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TMI Blog1970 (7) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... them was eminent counsel; the other a distinguished accountant. It was important in the public interest that the investigation should be completed as speedily as possible. Time was of the essence. Only thus could confidence be restored. At once Mr. Robert Maxwell, the most prominent member of the Pergamon Board, assured the inspectors of his full co-operation. He sent a memorandum saying: "In the interests of clearing the company's good name and reputation and in the interests of getting the inquiry completed as soon as possible, we promise the inspectors full co-operation." So far so good. Soon afterwards, however, things happened which considerably affected the attitude of Mr. Maxwell and his colleagues. On October 10, 1969, the Leasco Corporation, who had a sufficient holding for the purpose, removed Mr. Maxwell and some of the others from the board and appointed new directors in their stead. These new directors were Leasco men. On November 3, 1969, Leasco filed a suit in New York against Mr. Maxwell and some of his companies, charging them with fraud and deceit in connection with the sale of shares in Pergamon. The claim was for $22 million. These events made Mr. Maxwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Robert Maxwell himself. He came with his solicitor, Mr. Freeman, to the place where the inspectors were meeting. He gave his name and address and said that he was the holder of the Military Cross and a member of Parliament. Then Mr. Stable, a Queen's Counsel, one of the inspectors, asked him this simple question,"When did you first become associated with Pergamon Press Ltd.?" to which Mr. Maxwell replied : "Mr. Stable, in view of the submissions made on my behalf by Mr. Freeman, I respectfully refuse to answer any further questions unless I am ordered to do so by the court." This attitude left the inspectors with no alternative but to report the refusal to the court. Accordingly, they gave a certificate under section 167 (3) of the Companies Act, 1948, and made an affidavit setting out the facts. The matter came before Plowman J. [1970] 1 W.L.R. 1075, on April 24, 1970. He held that the objections taken by the directors were premature; they were not justified in their refusal to answer the questions. He made no order against them save that they pay the costs of the application. The directors appeal to this court. Mr. Morris Finer, on behalf of Mr. Maxwell, claimed that they h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to judicial proceedings. It may expose persons to criminal prosecutions or to civil actions. It may bring about the winding up of the company, and be used itself as material for the winding up : see In re S.B.A. Properties Ltd. [1967] 1 W.L.R. 799 ; 37 Comp. Cas. 618. Even before the inspectors make their report, they may inform the Board of Trade of facts which tend to show that an offence has been committed: see section 41 of the Act of 1967. When they do make their report, the board are bound to send a copy of it to the company ; and the board may, in their discretion, publish it, if they think fit, to the public at large. Seeing that their work and their report may lead to such consequences, I am clearly of the opinion that the inspectors must act fairly. This is a duty which rests on them, as on many other bodies, even though they are not judicial, nor quasi-judicial, but only administrative: see Reg. v. Gaming Board for Great Britain, Ex parte Benaim and Khaida. [1970] 2 W.L.R. 1009. The inspectors can obtain information in any way they think best, but before they condemn or criticise a man, they must give him a fair opportunity for correcting or contradicting w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omments before including it. But I think this also is going too far. This sort of thing should be left to the discretion of the inspectors. They must be masters of their own procedure. They should be subject to no rules save this : They must be fair. This being done, they should make their report with courage and frankness, keeping nothing back. The public interest demands it. They need have no fear because their report, so far as I can judge, is protected by an absolute privilege : see Home v. Bentinck [1820] 2 Brod. . Bind. 130, 162 per Lord Ellenborough and Chatterton v. Secretary of State for India in Council [1895] 2 Q.B. 189, 191 per Lord Esher M.R. On reading through the evidence in this case, I think the inspectors acted perfectly properly. They made it quite clear that they intended to act fairly. They gave every assurance which the directors could reasonably require. Yet the directors were not satisfied. They demanded further assurances. They had no colour of right to demand them. They knew that speed was essential. They had promised full co-operation, yet when asked the simple question: "When did you first become associated with Pergamon Press Ltd.?" each ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being in any position to assess whether facts exist which could give rise either to criticism of any of the company's officers or agents, or a fortiori whether there is any prima facie case fit to be considered by the Board of Trade for action. Such matters can usually only be uncovered and examined by the aid of those books and such evidence as the inspectors are entitled to demand by virtue of the provisions of section 167 of the Act of 1948. Next is the factor that it may be vital for the protection of the general public or for the protection of members of the company in question that the inquiry produces at least an interim report with the utmost practicable speed, otherwise a main purpose of the proceedings may fail. The present case is one in which such speed was essential. Last but not least it is necessary to say something as to what may be contained in the reports and the extent to which they are published. I have had the advantage of seeing a number of these, and in particular some that have been published by the Stationery Office and put on sale to the general a public at varying prices. Naturally, the contents and styles of such reports vary to a considerable d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " To come to that conclusion it is, as recent decisions have shown, not necessary to label the proceedings "judicial," "quasi-judicial," "administrative" or "investigatory": it is the characteristics of the proceeding that matter, not the precise compartment or compartments into which it falls and one of the principal characteristics of the proceedings under consideration is to be found in the inspectors' duty, in their statutory fact-finding capacity, to produce a report which may be made public and may thus cause severe injury to an individual by its findings. That characteristic is of itself sufficient to distinguish the position in the present case from that to which Lord Reid referred in Wiseman v. Bornetnan [1969] 3 W.L.R. 706, 710; [1970] 75 I.T.R. 652 (H.L.), when he said : "Every public officer who has to decide whether to prosecute or raise proceedings ought first to decide whether there is a prima facie case, but no one supposes that justice requires that he should first seek the comments of the accused or the defendant on the material before him. So there is nothing inherently unjust in reaching such a decision in the absence of the other party." The reports o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in whatever way it can best be obtained. That may be by interviews, it may be from statements obtained in writing, it may be from accounts and other documents, or it may be by their exercising their powers under section 167(3) to put questions to individuals, either on oath or not on oath. One way or another it may be a considerable time before the inspectors have before them sufficient information to see any pattern in the affairs of a company. Even when this pattern commences to take shape, they may need further material before the possibility emerges of any criticism attaching to individuals. Moreover, that possibility may derive from documentary evidence which is in substance uncontested, or it may derive from, a matter on which there may be a conflict of evidence between some witness and the person to whom blame may be attributed. In the latter case there may come the stage when the inspectors have to decide whether simply to record that Conflict or whether to seek to resolve it. The more complex the affairs of the company and the greater the number of subsidiary companies, the longer it may take before those respective stages are reached. In the course of that investiga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to be hypothetical." Is there then anything about this particular case that renders it different to the normal run of cases ? Mr. Finer submitted that there was a special factor, and he referred to the proceedings in the United States. In this behalf it is not necessary for me to go over the same ground as to the course of events as has already been covered by Lord Denning M.R. This was a company in which the capital as valued on the London Stock Exchange ran into many millions of pounds. The take-over or merger bid involved 25 million. The dealings on the London Stock Exchange were suspended, and, what is more, we were informed in this court that they remain suspended. That is a matter that must be of grave importance to a large number of individual shareholders in this company. Accordingly, the situation was one which called for as much speed as practicable in the investigation. The fact that Mr. Maxwell is being sued for heavy damages in New York by the American company and that the latter have now got control of Pergamon is not in point in relation to the interest of the many shareholders to whom I have referred or to the public interest in a matter of great importance t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en pursued against the fairness of inspectors' procedure, and we were informed that there was no trace of any such complaint in the reports which were presented by the committees presided over by Lord Greene, Lord Cohen and Lord Jenkins in 1926 (Cmd. 2657/1926), 1945 (Cmd 6659/1945) and 1962 (Cmnd. 1749/1962) respectively. As to the various procedural claims raised in the notices of appeal, being in agreement with what Lord Denning M.R. has said, I see no need to refer to them individually. I might perhaps add, however, that as to the claim to cross-examine witnesses, it is quite apparent from the contents of section 167(3), that this was hopelessly ill-founded. I would only add this, that having noted the professions on the part of the appellants in general, and Mr. Maxwell in particular, as to the need for speed in the investigation, and as to their desire to co-operate in it, I am in sympathy with one observation of Mr. Stable to which Mr. Finer objected. Mr. Stable referred to witnesses who "tend to come along and assure us that what is absolutely uppermost in their minds is giving us assistance and then put forward a method of conducting this inquiry which, if adopted, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial process, but, particularly since the company is entitled to a copy of the report, he should not be exposed to the risk of such proceedings without being given a fair opportunity by the inspectors to forestall an adverse report. If inspectors are disposed to report on the conduct of anyone in such a way that he may in consequence be proceeded against, either in criminal or civil proceedings, the inspectors should give him, if he has not already had it, such information of the complaint or criticism which they may make of him in their report and of their reasons for doing so, including such information as to the nature and effect of the evidence which disposes them so to report, as is necessary to give the person concerned a fair opportunity of dealing with the matter, and they should give him such an opportunity. What disclosure will be necessary for this purpose must depend upon the circumstances of the particular case. It may not, and I think often would not, in an ordinary case involve disclosing the identity of witnesses or the disclosure of transcripts. It certainly would not normally involve offering an opportunity to cross-examine any other witnesses, and, indeed, it ..... 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