Panesar & Ors v HM Revenue and Customs

This is an application for permission to appeal against the order of the Divisional Court (Lord Thomas of Cwmgiedd CJ and Foskett J) of 14 August 2014 dismissing claims for judicial review: [2014] EWHC 2821 (Admin). By those claims the applicants challenged a decision of His Honour Judge Cooke QC, sitting at the Central Criminal Court, accepting jurisdiction to determine a claim by Her Majesty’s Revenue and Customs [“HMRC”] pursuant to section 59 of the Criminal Justice and Police Act 2001 [“the 2001 Act”] for authority to retain material seized by them pursuant to search warrants that were subsequently quashed by the High Court. The applicants argued that on a proper construction of section 59 of the 2001 Act, the Crown Court had no jurisdiction to make the orders for retention sought by HMRC. The High Court disagreed. The applicants wish to challenge that conclusion. However, HMRC contend that the proceedings before the Crown Court and the Divisional Court were in a “criminal cause or matter” for the purposes of appeal routes with the consequence that the Court of Appeal has no jurisdiction. Rather the only appeal route is to the Supreme Court. The applicants have lodged an application with the High Court with a view to launching an appeal to the Supreme Court, should it be necessary. The skeleton arguments filed by the parties dealt not only with that issue but also with the merits of the appeal which the applicants wish to pursue. We heard argument on the question whether the Court of Appeal has jurisdiction in this matter as a preliminary issue in the application. For reasons which I will develop I have concluded that this court has no jurisdiction to hear the appeal.

These proceedings originate in search warrants issued by His Honour Judge Horton in Bristol Crown Court on the application of HMRC pursuant to section 8(1) and 9 of the Police and Criminal Evidence Act 1984 [“the 1984 Act”] as part of an investigation into an alleged substantial tax fraud. The material which had been seized following the issue of the warrants was not returned immediately to the various claimants in the High Court proceedings following the quashing of those warrants. The orders made by the Court deferred the return of the material pending an application by HMRC to the Crown Court pursuant to section 59(5)(b) of the 2001 Act for authority to retain it. The judge has since determined the substance of the application. He has allowed the HMRC to retain much, but not all, of what they had seized.

Section 59 of the 2001 Act provides:

“(1)

This section applies where anything has been seized in exercise, or purported exercise, of a relevant power of seizure.

(2)

Any person with a relevant interest in the seized property may apply to the appropriate judicial authority, on one or more of the grounds mentioned in subsection (3), for return of the whole or a part of the seized property.

(3)

Those grounds are –

(a)

that there was no power to make the seizure;

(b)

that the seized property is or contains an item subject to legal privilege that is not comprised in property falling within the section 54(2);

(c)

that the seized property is or contains any excluded material or special procedure material which –

(i)

has been seized under a power to which section 55 applies;

(ii)

is not comprised in property falling within section 55(2) or (3); and

(iii)

is not property the retention of which is authorized by section 56;

(d)

that the seized property is or contains something seized under section 50 or 51 which does not fall within section 53(3);

and subsections (5) and (6) of section 55 shall apply for the purposes of paragraph (c) as they apply for the purposes of that section.

(4)

Subject to subsection (6), the appropriate judicial authority, on an application under subsection (2), shall-

(a)

if satisfied as to any of the matters mentioned in subsection (3), order the return of so much of the seized property as is property in relation to which the authority is so satisfied; and

(b)

to the extent that that authority is not so satisfied dismiss the application.

(5)

The appropriate judicial authority –

(a)

on an application under subsection (2),

(b)

on an application made by the person for the time being having possession of anything in consequence of its seizure under a relevant power of seizure, or

(c)

on an application made –

(i)

by a person with a relevant interest in anything seized under section 50 or 51, and

(ii)

on the grounds that the requirements of section 52(2) have not been or are not being complied with,

may give such directions as the authority thinks fit as to the examination, retention, separation or return of the whole or any part of the seized property.

(6)

On any application under this section, the appropriate judicial authority may authorise the retention of any property which-

(a)

has been seized in exercise, or purported exercise, of a relevant power of seizure, and

(b)

would otherwise fall to be returned,

if that authority is satisfied that the retention of the property is justified on grounds falling within subsection (7).

(7)

Those grounds are that (if the property were returned) it would immediately become appropriate-

(a)

to issue, on the application of the person who is in possession of the property at the time of the application under this section, a warrant in pursuance of which, or of the exercise of which, it would be lawful to seize the property; or

(b)

to make an order under-

(i)

paragraph 4 of Schedule 1 of the 1984 Act,

(ii)

paragraph 4 of Schedule 1 to the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I 1989/1341 (N.I 12)),

(iii)

section 20BA of the Taxes Management Act 1970 (c.9), or

(iv)

paragraph 5 of Schedule 5 to the Terrorism Act 2000 (c.11),

under which the property would fall to be delivered up or produced to the person mentioned in paragraph (a).

(8)

Where any property which has been seized in exercise, or purported exercise, of a relevant power of seizure has parts (“part A” and “part B”) comprised in it such that-

(a)

it would be inappropriate, if the property were returned, to take any action such as is mentioned in subsection (7) in relation to part A,

(b)

it would (or would but for the facts mentioned in paragraph (a)) be appropriate, if the property were returned, to take such action in relation to part B, and

(c)

in all the circumstances, it is not reasonably practicable to separate part A from part B without prejudicing the use of part B for purposes for which it is lawful to use property seized under the power in question,

the facts mentioned in paragraph (a) shall not be taken into account by the appropriate judicial authority in deciding whether the retention of the property is justified on grounds falling within subsection (7).

(9)

If a person fails to comply with any order or direction made or given by a judge of the Crown Court in exercise of any jurisdiction under this section-

(a)

the authority may deal with him as if he had committed a contempt of the Crown Court; and

(b)

any enactment relating to contempt of the Crown Court shall have effect in relation to the failure as if it were such a contempt.

(10)

The relevant powers of seizure for the purposes of this section are-

(a)

the powers of seizure conferred by sections 50 and 51;

(b)

each of the powers of seizure specified in Parts 1 and 2 of Schedule 1; and

(c)

any power of seizure (not falling within paragraph (a) or (b)) conferred on a constable by or under any enactment, including an enactment passed after this Act.

(11)

References in this section to a person with a relevant interest in seized property are references to-

(a)

the person from whom it was seized;

(b)

any person with an interest in the property; or

(c)

any person, not falling within paragraph (a) or (b), who had custody or control of the property immediately before the seizure.

(12)

For the purposes of subsection (11)(b), the persons who have an interest in seized property shall, in the case of property which is or contains an item subject to legal privilege, be taken to include the person in whose favour that privilege is conferred. ”

The Divisional Court decided that section 59(5)(b) enabled HMRC, for the time being in possession of the seized material, to make the application for retention relying upon the grounds identified in section 59(6) and (7). To the extent that he ordered retention Judge Cooke QC was satisfied that, if that property were returned to the applicants, HMRC could immediately seek an appropriate warrant which would enable them lawfully to seize the material. Mr Jones QC told us that the applicants are likely to challenge that decision in judicial review proceedings.

The relevant powers of seizure identified in section 59(10) include those under the 1984 Act engaged by the original application before Judge Horton. “Appropriate judicial authority” is defined by section 64 in relation to England and Wales as a judge of the Crown Court; save for seizures under section 28(2) of the Competition Act 1998, seizures under section 352(4) of the Proceeds of Crime Act 2002 relating to civil recovery and seizures under section 50 of the 2001 Act, which confers additional powers of seizure on those lawfully on premises, but only relating to the Competition Act. In those cases the appropriate judicial authority is the High Court.

Before a warrant can be issued pursuant to section 8(1) of the 1984 Act the court must be satisfied that there are reasonable grounds for believing that an indictable offence has been committed, that there is material on the premises likely to be of substantial value to the investigation and that the material is likely to be relevant evidence. Relevant evidence means anything which would be admissible in evidence at a trial of the offence. Section 9 is concerned with special procedure material to which access is more tightly controlled. However, the same three conditions must be satisfied before the court goes on to consider the further conditions which apply before such material can be demanded, seized or inspected.

It has long been the case that appeals from the High Court in criminal causes or matters lie not to the Court of Appeal, but to the Supreme Court (and before its creation to the Judicial Committee of the House of Lords). That is the result of successive statutory provisions, now found in section 18(1)(a) of the Senior Courts Act 1981 [“the 1981 Act”] which provides:

“(1)

No appeal shall lie to the Court of Appeal-

(a)

except as provided by the Administration of Justice Act 1960, from any judgment of the High Court in any criminal cause or matter”.

Section 151 of the 1981 Act defines a “cause” as any action or any criminal proceedings and a “matter” as any proceedings in court not in a cause.

Mr Jones QC submits that section 59 of the 2001 Act is a provision which is designed to enable civil property rights to be vindicated swiftly by way of application in the Crown Court, rather than in more costly and cumbersome proceedings in the civil courts, when there is any dispute about entitlement to immediate possession of property seized pursuant to powers referred to in section 59(10). He submits that the meaning of “criminal cause or matter” is unclear, or at least the boundaries of its application can be opaque. In those circumstances the court should err in favour of an interpretation in any given case which enhances, rather than restricts, the appeal rights of those concerned. Mr Andrew Bird, for HMRC, submits that whatever may have been the difficulty in identifying whether proceedings with a criminal flavour are properly to be categorised as a criminal cause or matter in other cases, this is not one of them. Section 59 is concerned for the most part with material seized for the purposes of criminal proceedings. The procedure followed by HMRC in this case is designed to enable the retention of seized material for the purposes of a criminal investigation where otherwise it would have to be returned and a fresh application for a warrant made. He submits that the 2001 Act in its own terms makes the position clear and that authority, in particular Carr v. Atkins [1987] QB 963, supports the proposition that the underlying proceedings are a criminal matter.

The most recent comprehensive review of at times inconsistent authority on the meaning of “criminal cause or matter” was undertaken by Lord Neuberger of Abbotsbury MR in R (Guardian News and Media Ltd) v. City of Westminster Magistrates’ Court [2011] EWCA Civ 1188; [2011] 1 WLR 3253. The dispute before the Court of Appeal arose collaterally to extradition proceedings concerning alleged corporate bribery. Journalists attended the lengthy hearing at Westminster Magistrates’ Court during which many documents were referred to, for example statements, correspondence and written arguments. However, those not attending as parties had no access to them. The newspaper applied unsuccessfully to the District Judge for disclosure of the documents. There was an appeal by way of case stated, with parallel judicial review proceedings, to the Divisional Court which upheld the ruling of the District Judge. It was in those circumstances that the question arose in the Court of Appeal whether the proceedings were a criminal cause or matter. The newspaper readily accepted that the extradition proceedings themselves were a criminal cause or matter but submitted that the order refusing journalistic access to the underlying material was not.

At [36] Lord Neuberger concluded that the Court of Appeal had jurisdiction. The newspaper’s application had been wholly collateral to the extradition proceedings and made by someone not a party to those proceedings. The order of the District Judge relating to disclosure to a non-party did not invoke the Magistrates’ Court’s criminal jurisdiction and had no bearing upon the criminal (i.e. extradition) proceedings themselves. He recognised that free from authority he might not have reached the same conclusion [40] and that the only way coherence could be achieved on the meaning of section 18(1)(a) would be for the Supreme Court to consider its scope [43]. The core of Lord Neuberger’s reasoning is found in paragraphs [37] to [39]:

“37

I accept that this conclusion may be said to fall foul of the wide principle which may appear to have been laid down in the Amand case [1943] AC 147. However, my conclusion is consistent with the conclusion reached in Ex p Green … which, despite two opportunities, the House of Lords has not overruled or disapproved. Indeed, some of the observations in In re Smalley [1985] AC 622, and perhaps more arguably some of the observations of Lord Hoffmann in the Montgomery case [2001] 1 WLR 196, appear to suggest that the reasoning in the Amand case does not in fact go as wide as it might appear at first sight to go.

38

The reasoning in Ex p Green is not to be relied upon: it is demonstrably flawed. In the Montgomery case Lord Hoffmann obviously was unconvinced by the reasoning, and in Carr v Atkins [1987] QB 963 Sir John Donaldson MR held that the reasoning was no longer binding. However, my conclusion in this case appears to be consistent with Sir John Donaldson MR’s suggested justification for the conclusion in Ex p Green, and with his tentative guidance given in the most recent case on this issue in this court, Carr v Atkins. I also think that the conclusion lies comfortably with Lord Hoffman’s observations in the Montgomery case.

39

Furthermore, it does not seem to me that the conclusion that the Court of Appeal has jurisdiction in this case for the reason which I have given would mean that any other decision of this court would have gone the other way. …”

A brief excursion into the authorities referred to by Lord Neuberger in these extracts from his judgment illuminates the question in issue before us. Amand v. Home Secretary and Minister of Defence of Royal Netherlands Government [1943] AC 147 concerned an appeal against the refusal of the Divisional Court to grant a claim for habeas corpus by a Dutch subject being held by the United Kingdom authorities with a view to his being transferred to the Dutch authorities for trial as a deserter. Viscount Simon LC (at p 156), Lord Wright (at p 160) and Lord Porter at p 164) all expressed themselves in wide terms on the meaning of “criminal cause or matter”. The application for habeas corpus, although not itself criminal, arose in the context of a request that the appellant be delivered up for prosecution. The proceedings were thus a criminal cause or matter and no appeal lay to the Court of Appeal.

Uncertainty in this area arose following the decision of the Court of Appeal in R v. Southampton Justices, Ex p Green [1976] QB 11. The question was whether the Court of Appeal could entertain an appeal against the Divisional Court’s refusal to quash an order estreating a recognisance. Lord Denning gave the only reasoned judgment. The Court of Appeal accepted jurisdiction. He took a narrow view of Amand whilst apparently following it. He held that the order in question, which required a wife who had given surety for her husband to attend his trial to forfeit the surety when he failed to attend, was in the nature of a bond and gave rise to a civil debt. He considered that although it would be enforced as if it were a fine and arose in the course of criminal proceedings, this did not affect its essentially civil character. The judicial discussion that followed in a number of cases in the Court of Appeal sought to reconcile what, at first blush, may seem irreconcilable differences between these two decisions. As Lord Neuberger observed in the Guardian case, on neither of the two occasions that the case was discussed in the House of Lords (In re Smalley [1985] AC 622; Government of the United States v. Montgomery [2001] UKHL 3, [2001] 1 WLR 196) was Ex P Green overruled despite the questioning of Lord Denning’s reasoning.

In Montgomery at [17] Lord Hoffmann doubted the wisdom of attempting a definition of “criminal cause or matter” beyond the words of the statute. Montgomery concerned an order made under Part VI of the Criminal Justice Act 1988 restraining assets in this jurisdiction in aid of enforcement of a confiscation order obtained in the United States following a conviction for fraud.

The House of Lords did not accept the broad submission that the nature of the proceedings in which the original order was made necessarily determined the question whether enforcement proceedings were criminal or civil. Lord Hoffmann did not doubt that in most cases enforcement orders made in criminal proceedings would be part of them [19]. He considered it significant that the powers were conferred upon the High Court rather than the Crown Court or Magistrates’ Court and that the powers either mirrored or were expressed by reference to the civil jurisdiction for recovery of debt and determination of proprietary disputes in the High Court [20]. The property against which there could be enforcement was defined in terms which might give rise to complex proprietary disputes with third parties [21]. For these reasons, agreeing with the Court of Appeal, the House of Lords decided that the proceedings were not a “criminal cause or matter” for the purposes of section 18(1)(a) of the 1981 Act [22].

In coming to that conclusion Lord Hoffmann contrasted that position with cases concerning orders made with a view to a criminal prosecution or the production of documents. He mentioned Carr v Atkins in that context. [18].

Carr v. Atkins [1987] QB 963 was a decision of this court concerning proceedings in the Divisional Court arising out of the grant of an order by a criminal court pursuant to section 9 of the 1984 Act. It is thus directly in point. Sir John Donaldson MR gave a judgment with which both Stephen Brown and Croom-Johnson LJJ agreed. The Divisional Court had refused to quash an order of the Crown Court requiring the production of documents under section 9. After a review of the material provisions of the 1984 Act at 968 B to E Sir John Donaldson MR stated:

“It is to my mind clear beyond argument that the order which was made in this case was made in a criminal context … It is sufficient to note that no criminal proceedings have been begun here and, indeed, in most cases there is no doubt that orders would be sought under this Act where a decision had not yet been reached whether or not to prosecute. It is essentially a statutory provision in aid of a criminal investigation designed, if the evidence will stand it, to lead to a criminal prosecution. But unless it is to be said that an order under this Act is either never or very rarely one which is by its nature a criminal cause or matter merely because of the stage at which the order is made, then the fact that there are no criminal proceedings does not, in my judgment, matter. That fact stems purely from the nature of the Act and the statutory provisions and does not affect the criminal character of the proceedings.”

He continued by discussing Ex p Green and offered a reconciliation with Amand by suggesting that estreatments of bail may be so collateral to the criminal trial that they do not themselves constitute a criminal cause or matter. He concluded by stating:

“I have no doubt whatsoever that an order or a refusal of an order under Act of 1984 and all subsequent proceedings relating to such an order or refusal are properly to be characterised as orders in a criminal cause or matter, and it would follow from that that we have no jurisdiction. Accordingly, I would decline to hear the appeal.”

These last words appear precisely to cover the proceedings in this case in the Crown Court before His Honour Judge Cooke QC unless those proceedings can be distinguished. The applicants submit that the application under section 59 of the 2001 Act is civil in character and disconnected from the earlier flawed exercise of powers under the 1984 Act which by virtue of the quashing orders have for all purposes ceased to exist. I am unable to accept that submission.

Section 59 is concerned with what should happen to property which has been seized by the use or purported use of powers which exist in aid of criminal investigations. It envisages applications by a person with a relevant interest in the property, or by the person having seized it, either seeking its return or its retention. In both instances subsection (7) would fall to be considered. The effect of that subsection is to sanction retention if the person in possession (in this case HMRC) could, upon returning the property, immediately apply successfully to seize it once more. The remedy of retention under section 59 is discretionary. The factors to be taken into account were debated before His Honour Judge Cooke QC and may fall to be considered if the substance of his decision authorising retention is challenged. Nonetheless, at the heart of this provision is a test which has as its starting point for allowing retention the conditions found in the underlying statutes that authorise the seizure of property. It is designed to avoid the necessity of returning material with one hand only to take it away again with another following an application contemplated by subsection (7). It avoids the danger of the criminal investigation being imperilled by the destruction of property in the interval between return and re-seizure.

The application under section 59 is made in the Crown Court (a matter of significance in Montgomery). The statute identifies a small number of instances where the application should be made in a civil court. When considering an application under section 59(5)(b) of the 2001 Act, or considering subsections (6) and (7) when an application for return of property is made by a person with a relevant interest under section 59(2), the Crown Court is concerned no less with a statutory provision in aid of a criminal investigation with a view to criminal prosecution, than is a criminal court faced with an application under sections 8 or 9 of the 1984 Act. The reality is that it provides an alternative mechanism to a fresh application under the 1984 Act (and also the other criminal provisions to which section 59 applies) when something has gone wrong with the original process.

In my judgment there is no basis upon which the reasoning of this court in Carr v. Atkins can be distinguished. Nothing in Montgomery or the Guardian case calls it into question. I acknowledge that the authorities on the meaning of “criminal cause or matter” have given rise to some uncertainty and, as Lord Neuberger recognised in the Guardian case, some incoherence. It does not follow from the proposition that in some cases it is difficult to determine whether given proceedings are a “criminal cause or matter” that the same difficulty arises in all cases. I am satisfied that the underlying proceedings challenged in the Divisional Court in this case were a criminal matter. In the result the Court of Appeal has no jurisdiction to entertain an appeal from its order. The appellants must make their application to the Divisional Court and, if successful, pursue their appeal in the Supreme Court.

In those circumstances it is both unnecessary and inappropriate to consider the substance of the appeal. No previous case was cited which suggests that the relationship between section 59 of the 2001 Act and section 18(1)(b) of the 1981 Act has been considered. For that reason, if my Lord and my Lady agree I would grant permission to appeal but dismiss the appeal on the ground that there is no jurisdiction to entertain it in this court.

I agree.

I also agree.