Financial services — Confidential information — Disclosure — Financial Services Authority investigating defendant companies — Authority interviewing past and present employees — Claimant bringing action against companies and seeking inspection of documents including transcripts of interviews — Defendants objecting to disclosure — Whether confidential information received by defendants from Financial Services Authority — Whether disclosure permitted — Financial Services and Markets Act 2000, s 348 — CPR r 13.19(5)

Real Estate Opportunities Ltd v Aberdeen Asset Managers Jersey Ltd and others

Ch D: David Richards J: 15 December 2006

Where a company received information from the Financial Services Authority (“FSA”) as part of an investigation by the FSA, s 348 of the Financial Services and Markets Act 2000 did not prohibit the company from disclosing transcripts of interviews by the FSA with its present or former employees in so far as the transcripts contained information already and independently known to the company.

David Richards J so held in the Chancery Division in determining an application by Real Estate Opportunities Ltd under CPR r 31.19(5) for the court decide whether to uphold a claim by the defendants, Aberdeen Asset Managers Jersey Ltd, Aberdeen Asset Managers Ltd and UBS Ltd under CPR r 31.19(3) that they were permitted to withhold inspection of certain documents from the claimant on the basis that the documents constituted confidential information received by them from the FSA and disclosure would be a criminal offence under s 348 of the Financial Services and Markets Act 2000.

The first and second defendants were one of the leading fund managers of split capital investments companies. The third defendant was an investment bank with experience in the splits market. The defendants developed a proposal for the claimant company for its flotation on the splits market. The collapse of the splits market in 2001 led to investigations by the Financial Services Authority. A number of the defendants’ present and former employees were interviewed by the FSA as part of its investigation and the transcripts were then sent to the defendants. The claimant brought contract and tort claims against the defendants and sought inspection of certain documents, including transcripts of the interviews. The defendants claimed under CPR r 31.19(3) that they were permitted to withhold certain documents from disclosure, even though they were relevant to the issues in the claims against them. The third defendant objected to inspection on the ground that it was prohibited by s 348 of the Financial Services and Markets Act 2000. The first and second defendants, whilst accepting that s 348 did not apply to information which they already knew before the documents were supplied to them by the FSA, objected to inspection on the ground that the process of redaction would be so extensive so as to render the inspection disproportionate and that it should therefore be refused. The claimant applied to the court under CPR r 31.19(5) for the court to determine whether the defendants’ claim under CPR r 31.19(3) should be upheld.

DAVID RICHARDS J said that s 348 of the 2000 Act did not prohibit the disclosure by the defendant companies of transcripts of interviews by the FSA with their present or former employees insofar as those transcripts contained information already and independently known to the defendants. Where the recipient of information from the FSA was a company, prior knowledge of the company was to be determined applying the rules of attribution. The balance
of likely value when weighed against the problems associated with redaction favoured an order for inspection rather than a refusal. The defendants were therefore ordered to permit inspection of the information in issue, subject to redaction.

Appearances: Jonathan Sumption QC, Helen Davies and Simon Birt (Lovells) for the claimant; Mark Howard QC, Simon Salzedo and David Scannell (CMS Cameron McKenna LLP) for the first and second defendants; Iain Milligan QC and Adrian Beltrami (Mayer Brown Rowe & Maw LLP) for the third defendant.

Reported by: Sarah Addenbrooke, barrister