QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
MR JUSTICE HICKINBOTTOM
| THE QUEEN on the application of
(1) SATISH CHATWANI
(2) JAWAHAR CHATWANI
(3) BHASKER TAILOR
(4) RAKESH TAILOR
(5) RASHMI CHATWANI
(6) DAKSHA CHATWANI
(7) HANSA CHATWANI
(8) SHILPA CHATWANI
(9) RAKSHA TAILOR
(10) PRAVINA GULABIVALA
|- and -
|(1) THE NATIONAL CRIME AGENCY
(2) BIRMINGHAM MAGISTRATES' COURT
for the Claimants
Andrew Bird and David McNeill (instructed by NCA Legal) for the First Defendant
The Second Defendant neither appearing nor being represented
Hearing dates: 15-16 April 2015
Crown Copyright ©
Mr Justice Hickinbottom:
i) The lawfulness of the arrests.
ii) The NCA concedes that the search warrants were unlawful; and accepts that the warrants should be quashed, and the entries, searches and seizures made under their authority should be declared unlawful. The issue that remains is limited to whether, despite that unlawfulness, the court should in its discretion allow the NCA to retain the material seized – or any copies or schedules of that material – pending its proposed application for an order under section 59 of the Criminal Justice and Police Act 2001 ("the CJPA"), which enables an agency that has obtained material from an unlawful search to apply to the Crown Court to retain it.
The Factual Background
The Relevant Statutory Powers of the NCA
"(2) If a constable has reasonable grounds for suspecting that an offence has been committed, he may arrest without a warrant anyone whom he has reasonable grounds to suspect of being guilty of it.
(4) But the power of summary arrest conferred by subsection… (2)… is exercisable only if a constable has reasonable grounds for believing that for any of the reasons mentioned in subsection (5) it is necessary to arrest the person in question.
(5) The reasons are –
(e) to allow the prompt and effective investigation of the offence or of the conduct of the person in question;…"
Therefore, for an arrest under these provisions to be lawful, the arresting constable must have reasonable grounds for (i) suspecting that an offence has been committed and that the target of the arrest committed it; and (ii) believing that it is necessary to arrest the person to allow the prompt and effective investigation of the offence.
"An arrested person must be given sufficient information to enable them to understand they have been deprived of their liberty and the reason they have been arrested, as soon as practicable after the arrest, e.g. when a person is arrested on suspicion of committing an offence they must be informed of the nature of the suspected offence and when and where it was committed. The suspect must also be informed of the reason or reasons why arrest is considered necessary. Vague or technical language should be avoided. When explaining why one or more of the arrest criteria apply, it is not necessary to disclose any specific details that might undermine or otherwise adversely affect any investigative processes. An example might be the conduct of a formal interview when prior disclosure of such details might give the suspect an opportunity to fabricate an innocent explanation or to otherwise conceal lies from the interviewer."
"(1) A constable may search an arrested person, in any case where the person to be searched has been arrested at a place other than a police station, if the constable has reasonable grounds for believing that the arrested person may present a danger to himself or others.
(2) … [A] constable shall also have a power in any such case –
(b) if the offence for which he has been arrested is an indictable offence, to enter and search any premises in which he was when arrested or immediately before he was arrested for evidence relating to the offence.
(3) The power to search conferred by subsection (2) above is only a power to search to the extent that is reasonably required for the purpose of discovering any such thing or any such evidence.
(6) A constable may not search premises in the exercise of the power conferred by subsection (2)(b) above unless he has reasonable grounds for believing that there is evidence for which a search is permitted under that paragraph on the premises".
"… unless the custody officer has reasonable grounds for believing that his detention without being charged is necessary to secure or preserve evidence relating to an offence for which he is under arrest or to obtain such evidence by questioning him."
"(1) If on an application made by a constable a justice of the peace is satisfied that there are reasonable grounds for believing –
(a) that an indictable offence has been committed; and
(b) that there is material on premises mentioned in subsection (1A) below which is likely to be of substantial value (whether by itself or together with other material) to the investigation of the offence; and
(c) that the material is likely to be relevant evidence; and
(d) that it does not consist of or include items subject to legal privilege, excluded material or special procedure material; and
(e) that any of the conditions specified in subsection (3) below applies,
he may issue a warrant authorising a constable to enter and search the premises in relation to each set of premises specified in the application.
(1A) The premises referred to in subsection (1)(b) above are –
(a) one or more sets of premises specified in the application…
(2) A constable may seize and retain anything for which a search has been authorised under subsection (1) above.
(3) The conditions mentioned in subsection (1)(e) above are –
(d) that the purpose of a search may be frustrated or seriously prejudiced unless a constable arriving at the premises can secure immediate entry to them….
(4) In this Act 'relevant evidence', in relation to an offence, means anything that would be admissible in evidence at a trial for the offence."
"15 Search warrants - safeguards
(1) This section and section 16 below have effect in relation to the issue to constables under any enactment, including an enactment contained in an Act passed after this Act, of warrants to enter and search premises; and an entry on or search of premises under a warrant is unlawful unless it complies with this section and section 16 below.
(2) Where a constable applies for any such warrant, it shall be his duty –
(a) to state –
(i) the ground on which he makes the application;
(ii) the enactment under which the warrant would be issued;…
(b) to specify the matters set out in subsection (2A) below; and
(c) to identify, so far as is practicable, the articles or persons to be sought.
(2A) The matters which must be specified pursuant to subsection (2)(b) above are –
(a) if the application relates to one or more sets of premises specified in the application, each set of premises which it is desired to enter and search;
(b) if the application relates to any premises occupied or controlled by a person specified in the application –
(i) as many sets of premises which it is desired to enter and search as it is reasonably practicable to specify;
(ii) the person who is in occupation or control of those premises and any others which it is desired to enter and search;…
(3) An application for such a warrant shall be made ex parte and supported by an information in writing.
(4) The constable shall answer on oath any question that the justice of the peace or judge hearing the application asks him.
(5) A warrant shall authorise an entry on one occasion only unless it specifies that it authorises multiple entries.
(5A) If it specifies that it authorises multiple entries, it must also specify whether the number of entries authorised is unlimited, or limited to a specified maximum.
(6) A warrant –
(a) shall specify—
(i) the name of the person who applies for it;
(ii) the date on which it is issued;
(iii) the enactment under which it is issued; and
(iv) each set of premises to be searched, or (in the case of an all premises warrant) the person who is in occupation or control of premises to be searched, together with any premises under his occupation or control which can be specified and which are to be searched; and
(b) shall identify, so far as is practicable, the articles or persons to be sought….
16 Execution of warrants
(1) A warrant to enter and search premises may be executed by any constable.
(2) Such a warrant may authorise persons to accompany any constable who is executing it.
(2A) A person so authorised has the same powers as the constable whom he accompanies in respect of—
(a) the execution of the warrant, and
(b) the seizure of anything to which the warrant relates.
(2B) But he may exercise those powers only in the company, and under the supervision, of a constable.
(3) Entry and search under a warrant must be within three months from the date of its issue.
(3B) No premises may be entered or searched for the second or any subsequent time under a warrant which authorises multiple entries unless a police officer of at least the rank of inspector has in writing authorised that entry to those premises.
(8) A search under a warrant may only be a search to the extent required for the purpose for which the warrant was issued.
"6.9 Premises may be searched only to the extent necessary to achieve the purpose of the search, having regard to the size and nature of whatever is sought.
6.9A A search may not continue under:
- a warrant's authority once all the things specified in that warrant have been found;
- any other power once the object of that search has been achieved."
i) specify the offence under investigation (paragraph (3)(a));
ii) explain the grounds for believing that the offence has been committed (paragraph (4)(b));
iii) so far as practicable, identify the material sought (paragraph (3)(b));
iv) state whether the applicant wants other persons to accompany the officers executing the warrant (paragraph (3)(e));
v) where the applicant wants other persons authorised to assist officers in the search, to identify those other persons, by function or description; and explain why those persons are required (paragraph (9));
vi) disclose anything known or reported to the applicant that might reasonably be considered capable of undermining any of the grounds of the application (paragraph (10); and
vii) include a declaration by the applicant that to the best of his knowledge and belief, (a) the application discloses all the information that is material to what the court must decide, including anything that might reasonably be considered capable of undermining any of the grounds of the application, and (b) the content of the application is true; and a declaration by a senior officer that that officer has reviewed and authorised the application (paragraph (12).
The appropriate form of application and warrant is set out in the relevant Practice Direction.
The Plan: NCA's Late Disclosure
"Legal – Sufficient grounds to suspect involved in Money Laundering.
Alternative – Not arrest the above. This has been considered and negated as their lawful arrest will maximise the opportunity of gathering further evidence from interviews and searches.
Not arrest Satish/Jawah[ar]/Bhasker – It is excepted [sic] that at this time, there is less evidence against these people that the others mentioned however the alternative of not arrest/question/search is negated as it is highly likely that evidence will be lost. They hold prominent positions in the company and are suspected of guilty knowledge (at least) if not an active role in the concealment/layering of illicit cash.
Necessary – It is necessary to take action against persons who are engaged in unlawful laundering of criminal monies. It is necessary to arrest the above named for the reasons given. A series of CMP placements will be installed to capture those engaged in this criminality and provide evidence of Mens Rea OR NOT! The CHATWANI business empire is well-established and there [sic] methodology of concealing criminal cash will be sophisticated, therefore these tactics are proportionate and necessary to prove or disprove their involvement in the offences suspected.
Proportionate – As previously mentioned, the investigation of persons involved in money laundering, a serious offence, is entirely necessary. The tactics being deployed are entirely proportionate in the investigation of these crimes."
"Officer Wilde is a Tier 5 advisor. This is not… a rank within the NCA. The NCA's ranks are known as Grades. Tier 5 means that she has a nationally recognised specialist qualification to plan, prepare and support any interview strategy that is required in the most serious and complex investigations. Only a small number of NCA officers are qualified to this level. This role requires consideration into all aspects of arrest, custody processes, pre-interview briefings, interview strategies and the rationale around those decisions."
The main objective around the planned arrests and interviews of the seven subjects is not primarily at this stage to focus on the gathering of evidence from any accounts the suspects may provide. It is simply to provoke a behavioural reaction on their release from custody which will ultimately allow for the capturing of unequivocal evidence which will enhance any prosecution against these individuals. The strategy around the interview is simplistic in that there will be no challenges around any accounts given but to simply follow a pattern of topics and questions which when completed will conclude the objective. It will be necessary for the suspects to be held in custody for a set period of time to allow for technical equipment to be installed in some premises. There should be sufficient time to cater for this during the custody process.
It is not expected that interviewing officers should explore in any detail any account given. The evidence against the suspects and any challenges will come at a later date in the process when the gathering of all the available evidence is complete. All interviews will follow the same generic pattern and pre-interview disclosure to each suspect is identical to ensure the integrity of the overall objective is maintained.
The disclosure plan is to ensure the suspects have some knowledge why they have been arrested and sufficiently so to prompt conversations between one another on release. The disclosure is aimed at ensuring the suspects understand a number of facts. These are around:
- Undetermined period of time
- Linked to businesses
- Financial transactions
- Substantial amounts of money
- Investigation led by the [NCA]
This should be sufficient to allow them to infer what the investigation is about without the full facts being disclosed. The question may be asked around the failure to disclose evidence which we are already in possession of. I am satisfied that there are no issues with the tactic used here as the investigation team can show how previous similar intervention of a subject connected to these individuals [i.e. Tarr] led to further key evidence of their criminal activities and the investigation is still ongoing. The scenario showed after the release of the suspect linked to these individuals, he was instantly in contact and communicated with those subject to these arrests for sustained periods of time speaking in detail of the criminality taking place. It goes without saying that there is a strong likelihood that with minimal facts given to these individuals that the same scenario of contact will take place. On this basis there is reasonable and proportionate justification for it.
There will be no necessity for any phased or tactical disclosure plan. There will be one pre interview disclosure (attached) to any solicitor followed by a series of interviews to cover the necessary topics and questions as provided within the interview pack…".
"Arresting officers will receive limited information with regards to this case, this is done so that arresting officers cannot inadvertently disclose information regarding the case. The document is designed to give arresting officers sufficient grounds to arrest the suspects in this case."
The document continued (all emphasis in the original):
"Grounds for Arrest:
Nominated arresting Officers are to use the following arrest wording to achieve their arrest:
'You are under arrest for an offence of money laundering in that it is suspected over an undetermined period of time, businesses controlled by you, have been involved in the transfer of monies associated to fraud and the criminal proceeds thereof'
Money laundering Contrary to section 327 and 328 of [POCA]
'You do not have to say anything but it may harm your defence if you do not mention when questioned something you later rely on in court. Anything you do say may be given in evidence.'
The necessity under Code G of PACE for the arrest when presented to custody is for the following reasons:
TO ALLOW THE PROMPT AND EFFECTIVE INVESTIGATION ON THE BASIS OF
- Securing and preserving evidence by means of searching premises associated to the suspect
- Preventing the destruction of evidence and contact with co-accused and conspirators
- Purpose of questioning and the consideration of any Special warnings."
"The suspect has been linked to a number of business [sic]. It is believed that a number of financial transactions within the accounts of these businesses are associated to Fraud and the Criminal Proceeds of Crime. The value of these transactions is in excess of tens of millions of pounds."
"1. We need to at least consider whether or not it is feasible to do the deployment covertly via CME without being on the search?
I asked [redacted] to do a feasibility on the building a couple of months ago. It is surrounded by CCTV, alarms and locking shutters. Although I appreciate not impossible, I assessed the best way to obtain the product that we seek is to deploy the devices in the way we have discussed.
2. If we were to deploy on the back of the search, how would we manage any associates still in the office from seeing our activity?
As mentioned, part of the role of the 'Chaperone' will be to control this eventuality. I would seek to round up any occupants on the legal footing of interfering with a search and control their movements, notwithstanding the offices that you will be attacking will be that of the arrested subjects.
3. Additionally, we could do a survey as to whether they are feasible or not and deploy covertly at a later date?
We could, but the timing of this deployment and arrest is specifically timed to capture any reaction from the sentencing of Rajnesh Sharma. This is in the operational plan; given the opportunity to secure the surroundings that your staff will be working in, with the added benefit of time, during a warranted search, then this must be the most covert and productive way of achieving our objectives, with the minimum of risk."
It is clear from this exchange of emails that the plan as outlined above – and, indeed, as executed – was effectively settled by early October 2014.
The Plan as Executed
i) The eight applications were in essentially similar form, the only difference between them being in the description of the investigation. In each save for the application in respect of Kanta House, the money that was being laundered was described as "primarily being suspected to be the proceeds of VAT evasion". The Kanta House application added the words "… including duty evasion relating to alcohol importation and sales". Mr Jones pointed out that this appears to confuse VAT evasion and duty evasion; but the difference in the applications and warrants does not appear to be material for the purposes of the claim before this court.
ii) Mr Gozzer interrogated the Police National Computer, which did not show that any of the five Claimants had committed any previous offences. He did not make a similar enquiry of the HMRC, and he was unaware of the Claimants' compliance history so far as the HMRC is concerned. Although Mr Hickman was aware of the litigation between DDL and the HMRC about the razor blade VAT repayment – on 30 March 2015, the NCA confirmed that he had read the Upper Tribunal determination prior to asking Mr Gozzer to draft the warrant applications – Mr Gozzer was not told of it, and was unaware of it. In the event, the application (a) did not refer to the fact that the Claimants were men of good character, who had been in business for many years with an unblemished HMRC record (as they were); and (b) said that that there was no reason to think that legally privileged, excluded or special procedure material would be encountered on the searches (paragraph 3(d)).
iii) The offences being investigated were described as money laundering contrary to sections 327, 328 and 329 of POCA, and conspiracy to launder the proceeds of crime contrary to section 1(1) of the Criminal Law Act 1977 (paragraph 1); all, of course, indictable offences.
iv) In respect of his belief that the offence(s) had been committed, Mr Gozzer said (paragraph 2):
"There is significant intelligence and evidence from a number of Law Enforcement Agencies world wide to indicate that these offences have been committed in the UK and overseas. A number of criminal associates have already been arrested and convicted of money laundering offences."
v) The application identified the material sought as documents and mobile communication devices relating to money laundering activity. In respect of his belief that this material is likely to be relevant evidence, Mr Gozzer said (paragraph 3):
"It is known that mobile phones are a key method of communication between the parties to the alleged offences. Recovery and examination of those devices is expected to provide evidence of contact between the suspected offenders and other criminal associates. It is expected that further members of the criminal network will be identified through such examination.
The recovery of documentation detailing financial transactions and affairs at this premises will allow for a proper assessment of the personal and business activities of the companies and their officers. It will also… assist the quantification of the extent of their money laundering activity."
The warrants (that were, in this respect, in identical form) permitted a search for:
"Evidence of money-laundering – namely monies, documentary records in paper and electronic format, mobile telephones and other electronic communication and storage devices."
vi) The application indicated that forensic examiners, financial investigators and officers of HMRC would take part in the search, "to assist in the assessment of business interests, its legitimacy and with revenue compliance" (paragraph 7).
vii) Mr Gozzer said that he was not aware of any other information that might reasonably undermine any grounds of the application (paragraph 8).
viii) Mr Gozzer and Mr Warnock made the required declarations, the former declaring that, to the best of his knowledge and belief, the application disclosed "all the information that is material to what the court must decide…" (paragraphs 9 and 10).
ix) The draft warrants (which the magistrates endorsed) did not refer to any individuals or companies suspected, only to "OCGs" (presumably, organised criminal groups), "criminal groups" and "associates". Furthermore, there was no information given in the applications as to other individuals who might be at the premises, e.g. the wives of the first five Claimants (now, the Sixth to Tenth Claimants), and relatives who live at those addresses.
"We are satisfied that the criteria under section 8 PACE is made out."
i) The document refers to the assessment that the group had generated huge wealth from the sale of drugs, firearms and complex revenue fraud. It said that it was suspected that Kanta House was "at the hub of this criminal activity" (page 2).
ii) With regard to "Method", it said that "suitably trained officers" would monitor the movements of the subjects, and officers detailed to Kanta House would then secure the premises and:
"… encourage those not suspected of being involved in the investigation, to leave. Those persons insistent on remaining will be corralled into one place, for their own safety, while the search takes place." (page 3).
iii) In the Guidance Notes to Seizing Digital Exhibits, it said: "Take steps to disable CCTV recording".
iv) Mr Bird concedes that, in respect of the scope of material to be searched for and seized, "the warrants were much narrower than Mr Hickman wanted" (paragraph 16 of his skeleton argument). Appendix 9 to the briefing document set out the material to be seized, in the following terms:
"• Large amounts of cash (more than £1,000 BOE or equivalent.
• Handwritten lists of amounts of cash.
• Mobile telephones
• Data storage devices
• Details of all bank/building society accounts to be recorded within search booklet
• Documentation relating to business, properties and vehicles
• Telephone directory @ Kanta House
• Safety deposit box keys/references
• High Value items – Jewelry [sic] Etc."
"The list of items to be seized is not prescriptive and relies on the officer's initiative. The filter will be with the respective Scene Search Supervisor/exhibits officer."
The Challenge to the Arrests
i) The evidence that the NCA had acquired that (a) the Claimants and their business had links with Tarr and Batth – and, through Batth, Sharma – and (b) criminal money was being placed in and layered through the business, gave the NCA reasonable grounds for suspecting that Kanta group businesses were being used to launder money, with the active participation (or, at least, knowledge) of each Claimant.
ii) Mr Bird conceded that, although one purpose of arresting and detaining the Claimants was to secure evidence by questioning, it was not the dominant purpose – which was to get them away from Kanta House to enable the surveillance devices to be installed and to provoke a reaction from the Claimants that would then be captured on those devices. In the light of the Interview Strategy Document (see paragraphs 44-51 above) and the 9 October 2014 exchange of emails (paragraph 52), that concession was clearly properly made.
iii) However, in the terms of section 24(5)(e), it was necessary to arrest the person to allow the prompt and effective investigation of the offence – because, without the arrest, it was impossible to conduct the investigation as the NCA wished to conduct it, namely by implementing Mr Hickman's plan. This was justified because there was strong evidence that DDL had been used for money laundering purposes, and the plan was designed to obtain evidence as to knowledge of each of the five Claimants. Behaviour, captured on a covert surveillance device, had earlier been provoked by the arrest of Tarr. In terms of the arrest, the necessity criterion of section 24(5)(e) was therefore satisfied.
iv) Mr Bird accepted that, on the evidence, Rashmi – who was abroad on 28 January, returning on 31 January 2015 – would have voluntarily attended an interview, if he had been requested. However, he submitted that Rashmi's arrest on 5 February was justified under section 24(5)(e) because it enabled the NCA, under their post-arrest statutory powers under section 32 of PACE, to search Kanta House for his mobile phones. The arrest was thus also "necessary to allow the prompt and effective investigation of an offence".
v) In any event, whether the arrest was lawful depends upon what was in the mind of the arresting officer. They were unaware of any ulterior motives for the arrests. On what they had been told, each arresting officer did have reasonable grounds for (i) suspecting that an offence has been committed and that the individual he was arresting committed it; and (ii) believing that it was necessary to arrest the person to allow the prompt and effective investigation of the offence by questioning the suspect.
vi) Following arrest, the detention of each of the four Claimants arrested on 28 January 2015 was "necessary to secure… evidence relating to an offence for which he [was] under arrest or to obtain such evidence by questioning him" in the terms of section 37 of PACE, because questioning the four men gave the NCA the opportunity to place the surveillance devices in Kanta House covertly. "By questioning him" does not require that the evidence to be obtained necessarily has to derive directly from the answers to the questions put to the detained person.
"[T]he reasonable suspicion has to be in the mind of the arresting officer. So it is the facts known by or information given to the officer who effects the arrest or detention to which the mind of the objective observer must be applied."
"The position therefore is that if apparently reliable information is given to a police officer, who then relies on it without more to make an arrest, then that can give rise to reasonable grounds on his part so as to defeat a claim for wrongful arrest, notwithstanding that the apparently reliable information is incorrect."
"[Counsel for Mr Tchenguiz] submitted that there should be a very narrow exception granted to the O'Hara principle so that the 'reasonable grounds to suspect' of a constable should not include facts about which another member of the investigation team, upon which he relies, has positively and materially misled him in circumstances where the other team member knew or ought to have known that the information he provided was misleading. In other words, a police officer can be successfully sued for wrongful arrest in cases if he obtains information from another member of the investigating team who knew or ought to have known that the information, which he was providing, was misleading."
"The fact that the Cambridgeshire police officers who made the arrests may have been ignorant of the real motive for them does not entitle the court to focus just on their role and understanding of the matter – and the judge did not do that. He clearly treated the Cambridgeshire police, acting through their Chief Constable and DI Harrison of the regional crime squad, as having a 'corporate' state of mind for the purpose of testing the legality of the arrest. As to satisfaction of section 24 of [PACE], 'reasonable grounds for suspecting' Chalkley and Carter to be guilty of an arrestable offence, we cannot fault the judge's conclusion that all the officers concerned had such grounds. In particular, we agree with him that WDC Fletcher's information, which she passed to DI Harrison and to the Cambridgeshire officers who were to make the arrests, constituted reasonable grounds for suspecting the involvement of the two in the credit card fraud. And we can see no basis for rejecting the judge's conclusion that they did not know or believe, when making the arrest, that there was no possibility of charges for those offences following."
Auld LJ then moved on to consider collateral purpose.
"If the arrests had been unlawful because of the ulterior motive of the senior officers, those officers would have been liable for the tort and perhaps the crime of false imprisonment but the arresting officers would not."
It was in that context that the reference to the other officers and to the "corporate mind" was made. In the event, the Court of Appeal said (again, obiter) that the other officers did not act unlawfully either.
The Challenge to The Search Warrants
i) The preconditions of section 8(1)(a), (d) and (e) were not satisfied, i.e. at the relevant time, there were no reasonable grounds for suspecting that an indictable offence had been committed, or for believing that the material sought was likely to be relevant evidence and did not include legally privileged and special procedure material.
ii) Contrary to section 15(6)(b), the warrants failed to specify, so far as practicable, the articles to be sought.
iii) Furthermore, contrary to section 16(8), the searches of the premises then exceeded the extent required for the purpose for which the warrants were issued, by the officers (a) searching for and seizing articles outside the scope of the warrant, e.g. jewellery from the Claimant's homes; and (b) extending to searching for appropriate places to install the surveillance devices in Kanta House, and then installing them.
i) On an application for a search warrant, the court is not simply reviewing the reasonableness of the decision of the constable that the statutory criteria are met: before a warrant is issued, the court itself must be satisfied that the statutory requirements have been established. That is clear from the wording of section 8 itself, but was confirmed in R (Bright) v Central Criminal Court  1 WLR 662 at page 677 per Judge LJ and regularly since.
ii) The court itself must therefore be satisfied that there are reasonable grounds for believing that (a) an offence has been committed, (b) there is material on the relevant premises which is likely to be of substantial value to the investigation of the offence, and (c) the material is likely to be relevant evidence etc. That requires "careful consideration and rigorous and critical analysis by the [court]" (Tchenguiz at ), which involves particularly "detailed, anxious and intense scrutiny" in cases with a complex background such as those involving financial markets (Tchenguiz at ).
iii) The applicant therefore has a duty to put before the court the necessary material to enable the court to satisfy itself that the statutory conditions for the warrant are met.
iv) However, that is not the full extent of the applicant's duty. When applications are made without notice – particularly those that involve the potentially serious infringement of the liberty and rights of the subject, inherent in the grant and execution of a warrant to search and seize – there is a duty of candour. There must be full and accurate disclosure to the court, including disclosure of anything that might militate against the grant (Energy Financing Team Limited v The Director of the Serious Fraud Office  EWHC 1626 (Admin) ("Energy Financing"); see also, to the same effect, Golfrate at  per Lord Thomas). In Golfrate (at ), Lord Thomas quoted with approval from  of the judgment of Hughes LJ (as he then was) in In re Stanford International Bank Limited  EWCA Civ 137 ("Stanford") (at ), a case concerning a restraint order in support of confiscation proceedings under section 42-47 of POCA, that full paragraph reading as follows:
"… [It] is essential that the duty of candour laid upon any applicant for an order without notice is fully understood and complied with. It is not limited to an obligation not to misrepresent. It consists in a duty to consider what any other interested person would, if present, wish to adduce by way of fact, or to say in answer to the application, and to place that material before the judge. That duty applies to an applicant for a restraint order under POCA in exactly the same way as to any other applicant for an order without notice. Even in relatively small value cases, the potential of a restraint order to disrupt other commercial or personal dealings is considerable. The prosecutor may believe that the defendant is a criminal, and he may turn out to be right, but that has yet to be proved. An application for a restraint order is emphatically not a routine matter of form, with the expectation that it will routinely be granted. The fact that the initial application is likely to be forced into a busy list, with very limited time for the judge to deal with it, is a yet further reason for the obligation of disclosure to be taken very seriously. In effect a prosecutor seeking an ex parte order must put on his defence hat and ask himself what, if he were representing the defendant or a third party with a relevant interest, he would be saying to the judge, and, having answered that question, that is what he must tell the judge. This application is a clear example of the duty either being ignored, or at least simply not being understood. This application came close to being treated as routine and to taking the court for granted. It may well not be the only example."
Those comments apply equally to the duty of an applicant for a search warrant. That obligation was described by the President in Tchenguiz (at ) as "a very heavy duty… to ensure that what is put before the [court] is clear and comprehensive so that the [court] can rely on it and form [its] judgment on the basis of a presentation in which [it] has complete trust and confidence as to its accuracy and completeness". The duty extends to all known information that may be material to the court's decision, i.e. that might affect the court's decision. In a case involving complex financial matters, that presentation requires particular skill and experience (Tchenguiz at ). Legal advice should be sought at an appropriate level in every case of financial complexity (Golfrate at ).
v) The written application should be comprehensive. If an applicant supplements the written application orally – for example, in response to questions from the court – then the proceedings should be tape-recorded or, if that facility is not available, the party applying for the warrant should take a note and submit it to the court for approval (Energy Financing at [24(7)]).
"If and to the extent that it is not well-known and understood by police officers seeking orders such as those sought in this case, it is time that the message was brought home clearly to applicants…".
That judgment was handed down on 25 March 2014 – well before the applications were made in this case. Since that judgment, we understand from Mr Bird that other investigating authorities have taken steps to ensure that their practice complies with the principles set out so clearly in Tchenguiz.
i) Section 8 search warrant applications have to be made to a magistrate; but Crown Court judges have the powers of a magistrate, and section 8 applications in complex cases are regularly made to a circuit judge. No thought appears to have been given to whether the section 8 applications in this case would have been better made to the Crown Court; although other applications that were a necessary part of the plan (e.g. for the production orders) had to be made to the Crown Court in any event, and the search warrant applications could have been made at the same time. However, if, as the NCA believed, the court had no substantive part to play in issuing search warrants, then the constitution of the court to which the applications were made would not matter – because the court itself would not be required to make any value judgment.
ii) It explains why the material submitted to the magistrates was couched in terms of the asserted existence of reasonable grounds for suspecting an offence had been committed, and that the material sought (i.e. as evidence of money laundering) was relevant, rather than including evidence sufficient to justify a conclusion by the magistrates that reasonable grounds existed. The NCA's Amended Detailed Grounds of Resistance concede those deficiencies in the applications, so that the warrants that resulted were inevitably unlawful (paragraph 57(a) and (b)).
iii) It explains why, contrary to the requirements of section 15(2)(a) and (6)(b), the application (and, thus in their turn, the warrants) failed to identify, so far as practicable, the material/items sought and failing to give greater particularity with regard to the persons, dates and transactions known to the investigators. Again, the NCA concedes those deficiencies (paragraph 57(c) of its Amended Detailed Grounds of Resistance).
iv) It explains why (a) the material sought in the application and warrant ("evidence of money laundering", including mobile communication devices), widely as it was described, did not cover all of the material that Mr Hickman wished to search for and seize – he wished to seize any high value items such as jewellery (see paragraph 62-65 of his first statement); and (b) Appendix 9 to the operation order (which set out a list of the material to be searched for and seized: see paragraph 56(iv) above) included items outside the scope of the warrant, such as "diamonds", "high value items – jewlry [sic] Etc" and "Documentation relating to business, properties and vehicles" unrestricted to "evidence of money laundering". That order was prepared without reference to the wording of the warrants (paragraph 62 of Mr Hickman's first statement), apparently because he failed to appreciate the importance of the warrants. The operating order instructed the officers engaged in the search to seize these items. Although it said that the list was not prescriptive and what was in fact seized relied upon "the officer's initiative", of course many of the officers were not experienced and about a third were only trainees. In any event, none of the officers engaged in the operation (including those who were engaged on the search and seizure) appear to have considered themselves in any way restricted by the terms of the warrant, and thus, in breach of section 16(8) of PACE, seized material/items clearly outside the scope of the warrant. That breach, too, is accepted by the NCA (paragraph 57(d) of the NCA's Amended Detailed Grounds of Resistance).
v) Mr Bird said that it explains why (e.g.) the applications for the warrants referred to drugs and firearm offences, although there was no evidence that the Claimants had been involved in any such offences.
"I had no interest in any litigation from 2006 and did not seek to retrieve material from such a case. The inclusion of HMRC staff was meant to further minimise the disruption at Kanta House as they could quickly identify material that was potentially evidence of this offence [presumably, the money laundering offence], thus leaving other non-relevant material in place."
i) The basis for the NCA's contention that the preconditions of section 8(1)(a), (d) and (e) was not set out in the application: see paragraph 103(i) above.
ii) Contrary to section 15(6)(b), the warrants failed to specify, so far as practicable, the articles to be sought: see paragraph 103(ii) above.
iii) Contrary to section 16(8), the searches of the premises then exceeded the extent required for the purpose for which the warrants were issued, by the officers searching for and seizing articles outside the scope of the warrant, e.g. jewellery from the Claimant's homes: see paragraph 103(iii) above.
i) The NCA had authorisation from the Surveillance Commissioner to install the devices.
ii) The dominant purpose for obtaining the search warrants was to search the relevant premises (including Kanta House) and seize material relevant to the investigation. The search warrants were obtained prior to the surveillance device authorisation, and, even if that authorisation had been refused, the search warrants would still have been executed.
iii) In the event, one hundred officers were involved in the searches, and they removed van loads of material. The evidence is that the surveillance devices were installed by about 7pm on 28 January, but the search and seizure exercise went on until the early hours of the next morning. The search warrants were clearly not sham.
(1) This section applies where anything has been seized in exercise, or purported exercise, of a relevant power of seizure.
(2) Any person with a relevant interest in the seized property may apply to the appropriate judicial authority, on one or more of the grounds mentioned in subsection (3), for the return of the whole or a part of the seized property.
(3) Those grounds are –
(a) that there was no power to make the seizure;
(b) that the seized property is or contains an item subject to legal privilege that is not comprised in property falling within section 54(2);
(c) that the seized property is or contains any excluded material or special procedure material…
(4) Subject to subsection (6), the appropriate judicial authority, on an application under subsection (2), shall—
(a) if satisfied as to any of the matters mentioned in subsection (3), order the return of so much of the seized property as is property in relation to which the authority is so satisfied; and
(b) to the extent that that authority is not so satisfied, dismiss the application.
(5) The appropriate judicial authority –
(a) on an application under subsection (2),
(b) on an application made by the person for the time being having possession of anything in consequence of its seizure under a relevant power of seizure…
may give such directions as the authority thinks fit as to the examination, retention, separation or return of the whole or any part of the seized property.
(6) On any application under this section, the appropriate judicial authority may authorise the retention of any property which –
(a) has been seized in exercise, or purported exercise, of a relevant power of seizure, and
(b) would otherwise fall to be returned,
if that authority is satisfied that the retention of the property is justified on grounds falling within subsection (7).
(7) Those grounds are that (if the property were returned) it would immediately become appropriate—
(a) to issue, on the application of the person who is in possession of the property at the time of the application under this section, a warrant in pursuance of which, or of the exercise of which, it would be lawful to seize the property; or
(8) Where any property which has been seized in exercise, or purported exercise, of a relevant power of seizure has parts ("part A" and "part B") comprised in it such that –
(a) it would be inappropriate, if the property were returned, to take any action such as is mentioned in subsection (7) in relation to part A,
(b) it would (or would but for the facts mentioned in paragraph (a)) be appropriate, if the property were returned, to take such action in relation to part B, and
(c) in all the circumstances, it is not reasonably practicable to separate part A from part B without prejudicing the use of part B for purposes for which it is lawful to use property seized under the power in question,
the facts mentioned in paragraph (a) shall not be taken into account by the appropriate judicial authority in deciding whether the retention of the property is justified on grounds falling within subsection (7)…".
i) The "appropriate judicial authority" is a judge of the Crown Court (section 64(2)).
ii) Section 59(6) only comes into play in circumstances in which the issue or execution of a warrant is unlawful. This court differently constituted held in R (Panesar) v Central Criminal Court  EWHC 2821 (Admin) that, when a warrant is held to have been unlawful, section 59 still applies to give the Crown Court jurisdiction to consider an application to retain. Although an application to appeal that decision to the Supreme Court is pending, for the purposes of this claim Mr Jones rightly conceded that jurisdictional point.
iii) In those circumstances, the Crown Court has a discretion to authorise the retention of the material seized, despite the unlawfulness of the search, if, were the material to be returned, it would be immediately appropriate to issue a warrant under which it would be lawful to seize the property. The Crown Court therefore has to consider whether it would grant a (notional) application for a warrant, in those circumstances.
"Criminal litigation is not, however, a game. Although the police (or in this case SOCA) cannot escape the consequence of the illegality of the warrant, there is no reason why they should be placed in a worse position than if the warrant had never been sought or, conversely, why those, the subject of a warrant, (even if unlawful) should be in a better position to protect themselves from prosecution for unlawful conduct."
i) In the normal course, where material has been obtained as a result of an unlawful search and the agency seizing it wishes to retain it, the appropriate procedure is for the agency to make an application to the Crown Court under section 59. For the purposes of that application, the agency will have the benefit of considering the seized documents, and making submissions with that benefit.
ii) On a section 59 application, the court will be astute to examine the circumstances surrounding the illegal seizure. Any suggestion of bad faith, or even that the agency has adopted a less than rigorous and scrupulous approach to drawing up and executing the initial warrant, will weigh heavily against the exercise of the court's discretion in favour of authorising retention (R (El-Kurd) v Winchester Crown Court  EWHC 1853 (Admin) at  per Stadlen J). The circumstances may have been such that it will be open to the Crown Court to refuse the application as a whole.
iii) The Administrative Court will exercise restraint in ordering the return of such documents. Parliament has assigned responsibility for determining issues of retention to the Crown Court; and the Crown Court will have the advantage of being able to consider the documents seized, which this court will not.
iv) However, there may be circumstances in which it is appropriate to deny the agency of all benefit of the illegal search, irrespective of the nature and content of the documents seized. Those circumstances are likely to focus on the agency's own conduct. If it has acted in bad faith, that is likely to be a compelling reason for not allowing it to retain any benefit from the exercise. However, bad faith is not a prerequisite: the agency's conduct in obtaining and/or executing the warrant (or their subsequent conduct, as in Kouyoumjian) may drive this court to give the subjects of the warrants relief to deny the agency of all benefit of the unlawful search. I stress that the circumstances in which the court is likely to make such a finding will be rare.
Lord Justice Davis :