Faisaltex Ltd & Ors v Lancashire Constabulary & Anor

On 9 July I heard an application “for directions” in this litigation made by Mr Matthew Ryder on behalf of the Claimants. What he was in effect seeking was an injunction on their behalf to restrain, in certain defined respects, the conduct of investigations by the Chief Constable of Lancashire Constabulary and Her Majesty’s Revenue and Customs, who are the Defendants, into what are suspected to be large scale criminal activities.

In the action the Claimants seek declarations, delivery up and damages based on allegations of unlawful behaviour on the Defendants’ part. What is said, in particular, is that they made excessive seizures of the Claimants’ property when executing search warrants on or about 3 April 2008. There is already in place a protocol governing the inspection of the seized material, which is arranged so as to give an opportunity to independent counsel to identify any documents which are, or are likely to be, covered by legal professional privilege (which, of course, it is accepted the Defendants are not entitled to inspect or retain). What the Claimants seek primarily by this application is to extend the protocol to cover documents which may, for some other reason, have been unlawfully seized. In particular, it is suggested that the independent counsel should also seek out material which, by some definition or another, is not “relevant” to the Defendants’ enquiries.

The Claimants are also seeking an extension of time within which to comply with the protocol.

It is plainly undesirable for the court to become involved in such a way as to inhibit the discharge of the Defendants’ duties in the investigation of suspected crimes, save in so far as it can be demonstrated to be necessary and proportionate to do so.

The background of these enquiries is fully explored in two earlier judgments and does not need to be rehearsed again for present purposes. The first judgment is that of the Divisional Court following the Claimants’ application for judicial review relating to the legality of the search warrants: see R (Faisaltex & ors) v Preston Crown Court & ors [2008] EWHC 2832 (Admin). The second judgment is that of Blake J on the Claimants’ application for an injunction, made in these proceedings, and delivered on 20 March of this year.

For present purposes, I do not believe it is necessary for me to refer to the underlying facts save by way of very brief summary. The seizures were obtained pursuant to nine search warrants which were, as I have said, executed on 3 April 2008. These proceedings were commenced almost a year later, on 12 March 2009. The particulars of claim followed on 26 March and the defences were served on 6 May.

The Administrative Court upheld the legality of the issue of the warrants in question, but declined to adjudicate on the legality of their execution. It was suggested that it would be more appropriate for the Claimants to pursue, in this respect, a private law remedy. Keene LJ there referred, at [90]-[91], to the earlier decision of R v Chief Constable of the Warwickshire Constabulary, ex parte Fitzpatrick [1999] 1 WLR 564, where Jowitt J, with whom Rose LJ agreed, had emphasised a number of points of principle, at p.579:

“Judicial review is not a fact finding exercise and it is an extremely unsatisfactory tool by which to determine, in any but the clearest of cases, whether there has been a seizure of material not permitted by a search warrant. In my judgment a person who complains of excessive seizure in breach of section 16(8) should not, save in such cases, seek his remedy by way of judicial review but should rely on his private law remedy when he will have a tribunal which will be able to hear evidence and make findings of fact unfettered by Wednesbury principles. In an appropriate case the court in a private law action is able to grant interlocutory relief on a speedy basis on well recognised principles so that in all but the clearest cases of a breach of section 16(8) judicial review has only disadvantages and no advantages when compared with the private law remedy.”

In the light of these observations, Keene LJ noted that there was a dispute as to how much irrelevant material had been seized, if any, and said that it was quite clear that resolving disputes about the relevance of particular documents would be likely to require extensive oral evidence. The documentation is undoubtedly, as he described it, “voluminous”. It was recognised that “very considerable issues of fact are bound to arise”.

His Lordship concluded that there was no reason why civil proceedings could not establish whether any excessive seizure had taken place. These would determine the extent to which the relevant officer or officers had gone outside the scope of the warrant. He concluded:

“We are satisfied that judicial review proceedings are not an appropriate mechanism for resolving the large number of issues of fact as well as law which are likely to arise when determining whether excessive seizures have taken place in the execution of these warrants.”

In the light of this reasoning, albeit after some delay, the Claimants decided to commence these proceedings.

When the matter came before Blake J in March of this year, the remedy sought was an injunction to prevent the Defendants from inspecting the seized material prior to the resolution of the claim. That application was refused, and against that background Mr Bird, for the Defendants, submits that what the Claimants are now seeking is a further bite of the same cherry. He also concluded that the protocol arrangements, to which I have referred above, were, contrary to the Claimants’ submissions, capable of providing a reasonably effective procedure for the protection of the Claimants’ rights, particularly with regard to legal professional privilege. At that time the Claimants were asking for an injunction to prohibit the investigators from having access to any of the material in which LPP documents had been found until such time as a better protocol could be agreed. That was rejected.

What is now claimed is an injunction to extend the protocol much more widely, so as to prevent the investigators inspecting or retaining material which might be irrelevant to their task. That goes beyond any legitimate function of private law proceedings contemplated by the Divisional Court. They may be apt for resolving issues of fact and law for the purpose of deciding to what remedies the Claimants may ultimately be entitled, but there is no reason why they should be used for the supervision or management of ongoing criminal investigations.

At the conclusion of the hearing before me, just after 5 pm, I indicated that the applications would be refused. For lack of time, however, it was necessary for me to set out my reasons in writing at a later stage. That is the purpose of the present judgment.

Mr Bird submits, when it comes to the assessment of where the balance of convenience lies, that it is appropriate to take into account the public interest and, especially, the desirability that criminal investigations should be carried out as expeditiously as possible in accordance with the statutory obligations imposed and also the relevant codes of practice. He also argues that there is no reason to suppose that, in so far as it is proved ultimately that there has been any degree of excessive seizure, damages would not provide an adequate remedy to the Claimants. By contrast, he points out, no cross-undertaking as to damages has at any stage been offered by the Claimants.

It is unnecessary to go into detail as to the operation of the protocol, but it was referred to by Blake J in his judgment at [35] onwards and is also addressed in considerable detail in the witness statement of Kathryn Whelan, who is the solicitor for the HMRC. In brief, what has been happening is that the Defendants serve scanned copies of the seized material on the Claimants’ solicitors, together with specially adapted search software. There is set a deadline for the Claimants to identify the files among the scanned material that are likely to be subject to LPP. The Claimants inspect the scanned copies and identify the relevant files. Those are then sent to independent counsel, without being inspected by the Defendants’ investigating officers.

Should the independent counsel agree that the documents are subject to LPP, they will be returned to the Claimants forthwith without inspection by the officers. If the independent counsel disagrees, then the Claimants are to be notified. Any remaining disputes can be resolved through the statutory mechanism of an application to the Crown Court pursuant to s.59 of the Criminal Justice and Police Act 2001.

Mr Bird pointed out, as part of the narrative, that the number of documents sought to be excluded as being subject to LPP has so far been relatively small.

Central to Mr Ryder’s submissions is the decision in R v Chesterfield Justices, ex parte Bramley [2000] QB 576. It was as a result of that decision that Parliament shortly afterwards enacted Part 2 of the 2001 Act.

Section 50 of the Act now allows an officer to seize material in circumstances where it is not reasonably practicable for him to determine on the relevant party’s premises whether he is entitled to seize particular items. He is permitted to remove so much of the material from the premises as is necessary to enable him to make a determination. There is a balancing provision, however, contained in s.52 to the effect that the power cannot be exercised unless notice has been given to the occupier. Thus, submits Mr Ryder, in the absence of a s.52 notice, the principles discussed in Bramley remain effective.

In that case, the court discussed the principles applicable to excessive seizure. Their consideration covered not only documents subject to LPP but also material said to be irrelevant.

Where there is a lot of material, and it is not possible to sort out reasonably quickly that which is relevant (i.e. within the scope of the warrant) from that which is not, there is no statutory provision enabling seizure of all the material to take place for the purpose of sorting it out later. It would follow, in those cases where a constable purporting to act within the scope of the warrant has in fact seized items which are later determined to fall outside it, that there would be no defence to an action for trespass to goods. There is no doubt that the law recognises that damages may be recovered for material seized in good faith if it ultimately transpires that it was outside the scope of a lawfully issued warrant. That principle was endorsed not only in Bramley, at p.586, but also by the Divisional Court when considering the circumstances of the instant case: see again at [91].

Mr Bird emphasises that the issue of potential relevance is quite different from that of LPP. An independent advocate can more easily form a judgment as to the documents likely to be covered by LPP than would be possible in the case of disputed relevance. He suggests that relevance can only be determined by the investigators who, unlike independent counsel, would have an intimate knowledge of the case. Whereas Mr Ryder suggests that the independent counsel could be sufficiently briefed to discharge that function, Mr Bird argues that this would be simply impracticable. Furthermore, it would hardly be appropriate to describe such a person, once briefed, as genuinely “independent”. It is likely that he would have to refer to the investigators, from time to time, on a continuing basis in order to inform himself of their grounds for suspicion, in relation to any particular criminal offence, and their reasoning processes.

Obviously, an issue of relevance cannot finally be determined until the stage when the issues in criminal proceedings, if any, have been identified. In particular, one cannot anticipate at this stage any defences that may be relied upon. Inevitably, therefore, judgments as to potential relevance at this stage can only be provisional. What is relevant for the purposes of an investigation into whether criminal offences have been committed is likely to be judged by a different and broader test from that applicable in a later trial when the issues have been more closely defined.

A further important consideration is that there is detailed statutory control of the way in which such investigations are supposed to be carried out. It would hardly be consistent with that statutory framework if investigating officers were in effect required, whether on a voluntary basis or by means of a court order, to delegate the exercise of their judgment to someone else, such as a notionally “independent” counsel. It is hardly surprising that Mr Ryder was unable to cite any precedent for a court order of the kind I am now invited to make.

As to the protection of the Claimants’ rights and interests, Mr Bird argues that there can be little harm in an investigator inspecting an item which, it is ultimately decided, is of no relevance to the investigative task. It will be returned to the Claimants as soon as this becomes apparent.

The CPIA Code of Practice (to which my attention was drawn in the 2009 supplement to Archbold) imposes an obligation to pursue all reasonable lines of enquiry; that is to say, whether they point towards the suspected persons or away from them. Investigators are required to retain not only material for use in evidence but also unused material which may become, in due course, disclosable. The carrying out of these obligations will almost certainly be impeded if the decision-making process is taken away and laid at the door of independent counsel. This becomes even clearer when one recalls that the CPIA Code, at para 2.1, defines the notion of relevance by reference to how the material appears “to an investigator, or to the officer in charge of an investigation, or to the disclosure officer”. Investigators are enabled to seek advice from a prosecutor as to whether any particular item of material may be relevant: see the Code at para 6.1. That carefully considered framework, as sanctioned by the legislature, would be undermined if the Claimants’ proposal were adopted. What is more, as Mr Bird points out, if this proposal were carried through, it would be likely to give rise at some future criminal trial to applications based on abuse of process.

Both parties addressed me on the principles derived from the House of Lords’ decision in American Cyanamid v Ethicon [1975] AC 396 and Mr Bird, in particular, considered their application in the context of injunctions sought against public bodies. He referred, for that purpose, to their Lordships’ decision in R (Factortame) v Secretary of State (No 2) [1991] 1 AC 603.

Given the statutory background, which I have attempted briefly to summarise, Mr Bird submits that there is not even a triable issue as to the need for the Claimants to be protected by injunctive relief on the issue of relevance. I would accept that submission. Nevertheless, I go on to consider the balance of convenience. I would agree also with Mr Bird’s submission that the balance lies in favour of the court declining to interfere with the examination of the seized material by the Defendants in discharge of their statutory duties.

Mr Bird’s submissions are encapsulated in the following paragraphs of his skeleton argument:

“45.

The Chief Constable and HMRC have a duty to investigate allegations of serious crime, and to do this as thoroughly and as effectively as possible, in the public interest. In this case there was (and is) ample evidence that serious commercial crimes (counterfeiting, VAT fraud and excise fraud on a multi-million pound scale) had been committed. The question was and is as to who had committed them.

46.

It is in the public interest that the Defendants should pursue their investigations thoroughly, efficiently and speedily so as to make a report in due course to a prosecutor (in this case RCPO) who can then decide whether criminal proceedings should be instituted, in accordance with the Code for Crown Prosecutors.

47.

The Claimants are seeking the exercise of a judicial discretion to interfere in an ongoing and incomplete criminal investigation, in a way that will necessarily impede it.

48.

Injunctive relief is neither necessary nor convenient – the scanning exercise that is in place is a straightforward and workable process that does not require judicial intervention save as a last resort, and then in the more appropriate and cost-effective jurisdiction of the Crown Court.

49.

The Claimants’ private interest (that the police should not have access to potentially incriminating material until after their civil action is determined) is outweighed by the greater public interest.”

I agree that these powerful factors are sufficient to determine the balance of convenience in the Defendants’ favour.

Furthermore, I am not persuaded that damages would be an inadequate remedy for the Claimants if there has indeed been seizure in excess of authority. Their rights can be adequately protected without the grant of an injunction.

I turn to the remaining issue of an extension of time. Hitherto, matters have been dealt with in correspondence, with the Claimants’ advisers identifying their grounds for saying that further time is needed and the Defendants engaging in a dialogue with a view to agreeing extensions. This seems to me to be a far better procedure than for the court to intervene and impose an arbitrary time limit. At the moment, the parties have agreed between them that the Claimants shall carry out their investigation by 31 July (now less than three weeks away). What is sought is an extension to 30 September. I think it is better for the well tried procedure to run its course and for the Claimants’ solicitors to persuade the Defendants, if they can, that further time is necessary and reasonable. It is to be borne in mind, of course, that any further extension is likely to give rise to corresponding delay in the discharge of the Defendants’ statutory duties. As I have already made clear, I do not think it appropriate for the court to intervene.

It is quite apparent that the order sought on the Claimants’ behalf has nothing to do with case management in this litigation and, to that extent, the description of the application as being one for “directions” is inapposite.

Mr Ryder places reliance upon the terms of s.59 of the Criminal Justice and Police Act 2001 which provides, at (5), that “The appropriate judicial authority – … (c) on an application made – (i) by a person with a relevant interest in anything seized under s.50 or 51, and (ii) on the grounds that the requirements of s.53(2) have not been or are not being complied with, may give such directions as the authority thinks fit as to the examination, retention, separation or return of the whole or any part of the seized property”. He submits that this court is in a position to give similar directions in the proceedings issued in the High Court, as part of its case management powers, if s.59 has no direct application, or when it has not been relied upon. The context of s.59 makes clear that the legislative intention was to provide expressly for judicial supervision by the Crown Court in the circumstances specified. Given Parliament’s view as to the appropriate scope for judicial intervention in these matters, it can hardly be said to be necessary or appropriate to insert an extra layer of intrusion by way of interim injunctions in the High Court.