Clegg, R (on the application of) v Secretary for Trade and Industry & Ors

Where company inspectors have given a person a fair opportunity to answer provisional criticisms, a procedural complaint about the completion of their report will not justify relief unless the person can show that something of substance was lost and that the result might have been different.

Whether fairness required further notice depends on the parties’ communications and circumstances. It does not require inspectors to give further notice merely because a person has tactically withheld a written response. Declaratory relief concerning an inspectors’ report is discretionary and will be exceptional where it may misleadingly undermine conclusions unaffected by any proved unfairness.

Inspectors appointed under Companies Act 1985 and Financial Services Act 1986 investigated three companies and issued a combined report containing serious criticisms of Mr Clegg. He had received a schedule of provisional criticisms and had been interviewed, but his solicitors maintained that he could not provide a written response without disclosure of underlying material.

After a lengthy period without correspondence, the inspectors completed and submitted their report without further notice. Stanley Burnton J dismissed Mr Clegg’s judicial-review claim. He appealed, contending that the inspectors had acted unfairly by reporting without receiving and considering a written response.

1. Appeal dismissed unanimously. Chadwick LJ, with whom Sir Christopher Staughton and Schiemann LJ agreed, held that the claimant had not established a basis for declaratory relief.

2. The court applied the principle in Malloch v Aberdeen Corporation, [1971] 1 WLR 1578. A person alleging procedural unfairness need not prove that the result would certainly have differed. But he must show that something of substance was lost and that, but for the unfairness, the result might have been different. The claimant identified no substantial answer which a further written opportunity could have put before the inspectors. The judge was therefore entitled to find that nothing of substance had been lost.

3. Independently, the alleged unfairness was not made out. The claimant had received the provisional criticisms, had an opportunity to give evidence at interview, and had maintained a tactical position that he would not respond in writing without disclosure of the underlying material. The inspectors neither led him reasonably to believe that they would give further notice before reporting nor, on these facts, owed a duty of fairness to give such notice. Their failure to answer the solicitors’ letter promptly was regrettable, but did not render the process unfair.

4. Chadwick LJ further stated, obiter, that a declaration would in any event have been refused. A general declaration could wrongly be understood to undermine the whole report, while a particularised declaration would risk turning the court into an appellate tribunal on the inspectors’ factual conclusions. Such relief may nevertheless be appropriate where unfairness has deprived a person of material capable of making a real difference to the inspectors’ conclusions.

• Court of Appeal (Civil Division): The appeal was dismissed: [2002] EWCA Civ 519.
• Chancery Division: Stanley Burnton J dismissed the application for judicial review by an order made on 15 November 2001.