law existing in a number of Contracting Parties, requested the Court to find that Article 6 (art. 6) prevents self-incriminating evidence from being obtained from an individual under threat of judicial sanction and from being admissible in criminal proceedings.
67. The Court first observes that the applicant ’ s complaint is confined to the use of the statements obtained by the DTI inspectors during the criminal proceedings against him. While an administrative investigation is capable of involving the determination of a "criminal charge" in the light of the Court ’ s case-law concerning the autonomous meaning of this concept, it has not been suggested in the pleadings before the Court that Article 6 para. 1 (art. 6-1) was applicable to the proceedings conducted by the inspectors or that these proceedings themselves involved the determination of a criminal charge within the meaning of that provision (art. 6-1) (see, inter alia, the Deweer v. Belgium judgment of 27 February 1980, Series A no. 35, pp. 21 ‑ 24, paras. 42-47). In this respect the Court recalls its judgment in Fayed v. the United Kingdom where it held that the functions performed by the inspectors under section 432 (2) of the Companies Act 1985 were essentially investigative in nature and that they did not adjudicate either in form or in substance. Their purpose was to ascertain and record facts which might subsequently be used as the basis for action by other competent authorities - prosecuting, regulatory, disciplinary or even legislative (judgment of 21 September 1994, Series A no. 294-B, p. 47, para. 61). As stated in that case, a requirement that such a preparatory investigation should be subject to the guarantees of a judicial procedure as set forth in Article 6 para. 1 (art. 6-1) would in practice unduly hamper the effective regulation in the public interest of complex financial and commercial activities (ibid., p. 48, para. 62).
Accordingly the Court ’ s sole concern in the present case is with the use made of the relevant statements at the applicant ’ s criminal trial.
68. The Court recalls that, although not specifically mentioned in Article 6 of the Convention (art. 6), the right to silence and the right not to incriminate oneself are generally recognised international standards which lie at the heart of the notion of a fair procedure under Article 6 (art. 6). Their rationale lies, inter alia, in the protection of the accused against improper compulsion by the authorities thereby contributing to the avoidance of miscarriages of justice and to the fulfilment of the aims of Article 6 (art. 6) (see the above-mentioned John Murray judgment, p. 49, para. 45, and the above-mentioned Funke judgment, p. 22, para. 44). The right not to incriminate oneself, in particular, presupposes that the prosecution in a criminal case seek to prove their case against the accused without resort to evidence obtained through methods of coercion or oppression in defiance of the will of the accused. In this sense the right is closely linked to the presumption of innocence contained in Article 6 para. 2 of the Convention (art. 6-2).
69. The right not to incriminate oneself is primarily concerned, however, with respecting the will of an accused person to remain silent. As commonly understood in the legal systems of the Contracting Parties to the Convention and elsewhere, it does not extend to the use in criminal proceedings of material which may be obtained from the accused through the use of compulsory powers but which has an existence independent of the will of the suspect such as, inter alia, documents acquired pursuant to a warrant, breath, blood and urine samples and bodily tissue for the purpose of DNA testing.
In the present case the Court is only called upon to decide whether the use made by the prosecution of the statements obtained from the applicant by the inspectors amounted to an unjustifiable infringement of the right. This question must be examined by the Court in the light of all the circumstances of the case. In particular, it must be determined whether the applicant has been subject to compulsion to give evidence and whether the use made of the resulting testimony at his trial offended the basic principles of a fair procedure inherent in Article 6 para. 1 (art. 6-1) of which the right not to incriminate oneself is a constituent element.
70. It has not been disputed by the Government that the applicant was subject to legal compulsion to give evidence to the inspectors. He was obliged under sections 434 and 436 of the Companies Act 1985 (see paragraphs 48-49 above) to answer the questions put to him by the inspectors in the course of nine lengthy interviews of which seven were admissible as evidence at his trial. A refusal by the applicant to answer the questions put to him could have led to a finding of contempt of court and the imposition of a fine or committal to prison for up to two years (see paragraph 50 above) and it was no defence to such refusal that the questions were of an incriminating nature (see paragraph 28 above).
However, the Government have emphasised, before the Court, that nothing said by the applicant in the course of the interviews was self ‑ incriminating and that he had merely given exculpatory answers or answers which, if true, would serve to confirm his defence. In their submission only statements which are self-incriminating could fall within the privilege against self-incrimination.
71. The Court does not accept the Government ’ s premise on this point since some of the applicant ’ s answers were in fact of an incriminating nature in the sense that they contained admissions to knowledge of information which tended to incriminate him (see paragraph 31 above). In any event, bearing in mind the concept of fairness in Article 6 (art. 6), the right not to incriminate oneself cannot reasonably be confined to statements of admission of wrongdoing or to remarks which are directly incriminating. Testimony obtained under compulsion which appears on its face to be of a non-incriminating nature - such as exculpatory remarks or mere information on questions of fact - may later be deployed in criminal proceedings in support of the prosecution case, for example to contradict or cast doubt upon other statements of the accused or evidence given by him during the trial or to otherwise undermine his credibility. Where the credibility of an accused must be assessed by a jury the use of such testimony may be especially harmful. It follows that what is of the essence in this context is the use to which evidence obtained under compulsion is put in the course of the criminal trial.
72. In this regard, the Court observes that part of the transcript of answers given by the applicant was read to the jury by counsel for the prosecution over a three-day period despite objections by the applicant. The fact that such extensive use was made of the interviews strongly suggests that the prosecution must have believed that the reading of the transcripts assisted their case in establishing the applicant ’ s dishonesty. This interpretation of the intended impact of the material is supported by the remarks made by the trial judge in the course of the voir dire concerning the eighth and ninth interviews to the effect that each of the applicant ’ s statements was capable of being a "confession" for the purposes of section 82 (1) of the Police and Criminal Evidence Act 1984 (see paragraph 53 above). Similarly, the Court of Appeal considered that the interviews formed "a significant part" of the prosecution ’ s case against the applicant (see paragraph 40 above). Moreover, there were clearly instances where the statements were used by the prosecution to incriminating effect in order to establish the applicant ’ s knowledge of payments to persons involved in the share-support operation and to call into question his honesty (see paragraph 31 above). They were also used by counsel for the applicant ’ s co ‑ accused to cast doubt on the applicant ’ s version of events (see paragraph 32 above).
In sum, the evidence available to the Court supports the claim that the transcripts of the applicant ’ s answers, whether directly self-incriminating or not, were used in the course of the proceedings in a manner which sought to incriminate the applicant.
73. Both the applicant and the Commission maintained that the admissions contained in the interviews must have exerted additional pressure on the applicant to give testimony during the trial rather than to exercise his right to remain silent. However, it was the Government ’ s view that the applicant chose to give evidence because of the damaging effect of the testimony of the chief witness for the prosecution, Mr Roux.
Although it cannot be excluded that one of the reasons which affected this decision was the extensive use made by the prosecution of the interviews, the Court finds it unnecessary to speculate on the reasons why the applicant chose to give evidence at his trial.
74. Nor does the Court find it necessary, having regard to the above assessment as to the use of the interviews during the trial, to decide whether the right not to incriminate oneself is absolute or whether infringements of it may be justified in particular circumstances.
It does not accept the Government ’ s argument that the complexity of corporate fraud and the vital public interest in the investigation of such fraud and the punishment of those responsible could justify such a marked departure as that which occurred in the present case from one of the basic principles of a fair procedure. Like the Commission, it considers that the general requirements of fairness contained in Article 6 (art. 6), including the right not to incriminate oneself, apply to criminal proceedings in respect of all types of criminal offences without distinction from the most simple to the most complex. The public interest cannot be invoked to justify the use of answers compulsorily obtained in a non-judicial investigation to incriminate the accused during the trial proceedings. It is noteworthy in this respect that under the relevant legislation statements obtained under compulsory powers by the Serious Fraud Office cannot, as a general rule, be adduced in evidence at the subsequent trial of the person concerned. Moreover the fact that statements were made by the applicant prior to his being charged does not prevent their later use in criminal proceedings from constituting an infringement of the right.
75. It follows from the above analysis and from the fact that section 434 (5) of the Companies Act 1985 authorises, as noted by both the trial judge and the Court of Appeal, the subsequent use in criminal proceedings of statements obtained by the inspectors that the various procedural safeguards to which reference has been made by the respondent Government (see paragraph 63 above) cannot provide a defence in the present case since they did not operate to prevent the use of the statements in the subsequent criminal proceedings.
76. Accordingly, there has been an infringement in the present case of the right not to incriminate oneself.
B. Alleged misuse of powers by the prosecuting authorities
77. The applicant also complained that the prosecuting authorities had deliberately delayed the institution of the police investigation to enable the inspectors to gather evidence under their special powers. He referred to the meeting on 30 January 1987 between the inspectors and representatives of the Crown Prosecution Service (see paragraph 23 above), which preceded the formal initiation of the police investigation by some three months (see paragraph 26 above). In addition, documents disclosed for the purposes of the most recent appeal (see paragraphs 39-44 above) showed that, in the words of the Court of Appeal, "all concerned were conscious that the inspectors had greater powers than the police when conducting their interviews and it was clearly hoped that the inspectors would elicit answers ... which could be used in evidence at trial".
He reasoned that the fact that the Court of Appeal had found that there had been no abuse of process should not be decisive, since the domestic court could not apply the Convention and had been bound by English law to conclude that the use made at trial of the transcripts of the interviews with the inspectors had not been unfair.
78. The Government emphasised that the applicant had already argued this issue before the Court of Appeal without success (see paragraph 43 above) and that in raising it again in Strasbourg he was attempting to use the Court as a fourth instance, contrary to the established jurisprudence of the Court.
79. The Commission found it unnecessary to consider this head of complaint in view of its finding that the applicant had been denied a fair trial by reason of the use made of the transcripts during his trial.
80. In the light of the above finding of an infringement of the right not to incriminate oneself, the Court considers it unnecessary to examine the applicant ’ s allegations on this point. It notes, however, the findings of the Court of Appeal that the inspectors had conducted their inquiries independently without briefing or prompting by the prosecuting authorities and that there had been no improper or unfair collusion between them (see paragraph 43 above).
81. In conclusion the applicant was deprived of a fair hearing in violation of Article 6 para. 1 of the Convention (art. 6-1).
II. APPLICATION OF ARTICLE 50 OF THE CONVENTION (art. 50)
82. The applicant sought just satisfaction under Article 50 of the Convention (art. 50), which reads as follows:
"If the Court finds that a decision or a measure taken by a legal authority or any other authority of a High Contracting Party is completely or partially in conflict with the obligations arising from the ... Convention, and if the internal law of the said Party allows only partial reparation to be made for the consequences of this decision or measure, the decision of the Court shall, if necessary, afford just satisfaction to the injured party."
83. The applicant submitted that the prosecution case against him would have been in serious difficulties but for the evidence introduced at his trial, in violation of Article 6 (art. 6). He thus claimed pecuniary loss amounting to £3,668,181.37. This claim was made up of sums in respect of loss of earnings up to May 1995, travelling and subsistence expenses, fees paid to solicitors ( Payne Hicks Beach ) relating to the interviews before the inspectors and to solicitors (Landau and Landau) in respect of, inter alia, the criminal proceedings.
At the hearing before the Court, however, the applicant accepted that "true compensation" would be a finding in his favour by the Court and the resulting vindication of his good name.
84. The Government submitted that the applicant ’ s claim for pecuniary loss was excessive. In particular, they pointed out that Mr Saunders had not criticised the investigation by the inspectors itself, but had nonetheless sought reimbursement for his legal costs in connection with it. With regard to his claim for loss of earnings, they submitted that he was dismissed by Guinness following the company ’ s own investigation into the conduct of the take-over. Moreover, he had been in receipt of a pension from Guinness of £74,000 per annum since his dismissal, in addition to which, since May 1993, he had earned approximately £125,000 net per annum as a business consultant.
85. The Delegate of the Commission emphasised that in finding a breach of Article 6 para. 1 (art. 6-1) the Commission could not be taken to have made any suggestion as to the likely outcome of Mr Saunders ’ s trial had the transcripts not been admitted in evidence.
86. The Court observes that the finding of a breach in the present case concerned the criminal proceedings against the applicant and not the proceedings before the inspectors about which no complaint was made. Moreover, it cannot speculate as to the question whether the outcome of the trial would have been any different had use not been made of the transcripts by the prosecution (see, mutatis mutandis, the John Murray judgment cited above at paragraph 68, p. 52, para. 56) and, like the Commission, underlines that the finding of a breach of the Convention is not to be taken to carry any implication as regards that question.
It therefore considers that no causal connection has been established between the losses claimed by the applicant and the Court ’ s finding of a violation.
87. The applicant sought non-pecuniary damages of £1 million to compensate him for the denial of his right to a fair trial and the resulting anxiety, anguish and imprisonment.
88. The Government submitted that no award should be made under this head.
89. The Court considers that, in the circumstances of the case, the finding of a violation constitutes sufficient just satisfaction in respect of any non-pecuniary damage sustained.
90. The applicant claimed a total of £336,460.75 by way of costs and expenses in connection with the Strasbourg proceedings. This was composed of (1) £82,284.50 in respect of counsel ’ s fees; (2) £42,241.25 in respect of solicitors ’ fees and (3) £211,935 concerning the fees of the applicant ’ s advisers, Mr and Mrs Devlin.
91. The Government considered that the amounts claimed under this head were excessive. In particular they submitted that no award should be made in respect of the fees of Mr and Mrs Devlin since the applicant could have effectively presented his case in Strasbourg with the assistance only from experienced solicitors and leading and junior counsel.
92. The Delegate of the Commission had no comments to make on the amounts claimed.
93. The Court is not satisfied that the amounts claimed by the applicant were necessarily incurred or reasonable as to quantum. Deciding on an equitable basis, it awards £75,000 under this head.
94. According to the information available to the Court, the statutory rate of interest applicable in the United Kingdom at the date of adoption of the present judgment is 8% per annum.
1. Holds by sixteen votes to four that there has been a violation of Article 6 para. 1 of the Convention (art. 6-1);