UMBS Online, R (on the application of) v Serious Organised Crime Agency

This matter came before us on 15 March 2007 as a matter of great urgency to deal with an application for permission to appeal the refusal by Lloyd Jones J on 5 March to entertain the application for judicial review of two decisions of the Serious Organised Crime Agency (“SOCA”) made respectively on 21 February and 27 February. By those decisions SOCA refused to grant permission to the Laiki Bank (“the Bank”) to carry out the banking mandate of its customer, Chancery Solutions Limited (“CS”), in particular to deal with funds which CS held on trust for the applicant, the UMBS Online Limited (“UMBS”). Lloyd Jones J refused permission to apply for judicial review because he considered there had been no arguable case presented to him to justify that course of action. When the application for permission was first placed before the court Scott-Baker LJ adjourned it for oral hearing on notice. I was then asked to take the case in our list and felt that we should deal with the appeal if we granted permission. The reason for that was the urgency that then existed.

What had happened in a nutshell is that CS had apparently begun to entertain suspicion about monies passing through the account of UMBS and so consistently with their duties under the Proceeds of Crime Act 2002 (“POCA”) they reported their suspicions to the relevant authority, SOCA. The scheme of the Act, again in a nutshell, is that if SOCA do not refuse to give consent to the operation of the suspected account within seven days, then consent is deemed and persons are free to operate the account. If, however, consent was refused within that period of seven days, then by virtue of the operation of the act there was a further moratorium of 31 days during which no transactions could be passed through the account by anyone.

In this case SOCA entertained the report by CS but decided on 14 February to give their consent to CS. On or about that time the Laiki Bank had their own suspicions of what was happening and made their independent report to SOCA. This time SOCA decided, that decision being the first decision under challenge made on 21 February, to refuse consent for the operation of Laiki Bank’s account with CS thereby affecting the monies held by CS on behalf of UMBS. When UMBS learnt of this they wrote to SOCA on 26 February seeking permission. In the words of their letter:

“We would be grateful if SOCA would kindly provide its unreserved consent to CS and the Laiki Bank by no later than 4pm on Tuesday 27 February for the processing of all of our clients’ pending transactions.”

Those transactions were of course transactions which affected business customers of UMBS and on the evidence this presented those customers with considerable difficulties as they were unable to gain access to their funds. By the second decision of 27 February SOCA indicated that:

“In the absence of a further request for consent from Laiki Bank and a change in circumstances, the refusal of consent will not be revisited by the Serious Organised Crime Agency.”

So that is the second decision under judicial review. When the matter was before the court last week we thought that it would be expedient to operate CPR 52.15 so as to entertain the applications for judicial review by ourselves, if we were satisfied there was an arguable case. There did then seem to be an arguable case, at least in respect of the second decision of 27 February, and so we heard argument for the day, at the conclusion of which we were satisfied that SOCA’s refusal to give consent on the 27 February was unlawful, and we so declared and also required SOCA urgently to reconsider the request for consent set out in the letter of 26 February and to communicate that decision by noon on 19 March. SOCA have duly done that -- it may be a little late but that is beside the point for present purposes -- and by their reconsidered decision again refuse to give consent. The 31-day period expires on Saturday coming, 24 March.

Meanwhile SOCA, with the Revenue and Customs, have launched restraint proceedings and the Southwark Crown Court yesterday granted a restraint order effectively freezing the funds of the applicant. The matter was restored to us today and we considered before the short adjournment that we should hear further argument on the legality of the first refusal of the 21 February and heard Mr Downes advance his submissions. It was apparent before the short adjournment that Mr Hall, appearing for SOCA, was in some difficulty at least because he was unsure whether he was able to present to this court the evidence he wanted to present for him to put his case.

On reflecting about the matter over the adjournment it appeared to me, and perhaps to my Lords, that the better course of action now would be to grant permission to apply for the judicial review of the decision of 21 February, and having granted permission for that judicial review to take place, adopt the conventional course of sending it back to the Administrative Court. There is an arguable case in respect of that first decision, not least because Mr Downes has put up the argument that Article 1 of the First Protocol bites. It was not an argument ventilated before Lloyd Jones J but before us it is at least arguable. He submits that as a result there has to be knowledge for those affected by the stringent effects of POCA that they know in advance by what criteria SOCA will decide whether to grant or withhold consent. Those criteria are not at all established or have not been established at least until this case. There may be criticisms about them and there is apparently, on a concession made by Mr Hall, a rethink by SOCA of those criteria so that the criteria by which they took their third decision yesterday are different from those which impelled their decision upon 21 February.

All of those give rise to important arguments and they are important not only to this applicant but they are important to thousands who are affected by the operation of POCA. We consider that it is now far better that time be taken for both parties to consider their position and to go back to the Administrative Court. From the applicant’s point of view that will enable them to file amended grounds setting out precisely what the grounds of those challenges are. It will entitle them to consider their arguments and marshal them properly and put in proper skeleton arguments dealing with the whole case as now has emerged. It will enable SOCA to consider fully the evidence they need to present to marshal their defence and to ensure that the criteria which will be published are the criteria by which they have, and more importantly, will operate in future. There is now no urgency because the best remedy that the applicant can have, if they have any remedy at all, is one for damages, says Mr Downes, or at least paving the way for a complaint to Strasbourg, but it will not make any material difference to the use of their funds which are tied up by the restraint order.

So for reasons that will be developed and handed down in writing, I would grant permission to appeal the order of Lloyd Jones J of 5 March insofar as it relates to the decision of 21 February, allow that appeal, and now send the matter back to the Administrative Court.

I agree.

I agree.