Tchenguiz v Director of the Serious Fraud Office

On 17 May 2011 the appellants, Robert Tchenguiz and R20 Limited, commenced a claim for judicial review against the Director of the Serious Fraud Office (“the SFO”) and others in which they sought review of decisions to apply to the Central Criminal Court for search warrants relating to a home and business address, the decision of the Central Criminal Court to grant the warrants, and the decision made by or on behalf of the Commissioner of the City of London Police to arrest and bail Mr Tchenguiz on suspicion of offences of fraud. In parallel proceedings companies associated with Robert Tchenguiz, brother of Vincent Tchenguiz brought similar claims. Mr Vincent Tchenguiz was named as an interested party and subsequently obtained leave to proceed as a claimant. The current appeal only concerns the proceedings instituted by these appellants.

In a judgment of the Queen’s Bench Divisional Court (The President, Sir John Thomas and Silber J), handed down on 31 July 2012 ([2012] EWHC 2254 (Admin)), the court held, among other things, that in making its application for search warrants to HHJ Worsley QC at the Central Criminal Court the SFO had made material non-disclosure and factual misrepresentations which vitiated the grant of the warrants. In the case of these appellants the order sealed on 20 September 2012 (the “Order”) provided, so far as material, as follows:

“UPON HEARING [counsel] … the court:

(1)

QUASHES the search warrants executed on 9 March 2011 at the claimants’ home and business premises … on the grounds set out in the judgment; and consequently,

(2)

DECLARES the entries, searches and seizures conducted pursuant to the warrants to be unlawful on the grounds set out in the judgment;

(3)

…

(4)

TRANSFERS, pursuant to CPR Part 54.20 any actions by the claimants … for damages to a judge to be assigned of the Queen’s Bench Division;

(5)

ORDERS that there should be a directions hearing for the further conduct of the action before the assigned judge, such hearing to be listed in the usual way during the Michaelmas term 2012 and the claimants shall serve Heads of Claim (so far as they are known) and proposed directions 21 days in advance of the hearing, and the [SFO] shall serve [its] response to those heads of claim and proposed directions 7 days in advance of the hearing. …”

On 19 November 2012 the appellants, pursuant to paragraph 5 of the Order, submitted a document called “Outline Heads of Claim”. They pleaded not heads of claim but heads of damage. Nonetheless, in its response of 22 November 2012 the SFO stated, at paragraph 2:

“2.

The SFO admits liability for trespass to land in consequence of the order of the Administrative Court quashing the search warrants. It admits a consequential liability for damages for any loss of use of the land sustained by the claimants as a result of the trespass. The SFO denies liability for all other claimed consequential losses.”

On 5 December 2012, Eder J gave directions for the further progress of the proceedings. On 4 March 2013 the SFO served its Defence in response to the appellant’s Particulars of Claim dated 31 January 2013 (in which causes of action had been pleaded). At paragraph 11 of the Defence, in contradiction of the concession made in its response of 22 November 2012, the SFO pleaded as follows:

“Trespass to land

11.

As to paragraph 13:

(1)

It is the SFO’s case that, although the warrants were wrongly obtained, they were nonetheless valid and effective at the date of the acts complained of; and accordingly afford a lawful justification in respect of any private law claims.

(2)

Furthermore, any claim in trespass is barred by the Constables Protection Act 1750.

(3)

To the extent that the SFO has previously admitted trespass in paragraph 2 of the SFO’s response to Head of Claim and Draft Directions of 22 November 2012 the SFO will, with the permission of the court, withdraw such admission.”

On 4 and 5 June 2013 a hearing was held before Eder J to resolve two issues, namely whether:

(1)

the principle of res judicata operated to exclude any defence by the SFO to the appellant’s private law claim in trespass; and

(2)

if not, the SFO should be granted permission to withdraw the concession made in its Response of 22 November 2012.

In a judgment handed down on 14 June 2014, Eder J resolved both these issues in favour of the SFO. In the present appeal the appellants now challenge the judge’s decision upon the first issue. No appeal is brought from the judge’s decision on the second issue. The essence of the appellants’ case is that the declaration made by the Divisional Court at paragraph 2 of its order disposed of the issue of liability for trespass upon the appellants’ land in execution of the unlawful warrants. It is, therefore, not open to the SFO to seek to re-litigate the issue in the proceedings transferred to the Queens Bench Division. The only remaining issues in the private law claim by the appellants for trespass are causation and quantum of damages.

Res judicata

It is common ground between the parties that where an issue has been determined between them in one set of proceedings by a court of competent jurisdiction, they are, subject to appeal, bound by the court’s decision and may not seek to re-litigate the issue. The estoppel may apply to one or more issues in the proceedings or to the cause of action itself. While it is not necessary for present purposes further to discuss the principle of res judicata, since the SFO accepted before the judge that the conclusions of fact and law made by the Divisional Court were binding on the parties, it seems to me to be an inevitable consequence of the appellants’ argument on appeal that the species of estoppel for which they contend is cause of action estoppel. The issue in contention before the judge and before this court is whether either in its judgment or in its order the Divisional Court disposed of the issue of liability at common law for trespass to land.

By the Senior Courts Act 1981, section 31(4), as substituted by the Civil Procedure (Modification of the Supreme Court Act 1981) Order 2004 (SI 2004/1033), the Administrative Court may award “damages, restitution or the recovery of a sum due” if “(a) the application includes a claim for such an award arising from any matter to which the application relates; and (b) the court is satisfied that such an award would have been made if the claim had been made in an action begun by the applicant at the time of making the application”. However, the provision is procedural in its effect and, it is common ground, does not change the general rule of substantive law that there is no right to damages for unlawful administrative action of itself. The claimant must identify a tortious liability or a right to restitution or recovery of a sum due. Alternatively, the Human Rights Act 1998, section 8, provides the court with power to award damages in breach of Convention rights.

The procedural consequences of the mixed jurisdiction of the Administrative Court are helpfully discussed in De Smith’s Judicial Review, 7^th Edition, in chapter 19, at paragraphs 9 and 25. At paragraph 9:

“The CPR part 54 judicial review procedure is not well suited to determining those monetary claims which turn on factual disputes which are more appropriately dealt with by a detailed statement of claim and oral evidence from witnesses subject to cross-examination. In such cases, it may be more convenient for the Administrative Court first to determine the public law issues, and then make an order transferring the issues relating to tortious or other private law liability to proceed as if begun under CPR Part 7. Among other possible ways of determining issues are: the court may award damages at the judicial review hearing but leave quantum to be assessed by a master; where a claim is started in the County Court but it is thought that expertise in public law issues is needed, the case may be transferred to the High Court to be heard by a judge with Administrative Court experience; or a High Court judge with Administrative Court expertise may sit as a judge in the County Court pursuant to section 5(3) of the County Courts Act 1984.”

As to the effect of a decision at public law relevant to a private law claim the authors state, at paragraph 25:

“A finding by a court that a public authority, in performing a public function, has breached a ground of judicial review does not of itself provide a basis for entitlement at common law to compensation … To recover damages, a recognised cause of action in tort must be pleaded and proved – such as negligence, the tort of breach of statutory duty, misfeasance in public office, false imprisonment or trespass. So while in some cases it may be a necessary condition, it is never a sufficient one for the award of damages that the act or omission complained of be “unlawful” in a public law sense.”

It will be necessary to consider the authoritative justification for the statement made in the final sentence of paragraph 25 later in this judgment.

The appellants’ first ground of appeal is that by the specific declaration made by the Divisional Court in paragraph 2 of its Order (that entry upon the appellants’ land was unlawful consequent upon the quashing of the search warrants in paragraph 1) the Court had disposed of all and any issues relating to liability for the tort of trespass. Secondly, it is contended that since, as Eder J was prepared to assume for the purposes of argument, the judicial review claim embraced a claim for damages for the tort of trespass, it was incumbent upon the SFO to raise in its defence to the judicial review claim the matters it now seeks to raise in defence to the Part 7 claim made by the appellants. The consequence of its failure to do so was that the Divisional Court was not required to give consideration to the defences now raised and the SFO is estopped from raising them now. Thirdly, the appellants contend that Eder J erred in his construction of submissions made by counsel to the Divisional Court in justification of his conclusion that the Divisional Court did not, by its Order, dispose of the issue whether the SFO’s entry upon the appellants’ land was unlawful in the private law sense.

At the heart of the appellants’ argument is the assertion, explicitly made by Mr Bailin QC, that there is no such concept as public law unlawfulness that is distinguishable from unlawfulness for all other purposes. Mr Bailin’s assertion attaches to the proper construction of paragraph 2 of the Order made by the Divisional Court. If “unlawful” means unlawful for all purposes the order disposes of any subsequent claim for trespass between the same parties and based upon the same facts. If, on the other hand, the law recognises a distinction between unlawful in a public law sense and unlawful in the private law sense, the issue in this appeal will be whether, as Eder J found, the Divisional Court transferred to a Part 7 claim in the QBD all questions relating to the claim for damages, including the consequences in private law of entry upon land pursuant to a warrant that had been quashed.

In Percy & Anr v Hall & Others [1997] QB 924, the plaintiffs were charged with breaches of byelaws. The Divisional Court held that the byelaws were invalid since they failed adequately to define the protected area from which the plaintiffs were excluded. The plaintiffs thereupon brought actions for wrongful arrest and false imprisonment against the police officers who had arrested them. The Court of Appeal held that the question whether the police officers acted tortiously in arresting the plaintiffs was to be determined as at the time of the events complained of. The byelaws, at the time of the purported arrests, were or were to be presumed valid in law. Even if the byelaws were properly to be regarded as void for uncertainty, the officers remained entitled to plead the defence of lawful justification, provided they could show that they were acting in the reasonable belief that the plaintiffs were committing an offence against those byelaws. Simon Brown LJ said, at page 947H:

“It seems to me one thing to accept, as I readily do, that a subsequent declaration as to their invalidity operates retrospectively to entitle a person convicted of their breach to have that conviction set aside; quite another to hold that it transforms what, judged at the time, was to be regarded as the lawful discharge of the constable’s duty into what must later be found actionably tortious conduct. I do not understand this point ever to have been addressed before.

In my judgment it is not covered by the general doctrine of retroactivity with regard to the annulment of invalid instruments. I am not prepared to regard the many broad statements of principle as going this far.

On the face of it, any right of redress on the part of those arrested under what ultimately are found to be defective byelaws should be against the Secretary of State as the maker of the invalid instrument. The Secretary of State is, indeed, here said to be liable on that ground. If, however, as Mr Plemming recognises may well be the case, no such claim succeeds, essentially because English law provides no cause of action for invalid administrative action as such, that is no basis for creating a cause of action instead against those, here the defendant constables, who are not responsible for the invalidity. Nor is it a good ground for denying them the common law defence of lawful justification which should surely be available to them. Quite the contrary. I see no sound policy reasons for making innocent constables liable in law, even though such liability would be underwritten by public funds.”

Peter Gibson LJ and Schiemann LJ gave concurring judgments.

In Olotu v Home Office & Anr [1997] 1 WLR 328, the plaintiff was held in custody pending trial for a period which exceeded that permitted by section 22 of the Prosecution of Offences Act 1985 and Regulation 5 of the Prosecution of Offences (Custody Time Limits) Regulations 1987. The Court of Appeal upheld the striking out of the plaintiff’s claim against the Home Office for damages for her false imprisonment during a period of 81 days in excess of the prescribed time limit. Lord Bingham CJ made specific reference to the distinction between public law illegality and the right of the detainee to recover damages for false imprisonment, at page 335B:

“The plaintiff was in the custody of the Crown Court. Only by order of the court was that period of custody brought to an end. Once the custody time limit had expired without extension, the Crown Court would have been obliged to order the release of the plaintiff, but such a release would have been on bail and the Crown Court could have imposed terms with which the plaintiff would have been obliged to comply after release. Once the custody time limit had expired, the plaintiff was in my view unlawfully detained, and an order which could have led to her release could have been obtained either from the Crown Court or from the Divisional Court; but it does not follow that in the absence of any such order the governor was guilty of falsely imprisoning the plaintiff and, in my view, he was neither entitled nor bound to release her.”

Mummery LJ, at page 338A, pointed out that the “valid warrant of commitment provides a conclusive answer to the plaintiff’s claim of false imprisonment against the Home Office”. Auld LJ agreed with both judgments.

In Regina (Lunn) v Governor of Moorland Prison [2006] EWCA Civ 700, [2006] 1 WLR 2870, the Court of Appeal held that a prison governor’s duty was to carry out the terms of a warrant of imprisonment faithfully and to detain the claimant until the date on which he was entitled to be released on licence. Once that date arrived the governor had neither the right nor the duty to detain the claimant and would have acted unlawfully if he had done so. Through a drafting error a warrant delivered to the governor stated that the claimant’s sentences were concurrent when in fact they had been ordered to run consecutively. Accordingly, the claimant was released on licence on 24 September 2004. The Crown Court purported to correct the drafting mistake in the warrant on 26 November and three days later the claimant was re-arrested and returned to prison. The prison governor subsequently maintained that the claimant had been released by mistake and, accordingly, a period of 65 days spent in the community upon his release was to be disregarded in calculating his early release date. The Court of Appeal reversed the Divisional Court’s dismissal of the claimant’s claim for judicial review of the governor’s decision, holding that while the amended order had retrospective effect, it did not retrospectively render unlawful the governor’s decision to release the claimant on licence. Moore-Bick LJ, giving the judgment of the court, said at paragraphs 21 and 22:

“21.

The authorities to which we have referred draw a distinction between the intrinsic lawfulness of the continued detention (in the sense that it could be successfully challenged in the courts) and the liability of the prison governor for the tort of false imprisonment. As far as the governor’s position is concerned, it is clear that he is entitled, and indeed bound, to comply with the order of the court and does not incur any liability for false imprisonment provided he has properly done so.

22.

It is an important principle of the administration of justice that an order of a court of competent jurisdiction made in the exercise of that jurisdiction, as it was in this case, is valid and binding until it is varied and set aside, either on appeal or in the proper exercise of the court’s own jurisdiction (it is unnecessary in this case to consider the position in relation to an order which is unlawful on its face or which is made in excess of jurisdiction, though, as appears from the authorities, an order which is valid on its face is binding even if it was made in excess of jurisdiction and is therefore liable to be set aside). It is necessary that that should be the case, both in order to preserve the authority of the courts and thereby the orderly administration of justice and to ensure that those who have to take action on the basis of the court’s orders may be confident that they can lawfully do so.”

These three decisions of this court demonstrate clearly, in my view, recognition of the distinction to be drawn between public law unlawfulness entitling the person affected to challenge the order made by a judicial authority (and its execution), and private law liability for damages of those acting under judicial authority in its execution. Contrary to the submission made on behalf of the appellants, the term public law unlawfulness is a term recognised by the law and, in my judgment, is apt to distinguish between public and private law consequences of an act unlawful in public law. The statement of principle made at chapter 19-25 of De Smith (paragraph 8 above) is fully justified by authority. That being the case, I turn to the question whether, in paragraph 2 of its Order, the Divisional Court was making any ruling upon the private law effects of the unlawfulness, in public law, of the warrant and its execution by entry onto the property of the appellants.

In my judgment, despite the preparedness of Eder J to assume for the purpose of argument that the judicial review claim embraced a private law claim for damages in trespass, it did not do so. No such claim is to be found in the judicial review claim form or in the statement of grounds. As Vos LJ notes at paragraph 23 of his judgment, in their prayer for relief the appellants sought quashing orders, declarations, damages and costs. Not until 1 March 2013 did the appellants amend their judicial review claim form and Part 7 claim form to include a claim for damages for trespass to land. In my judgment, there was no occasion, upon the claim presented to the Administrative Court, for the SFO to plead defences available in a private law action. It was conceded by Mr Bailin QC in the course of argument that the defences of common law justification and immunity from suit under the Constables Protection Act 1750 could not have availed the SFO in its defence to the public law claim. Declarations by the Administrative Court as to the unlawfulness on public law grounds of steps taken to execute an unlawful warrant are not infrequently the foundation for the grant of further prerogative relief, such as an order for the return of documents or other property so obtained. In the present case that aspect of the claim was compromised. The making of a declaration of unlawfulness on public law grounds does not, in my opinion, imply any intention by the court to make a finding of tortious liability. On the contrary, had that been the Court’s intention I would have expected it to raise the matter in argument and say so in its judgment and Order.

I turn, therefore, to the appellants’ third ground of appeal. It is not necessary to rehearse in full the judge’s examination of representations made by the parties to the Divisional Court because, in my view, the present dispute is resolved by an examination of the Order made. I shall refer only to essential parts of the exchanges. On the third and final day of argument before the Divisional Court, Mr Eadie QC on behalf of the SFO, addressed the Court as follows:

“… what we don’t want, as it were, is to drift into the position where in essence what is going to be said in the Queens Bench Division action is: you have determined all the liability issues, don’t worry about how the cause of action works, don’t worry about time or damage to that, you can just look at all the consequences and just say, how much loss do those consequences cause? That, in my respectful submission, would be an entirely wrong approach in principle.”

The President responded to the effect that what the court included in its judgment may give rise to an issue estoppel. It is clear the court was being invited not to make a determination in respect of any private law proceedings. In response, Mr Hugo Keith QC, on behalf of other claimants, conceded that all grounds upon which the claimants had relied were public law grounds. The President responded that if there were private law claims distinct from the public law claims, there would have to be statements of claim. Following handing down of the judgment of the Divisional Court on 31 July 2012, the parties submitted draft orders for approval and addressed the court upon them. Mr Keith QC acknowledged that no private law claims had yet been instituted. While no demur came from counsel for these appellants, he submitted a draft order which sought declarations that the search warrants were unlawfully issued “following material non-disclosure and misrepresentations”, and that entry onto, searches and seizures made at the premises were unlawful and in violation of the claimants’ Article 8 ECHR rights. At paragraph 8 of the draft appeared the following:

“8.

Damages (including Human Rights Act, aggravated and exemplary damages) resulting from the unlawful warrants, searches and seizures, to be agreed within 90 days failing which they shall be transferred to the Queens Bench Division for assessment. The assigned Queens Bench Division judge to make directions regarding service of pleadings.”

It is plain that the appellants were seeking from the court an order simply for the assessment of damages without consideration of liability.

The SFO in its draft order conceded that the search warrants should be quashed and that the court should make a declaration as to the unlawfulness of the entries, searches and seizures conducted pursuant to the warrants. However, paragraph 4 of its proposed order read:

“4.

TRANSFERS, pursuant to CPR Part 54.20 any actions by the claimants … for damages to a judge to be assigned of the Queens Bench Division.”

The approved and sealed Order added the words “on the grounds set out in the judgment” to the order quashing the search warrants and the declaration as to the unlawfulness of the entries, searches and seizures conducted pursuant to the warrants. It is to be noted that at paragraphs 286 and 287 of its judgment the Divisional Court had said:

“(i)

Declaration

286.

The claimants sought a declaration that the warrants and searches and seizures consequent upon them were unlawful; they relied on decisions to the effect that this was relief that could be granted. Their entitlement to a declaration was accepted by the SFO.

287.

It will be necessary for that declaration to be drafted by the parties with care so that no misunderstandings arise in any other proceedings.”

Secondly, paragraph 4 of the Order adopted, as Mr Eadie had requested on 24 May 2012, the transfer of “any actions” for damages to a judge to be assigned and ordered that a directions hearing should be held for consideration of the future “conduct of the action”. At paragraph 288 of its judgment the Divisional Court had said:

“288.

It was common ground that this court should transfer the action to the ordinary list of the Queen’s Bench Division under CPR Part 54.20 for any civil claims for damages to be pleaded and determined by a judge of the Division.”

Since there was no discussion between counsel and the Divisional Court as to possible private law defences to an action for trespass, it is impossible to infer that the court intended, when making its order, to preserve, specifically, the justification and immunity defences, or any particular defence available to the SFO. However, I have no doubt that the Court was making explicit what was in any event implicit, namely that it was resolving only the public law aspects of the claim; private law issues, both liability and quantum, were to be determined in actions separately brought in the Queen’s Bench Division. I conclude that Eder J was manifestly right to find, subject to permission to withdraw the concession as to liability, that no estoppel operated to prevent the SFO from raising either of the defences on which it proposed to rely. It is not contended on behalf of the appellants that, subject to the plea of res judicata, those defences have no prospect of success. Whether the defences have merit in themselves is a matter for decision by the Queen’s Bench Division in its consideration of the issue of private law liability for trespass.

For these reasons I would dismiss the appeal.

I agree with Pitchford LJ that this appeal should be dismissed. I add a few words of my own only in relation to two of the matters raised in paragraphs 14 and 15 of his judgment.

In my judgment, it is not necessary for us to decide whether or not the concept of “public law unlawfulness” has a recognised meaning. The order made by the Divisional Court expressly stated that it was declaring that the entries were unlawful “on the grounds set out in the judgment”. Those grounds were solely public law grounds. The Divisional Court’s judgment made no mention of the determination of a claim for damages for trespass. Thus, on a proper construction of the Divisional Court’s order, it was referring solely to the grounds of unlawfulness referred to in its judgment and was not determining whether the entries constituted an actionable trespass. This construction is supported, in my judgment, by paragraph 288 of the Divisional Court’s judgment (paragraph 18 above), which recorded that it was common ground that it should transfer the action to the ordinary list of the Queen’s Bench Division “for any civil claims for damages to be pleaded and determined”.

Pitchford LJ has formed the view that the appellants’ original judicial review claim did not include a private law claim for damages for trespass before that claim was amended on 1^st March 2013. That may turn on the proper meaning of the final claim for simply “damages” included in that original application. I do not think it is necessary for us to decide that point. As Eder J held, even if such a private law claim was included in the judicial review claim, it was not determined by the Divisional Court. Instead, it was transferred for determination to the Queen’s Bench Division (see paragraph 288 of the judgment and paragraph 4 of the order). The appellants’ claim for damages has now been amended so that it clearly includes a claim for damages for trespass, and it is that claim, amongst others, that is squarely before the court for determination.

I agree that the appeal should be dismissed for the reasons given by Pitchford LJ.