England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT

		Royal Courts of Justice Strand London WC2A 2LL
		14 July 2009

1. MRS JUSTICE DOBBS: This is an appeal by the Commissioners of Her Majesty's Revenue and Customs by way of case stated against the decision of the Manchester Crown Court, dated 16 October 2008, which allowed an appeal by the respondent against an order for forfeiture made by the Trafford Magistrates' Court, on 2 June 2008, of a sum of cash which had been seized from him by HM Customs and Revenue at Manchester Airport on 22 September 2007. The appellant seeks to appeal certain rulings made by the Crown Court during the appeal.

Background

2. On 22 September 2007, the respondent was stopped at Liverpool Airport by an officer of HM Revenue and Customs. He provided certain details to the officer, namely, his name, date of birth, nationality, and that he was travelling alone to Amsterdam to visit his daughter. He was asked if he had any cash on him and he produced approximately £2,000 in 20 pound notes, and approximately £1,000 in Euros. He explained that this represented the proceeds from the sale of his motor car that morning for £2,900. He had decided to travel that day having sold his car.
3. He was not cautioned, nor told the reasons for the questions. The respondent was asked to wait.
4. In the meantime the officer went to check to see if the respondent had a criminal record. It transpired that he did, revealing convictions for serious criminal offences, including robbery and possession of drugs with intent to supply for which he received a sentence of 8 years. By this time, the officer was concerned by the fact that the respondent was heading for a source country, and that his answers were unsatisfactory and that he had more than the minimum amount under the 2002 Act. The officer returned and questioned the respondent further.

The hearing

5. The appeal took place on 16 October 2008 and was by way of re-hearing. The only evidence was that of the officer, Karen Thorpe. The following facts were found by the court:

"(1) At approximately 17.55 hours on 22 September 2007, Karen Thorpe, an officer of HM Revenue and Customs was on duty at Liverpool Airport.

"(2) She was involved in an exercise looking for cash carried by passengers leaving the United Kingdom.

"(3) She stopped the appellant and asked him questions as to his identity, nationality, and destination, purpose of visit to that destination and whether he had cash upon him.

"(4) The appellant provided his name, date of birth, stated that he was an Italian passport holder, and that he was travelling alone to Amsterdam to visit his daughter who lived there with her boyfriend.

"(5) The appellant also stated that his mother lived in Sicily and that he might go on there to visit her with his daughter.

"(6) Karen Thorpe also asked the appellant whether he had any cash upon him and the appellant produced approximately £2000 in £20 notes and approximately £1000 in Euros. Karen Thorpe (for reasons which were not specified) declined to touch the cash but asked him how he had come by the sums held by him. She did not inform the appellant that the reasons for her questions were directed solely as to the issue as to whether that cash might be recoverable property or intended for use in unlawful conduct so as to be liable to seizure under section 294 of the Proceeds of Crime Act 2002.

"(7) The appellant stated that he had sold a Ford Focus motor car that same morning and had received the sum of £2900 against an asking price of £3000.

"(8) Karen Thorpe asked the appellant to wait and went to another location at the Airport where she accessed the appellant's criminal record which revealed (inter alia) convictions for a serious robbery and for possession of cannabis with intent to supply and other drugs offences for which he had been sentenced to a term of 8 years' imprisonment.

"(9) Karen Thorpe stated, and we found, that upon her return to question the appellant she was concerned by the fact that the appellant, as a man with a serious previous conviction relating to the supply of cannabis, was heading for a 'source' country (described by her as a country from where drugs were readily available), was in possession of more than the minimum amount of cash (within the meaning of the 2002 Act), and had provided an explanation for the possession of the cash which was suspicious.

"(10) We concluded that Karen Thorpe believed that the appellant was involved in further offending, either by travelling to Amsterdam to acquire or pay for cannabis already acquired or was involved in money laundering offences arising from drug dealing."

6. Turning to the legal issues, the case stated indicates that at the point where the officer described her concerns about the appellant, the court, of its own notion, raised the question as to whether there should have been a caution administered in the light of the information now in the officer's possession. The officer told the court that when involved in looking for cash exercises over a number of years, she had never been advised that she might have to caution an individual questioned by her, nor had she done so. The officer had not told the respondent that she did not propose that what was said by him when questioned would be used in any proceedings other than civil proceedings. However, the court's concern was that there were grounds to suspect the respondent of an offence or offences and that an interview was to take place, and thus, in the context of Code C paragraph 10.1 of PACE:

"Any answers or silence may be given in evidence in a court in a prosecution."

7. Moreover, the officer would be duty bound to report what had happened and there could well have been an investigation to discover whether the respondent had reverted back to drugs dealing.
8. Counsel representing Her Majesty's Revenue and Customs at the court below, argued that there was no need to caution the respondent, or alternatively, even if there had been a breach of PACE, that these were civil proceedings and it was immaterial. Moreover, section 78 had no application in civil proceedings.

The court's decision

9. The court considered (although it is to be noted that the officer had not been questioned about this) that the officer might well feel that she should proceed beyond confiscating the cash and cause further enquiries to be made, which, depending upon what further evidence was discovered, could lead to prosecution. Thus, the court was satisfied that the appellant's answers "may be given in evidence to a court in a prosecution". Thus, when Karen Thorpe returned to question the respondent, the court found that he should have been cautioned, because there was ground for suspicion that the appellant was going to Amsterdam to acquire or pay for drugs, or to involve himself in money laundering arising from drug dealing. The court therefore felt that the officer had grounds to suspect an offence and that the caution should have been administered.
10. The court considered that none of the exceptions in Code C10.1 applied and that the question was whether any of the answers "may be used in a prosecution". It appears that the court considered the exceptions to be exhaustive, and thus, did not consider whether the particular facts of this case could come within the spirit of the exceptions by way of analogy. The court ruled therefore, that Code C10 applied and that the failure to caution was a breach of PACE, even though the answers might only be used in civil proceedings.
11. The reasoning of the court was that, because the officer had not advised the respondent that his answers would not be used in any future criminal proceedings, the obligation to caution existed as a matter of law, and the officer's failure to caution constituted a breach of the Code. Had the respondent been told from the outset that the officer did not intend to use any of the answers for any purpose other than civil proceedings, then the court would have accepted that the answers would not have been used in a prosecution, and therefore no caution would have been necessary. There was a breach of PACE, and without looking at the contents of the remainder of the interview, the judge and the justices exercised their discretion to exclude it under section 78 of PACE. Following this ruling Her Majesty's Revenue and Customs said that no further evidence would be called, and accordingly the appeal was not opposed.

Questions for the opinion of the High Court

12. There are two issues, split into four questions for the consideration of the High Court:

a)(i) whether an officer must caution a person under Code C10 if she proposes to ask him questions about money found in his possession when she does not propose (although he does not know this) to use the answers in criminal proceedings;

a)(ii) whether, on its proper construction, paragraph 10.1 of Code C requires a caution to be given in circumstances where the answers or silence are later proposed to be given in evidence to a court exercising jurisdiction in civil proceedings and not in a prosecution;

a)(iii) whether the answer to question a)(ii) is any different in a case where the officer has not informed the person being questioned that she did not intend to use any answers given by him for any purpose other than civil proceedings;

b) whether section 78 of the Police and Criminal Evidence Act 1984 applies in proceedings for forfeiture of cash under section 298 and 299 of the Proceeds of Crime Act 2002.

The submissions of the appellant

13. The first argument made by the appellant is that the proceedings for forfeiture of cash are civil proceedings and that the Crown Court was exercising its limited civil jurisdiction. The appellant makes the following submissions in relation to questions a)(i) to a)(iii) which all concern the administration of the caution:
14. (1) PACE applies to the conduct of constables and others charged with investigating criminal offences and to evidence in criminal proceedings, whereas part 5 of POCA (Proceeds of Crime Act) has its own powers of search and seizure and its own separate Code of Conduct made under section 292 of POCA, which, in itself, is a good ground for considering that PACE and its Codes have no or limited application to the present case. Paragraph 35 of the POCA Code makes provision for a caution in particular circumstances, but it also requires the officer to give the person the opportunity to explain the provenance of the cash.
15. (2) The caution as set out in code C10 of PACE would be misleading so far as civil proceedings are concerned, as the rules for drawing inferences from silence do not depend on mentioning when questioned something which the person later relies on in court. In forfeiture cases an inference can be drawn from silence at a hearing, see the case of Ali v Best [1995] 161JP 393, page 399 G to H. A failure to give an explanation at all is also capable of giving rise to an inference that there is no innocent explanation.
16. (3) The requirement to caution in Code C10 is subject to the words "if either the suspect's answers or silence may be given in evidence to a court in a prosecution". As Code C10 makes clear, a caution need not be given if the questions are put for other purposes such as the examples given, including the example of an effective search. The exceptions are not exhaustive. The officer in this case needed to ask further questions in order to take the decision whether or not to detain the cash.
17. (4) On the court's findings, the officer did not tell the respondent the reason for her questioning. However, the fact was that there was no criminal proceedings brought against the respondent. If there had been, the absence of a caution would be a factor that could be taken into account. In this case, HMRC used only the civil sanction, thus, there could be no breach of PACE, because a) the officer was not asking questions about an offence but was asking questions about the origin of the money; and b) the obligation is only if the suspect's answers or silence may be given in evidence to a court on a prosecution.
18. (5) If the officer had reported it to her superior, of which there was no evidence that she had to, and if the superior officer decided that a criminal investigation should be instigated, the protection of PACE would come into play in any subsequent criminal proceedings, and any breach could be dealt with appropriately. The case of R v Gill [2004] 1WLR 469 is distinguished. This case involved what is known as a "Handsard" interview. The distinction can be made, it is submitted, because it related to criminal proceedings, the issue at stake was the admissibility of evidence in criminal proceedings, and the Hansard procedure included a right to prosecute.

The discretion to exclude

19. The appellant submits that even if there was a breach of Code C, which is not accepted, the court had no discretion to exclude the evidence under section 78 of PACE. Although there are powers under civil procedure rules and case management powers to exclude evidence to ensure that the proceedings were not unfair, the court did not, in this case, purport to exercise them. Section 78 clearly relates to criminal proceedings, as can be seen by section 82 of the Act. As counsel acknowledges today, counsel in the court below, not counsel who appears today, did not take the court to that section. It is submitted, therefore, that all the answers to the question should be in the negative.
20. There are no submissions that the matter be remitted to the Crown Court for re-hearing in the light of the modest amount at stake, and in the light of the fact that counsel for the appellant did not draw the court's attention to the POCA code, nor section 82 of PACE. The appellant seeks a quashing of the ruling made with regard to the exclusion of the evidence, as opposed to the decision to allow the appeal in the light of the fact that HMRC, following the ruling, did not oppose the appeal.

The relevant sections of law

21. The relevant parts of the 2002 Act are in part 5. Section 240 sets out the general purpose of the Act which includes, under subsection (1)b) "Enabling cash", which is or represents property obtained through unlawful conduct, or which is intended to be used in unlawful conduct, to be forfeited in civil proceedings before a Magistrates' Court.
22. Section 241 sets out the definition of unlawful conduct, and section 242 deals with property obtained through unlawful conduct.
23. Section 292 sets out the provisions for the making of the Code of Conduct by the Secretary of State, and section 294 enables a customs officer or constable or credited financial investigator to seize any cash if he has reasonable grounds for suspecting that it is recoverable property, or intended by any person for use in unlawful conduct.
24. Section 298 deals with the application to be made for forfeiture of cash at, inter alia, a Magistrates' Court, and section 299 deals with the appeal provisions against the decision under section 298.
25. At the relevant time, there was a Code in respect of constables and customs officers of the search powers, headed "Code of Conduct for constables and customs officers under the Proceeds of Crime Act 2002". This was issued in December of 2002. This has now been replaced by a subsequent Code which came into force on 6 April 2008. It is the former Code that we are concerned with in this case.
26. Paragraph 35 of the code reads:

"If the officer discovers cash during a search, he or she should give the person who has possession of it an opportunity to provided an explanation of its ownership, origins, purpose and destination. If, in a particular case, questioning which covers whether the person has committed an offence is likely to constitute questions that require a caution -- under the Police and Criminal Evidence Act 1984, Code C, in England and Wales."

The current version of the Code is no more elegantly phrased. Hopefully a future version will read with more clarity.

27. Paragraph 24 of the Code relates to steps prior to search of a person, and it reads:

"If the officer suspects that the person has cash concealed on his or her person, the officer must take the following steps:

* Inform the person that he has reasonable grounds for suspecting that he or she has cash on their person which is not less than the minimum amount and is recoverable property, or is intended by any person in unlawful conduct;

* Inform the person that he has the power to search them under section 289 of the Proceeds of Crime Act 2002, for the purposes of finding such cash;

* Produce any document authorising the search, if applicable;

* Ask the person to confirm or deny whether they have cash on their person; and

* Allow the person the opportunity to produce and hand over the cash.

These steps do not necessarily have to be followed in the order presented. The officer will have flexibility depending on the circumstances of an individual case, but that all the steps must be undertaken."

28. Paragraph 25 reads:

"Before any search for cash takes place, the officer must take reasonable steps to give the person to be searched the following information:

* The officer's name (unless the officer reasonably believes that giving his or her name might put him or her in danger, in which case a warrant card number or other identification should be given which proves their status as a constable or customs officer but not their name);

* The fact that the search is being carried out under section 289 of the Proceeds of Crime Act 2002; and

* A clear explanation of (i) the purpose of the search, and (ii) the grounds for reasonable suspicion."

The Police and Criminal Evidence Act and the Codes

29. The Police and Criminal Evidence Act 1984 applies to the conduct of constables and others charged with the duty of investigating criminal offences, and to evidence in criminal procedures. Section 67, subsection 11 of PACE makes provision that in all criminal and civil proceedings, any Code should be admissible in evidence. And, if any provision of such a Code appears to the court or tribunal conducting the proceedings to be relevant to any question arising in the proceedings, it should be taken into account in determining that question.

"78. - Exclusion of unfair evidence.

(1) In any proceedings the court may refuse to allow evidence on which the prosecution proposes to rely to be given if it appears to the court that, having regard to all the circumstances in which the evidence was obtained, the admission of the evidence would have such an adverse effect on the fairness of the proceedings that the court ought not to admit it.

(2) Nothing in this section shall prejudice any rule of law requiring a court to exclude evidence.

[(3) This section shall not apply in the case of proceedings before a magistrates' court inquiring into offences as examining justices.]

...

"82. - Part VIII - interpretation.

(1) In this part of the Act -

'confession', includes any statement wholly or partly adverse to the person who made it, whether made to a person in authority or not and whether made in words or otherwise; 'court martial' means a court-martial constituted under the Army Act 1955, the Air Force Act 1955 or the Naval Discipline Act 1957 [...];

Proceedings means criminal proceedings, including - at

A) proceedings in the United Kingdom or elsewhere before a court-martial constituted under the Army Act 1955 [, the Air Force Act 1955 or the Naval Discipline Act 1957];

B) proceedings in the United Kingdom or elsewhere before the Courts-Martial Appeal Court -

(i) on an appeal from a court-martial so constituted [...]

(ii) on a reference under section 34 of the Courts-Martial (Appeals) Act 1968; and

C) proceedings before a Standing Civilian Court; and

'Service court' means a court-martial or a Standing Civilian Court."

30. Turning to Code C, Code C10 deals with cautions:

"10. Cautions.

(a) When a caution must be given.

10.1 - A person whom there are grounds to suspect of an offence, see Note 10A, must be cautioned before any questions about an offence, or further questions if the answers provide the grounds for suspicion, are put to them if either the suspect's answers or silence, (i.e. failure or refusal to answer or answer satisfactorily) may be given in evidence to a court in a prosecution. A person need not be cautioned if questions are for other necessary purposes, e.g.:

(a) solely to establish their identity or ownership of any vehicle;

(b) to obtain information in accordance with any relevant statutory requirement, see paragraph 10.9;

(c) in furtherance of the proper and effective conduct of a search, e.g. to determine the need to search in the exercise of powers of stop and search or to seek cooperation while carrying out a search;

(d) to seek verification of a written record as in paragraph 11.13;

(e) Not used.

10.2 - Whenever a person not under arrest is initially cautioned, or reminded they are under caution, that person must at the same time be told they are not under arrest and are free to leave if they want to. See Note 10C.

10.3 - A person who is arrested, or further arrested, must be informed at the time, or as soon as practicable thereafter, that they are under arrest and the grounds for their arrest, see paragraph 3.4, Note 10B and Code G, paragraphs 2.2 and 4.3..

10.4 - As per Code G, section 3, a person who is arrested, or further arrested, must also be cautioned unless:

(a) it is impracticable to do so by reason of their condition or behaviour at the time;

(b) they have already been cautioned immediately prior to arrest as in paragraph 10.1.

(b) Terms of the cautions

10.5 - The caution which must be given on:

(a) arrest;

(b) all other occasions before a person is charged or informed they may be prosecuted, see section 16 should, unless the restriction on drawing adverse inferences from silence applies, see Annex C, be in the following terms:

'you do not have to say anything. But it may harm your defence if you do not mention when questioned something which you later rely on in Court. Anything you do say may be given in evidence'".

31. In the notes for guidance, see 10(a), reads:

"There must be some reasonable objective grounds for the suspicion based on known facts or information which are relevant to the likelihood the offence has been committed and the person to be questioned committed it."

32. Code C11.1(a) deals with interviews and is as follows:

"An interview is the question of a person regarding their involvement or suspected involvement in a criminal offence or offences which, under paragraph 10.1, must be carried out under caution. Whenever a person is interviewed they must be informed of the nature of the offence or further offence."

Discussion and decision

33. I turn to the questions posed, but before doing so, some preliminary points need to be highlighted. First of all, these proceedings are undoubtedly civil proceedings, see section 240 of POCA; secondly, the proceedings constitute an action in rem not in personam, in other words they are about the seized cash not the respondent. The relevance of the respondent, his answers and background, is in relation to proof that the property is recoverable property or is intended by any person for use in unlawful conduct. It is immaterial for the purposes of this regime whether or not the person detained is involved in a criminal offence himself, so long as it can be proved that the cash is recoverable or is to be used for unlawful conduct by any person; thirdly, the code under POCA which applied in this case is no longer in force. It has been replaced with a more up-to-date version. Also, the version of Code C applicable for the purposes of this case has been replaced. The decision in relation to this case therefore has no general application, save for the fourth question posed; fourthly, the attention of the court below was not drawn to the Code of Conduct under POCA in place at the time, and thus, the questions of the court below centre on Code C10 of PACE in isolation.

Question a)(i)

34. The question is an open ended one, and is phrased as if it relates to a matter of law and not fact specific. Taking the question literally, Code C10, as it was then, related to questioning where the person is suspected of an offence and where the answers or silence may be given in evidence in a prosecution. The Code of Conduct which governed the actions of the customs officer did make provisions for a caution in particular circumstances, but importantly made provision for the person to be given the opportunity to explain the provenance of the cash. The answer to the question posed is that, if the questioning is for the purpose of civil proceedings, namely, as in this case, the seizure of cash, and the officer is not addressing his questions to the issue of the questioned person having committed an offence and possible criminal proceedings, a caution need not be administered because the pre-requisites for giving a caution are not made out.
35. For the sake of completeness however, I turn to consider the questions set against the facts as found by the court. In doing so, the following observations need to be made: the court came to the conclusions that there were grounds to suspect the respondent of a number of different criminal offences, however, there was no question by the court or counsel for Her Majesty's Revenue and Customs of the officer about her state of mind so far as grounds for suspicion as opposed to concerns, and whether, be they subjective or objective grounds, about a criminal offence having been committed; secondly, to what issue the questions she asked the respondent following finding out about his previous convictions went, in other words whether to the issue of detention of the cash or possibly criminal offences; thirdly, if the latter, why she did not caution the respondent; and fourthly, whether she had to report the case to her superior or any customs officers conducting criminal investigations in any event. Depending on the responses, further questions may have been appropriate.
36. This further questioning would have clarified the position and could have been done without the admission of the remainder of the interview given that the court was loathe to see or hear the evidence. I note in passing however, that it is difficult how a court can rule on whether the admission of certain evidence would have such an adverse effect on the fairness of the proceedings, if the court does not know what that evidence is. In the event, the lack of evidence meant that the court made certain assumptions about what the officer might have done, and also about her state of mind.
37. Turning to the court's findings, it is to be noted that there is no finding that the officer was asking or was about to ask questions regarding an offence which would invoke the provisions of C10, should reasonable grounds have existed for suspicion. The finding is that the officer was acting in the "looking for cash" exercise. The questions she asked were about the cash and its provenance. There is also no finding of fact, because the questions were not asked, that the officer was going to ask questions on the basis that the respondent was a suspect and that criminal proceedings might ensue. It follows, therefore, that in the particular circumstances of this case, because further questions were not asked of the officer, that the answer to the question posed, set against the facts as found as opposed to the assumptions made, is also no.

Question a)(ii)

38. This, again, is a broad question. The only difference between this question and the first, is one of the construction of C10. There is nothing in paragraph 10.1 of Code C to suggest that a caution should be given where the answers are to be given in civil proceedings. The essential difference between the proceedings is that these proceedings, as has already been noted, are actions in rem, and the respondent was not in the position of being a suspect for the purpose of criminal proceedings. However, the question should be confined to the facts of this case, and those findings of fact do not alter the position.

Question a)(iii)

39. The fact that the officer did not specifically indicate that the questions were not to be used for anything other than civil proceedings makes no difference in this case. There may be circumstances where the answer to such a question may be different, but for the purposes of this case the answer is in the negative. The code for customs officers under POCA, sets out guidance about steps to be taken pre and during search. They are set out in paragraphs 24 and 25. However, there was no search in this case and thus no invasion of the respondent's privacy, and therefore paragraph 25 of the Code had no application.
40. In relation to paragraph 24, the officer had carried out some of the steps set out therein, but because the court ruled the rest of the questions and answers inadmissible and customs called no further evidence, there was no evidence as to whether the other steps envisaged in the Code had been carried out. In any event, given that there was no need for a search, the other provisions, save for the first mentioned one, were otiose. It is to be noted however, that there is nothing in the Code requiring the officer to proceed the questioning by indicating the purpose of it. Moreover, the court below did not have its attention drawn to the relevant Code.

Question b)

41. Whilst I have already indicated that the conclusions reached have only application to the particular facts of this case, not least because the Codes then enforced no longer have any application, this final question is of general application.
42. Section 78 of PACE refers to the "prosecution" that in itself should have been a clue. However, it is quite clear from section 82 of PACE that section 78 only relates to criminal proceedings. Given that these are civil proceedings (see section 240 of POCA) civil powers to exclude evidence would have to be used if it was considered that the interests of justice so required the exclusion. The court purported to act using powers exercisable only in the criminal jurisdiction, and therefore the answer to this kind of question is also in the negative.

In summary therefore, the answer to all the questions posed is in the negative. The ruling of the court below excluding the further evidence of the customs officer is quashed. No other order is sought or is necessary.

Thank you very much.

43. MR BIRD: My Lady, there are a couple of minor errors in the judgment. My Lady referred to the Code of Practice, it should be the Code of Conduct.
44. MRS JUSTICE DOBBS: Can the record note that where I have said Code of Practice it is to be Code of Conduct.
45. MR BIRD: And my Lady said that the relevant parts of the 2002 Act were in part 4 when in fact they are in part 5.
46. MRS JUSTICE DOBBS: Part 5, did I say part 4?
47. MR BIRD: You said part 4.
48. MRS JUSTICE DOBBS: Well, I had part 5 written down, so all right. That is something that can be also read into the record.
49. Thank you very much indeed for your assistance Mr Bird.