England and Wales High Court (Administrative Court) Decisions

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

		Royal Courts of Justice Strand London WC2A 2LL Friday, 14 January 2011

LORD JUSTICE GROSS:

1. There are before the court applications on the part of both the claimants, to whom I shall generally refer for brevity as Mr Gittins save where the context otherwise requires, and the defendant to whom I shall refer as HMRC. Mr Gittins applies for permission to apply for judicial review and, if permission is granted, judicial review of the decision of HHJ Stephens QC of the Central Criminal Court on 24 September 2010 to issue two warrants for the search of premises at 17 to 19 Cockspur Street and 27 Montpelier Street. Mr Gittins also seeks judicial review of a decision to issue a notice pursuant to section 50 of the Criminal Justice and Police Act 2001 during the execution of one of the warrants on 29 September 2010 at 27 Montpelier Street.
2. For its part HMRC seeks the discharge of the interim order granted by HHJ Bidder QC sitting as a High Court Judge on 28 October 2010. No more need be said of the application concerning the injunction granted by HHJ Bidder QC. If Mr Gittins succeeds on the judicial review matter then he would be entitled to the return of the documents so that the injunction would be unnecessary; if HMRC succeeds then the injunction must go.
3. The matter was heard yesterday but concluded too late for judgment to be given then. Accordingly, judgment is being given this morning.
4. With regard to Mr Gittins and the other claimants I should say something. Mr Gittins is a resident of the Isle of Man and a fellow of the Institute of Chartered Accountants in England and Wales, having qualified in 1975. He says that he is the chairman and majority share holder of Montpelier Holdings LLC, which is a diverse financial advisory business consisting of over 50 companies operating in 10 countries with over 500 staff. Montpelier Holdings LLC is the ultimate parent company of the second and third claimants. Mr Gittins says that he is a director of both of them as well and he is also a director of many other companies in the group. He has been concerned with tax planning for 35 years, during which time he has been in almost constant correspondence with HMRC on numerous tax planning schemes for his clients.
5. The second claimant, which has operated since 1992, is registered in the Isle of Man and offers tax planning primarily to UK residents, both individual and corporate.
6. The third claimant, also registered in the Isle of Man, offers trust and corporate services to support these tax plans, and is licenced and regulated by the Isle of Man Financial Supervision Commission.
7. The second and third claimants operate from offices in the Isle of Man. The second claimant has various United Kingdom registered subsidiary companies which operate from 27 Montpelier Street. These companies are sales vehicles. There is also an office at 17 to 19 Cockspur Street. The offices at Cockspur Street are in multiple occupation, with Montpelier occupying the second and third floors and other businesses occupying the rest of the building.
8. Mr Gittins is resident in the Isle of Man but when he is in London he says that he stays at 27 Montpelier Street which he uses as an office.
9. Turning to HMRC's concerns in this matter, they are explained in a statement of a Mr Rawbone, an inspector of taxes within the Criminal Investigation Directorate, to which I shall refer as CI, within HMRC. Mr Rawbone says that he is presently the officer in charge of a criminal investigation into Mr Gittins and four tax plans promoted by him through the second claimant and various other companies owned by or associated with him. He is investigating the matter with a view to establishing whether or not criminal offences have occurred.
10. The tax plans concerned are known to HMRC as:

"Tax Plan 1" - Relevant Discounted Securities ("RDS tax plan");

"Tax Plan 2" - Capital Redemption Policies ("CRP tax plan");

"Tax Plan 3" - Contracts for Difference ("CFD tax plan");

"Tax Plan 4" - Gifting of Gilts ("charity tax plan").

The criminal investigation, Mr Rawbone says, involves indictable offences, namely cheating the Public Revenue contrary to common law and/or false accounting contrary to section 17 of the Theft Act 1968. According to Mr Rawbone, Mr Gittins is not the only suspect in the inquiry and it may extend to other individuals and companies.

11. The tax plans were brought to the attention of CI by the anti-avoidance group of HMRC which, together with specialist investigations, had opened civil enquiries into the tax returns of subscribers who had made claims to relief from tax under one or other of the plans. The aim of the civil enquiries was to determine whether or not the steps said to have been taken under the plans had the desired effect in law. Mr Rawbone comments on the implications of decisions in two similar schemes. Mr Rawbone goes on to say that the aim of the criminal inquiry was and is to determine whether or not the steps said to have been taken under the plans had in fact been implemented as the subscribers and HMRC had been led to believe.
12. On the basis of the information available at present, Mr Rawbone says that CI does not suspect the subscribers to the four tax plans of acting fraudulently. He speaks to the belief that Mr Gittins assured the subscribers that what was being done complied with the law and that he used advice he sought from counsel to support this. He says that, so far as is known, apart from signing documents the subscribers had little or no involvement in the actual implementation of the tax plans. Mr Rawbone underlines that since 16 February 2007 when the criminal investigation began, the civil enquiries into the four suspect plans have continued independently of the criminal inquiry and a "Chinese wall" has been maintained between them to protect the integrity of each.
13. The amount involved, according to Mr Rawbone, is substantial. Claims to relief from tax in excess of £554 million have been made in the tax years ending 5 April 2003 to 5 April 2008 by at least 651 subscribers to one or other of the four suspect tax plans. If repayments had been made or relief allowed in every case the estimated tax loss arising from the four plans we have would have been in excess of £97 billion. The majority of the repayments, however, were stopped when the civil enquiries into the tax returns of individual subscribers were opened.
14. Mr Rawbone goes on to explain HMRC's stance as to Mr Gittins. HMRC believes that Mr Gittins devised the four tax plans and controlled, directly or indirectly, all of the companies used in their implementation. Mr Rawbone says that Mr Gittins, through Consultants, had a direct interest in the success of the subscribers' claims in that, in addition to the initial fees, which are estimated to be £8.8 million for the four plans, Consultants was due to receive for three of them an additional success fee. This was to be calculated by reference to the tax saved or amount invested if and when HMRC agreed a particular claim and is estimated to be some £5.5 million. Thus, fees in excess of £14 million might be anticipated if the tax plans had been successful.
15. The criminal investigation has relied on cooperation with the authorities in the Isle of Man through letters of request. However, the two authorities -- the authorities here and the authorities in the Isle of Man -- have of course proceeded independently.
16. As to the nature of the fraud, emphasis is placed, if I have understood Mr Rawbone correctly, on matters which may shortly be described as fictitious loans. The matter is set out in some greater detail in Mr Rawbone's witness statement but it is unnecessary to take up more time on that aspect of the matter in this judgment.
17. I come next to the history of the proceedings. Search warrants were applied for and granted. On 24 September 2010 an application supported by an information was made, in the event to HHJ Stephens QC at the Central Criminal Court, by Mr Yates, an officer of HMRC, for the grant of two warrants to enter and search premises. These applications were made pursuant to the provisions of section 9 and paragraph 12 of schedule 1 of the Police and Criminal Evidence Act 1984 ("PACE"). The premises were 17 to 19 Cockspur Street SW1, and 27 Montpelier Street SW7.
18. The investigation into Mr Gittins by HMRC, as has already been noted, involved cooperation with the authorities on the Isle of Man. The warrants issued by HHJ Stephens QC were executed on 29 September 2010. Independent counsel were present at both sets of premises for the express purpose of advising on issues of legal professional privilege ("LPP") which might arise. The warrant issued in the Isle of Man was executed on the same date. In the event, Mr Gittins was arrested at the Montpelier Street premises and interviewed under caution on 29 September 2010. He was bailed to return to Notting Hill Police Station. Understandably, and as is recounted in the statement of facts, Mr Gittins was shocked by the arrest and found it most disconcerting.
19. In the course of the searches various notices were issued by HMRC officers pursuant to section 50 of the Criminal Justice and Police Act 2001 ("the 2001 Act") giving additional powers of seizure in respect of various computers at 27 Montpelier Street. Subsequent to these events correspondence then ensued.
20. In a careful and courteous letter dated 3 October 2010, solicitors for Mr Gittins sought a blanket undertaking from HMRC not to review any of the material seized in London. To that letter HMRC replied, it may be said also courteously, declining to give any such undertaking.
21. The injunction granted by HHJ Bidder QC on 28 October was in terms that HMRC shall not carry out any examination or further examination of all or any of the items seized on 29 September until after permission to apply for judicial review shall have been considered or until further order of the court. Most unfortunately, considerable delay then ensued, as commented upon by Burnett J, before whom the matter came on 27 December 2010. The injunction, in effect, stopped the investigation in its tracks. It is pursuant to Burnett J's order of that date that the applications came before us now.

Preliminary point

22. Until yesterday nothing more than a reference in counsel's skeleton argument and in Mr Rawbone's witness statement was made to the proceedings before HHJ Stephens QC. Neither the information nor a transcript of the proceedings were produced, nor were redacted copies supplied. The HMRC position was that more could not be disclosed for fear of prejudicing the continuing investigation which is not confined to Mr Gittins.
23. Mr Jones QC, representing Mr Gittins, protested strongly in this regard in his skeleton argument. Plainly his protests bore fruit. Yesterday morning Miss Dobbin, counsel representing HMRC, supplied us with a "gist" document. She explained that, while the drafting was, in essence, attributable to her, there had been a number of revisions in which HMRC officers had been involved. The document was supplied and, in addition, HMRC agreed, when pressed by the court, to swear an affidavit verifying that the gist document fairly, frankly and faithfully represented the information and the hearing at the Central Criminal Court. An undertaking was given in that regard. The affidavit was to be sworn by Mr Yates and furnished this morning. I shall need to return to that matter later in this judgment.
24. That was not quite the end of the matter yesterday. After some further debate in the course of the hearing, a redacted transcript of the hearing before HHJ Stephens QC was produced. I cannot avoid expressing strong regret that the matter has proceeded in this fashion, even though yesterday ultimately very little time was lost and, in my judgment, Mr Jones was not prejudiced in the manner in which he was able to put the case -- albeit that he said that his emphasis would have been different had he had the gist document and the transcript in advance. There was yesterday no application for an adjournment to enable Mr Jones to deal further with the gist document and the transcript.
25. It is unnecessary to trawl through the authorities to make the following observations:

1) A search warrant is intrusive and capable of causing grave reputational and other damage. As has been said, it must never be regarded as routine: see Redknapp [2008] EWHC 1177, especially at [13]; Faisaltex [2008] EWHC 2832 (Admin) [2009] 1 WLR 1687, especially at [24]. In this regard it may be said that there are some similarities between a search warrant and Mareva, Anton Piller and Restraint Orders.

2) When an application for judicial review is launched seeking to quash the grant of a search warrant, it is, again, in some respects, akin to the "return date" for Mareva's, Anthony Piller's and Restraint Order's. Ordinarily, the expectation will be that the party challenging the grant of the warrant must be entitled to know the basis upon which the warrant was obtained.

3) By their nature, criminal investigations are such that there will be occasions when, for good reason, HMRC (or other authorities as the case may be) will not be able to divulge the full information or the full contents of the discussion before the judge who granted the warrant. There is an important public interest in combating economic crime, and HMRC's proper efforts to do so should not be undermined.

4) But, as it seems to me, HMRC should be in a position to justify that stance by reference to the facts of the individual case. No general policy would, in my judgment, suffice to do so unless such "non-disclosure" is warranted by the facts of the individual case. The norm should not be that while a criminal investigation is continuing HMRC will not disclose the basis upon which the warrant was granted. In saying this, I do not see any conflict with the observations of this court in Whiston-Dew, unreported [2009] EWHC 3761 (Admin), which, to my mind, goes no further than emphasising the need for a fact sensitive consideration of the circumstances of the individual case. If Whiston-Dew goes further than that, then I would respectfully be unwilling to follow it. I repeat, if there is to be non-disclosure of the basis upon which the warrant was obtained, it must be justified by the facts of the individual case.

5) Where full disclosure cannot be given (and there will be cases where it cannot be), HMRC should, if at all possible, and again unless there is good reason for not doing so, make available, and in a timely fashion, a redacted copy or at least a note or summary of the information and the hearing before the judge, where appropriate, backed by an affidavit. It is most unfortunate that it took until yesterday for this to happen in the present case. It has not helped the preparation or presentation of this case. In some circumstances it might have resulted in the court declining to accept further material from HMRC and in other cases it might very well result in an adjournment at the cost of HMRC.

The application for permission to apply for judicial review

26. I turn to the application brought by Mr Gittins. It is advanced by Mr Jones QC under the following headings:

1) Ground 1 - the warrants were drafted too widely. Here, three points are taken (a) excessive width; (b) LPP; (c) relevant evidence.

2) Ground 2 - statutory pre-conditions were not met.

3) Ground 3 - failure to disclose relevant matters to the judge.

I shall take these grounds in turn.

Ground 1

27. This ground goes to the drafting of the warrants. The starting point must be the wording of these warrants, a matter I underline as, with respect to Miss Dobbin in particular, authorities dealing with the construction of other warrants with different wording are of no significant assistance in construing these warrants. The warrants for the two properties are effectively in the same wording so that the warrant for 17 to 19 Cockspur Street SW1 can be taken as the example:
"WARRANT TO ENTER AND SEARCH PREMISES FOR EVIDENCE OF AN INDICTABLE OFFENCE (SCHEDULE 1 PARAGRAPH 12 AND SECTION 15 OF THE POLICE AND CRIMINAL EVIDENCE ACT 1984) IN THE CENTRAL CRIMINAL COURT

On this day 24th September 2010 an application supported by an information was made by Paul Joseph Yates an Officer of Her Majesty's Revenue and Customs, for the issue of a warrant under schedule 1 paragraph 12 of the Police and Criminal Evidence Act 1984 to enter the premises situated at;

17 - 19 Cockspur Street, London SW1Y 5BL

And search for material from 1st December 2002 to date pertaining to income tax loss relief claims, capital gains tax loss of relief claims and corporation tax loss relief claims by individual and companies who have subscribed to four tax plans promoted by Montpelier Tax Consultants (Isle of Man) Limited (formally MTM (Tax Consultants) Limited and Montpelier Tax Planning (Isle of Mann) Limited) involving Relevant Discounted Securities, Capital Redemption Policies, Contracts for Difference and Gifting of Gilts to Charity. This includes, but is not be limited to, the following;

(1) All internal and external correspondence (including notes of meeting, telephone calls and emails), all documents, all agreements, all financial, business and accounting records (including audited, internal, group and management accounts) and all banking records (including opening application forms, records of signatories, authorisations, statements and paying in books) whatsoever, whether held in written form, on microfiche, magnetic tape, computer or any other form of mechanical or electronic retrieval mechanism, relating to the promotion, marketing and implementation of the four tax plans involving Relevant Discounted Securities, Capital Redemption Policies, Contracts for Difference and Gifting of Gilts to Charity in general and in particular the role of the companies detailed below and the role of any other companies or individuals involved in the promotion marketing and implementation of the four tax plans including but not limited to:

(2) All correspondence, documents, agreements, financial, accounting, business and banking records kept by Montpelier Trustees Limited (formally known as MTM Trustees Limited) for:

(a) The administration of the trusts set up for subscribers to the four tax plans including notes or minutes of meetings, resolutions, deeds of appointment, deeds of assignment, investments made, financial statements, trust records and accounts.

(b) The creation, issue, sale and, if appropriate, redemption of the Relevant Discounted Securities issued in March 2003.

(3) All correspondence, documents, agreements, financial, accounting, business and banking records kept by M.T.Holdings Limited, Mossbank Enterprises Limited and Bayridge Investments LLC for the loans supposedly made by them in connection with the four tax plans involving Relevant Discounted Securities, Capital Redemption Policies, Contracts for Difference and Gilts gifted to the charity, including but not limited to:

(a) Minutes of director, board and share holder meetings.

(b) Journal and ledger entries showing opening and closing balances and any movements between.

(c) bank account authorisations in particular those for inter company and bulk or multiple payments and/or transfers.

(4) All correspondence, documents, agreements, financial, accounting, business and banking records kept by Mossbank Enterprises Limited, Montpelier Insurance Company Inc (formally known as MTM Insurance Company Inc), Pendulum Investments Corporation, Pendulum Investments Limited and Alphabeta Trading Limited for the Relevant Discounted Securities, Capital Redemption Policies, Contracts for Difference and Gifting of Gilts to Charity including option agreements and stock transfer forms, including those in the name of Arvington Limited, with Rotunda Limited (formally known as Vauxhall Adult Education Trust Limited and Rotunda College Limited), including but not limited to:

(a) Minutes of director, board and share holder meetings.

(b) Journal and ledger entries showing opening and closing balances and any movements between.

(c) Bank account authorisations in particular those for inter company and bulk or multiple payments and/or transfers.

(5) All correspondence, documents, agreements, financial, accounting, business and banking records kept by Montpelier Tax Consultants (Isle of Man) Limited (formally MTM (Tax Consultants) Limited and Montpelier Tax Planning (Isle of Man) Limited) and Montpelier (Trust and Corporate) Services Limited (formally MTM (Isle of Man) Limited) but only in so far as they relate to the four tax plans involving Relevant Discounted Securities, Capital Redemption Policies, Contracts for Difference and Gilts gifted to the charity.

(6) All audited, internal, group, management or any other form of accounts prepared for Montpelier Tax Consultants (Isle of Man) Limited (formally MTM (Tax Consultants) Limited and Montpelier Tax Planning (Isle of Man) Limited) and Montpelier (Trust and Corporate) Services Limited (formally MTM (Isle of Man) Limited).

Having been satisfied that the conditions in paragraphs 2 and 14 of schedule 1 have been fulfilled, authority is hereby given for any Officer of Her Majesty's Revenue and Customs accompanied by such other person or persons as are necessary for the purpose of the search, to enter the said premises on one occasion within three months from the date of issue of this warrant to search for, seize and retain the material in respect of which the application is made."

28. As a matter of general approach I have no doubt that, given their nature, warrants are to be construed strictly but also fairly and as a whole.

Ground 1(a) - excessive width

29. Mr Jones' first criticism is what he terms the excessive width of the language. He relies on s.15(6)(b) of PACE, which provides as follows:

"A warrant (b) shall identify, so far as is practicable, the articles or persons to be sought".

30. As is settled by authority, the warrant needs to be drafted with sufficient precision to enable both those who execute it and those whose property is affected by it to know whether any individual document or class of documents falls within it. See Energy Financing Team v Director of the Serious Fraud Office [2005] EWHC 1626 at [24]. Here, Mr Jones submits that the warrants were not sufficiently precise. He says, in effect, that no occupier or possessor of documents would understand what was meant by the words "this includes but is not limited to the following ...". He reminds the court that that wording was to be found at the end of both sub paragraphs (1) and (4) of the warrant. Nor, he says, would any officer of HMRC understand what was thus meant. Flexibility in the course of the search is provided by section 19 of PACE in accordance with its terms. Flexibility must not be built into the terms of the warrant. A warrant must be drafted in terms no wider than a notice to produce under paragraph 4 of schedule 1 of PACE.
31. Miss Dobbin vigorously defends the drafting of the warrants. Putting to one side her reliance on other authorities, she says that, upon an analysis of the warrants, the material to be searched for and seized was carefully described. The warrants were limited in time from 2002 to the date of the search. The search was for income tax loss relief claims, capital gains tax loss relief claims, and corporation tax loss relief claims by individuals and companies who had subscribed to four tax plans promoted by the second claimant. It was further specified that the plans involved were the plans to which reference has already been made in the course of recounting Mr Rawbone's witness statement. The types of document were further specified in significant detail and examples were given. She disputes that those executing the search and any property holder would not have understood what was meant, provided only that they read the warrant properly. In this case the warrants identified at the outset that the material to be seized was confined to the four tax plans specified. The warrants proceeded on a carefully structured basis. Miss Dobbin submits that the documents sought were identified in the warrants with some precision.
32. I am, with respect, wholly unable to accept Mr Jones' criticism of the width of the language in the warrants. Having set out the arguments at some length I can state my conclusions very briefly. Construed strictly but fairly and as a whole, the warrants are limited, and plainly so, both in terms of time and the category of documents sought. The suggestion that they would not be understood simply lacks force. On any proper reading of the warrants it is plain that the documents sought go to the mechanics of the four plans or schemes and no wider. No more need be said. The challenge under ground 1(a) fails.

Ground 1(b) - LPP

33. Here, Mr Jones focuses on the professional activities of Mr Gittins; see the statement of facts, paragraphs 22 and following, where emphasis is placed on the contents of Mr Gittins's laptop, including material relating to litigation between various of his clients and HMRC. The warrants, he said, authorised the seizure of documents the subject of legal professional privilege. The warrants should have contained an express exception for privileged documents. They did not. Indeed, Mr Jones went so far as to say that they "permit and encourage the seizure of documents whether or not" they are privileged. The warrants should be quashed on this ground.
34. Miss Dobbin submits that the warrants did none of the things Mr Jones suggested. She submits that there is no sensible basis for the contention that the warrants permitted and encouraged the seizure of documents which were the subject of legal and professional privilege. She further submitted that it was difficult to understand why the type of material specified in the warrant would include that which is subject to privilege as defined by s.10 of PACE.
35. I start with the legal framework:

Police and Criminal Evidence Act 1984 -

"8(1) If on an application made by a constable a justice of the peace is satisfied that there are reasonable grounds for believing

...

(d)that it does not consist of or include items subject to legal privilege, excluded material or special procedure material

...

He may issue a warrant authorising a constable to enter and search the premises.

...

9(1) A constable may obtain access to excluded material or special procedure material for the purposes of a criminal investigation by making an application under Schedule 1 below and in accordance with that Schedule.

(2) Any Act (including a local Act) passed before this Act under which a search of premises for the purposes of a criminal investigation could be authorised by the issue of a warrant to a constable shall cease to have effect so far as it relates to the authorisation of searches—

(a)for items subject to legal privilege.

...

10(1) Subject to subsection (2) below, in this Act "items subject to legal privilege" means—

(a)communications between a professional legal adviser and his client or any person representing his client made in connection with the giving of legal advice to the client;

(b)communications between a professional legal adviser and his client or any person representing his client or between such an adviser or his client or any such representative and any other person made in connection with or in contemplation of legal proceedings and for the purposes of such proceedings; and

(c)items enclosed with or referred to in such communications and made—

(i) in connection with the giving of legal advice; or

(ii) in connection with or in contemplation of legal proceedings and for the purposes of such proceedings

When they are in the possession of a person who is entitled to possession of them

(2) Items held with the intention of furthering a criminal purpose are not items subject to legal privilege.

...

14(2) Subject to the following provisions of this section, this subsection applies to material, other than items subject to legal privilege and excluded material, in the possession of a person who—

(a)acquired or created it in the course of any trade, business, profession or other occupation or for the purpose of any paid or unpaid office.

...

19(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."

Police and Criminal Evidence Act 1984, Schedule 1 -

"2. The first set of access conditions is fulfilled if -

(a) there are reasonable grounds for believing -

(i) that a serious arrestable offence has been committed;

(ii) that there is material which consists of special procedure material or includes special procedure material and does not also include excluded material on premises specified in the application;

(iii) that the material is likely to be of substantial value (whether by itself or together with other material) to the investigation in connection with which the application is made; and

(iv) that the material is likely to be relevant evidence"

Criminal Justice and Police Act 2001 -

"50(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

...

(4)Section 19(6) of the 1984 Act and Article 21(6) of the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989 1341 (N.I. 12))(powers of seizure not to include power to seize anything that a person has reasonable grounds for believing is legally privileged) shall not apply to the power of seizure conferred by subsection (2)."

36. As to principle, for present purposes it is unnecessary to say more than the following:

1) As is plain, even -- dare I say so -- from the unfortunate jumble of legislative provisions, no warrant can authorise the seizing of items subject to LLP.

2) If on its true construction a warrant extends to material for which there are not reasonable grounds for believing that it does not consist of or include items subject to LPP then the warrant will be quashed, at least unless the offending passages can be severed. Such a warrant cannot be saved by precautions governing its execution on the day, such as, for example, the engagement of independent counsel.

3) The mere fact that on the premises to be searched there will or may be items subject to LPP does not mean that a warrant for the search of those premises will need to be quashed. Such a conclusion seems to me plain, not least from the terms of paragraph 2(a) of schedule 1. For the avoidance of doubt, s.19(6) of PACE applies only once the officers executing the search are already on the premises, ie it goes only to the manner of exercise of the powers of search and seizure, not to whether a warrant should have been granted in the first place. Good practice will no doubt involve the taking of suitable precautions such as the engagement of independent counsel to deal with contingencies arising in the course of the search, but the desirability or need for such precautions does not in any way give rise to a proper ground for complaint as to the warrant.

4) There can be no general, still less universal, rule, but, in a case such as the present where a search is to be conducted of the premises of a professional man where items subject to LPP may be encountered, no harm would be done by an express exclusion for such items. Indeed, it might be better if the warrants in this case had included such wording. That said, the absence of an express exclusion for items subject to LPP does not require the quashing of a warrant which is otherwise appropriately drafted. As already underlined, an exclusion of this nature is simply making express that which is in any event implicit.

37. In the light of these principles, ground 1(b) can be swiftly disposed of. With respect to Mr Jones, it is without substance.

1) It is fanciful to suggest that the wording of the warrants permitted or encouraged the seizure of documents whether or not they were privileged.

2) Having regard to the nature of the materials covered by the warrants, the test most favourable to Mr Gittins -- that contained in section 8(1)(d) of PACE -- was satisfied. There were reasonable grounds for believing that documents relating to the mechanics of the plans or schemes would not contain items subject to LPP. Those, as already suggested, were the documents to which the warrants related. That conclusion, I emphasise, is in no way undermined by the appropriate precautions commented favourably upon by the judge, including the instruction of independent counsel, taken by HMRC relating to the conduct of the search in the event that privileged material was encountered. Mr Jones' reliance on the gist document in this regard is, with respect, misplaced.

3) So far as concerns computers, because on the day it was feared that privileged material could not be separated from non-privileged material, notices were issued under s.50 of the 2001 Act. By reason of s.50(4) of that Act, s.19(6) of PACE is effectively disapplied. No complaint could properly be made in this regard.

4) The letter written on the day of the search on behalf of the claimants and handed to HMRC officers said only this:

"Dear sirs, please see memo attached from our Isle of Man office. I have been asked to hand you this letter. Having taken legal advice, Montpelier Tax Consultants (IOM) Limited want it noted that, as far as they are concerned, under the terms of the warrants you should only be taking documents, agreements, correspondence etc relating to the four schemes mentioned in the warrants. All documentation relating to any other schemes should not be taken"

38. The letter was signed, or signed on behalf of, Mr Garrett, a director of the third claimant. Strikingly, the letter said nothing about the risk of the search trespassing into privileged documents.

Ground 1(c) - relevant evidence

39. Here, Mr Jones complains that, given the wording of the warrants, it cannot be concluded that the material seized came within s.8(4) or paragraph 2(a)(4) of schedule 1 of PACE. Paragraph 2(a)(4) has already been set out; s.8(4) reads as follows:

"In this Act 'relevant evidence' in relation to an offence means anything that would be admissible in evidence at a trial for the offence".

Mr Jones rightly emphasises that the test here is whether there are reasonable grounds for believing that the material is likely to be "relevant evidence" -- rather than simply that the material is likely to be relevant to the inquiry. Until the arrival of the gist document and the redacted transcript he supported this submission by criticism of HMRC for not disclosing the information on which the application for the warrants was based. Having seen those documents he maintains his submission that HMRC has not satisfied the applicable test. HMRC have not been entitled to engage in a fishing expedition, which this was.

40. Miss Dobbin responds as follows. She submitted, relying, at least initially, on Mr Rawbone's statement, that this was an investigation into whether the four tax plans were actually implemented and whether the steps had been taken as the subscribers to those plans had been led to believe. The implementation of the plans had depended, among other things, on interest free loans being made to subscribers or purchasers, and all sales of assets being made by companies controlled by Mr Gittins. As she expressed it in her skeleton argument, in simple terms the investigation was examining whether the transactions carried out under these plans by the entities involved were fictitious. That involved an examination of the mechanics of all the entities involved in the schemes. The material specified in the warrants was the sort of material which will be relevant evidence in determining those questions.
41. The point is a short one and does not benefit from elaboration. If this was a fishing expedition then Mr Jones would be right but, with respect, I do not think that it was. Instead, having regard to Miss Dobbin's argument based on Mr Rawbone's evidence as to the nature of the investigation, now, it may be said, reinforced by the gist document and the redacted transcript, I think that the statutory test contained in schedule 1 of PACE was satisfied. There were "reasonable grounds for believing" that the material "was likely to be relevant evidence". Ground 1(c) fails.

Ground 2

42. I have already commented on the intrusive nature of warrants and the risk that they may result in grave consequences. The use of warrants therefore requires justification. They plainly should not be either routine, as already discussed, or a measure of first resort. They should be a measure, in effect, of last resort. Accordingly and understandably, PACE provides that various cumulative conditions must be satisfied for a warrant to be granted. For present purposes the relevant conditions are those contained in paragraphs 2(b) and 14(d) of schedule 1 of PACE. These provide as follows:

"2(b) other methods of obtaining material (i) have been tried without success; or (ii) have not been tried because it appeared that they were bound to fail

...

14(d) that service of notice of an application for an order under paragraph 4 above may seriously prejudice the investigation."

43. Mr Jones submits that these pre-conditions were not satisfied. He points to Mr Gittins' regular compliance with notices to produce in the past. He relies on Mr Gittins', and for that matter the corporate claimant's, good character, and Mr Gittins' years of dealing with the Revenue authorities. He says that suspicion that a crime has been committed by a person of good character is not enough.
44. With reference to the gist document, he says that, while mention appears to have been made, albeit inadequately, to paragraphs 2(a) and 14(d) of schedule 1, paragraph 2(b) was overlooked.
45. He takes a further point as to the banking documents. These could have been in any event, or had been, obtained from RBS, the claimant's sole banker. By itself, this complaint should result in the grant of the warrants being quashed. The extension of the warrants to the banking documents could not be severed and the pre-conditions could not be satisfied in that regard.
46. Miss Dobbin responds along the following lines. She submits that the pre-conditions of both paragraphs 2(b) and 14(d) were satisfied. She highlights the fact that Mr Gittins is himself a suspect in a complex criminal investigation into a fraud upon the Public Revenue. She also emphasises that there are other suspects in the investigation who have yet to be arrested. Service of a notice to produce under paragraph 4 of schedule 1 would tip off Mr Gittins and others, so giving rise to a real risk that documentation would be destroyed. She submits that material is not sought from Mr Gittins on the basis that he is a tax adviser to others who are the subject of an investigation; he is instead himself a suspect in a criminal investigation, so that his previous compliance with other orders to produce material when he has not been a suspect is of little, if any, relevance.
47. Further, in support of these submissions she points to the observation in the Energy Financing Team Limited case, to which I have already referred, at [6]. There, the court recorded that counsel had accepted that, where documents are sought from "someone suspected of involvement in a fraud ... it will rarely be practicable to obtain them by notice ...". Miss Dobbin further submits that the position of Mr Gittins is indistinguishable to or analogous with that of the accountant in Faisaltex, to which, again, I have already referred. In that case a warrant was executed against the accountant. The position of the solicitors was of course very different. So, here, Mr Gittins is personally and directly caught up in the criminal investigation.
48. As to the gist document, she relies on paragraphs 5 and 11 to 12. Though nothing appears from the transcript available to us, she says that paragraph 2(b) of schedule 1 was addressed in terms, if in general terms, in the information, which of course we do not have. She submits that no proper criticism can be made of HMRC's approach here in the light of the totality of materials before the judge, as may be inferred even from simply the gist document and the redacted transcript.
49. As to the position of RBS and the banking documents, that is no more than a red herring. HMRC was interested, and justifiably so, in where those documents were found and in any annotations there might be.
50. The point as to the banking documents can be at once disposed of. I agree with Miss Dobbin. Their inclusion in the warrants was justifiable for the reasons she gave. In any event, in the overall context, their inclusion, even if unjustified, was de minimis. At worst, if I had thought, which I do not, that their inclusion was unjustified, I would have been minded to sever the provision dealing with them.
51. I return to the substantive complaint that, with a professional man of good character and long standing, the use of these intrusive and damaging warrants was unjustified. For my part, this was easily the most difficult issue in this litigation and I confess to some sympathy with Mr Jones' forcefully presented submissions in this regard. In the relationship between state and citizen with which this case is concerned, it is of the first importance that an issue of this nature is thoroughly considered by the authorities before a warrant is sought. A pro forma or box ticking approach would be quite wrong.
52. However, after the most anxious reflection I am unable to accept Mr Jones' submission. I remind myself that we are being asked to review the decision taken by the very experienced judge who plainly conducted a searching examination of the application. He had before him a considerable body of material. Mr Gittins is at the centre of, or at least an important figure in, an investigation of major fraud and, notwithstanding his good and long standing in this area of practice, he is personally suspected of fraud.
53. In these circumstances, I am unable to conclude that the decision to which the judge came, that, as recorded on the face of the warrants, both paragraphs 2(b) and 14(d) of schedule 1 are satisfied, was unlawful, irrational or perverse. The position is to some extent analogous with that which obtained in Faisaltex at [57]. Had the risk which HMRC apprehended materialised, the position would or might have been irremediable.
54. For these reasons, I would reject this ground of complaint as well.
55. It is unnecessary to say anything of the "offer" canvassed by Mr Jones in the course of his submissions yesterday.

Ground 3

56. This ground alleges non-disclosure. The principles are well understood and settled. The applicant must plainly give full assistance to the judge from whom he seeks a warrant. See the case of Energy Finance at [24]. If he does not, he risks the quashing of the warrant. Thus far there can be no quibble. In the light, however, of the gist and the transcript, this point can be taken summarily. Understandable though Mr Jones' concerns were prior to their appearance, as it seems to me, all his complaints under this heading now go. He cannot surmount the combined weight of material contained in those documents dealing with what was put before the judge, supplementing the somewhat more sparse details previously contained in Mr Rawbone's witness statement. It follows that ground 3 too must fail.
57. Accordingly, and in my judgment, the application for permission must be refused and the injunction discharged.

Post script

58. This morning a draft affidavit appeared from Mr Yates. It did not simply verify the matters to which I have already referred relating to the gist document. The court had anticipated an affidavit certainly not longer than one page and probably not longer than one paragraph. It sought, on the quickest of readings de bene esse, to buttress the case for HMRC in various respects. That was quite improper and should never have happened. I have no doubt that this court should not pay any attention to the matters referred to in that affidavit in support of the HMRC case and, when the matter arose at the start of the hearing today, I so indicated.
59. Mr Jones, with reference to paragraph 13 of the draft affidavit, sought an adjournment to address submissions on the width of the warrants in the light of the material in the draft affidavit. For my part, I am not persuaded that the summary material in the affidavit in any way lent support to Mr Jones' projected complaint and, for that reason, the court refused Mr Jones' application earlier this morning. I repeat with regret, it was most unfortunate that the matter proceeded in that fashion. It should not have.
60. MR JUSTICE DAVIS: I agree that this application should be dismissed and, in consequence, the interim injunction discharged for the reasons given by Gross LJ. I too had particular concerns as to whether the conditions set out in paragraph 2(b) of schedule 1 to the 1984 Act was fulfilled in this case but, having reflected on the matter, I take the view on the whole that the Crown Court Judge was entitled to conclude that this condition, along with the other conditions, was fulfilled.
61. I would add some words of my own about the initial failure of HMRC to comply in any way prior in part to Mr Rawbone's statement of 6 January 2011 and, more particularly, prior to the morning of the hearing before us, with Mr Gittins' solicitors' written request made on 3 October 2010 for information about the basis and materials on which the warrants were sought and granted. I got the distinct impression that HMRC may simply have been adopting, until late reconsideration in the present case, a policy of total non-disclosure. Such a general policy may be convenient to the Executive; but that it is not justified in terms of inflexible application is illustrated by this very case. On the morning of the hearing Miss Dobbin produced, clearly after HMRC had further reconsidered its position, the detailed and informative document (which is to be verified by affidavit) setting out the gist of what was put before the Crown Court Judge. This was supplemented further during the course of the hearing before us by production by Miss Dobbin of a redacted transcript of the hearing below. No prejudice of any kind was identified as occasioned to HMRC by producing such materials. They could and should have been produced much earlier.
62. The Whiston-Dew case was also a case involving the issue of warrants, albeit in the context of the Taxes Management Act 1970. It appears that detailed evidence was put in in the course of that case on behalf of HMRC to explain why, where a criminal investigation was still in progress, there was a practice not to reveal details of the investigations. It was pointed out, by way of example, that it can be undesirable and prejudicial for such disclosure at that stage because, amongst other things, it may be damaging to give an insight into HMRC's thinking or to reveal its state of knowledge, or indeed lack of knowledge, or to reveal identities of other potential suspects. So much can be, in general terms, accepted: as indeed it was by Sullivan LJ in that case. But, as it seems to me, it is wrong for HMRC to turn from a position that it is generally undesirable to reveal to a criminal suspect full details of the pending investigations as revealed to the Crown Court Judge, to a position whereby it is asserted that it is wrong to give the suspect any information at all as to the basis on which an application for a warrant was sought and made. The one does not necessarily follow from the other, as, again, this present case illustrates.
63. In my view, the decision in Whiston-Dew is not to be taken as approval of a general policy not, while the criminal investigation is still pending, to disclose any details at all of the information or materials on which a warrant is sought or granted. On the contrary, Sullivan LJ stressed that each such case is fact sensitive and that flexibility is required.
64. It must not be overlooked that an order issuing a warrant of the kind sought and granted in this case is, by its very nature, highly intrusive. Hence indeed the stringent pre-conditions under the 1984 Act Parliament has stipulated should be fulfilled before such an order may be made. Further, such orders are ordinarily, as here, sought on an ex parte basis: a reversal of course (albeit on well established grounds) of the usual rule that a party is entitled to be heard before any order is granted against him. Those two considerations seem to me to indicate that the prima facie starting point should be for HMRC to give, where requested, to the person who may be aggrieved at the issuing of the warrant and who may wish to challenge it, as much relevant information as practicable, provided it is not prejudicial to the investigation, as to the basis on which the warrant was obtained from the Crown Court.
65. It is of course relatively easy to envisage that there may be many cases where it could indeed be prejudicial to the investigation, prior to any charging decision, to disclose parts of the information and other materials deployed before the Crown Court Judge in seeking the warrant. Non-disclosure in such circumstances can be justified. In the present case for example, we are told that a 59 page information and 3 supporting folders of materials were placed before the judge. Those have not thus far, in their full terms, been disclosed to Mr Gittins, and indeed Mr Jones QC did not seek to say they should have been, at all events at this stage. But, to repeat, it is not legitimate to move, without additional justification, from a position whereby it can properly be said that not all the materials placed before the Crown Court Judge should be disclosed, to a position whereby it can be said that the recipient of the warrant is to be told nothing at all as to the basis on which the warrant was sought.
66. In my view, therefore, in each case where a request for such information is made by the person the subject of a warrant of the kind made here, HMRC should consider such requests on a individuated basis. Specifically, HMRC should assess what materials and information relied on before the Crown Court can properly be disclosed, with or without editing, and whether by way of summary or otherwise, without prejudicing the criminal investigation. It would be wrong simply to hide behind an asserted general policy as a justification in itself for declining to give any information. Indeed, I suspect that, while there perhaps may be cases where declining to give any information at all may be justified in particular circumstances, such a situation is likely to be an exception. Certainly it should not be taken as a norm. Where such a situation is said by HMRC to arise, then HMRC should be prepared to justify it. It is indeed, as I see it, salutary that that should be so.
67. If all this means, by reference to the observations made by Sullivan LJ in paragraph 12 of his judgment in the Whiston-Dew case, that I am of the school of thought that there is a presumption in favour of disclosure, subject to considerations of the integrity of the criminal investigation, then I am content with that. But in my view, it perhaps is better not to think in terms of presumptions, albeit rebuttable presumptions: because to do so may tend to obscure the need, in this particular context of obtaining warrants, for a flexible assessment of what should properly be disclosed, on a fact specific basis by reference to the circumstances of each individual case.
68. LORD JUSTICE GROSS: Thank you. Anything to be said about costs?
69. MR JONES: My Lord, no application is made and I would respectfully suggest that each side should bear its own costs.
70. MS DOBBIN: My Lord, there was going to be no application for costs.
71. LORD JUSTICE GROSS: Very prudent.