Smellie CJ
THE GRAND COURT OF THE CAYMAN ISLANDS
CRIMINAL SIDE
INDICTMENT 6 OF 2001
THE QUEEN
V
DONALD STEWART
BRIAN CUNHA
IVAN BURGES
JUDITH DONEGAN
Appearances:
Mr. Andrew Mitchell Q.C. and Mr. Kennedy Talbot instructed by Miss Cheryl Richards Crown Counsel on behalf of the Crown.
Mr. Michael Hill Q.C. instructed by Mr. Marcus Thompson of Walkers for the defendant Stewart.
Mr. Geoffrey Cox instructed by Mr. Lee Freeman of Campbells for defendant Cunha
Mr. Trevor Burke Q.C. instructed by Mr. David McGrath of Quin & Hampson for the defendant Burges.
Mr. Neil Sharkey Q.C. instructed by Mr. John Furniss for the defendant Donegan.
Before: Hon. Chief Justice Anthony Smellie
Date: 18.7.2002
REASONS FOR DECISION
(GIVEN IN THE ABSENCE OF THE JURY)
As the result of a ruling I made only last week in the course of a voir dire enquiry about the testimony of the first prosecution witness, Mr. Michael Pilling; there has been late disclosure of material which has been shown to have some bearing upon the proper presentation of this case to the jury. Mr. Pilling is one of the two official liquidators of Eurobank and is called by the prosecution to testify to a wide ranging number of issues.
These relate to the systems, practices and apparent "due diligence" failings within the bank as found by the liquidators and their staff when they took over the bank in May 1999.
The late disclosure may be described as being of two types of material:
(i) drafts of Mr. Pilling's statement of which there was a number (at least 8) leading up to his final statement upon which he testified.
(ii) related correspondence generated as between the legal advisors and employees of his liquidation staff, during the course of the drafting of his statement.
A third category of material which is no longer available and about the unavailability of which there is strong complaint, are the underlying working papers which would have been generated by those involved in compiling the drafts. It is important to note that this category, it has been ascertained, would not have included official documents of the bank not used by the prosecution. Those, the defence acknowledge, are to be all still intact and available, albeit impracticable for the defence to examine on an individual basis.
There are several hundreds of thousands such documents described as "prosecution unused material" which, although ordered to be and made available to the defence at least since January of this year, could not all have been examined by the defence because, I am told, they neither have had the time nor resources to do so. No actual prejudice is said or specified to have arisen from those circumstances.
The concern is that the underlying working papers for the draft statements are not to be available at all.
This ultimately, as I understand it, is the real basis of complaint of prejudice which is advanced by the defence (i.e. Mr. Hill, Mr. Cox and Mr. Sharkey on behalf of their respective clients).
It proceeds on the now clearly established footing that Mr. Pilling was in no real manner primarily responsible for the drafting of his statement or the compilation of the underlying working material upon which his statement was based. That was primarily the work of those others - the legal adviser and liquidation staff - already identified such that there is very little if anything of fact asserted in his statement about which Mr. Pilling can properly testify of his own knowledge.
There were nonetheless, from a review of his evidence some 26 - 30 specific areas of factual assertions in his evidence in chief. I will return to deal with these.
The position, as it has been acknowledged by the prosecution, is that because others did the underlying preparatory work for his statement, Mr. Pilling must now properly be regarded and is now to be presented by the prosecution as being primarily the custodian of the records of the bank in his capacity as one of the liquidators of the bank.
The prejudice arising from all this, say the defence, is two-fold.
First the jury have heard the 26 - 30 assertions of fact on the basis that Mr. Pilling had verified and had satisfied himself that they were true, but, as it has unfolded, that is not the case.
Second, because the working papers used for the preparation of his statement have been shredded and so are no longer available, the audit trail which could have been followed back to see how the material for his statement was identified and selected has also been lost, the result being that the defence are unable either to verify or refute the accuracy of the many factual conclusions in his statement about which he testified.
The defence say they were entitled to rely upon the factual assertions in Mr. Pilling's statement and had agreed that his evidence could be marshalled on the basis that they
were true. Mr. Cox in particular, submitted that had they reason to doubt the veracity of Mr. Pilling's factual assertions, they would have approached the defence differently.
By this I understand him to mean that assertions of fact against the interests of their clients, accepted as true coming from Mr. Pilling because he was assumed to have verified his statement, would not have been so accepted. Instead, they would have put the prosecution, to the extent the prosecution needed them, to strict proof of those facts; presumably by adducing evidence from someone from Mr. Pilling's liquidation team having full knowledge of the facts.
Mr. Hill described this shortcoming - the unavailability of working papers - as the real vice in these terms:
"It goes back to whether in fact we should have had all this material going back at the end of 2000, the beginning of 2001, and there is no argument to the contrary in our respectful submission, and whether in all the circumstances if we didn't have them, we have suffered prejudice as a result. The prejudice manifests itself in various ways. One of them is that as a result of it, throughout 2001 and into 2002, as late as May 2002, we were saying in effect, we want the underlying documentation. Now that I know, I was almost whistling in the wind because this underlying documentation is long long gone, there is a clear prejudice. How do we correct that in cross-examination --
These were the working papers of the persons, who were going through the banking records, which they then had and those working papers were for the purpose of producing reports to Mr. Pilling to write his statement. But that would have told us things we have been asking for. What did you select your documents from? Where did you get them from?"
Mr. Hill went on to explain, in terms which expanded upon what Mr. Sharkey and Mr. Cox also said; that the point of that kind of disclosure would have been to follow the audit trail of the development of Mr. Pilling's statement; to cover the same ground as those who did the ground work for the statement. That, Mr. Hill emphasised, is the whole point of this kind of disclosure. Mr. Hill describes this as the "lost window of opportunity" through which the defence was entitled to look to see whether material
helpful to them existed: citing Regina v Melvin (unreported) 20 December 1993 per Jowitt
(later cited with approval by the English Court of Appeal in Keane [1994] 1 W.L.R. 746.
Justice Jowitt said:
"I would judge to be material in the realm of disclosure that which can be seen on a sensible appraisal by the prosecution:
(1) To be relevant or possibly relevant to an issue in the case
(2) To raise or possibly raise a new issue whose existence is not apparent from the evidence the prosecution proposes to use;
(3) To hold out a real (as opposed to fanciful) prospect of providing a lead on evidence which goes to (1) or (2)"
(See also ruling delivered in related liquidation proceedings in G.C. Cause 379/99 on 22 January 2002).
This then, is the fundamental issue with which I have had to grapple: Just what is the nature of the window of opportunity for inquiry which has been lost to the defence? Just what is the nature of the irremediable prejudice suffered?
The answer to this can only be found in the context of the factual assertions made by Mr. Pilling in his evidence. Only in that regard can it be said that the lost audit trail for the preparation of this statement is relevant. It can only be to the extent that he has asserted matters of fact which the defence are to be hampered from disproving that might it be said that they have been prejudiced.
Defence Counsel have not suggested that they were hoping to rely on Mr. Pilling to prove issues of fact which the defence need for the presentation of their cases. That is not surprising for, after all, Mr. Pilling is a chief prosecution witness.
Viewed in that way, the very finite and already identified areas of factual assertions are, in my view, quite amenable to being disproved – if disproof of them is in the interest of the defence – by way of cross-examination.
If in respect of any of them Mr. Pilling is put to strict proof and is unable to substantiate because he did not do the ground work himself and because the audit trail for it is no longer available, that assertion would be thus undermined.
Indeed, as it is now quite clear that he testifies in the capacity of little more than as custodian of the records, that is likely to be the outcome in respect of many of the assertions.
Similarly, the approach which might be taken to any other witness of fact speaking to what the records of the bank may or may not have revealed and giving testimony without the benefit of the underlying working papers which would have led to such conclusions.
This is likely to be the case with any other witness who was involved with the ground work upon which Mr. Pilling’s statement was based.
Viewed in that way, the loss of the working papers is to be regarded not as necessarily prejudicial to the defence, but as a possible advantage to the defence and disadvantage to the prosecution.
It has been suggested that as one of, albeit the least acceptable of the four possible remedies to the perceived prejudice to the defence, I should direct the jury in terms to be carefully couched; to disregard Mr. Pilling’s evidence to the extent of those factual assertions. In effect such a direction would be that the jury might not rely upon Mr. Pilling in any way as to the facts said to be discovered within the bank when he took over.
While I do not conclude that the prejudice apprehended by the defence is likely to result, I have given this option some consideration and have decided not to adopt it.
My reason is that if I were to do so, that would shut any remaining window of opportunity for the defence to explore, through the cross-examination of Mr. Pilling, matters of fact which may be helpful to the defence.
An obvious generic example of this would be the admission of this witness in cross-examination, that there may be records of instructions from defendants to staff of the bank in exculpatory terms on due diligence matters; which may have been overlooked for the purpose of the compilation of his statement.
Any general direction to the jury that the witness is not to be relied upon at all for the purpose of establishing the factual matrix would, it seems to me, invalidate even such an admission. And whether or not at the end of the day the full and accurate position is ever put before the jury, the raising of doubts of that sort are within the entitlement of the defence, consistent with where the burden of proof lies in a criminal case.
The other proposed remedies, it would be axiomatic, do not arise for consideration at all in the light of my finding of no potential prejudice to the defence.
Those were, for the sake of context:
(i) the complete stay of the proceedings (as per Mr. Sharkey for Donegan)
(ii) the discharge of the jury as having been tainted by hearing the testimony of factual assertions by Pilling which we now know are not to be substantiated or verified of his own knowledge (per Mr. Hill)
(iii) the stay of Count 1, the conspiracy count, on the basis that the factual matrix of the bank and the extent Pilling's evidence goes to it, is relevant only to that count (per Mr. Hill)
Those are all extreme recourses which, even in the circumstances of a real showing of prejudice or potential prejudice, are to be taken only as a matter of last resort. The case
law even suggests that there must be a showing of serious fault on the part of the Crown and the likelihood that the defendant as a result might not receive a fair trial: R v Stallard, 2000 E.W.J. No. 2347 (C.A.) 1 WLR 1295 and R v Swingler [1998] E.W.J. No. 1477 C.A.. The most recent case - R v Feltham Magistrate's Court (ex parte Ebrahim) [2001] 1293, goes as far as to suggest that a fair trial must be impossible.
The same view must be taken of the late disclosure of material which does exist; i.e.: categories (i) and (ii) first above mentioned.
From them it appears that there were four areas in which Mr. Pilling's statement may have been materially changed during the course of drafting. Late though it certainly is, this is disclosure which can only assist, not prejudice the defence. It is immediate basis for cross-examination.
There remains the question whether the late disclosure was in breach of the prosecution's legal duty of disclosure.
Mr. Mitchell says it was not. He started off on this track on the basis that "the local practice and procedure, developed as he ventured to describe it, into "the local common law;" was not to disclose drafts and working papers for drafts of witness statements unless the defence requested them.
In other words, whatever may be the position in England and Wales as to a practice which is more favourable to the defence evolved there as being appropriate and fair, that is not the position here.
I felt at the time of the arguments and still feel absolutely no sympathy for such an argument. I then gave some reasons for rejecting it which I expand upon now.
I think that it lies ill indeed in the mouth of leading Counsel engaged no doubt to ensure the application of best practices to the presentation of the Crown's case, to say that any lesser standards should excuse his non-fulfilment of that obligation. It is apparent from the file note of a meeting which included Mr. Mitchell and the legal advisors to the liquidators and which took place as long ago as September 2000, that the availability of drafts of witness statements (and specifically Mr. Pilling's) was a potential issue. Mr. Akiwumi, then Crown Counsel, who was also present, is noted as having said that there is no practice of providing draft witness statements to the defence in this jurisdiction. Mr. Mitchell then advised that they should be kept, presumably so as to be available if they were requested. That advice would not have been given in a state of mind of anything but appreciation of an obligation of disclosure to the defence. It then became, in my view, but a nicety as to whether the drafts should be disclosed or not, dependent on whether or not they were specifically requested by the defence.
Requested or not, their potential relevance would have upon careful reflection, been apparent to the prosecution and would not have dissipated with the passage of time. The drafts should therefore have been offered to the defence much sooner than they were produced.
Further argument from Mr. Mitchell to the effect that his expressed view of the law and practice in this jurisdiction is shared by others including the Solicitor General is, with respect, besides the point. Apart from any issue as to the relevance of those views, it is quite apparent that those further views could have been expressed only after the meeting of September 14th at which the decision not to disclose was taken. As to whether they
influenced any ongoing assessment of the duty subsequently to disclose would be a matter for further enquiry, if needs be.
Be that as it may, I have no hesitation in concluding that the common law of England and Wales in that respect and as expressed in the cases which I have cited, is the law as it is applicable in this jurisdiction.
It follows that the prosecution was in breach of the duty to disclose the draft witness statements.
The failure to do so has resulted in avoidable delay and wasted costs in a manner which, therefore, could hardly be regarded as anything but unreasonable.
Hence the order I made for wasted costs - a consequence which, I might add, Mr. Mitchell intimated in the course of the arguments on this issue, he accepted as likely; when he urged the Court not to adopt any of the other recourses argued for by the defence.
Anthony Smellie
Chief Justice
Dated 18th day of July 2002
Amended 26th September 2002