Chatwani & Ors, R (on the application of) v The National Crime Agency & Anor

On 28 January 2015, the First Defendant (“the NCA”) arrested and detained the First to Fifth Claimants; and executed search warrants, issued by the Second Defendant (“the Magistrates’ Court”), at six premises at which those Claimants lived or worked. In this judicial review, the Claimants challenge both the arrests and search warrants.

The claim gives rise to two issues for this court, namely:

The First, Second and Fifth Claimants (“Satish”, “Jawahar” and “Rashmi”) are brothers. They arrived in the United Kingdom from Uganda in the early 1970s, and have remained here as non-domiciled residents since. They each have accountancy qualifications.

From the early 1980s, they have had business interests held in a corporate structure, the three brothers being directors of each of the relevant companies, the largest and most relevant to this claim being Fairview Hotels & Healthcare Limited (“Fairview”) and Davis & Dann Limited (“DDL”), both owned by the brothers for over 20 years. Fairview now ultimately owns and manages six hotels including the Mercure Bloomsbury London Hotel, with an annual turnover of about £10m. Jawahar is particularly involved in the management of Fairview. DDL has an annual turnover of about £50m, from a core business of trading in a wide-range of fast-moving bulk consumables, including pharmaceuticals, toiletries, household goods, soft drinks and (since 2012) under bond alcohol in the form of beer and wine. Much of the trading is done on the grey or parallel market, i.e. outside the manufacturer’s authorised trading channels, and in very large quantities. DDL’s day-to-day operations are handled by Rashmi, and the Fourth Claimant (“Rakesh”) who acts as DDL’s General Manager. The Third Claimant (“Bhasker”) acts as Company Secretary for many of the group companies. The Head Office for the group is Kanta House, in Ruislip.

As a substantial trading company, DDL has had regular dealings with HM Revenue and Customs (“HMRC”), until recently without incident. However, in 2006, a VAT repayment was refused on the basis that a particular payment had been made by DDL as part of a series of fraudulent transactions. The payment related to the purchase of 24m razor blades for nearly £25m net of VAT, through twelve separate transactions, which contributed to a VAT repayment claim of some £4.3m. It turned out that the company at the top of each transaction chain defaulted in accounting for the VAT charged on its sale: it was a missing trader intra-community (or “MTIC”) fraud. HMRC considered that DDL ought to have known that the transactions were connected with VAT fraud, and refused the repayment. DDL unsuccessfully appealed to the First-tier Tribunal, which found that the only reasonable explanation for the circumstances in which the purchases took place was that they were connected to fraud. However, on 6 August 2013, the Upper Tribunal (Tax and Chancery Chamber) allowed DDL’s appeal, finding that the terms of dealing for the razor blades were broadly consistent with the way in which transactions in the grey market are ordinarily conducted; and DDL were innocent traders within a fraudulent scheme. HMRC are currently appealing that determination to the Court of Appeal: they have been granted permission, and a hearing date has been set for November 2015.

The Sixth to Tenth Claimants are the wives of the First to Fifth Claimants.

The NCA is a national law enforcement agency, which has been in existence since October 2013 when (amongst other things) it replaced the Serious Organised Crime Agency (“SOCA”). It was created by section 1(1) of the Crime and Courts Act 2013, with the functions of “securing that effective activities to combat organised crime and serious crime are carried out…”, and of “gathering, storing, processing, analysing and disseminating information relevant to (a) activities to combat organised crime, (b) activities to combat any other kind of crime, (c) exploitation proceeds investigations…” (section 1(5)). It is an investigating agency, without the function of prosecuting offences, which is left to other agencies notably the Crown Prosecution Service (“the CPS”) (section 1(10)).

The Director General of the NCA is able to designate any NCA officer as having the powers of a constable (section 10). Article 3 of the Crime and Courts Act 2013 (Application and Modification of Certain Enactments) Order (SI 2014 No 1704) provides that the Police and Criminal Evidence Act 1984 (“PACE”) applies in relation to NCA officers so designated, subject to the modifications in Schedule 1 to the Order. Under those modifications, generally, where PACE requires the approval of an act by a police officer of at least the rank of inspector, such an act requires the approval of an NCA officer of at least grade 3 (which is inspector-equivalent).

This claim arises out of Operation Heteredon, an NCA investigation into money laundering. Brian Hickman is the lead officer of the operation, and Kevin Gilligan is the senior financial investigator.

In paragraphs 7 and following of his first statement dated 4 March 2015, Mr Hickman sets out the main evidence that, he considers, links DDL and the first five Claimants to the investigation. There are two primary strands, namely (i) evidence of a link to known and suspected money launderers through a man called Harvinder Batth (also known as Nindy Singh), and (ii) evidence of payments into DDL’s bank account of moneys known or suspected to be the proceeds of crime, including the proceeds of a phishing scam on a school.

The evidence in the first strand is, briefly, as follows. As a result of the investigation, when Rajnesh Sharma (an Indian national based in Hamburg) visited the United Kingdom in March 2014, he was arrested for offences involving international money laundering. In August 2014, at Birmingham Crown Court, he pleaded guilty to offences involving not less than £10m of laundered money, and was sentenced to just over six years’ imprisonment. His brother-in-law also pleaded guilty to similar offences, and was sentenced to three and a half years.

Those two men having been convicted, the focus of the operation turned to others who had connections with Sharma, notably Batth and Batth’s wife, Harjeet Kaur Dhariwal. Batth had been convicted of money laundering offences in 2008, when he was sentenced to nine years’ imprisonment, and was made subject to a confiscation order in the sum of £500,000. He was released on licence in 2012.

Batth was known to Rashmi, who had met him in 2006. When Batth was allowed out of prison on day release, Rashmi (who by this stage knew of his conviction) gave him a job with DDL because (he says) he felt sorry for him and his family. When Batth was released on full-time licence in November 2012, that job was made full-time.

In November 2013, Batth told Rashmi that, if he did not satisfy the confiscation order, he and his family would lose their home. He asked Rashmi if he could help. Rashmi arranged for DDL to loan Batth £179,000 – paid to HM Courts Service in part satisfaction of the confiscation order – which ensured the house was safeguarded; on the basis that (i) Batth would repay the debt and interest within two years, (ii) Batth would sell the house to discharge the debt; and (iii) in the meantime, the company took a charge on both that house and property owned by Batth’s father-in-law (i.e. Dhariwal’s father). (There is also evidence that DDL has paid £215,000 to another convicted money launderer, Brian McAvetey, after which he paid off a confiscation order of £200,000 earlier imposed on him. Mr McAvetey was in HMP Spring Hill at the same time as Batth.)

Enquiries with HMRC revealed that the 2013 declared income of Batth and Dhariwal was about £10,000. Dhariwal appeared to be on housing benefit. However, it seemed that they were living in a house in Gerrards Cross, purchased in August 2014 for £735,000 by a Jersey company with which it was believed the Chatwani brothers had connections; they each drove vehicles registered to third parties; and they had two children attending private schools. It was considered that their lifestyle did not reflect their declared income.

Batth is associated with another individual who has been the subject of the investigation, Cliff Tarr. There is evidence that Tarr, although not employed by any of the Kanta companies, visited Kanta House frequently in late 2014, and drove a BMW car registered to and insured by Kanta Enterprises Limited (another group company). During October and November 2014, Tarr was observed at Kanta House and other venues, sometimes with and sometimes without Batth, collecting and delivering boxes, bags and packages. Some of the collections appear to have been of large amounts of cash. Evidence obtained from mobile phones suggests that Tarr was working to Batth’s direction.

On 20 November 2014, Tarr was arrested in Durham in possession of just over £50,000. In interview, he said that he was employed to collect and deliver cash by a man whom he refused to name due to “fear of reprisals”; but this man (he said) worked at Kanta House, and provided him with the BMW. He believed the cash collected was related to the sales of beer and wine.

Tarr was released on bail. His car was bugged with a surveillance device. In the covert evidence of a telephone call by Tarr, he referred to Rashmi, as someone to whom the recipient of the call should speak. Further, on the evening after Tarr’s release on bail, Rashmi was observed meeting Batth and Dhariwal in a public house, from where, shortly before 11pm, they left to go to Kanta House where they spent nearly an hour. In addition, conversations caught by another surveillance device include Batth referring to “money laundering” when talking to Dhariwal.

Mr Hickman suspected that Tarr was acting as a cash courier for an organised crime group, as part of money laundering activities, primarily at the direction of Batth; but others at Kanta House (notably Rashmi) were also implicated, and it is likely that others there were at least aware of the activities.

The second primary strand of evidence concerns payments made to DDL bank accounts, outlined in paragraphs 35-47 of Mr Hickman’s first statement. For example, when Tarr was arrested, he had on him bank payment-in slips to the credit of the accounts of Talwar Brothers Limited and EM Trade Solutions (a Portuguese company). There is evidence to suggest that this money found its way to DDL through intermediate companies, including AV Traders Limited, Prestigious Trading Limited and Global Walker Trading Limited. In a few months of 2014, EM Trade Solutions, Prestigious Trading and Global Trading each paid DDL between £600,000 and £1m. Since 2012, the account of AV Traders has received cash deposits of over £3m, and made bank transfers to DDL’s account of over £4m. Mr Hickman suspects that this is evidence of DDL using its business, which involves the rapid transfer of large amounts of cash, as a cover for money laundering.

More discretely, there is evidence that a sum obtained from a particular fraud ended up in DDL’s bank account. On 25 July 2013, about £1.1m that had been obtained as a result of a phishing scam on an academy school was transferred into a bank account held by Tibirjkovs Limited, and promptly dispersed into twenty separate accounts. One of the largest beneficiaries was a Pervez Hussein, who received two payments totalling about £140,000, which was transferred to DDL via an intermediate company. Hussein is currently awaiting a charging decision from the CPS. He has previous convictions, including one for importing Class A drugs for which he was sentenced to seven years’ imprisonment in 2003.

On the basis of all this evidence, Mr Hickman suspected that various employees of DDL – including Batth and the first five Claimants – and Dhariwal were providing a money laundering service which included the placement, layering and integration of the proceeds of crime running into millions of pounds. Batth and Dhariwal were thought to operate cash couriers recruited to place the proceeds of crime into the bank accounts of a complex network of companies, many of which were listed as traders in commodity-based goods. The others were suspected of being instrumental in the integration of this criminal money into the legitimate money system through their businesses and property interests, either playing an active part in these activities or at least being aware of them.

The offences of which they were suspected fell within Part 7 of the Proceeds of Crime Act 2002 (“POCA”). Section 327 makes it an offence to conceal, disguise, convert, transfer or remove from the jurisdiction criminal property. Section 328 makes it an offence to enter into or become concerned in an arrangement which he knows or suspects facilitates the acquisition, retention, use or control of criminal property. Section 329 makes it an offence to acquire, use or have possession of criminal property.

Mr Hickman devised a plan. In doing so, Mr Bird accepted that the NCA, as the new national agency created to combat financial and other organised crime, was deliberately trying to stretch the boundaries imposed upon such investigation agencies by the statutory scheme under which they operate. The NCA was, he submitted, entitled – and, indeed, driven by the ingenuity of criminals, often intent on frustrating justice by any means – to employ unconventional and unexpected policing methods, as were used in this case. However, innovative and audacious as these methods were, he maintained that they were justified; and, subject to the plan being properly executed, they were within the statutory boundaries and lawful.

I will deal with the plan in more detail when I come to its execution. However, it was, briefly, as follows. It was proposed to arrest the seven suspects (i.e. the first five Claimants, Batth and Dhariwal) in a deliberately boisterous way, and, during the time they were being held after arrest, to place covert surveillance devices in Kanta House whilst seizing documents from there, the suspects’ homes and (under production orders) from their banks and auditors. During the course of questioning, the suspects would be given enough information to enable them to understand what the investigation was about, without disclosing the full facts or details. They would then be released, in the hope that their arrest and questioning would “provoke a behavioural reaction on their release from custody which would ultimately allow for the capturing of unequivocal evidence which would enhance any prosecution against these individuals” (Appendix 3 of the Interview Strategy Document: see paragraphs 44 and following below), i.e. on release, they would have conversations with each other or third parties that would evidence, if not conclusively confirm, their part in the suspected money laundering activities which would be captured by the covert devices in (e.g.) Kanta House and Batth’s car.

Of course, the NCA can only act within the powers granted to it by Parliament – there is no suggestion that, in this case, they acted under any common law powers. Before I describe how this plan was executed – crucial for the purposes of this claim – it would be helpful to deal with the statutory powers under which the NCA were operating. The plan required the use of powers under five distinct parts of the statutory regime.

First, it was proposed to arrest the seven suspects without an arrest warrant, under section 24 of PACE which, as substituted by section 110(1) of the Serious Organised Crime and Police Act 2005 (“SOCPA”), provides (so far as relevant to this claim):

“(2)

If a constable has reasonable grounds for suspecting that an offence has been committed, he may arrest without a warrant anyone whom he has reasonable grounds to suspect of being guilty of it.

…

(4)

But the power of summary arrest conferred by subsection… (2)… is exercisable only if a constable has reasonable grounds for believing that for any of the reasons mentioned in subsection (5) it is necessary to arrest the person in question.

(5)

The reasons are –

…

(e)

to allow the prompt and effective investigation of the offence or of the conduct of the person in question;…”

Therefore, for an arrest under these provisions to be lawful, the arresting constable must have reasonable grounds for (i) suspecting that an offence has been committed and that the target of the arrest committed it; and (ii) believing that it is necessary to arrest the person to allow the prompt and effective investigation of the offence.

Section 28(3) of PACE requires a constable to inform a person of the grounds for arrest, at the time of arrest or as soon as practicable after the arrest. Note 3 of PACE Code of Practice G (Code of Practice for the Statutory Power of Arrest by Police Officers) explains this as follows:

“An arrested person must be given sufficient information to enable them to understand they have been deprived of their liberty and the reason they have been arrested, as soon as practicable after the arrest, e.g. when a person is arrested on suspicion of committing an offence they must be informed of the nature of the suspected offence and when and where it was committed. The suspect must also be informed of the reason or reasons why arrest is considered necessary.  Vague or technical language should be avoided.  When explaining why one or more of the arrest criteria apply, it is not necessary to disclose any specific details that might undermine or otherwise adversely affect any investigative processes.  An example might be the conduct of a formal interview when prior disclosure of such details might give the suspect an opportunity to fabricate an innocent explanation or to otherwise conceal lies from the interviewer.”

Effectively in support of his powers of arrest, a constable has powers of search under section 32 of PACE (as amended by section 111 of, and paragraph 43(6) of Schedule 7 to, SOCPA), as follows:

“(1)

A constable may search an arrested person, in any case where the person to be searched has been arrested at a place other than a police station, if the constable has reasonable grounds for believing that the arrested person may present a danger to himself or others.

(2)

… [A] constable shall also have a power in any such case –

(a)

…

(b)

if the offence for which he has been arrested is an indictable offence, to enter and search any premises in which he was when arrested or immediately before he was arrested for evidence relating to the offence.

(3)

The power to search conferred by subsection (2) above is only a power to search to the extent that is reasonably required for the purpose of discovering any such thing or any such evidence.

…

(6)

A constable may not search premises in the exercise of the power conferred by subsection (2)(b) above unless he has reasonable grounds for believing that there is evidence for which a search is permitted under that paragraph on the premises”.

Mr Jones initially suggested that these powers of search are restricted to circumstances in which the arresting constable has reasonable grounds for believing that the arrested person may present a danger to himself or others; because “in any such case” in subsection (2) is so restricted. However, during the course of debate he conceded that that was not an interpretation open to him. That concession was well made. As Eady J held in Lord Hanningfield of Chelmsford v Chief Constable of Essex Police [2013] EWHC 243 (QB) at [10]-[12], “in such a case” refers to “any case where the person to be searched has been arrested at a place other than a police station” without that restriction. That is not only the natural meaning of the discrete provision, but is confirmed when the provision is seen in the context of subsections (3) and (6), which are clearly premised on that construction.

Second, it was essential to the plan that the arrested men were detained for sufficient time to enable the surveillance devices to be planted at Kanta House. The plan was to take them to Polar Park Police Station, Heathrow, where they would ask the custody sergeant to detain them pending questioning. The relevant statutory provision is section 37(2) of PACE, under which a custody officer who does not have sufficient evidence upon which to charge an arrested person is required to release him:

“… unless the custody officer has reasonable grounds for believing that his detention without being charged is necessary to secure or preserve evidence relating to an offence for which he is under arrest or to obtain such evidence by questioning him.”

Third, the NCA had to apply to the Surveillance Commissioners for authorisation approval to install the proposed surveillance devices. Under Part II of the Regulation of Investigatory Powers Act 2000 and section 93 of the Police Act 1997, an authorising officer (who may be an NCA officer) may, if he believes it is necessary for the purpose of detecting serious crime and that the action is proportionate to what the action seeks to achieve, authorise the use of surveillance equipment. Section 97(2) of the 1997 Act provides that, where any property specified in the authorisation is a dwelling or office premises, then the authorisation must be approved by a Surveillance Commissioner appointed under section 91(1)(b) of that Act. In this case, authorisation was obtained on 26 January 2015, i.e. after the search warrants had been obtained on 19 January 2015, but prior to the raid. By section 91(10) of the 1997 Act, decisions of the Surveillance Commissioners are not liable to be questioned in any court of law. In any event, the lawfulness of the installation of the surveillance devices is not in issue in this claim; indeed, neither the application for, nor the authorisation of, the placement of surveillance devices is before the court.

Fourth, the NCA had to apply to Birmingham Crown Court for production orders in respect of relevant material held by DDL’s bank and auditors. Such an application was made by Mr Gilligan on 23 January 2015. In respect of production orders, by section 345-346 of POCA, where there is a money laundering investigation and there are reasonable grounds for suspecting that the person who is the subject of that investigation has committed a money laundering offence, a Crown Court judge may issue an order for the purposes of that investigation, requiring a specified person who appears to be in control of material likely to be of substantial value to the investigation to produce that material to an appropriate officer for him to take away. Again, in this claim, no aspect of the production orders is in issue; although one of the orders was the subject of separate proceedings (Claim No CO/965/2015), which was heard on 29 April 2015 by a differently constituted court of which I was also a member. A separate judgment in that claim has been delivered today ([2015] EWHC 1284 (Admin)).

Fifth, it had to obtain search warrants in respect of Kanta House and the Claimant’s homes. The relevant statutory power to enter, search and seize property is found in Part 2 of PACE. The power is only exercisable pursuant to a warrant obtained by a constable (including an authorised NCA officer: see paragraph 8 above). Generally, a warrant has to be obtained under section 8 as amended by section 113(3) of SOCPA 2005 which, so far as relevant to this claim, provides:

“(1)

If on an application made by a constable a justice of the peace is satisfied that there are reasonable grounds for believing –

(a)

that an indictable offence has been committed; and

(b)

that there is material on premises mentioned in subsection (1A) below which is likely to be of substantial value (whether by itself or together with other material) to the investigation of the offence; and

(c)

that the material is likely to be relevant evidence; and

(d)

that it does not consist of or include items subject to legal privilege, excluded material or special procedure material; and

(e)

that any of the conditions specified in subsection (3) below applies,

he may issue a warrant authorising a constable to enter and search the premises in relation to each set of premises specified in the application.

(1A) The premises referred to in subsection (1)(b) above are –

(a)

one or more sets of premises specified in the application…

(2)

A constable may seize and retain anything for which a search has been authorised under subsection (1) above.

(3)

The conditions mentioned in subsection (1)(e) above are –

…

(d)

that the purpose of a search may be frustrated or seriously prejudiced unless a constable arriving at the premises can secure immediate entry to them….

(4)

In this Act ‘relevant evidence’, in relation to an offence, means anything that would be admissible in evidence at a trial for the offence.”

Section 8(1)(d) indicates that this procedure is not appropriate unless there are reasonable grounds for believing that the relevant material will not include items subject to legal privilege (defined in a conventional way in section 10), excluded material or special procedure material (defined in sections 11-14 to include material created or acquired in the course of a trade which are held in confidence). Section 9 requires applications to obtain access to such material to be made in accordance with a special procedure set out in Schedule 1 to PACE, which has further safeguards and which has to be brought before a Crown Court judge rather than a magistrate.

The procedure, whether under section 8 or Schedule 1, is subject to general safeguards set out in sections 15 and 16 of PACE which, so far as relevant, provide:

“15

Search warrants - safeguards

(1)

This section and section 16 below have effect in relation to the issue to constables under any enactment, including an enactment contained in an Act passed after this Act, of warrants to enter and search premises; and an entry on or search of premises under a warrant is unlawful unless it complies with this section and section 16 below.

(2)

Where a constable applies for any such warrant, it shall be his duty –

(a)

to state –

(i)

the ground on which he makes the application;

(ii)

the enactment under which the warrant would be issued;…

(b)

to specify the matters set out in subsection (2A) below; and

(c)

to identify, so far as is practicable, the articles or persons to be sought.

(2A) The matters which must be specified pursuant to subsection (2)(b) above are –

(a)

if the application relates to one or more sets of premises specified in the application, each set of premises which it is desired to enter and search;

(b)

if the application relates to any premises occupied or controlled by a person specified in the application –

(i)

as many sets of premises which it is desired to enter and search as it is reasonably practicable to specify;

(ii)

the person who is in occupation or control of those premises and any others which it is desired to enter and search;…

(3)

An application for such a warrant shall be made ex parte and supported by an information in writing.

(4)

The constable shall answer on oath any question that the justice of the peace or judge hearing the application asks him.

(5)

A warrant shall authorise an entry on one occasion only unless it specifies that it authorises multiple entries.

(5A) If it specifies that it authorises multiple entries, it must also specify whether the number of entries authorised is unlimited, or limited to a specified maximum.

(6)

A warrant –

(a)

shall specify—

(i)

the name of the person who applies for it;

(ii)

the date on which it is issued;

(iii)

the enactment under which it is issued; and

(iv)

each set of premises to be searched, or (in the case of an all premises warrant) the person who is in occupation or control of premises to be searched, together with any premises under his occupation or control which can be specified and which are to be searched; and

(b)

shall identify, so far as is practicable, the articles or persons to be sought….

16

Execution of warrants

(1)

A warrant to enter and search premises may be executed by any constable.

(2)

Such a warrant may authorise persons to accompany any constable who is executing it.

(2A) A person so authorised has the same powers as the constable whom he accompanies in respect of—

(a)

the execution of the warrant, and

(b)

the seizure of anything to which the warrant relates.

(2B) But he may exercise those powers only in the company, and under the supervision, of a constable.

(3)

Entry and search under a warrant must be within three months from the date of its issue.

…

(3B) No premises may be entered or searched for the second or any subsequent time under a warrant which authorises multiple entries unless a police officer of at least the rank of inspector has in writing authorised that entry to those premises.

…

(8)

A search under a warrant may only be a search to the extent required for the purpose for which the warrant was issued.

…”.

The restriction in section 16(8) is reinforced by paragraphs 6.9 and 6.9A of PACE Code of Practice B (Code of Practice for Searches of Premises by Police Officers and the Seizure of Property found by Police Officers on Persons or Premises), which provide:

“6.9

Premises may be searched only to the extent necessary to achieve the purpose of the search, having regard to the size and nature of whatever is sought.

6.9A A search may not continue under:

•

a warrant’s authority once all the things specified in that warrant have been found;

•

any other power once the object of that search has been achieved.”

Sections 8, 15 and 16 are supplemented by the Criminal Procedure Rules, rule 6.30 of which requires a section 8 application to:

Rule 6.33 sets out the information which a section 8 warrant must identify, including (i) “so far as practicable, the material, documents, articles or persons sought” (paragraph 1(c)), and (ii) “the person in occupation or control of the premises to be searched, where the application specified such a person” (paragraph 2b)).

Thus, sections 15 and 16, and the supporting procedural rules, describe the requirements Parliament has considered necessary to safeguard citizens who might be the subject of without notice applications by an agency of the State, such as the NCA, that have the potential seriously to interfere with the rights, interests and day-to-day life and business of them and affected third parties. It is well-established that any breach of section 15 or 16 renders the search and seizures unlawful (R v Chief Constable of Warwickshire Police ex parte Fitzpatrick [1999] 1 WLR 564).

Sections 21 and 22 of PACE deal with access to, copying of and retention of any seized material. Under section 21(5), the constable has a power to copy any seized material; and, by section 22(4), is not permitted to retain an original item if a copy would suffice for evidential purposes. Under paragraphs 5.1 and 5.5 of the Code of Practice issued under the Criminal Procedure and Investigations Act 1996, and paragraphs 15, 21 and 25 of the Attorney General’s Guidelines on Disclosure, unless seized material is incapable of having any bearing on a criminal case, then it should be inspected, scheduled and retained (at least in copy form).

Mr Hickman’s first statement sets out, to an extent, how and why the plan was executed as it was; but this has become much clearer from three documents disclosed late in this claim. Two of these were attached to a second statement of Mr Hickman dated 9 April 2015; the third was disclosed by the NCA’s solicitor on the afternoon of 14 April 2015.

First, there is a computer printout recording Mr Hickman’s reasons for his decision on 22 December 2014 to arrest the seven suspects. In these reasons, it is said, of the seven (emphasis in the original):

“Legal – Sufficient grounds to suspect involved in Money Laundering.

…

Alternative – Not arrest the above. This has been considered and negated as their lawful arrest will maximise the opportunity of gathering further evidence from interviews and searches.

Not arrest Satish/Jawah[ar]/Bhasker – It is excepted [sic] that at this time, there is less evidence against these people that the others mentioned however the alternative of not arrest/question/search is negated as it is highly likely that evidence will be lost. They hold prominent positions in the company and are suspected of guilty knowledge (at least) if not an active role in the concealment/layering of illicit cash.

Necessary – It is necessary to take action against persons who are engaged in unlawful laundering of criminal monies. It is necessary to arrest the above named for the reasons given. A series of CMP placements will be installed to capture those engaged in this criminality and provide evidence of Mens Rea OR NOT! The CHATWANI business empire is well-established and there [sic] methodology of concealing criminal cash will be sophisticated, therefore these tactics are proportionate and necessary to prove or disprove their involvement in the offences suspected.

Proportionate – As previously mentioned, the investigation of persons involved in money laundering, a serious offence, is entirely necessary. The tactics being deployed are entirely proportionate in the investigation of these crimes.”

Second, there is a patently important document prepared by NCA Tier 5 Advisor Victoria Wilde, entitled “Operation Heteredon: Interview Strategy/Policy Decision” (“the Interview Strategy Document”). Mr Hickman says that this document was created by Ms Wilde at his request (paragraph 1 of his second statement). He explains (paragraph 5):

“Officer Wilde is a Tier 5 advisor. This is not… a rank within the NCA. The NCA’s ranks are known as Grades. Tier 5 means that she has a nationally recognised specialist qualification to plan, prepare and support any interview strategy that is required in the most serious and complex investigations. Only a small number of NCA officers are qualified to this level. This role requires consideration into all aspects of arrest, custody processes, pre-interview briefings, interview strategies and the rationale around those decisions.”

The document is focused on the “Disclosure Plan”, which it describes as follows:

“Reasoning

The main objective around the planned arrests and interviews of the seven subjects is not primarily at this stage to focus on the gathering of evidence from any accounts the suspects may provide. It is simply to provoke a behavioural reaction on their release from custody which will ultimately allow for the capturing of unequivocal evidence which will enhance any prosecution against these individuals. The strategy around the interview is simplistic in that there will be no challenges around any accounts given but to simply follow a pattern of topics and questions which when completed will conclude the objective. It will be necessary for the suspects to be held in custody for a set period of time to allow for technical equipment to be installed in some premises. There should be sufficient time to cater for this during the custody process.

It is not expected that interviewing officers should explore in any detail any account given. The evidence against the suspects and any challenges will come at a later date in the process when the gathering of all the available evidence is complete. All interviews will follow the same generic pattern and pre-interview disclosure to each suspect is identical to ensure the integrity of the overall objective is maintained.

Justification

The disclosure plan is to ensure the suspects have some knowledge why they have been arrested and sufficiently so to prompt conversations between one another on release. The disclosure is aimed at ensuring the suspects understand a number of facts. These are around:

•

Undetermined period of time

•

Linked to businesses

•

Financial transactions

•

Substantial amounts of money

•

Investigation led by the [NCA]

This should be sufficient to allow them to infer what the investigation is about without the full facts being disclosed. The question may be asked around the failure to disclose evidence which we are already in possession of. I am satisfied that there are no issues with the tactic used here as the investigation team can show how previous similar intervention of a subject connected to these individuals [i.e. Tarr] led to further key evidence of their criminal activities and the investigation is still ongoing. The scenario showed after the release of the suspect linked to these individuals, he was instantly in contact and communicated with those subject to these arrests for sustained periods of time speaking in detail of the criminality taking place. It goes without saying that there is a strong likelihood that with minimal facts given to these individuals that the same scenario of contact will take place. On this basis there is reasonable and proportionate justification for it.

There will be no necessity for any phased or tactical disclosure plan. There will be one pre interview disclosure (attached) to any solicitor followed by a series of interviews to cover the necessary topics and questions as provided within the interview pack…”.

Therefore, although it was intended to interview the suspects after arrest, it seems clear from this document that the dominant purpose of the arrest and detention was not to gather evidence from the suspects, or to give them an opportunity to give their version of events, or even to give them an opportunity to implicate themselves more in the transactions suspected of being money laundering by failing to explain those transactions or fabulating an explanation. In pursuance of the plan, it was to (i) get them away from Kanta House to allow the covert surveillance devices to be installed without their knowledge; and (ii) feed them sufficient information in circumstances in which they would likely discuss relevant matters between themselves or with third parties that would be captured on the surveillance devices.

It was part of the plan to restrict information given to those employed to execute it, such as the arresting officers and custody officers “to ensure the integrity of the… plan”. Appendix 1 to the Interview Strategy Document was a short “Briefing to Arresting Officers”. This did not refer to the intention to place covert surveillance devices in Kanta House, and the hope that the arrests and questioning of the Claimants whilst detained would provoke a reaction that would be caught by those devices; nor did that feature in the oral briefing of officers.

Appendix 1 explained to the officers:

“Arresting officers will receive limited information with regards to this case, this is done so that arresting officers cannot inadvertently disclose information regarding the case. The document is designed to give arresting officers sufficient grounds to arrest the suspects in this case.”

The document continued (all emphasis in the original):

“Grounds for Arrest:

Nominated arresting Officers are to use the following arrest wording to achieve their arrest:

‘You are under arrest for an offence of money laundering in that it is suspected over an undetermined period of time, businesses controlled by you, have been involved in the transfer of monies associated to fraud and the criminal proceeds thereof’

Money laundering Contrary to section 327 and 328 of [POCA]

Caution:

‘You do not have to say anything but it may harm your defence if you do not mention when questioned something you later rely on in court. Anything you do say may be given in evidence.’

Necessity:

The necessity under Code G of PACE for the arrest when presented to custody is for the following reasons:

TO ALLOW THE PROMPT AND EFFECTIVE INVESTIGATION ON THE BASIS OF

•

Securing and preserving evidence by means of searching premises associated to the suspect

•

Preventing the destruction of evidence and contact with co-accused and conspirators

•

Purpose of questioning and the consideration of any Special warnings.”

Nothing further was revealed to the arresting officers in this document; and there is no evidence that anything else material was disclosed to them at their oral briefing on 28 January 2015.

Appendix 2 was the “Briefing to Custody Officers”. It was intended to be sufficient for the custody officer to authorise detention, and it was not intended to supplement it orally. The document sets out brief details of the background, which, it says, deliberately did not set out any details of the evidence to ensure integrity of the plan. It says that the suspects would be arrested for money laundering contrary to sections 327 and 328 of POCA; and the custody record should be completed as follows:

“The suspect has been linked to a number of business [sic]. It is believed that a number of financial transactions within the accounts of these businesses are associated to Fraud and the Criminal Proceeds of Crime. The value of these transactions is in excess of tens of millions of pounds.”

Therefore, the Interview Strategy Document envisaged that each arrestee would be treated in exactly the same way, and told exactly the same things. The evidence is that the arrests were effected accordingly.

In addition to those documents disclosed in Mr Hickman’s second statement, at about 4pm on 14 April 2015 (the day before the hearing before this court), the NCA disclosed to the Claimants’ solicitors a third document in the form of an exchange of emails dated 9 October 2014, between Mr Hickman and an anonymised NCA officer, in which Mr Hickman responded to queries raised by that officer, as follows:

“1.

We need to at least consider whether or not it is feasible to do the deployment covertly via CME without being on the search?

I asked [redacted] to do a feasibility on the building a couple of months ago. It is surrounded by CCTV, alarms and locking shutters. Although I appreciate not impossible, I assessed the best way to obtain the product that we seek is to deploy the devices in the way we have discussed.

2.

If we were to deploy on the back of the search, how would we manage any associates still in the office from seeing our activity?

As mentioned, part of the role of the ‘Chaperone’ will be to control this eventuality. I would seek to round up any occupants on the legal footing of interfering with a search and control their movements, notwithstanding the offices that you will be attacking will be that of the arrested subjects.

3.

Additionally, we could do a survey as to whether they are feasible or not and deploy covertly at a later date?

We could, but the timing of this deployment and arrest is specifically timed to capture any reaction from the sentencing of Rajnesh Sharma. This is in the operational plan; given the opportunity to secure the surroundings that your staff will be working in, with the added benefit of time, during a warranted search, then this must be the most covert and productive way of achieving our objectives, with the minimum of risk.”

It is clear from this exchange of emails that the plan as outlined above – and, indeed, as executed – was effectively settled by early October 2014.

As I have described, the decision to arrest the seven suspects was made by Mr Hickman on 22 December 2014. Other officers proceeded to apply for production orders in respect of the banks and auditors, and for covert surveillance authorisation.

In the meantime, Mr Hickman asked another NCA officer, Andrew Gozzer, to prepare section 8 applications to the Magistrates’ Court, namely informations and warrants in respect of Kanta House and seven other premises which were thought to be the homes of the five Claimants, Batth and Dhariwal. Mr Hickman says (at paragraph 50 of his first statement) that he asked Mr Gozzer to prepare the applications because he was an experienced officer and was fully aware of all aspects of the operation. For Mr Hickman’s part, he said (at paragraph 52) that it had been many years since he himself had applied for a warrant, and he had “not appraised [himself] of the additional scrutiny that has occurred around these documents in more recent cases”. However, Mr Gozzer says that, whilst he had applied for warrants whilst serving with Dyfed Powys Police from 1987, he had not made an application for a warrant since he left that force in 2004; although, prior to transfer to the NCA in October 2013, he was an accredited investigator with SOCA and had, between 2006 and 2008, attended SOCA’s modular investigator programme which contained modules dealing with the theory of applying for search warrants including a practical exercise. He has received no training in applying for warrants since that programme (paragraphs 6-19 of his statement dated 4 March 2015). Mr Hickman explains (paragraphs 50 of his first statement) that there is no process for the CPS to authorise or scrutinise applications for warrants; and “the NCA does not have a legal or any other department with the responsibility of scrutinising/approving warrant applications”. By that, he did not mean that the NCA do not have internal lawyers available – they do – but rather, at the relevant time, warrant applications were not routinely scrutinised and approved by those lawyers. In any event, the applications in this case were not the subject of any consideration by a lawyer.

Mr Gozzer duly prepared the informations/applications and draft warrants, which were approved by Mr Gilligan and Mr Hickman. They were authorised by NCA Grade 3 Officer Adam Warnock, after Mr Gozzer had presented the applications to him and given him an explanation of the grounds.

The relevant parts of the applications were as follows:

It seems that Mr Gozzer prepared the applications on the basis that he did, omitting detailed information from the warrant application forms which (he accepts) would have assisted the magistrates, because that was “in line with [his] previous practice, experience and training” (paragraph 30), which appears to have been from his days with Dyfed Powys Police over 10 years previously. He expected that the magistrates would require further information from him, which he would provide orally, the detail of which would be recorded by the court (paragraph 31). He therefore prepared a four-page note for himself to enable him to answer any questions that the magistrates might put to him (paragraph 66). The only mistake in the applications that he appears to have understood as such, prior to the issue of this claim, was the failure to name the suspects and their relationship to each of the relevant premises (paragraph 32).

In the event, on 19 January 2015, Mr Gozzer duly attended the Magistrates’ Court, alone, and presented the applications on oath to a court comprising two magistrates and a clerk, Kamran Baig. The applications were made solely on the basis of the applications themselves and the informations: no other documents were presented to the justices. In addition, Mr Gozzer took with him the note to which I have referred. After a process which appears to have lasted no more than 45 minutes in total, the magistrates issued the warrants, saying:

“We are satisfied that the criteria under section 8 PACE is made out.”

Mr Gozzer did not make any note of the hearing. He says, in paragraphs 72 and following of his statement, that he answered some questions from the magistrates and relayed some of the contents of his note to them, as particularly set out in paragraphs 88-94 of the statement. Mr Baig has prepared a statement dated 7 April 2015, in which he confirms that he noted that the warrants did not name the suspects; but, if Mr Gozzer had given any additional verbal evidence or if the magistrates had asked any questions, he (the clerk) would have made a full note on the file, which is what Mr Gozzer himself expected (see paragraph 57 above). There is no such note. Furthermore, the magistrates did not set out any additional information that was given to them in the section of the application form for that very purpose.

I appreciate that, according to his evidence, if Mr Gozzer had answered questions from the magistrates, this would have been the first time he had ever done so on an application for a warrant; and, therefore, he might have been expected to have remembered it. However, it is well-established that, if information over and above that contained in the application is required in order to satisfy the court that a warrant is justified, a note should be made of the additional information so that there is a record of the basis upon which the warrant was issued (see, e.g., R (Redknapp) v Commissioner of the City of London Police [2008] EWHC 1177 (Admin) 2091 (“Redknapp”) at [13] per Latham LJ). At least, Mr Baig appears to have been aware of that requirement. Furthermore, as Mr Bird conceded, looked at in the round (and taking into account, e.g., the form of the applications, the time spent on them by the magistrates and the understanding of Mr Gozzer as to the role of the court (see paragraphs 102 and 108-109 below)), it appears as if the Magistrates’ Court merely rubber-stamped the eight applications put before them. In all of the circumstances, I consider Mr Baig’s evidence the more reliable on this point; and I am satisfied that, at the hearing, Mr Gozzer added nothing of substance to the written applications themselves.

The arrests and searches were planned to take place on 28 January 2015. Because of the large numbers of personnel involved – about one hundred – the previous day, Mr Hickman held a briefing meeting with scene search supervisors, including NCA Officer Henry Scutt who was made responsible for the operation at Kanta House. Neither Mr Hickman nor Mr Gozzer was involved with the arrests or searches on the day. No HMRC personnel were involved either; apparently because none was available.

The basis for the search was a briefing document, or “operation order”, which Mr Hickman attaches to his first statement. Of this document, the following are worthy of note:

Although Batth and Dhariwal were arrested by uniformed officers the same day elsewhere, it was proposed to arrest Satish, Jawahar, Rashmi, Bhasker and Rakesh on 28 January 2015, immediately prior to the search warrants at Kanta House and their homes being executed. Specific officers were assigned to arrest each of those men. As I have indicated, Mr Scutt was the officer in charge of the operations at Kanta House. He is a Grade 4 NCA senior investigator, who has been a Detective Sergeant for the last eight years. At 8am on 28 January, he gave a briefing to the arresting officers and the personnel who were going to be involved in the search. Mr Scutt says (on page 2 of his statement of 2 March 2015) that all of the officers were trained in search procedures, but he was aware that many of the deployed officers were “newer less experienced investigators” of whom about one-third were trainee investigators under the supervision of development officers who were present. The briefing was in line with the briefing document to which I have referred.

The arrests were intended to be simultaneous. About thirty vehicles with about a hundred men attended Kanta House for the purpose of effecting the arrests, executing the search warrants and taking the opportunity to deploy the covert surveillance devices.

Each of those arrested was told that they were under arrest for money laundering, in that it was suspected that, over an undetermined period of time, businesses controlled or linked to them had been involved in the transfer of monies associated with fraud and the proceeds of crime, contrary to section 327 and 328 of POCA; and it was necessary to arrest them in order to conduct a prompt and effective investigation by means of interviewing.

Rashmi was abroad on 28 January, and was not arrested that day. Satish, Bhasker and Rakesh were arrested at Kanta House. They were each handcuffed, and taken to Polar Park Police Station, where they arrived between 12.15 and 12.24. Their solicitor (Ms Todner) arrived at 15.08 and, once she had seen each of them, their interviews began at 16.31. Jawahar was arrested at the Mercure London Bloomsbury Hotel, and taken to the same police station where he arrived at 15.44. His solicitor arrived at 16.47. Batth, who as also arrested that day, was also being held there. The interviews took place between 16.31 and 22.18. They were released between 00.07 and 00.18 the following morning, at the same time as Batth. It is accepted by Mr Bird that they were released together as part of the plan, so that the Tailor brothers would drive away from the police station with Batth, in his car which had had a surveillance device fitted to it previously, in the hope that conversations would be captured that would be helpful to the investigation.

Meanwhile, over 500 bags of material were seized from Kanta House, before the NCA officers left the premises at about 4am the following morning. The evidence suggests that the seizure of material was not fully ordered and to an extent haphazard – unsurprising given the scope of the operation order, the failure to inform the officers of any of the details of the operation and the general inexperience of the officers. In line with the operation order (but outside the scope of the warrant), jewellery and diamonds were taken from the Claimants’ homes, and documents etc were taken from Kanta House without any specific consideration as to whether they amounted to evidence of money laundering.

During the time they were at the premises, the CCTV cameras were disabled. Mr Bird accepted that, although the surveillance authorisation could have authorised such a step, there was no evidence before the court that that trespass was authorised by the Commissioner or in any other way. Nor, he accepted, was there any evidence of any authority under which staff could have been “corralled” so that they would not witness the placement of the surveillance devices. The covert surveillance devices were installed, after the CCTV cameras had been disabled, with no staff present to witness the installation but before the search had been completed.

The day after these events (29 January 2015), Satish had a number of telephone conversations with his legal advisers, who recommended that, following the raid, a sweep of the premises should be done for surveillance devices. On 2 February, at Kanta House, Satish met an investigator experienced in such work, when they discussed the planned sweep including dates and premises to be included, to commence that day with the residential premises and to conclude with Kanta House on 7 and 8 February. That was a weekend, and was chosen because the sweep required the building to be empty to avoid interference from mobile phones etc.

Although the surveillance authorisation was for a period of three months, Mr Hickman intended to record conversations from Kanta House for only two or three weeks (paragraph 13 of his second statement). In the event, as a result of monitoring the surveillance devices in Kanta House when the sweep was being discussed, the NCA knew that a sweep was to take place there on 7 February, and the devices were removed two days before in the circumstances set out in paragraph 73 below.

Rashmi returned to the UK on 31 January 2015. The previous day, solicitors on his behalf wrote to the NCA saying that he would voluntarily surrender and cooperate.

On 4 February 2015, the NCA wrote to the Claimant’s solicitors, notifying them that they proposed to make an application to Birmingham Crown Court under section 59(6) of the CJPA for the retention and use of the material held as a result of the warrants executed on 28 January 2015. As such an application can only be made when the search and seizure were unlawful (see paragraph 132-3 below), it is clear that, by 4 February, the NCA had appreciated that the warrants under which they had operated were unlawful.

On the morning of the following day, 5 February 2015, as Rashmi left Kanta House following a meeting with his solicitor and Satish, he was arrested by NCA officers, subjected to a personal search, put in a van and driven to Polar Park Police Station where he was interviewed. The NCA officers searched Kanta House under their section 32 powers (see paragraph 29 above), and seized Rashmi’s mobile phones. The NCA officers took that opportunity covertly to remove the surveillance devices that had been placed there.

This claim was issued 6 February 2015. The Claimants applied for urgent interim relief in the form of an order forbidding any further copying or use of the documents seized under the warrants or any copies already made, which was put before Rose J that day. She refused that application on the papers, and the NCA continued to copy the material seized. On 13 February, Lang J ordered the application for permission and interim relief to be set down for an oral hearing, which Lang J herself heard on 17 February 2015 when she granted permission to proceed and interim relief in the form requested. She ordered that all copying cease, and originals and copies be moved to third party storage. That injunction remains in place.

Any arrest involves trespass to the person, and any such trespass is unlawful unless the arrestor is able to justify the trespass (Dallison v Caffrey [1965] 1 QB 348 at page 370 per Diplock LJ). As I have described (paragraph 27 above), for an arrest under section 24 of PACE to be lawful, the arresting constable must have reasonable grounds for (i) suspecting that an offence has been committed and that the target of the arrest committed it; and (ii) believing that it is necessary to arrest the person to allow the prompt and effective investigation of the offence. Furthermore, any arrested person is entitled to be told the essential legal and factual basis for his arrest, in simple language which he can understand (Christie v Leachinsky [1947] AC 573 at page 593 per Lord Simonds, recently confirmed in (e.g.) Taylor v Chief Constable of ThamesValleyPolice [2004] EWCA Civ 858 at [30] per Clarke LJ (as he then was); the common law position now being fortified by article 5(2) of the European Convention on Human Rights (“ECHR”)).

Mr Jones submitted that the arresting officers did not explain the factual and legal basis of the arrests to the Claimants, as they were required to do. This reflected the fact that they had not been given the full factual background, or the true purpose for the arrests and subsequent detention, which was not to enable the Claimants to be questioned but to keep them away from Kanta House for long enough for the covert surveillance devices to be installed. Therefore, whilst Mr Jones accepted that the limited information that had been given to the arresting officers would have provided reasonable grounds to suspect each of the first five Claimants of money laundering offences, and for believing that an arrest was necessary to allow the prompt and effective investigation of that offence, that was only because they had been deliberately isolated from the true facts and position by their superiors such as Mr Hickman. The arresting officers had thus been manipulated into making what were essentially sham arrests, or at least arrests with a dominant purpose other than to allow the prompt and effective investigation of an offence.

Mr Bird responded to the full breadth of those submissions. He submitted that the arrests of the first five Claimants were lawful, on the following basis:

Put as widely as Mr Jones’ submissions were, several issues are potentially raised. However, in my view, for the purposes of this claim, it is important to focus on the decisions challenged, namely the arrests of the first five Claimants on 28 January and 5 February 2015. Although, where (e.g.) there are substantial evidential disputes, another forum may be more suitable, it is clear that such decisions are amenable to judicial review in appropriate circumstances (see Redknapp at [23]).

The starting point for consideration of the lawfulness of the arrests is, of course, the relevant statutory provisions. By section 24 of PACE (and its predecessors), Parliament has determined that an arrest is justified where the arresting constable has, in his own mind, reasonable grounds for suspicion that an offence has occurred etc. Therefore, the objective test that is inherent in the concept of reasonableness has to be applied to the facts known to or the information given to the arresting constable.

That was established in O’Hara v Chief Constable of the Royal Ulster Constabulary [1997] AC 286 – indeed, in R (Rawlinson & Hunter Trustees) v Central Criminal Court; R (Tchenguiz and R20 Limited) v Director of the Serious Fraud Office [2012] EWHC 2254 (Admin) (“Tchenguiz”), a case to which I will return, Sir John Thomas PQBD (as he then was) referred to it as “the O’Hara principle” (at [218]), and even “the O’Hara rule” (at [234]). Mr O’Hara was arrested under the Prevention of Terrorism (Temporary Provisions) Act 1984 by a detective constable who had no basis for suspecting that he had been involved in terrorism, save for being told at a briefing meeting earlier that morning that he had been involved in a murder. That information was scanty and, in the event, the suspect was released without charge; but Lord Hope (with whom the other members of the Appellate Committee agreed) confirmed that:

“[T]he reasonable suspicion has to be in the mind of the arresting officer. So it is the facts known by or information given to the officer who effects the arrest or detention to which the mind of the objective observer must be applied.”

Therefore, simply because the information upon which the arresting constable relies is thin or incorrect, that does not in itself render the arrest unlawful if, on the basis of the information he has, the arresting constable has reasonable grounds for suspicion.

The principle was recently considered by Sir John Thomas PQBD in Tchenguiz (at [214] and following). Having considered the authorities, he set out the principle as follows (at [217]):

“The position therefore is that if apparently reliable information is given to a police officer, who then relies on it without more to make an arrest, then that can give rise to reasonable grounds on his part so as to defeat a claim for wrongful arrest, notwithstanding that the apparently reliable information is incorrect.”

Tchenguiz concerned an investigation by the SFO and the City of London Police, who “worked closely and hand-in-hand and therefore became part of a joint investigating team” (at [221]). The police officer who arrested Mr Tchenguiz did so on the basis of information given to him by an SFO officer. That information was not only wrong in material respects, but the SFO was on notice that it was wrong. In those circumstances, it was contended that the O’Hara principle should not apply. As Sir John Thomas put it (at [218]):

“[Counsel for Mr Tchenguiz] submitted that there should be a very narrow exception granted to the O’Hara principle so that the ‘reasonable grounds to suspect’ of a constable should not include facts about which another member of the investigation team, upon which he relies, has positively and materially misled him in circumstances where the other team member knew or ought to have known that the information he provided was misleading. In other words, a police officer can be successfully sued for wrongful arrest in cases if he obtains information from another member of the investigating team who knew or ought to have known that the information, which he was providing, was misleading.”

The court rejected that submission.

First, it said that the submission failed to take into account the relationship between the SFO and the police. The SFO has the statutory function of investigating fraud, and it cannot be a duty of the police to exercise an independent mind on the results of the investigations: indeed, there was a Memorandum of Understanding between the SFO and the City of London Police which provided that the SFO would ensure that the information passed to the police by the SFO for the purposes of making arrests would be fully accurate and complete.

Second, it failed to take into account the rights of someone wrongly arrested as against any person who was responsible for the arrest “by giving some direction to the police officer, or procuring, or directly requesting, or directly encouraging the arrest by the police officer”. This was illustrated (the court said) by Davidson v Chief Constable of North Wales Police [1994] 2 All ER 597, in which police officers arrested the claimant on the basis of wrong information provided by a store detective. A claim for damages was brought in the county court against both the Chief Constable (as vicariously liable for the acts of the police officers) and the store detective. The claim against the police officers was discontinued on the first day of the trial, the issue occupying the court thereafter being whether the store detective simply passed on (incorrect) information or went further in procuring the arrest.

Thus, in Tchenguiz, even if he had no cause of action against the arresting constable, if the facts supported the contention, Mr Tchenguiz could contend that (i) his arrest was procured maliciously and without reasonable and probable cause, which would found a claim of malicious arrest; or (ii) his arrest was procured or directly requested by the SFO and so it should be liable for false imprisonment, a tort of strict liability which does not require proof of malice. It was the availability of those private law remedies (the President said) that ensured that section 24 did not breach the safeguards afforded by article 5 of the ECHR. The court therefore found (at [234]) that there was no basis for contending that there should be an exception to the O’Hara rule of the kind suggested. On that basis, although the arrest of Mr Tchenguiz might result in claims against others, it could not result in a claim against the arresting constable (or, vicariously, against the Chief Constable) for wrongful arrest; and it could not found a public law claim in this court that the arrest by the constable was unlawful.

The evidence of connections with known money launderers (such as Batth, Tarr and, through Batth, Sharma) and of money laundering transactions involving DDL (see paragraphs 10-23 above) was, in my view, clearly sufficient to give rise to a reasonable suspicion of money laundering on the part of each of the first five Claimants (see paragraph 116 below) Mr Jones – in my view, quite properly – conceded that, on the information given to the arresting constables in this case (which was, as I have described, identical in each case), each constable could have reasonably suspected that the Claimant he was to arrest had committed an indictable offence. Mr Jones’ submission was based upon the premise that that information provided by a senior officer to the arresting constables was deliberately incomplete and misleading.

However, whilst there are differences on the facts between this case and Tchenguiz (e.g. the information provided to the arresting constable in that case was provided by someone from a separate investigation agency), in my judgment those differences are not material to the applicability of the principle laid down in that case. Following full argument, the proposition considered and approved by the court was that a constable is not liable for wrongful imprisonment if, on the information he has been given, he reasonably suspects an indictable offence has been committed, and reasonably believes that the arrest is necessary on one of the statutory grounds, even if that information has been provided to him by a member of the investigating team who knew that the information was misleading.

In my respectful view, insofar as that is not binding on this court, the reasoning of the President in Tchenguiz is compelling, and I would follow it. Particularly in a complex investigation, arresting constables do not have a duty to check the information upon which they are asked by an investigating team to make an arrest. Such an obligation would be impracticable, and section 24 does not impose it. Even if the informant is internal and knows that the information he is providing is wrong or misleading, the arresting constable cannot be liable for wrongful arrest if, on the basis of that information, he reasonably suspected the arrestee of having committed an indictable offence. The arrest is not “unlawful” in that sense, and is not amenable to a claim for wrongful arrest against the constable, nor a public law remedy; although, as Tchenguiz emphasised, other private law remedies may be available to the arrested individual.

Before I leave this topic, I should deal with one further authority, the Court of Appeal (Criminal Division) case of R v Chalkley [1998] 2 Cr App R 79. We were referred to this case primarily in relation to collateral motive for an arrest; but it is a case which, in the context of arrests, appears to have considered “a corporate state of mind” rather than focusing exclusively on the mind of the arresting constable.

The two defendants pleaded guilty to conspiracy to rob, after the trial judge admitted evidence of covertly obtained recordings of conversations between them from which it was clear they were planning robberies. The surveillance device was planted in Chalkley’s home after he had been arrested by constables in a different police force (Cambridgeshire) for obtaining goods fraudulently on a credit card. There were reasonable grounds for suspecting the men had committed that offence, but a decision had already been taken not to prosecute them for it. The arrests were therefore a ruse to enable the bugging device to be planted: the police investigating the robberies could think of no other practical way of planting it. The arresting constables were unaware of the true motive for the arrests. In the robbery trial, the defendants sought to have the covertly obtained evidence excluded under section 78 of PACE.

In holding that the evidence was admissible, the judge found that the arrests were lawful. The Court of Appeal agreed. In giving the judgment of the court, Auld LJ said:

“The fact that the Cambridgeshire police officers who made the arrests may have been ignorant of the real motive for them does not entitle the court to focus just on their role and understanding of the matter – and the judge did not do that. He clearly treated the Cambridgeshire police, acting through their Chief Constable and DI Harrison of the regional crime squad, as having a ‘corporate’ state of mind for the purpose of testing the legality of the arrest. As to satisfaction of section 24 of [PACE], ‘reasonable grounds for suspecting’ Chalkley and Carter to be guilty of an arrestable offence, we cannot fault the judge’s conclusion that all the officers concerned had such grounds. In particular, we agree with him that WDC Fletcher’s information, which she passed to DI Harrison and to the Cambridgeshire officers who were to make the arrests, constituted reasonable grounds for suspecting the involvement of the two in the credit card fraud. And we can see no basis for rejecting the judge’s conclusion that they did not know or believe, when making the arrest, that there was no possibility of charges for those offences following.”

Auld LJ then moved on to consider collateral purpose.

Before us, Mr Jones did not suggest that this was authority for the proposition that, in considering reasonable grounds for suspicion in the context of testing the legality of an arrest in this court, the focus should be wider than the mind of the arresting constable. In my view, he was right not to do so: it does not support that proposition.

The case concerned the exclusion of evidence under section 78 of PACE, on the basis that its admission would have such an adverse effect on proceedings that it ought not to be admitted. The Court of Appeal held that, even if the arrests had been unlawful, the judge’s refusal to exclude the evidence was correct; because its admission would not render the convictions unfair. Thus, what the court said about the legality of the arrests was obiter. But in any event, the court was considering the legality of the arrests in a different – and wider – context from this court in this case. Section 78 required the Crown Court to consider all of the circumstances that bore upon the fairness of admitting the evidence; which would include, not only the legality of the conduct of the arresting officers (which the Court of Appeal appears to have considered was lawful, in that the requirements of section 24 of PACE had been met: see the quotation above), but also the legality of the conduct of other police officers in relation to the arrests. As Professor Sir John Smith, presaging the comments of the Lord Chief Justice in Tchenguiz, said at the time ((1999) Crim LR 214 at page 216):

“If the arrests had been unlawful because of the ulterior motive of the senior officers, those officers would have been liable for the tort and perhaps the crime of false imprisonment but the arresting officers would not.”

It was in that context that the reference to the other officers and to the “corporate mind” was made. In the event, the Court of Appeal said (again, obiter) that the other officers did not act unlawfully either.

Chalkley does not appear to have been referred to in Tchenguiz, no doubt because it was not thought relevant to the circumstances of that case. Nor, in my view, is it relevant to the circumstances of this.

Finally on this ground, in my view, the arresting officers did sufficiently notify the Claimants of the suspected offences. It was clear that they were money laundering offences under section 327 and 328 of POCA, that laundering being in the context of the businesses in which each was involved. Given the constable was not bound to disclose details that might undermine or otherwise adversely affect any continuing investigation (see paragraph 28 above), in my view the Claimants were given sufficient legal and factual reasons for their arrest.

For those reasons, the challenge made to the arrests, in this court, fails.

As I have indicated, the Claimants’ complaints about the police in respect of their arrest and detention are not limited to whether the arresting constables acted lawfully: they suggest that the officers who misled them as to the real reason for the arrests acted unlawfully, as did the police officers who contrived to keep the men detained for sufficient time to enable the covert surveillance devices to be planted at Kanta House, which was an integral part of the plan. Mr Bird submitted, with some force, that a claim based upon an ulterior motive for the arrest would struggle in the face of (i) the evidence that they had committed money laundering offences and that the police wished to interview them, and (ii) cases such as Chalkley (see paragraphs 91-96 above). In respect of the period of detention, he submitted that, on the evidence (set out very briefly above at paragraph 66), it is clear that the period of detention was not extended to ensure that the officers planting the devices at Kanta House had sufficient time to do so, undisturbed.

In my view, this court is not an appropriate forum for these other claims, which are, to a considerable extent, fact-dependent. If tortious claims such as false imprisonment, malicious arrest and/or wrongful detention are to be made, then they should be pursued in the form of a properly pleaded Part 7 claim, in which evidence can be adduced and subjected to the rigours of cross-examination if contested, as seems likely. I should make clear that no party should gain any encouragement or discouragement from this judgment in respect of such claims, which I have not considered.

Mr Jones submitted that the search warrants issued by the Magistrates’ Court were unlawful, on two broad grounds.

First, as his main ground, he submitted that Mr Gozzer, as applicant for the warrants, had failed to disclose all relevant matters to the justices; as a result of his whole approach to the application for, and execution of, the warrants being fundamentally flawed as a matter of law. This was not just true of Mr Gozzer: the approach of the NCA to warrants appeared to be systemically flawed, in that none of the officers involved in this case (including Mr Gozzer’s superiors, Mr Hickman and Mr Warnock) appreciated the vital role of the court in the warrant process. That role was to ensure that the requirements of the statutory scheme were met, so that the rights and interests of the object of the proposed warrant were not unlawfully interfered with. The NCA had, in effect, abrogated that role to itself. That appeared to explain why Mr Gozzer (with the approval of his superiors) thought it appropriate to deny the magistrates information that they would have needed if the magistrates were required to satisfy themselves that the statutory criteria had been met. In the applications, he merely asserted that the statutory criteria were met, and persuaded the lay magistrates to rubber-stamp the applications on that basis.

Second, Mr Jones submitted that various particular statutory requirements had not been met:

In my view, there is considerable overlap between these grounds – as any fundamental misunderstanding that led to a failure to disclose information to the Magistrates’ Court, would likely lead to the various particular statutory requirements being ignored or otherwise not being met. I shall deal with Mr Jones’ main ground first, and then the various elements of the second ground insofar as I have not already covered them.

As Lord Thomas LCJ recently said in R (Golfrate Property Management Limited) v The Crown Court at Southwark [2014] EWHC 840 (Admin) (“Golfrate”) at [22], the applicable approach to disclosure in applications for warrants is well-established and uncontroversial, the relevant principles being summarised by Sir John Thomas himself giving the judgment of the Divisional Court in Tchenguiz at [81]-[98]. Although those cases involved search and seizure applications to a different court (the Crown Court) by different authorities (the SFO and the Metropolitan Police service respectively) under different statutory provisions (section 2(4) of the Criminal Justice Act 1987 and section 353 of POCA respectively), it was rightly common ground before this court that the principles are equally applicable to an application to a justice or justices under section 8 of PACE, particularly where (as here) the application is made in the context of an investigation involving money laundering or other financially complex matters. Indeed, given that such applications might be made to lay magistrates, who may be less able to consider and question applications with the same experienced and informed rigour as would (e.g.) a circuit judge, it is arguable that the obligation on an applicant might be even more onerous. It is certainly just as important.

The relevant principles are as follows:

As I have said, those principles – derived from the statutory scheme, and in particular reflecting the checks and balances which Parliament has incorporated in that scheme where without notice procedures for draconian measures are made – are well- and long-established. Every agency that applies without notice for search warrants, or other similar support from the court, should be aware of these principles; and have systems to ensure that they are respected in practice. The courts have, time and again, stressed the need for awareness of, and compliance with, these principles (e.g. Hughes LJ in Stanford at [191], quoted above). The Lord Chief Justice emphasised in Golfrate (at [28]) that, in respect of the nature and importance of an applicant’s duties to the court in such applications as these:

“If and to the extent that it is not well-known and understood by police officers seeking orders such as those sought in this case, it is time that the message was brought home clearly to applicants…”.

That judgment was handed down on 25 March 2014 – well before the applications were made in this case. Since that judgment, we understand from Mr Bird that other investigating authorities have taken steps to ensure that their practice complies with the principles set out so clearly in Tchenguiz.

It is therefore, to say the least, disappointing and of great concern that in this case the NCA failed to have any regard to the fundamentals of the statutory scheme, or the principles derived from that scheme as set out in such cases as Tchenguiz. Mr Bird fully and contritely accepted that the approach taken by the NCA to these applications for search warrants was entirely wrong, and was based upon a fundamental misconception as to the role of the court in such applications, interposed as it is between the citizen and the executive. He accepted that neither Mr Gozzer who made the applications, nor his superiors Mr Hickman and Mr Warnock (an inspector-level officer) who approved them, understood the basics of the warrant procedure. To them can presumably be added other officers who were instrumental in the plan, such as Ms Wilde who drafted the Interview Strategy Document. In this operation, as Mr Bird stressed, the NCA sought to press the legitimate boundaries of the statutory schemes within which it operates – it was novel and “audacious” policing – and yet, in the very circumstances in which they are likely to be most important, no one involved at the NCA appreciated the checks and balances provided by Parliament that are inherent in those schemes to ensure that they are not abused. Apparently, no one even considered taking legal advice on the warrants, or any other aspect of the plan, either from the in-house lawyers that are available to the NCA, or externally.

Mr Jones submitted that the NCA must have acted in bad faith, because it is sensibly inconceivable that no one in an agency such as the NCA appreciated the basic requirements of search warrants. Mr Bird, whilst accepting that the NCA’s approach was indefensible and resulted in the NCA entirely displacing the function of the justices, submitted that it adopted the approach it did, not because of bad faith, but out of ignorance of the appropriate procedures and a complete failure to appreciate the fundamental role of the court in the without notice issue of search warrants.

Mr Jones’ submissions have considerable superficial force: the level of systemic ignorance in respect of basic investigation procedures, on the part of a national agency established to investigate organised and other serious crime, upon which Mr Bird’s submission is based is difficult to believe and would be shocking. However, on the evidence, I am not satisfied that there was bad faith on the NCA’s part. Looking at the evidence as a whole, this case smacks of incompetence, not bad faith. For example, the applications failed to employ evidence strongly supportive of the suspicion that the Claimants had committed an offence (e.g. the links of Tarr with Kanta House, and in particular with DDL and Rashmi). There was no reason for not disclosing that evidence to the magistrates, except that the applications were made on the legal misconception that the magistrates were not interested in satisfying themselves that the statutory criteria had been met.

With regard to the application and execution of the search warrants, in my view the failings of the NCA resulted from ignorance on the part of the officers involved, coupled with a systemic failing which resulted in the fundamentally misconceived approach to these warrants being pursued and not being stopped. The NCA generally (and the applicant, Mr Gozzer, in particular) considered that it was sufficient for the warrant applications to assert that the applicant held the relevant statutory beliefs on the basis of intelligence that he had received: and, clearly, the justices also considered that their role was one of rubber-stamping the application on that basis. As Mr Bird rightly accepted, although the magistrates failed in their statutory duty to ensure that the relevant criteria were met, it does not lie in the mouth of the NCA to blame them, as the magistrates were entitled to rely upon what they were told in the application and hearing.

In my view, this misconception explains much with regard to the applications for, and execution of, the search warrants.

On the basis of the conceded breaches of sections 15 and 16, the NCA concede that the search warrants were unlawful. Indeed, in effect, they made that concession as early as 4 February 2015 (see paragraph 72 above).

However, Mr Jones relied on grounds wider than the concessions made by the NCA. He submitted that, not only did Mr Gozzer fail to put before the magistrates the material they needed to enable them to exercise their function under section 8, but that, in fact, there were no reasonable grounds for suspecting an offence had been committed, or for believing that the items sought were likely to be relevant evidence or that the items sought did not include legally privileged or special procedure material. I will deal with those three matters in turn.

First, I am unpersuaded that, on the evidence available to the NCA, there were no reasonable grounds for suspecting that an indictable offence had been committed. In my view, there were such grounds.

Mr Jones emphasised that the Claimants were professionally qualified, well-established, successful businessmen with no previous convictions, and indeed a positively good character; their success as businessmen can explain any signs of wealth that may be apparent; and the tribunal proceedings exonerated them of any guilty knowledge with the VAT fraud in relation to the razor blades, which considered and exonerated their mode of commercial operations. That is all true: but successful money laundering requires men of good character to place criminal proceeds, and the statement of Mr Hickman (had it been deployed) evidences connections with known money launderers (such as Batth, Tarr and, through Batth, Sharma) and of money laundering transactions involving DDL (see paragraphs 10-23 above). That evidence is clearly sufficient to evoke a reasonable suspicion of money laundering on the part of each of the first five Claimants, either as active participants or on the basis of knowledge with regard to the company’s transactions. Indeed, in my view the evidence relating to the moneys deriving from the school phishing scam (see paragraph 21 above) would, alone, give rise to such a reasonable suspicion. Where the warrant process failed was not that there were no reasonable grounds for suspicion, but that the basis of those grounds was not set out in the application to enable the magistrates to judge whether those suspicions were reasonable.

Nor do I consider the identification of offences in the applications/warrants flawed: offences under Part 7 of POCA notoriously overlap, section 327 concerning concealing, transfer and conversion of criminal property, and section 328 concerning entering into an arrangement suspected to facilitate the acquisition, retention, use or control of criminal property on behalf of someone else.

Similarly, second, I consider the NCA did have reasonable grounds for believing that material at the various premises was likely to be relevant evidence in respect of those crimes. Both the business premises and the Claimants’ homes were likely to have evidence in relation to the identified offences.

However, again, the procedure went very wrong. I accept Mr Jones’ submissions that the wording of the warrants was too wide in identifying the material sought as “evidence of money laundering”. Section 15(6) of PACE provides that a warrant must “identify, so far as practicable, the articles… sought…”. That requires the warrant to set out the articles with sufficient particularity so that anyone interested in the execution of the warrant (but particularly the officers involved in the search and seizure operation, and the holder of the articles) may ascertain whether a particular article fell within, or outside, the scope of the warrant (McGrath v Chief Constable of the Royal Ulster Constabulary [2001] UKHL 39 at [18] per Lord Clyde; recently reiterated, after a review of the relevant authorities, by Wilkie J in van der Pijl v Kingston Crown Court (No 1) [2012] EWHC 3745 (Admin) at [53]) and by Pitchford LJ in R (Hoque & Das) v City of London Magistrates’ Court [2013] EWHC 725 (Admin) (“Hoque & Das”) at [13]). I accept Mr Jones’s submissions that “evidence of money laundering” fails this test. Indeed, this may be unsurprising because, as I have described, the application and warrant appear to have been drafted on the basis that the precise terms of the warrant did not really matter. In the event, the wording of the warrants became irrelevant in the sense that, in practice, the warrants were overtaken by events; because Mr Hickman ignored them and gave the officers employed in the search carte blanche to search for and seize any and all documents, subject only to the exercise of their own discretion and constraint.

Mr Jones submitted that, as Mr Hickman knew about the determination of the Upper Tribunal in relation to the VAT matter (which involved a huge shipment of razor blades and a VAT reclaim for over £4m), he must have known that there would likely be legally privileged material at the Kanta House offices, as there proved to be. Consequently, the application under section 8 was misconceived; the application ought to have been made under section 9 and schedule 1, with its additional safeguards, including the requirement to make the application before a circuit judge rather than magistrates.

The evidence of Mr Hickman on this issue is less than satisfactory. It is clear from his first statement that he was aware of the HMRC 2006 razor investigation (paragraph 53), and it is now clear that he had read the Upper Tribunal determination when he briefed Mr Gozzer to apply for the warrants (see paragraph 56(ii) above). The warrant applications of course referred to the money that was suspected of being laundered being “primarily suspected to be the proceeds of VAT evasion”. Mr Hickman says in his evidence that he had no previous experience of dealing with MTIC frauds, and had a meeting with an HMRC officer prior to the 28 January 2015 raid at which he asked him if he could provide HMRC officers with an MTIC background to accompany the NCA officers on the raid (paragraph 54). However, he goes on to say (also paragraph 54):

“I had no interest in any litigation from 2006 and did not seek to retrieve material from such a case. The inclusion of HMRC staff was meant to further minimise the disruption at Kanta House as they could quickly identify material that was potentially evidence of this offence [presumably, the money laundering offence], thus leaving other non-relevant material in place.”

As Mr Jones submitted, in the circumstances, it is difficult to see how Mr Hickman “did not envisage finding items of legal privilege” at Kanta House relating to the VAT reclaim, which he says he did not (paragraph 54 of his first statement). Mr Hickman’s evidence is unclear as to whether he in fact brought his mind to bear on the issue of legally privileged material (although paragraph 56 of his first statement suggests that, if he had envisaged coming across such material, he would have asked “independent counsel to attend”). Given his ignorance of the statutory scheme, it would not be surprising if he had not done so. In the event, due to the width of the orders to those involved in the search and seizure and the presence of legally privileged material, a substantial amount of privileged material was removed.

Whilst I do not consider it to have been the most egregious error in this case, in my judgment Mr Hickman ought to have expected to have come across privileged material in the search of Kanta House, and therefore proceeded to have applied to the Crown Court under section 9 and schedule 1.

In considering the main ground, I have already dealt with most of the strands that comprise Mr Jones second ground, that various particular statutory requirements had not been met, as follows:

That leaves just one subground, namely that, again contrary to section 16(8), the searches of the premises exceeded the extent required for the purpose for which the warrants were issued, by extending to searching for appropriate places to install the surveillance devices in Kanta House, and then installing them.

Mr Bird accepted that the public law principle of dominant purpose applied here, namely that, where an act may serve two or more purposes, some authorised and some not, the act will be lawful if the permitted purpose is the true and dominant purpose behind the act, even though some secondary or incidental advantage may be gained for some purpose outside the authority’s powers (Padfield v Ministry of Agriculture, Fisheries and Food [1968] AC 997, as applied in this area by R v Southwark Crown Court ex parte Bowles [1998] AC 641 at page 650-1 per Lord Hutton, giving the only substantive judgment).

However, although the search warrant was used to gain access to Kanta House for the purpose of installing the surveillance devices, Mr Bird submitted:

Mr Jones submitted that the search warrants were improperly used. Section 16(8) of PACE and PACE Code of Practice B (quoted above, at paragraphs 36-37 respectively) require that a search warrant be used only to the extent required for the purpose for which the warrant was issued. In this case, it was used to search for places to install the surveillance equipment, and then install that equipment. I am, however, unpersuaded by those arguments. The installation of the surveillance devices was authorised, not by the search warrants, but by the Surveillance Commissioner. The terms of that authorisation are not known to us – we do not know, for example, if it authorised installation in the manner in which it was accomplished, or even if the Commissioner was told of that proposed manner – but Mr Jones accepts that the NCA could have (e.g.) broken into Kanta House to install the devices, if it had wished. If it were the dominant purpose of the search warrant to search Kanta House and seize relevant material from there, I do not consider that the NCA acted improperly in using that opportunity to install the devices they were authorised to install. The argument that the NCA officers used the search warrant to search for places to install the devices is, in my respectful view, strained and thin.

However, nor do I agree with Mr Bird’s contention that the NCA was under no obligation to disclose to the magistrates the proposal to use the opportunity of the execution of the search warrant to plant the devices. Even if the NCA contended that their dominant purpose in obtaining and executing the warrants was to obtain relevant evidence from the search, in my view it was required to disclose that to the magistrates; because an applicant is bound to disclose any material information that might affect the exercise of the magistrates’ power to issue a warrant, and information that the opportunity was going to be used in that way may have led the magistrates to question the dominant purpose of the warrants. Again, this comes back to the failure of Mr Gozzer and the NCA properly to appreciate the respective roles of the applicant and the court in a without notice application of the type made by Mr Gozzer here.

As I said at the outset of this judgment, the real issue for the court in relation to the search and seizure warrants is the appropriate relief; and, in particular, whether, despite the unlawfulness of the warrants, the NCA should be allowed to keep the documents seized, and/or work product from those documents such as copies and schedules, pending an application under section 59 of the CJPA.

Any breach of section 15 or 16 renders the issue and/or execution of the relevant warrant unlawful (see paragraph 40 above); and, on the principle that a person should not profit from his own wrong, that imposes an obligation on the agency of the State that has obtained documents to return all of the material seized and not use any work product derived from that material, such as copies. That would apply even if the error in the application (as reproduced in the warrant) was small, and immaterial in the sense that, had the application contained the correct information, the court would in any event have issued a warrant.

Parliament stepped in to give the agency a second chance. Section 59 of the CJPA provides, so far as relevant to this claim:

(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 the 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 section 54(2);

(c)

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

(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…

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

(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)…”.

The following are worthy of note:

Thus, Parliament has permitted the retention of documents obtained from an unlawful search, under certain circumstances, and subject to the agency holding the seized documents persuading a Crown Court judge that (i) he would now grant a notional application for a warrant that would result in the seizure of those documents, and (ii) he should exercise his discretion to allow retention. The reason for allowing an agency to rely upon its own illegal act was pithily put by Leveson LJ in R (Cook & Cook) v Serious Organised Crime Agency [2010] EWHC 2119 (Admin) at [16]:

“Criminal litigation is not, however, a game. Although the police (or in this case SOCA) cannot escape the consequence of the illegality of the warrant, there is no reason why they should be placed in a worse position than if the warrant had never been sought or, conversely, why those, the subject of a warrant, (even if unlawful) should be in a better position to protect themselves from prosecution for unlawful conduct.”

The subject of a warrant may be better off if the documents are returned, and then another warrant sought, because he will have an opportunity to destroy incriminating material before the further warrant is executed. Warrants of this sort are, of course, sought without notice on the basis that, if the subject were alerted to the investigation, there is a risk that he might destroy documents with a view to avoiding their disclosure. However, of course, under the section 59 procedure, the agency does benefit from its own unlawful act of seizing the documents in the first place; because, at the section 59 hearing before the Crown Court judge, it will have had the opportunity to consider the seized documents and make submissions for a warrant in relation to specific documents and classes of documents in the notional application from a more informed standpoint than if it had been making an application for a warrant blind.

The fact that Parliament has countenanced the retention of documents seized as the result of an unlawful search – and has set out a procedure for enabling the issue of retention to be determined by a Crown Court judge – is an important factor to be taken into account when this court is asked to order such documents to be returned without such a procedure. It is a powerful reason for restraint. However, as Mr Bird properly accepts, on finding that documents were seized by an agency as the result of an unlawful search, relief is (as always in this court) a matter for the court’s discretion; and, therefore, despite an application under section 59 being the norm, there may be circumstances in which it is appropriate for this court to deny an agency any benefit from its wrongdoing – including the benefit of having the seized material (and work product from it) available for the pursuit of a section 59 application – by ordering the return and/or destruction of such material.

Indeed, such relief was granted by this court (again, differently constituted) in R (Kouyoumjian & Kouyoumjian) v Hammersmith Magistrates’ Court [2014] EWHC 4028 (Admin) (“Kouyoumjian”). The sole dispute in that case was whether all materials seized in an admittedly unlawful search, and copies, be returned to the claimants. The court held that such an order should be made, because the agency (in that case the Metropolitan Police) had misled both this court in the judicial review application, and the Crown Court in its parallel section 59 application, as to the aim of the search, the agency’s position changing without explanation from the time of the application for the warrant (when it said it required the warrant to investigate the importation of cocaine) to the afternoon of the hearing before this court (by which time the investigation into drugs had been dropped, but an investigation into more general financial matters was being pursued). Although bad faith was not found, the failure to fulfil the duty of candour to this court resulted in the order for return being granted.

Despite their diligent researches, Counsel before us were unable to identify any other case where such relief has been given; and, indeed, Counsel in Kouyoumjian too were unable to find any earlier case. In the other cases to which we were referred, in which no such relief was granted, the errors in the warrant were relatively minor. For example, in R (Anand) v HM Revenue and Customs [2012] EWHC 2989 (Admin), the non-disclosure was limited to an incorrect assertion that an animation clip had been provided by accountants, the warrant also being too widely drawn in terms of the material sought, contrary to section 15(6)(e). The court held that, if the information disclosed had been correct, a warrant would have been granted in any event; and no other relief than quashing of the warrant would be appropriate. In van der Pijl the defect was a failure properly to identify the subjects of the warrant, which could be remedied simply by inserting the identity of the suspects. Again, this was not considered to be sufficient to make an order for return of all the material appropriate: the matter was left to be dealt with by the Crown Court under section 59.

Unsurprisingly, these cases illustrate that, in terms of appropriate relief, each case will be fact-dependent. However, on the basis of the authorities, the following propositions can be made:

The question is, therefore, was the conduct of the NCA in this case such that it should be relieved of any benefit of the unlawful searches? After careful consideration, I have concluded that it was.

As I have already indicated, on the evidence before this court, I am unpersuaded that the NCA officers acted in bad faith. However, they acted with patent and egregious disregard for, or indifference to, the constitutional safeguards within the statutory scheme within which they were operating. The individual officers, I accept, were acting out of ignorance: but that ignorance was deep, it ran to inspector-level, it related to the fundamentals of the scheme being operated and there were no systemic checks to ensure warrants were not issued without even consideration of the requirements of sections 15 and 16 of PACE. Given the system then in place, it was almost inevitable that an application for a warrant would be grossly deficient; and, given that these warrants appear to have been regularly dealt with by lay magistrates in Birmingham, that the issued warrants would be grossly deficient.

This is not a case where the error in the application and thus the warrant was relatively minor. The errors were grave, and went to the very root of the statutory scheme. It is not a case in which it can be said that, had due disclosure been given to properly informed magistrates, they would inevitably have issued the warrants in any event. Indeed, whatever the documents seized might reveal, there is considerable force in Mr Jones’ submission that, on a section 59 application, a Crown Court judge in this case could only properly exercise his discretion by entirely refusing the application to retain – although, even where a judge might allow a section 59 application, that is no bar to this court intervening in an appropriate case to restrict or prohibit retention of material by the investigating agency.

Mr Jones complains that, on notice of this claim, the NCA continued to copy the material they had seized. Mr Bird accepts that it did so to obtain a tactical advantage, because in some of the authorities it has been said that it may be appropriate to allow the agency to retain copies whilst being required to return original documents seized in an unlawful search, and taking the copies would give the court some flexibility in respect of relief. There is no doubt that the NCA was lawfully permitted to take copies of the documents they seized, until Lang J’s injunction. Indeed, an earlier application was made to Rose J for an injunction, and she refused it. However, I do not see how an agency taking copies can, or should, put it into a better position than if it had not done so.

In granting permission to proceed, Lang J said (at [32]) that, given the risk of abuse of power, this court should not encourage the view that an agency can seize material without following correct procedures, in the hope and expectation that, having examined the documents seized, it will be able to apply for retrospective authorisation. I agree. In the extraordinary circumstances of this case, in my judgment, the conduct of the NCA, whilst falling short of bad faith, has been such that it should not be allowed any actual or potential benefit from the unlawful search and seizure that directly flowed from such conduct.

For those reasons, I would refuse the judicial review insofar as it challenges the arrests, and allow it insofar as it challenges the search warrants.

In terms of relief, subject to submissions in respect of the precise order, I would declare the relevant warrants unlawful; order the NCA to deliver up the seized material, and to deliver up or destroy all copies, schedules and other work product derived from the seized material; and, subject to further order, prohibit the NCA from using the material or anything derived from the material for the purposes of this investigation or for any other purpose.

In recent times there have been increasing numbers of challenges, some of them very high profile, in the Administrative Court to the obtaining and/or execution of search warrants by police or investigating authorities. Some such challenges are unfounded. Others are all too well founded. Regrettably, many of the challenges raised are directed at the woefully inadequate preparation of the applications to the court for the issue of the warrant: sometimes, one suspects, because of the apprehension – entirely misplaced – on the part of the police or investigating authorities that such applications are in essence matters of routine, in effect requiring no more than a rubber stamp of approval from the courts. If, as regrettably also sometimes happens, those applications then do not receive the close scrutiny from the courts which is needed, trouble can ensue.

The present case is just about a paradigm example of (a) lack of understanding of what was required for the applications; (b) lack of preparation and deployment of the information needed for the applications; (c) lack of sufficient scrutiny by the justices; and (d) lack of regard at the stage of execution as to what the warrants actually permitted. It is, to my mind, rather remarkable that as at January 2015 an organisation such as the NCA could have been so ill-informed as to the required processes. When one then adds into the mix the fact that the NCA had formed a very astute and (in Mr Bird’s word) “audacious” strategy on the back of the contemplated searches and arrests one can at least understand the allegation that there was here manipulation, in bad faith, of the entire search warrant system. Indeed it is difficult not to have concerns that those involved may have been working on, as it were, the basis of a presumption of guilt and the basis of a perception that, when dealing with presumed or suspected sophisticated criminality, the ends justify the means. Courts of law, however, cannot be expected to work on such bases.

For the future, in complex matters of this kind authorities such as the NCA would be very well advised to consider taking legal advice (internal or external) in advance of their applications for warrants. They would also be very well advised to bear in mind that many defendants in such cases will thereafter – as in this case – be giving the closest scrutiny to the validity of the warrants and will be well resourced to raise legal challenges. At all events, laxness in this context cannot readily be tolerated when one compares and contrasts the very careful preparation routinely given to, and close scrutiny undertaken by the courts of, applications made without notice for search orders in civil cases.

Considering the totality of the evidence and in agreement with Hickinbottom J, I have nevertheless reached the conclusion that bad faith is not made out in this particular case, whatever justifiable criticisms may be made both as to the obtaining of the warrants and thereafter as to the way in which they were executed: which, among other things, went well beyond what the justices had actually authorised. Indeed, this even, according to the evidence filed, culminated in wedding rings and other personal jewellery of the suspects’ wives being seized when the private residences were searched.

That said, in my view in the present case the conduct of the NCA both in the manner of obtaining and in the manner of executing the warrants was sufficiently egregious, albeit falling short of bad faith, as to justify depriving it of any advantage or benefit whatsoever derived from such warrants. Justice so requires. And if such a decision operates to have something of a deterrent effect hereafter on ill-prepared or ill-executed applications, and to modify any mindset of police or investigating authorities that they can always expect to be permitted to fall back on section 59 of the 2001 Act, then so much the better.

Mr Bird submitted that had all the relevant details and had all the information as to what the NCA was proposing been provided to the justices they still would inevitably have granted the applications. I do not accept that. Very possibly they might: but that is not the point. In any case, even if it were so, that still does not deprive this court of the power to withhold from the NCA any advantage arising by reason of its conduct.

In the circumstances of this case, therefore, it would in my view be wrong to permit the NCA to gain any advantage of any kind arising from its conduct. It is true that in some cases where there has been found to be an invalid warrant the Administrative Court has been prepared to permit the investigating authority in question to apply to the Crown Court under section 59, retaining and making use of the materials seized (or at all events copies) for that purpose. After all, that is the underpinning rationale of the section: and in this regard one must not overlook the important fact that very often – I am talking generally, not necessarily by reference to this case – the authorities are dealing with unscrupulous individuals whose concern may well be to frustrate, not advance, the interests of justice and who may be only too ready to destroy incriminating materials. But here this was no technical breach on the part of the NCA: on the contrary, at almost every stage of issue and execution there was a profound and sustained misuse of and/or lack of understanding of the warrant process.

It was rightly accepted by Mr Bird that there is (as the case of Kouyoumjianillustrates) no principle that in cases of this kind the Administrative Court must always permit the matter to be resolved by the Crown Court under the section 59 procedure, letting the investigating authorities make use of the seized materials (or copies) for that purpose. A section 59 application, actual or proposed, will always, I accept, be a highly material factor in this regard; but the Administrative Court nevertheless retains a discretion in such circumstances as to the relief which it thinks appropriate to grant or withhold. In the present case, and given its rather extreme circumstances, I would direct the delivery up of the entirety of the seized materials and copies, and any lists or extracts or other product derived therefrom. If that has the consequence of hampering, or even rendering unviable, any contemplated section 59 application then that is a consequence which the NCA has brought upon itself.

On the question of the lawfulness of the arrests, I agree that the claimants’ challenge fails. There were ample grounds for suspecting the relevant claimants of criminality (money laundering): and the reasons for the arrests were made sufficiently clear to those claimants at the time. That there were perceived collateral advantages and motivations for the NCA in making the arrests and removing the suspects from the building and thereafter detaining them does not of itself invalidate the arrests.

Overall, I am in agreement with the judgment of Hickinbottom J and with the orders which he proposes. The parties are to lodge an appropriate minute of order accordingly. The parties are also to lodge written submissions on any outstanding matters of dispute arising from the orders made, and on costs, if such matters cannot be agreed.