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Cite as: [2016] EWHC 2039 (Admin)

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		Neutral Citation Number: [2016] EWHC 2039 (Admin)
		Case No: CO/2345/2015 and CO/3599/2016

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

Royal Courts of Justice
Strand, London, WC2A 2LL

05/08/2016

B e f o r e :

THE HON. MR JUSTICE CRANSTON
____________________

Between:

	C	Appellant
	- and -
	HM TREASURY	Respondent

____________________

Steven Powles and Megan Hirst (instructed by Ahmed & Co) for the Appellant
Steven Kovats QC and Steven Gray (instructed by the Government Legal Department) for the Respondent
Peter Carter QC (instructed by the Special Advocate Support Office) as Special Advocate

Hearing dates: 19 July, 20 July and 21 July 2016
____________________

HTML VERSION OF JUDGMENT APPROVED
____________________

See Orders

Mr Justice Cranston:

Introduction

The appellant appeals under section 26 of the Terrorist Asset-Freezing etc. Act 2010 ("the 2010 Act") against his original and his renewed designation. In February 2015 the appellant was designated pursuant to section 2 of the 2010 Act, and the designation was renewed on 11 February 2016 under section 4. It is convenient to consider both appeals alongside each other. The effect of the appellant's designation is that he is prohibited from dealing with his funds and economic resources, unless an exemption applies or where a licence has been granted by HM Treasury ("the Treasury"). Moreover, without a licence others are prohibited from dealing with him as regards financial matters. Apparently this is the first occasion on which a court has fully considered the Treasury's decision to designate.

The Treasury's case is based on the appellant's relationship with the organisation Al-Muhajiroun. It was founded in 1996 by Omar Bakri Muhammad, who was excluded from the UK and is now in Lebanon. Following this, Anjem Choudary, the appellant's brother, became the leader of ALM in the UK. ALM reformed in 2004 under the names Al-Ghurabaa and The Saved Sect, and in 2006 these were proscribed under the Terrorism Act 2000 ("the 2000 Act") on the basis of their promoting terrorism: 2006 SI No 2016. In 2010, 2011 and 2014 the Home Secretary laid further proscription orders against other organisations treated as alternative names for ALM: see 2010 SI No 34; 2011 SI No 2688; 2014 SI No 7612. All are covered by the term "ALM" in this judgment. Since 2014 the severity of the threat posed by ALM is assessed to have increased because of an oath of allegiance to the Islamic State of Iraq and the Levant ("ISIL") signed by Bakri, Anjem Choudary and others.

Although not considered a member of ALM, the basis for freezing the appellant's assets is that he was providing funds to ALM through employing its members in one of his businesses, which he was cross-subsidising, and allowing it to use one of his premises, 32 New Road, as its de facto headquarters, before it moved to other premises in East London, unconnected with him, in January 2015. In summary, the appellant contends (1) that the disclosed material is insufficient to support a reasonable belief that he is or has been involved in supporting ALM; and (2) that his designation is unnecessary, disproportionate, and in violation of his rights under Article 8 of the European Convention on Human Rights ("the Convention") and Article 1 of the First Protocol to the Convention.

There was open and closed material and I heard evidence and submissions in open and closed sessions during the course of the hearing. At the hearing, there was no outstanding argument by the special advocate in relation to disclosure of material from closed to open. In my view, the case can be decided without reference to the closed material and there is no need for any separate judgment apart from this one.

Legal framework

The Treasury's power of designation is contained in section 2 of the 2010 Act. So far as relevant to this case it provides as follows:

"(1) The Treasury may make a final designation of a person for the purposes of this Part if –

(a) they reasonably believe –

(i) that the person is or has been involved in terrorist activity,

…

(b) they consider that it is necessary for purposes connected with protecting members of the public from terrorism that financial restrictions should be applied in relation to the person.

(2) For this purpose involvement in terrorist activity is any one or more of the following –

…

(b) conduct that facilitates the commission, preparation or instigation of such acts, or that is intended to do so;

(c) conduct that gives support or assistance to persons who are known or believed by the person concerned to be involved in conduct falling within paragraph (a) or (b) of this subsection.

(3) It is immaterial whether the acts of terrorism in question are specific acts of terrorism or acts of terrorism generally.

(4) In this section –

"terrorism" has the same meaning as in the Terrorism Act 2000 (see section 1(1) to (4) of that Act);

and the reference in subsection (1)(b) above to financial restrictions includes a reference to restrictions relating to economic resources."

Thus there are three components to the Treasury making a final designation under section 2 of the 2010 Act: it must reasonably believe that the person is or has been involved in terrorist activity; it must consider that it is necessary for purposes connected with protecting members of the public from terrorism that financial restrictions should be applied to the person; and if both of these threshold criteria are met, it may decide to designate (it has a power but not a duty).

The concept of reasonable belief that an individual is, or has been, involved in terrorist activity, set out in section 2(1)(a)(i) of the 2010 Act, occurs as well in section 3(1) of Terrorism Prevention and Investigation Measures Act 2011 ("the TPIM Act" or "the 2011 Act"). In considering the latter section in Secretary of State for the Home Department v. CC and CF [2012] EWHC 2837 (Admin), [2013] 1 WLR 2171, Lloyd Jones LJ referred at paragraph [24] to the well known dictum of Laws LJ in A v. Secretary of State for the Home Department [2004] EWCA Civ 1123, [2005] 1 WLR 414 at paragraph [229]: "Belief is a state of mind by which the person in question thinks that X is the case. Suspicion is a state of mind by which the person in question thinks that X may be the case". Invoking the analysis of Neuberger LJ in A v. Secretary of State for the Home Department, and of Collins J in Secretary of State for Home Department v. BM [2012] EWHC 714 (Admin), Lloyd Jones LJ held that the standard of reasonable belief does not require proof of underlying facts to the standard of the balance of probabilities; it does not import any requirement of proof of involvement in any specific terrorist related activity to any higher standard than that which can properly give rise to a reasonable belief: [27]-[29] (appealed, but not on this point: [2014] EWCA Civ 559, [2014] 1 WLR 4240).

As to the requirement in section 2(1)(b) of the 2010 Act of the necessity of financial restrictions, guidance again comes from case-law considering other terrorism legislation. In giving the judgment of the Court of Appeal in Secretary of State for the Home Department v. MB [2006] EWCA Civ 1140, [2007] QB 415, a control order case, Lord Phillips CJ said:

"63 Whether it is necessary to impose any particular obligation on an individual in order to protect the public from the risk of terrorism involves the customary test of proportionality. The object of the obligations is to control the activities of the individual so as to reduce the risk that he will take part in any terrorism-related activity. The obligations that it is necessary to impose may depend upon the nature of the involvement in terrorism-related activities of which he is suspected. They may also depend upon the resources available to the Secretary of State and the demands on those resources. They may depend on arrangements that are in place, or that can be put in place, for surveillance.

64 The Secretary of State is better placed than the court to decide the measures that are necessary to protect the public against the activities of a terrorist suspect and, for this reason, a degree of deference must be paid to the decisions taken by the Secretary of State…

65 Notwithstanding such deference there will be scope for the court to give intense scrutiny to the necessity for each of the obligations imposed on an individual under a control order, and it must do so. The exercise has something in common with the familiar one of fixing conditions of bail. Some obligations may be particularly onerous or intrusive and, in such cases, the court should explore alternative means of achieving the same result."

Thus, what could be called the plain need for measure must be considered in context and in light of proportionality.

In CF v. Secretary of State for the Home Department [2013] EWHC 843 (Admin) Wilkie J considered the necessity and proportionality of various restrictions imposed under a TPIM notice on a person suspected of terrorism-related offences. After referring to the previous case law, he drew from it three principles: first, the graver the impact of the measure, the more compelling the justification needed and the greater care with which it must be examined; secondly, necessity is not to be equated with useful, reasonable or desirable; and thirdly, each measure has to be individually examined and the court will not too readily accept claims to be deferential bearing in mind that the Secretary of State will not have heard or read all the evidence before the court: [25]-[26]. Silber J adopted this analysis at paragraphs [11]-[13] of BF v. Secretary of State for the Home Department [2013] EWHC 2329 (Admin), another TPIM case.

In section 1 of the 2000 Act, terrorism is defined as follows:

"(1) In this Act "terrorism" means the use or threat of action where –

(a) the action falls within subsection (2),

(b) the use or threat is designed to influence the government or an international governmental organisation or to intimidate the public or a section of the public, and

(c) the use or threat is made for the purpose of advancing a political, religious, racial or ideological cause.

(2) Action falls within this subsection if it –

(a) involves serious violence against a person,

(b) involves serious damage to property,

(c) endangers a person's life, other than that of the person committing the action,

(d) creates a serious risk to the health or safety of the public or a section of the public, or

(e) is designed seriously to interfere with or seriously to disrupt an electronic system.

(3) The use or threat of action falling within subsection (2) which involves the use of firearms or explosives is terrorism whether or not subsection (1)(b) is satisfied.

(4) In this section—

(a) "action" includes action outside the United Kingdom,

(b) a reference to any person or to property is a reference to any person, or to property, wherever situated,

(c) a reference to the public includes a reference to the public of a country other than the United Kingdom, and

(d) "the government" means the government of the United Kingdom, of a Part of the United Kingdom or of a country other than the United Kingdom.

(5) In this Act a reference to action taken for the purposes of terrorism includes a reference to action taken for the benefit of a proscribed organisation."

Section 3 of the 2000 Act sets out the circumstance in which an organisation may be proscribed.

A final designation expires at the end of the period of one year beginning with the date on which it is made, unless it is renewed. The Treasury are permitted to renew a final designation at any time before it expires if the requirements in section 2(1)(a) and (b) continue to be met: section 4.

The consequences of designation are dealt with in Chapter 2 of the 2010 Act. There are prohibitions on dealing with funds or economic resources owned, held or controlled by designated persons and on making funds, financial services or economic resources available to them or for their benefit: sections 11-16. These prohibitions do not apply to anything done under the authority of a licence granted by the Treasury: section 17.

There is a right to appeal a decision of the Treasury to make a final designation in section 26 of the 2010 Act. As far as relevant, it reads:

"(1) This section applies to any decision of the Treasury –

(a) to make or vary an interim or final designation of a person,

(b) to renew a final designation of a person…

(2) The designated person concerned may appeal against any such decision to the High Court…

(3) On such an appeal, the court may make such order as it considers appropriate."

Thus a court could find that a final designation was rightly made but should later have been revoked and could, depending on what the appellant was appealing against, allow the appeal in part. In my view the scheme of the legislation is such that there is a need separately to appeal a decision to renew a designation even if there is a previous, extant appeal of the original designation. An appeal under section 26 does not suspend the effect of the decision: section 26(4).

The Treasury contends that the limited duration of a designation, and the fact that each renewal attracts a separate right of appeal, means that the focus must be on the situation at the time of designation or its renewal. After all, Parliament has conferred on the Treasury the power to make the decision, indeed a discretion not to make an order even if its view is that the threshold conditions of reasonable belief and necessity are met. In my view, however, an appeal pursuant to section 26 of the 2010 Act requires consideration of whether the requisite conditions were met both at the time of designation and at the time of the appeal hearing. That position is borne out by the wide order-making power of the court in section 26(3) and the fact that both parties may adduce evidence on appeal which may not have been before the Treasury in the decision to designate.

Section 27 provides for the review of decisions of the Treasury other than a decision to which section 26 applies. Section 27(2) states that any person affected by a decision to which the section applies may apply to the High Court for the decision to be set aside.

As regards the disclosure of information in appeal proceedings under section 26, section 28(4) applies sections 66 to 68 of the Counter-Terrorism Act 2008. Insofar as relevant, section 66 states:

"(2) A person making rules of court must have regard to –

(a) the need to secure that the decisions that are the subject of the proceedings are properly reviewed; and

(b) the need to secure that disclosures of information are not made where they would be contrary to the public interest…

(4) Rules of court may make provision –

(a) enabling the proceedings to take place without full particulars of the reasons for the decisions to which the proceedings relate being given to a party to the proceedings (or to any legal representative of that party);

(b) enabling the court to conduct proceedings in the absence of any person, including a party to the proceedings (or any legal representative of that party)…"

Section 67 provides, inter alia:

"(2) Rules of court must secure that the Treasury are required to disclose –

(a) material on which they rely;

(b) material which adversely affects their case; and

(c) material which supports the case of a party to the proceedings.

This is subject to the following provisions of this section.

(3) Rules of court must secure –

(a) that the Treasury have the opportunity to make an application to the court for permission not to disclose material otherwise than to –

(i) the court; and

(ii) any person appointed as a special advocate;

(b) that such an application is always considered in the absence of every party to the proceedings (and every party's legal representative);

(c) that the court is required to give permission for material not to be disclosed if it considers that the disclosure of the material would be contrary to the public interest;

(d) that, if permission is given by the court not to disclose material, it must consider requiring the Treasury to provide a summary of the material to every party to the proceedings (and every party's legal representative); and

(e) that the court is required to ensure that such a summary does not contain material the disclosure of which would be contrary to the public interest.

…

(6) Nothing in this section, or in rules of court made under it, is to be read as requiring the court to act in a manner inconsistent with Article 6 of the Human Rights Convention."

The procedural rules applicable under section 26 of the 2010 Act are set out in CPR, Part 79, section III. They provide for a closed material procedure with the involvement of special advocates. For this reason, CPR 79.2 modifies the overriding objective.

"79.2 (1) Where this Part applies, the overriding objective in Part 1, and so far as relevant any other rule, must be read and given effect in a way which is compatible with the duty set out in paragraph (2).

(2) The court will ensure that information is not disclosed contrary to the public interest.

(3) Without prejudice to paragraph (2), the court will satisfy itself that the material available to it enables it properly to determine the proceedings."

Where the Treasury seek to withhold disclosure of any closed material from an appellant and the appellant's legal representative, the procedure to be followed is set out in CPR 79.25. Under CPR 79.26, the court fixes a hearing for the Treasury and the special advocates to make oral representations unless, amongst other reasons, the latter gives notice to the court that they do not challenge the application. CPR 79.26(5) and (6) require the court to permit the Treasury to withhold closed material where its disclosure would be contrary to the public interest.

The evidence

As well as the documentary evidence, there was oral evidence during the hearing from the appellant and his accountant, Mr Giuseppe Colombi, and from three witnesses called by the Treasury, Mr Peter Maydon, head of the Treasury's sanctions and counter-terrorist financing unit; Detective Sergeant Ian Collins of the Metropolitan Police, currently with the national terrorist financial investigation unit ("NTFIU"); and JA, a member of the Security Service.

Mr Kovats QC for the Treasury submitted that I should hear the appellant's evidence first. Although conceding that the 2010 Act and CPR, Part 79, do not provide expressly for the matter, he contended that the statutory language clearly indicated that this was an appeal by a designated person whose assets had been frozen and, as with any appeal, it was for the appellant to make the case. He drew some support from the wording of section 27(3), which means that the designated person has to make the case in seeking a review of decisions other than those which can be appealed under section 26. Mr Powles, for the appellant, submitted the Treasury had the burden and drew a contrast with the position under the TPIM Act 2011, where in general the court gives prior permission for the making of an order and that is followed by a directions and a review hearing: sections 6, 8-9.

In my judgment, while under section 26 a designated person is appealing the freeze order, it is an appeal where the Treasury is in reality seeking to uphold an order it has made without any prior judicial involvement. Section 27(3) throws no light on the issue: it is concerned with situations where, say, there is an application for a licence so a bank can deal with the designated person's assets once the assets have been frozen. Placing the burden on the Treasury at the hearing simply continues what, under the standard directions order, has occurred when an appeal is initiated: the Treasury produces its reasons and evidence, and the appellant follows with his. The standard directions are annexed to this judgment. In other words the burden in a section 26 appeal is, in my judgment, on the Treasury to justify to the court the order it has made.

The appellant objected to the late service of a second report by Mr Warren Gordon, a forensic accountant working for the Metropolitan Police ("the Gordon report"). The appellant contended that there was not sufficient time to assess the evidence and that he would want to engage his own forensic accountant to prepare a report. In effect, the report confirms the Treasury's case, already known to the appellant. It is also backed by the objective evidence of over one hundred exhibits. I admitted the report. At the hearing the appellant accepted the parts of the report put to him.

In turn the Treasury objected to the late service of a psychiatric report about the appellant relevant to the impact of the designation on him. I admitted the report as supplementary to the evidence already given by the appellant and his wife as to the adverse financial and social effects which designation has had on the appellant and his family.

Appellant's businesses

The appellant's evidence was that, after reading chemistry at the University of Leeds, he decided to pursue a career in accounting. He progressed to becoming a financial accountant at Kingston University and studied to become a certified accountant. He began a computer training company in 2000 and Best Training Solutions Ltd ("Best Training") began trading in 2001 in Whitechapel Road, East London. It received government grants to provide persons with basic skills for employment. It became very successful and was one of the largest training providers in London with four main branches, over ten partnerships in libraries and community centres and a presence in twenty Job Centres. At its peak it had a turnover of £1.4million and employed on average 40 persons.

After the appellant's arrest on 25 September 2014, the Skills Funding Council removed Best Training from the register as a learning provider, its accreditations with awarding bodies were suspended, government payments ceased and its computers and electronic devices seized for the police investigation. Government funding accounted for 95 percent of its turnover. The appellant states that he had no alternative but to suspend its operations and terminate the contracts of its staff.

Master Printers Ltd ("Master Printers") was incorporated as Best Training (UK) Limited on 28 January 2009 and changed its name a year later, on 24 February 2010. The appellant's evidence was that the idea behind Master Printers was to undertake printing work for Best Training rather than having to pay for work to be outsourced. Master Printers was initially at 32 New Road, East London, but lack of space there led it to move to 113 Chapman Street, which was rented from 14 April 2011. In March 2012 the police searched Master Printer's premises and arrested the appellant and his brother, Anjem. It was alleged that the brother was using the premises to forge travel tickets. After twelve months the appellant was informed that no charges would be brought. As a result of the police search, Master Printers' printing presses were seized. The appellant's evidence was that he had no choice but to close the business. On 9 March 2012, Companies House issued a first warning letter in respect of an outstanding annual return. A second warning letter followed on 29 May 2012. Companies House dissolved Master Printers on 11 September 2012.

Yummy Sweets Ltd ("Yummy Sweets") was incorporated on 19 May 2011 as Islamic Toys Limited and changed its name on 4 November 2011. It operated at 32 New Road, two other premises in the East End of London and online. The appellant's evidence was that after Master Printers moved from 32 New Road he explored various business ventures. Finally, he established this business when he read that old-fashioned sweet shops were closing down, providing a market opportunity, and also to sell halal sweets. After considerable effort and expenditure he developed a halal chocolate bar. Because of the media publicity which 32 New Road attracted (see below), the business was affected. In May 2014, Yummy Sweets was offered for sale but no buyer was found.

In his report, Mr Gordon opined that the nature of the material provided to him lead him to conclude that Master Printers and Yummy Sweets were not well-run businesses. There was a lack of adequate records, borne out by the number of queries raised by Best Choice Accountancy when preparing the VAT returns and financial statements. There were gaps in the sales records, which had led to sales for some periods having to be estimated. There were no reconciliations for the wages, PAYE and national insurance transactions or VAT. As regards Yummy Sweets, it made standard-rated and zero-rated supplies for VAT purposes. The most efficient method to account for the different supplies would have been to use different codes on a cash till when making the sales. Instead, the company kept a record of only one takings amount and the split between standard and zero-rated sales was made using complex calculations based on purchases and the number of slices sold by type of cake. The appellant emphatically rejected Mr Gordon's suggestion that the businesses were not well run.

The appellant accepted evidence about the accounts of his companies contained in the Gordon report. That evidence was as follows:

a) Best Training: Sales increased from £503,438 in 2009 to a maximum of £1,374,589 in 2011. They then decreased to £411,922 in 2015. Profits before management charges increased from £118,788 in 2009 to a maximum of £369,050 in 2011, decreasing to a loss of £33,668 in 2015.

b) Master Printers: There were no sales for Master Printers for the period ending 28 February 2010, resulting in a loss of £11,198. The first sales for Master Printers were for the quarter ending 30 November 2010. Sales for the year ending 28 February 2011 were £14,729. Wages were £48,334 and other costs £50,941, resulting in a loss before management charges of £84,546. Sales for the year ending 28 February 2012 were £50,003. Wages were £50,357 and other costs were £105,443, resulting in a loss before management charges of £105,797.

c) Yummy Sweets: Its first cash banking occurred on 20 December 2011. Sales for the period ending 31 May 2012 were £35,040, gross profit was £23,039, director's salary (paid to the appellant's sister) was £1,500, wages were £14,241 and other costs were £40,401, resulting in a loss of £33,103. Sales for the year ended 31 May 2013 were £72,403, gross profit was £16,416, wages were £78,067, other costs were £44,621, resulting in a loss before management charges of £106,272. Sales for the year ending 31 May 2014 were £47,514, gross profit was £20,924, wages were £55,216, other costs were £82,462, resulting in a loss before management charges of £116,754. Sales for the year ending 31 May 2015 were £3,963, gross profit was £152, wages were £13,010, other costs were £29,819, resulting in a loss of £42,677.

Overall, Mr Gordon's analysis of the financial statements showed total losses for Master Printers of £201,541 and total losses for Yummy Sweets of £298,806. Master Printers received a total of £278,715.10 from Best Training and a further £82,707.70 from the appellant, a sum greater than its total sales of £64,732. Yummy Sweets received a total of £169,900.00 from Best Training, a sum greater than its total sales of £158,920. In other words, the total received by the two businesses from Best Training and the appellant himself was £531,322.80. Mr Gordon opined that neither company would have been able to commence or to continue to operate without that support. He also noted that Best Training and the appellant paid third parties directly on behalf of Master Printers and Yummy Sweets but was unable to determine the total for these payments due to the deficiencies in the record keeping and the method of preparation of the financial statements.

The issue of management charges arose in this way. The financial statements for Best Training included management charges as an expense in the years ending 28 February 2011 to 28 February 2015. In total these amounted to £693,663. The management charges were included as income in the financial statements of Master Printers and Yummy Sweets. The result was to turn the losses of those two companies into profits. In his report, Mr Gordon stated that he had not discovered any commercial basis for these charges.

The appellant's accountant, Mr Colombi of Best Choice Accountants, gave evidence. He is based in Italy but has part-time staff here. He met the appellant in 2009 through a manager of National Westminster Bank. The appellant was unhappy with his existing accountant. The idea of the management charges was to reduce the large tax liability of Best Training and to account for the time the appellant was spending with Master Printers and later Yummy Sweets. Mr Colombi said that he had to do what the client had suggested. With hindsight he might have approached the matter differently but at the time he thought that there was a genuine commercial basis for doing what was done. He could not advise on group relief. He was not the companies' auditors. It was offensive to suggest that the management charges were to fund terrorism and start up companies were often unprofitable. These new businesses were to diversify away from Best Training, so heavily dependent on government contracts.

In his evidence the appellant accepted that both Master Printers and Yummy Sweets would not have been able to commence or continue to operate without support from Best Training and his own financial contribution. After the raid on Master Printers in 2012 he had to draw on his savings to contribute to the businesses. The support from Best Training and himself for Master Printers and Yummy Sweets was not unusual. New businesses in their earlier years would usually be making losses until on their feet and would need the support of those behind them. The appellant did not know whether the Gordon report was correct as regards the need for reconciliation with Yummy Sweets. He applied the approach used in Best Training. Yummy Sweets had had a VAT inspection which did not raise issues. As to the management charges, the appellant said that this was simply a recognition that he was spending time and effort working for Master Printers and Yummy Sweets. He discussed the management charges with his accountant. What he charged for that time and effort was up to him.

32 New Road, CIS and Anjem Choudary

On 21 December 2009 the appellant entered a ten-year lease for 32 New Road, East London, through his company, Master Printers. The premises were renovated. Eventually, Yummy Sweets occupied the ground floor. The appellant's evidence was that he intended the top floors to be converted into a flat which would be rented. There was a large basement surplus to requirements and he founded the Centre for Islamic Studies ("CIS") to use it.

CIS was established, on the appellant's evidence, because as a Muslim and as an individual who had been successful he wanted to do something on a spiritual level and to give back to the local community. His intention was to have something similar to the Tayyiban Institute, also on New Road, which offered Islamic courses but charged people for them. He wanted to provide services free of charge for the community. He would also be able to refer some of those attending to Best Training for education in basic skills. So he set up the CIS in the basement in December 2009. It was widely publicised in East London.

Master Printers offered to rent the premises for a year from 1 January 2011 jointly to CIS, "a newly formed voluntary organisation", and to Manowar Ahmed, with the proposed use being to provide Islamic services including teaching and advice for the local community. On 11 September 2011 a three-year sublease was entered between Master Printers and CIS (described as being of the first and second floors, 32 New Road). Under that sublease the premises were to be used for free legal advice, family services, mother and toddler mornings, employment and career advice, and private one to one Arabic and Quranic tuition. It was signed by Abdul Odoid, the manager of Master Printers, and Abdul Muhid, on behalf of the Centre for Islamic Services. Although under the sublease CIS was to pay a monthly rent of £400, the rent was never enforced. It appears that the costs for the renovation of the premises were incorporated into the financial statements of Master Printers with a proportion of the costs in respect of the Centre for Islamic Services allocated to the appellant.

The appellant's evidence was that he was a practising Muslim but his marriage to his wife, now a GP and partner in a surgery, led to a rift with his family. Following his father's death and his performing the Hajj pilgrimage, the appellant explained that he was gradually reconciled with his family, from 2005, including his brother, Anjem. Anjem had taken a different path in developing his knowledge of Islam and proselytising. The appellant said that he paid the school fees for Anjem's children through funds paid to his sister.

The appellant's evidence was that he wanted Anjem to give lessons from 32 New Road as an Islamic scholar. He never asked Anjem about ALM and knew nothing about the oath of allegiance it gave to ISIL in 2014. He accepted that his brother's assumed name or kunya was on the oath of allegiance. He only discussed Muslim issues with his brother. He was sure that after ALM had been proscribed Anjem, as a law-abiding person, would have had nothing to do with it. Anjem conducted Sharia surgeries at the centre for married couples and the appellant would occasionally act as witness, since Best Training was nearby.

The appellant said that he would not have tolerated any sort of material which incited hatred. He had committed Best Training to a pledge organised by London Borough of Tower Hamlets to promote diversity and equality and to oppose discrimination. There was one occasion when he became aware through the press of leaflets relating to women and Sharia law placed in the shop without his authority. He was furious, had them removed and gave verbal warnings to his staff.

The appellant said that although initially he tried to attend some of the courses at the CIS to improve himself spiritually, this soon became difficult due to work pressures. The only time he would attend regularly was in Ramadan to open his fasts, and for congregational prayers on a Friday because the mosque was crowded and smelly. In effect the centre was given over to volunteers to run it for the community. The police searched the premises in November 2011 on the basis it was the ALM's headquarters. Due to adverse media attention it became more difficult for it to carry on its activities. People were disconcerted by the media and adverse publicity, which attracted members of the English Defence League, who caused disruption. It was ludicrous to say that 32 New Road was the headquarters of ALM. He provided no financial support to ALM. Activities were reduced and ultimately it was limited to Friday communal prayers. At the time of his arrest in September 2014, even the Friday prayers had been discontinued.

Because of the media attention focused on 32 New Road the appellant began thinking about relinquishing the lease from mid-2013. He recognised Yummy Sweets was not doing as well as he had hoped and he wanted to reduce overheads by carrying on the business from the other two outlets, one of which had dispensed with the name Yummy Sweets and was known as Treats Galore. There are a series of text exchanges with his landlord to this effect and a newspaper photograph from 25 September 2014 with a "For Sale" sign outside 32 New Road. DS Collins said that he was unaware of the latter. The lease to 32 New Road was eventually surrendered in 2015.

Appellant's employees, associations and demonstrations

The Treasury's case against the appellant turns in part on the appellant's engagement in his businesses of persons alleged to be associated with ALM. It was accepted that some at least had had other jobs in the past. The PAYE records for Yummy Sweets dated 5 April 2013 lists 13 names and with the exception of the appellant's sister, they are all believed to have links to ALM indeed, with the exception of only one, at the time of their employment with Yummy Sweets. The appellant's employees included the following:

Mohammed Mizanur Rahman: The Treasury's case is that he is a member of the core leadership of ALM. His name featured on the membership documents seized by police in 2003, following searches of premises linked to ALM, and there is extensive police reporting regarding his attendance at ALM demonstrations, being involved in the distribution of extremist literature and running Dawah stalls. He was convicted in 2007 of soliciting murder and a racially aggravated public order offence in relation to his participation in August 2006 in a demonstration outside the Danish embassy in London, concerning the publication of cartoons portraying the Prophet Mohammed. On appeal his sentence was reduced to four years' imprisonment, see [2008] Crim 2290. Along with Omar Bakri and the appellant's brother, he was one of the four who, in 2014, signed the ALM oath of allegiance to ISIL.

From its early days, Rahman was employed by Best Training and later Best Training, Master Printers and Yummy Sweets engaged Rahman's company. The appellant's evidence was that his was the main company used for all marketing design, website design and database management. In the appellant's opinion, Rahman was a good designer and less expensive than others. The appellant knew him only on a professional basis. He lent him money to establish a nursery but he assisted many with loans. He had no idea of how Rahman's passport happened to be at his home. The appellant had known Rahman a long time and they met for lunch or dinner about once a month to discuss business issues. He did not know of the 2007 convictions.

Abdul Muhid: The Treasury's case is that he has had a core leadership role in ALM for many years. In 2007 he was convicted of two counts of soliciting to murder following the Danish Embassy demonstration. On appeal his sentence was reduced to four years' imprisonment: [2007] EWCA Civ 2692. There is extensive police reporting of his involvement in ALM demonstrations and on Dawah stalls. The appellant's evidence was that he employed Muhid to manage Yummy Sweets at 32 New Road. He saw him often, perhaps once a month, to discuss the shop and dined with him on occasions, often to discuss work. The appellant's evidence was that he did not know of Muhid's convictions.

Mohammed Fostok: He is the son of Omar Bakri Mohammed, the head of ALM, now in Lebanon. There is extensive police information linking him to ALM demonstrations and Dawah stalls. The appellant said that he recruited him from a local company as a graphics designer and employed him over several years with Master Printers and Yummy Sweets. The appellant accepted that he is Bakri's son. He did not know that he was an ALM member when, as a proscribed organisation, it had no members as far as he knew.

Shahan Choudhury: DS Collins's evidence was that he was believed to be a member of ALM and had joined ISIL in Syria. He was employed by both Master Printers and Yummy Sweets. The appellant's evidence was that Shahan Choudhury was given warnings for under-performance as an employee. He did not know where he was or whether he had left the country.

Omar (Trevor) Brooks: The police believe him to be a senior ALM leader; there is extensive police reporting of his attendance at ALM demonstrations and on Dawah stalls. He was convicted in 2008 of terrorism offences, along with Simon Keeler, and sentenced to imprisonment. He was employed by Yummy Sweets. The appellant's evidence was that he was hardworking, did a lot of overtime. He had little to do with him and was not aware of Brooks's 2008 conviction.

Hamza Yaqub: He is believed by the police to be a senior ALM member. He is suspected of having travelled to the Middle East to join ISIL and is wanted on suspicion of having committed terrorism offences. There is extensive police information linking him to many ALM demonstrations and he is associated with a large number of known ALM members. He was employed for a time by Master Printers and Yummy Sweets. The appellant's evidence was that he had no contact with Yaqub outside his employment, did not know of Yaqub's offending, and did not know that he had left the country.

Ali Afsor: Ali Afsor is, in the opinion of the police, a member of the core ALM leadership, with extensive police information regarding his presence at ALM demonstrations and Dawah events. Police information also shows his association with many ALM members. In August 2014, he was convicted of three offences contrary to section 58 of the 2000 Act, as a result of material being found on his computer. He was employed at Master Printers and as a shop assistant at Yummy Sweets. The appellant's evidence was that he found Afsor to be an honest employee with the daily takings and that he had nothing to do with him outside work. He was not aware of the convictions.

Siddhartha Dhar: The police's view is that he has been a member of the core leadership of ALM for many years. There is extensive police reporting and footage of his attendance at demonstrations. He was convicted of a racially aggravated public order offence as a result of his anti-Semitic behaviour during an ALM demonstration in 2003. He is wanted for terrorism offences having fled the UK following his release on police bail. He apparently travelled to Syria to join ISIL. Once in Syria, he uploaded to his Twitter account a photograph of himself holding a baby and an AK-47 rifle, swearing his allegiance to ISIL. He worked for Master Printers. The appellant's evidence was that he rarely had any contact with him outside employment, although he occasionally asked him to maintain the printers at Best Training.

In addition to the appellant employing those believed to be associated with ALM, the Treasury's case was also based on his dealings with others viewed as key ALM members. Among them were the following:

Anthony Small: The police believe he was a core member of ALM through his participation over many years in ALM demonstrations. Best Training cheque books and a paying in book were found in a search of Small's house on 25 September 2014. The appellant's evidence was that he used Small as a personal trainer and to teach his children self-defence. He was shocked to learn about the cheque book and paying in book and could only think that during the police searches things had been mixed up. He had lent money to Small, but that was part of his helping people. It had never been repaid.

Simon Keeler: He is believed to be a member of the core leadership of ALM with extensive police information and footage over many years showing him involved in ALM demonstrations, Dawah activity and leaflet distribution. In 2008, he was convicted alongside Omar Brooks of offences contrary to sections 15 and 59 of the 2000 Act. Simon Keeler was employed as a builder at Yummy Sweets. The appellant's evidence was that he was not aware of his convictions.

Brusthom Ziamani: On 19 March 2015 he was sentenced to 22 years' imprisonment for preparing acts of terrorism. He was arrested by the police for possession of weapons and he was intending to commit an attack on a soldier similar to that suffered by Lee Rigby in Woolwich. During his trial he stated that he initially turned to his local mosque for support before he fell in with the Muslim group, ALM, who gave him money, clothes and a place to stay. He attended their talks in the basement of a halal sweet shop in Whitechapel and bought a black flag to take on their demonstrations. The police believe that shop was Yummy Sweets at 32 New Road. In sentencing him at the Central Criminal Court on 20 March 2015, HH Judge Pontius said that he had no doubt that he

"fell under the malign influence of [ALM] fanatics who were considerably older, and had been immersed in extremist ideology for longer than him."

The appellant's evidence was that although Ziamani may have attended courses at Best Training, he could not recall ever meeting him. Although photographed close by each other, he could not recall meeting him at the demonstration they both attended on 9 May 2014 outside the Indian High Commission.

IM: The appellant loaned him £2,000, which was not repaid, as a deposit for rent. Although he did not know him well, he had heard of his plight through his brother, Anjem. IM had a wife and several children and needed a home. The appellant's evidence was that as someone with means, he saw it as his duty to help those less fortunate in the community. He did not know that IM was now subject to a TPIM notice.

When it was put to the appellant that it could not be a coincidence that, except for his sister and one other person, all those employed at Yummy Sweets were assessed to be a member of ALM; the appellant explained that he hired by word of mouth. There were also some employees who had not been assessed as ALM members. All he was concerned with was whether they could do the job and were honest workers. (There were two text messages from late 2013 when the appellant had issued warnings to the staff of Yummy Sweets about slackness.) If he had known of the serious terrorist offences of some of them he would not have employed them. Looking back it was shocking. In his view those with minor offences should be given another chance. There was no question that those he employed were not genuinely working, and for relatively modest amounts. Maybe he was a victim of his charitable nature.

The appellant was present at least two demonstrations attended by some of these employees and associates. The first was outside the US embassy on 14 September 2012 against the release of a film entitled "Innocence of Muslims". Also at the demonstration were the appellant's brother, Anjem, Simon Keeler, Hamza Yaqub, Iqbal Hussain, Mohammed Fostok, Anthony Small, Terry Le Page, and Omar (Trevor) Brooks. The second demonstration was outside the Indian High Commission on 9 May 2014. It was attended by the appellant's brother, IM, Mohammed Fostok, Siddhartha Dhar, Abdul Muquith, Dean Le Page, brother of Terry Le Page, and Brusthom Ziamani. In one of the photographs taken on the day the appellant was in close proximity to the last three.

In one of his witness statements the appellant said that he could not recall attending the US embassy demonstration. In a later witness statement he accepted that he had attended and that he may have learnt about it through one of his employees. In cross-examination, DS Collins accepted that there was nothing unlawful about demonstrating, that being there did not necessarily mean that he was an ALM supporter and that it was difficult to say who else was at the demonstration. In his evidence the appellant said that he attended the demonstrations on his own; he felt strongly about the issues.

The appellant's designation

On 25 September 2014 search warrants were executed at various premises, including the appellant's business premises and home. Eleven persons were arrested, including the appellant, on suspicion of being a member of a proscribed organisation, supporting a proscribed organisation, and encouraging terrorism. Bail was granted.

In searching 32 New Road amongst other items the police found a list of Muslim prisoners, including some sentenced for terrorist offences, including Abdul Muhid; a sheet of paper naming Mohammed Mizanur Rahman as a student of Omar Bakri Muhammad; and an ISIL flag. The appellant denied knowledge of any of those items.

Subsequently, eight of those arrested that day, including the appellant, applied for a variation of their bail conditions at Westminster Magistrates' Court. Chief Magistrate Riddle removed some of the conditions. At one of the hearings, on 5 February 2015, the Chief Magistrate remarked that despite his comments at previous hearings, no evidence of any significance had been provided to justify the conclusion that the applicants were involved in terrorism. He added that it was not evidence against an individual to say that another individual had been charged or had left the jurisdiction for Syria. On 5 August 2015 the police informed the appellant that no further action would be taken against him in relation to the alleged offences of supporting a proscribed organisation. Only two of those arrested on 25 September 2014 were ultimately charged.

Meanwhile, on 12 February 2015, the appellant had been designated under section 2 of the 2010 Act. A meeting had taken place between Treasury officials, the police and other civil servants on 9 February 2015. It discussed a statement of case prepared by DS Collins dated 4 February 2015. The statement of case was to the effect that the appellant was believed to be responsible for providing financial support to a proscribed organisation, namely ALM.

After setting out background to the police investigation, the statement of case read that

"without financial support of [the appellant], ALM could not exist as a functioning entity."

In evidence Detective Sergeant Collins accepted that this was in error and that what should have been said was that without the appellant's support, ALM could not have functioned at 32 New Road. The statement of case also referred to the appellant receiving £10,000 from Omar Butt, an Islamic extremist in Manchester, which "shows the extent of his network". In his evidence the appellant explained this as a loan. In conclusion, the statement of case said that at that stage there were no other means of managing the risk posed in relation to the appellant's access to funds and ability to generate them.

The minutes of the 9 February meeting record that the police expected to charge the appellant with an offence of providing support to ALM as an organisation proscribed under the 2000 Act. The appellant's known links to ALM were primarily through his employment of the organisation's members and their use of his property. There was limited additional evidence showing his direct involvement with ALM. Following the meeting the police answered a number of questions raised by the Treasury.

In his evidence Mr Maydon explained that the Treasury do not themselves see the underlying evidence for a freeze order but rely on the assessment set out in NTFIU's statement of case, but the Treasury challenge what they are told. He accepted in cross examination that one of the factors in decision making is the need to maintain relations with the police but said that the Treasury would tell the police when they considered that a designation was not justified.

A recommendation to designate the appellant dated 12 February 2015 went to the relevant Minister, the Commercial Secretary of the Treasury. The submission set out the background of the appellant's businesses and property. Turning to the case for designation, it referred to the appellant facing charges under the 2000 Act and that there were no financial conditions attached to his bail. The submission stated:

"In order for the statutory test for designation to be met, evidence must demonstrate that the individual(s) is or has been involved in terrorist activity, and that the asset freeze is necessary for public protection. The case outlined above, and covered in more detail in Annex A, C, D and E, demonstrates that Choudary has been supporting a proscribed organisation by funding and providing a safe meeting place for the organisation and facilitating the group's activities by funding employment opportunities in an otherwise failing business for its key members. By doing so he has enabled the organisation to grow."

As to proportionality the submission referred to the appellant's wife and children, asserted that a less intrusive option was not available, but warned that it would not be possible to disclose much to the appellant because it would form the basis of the criminal charges. The submission stated that since his arrest the appellant had continued to demonstrate business acumen: while he had closed Best Training, he had converted one of his sweet shops into a training centre (it had been referred to the local authority because of safeguarding concerns) and he had started an online sweet business. He retained the lease on 32 New Road "so it is possible that ALM and [the appellant] could start to use it again at a future date." A freeze was necessary to stop him making funds available to ALM and its members and to manage the risk he posed.

The annexes attached to the submission included a detailed assessment of the evidence, the minutes of the 9 February meeting, the police statement of case and details of the NTFIU investigation, a report on the background to proscribing ALM, and a document setting out the further questions from the Treasury and the answers received. The detailed assessment of evidence noted that although ALM had not used 32 New Road since the police search and arrests, the appellant still retained the lease and could reuse the premises. It stated that the police considered an asset freeze necessary to prevent him making funds available to ALM and its members and managing the terrorist financing risk he posed.

The NTFIU document had a heading "Summary of offence", which referred to the suspicion that the appellant was using substantial profits from Best Training to subsidise the failing enterprise Yummy Sweets, the employees of which were all members of ALM. The appellant had enabled the group to exist and grow by providing employment and meeting places under an apparent legitimate veil of a confectionary shop. There was telephone text evidence between those arrested showing open invitations to attend prayer meetings at 32 New Road, meetings which were believed to be illicit meetings between Islamic extremists who were ALM members.

The Treasury wrote to the appellant on 13 February 2015 to notify him of his designation and of the effect of the restrictions imposed upon him. The letter informed the appellant that the reason for his designation was that he was "involved in providing financial and logistical support to members of a Proscribed Organisation, namely ALM, knowing that such support will provide them means and opportunities to continue their extremist activities."

At the time of the designation the Minister agreed not to publicise the appellant's designation to avoid any potential prejudice to any future criminal proceedings against him. On 22 May 2015, the appellant lodged an appeal against his designation. On 5 August the appellant was notified that no action would be taken against him in relation to the offence of supporting a proscribed organisation. As a result, the Treasury informed him on 6 August 2015 that his designation was to be reviewed.

After his designation it was discovered that the appellant had not made full disclosure of his finances as he was obliged to under the legislation. Explanations were provided. The Treasury took no further action regarding dormant bank accounts although action in relation to non-disclosure of a loan is ongoing. The appellant made applications under the legislation. Safeguarding concerns were raised about the appellant's new tuition business when young people could be vulnerable to radicalisation. That was closed some time in 2015. The appellant did not pursue a matter of employment with another business, The Sweet Factory. Applications have been made and approved, for example to enable the appellant's wife to transfer funds for him.

On 11 February 2016 the Treasury notified the appellant that his designation had been renewed. In the ministerial submission earlier that month, the error in the police statement of case for February 2015 was corrected: it was not that without the appellant's financial support ALM could not exist as a functioning entity, it was that without that financial support

"ALM could not have continued to exist as a functioning entity from 32 New Road…"

The case on the second threshold was explained by reference to the appellant's track record of terrorist financing, his business history showed he could access significant funds, he had the potential to build a business via his contacts and proven business acumen, and he had the intention to do this as demonstrated by his approach to the Treasury for a licence. The submission continued that the Security Service assessment in November 2015 was that without the freeze he would be able to re-establish his financial position and provide support to ALM. Some £106,000 was owed to Best Training for training work it had undertaken and by the bank. That would have to be paid to him. The submission added that due to funds put into Yummy Sweets when it was failing, the appellant had accumulated a large mortgage and considerable personal debt. The police investigation had found that this financial support was used to prop up Yummy Sweets for continued use by ALM members.

The designation letter sent to the appellant stated that the Treasury considered that he had engaged in terrorist activity in the provision of financial support to ALM. It continued to rely on the evidence, both open and closed, posited in support of the designation a year earlier. The Treasury remained of the view that the imposition of the asset freeze was necessary for the purposes of public protection. In its decision, the Treasury noted:

"(a) your assets have been frozen for a relatively short period of time;

(b) over the previous year, other restrictive measures (e.g. bail conditions), imposed on you and a number of your associates, that may have served to reduce engagement in terrorist activity, have been lifted. The asset freeze remains an important measure in helping to prevent funds/assets being made available to support the activities of individuals associated with ALM; and

(c) without financial restrictions, there remains a risk that you would use funds to support terrorist activity.

Due to the ongoing police investigation the Minister has decided, in accordance with section 3 of the [2010] Act, that the decision to designate should be notified only to those considered appropriate and should not be publicised generally."

The appeals