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The rules of professional bodies/regulators generally impose a duty on their members to provide information, assistance or cooperation in pursuit of the regulator’s investigatory and disciplinary functions. In the course of their investigations, regulators may find that members (whether witnesses or individuals under investigation) are reluctant to provide such assistance, on the basis that to do so may expose them either to further disciplinary proceedings or to criminal proceedings. The issue was considered by the High Court and Court of Appeal in R v Institute of Chartered Accountants in England and Wales, ex parte Nawaz ([1997] EWCA Civ 1530 (Court of Appeal, Leggatt J); [1997] P.N.L.R 433 (High Court, Sedley J)). The effect of Nawazis that, provided that the regulator exercises functions of sufficient public interest, the member will not be able to claim the privilege against self-incrimination.

Mr Nawaz was a member of the Institute of Chartered Accountants in England and Wales (‘ICAEW’). As part of its investigatory process and under the relevant byelaw, ICAEW requested that Mr Nawaz provide ICAEW with information and documents. These could subsequently be used against him in disciplinary proceedings. Having taken legal advice, Mr Nawaz refused, describing the request as an effort to ‘dig the dirt’. The Investigating Committee laid a formal complaint against Mr Nawaz of, inter alia, failing to respond adequately to the request for information. The charge was found proved against Mr Nawaz and he was disciplined. He subsequently appealed to the High Court on the basis that the duty to provide information violated the common law privilege against self-incrimination.

Privilege and waiver

The court held that the privilege against self-incrimination was capable of applying in relation to all exercises of public power, rather than being confined to judicial or quasi-judicial proceedings. Notwithstanding this, by becoming a member of the ICAEW, Nawaz was taken to have contracted with the ICAEW on the terms of its charter, byelaws and regulations and, therefore, to have prima facie waived privilege.

Potential limits on waiver

The main question to be decided was whether the requirement to provide information is so wide that it should be read down to conform with the requirements of public law. If so, this would limit the prima facie waiver of privilege and thus exclude ICAEW’s power to call on Mr Nawaz to provide material which may incriminate him. Sedley J considered the decisions of the House of Lords inAT and TIstel Limited v Tully[1993] A.C. 45, andR v Director of the Serious Fraud Office ex parte Smith [1993] A.C. 1, which both consider in detail the nature of the privilege in criminal and civil proceedings.

In Smith, Lord Mustill distinguished six ‘rights to silence’ (paragraphs 30-31), the relevant one in Nawaz being ‘a general immunity, possessed by all persons and bodies, from being compelled on pain of punishment to answer questions the answers to which may incriminate them.’ His Lordship then proceeded to discuss four distinct motives which had seen these immunities become embedded in English law:

The common view that one person should, so far as possible, be entitled to tell another person to mind his own business;

The long history of reaction against abuses of judicial interrogation, with specific reference to the secretive proceedings of the Star Chamber;

The notion that it is ‘contrary to fair play’ to put an accused in a position where he is exposed to punishment whatever he does;

The desire to minimise the risk that an accused will be convicted on the strength of an untrue extra-judicial confession.

Sedley J held that none of these motives applied to Mr Nawaz, noting that:

The Royal Charters constituting ICAEW and the legislation under which it operates make it ICAEW’s business to investigate possible cases of misconduct;

The requirement to provide information cannot be equated with torture and is a reasonable function of the public responsibility which an individual undertakes by becoming a chartered accountant;

The same is true of the argument that an accused is put in a position where he is exposed to punishment whatever he does. The instinct for fair play which ordinarily makes such a dilemma unacceptable has to accommodate the public interest in detecting malpractice in a profession which is central to the financial wellbeing of millions of individuals and of the country as a whole;

The final consideration, the risk of untrue admissions, had no bearing in Nawaz’s case.

On appeal, Sedley J’s decision, namely that "intelligible and powerful grounds of public policy" exist for endorsing the waiver was endorsed by the Court of Appeal, Leggatt LJ remarking as follows:

“When a person enters a profession he accepts its duties and liabilities as well as its rights and powers. Similarly, he may acquire or surrender privilege and immunities... In my judgment, acceptance of a duty to provide information demanded of an accountant constitutes a waiver by the member concerned of any privilege from disclosure. It is plainly in the public interest, as well as the interests of the profession, that the Institute should be enabled to obtain all such information in the profession of its members as is relevant to complaints of their professional misconduct.”

Other regulators and the importance of the public interest

The same reasoning has subsequently been applied to solicitors’ disciplinary proceedings (Macpherson v Law Society [2005] 2837 (Admin) at paragraph 10; Holder v Law Society [2005] EWHC 2023 (Admin) at paragraphs 34-42) and has seen the courts paying significant regard to the nature of a regulator’s responsibilities and the public interest inherent in their work. Provided that the public interest is sufficiently great, any regulator exercising supervisory functions of its members is likely to be able to require information or assistance from them, notwithstanding that this may expose the member in question to further regulatory proceedings.

Criminal proceedings and the duty to administer cautions

The misconduct identified inNawaz related to unregistered auditing, itself a criminal offence; with Sedley remarking (p.451) 'that such auditing can also be a criminal offence emphasises, if anything, that it is not merely the accountant's private business’. In addition, at common law there is no absolute bar on evidence in regulatory proceedings being adduced in subsequent criminal proceedings (see, for example,Colpus [1917] 1 K.B. 574, in which evidence given before a military Court of Inquiry was subsequently deemed admissible in criminal proceeding).

Further, there is no principle in law which debars a claimant in a civil action from pursuing an action merely because to do so would or might result in the defendant, in taking some necessary procedural step in defending the civil proceedings, having to disclose his likely defence in parallel criminal proceedings (see Jefferson v Bhetcha [1979] 1 W.L.R. 898, though the court may exercise its discretion to stay civil proceedings pending the outcome of criminal proceedings if it considers it in the interests of justice). The weight of authority therefore suggests that an individual subject to professional disciplinary proceedings cannot refuse to engage simply on the basis that to do so may expose them to criminal charges.

In addition, provided that they are not persons ‘charged with the duty of investigating offences or charging offenders’ (Police and Criminal Evidence Act 1984 s.67(9)), investigators questioning persons suspected of conduct which may amount to a criminal offence are under no duty to administer a formal caution to the effect that the answers given may be used in criminal proceedings; this exemption will apply in the context of the majority of regulatory proceedings (though, Colpus notwithstanding, a failure to caution could potentially have an impact on the admissibility of any admissions in subsequent criminal proceedings).

Legal Professional Privilege

While a regulatory body may have the power to demand information from its members, communications which are subject to legal professional privilege generally fall outside such a power. Legal professional privilege can only be overridden by primary legislation containing express words or necessary implication (see, for example,B & Others v Auckland District Law Society and Another [2004] 4 All E.R. 269. A notable exception relates to solicitors’ accounts. InParry-Jones v The Law Society [1969] 1 Ch. 1, the Law Society’s power to require solicitors to disclose their books was held to be ‘a valid rule which overrides any privilege or confidence which otherwise might subsist between solicitor and client. It enables the Law Society for the public good to hold an investigation, even if it involves getting information as to client affairs’.

In R (on the application of Morgan Grenfell & Co Ltd) v Special Commissioner of Income Tax [2003] 1 A.C. 563 (opinion of Lord Hoffman at p.612) the House of Lords held that the true justification for this decision was that ‘this limited disclosure did not breach the clients' LPP... It does not seem to me to fall within the same principle as a case in which disclosure is sought for a use which involves the information being made public or used against the person entitled to the privilege’. The disclosure of the documents in question must be truly necessary to enable the investigating officer to ascertain whether or not the individual in question has complied with the Solicitors’ Accounts Rules, and the material must only be used for the purpose of the investigation and any consequent proceedings.

David Northfield

Associate at Field Fisher Waterhouse


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