England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Mr Justice GOSS

[2015] EWHC 3424 (Admin)

		Royal Courts of Justice Strand, London, WC2A 2LL
		28 July 2017

Sir James Munby, President of the Family Division :

1. This is an appeal, pursuant to permission granted by Hamblen LJ on 1 February 2017, [2017] EWCA Civ 208, from an order made by Goss J on 26 November 2015, [2015] EWHC 3424 (Admin), refusing the appellant permission to apply for judicial review of a decision of DJ(MC) Hunter sitting in Bromley Magistrates' Court on 10 March 2015. The District Judge was hearing forfeiture proceedings against the appellant pursuant to section 298 of the Proceeds of Crime Act 2002.
2. Before proceeding any further it is convenient to set out the relevant provisions of the Act. I start with section 294 which, so far as material, provides as follows:

"294 Seizure of cash

(1) … a constable … may seize any cash if he has reasonable grounds for suspecting that it is –

(a) recoverable property, or

(b) intended by any person for use in unlawful conduct."

Nothing turns for present purposes on the meanings of "recoverable property" or "unlawful conduct."

3. Section 295, so far as material, provides as follows:

"295 Detention of seized cash

(1) While the … constable … continues to have reasonable grounds for his suspicion, cash seized under section 294 may be detained initially for a period of 48 hours.

…

(2) The period for which the cash or any part of it may be detained may be extended by an order made by a magistrates' court …; but the order may not authorise the detention of any of the cash –

(a) beyond the end of the period of six months beginning with the date of the order,

(b) in the case of any further order under this section, beyond the end of the period of two years beginning with the date of the first order.

…

(4) An application for an order under subsection (2) … may be made by … a constable ... and the court … may make the order if satisfied, in relation to any cash to be further detained, that either of the following conditions is met.

(5) The first condition is that there are reasonable grounds for suspecting that the cash is recoverable property and that either –

(a) its continued detention is justified while its derivation is further investigated …, or

(b) proceedings against any person for an offence with which the cash is connected have been started and have not been concluded.

(6) The second condition is that there are reasonable grounds for suspecting that the cash is intended to be used in unlawful conduct and that either –

(a) its continued detention is justified while its intended use is further investigated …, or

(b) proceedings against any person for an offence with which the cash is connected have been started and have not been concluded."

4. Section 297, so far as material, provides as follows:

"297 Release of detained cash

(1) This section applies while any cash is detained under section 295.

(2) A magistrates' court … may direct the release of the whole or any part of the cash if the following condition is met.

(3) The condition is that the court … is satisfied, on an application by the person from whom the cash was seized, that the conditions in section 295 for the detention of the cash are no longer met in relation to the cash to be released."

5. Section 298, so far as material, provides as follows:

"298 Forfeiture

(1) While cash is detained under section 295 … an application for the forfeiture of the whole or any part of it may be made … to a magistrates' court by … a constable …

(2) The court … may order the forfeiture of the cash or any part of it if satisfied that the cash or part –

(a) is recoverable property, or

(b) is intended by any person for use in unlawful conduct.

…

(4) Where an application for the forfeiture of any cash is made under this section, the cash is to be detained (and may not be released under any power conferred by this Chapter) until any proceedings in pursuance of the application (including any proceedings on appeal) are concluded."

6. There is no need for any detailed exegesis of these provisions. The statutory scheme is clear, moving through three stages: seizure (section 294), detention (section 295) and forfeiture (section 298). Detention for more than 48 hours and forfeiture require judicial sanction on carefully defined criteria and subject, as might be expected, to appropriate procedural safeguards.
7. Two particular points need to be noted. First, that provided the court is satisfied of the matters specified in section 295(4) or section 298(2), as the case may be, there is no requirement that the basis of the seizure, detention and forfeiture remains the same throughout. Thus, subject to proof of the relevant "suspicion", on the part of the constable, or of the relevant ground upon which the court is "satisfied", cash can, for example, be seized on suspicion of having been stolen, can thereafter be detained by the constable on suspicion, or by the court on being satisfied, that is the proceeds of a VAT fraud, and can eventually be forfeited by the court on being satisfied that it has been laundered: consider, for example, the words "while its derivation is further investigated" in section 295(5)(a). The second point to be noted is that the effect of section 298(4) is, for example, that the power to order release under section 297 is no longer exercisable once the forfeiture proceedings are under way.
8. The litigation has been protracted, with various applications by the appellant to the Administrative Court, but so far as material for present purposes the facts can be very shortly stated. On 10 January 2014, a constable, in the course of executing at the appellant's house a search warrant issued by DJ(MC) Fanning on 8 January 2014, seized a quantity of cash and arrested the appellant on suspicion of money laundering. On 17 February 2014, according to the police, a constable purported to re-seize the cash under section 294. Orders under section 295 were made by Bromley Magistrates' Court on 19 February 2014 (for one month) and on 14 March 2014 (for three months). During the currency of the latter order, the police applied under section 298 for a forfeiture order. I need not go through the history of that application. Eventually it came before DJ(MC) Hunter on 10 March 2015.
9. Amongst other matters the appellant wished to challenge before the District Judge, was the legality of what had happened on 17 and 19 February 2014. I need not go into the details but he accused the police of having knowingly misled the court. The District Judge refused to embark upon that investigation. On 27 March 2015, he made an order for forfeiture in the sum of £7,770.
10. On 27 May 2015, the District Judge stated a Case on various matters raised by the appellant. The Case Stated identified, as an issue the appellant wished to challenge, the District Judge's:

"failure to hold a preliminary hearing to address questions of law being:

a) The lawfulness of otherwise of the search warrant issued by my colleague District Judge Fanning on the 8^th January 2014;

b) The lawfulness of the Appellant's arrest which he contended was in breach of the Police and Criminal Evidence Act; and

c) The lawfulness of the re-seizure of the cash (assuming that points a) and b) were answered in the Appellant's favour)."

The District Judge went on to explain why he was not prepared to state a Case on these points. In the course of this he said:

"The correct avenue of appeal regarding the lawfulness of the grant of a search warrant is by way of application for leave to judicially review that decision.

… in my opinion, it was not for me to have acted as an appeal court regarding the lawfulness or otherwise of the grant of the search warrant.

… the lawfulness of the arrest is not, of itself, relevant to the question of forfeiture. I was being asked to consider whether the seized cash was either recoverable property or was intended by any person for use in unlawful conduct."

11. The one remaining issue, in relation to which Hamblen LJ granted permission to appeal, is, as set out in his order dated 1 February 2017,

"whether the Administrative Court should have granted permission to bring a claim for judicial review of the decision of [DJ(MC) Hunter] not to hear a preliminary argument on whether the detention under section 295 … was lawful before proceeding to the forfeiture application."

It is common ground that this relates to DJ(MC) Hunter's decision on 10 March 2015. It will be noted, therefore, that we are not concerned either with what happened during the remainder of the hearing before DJ(MC) Hunter or with his final decision.

12. The point before us is a short one. Reduced to essentials, the argument of Ms Anne Studd QC on behalf of the appellant is that if a challenge is raised to the lawfulness of either the original seizure or, as here, the subsequent detention of the cash, that matter must be determined as a preliminary issue by the court hearing the forfeiture proceedings. Mr Kennedy Talbot QC and Mr James Byrne, on behalf of the Commissioner of Police of the Metropolis, submit to the contrary. Ms Studd's argument, they contend, is contrary both to the statutory scheme, if properly understood, and to the decision of Keith J in Secretary of State for the Home Department v Tuncel and another [2012] EWHC 402 (Admin), [2012] 1 WLR 3355.
13. It is convenient to start with Tuncel. The magistrates' court, having decided that the case fell within section 298(2), ordered forfeiture. The defendant appealed to the Crown Court. His Honour Judge Oliver ruled that, before an order of forfeiture could be made under section 298, the court had to be satisfied that, at the time when it was seized, there had been reasonable grounds for suspecting that the cash had been obtained through, or was for use in, unlawful conduct; in other words, that the initial seizure was lawful. Since he could not be so satisfied, the judge ruled that the defendants had no case to answer. On the Home Secretary's appeal by way of case stated, Keith J set aside the Crown Court's order and remitted the case for further hearing.
14. Keith J's reasoning is set out in paras 17-18 of his judgment:

"17 In short, the authorities which Judge Oliver thought pointed to the conclusion he reached did no such thing. The fact is that his construction of section 298(2) of the 2002 Act involved reading words into it which were not there. There are good reasons why he should not have done that. The seizure and detention of cash" – Keith J is clearly here referring to sections 294 and 295(1) – "will take place before the court has had any opportunity to consider whether it should have been seized and detained. Some mechanism" – Keith J is here referring to sections 295(2) and 297 – "has to be in place to ensure that it is not seized and detained on a whim. That is to be contrasted with the forfeiture of the cash. Cash cannot be forfeited until a court has sanctioned its forfeiture. Since it will not sanction its forfeiture unless it has been persuaded that the cash was obtained through, or was intended for use in, unlawful conduct, there is no need for any requirement about the reasonableness of the suspicions of the customs officers in the first place.

18 It may be that the judge had something quite radical in mind. If the original seizure and detention of the cash had been unlawful, why should the UKBA be allowed to benefit from that? Should not the original illegality be regarded as infecting everything which happened thereafter and disabling the court from subsequently ordering its forfeiture, even if the court was satisfied that the provenance of the cash or its intended use was in truth unlawful conduct?" – Keith J then considered the decision of this court in R (Hoverspeed Ltd) v Customs and Excise Comrs [2002] EWCA Civ 1084, [2003] QB 1041, and continued – "Applying that reasoning to the present case, there is no doctrine in cases concerning the forfeiture of cash denying the authorities the "fruits of the forbidden tree", unless the relevant statutory regime made the forfeiture of the cash dependent on the cash having been lawfully seized and detained in the first place. For the reasons I have already given, I do not think that the relevant statutory regime did that."

15. I respectfully agree both with Keith J's conclusion and with his reasoning.
16. There is, in my judgment, nothing in the decision of the Divisional Court (Gross LJ and Leggatt J) in R (Merida Oil Traders Ltd) v Central Criminal Court and others [2017] EWHC 747 (Admin) which ought to lead us to a different conclusion. The court was there concerned with section 295 (see para 68) and section 297 (see para 96), not with section 298. The judges cited Tuncel (see paras 54-55) without disapproval. Nor, in my judgment, does the judgment of the Lord Ordinary, Lord Clarke, in the Outer House of the Court of Session in Ho, Ho, Hing and Chin v Lord Advocate 2004 SC 1, upon which she relied, assist Ms Studd. The first question there was whether the sheriff, when exercising the court's powers under section 297, had jurisdiction to consider the lawfulness of the seizure under section 294 or of the subsequent detention under section 295. Lord Clarke held (para 34) that the sheriff had no such jurisdiction: "all that the sheriff, in sec 297(1) proceedings, can have regard to is whether the conditions set out in section 295 continue to be met." The second question was whether judicial review would, in appropriate circumstances, lie to challenge a decision of the sheriff under section 295. Lord Clarke held (paras 32, 36) that in principle it could. I respectfully agree with the Lord Ordinary, but the question before us is not as to the nature of the remedy available to a respondent who wishes to challenge a decision under section 295 or section 298, but whether, as a matter of substantive law, DJ(MC) Hunter was right in deciding as he did.
17. Reverting to section 298, I agree with Mr Talbot's three central submissions: first, that the only question for consideration by the court when dealing with a forfeiture application is whether, as a matter of fact, the conditions in section 298(2) are satisfied; secondly, that the purpose of section 298(1) is merely to impose a temporal limit upon the ability of the constable to seek a forfeiture order; and, accordingly, thirdly, that section 298 does not require, as what Ms Studd calls 'a gateway for forfeiture', that the cash was properly detained under section 295. The point, at the end of the day, is as short and simple as this.
18. Ms Studd submitted that the effect of this was that, as she put it, a shutter comes down in relation to what has gone before. I do not agree. The central issue for the court when hearing a forfeiture application is whether the constable can establish the two factual matters set out in section 298(2). In relation to those factual matters, it is of course open to the respondent to mount any relevant challenge to the constable's case, whether by cross-examination of the constable's witnesses or by calling witnesses in his defence. If, in relation to those factual matters, it is relevant to his defence for the respondent to explore matters which arose in the earlier stages of the process, then of course he must be permitted to do so. And he is not to be stopped from doing so, always assuming it is relevant to the factual matters to be established under section 298(2), merely because it may, incidentally, involve allegations of illegality at either the seizure or detention stages. What, on the other hand, is impermissible, is an exploration of such matters not with a view to challenging the factual matters required to be established under section 298(2) but simply, as in the present case, with a view to challenging the legality of the earlier stages in the process.
19. In his judgment, Goss J explained why on this point he was refusing permission to apply for judicial review (para 37):

"The … general complaints are that the lawfulness of the search warrant, the detention of the money seized and, therefore, the application as a whole were not considered at a preliminary hearing. There is no arguable ground in relation to these complaints … The forfeiture of the cash, the issue upon which District Judge Hunter had to adjudicate, was not dependent upon it having lawful seized and detained. In the case of UKBA v Tuncel and Basbaydar [2012] EWHC 402 (Admin) Keith J, after referring to R (on the application of Hoverspeed Ltd) v Commissioners of Customs and Excise [2003] QB 1041, confirmed that the court being satisfied that the seizing officer had reasonable grounds for suspecting that it had been obtained through, or was intended for use in, unlawful conduct, was irrelevant to forfeiture proceedings. At paragraph 18, he stated that:

"… there is no doctrine in cases concerning the forfeiture of cash denying the authorities the 'fruits of the forbidden tree', unless the relevant statutory regime made the forfeiture of the cash dependent of the cash having been lawfully seized and detained in the first place."

The relevant statutory regime in that case was the applicable regime in this case, namely POCA 2002, which does not, for the reasons given by Keith J, make forfeiture dependent upon determination of the lawfulness of the seizure and retention of the cash. Accordingly, all these issues are and were irrelevant to the forfeiture proceedings."

20. In my judgment, Goss J was correct to decide as he did and for the reasons he gave.
21. Accordingly, in my judgment, this appeal fails and must be dismissed.
22. After I had prepared the draft of this judgment, we received further written submissions direct from the appellant. In part they amounted to an attempt to widen the ambit of the appeal as defined by Hamblen LJ; in significant part they were, as a matter of law, irrelevant to anything we had to decide. Nothing in the appellant's further submissions begins to persuade me to alter either my conclusions or my reasoning."

Lord Justice McFarlane :

23. I agree.