20 April 2021
The scope of “reasonable excuse” part II: when can a person lawfully refuse to answer questions in a compelled interview in a criminal investigation?
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This month’s Supreme Court decision in R (on the application of KBR, Inc) v Director of the Serious Fraud Office – which held that a foreign company cannot be compelled pursuant to Section 2(3) of the Criminal Justice Act (‘CJA’) to produce documents held overseas – has reawakened interest in the compulsory powers of criminal law enforcement agencies. We have already written about the impact of this judgment on companies (see here) and individuals (see here). In our last newsletter, we considered when the recipient of such a notice can lawfully withhold the documents sought. Our analysis of that issue remains largely unchanged but should be read in light of the Supreme Court’s decision. This article considers the related issue – which fell outside the Supreme Court’s remit – of when a person can lawfully refuse to answer questions in a compelled interview.
Compelled interviews are creatures of statute. The SFO Director is empowered by Section 2 of the CJA to issue a notice compelling a person to “answer questions […] with respect to any matter relevant to the investigation”. FCA investigators are empowered by section 171 Financial Services and Markets Act 2000 to issue a notice compelling a person to “answer questions […] only so far as the investigator concerned reasonably considers the question […] to be relevant to the purposes of the investigation”. HMRC, NCA and police officers are empowered by section 62 Serious Organised Crime and Police Act 2005 to issue a notice compelling a person to “answer questions with respect to any matter relevant to the investigation”.
The language of these statutes varies slightly but the general legal obligation is identical: the interviewee must answer the investigator’s questions provided those questions are relevant to the investigation.
An uninformed interviewee might assume that this obligation is absolute; that every question without exception must be answered. This assumption is unhelpfully (and perhaps unsurprisingly) perpetuated by the SFO in the guidance it sends to prospective interviewees, which embellishes the statutory obligation by asserting that: “section 2 CJA gives the SFO power to compel you to answer all questions on any matters relevant to the investigation fully and accurately.” The SFO’s subsequent warning that any failure to answer questions without a reasonable excuse amounts to a criminal offence adds further pressure on an interviewee to answer all questions without exception.
In fact, the obligation to answer all questions in a compelled interview is not absolute. There are exceptions. Understanding the scope of these exceptions – the circumstances in which an interviewee acts lawfully in refusing to answer a question – is critical for lawyers advising corporates and individuals embroiled in criminal investigations.
To be clear, by “refusing to answer a question”, we are not concerned with the interviewee who responds by saying “I don’t know” or “I don’t recall”. As long as these answers are truthful, the interviewee is discharging their statutory obligation. Rather, we are concerned with the interviewee who responds by saying “I am not answering that question”.
We now identify six categories (in ascending order of legal interest) in which the compelled interviewee is lawfully entitled to say: “I am not answering that question.”
First, an interviewee is not obliged to answer a question that is demonstrably and objectively irrelevant to the investigation. The objection should be justified on the record by reference to the compulsory notice outlining the scope of the investigation.
Secondly, there are (admittedly unusual) circumstances that mean it would be unfair or oppressive to expect the interviewee to answer a question accurately. For example, the question may be hopelessly incoherent, the question may be repetitious of previous questions, or the question may be based on a document the interviewee has not read and the investigator is unwilling to provide. Again, the interviewee or defence lawyer should justify the refusal to answer on the record.
These first two categories are relatively banal. But things become a bit more interesting with the third category. An interviewee can lawfully refuse to answer questions if he or she is overseas because being overseas means the SFO cannot validly serve the section 2 notice upon him or her. In other words, the notice has no extraterritorial effect. As long as the prospective interviewee remains overseas, he or she can never be interviewed compulsorily in England.
The fourth category is a bit more interesting again. A compelled interviewee is not obliged to answer questions where to do so would waive LPP (except where the crime/fraud exception applies). In practice, applying this principle is not always straightforward: for instance, the interviewee may be asked questions the answers to which are protected by the legal privilege of a third party, such as the interviewee’s employer, and which the interviewee is not authorised to waive. It is therefore often necessary to obtain confirmation from any relevant third party, in advance of the interview, whether it has waived privilege in respect of the criminal investigation, and if so whether the waiver is full or partial.
The fifth category is where matters become genuinely interesting (at least for lawyers). It is sometimes suggested that it is unlawful to ask a compelled interviewee to give their opinion. The objection is that the interviewee is a witness of fact and should therefore only be asked about factual matters he or she witnessed; that opinions are the exclusive domain of expert witnesses. Indeed, the SFO guidance asserts that “the purpose of the interview is to obtain facts concerning the matters set out in the notice”. It says nothing about obtaining opinions. A defence lawyer who objects to a question eliciting an interviewee’s opinion might also try to argue that the opinion, if ultimately incorporated into a witness statement under Section 9 of the Criminal Justice Act 1967, would be inadmissible at trial, and so it will not advance the investigator’s case to ask for the opinion now in interview.
However, it is not quite that simple. The distinction between facts and opinions is not one recognised by the statutory obligation, which is to answer questions “with respect to any matter relevant to the investigation” (in non-FCA interviews) or where “the investigator concerned reasonably considers the question […] to be relevant to the purposes of the investigation” (in FCA interviews). In our view, this language empowers the investigator to compel an interviewee’s opinions provided those opinions are objectively relevant to the investigation. Thus, whilst certain questions seeking opinions will be plainly irrelevant (“do you prefer dogs or cats?”), other such questions may well be objectively relevant (“did you think the company’s CEO was telling the truth about X?”). This is particularly so if the opinion elicited (e.g. whether the CEO was being truthful about X) is relevant to explaining why the witness did certain acts or said certain things at the time (e.g. the interviewee sent an email asking for the CEO’s statement about X to be independently verified). Objectively relevant opinions are fair game in a compelled interview.
The practical challenge lies in policing opinion-based questions, which will inevitably involve varying degrees of relevance. It is all too easy for an investigator to assert that they (unlike the interviewee or the defence lawyer) are the sole guardians of relevance because they approach matters from the holistic perspective of seeing the many moving parts of the investigation – and by implication all lines of enquiry relevant to it. But an investigator should not be given carte blanche. Depending on the circumstances, it may be appropriate to push back and ask why certain opinions are relevant or prepare the interviewee carefully by testing the boundaries of what he or she can honestly give opinions about, and with what qualifications. The interviewee should never be bullied by the compulsion to express opinions where he or she is plainly deprived of the relevant facts. Sometimes the most truthful answer is: “I don’t know enough to give an opinion about that.”
The sixth and final category is by far the most interesting. All of the relevant statutes provide that the interviewee can lawfully refuse to answer a question if he or she has a “reasonable excuse”, but none of them define what reasonable excuse means. Case law – nearly all of which concerns the SFO’s power under Section 2 of the CJA – assists in clarifying its parameters.
In Re Arrows Ltd, the issue was whether liquidators served with a Section 2 CJA notice were obliged to disclose documents obtained in the course of their statutory activities. Noting that Section 3(3) CJA provides that no statutory obligation of secrecy (save for one imposed by the Taxes Management Act 1970) prevents information being provided to the SFO pursuant to a section 2 CJA notice, the court concluded that the scope of “reasonable excuse” must encompass additional public interests justifying non-disclosure:
“When one considers the various heads of policy, such as national security, diplomatic relations and the administration of central government, which have been held to justify non-disclosure even for the purposes of justice, I find it impossible to suppose that the only public interest which Parliament thought capable of taking precedence over the investigation of fraud was the efficient collection of the revenue […] a “reasonable excuse” in section 2(13) must include any case in which a person is required or entitled under some other rule of law to withhold the information.
These conclusions were expressly approved by the House of Lords in Hamilton and Others v Naviede in response to a submission by the SFO that Section of the 2 CJA overrides public interest immunity as well as common law and statutory duties of confidence. The Court of Appeal in Omega Group Holdings Ltd v Kozeny went further, and held that a defence of reasonable excuse may be found in considerations of the public interest that go wider than the trilogy of examples in Re Arrows, i.e. national security, diplomatic relations and the administration of central government. The court did not spell out what additional examples of the “public interest” it had in mind, but it cautioned that a court should be alert to whether there was a “special reason for fearing injustice” if a person was compelled to comply with a section 2 CJA notice.
In our experience, the most common reason for fearing injustice in a compelled interview is the risk that it triggers a prosecution overseas. Indeed, in Re Arrows, the court referred fleetingly to the risk of overseas prosecution in order to dismiss it, noting that complying with the section 2 CJA notice in that case had no bearing on the “liberty of the subject, which is seldom outweighed by any other considerations of the public interest”. The implication is clear: if answering certain questions in a compelled interview means the interviewee will lose his or her liberty in foreign criminal proceedings, this injustice will usually prevail over the public interest in the investigation of a domestic crime.
To explore this point in more detail, we must leave behind the case law concerning Section 2 of the CJA and turn to the case law concerning self-incrimination under foreign law. In Brannigan v Davison, the plaintiffs were required by a New Zealand commission of inquiry to answer questions about transactions which took place in the Cook Islands. To do so would inevitably involve the commission of offences under banking secrecy laws of the Cook Islands. Equally, to refuse to answer the questions without “sufficient cause” was an offence under New Zealand law and could result in imprisonment if there was no “just excuse” for the refusal.
The Privy Council reasoned that if the mere threat of foreign prosecution could allow a witness to refuse to answer questions, this would effectively establish the primacy of foreign law over that of the domestic state, which could not be right. But the opposite conclusion was equally unattractive:
“If the unqualified application of the privilege to foreign law is unsatisfactory, so also is the opposite extreme. The opposite extreme is that the prospect of prosecution under a foreign law is neither here nor there. Since the privilege does not apply to prosecution under foreign law, the witness must always answer a relevant question in the domestic proceedings, regardless of the nature of the crime under the foreign law and regardless of the likely practical consequences for the witness under that law […] This important question need not be answered in the present case, and their Lordships consider it better to leave the answer to be supplied on another occasion. The reason why the question need not be answered is that in the present case the statutory “sufficient cause” and “just excuse” exceptions provide ample scope for all the circumstances to be taken into account. Inherent in these two expressions, which are synonymous in this context, is the concept of weighing all the consequences of the refusal to give evidence: the adverse consequences to the inquiry if the questions are not answered, and the adverse consequences to the witness if he is compelled to answer.
Their Lordships went on to describe the risk that the plaintiffs would be extradited from New Zealand to the Cook Islands if they answered questions under compulsion as “fanciful”. In other words, the actual jeopardy of prosecution was non-existent, and so no balancing of the competing adverse consequences was required.
To summarise: a compelled interviewee has a reasonable excuse not to answer a question if he or she can demonstrate that giving the answer would engage policy grounds justifying non-disclosure. These policy grounds are not closed and may extend to circumstances in which answering the question would give rise to special reasons for fearing injustice. The risk of foreign prosecution may, depending on the circumstances, constitute a special reason for fearing injustice. The similarity between the New Zealand statutory provisions (“sufficient cause” and “just excuse”) in Brannigan and the “reasonable excuse” defence in the relevant English statutes indicates that “reasonable excuse” must be capable, in the right case, of extending to the risk of foreign prosecution. Any other conclusion would lead to precisely the harsh results which the Privy Council in Brannigan was at pains to avoid.
Whether a particular interviewee is able to lawfully assert the reasonable excuse defence in these circumstances – trapped between the domestic obligation to answer a question and the jeopardy of foreign prosecution – depends on balancing both sets of adverse consequences. Is the foreign prosecutor likely to open a criminal investigation and take steps to extradite the interviewee? Is the foreign offence punishable by imprisonment? What is the likelihood of a custodial sentence being imposed?
In practice, these questions must be explored in advance of the interview date and a pragmatic solution reached to mitigate the risks. The foreign prosecutor could be asked to give an undertaking that the interviewee will not be prosecuted if he or she answers the questions in England. If that fails, the English prosecutor could be asked to give an undertaking that it will refrain from asking questions that require the interviewee to breach foreign law, or alternatively an undertaking that it will not take steps to prosecute the interviewee if he or she refuses to answer those questions. If neither prosecutor gives way, leaving the interviewee in actual jeopardy of losing their liberty, the reasonable excuse defence, whilst untested, in our view, stretches just wide enough to justify a refusal to answer questions.
  UKSC 2
  Ch 545
 See p.552 of the report.
  2 A.C. 75
 See p. 100 of the report.
  1 W.L.R. 104
 See p.116 of the report.
 See p.117 of the report.
 See p.554 of the report.
  A.C. 238
 See p.246 E-H of the judgment.
 See p.249 of the report.
 See p.251 B-D of the report.
 See p.253 F-G of the judgment.