QUEENS BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| THE QUEEN on the application of H||Claimant|
|- and -|
|COMMISSIONERS OF INLAND REVENUE||Defendants|
Nicholas Ainley (instructed by Malcolm McHaffie, Solicitor of Inland Revenue) for the Defendants
Hearing dates: 14 and 15 October 2002
Crown Copyright ©
Mr Justice Stanley Burnton:
(a) That section 20C did not confer authority on the Inland Revenue officers to copy the entirety of the hard drive of the computer. In the absence of an agreement with H, at most they were entitled to examine the contents of the hard drive in the course of their search and to require the copying or printing of any file or document they found that might be required as evidence for the purposes of relevant proceedings, pursuant to section 20C(3A). In other words, they were required to sift the contents of the hard drive during their search and select the material that was incriminating.
(b) That P did not have H’s authority to enter into the agreement.
(c) That he, H, did not ratify or approve the agreement during the course of his telephone conversation with Mr Dillon.
(d) That in any event the agreement was signed by P in circumstances in which the Inland Revenue officers had failed to make full disclosure of the advantages to the Revenue of the agreement; and that the Revenue are therefore not entitled to rely on it.
(e) Although the agreement is not binding on H, by agreeing in clause 5 that the imaging and removal of the computer were not a seizure and removal within the terms of section 20C(3) of the Taxes Management Act 1970, the Inland Revenue officers are precluded from relying on their powers under that provision.
The statutory provisions
“(1) If the appropriate judicial authority is satisfied on information given on oath by an officer of the Board that-
(a) there is reasonable ground for suspecting that an offence involving serious fraud…in relation to tax…has been…committed and that evidence of it is to be found on premises specified in the information; and
(b) in applying under this section, the officer acts with the approval of the Board given in relation to the particular case,
the authority may issue a warrant in writing authorising an officer of the Board to enter the premises, if necessary by force, at any time within 14 days from the time of issue of the warrant, and search them.
(3) An officer who enters the premises under the authority of a warrant under this section may-
(b) seize and remove any things whatsoever found there which he has reasonable cause to believe may be required as evidence for the purposes of proceedings in respect of such an offence as is mentioned in subsection (1) above; and
(c) search or cause to be searched any person found on the premises whom he has reasonable cause to believe to be in possession of any such things;
but no person shall be searched except by a person of the same sex.
(3A) In the case of any information contained in a computer which is information that-
(a) an officer who enters the premises as mentioned in subsection (3) above has reasonable cause to believe may be required as evidence for the purposes mentioned in paragraph (b) of that subsection; and
(b) is accessible from the premises,
the power of seizure under that subsection includes a power to require the information to be produced in a form in which it can be taken away and in which it is visible and legible.”
“Where anything which has been removed by an officer of the Board … is of such a nature that a photograph or copy of it would be sufficient –
(a) for use as evidence at a trial for an offence, or
(b) for forensic examination or for investigation in connection with an offence,
it should not be retained longer than is necessary to establish that fact and to obtain the photograph or copy.”
Section 20D(3) provides:
“… in sections 20 to 20CC above ‘document’ means, subject to (irrelevant), anything in which information of any description is recorded.”
The application of the statutory provisions to a computer
“50. Additional powers of seizure from premises
(1) Where –
(a) a person who is lawfully on any premises finds anything on those premises that he has reasonable grounds for believing may be or may contain something for which he is authorised to search on those premises,
(b) a power of seizure to which this section applies or the power conferred by subsection (2) would entitle him, if he found it, to seize whatever it is that he has grounds for believing that thing to be or to contain, and
(c) in all the circumstances, it is not reasonably practicable for it to be determined, on those premises –
(i) whether what he has found is something that he is entitled to seize, or
(ii) the extent to which what he has found contains something that he is entitled to seize,
that person’s powers of seizure shall include power under this section to seize so much of what he has found as it is necessary to remove from the premises to enable that to be determined.
(2) Where –
(a) a person who is lawfully on any premises finds anything on those premises (“the seizable property”) which he would be entitled to seize but for its being comprised in something else that he has (apart from this subsection) no power to seize,
(b) the power under which that person would have power to seize the seizable property is a power to which this section applies, and
(c) in all the circumstances it is not reasonably practicable for the seizable property to be separated, on those premises, from that in which it is comprised,
that person’s powers of seizure shall include power under this section to seize both the seizable property and that from which it is not reasonably practicable to separate it.
“To what extent, if at all, are the police entitled to sift documents on site in respect of which legal privilege is claimed by or on behalf of the occupant? To what extent, if at all, are the police entitled to remove such documents from the site for later sifting, either by them or on their behalf?”
“(2) The constable may seize anything which is on the premises if he has reasonable grounds for believing –
(a) that it has been obtained in consequence of the commission of an offence; and
(b) that it is necessary to seize it in order to prevent it being concealed, lost, damaged, altered or destroyed.
(3) The constable may seize anything which is on the premises if he has reasonable grounds for believing –
(a) that it is evidence in relation to an offence which he is investigating or any other offence; and
(b) that it is necessary to seize it in order to prevent the evidence being concealed, lost, altered or destroyed.”
“(6) No power of seizure conferred on a constable under any enactment (including an enactment contained in an Act passed after this Act) is to be taken to authorise the seizure of an item which the constable exercising the power has reasonable grounds for believing to be subject to legal privilege.”
“The constable may require any information which is contained in a computer and is accessible from the premises to be produced in a form in which it can be taken away and in which it is visible and legible if he has reasonable grounds for believing - (a) that - (i) it is evidence in relation to an offence which he is investigating or any other offence; or (ii) it has been obtained in consequence of the commission of an offence; and (b) that it is necessary to do so in order to prevent it being concealed, lost, tampered with or destroyed.”
Similarly section 20(1) provides:
“Every power of seizure which is conferred by an enactment to which this section applies on a constable who has entered premises in the exercise of a power conferred by an enactment shall be construed as including a power to require any information contained in a computer and accessible from the premises to be produced in a form in which it can be taken away and in which it is visible and legible.”
Lastly, section 16(8) of PACE is relevant:
“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 may well apply to material held on a computer. The constable may have reasonable grounds for believing that some of it is subject to legal professional privilege. If so he cannot seize the computer or the disk, or any ‘image’ of it but he can require all other relevant information to be produced in a form in which it can be taken away, and in which it is visible and legible. And of course, depending on the circumstances, a simple claim to legal professional privilege may well not constitute reasonable grounds for believing any of the computer information to be subject to legal professional privilege.”
“9. Sifting and removal for sifting
Clearly, as it seems to me, the statute envisages that in any ordinary case those who execute the warrant will search at the premises for what they require.
In order to decide how much of the available material falls within the scope of the warrant the searchers will have to look at documents, as was accepted by this court in Reg. v. Leeds Magistrates' Court, Ex parte Dumbleton  Crim.L.R. 866, where Leggatt L.J. said:
‘I do not consider that in attempting to sift or sort the documents at the applicants premises the police were acting beyond their powers. It was their duty to sort the documents that they were entitled to seize from the remainder, even if some of the other material turned out to consist of special procedure material or to be legally privileged.’
But if there is a lot of material, and it is not possible to sort reasonably quickly and easily the material that is relevant (i.e. within the scope of the warrant) from that which is not, what is to be done? Can the constable who is executing the warrant do a preliminary sift at the premises where the documents are stored, and then take all, or a large part of the material away to sort it out properly elsewhere? Common sense suggests that the answer to that question should be in the affirmative, with the owner of the material or his representative having a right to be present when the sorting takes place, and meanwhile the material being stored in sealed containers, but that is not what the statute says. To my mind if the material is taken from the premises searched, other than by agreement, it is "seized," as was said by Slade L.J. in Reynolds v. Commissioner of Police of the Metropolis  Q.B. 881, 895f. And the only right to seize is that to be found in section 8(2) of the Act, which, subject to section 19(2)(3) and (4), is restricted to items for which a search has been authorised by the warrant.
If a constable executing a warrant seizes items which when examined are found to be outside the scope of the warrant, and not covered by section 19, even if he acts in good faith I find in the statute no defence to an action for trespass to goods based on that unjustified seizure, and in some cases the award of damages could be significant (e.g. if the documentation erroneously seized was critical to the maintenance of a solicitor's practice, or the ongoing operation of a large business).
The argument I have just set out was one of the arguments addressed by the Court of Appeal in Reynolds v. Commissioner of Police of the Metropolis. There the warrant had been obtained under section 16(1) of the Forgery Act 1913, which entitled the officer executing it to search for any forged document, seal or die ‘and if the same shall be found on search, it shall be lawful to seize it.’ There, as in the Police and Criminal Evidence Act 1984, the statutory power to seize would appear to be restricted to the items identified in the warrant, but the court rejected that literal approach (see Slade L.J., at pp. 895-896). In that case the court held that, after some preliminary sifting at the premises where the documents are found, an officer who is executing a warrant can (per Slade L.J., at p. 896d) remove from the premises files, books, bundles or documents which at the time of removal he reasonably believes contain (i) forged material (in the present case that would be material within the scope of the warrant) or (ii) material which may be of evidential value as showing that the owner is implicated in some other crime (now dealt with in section 19(2) and (3) of the Act of 1984). Clearly that is persuasive, but: (1) section 16(1) of the Forgery Act 1913 differs from the Act of 1984 in that the material seized is carried before "a justice of the county or place in which the warrant was issued, to be by him disposed of according to law." There is therefore a quick and effective remedy available if the officer who executes the warrant goes beyond its terms; (2) as Waller L.J. said in Reynolds v. Commissioner of Police of the Metropolis  Q.B. 881, 889: ‘Searching and taking away papers is an invasion of liberty and such action must be carefully scrutinised.’ The same point is made in article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (1953) (Cmd. 8969); (3) in Reg. v. Southwark Crown Court, Ex parte Gross (unreported), 24 July 1998, a case concerned with legal professional privilege, another division of this court held that it was not permissible under the Act of 1984 to remove documents from the premises for sifting. There is no reference in the judgments to Reynolds v. Commissioner of Police of the Metropolis, which may not have been cited, and for reasons which appear below I venture to doubt part of what was decided in Ex parte Gross, but the approach to the statutory wording does seem to me to be correct.
To put the matter in terms which would meet the requirements of the Convention it seems to me that if in a democratic society it is necessary for the prevention of crime to invade privacy to a greater extent than is spelt out in the Act of 1984, then the limits of the invasion must be spelt out in the statute or in some regulations or code made thereunder, and there must be a convenient forum available for dealing with disputes: cf. Niemietz v. Germany (1992) 16 EHRR 97. Meanwhile, in order to defend the right to privacy, I see no escape from the proposition that the words of the statute should be strictly applied.”
“1.3 The Changing Law
As a result of the decision in R v Chesterfield Justices and Chief Constable of Derbyshire, ex parte Bramley … it appears that it is no longer correct to image the all data [sic] held on a computer found at a search location and for this imaged data to be subsequently sifted and/or analysed by THE CFT. [The Computer Forensic Team of the Special Compliance Office of the Inland Revenue.] An officer conducting a search under the authority of a S20C warrant must have reasonable cause to believe that any computer data seized may be required as evidence of an offence involving serious fraud in connection with or in relation to tax. The officer cannot reasonably believe that the entirety of the computer data is relevant and therefore seizure of (or copying of) all the data must mean that material has been seized outside the authority of the warrant. To have reasonable cause to believe that the computer material is relevant, the seizing officer will need to have examined it. The implication being that searches of computers will need to be conducted and completed on site. This does not prevent the imaging and removal of computer data by agreement with an appropriate person at the search location.
The conduct of searches in the course of the execution of a warrant obtained under S20C Taxes Management Act 1970 is now subject to reappraisal. A trio of cases:
R v Customs and Excise ex parte Popely and another  STC 1016
R v Chesterfield Justices and Chief Constable of Derbyshire ex parte Bramley (The Times, 10 November 1999), and
R v Inland Revenue Commissioners ex parte Tamosius & Partners (a firm)  STC 1077
have developed the law relating to the conduct of searches and the resolution of disputed claims that legal professional privilege attaches to material discovered during the course of a search.
Prior to these decisions, a S20C search of any computer thought to hold evidence was effected by the imaging of the data storage system (whether hard drive or other media) of that computer. The imaged data would then be analysed off site and at a later date by the Special Compliance Office Computer Support. A consequence of imaging all the data on the computer is that material irrelevant to the investigation is uplifted as well as possibly a subset of material that is potentially privileged whether or not relevant.
The judgment in ex parte Bramley will alter this practice. Kennedy LJ … held that section 8(2) Police and Criminal Evidence Act 1984 (‘PACE’) was the only authority for the seizure of material during a search conducted under the authority of a warrant under section 8(1). Section 8(2) is limited by section 16(8) [only search to the extent required for the purposes for which the warrant was issued] and subject to section 19. Under section 19(2) and 19(3) seizure of material is permitted if the constable has reasonable grounds for believing, inter alia, that it is evidence in relation to an offence which he is investigating or any other offence. Even where there may be large quantities of material to consider the constable must have formed reasonable grounds for deciding what was relevant. There was no power to take material from the search premises for later sifting to determine what might be relevant. Kennedy LJ also thought that the prohibition in section 19(6) on the removal of material reasonably believed by the constable to be subject to legal professional privilege, may extend to material held on computer. If the constable had reasonable grounds for believing that privileged material might be held on the computer this would prevent seizure of the computer or disk or any ‘image’ (see page 6 judgment). Turner J … agreed with Kennedy LJ. He recognised the practical difficulties that flowed from this construction of the relevant PACE provisions but declined to imply into the search power a power to remove material for later sifting. Turner J suggested that primary legislation was required to address this problem.
The consequence for S20C searches is clear. The power to seize and remove material is set out in section 20C(3)(b). The searching officer must have reasonable cause to believe the material may be required as evidence. There is nothing in S20C that authorises the removal of material for later sifting to determine what might be relevant. There is no authority in S20C(3)(b) for the imaging of the entire computer data storage system as this, prima facie, must entail the seizure of material that is irrelevant. The search officer cannot hold a reasonable belief that all the image data might be relevant. Material will therefore have been uplifted outside the authority given by statute. This, per Bramley, may result in an action for trespass to goods and liability in damages …
Leading counsel has been asked to consider how searches of computers should be conducted in light of these cases. Counsel’s view is that the imaging of computer data for removal and later sifting is outside the scope of the authority under S20C(3). Searches of computers must be completed on site. If necessary this may mean maintaining a presence at the search location for the duration of the warrant and seeking supplementary warrants if the search has not been completed. Counsel has suggested that technical solutions be explored to see if it is possible to conduct computer interrogations in a speedier manner.”
“Part III (of the Bill: Part II of the Act) will further bolster the powers of law enforcement agencies by modernising powers of seizure. The Bill gives the police and other law enforcement agencies powers to seize material and remove it for sifting elsewhere. The new measures address two separate issues. They deal with the problems identified in the Bramley judgment, which brought into focus the difficulties faced by the police and other investigators when the material that they are entitled to seize is mixed with a collection of material to which that entitlement does not apply.
Sometimes, those investigating a crime may not know to which part their entitlement applies, especially when the material is stored electronically. In the Bramley judgment, the divisional court recognized the defect in the law, but said that it could be overcome only by making changes in primary legislation. The Bill removes those difficulties by giving police and other law enforcement agencies power to remove material from premises for examination where constraints of time or technology make it not reasonably possible to carry out the process on the premises.”
(Hansard, 29 January 2001, columns 41-42.)
“The beliefs or assumptions of those who frame Acts of Parliament cannot make the law.”
“… any person who enters the premises under the authority of the warrant may –
(a) take with him such other persons as appear to him to be necessary;
(b) seize and remove any documents or other things whatsoever found on the premises which he has reasonable cause to believe may be required as evidence for the purpose of proceedings in respect of a fraud offence which appears to him to be of a serious nature;
Section 96 of VATA provides that “‘document’ means anything in which information of any description is recorded”.
“The criticisms of the searches
 Mr Knowles’ (counsel for the claimants) next complaint is that the search was rendered unlawful by the seizure of a large quantity of material which fell outside the terms of the warrant. He points out that the inquiry did not extend to the relationship between Da Costa and its clients, as was made clear in the briefing given to search officers, but, it is said, ‘thousands of clients’ files were seized’. This was really a complaint in relation to computer imaging, as is clear from Mr Knowles’ skeleton argument. For the purposes of this judgment I accept that the images incorporated a vast number of documents relating to the firm’s clients, and held by it subject to a duty of confidence, but I was not impressed by Mr Knowles’ submission that the searching officers could simply have asked a partner or someone in authority at the firm to print off relevant files.
 Mr Coppel, for the Customs and Excise, accepts that an image was taken of each of the two hard disks on the firm’s computer server. He goes on to point out that a computer hard disk is a single storage entity which falls within the definition of a ‘document’ in section 96(1) of the 1994 Act because it is something ‘in which information of any description is recorded’. Thus a hard disk may be seized and removed pursuant to the power to seize and remove documents to be found in paragraph 10(3)(b) of Sch 11 provided that it contains material which the searching officer at the time of the search has reasonable cause to believe might be required as evidence in relation to the suspected offence or offences, and it is not even suggested that that requirement was not satisfied in this case. The officer is not required to extract from the hard disk just the information he believes may be required, nor is it practicable for him to do so. Imaging was much less intrusive than seizing the hard disks. It was apparently agreed to by a partner, who I accept did not have authority to waive professional privilege on behalf of clients. If the result was that the Customs and Excise obtained amongst other things information in relation to clients of the accountancy practice that is no more objectionable than if they had for good reason taken possession of a leather bound ledger much of which contained information of a similar kind. For the reasons given by Mr Coppel I accept that no complaint can be sustained in relation to the imaging procedure which was adopted. Although Mr Knowles complains in his skeleton argument that other items were seized which fell outside the terms of the warrant, that complaint was not pursued in oral argument, probably because, as explained by Mr Coppel in his skeleton argument, each item of material complained of was clearly material which the authorised officer at the time of the search did have reasonable cause to believe might be required in evidence in relation to the suspected offence. Accordingly I need say nothing about the seizure of those other items.”
“(3) Embedded Data
This is data that is contained within a file but cannot be accessed by simply opening the container file. This occurs when multiple data items are stored in a single file. This is common with email, databases, accounts and personal organiser applications where many individual emails, records, transactions or addresses are stored in a single file. The format of these composite files is usually such that an individual item cannot be identified and extracted without using specific software.”
“(4) Distributed Data
This is data that has elements stored in more than one file. This occurs commonly with database and accounts applications. Company names may be stored in one file, transactions in another and an index tying the two together in another file. The format of these files is usually such that an individual item cannot be identified and extracted without using specific software. Similarly the elements of the data usually cannot be brought together to recreate the information without using specific software.”
Lastly, there may be encrypted data on the disk. Mr Smith describes it as follows:
“(5) Encrypted Data
This is data that has been protected so that only someone with the correct password or other access details can access the data. This includes files that are password protected, files within an encrypted container file, sections of accounts, databases or other applications that are password protected and encrypted emails. If the correct access details are not known then the encryption must be broken or circumvented to access the data. Weak protection can be defeated in a few minutes, medium protection takes a few days or weeks and strong protection takes months, years or centuries to defeat rendering some data effectively unrecoverable.”
P’s authority to enter into the agreement permitting removal of the computers
Did H ratify the agreement?
“Although neither my note book nor that of Mr Fallon record the fact, I recall telling (H) that (P) had signed an agreement to image the hard drives in the computers in the house and that his response was either ‘fine’ or ‘OK’ or words to that effect. He certainly did not object to (P) giving this authority and his only concern appeared to be that we did not make a mess in the house. …”
“I explained to (P) that the easiest way to deal with the data on those computers was for him to sign an authority for the Revenue’s computer specialist to image the hard drives of the computers and for the data to be extracted at a later date from the imaged drives. The alternative course of action being to access the hard drives of each computer and view each and every file to determine whether it contained information that contained or may contain evidence of a fraud against the Revenue. Such an exercise would take a considerable amount of time and could necessitate the Revenue seeking an extension to the warrant, which was currently valid until 23:59. (P) carefully read and then signed the ‘computer agreement’ to allow the Revenue to image the hard drives or where there were difficulties in doing so, take the computer away.”
The effect of clause 5 of the agreement
1. I, (P), in the capacity of (position) parent / father-in-law of Mrs (H) and Mr (H) and keyholder at (address) voluntarily consent to Officers of the Inland Revenue Special Compliance Office imaging the entirety of the hard drive or drives or other electronic data storage media of or associated with any of the computers on any of the premises occupied by me and/or the said company. I agree to the removal from the premises mentioned above of said images for later examination by the Inland Revenue Special Compliance Office and I am aware that I or a representative may be present during that subsequent initial examination.
2. In the event that it proves impossible to complete the imaging process at the premises, I agree to the removal of such equipment as is needed to complete the process. I further understand that the Inland Revenue Special Compliance Office undertake to return the equipment as soon as is practical after the process is completed.
3. I further agree to the seizure and removal of back up disks, back up tapes of other electronic storage media that are associated with but not an integral part of the computers referred to above. I understand that these will be removed without detailed examination and I am aware that I or a representative may be present during the subsequent initial examination.
4. In the event of any claim of Legal Professional Privilege (LPP) being made in relation to an item covered by this agreement I confirm that independent Counsel, as nominated by the Attorney General, shall be appointed to determine the validity of such a claim. Any item which independent Counsel concludes is in fact the subject of LPP will not be examined by the investigators in this matter.
5. I understand that the said imaging and removal at this stage, and any removal of equipment at paragraph 2 above, is not a seizure and removal within the terms of Section 20C(3) Taxes Management Act 1970.