In an ever-more-global business world, multiple civil and criminal legal proceedings will often take place in more than one jurisdiction. Sometimes – as in the case of international asset-recovery – they are co-ordinated. In other cases, a defendant may be prosecuted by the authorities in one country in relation to a matter which then arises in a civil claim by other parties in another country. The interplay between such proceedings is important, but also potentially complex.
In May – over a year after being convicted by a San Francisco jury of 16 counts of wire and securities fraud – Sushovan Hussain, former chief financial officer of Autonomy, was sentenced to five years in prison. The charges related to the $11bn sale of Autonomy to Hewlett-Packard (HP) in 2011. Hussain was also ordered to pay a fine of $4m and to forfeit the sum of $6.1m, which he personally received from the premium paid by HP for Autonomy’s shares. Mike Lynch, Autonomy’s founder and former CEO, now faces his own trial in the US Courts in relation to his alleged criminal liability in relation to that sale.
Meanwhile, on this side of the Atlantic, the largest fraud claim ever to be heard in this country began in the High Court in March. It alleges that Hussain and Lynch falsely inflated Autonomy’s share price in advance of HP’s $11bn acquisition. The core question in the civil case is whether HP’s $8.8bn write-down of the value of Autonomy was the result of a fraud or, as the defendants contend, because of HP’s mismanagement of the business post-acquisition.
One question which arises is what relevance Hussain’s conviction in the United States has to the civil fraud proceedings in England. At one level, the answer is simple: none. As long ago as 1943 the Court of Appeal in Hollington v F Hewthorn & Co decided that the findings of courts, tribunals and inquiries are not admissible in later proceedings.
The reason for this is eminently practical. Findings of fact by one tribunal should not bind a subsequent tribunal, which might be deciding the relevant issue on different evidence. Indeed, the problem will often be that it is not possible to know whether the evidence is different.
In 1968, section 11 of the Civil Evidence Act qualified this exclusion by permitting the fact that a person had been convicted of an offence in the UK to be admitted in evidence for the purpose of proving that he had committed that offence, if that fact is relevant to any issue in those later civil proceedings. Even when admitted in evidence, the fact of that conviction is not conclusive of the relevant issue in the civil proceedings.
Rather, it remains open to the party who received the conviction to prove that he did not in fact commit the offence, but this will not be very easy to do – not least because of the higher standard of proof in criminal proceedings. Allegations of irregularities in the criminal trial are usually defeated by the existence (in most cases) of a right of appeal (whether exercised or not). Potentially more credible are attempts by the defendant to rely on new evidence that is said to have been unavailable at the original trial.
Section 11 refers only to convictions in the UK and in 2016, in the case of Daley v Bakiyev (where the foreign conviction was for organising an attempted contract killing in Kyrgyzstan), the High Court decided that the Hollington rule continues to apply to foreign convictions; they therefore remain inadmissible in English proceedings.
This does not mean that other aspects of foreign criminal proceedings are not both relevant and admissible. Thus, in the HP civil fraud claim in the High Court, extensive (and sometimes controversial) use has been made of transcripts of the evidence given before the San Francisco jury, both to support and to contradict testimony given in the English proceedings.
Another source of relevant and (potentially admissible) evidence which arises from the criminal process is a Deferred Prosecution Agreement (DPA) under the Crime and Courts Act 2013. In such cases there is of course no conviction but rather a publicly available statement of underlying facts. This statement is signed by both prosecution and defendant and is part of the basis on which the criminal judge decides whether to approve the DPA.
If the defendant is subsequently prosecuted for the relevant offences (because of a failure to comply with the terms of the DPA) then the DPA is admissible in evidence in those proceedings. In principle, there is no reason why the DPA should not also be admissible in a civil claim as evidence of the facts in question, whether or not there has been a prosecution.