Jersey Unreported Judgments

Costs - an application on disclosure and costs.

[2019]JRC56B

Royal Court

(Samedi)

2 April 2019

Before     :		J. A. Clyde-Smith, Esq., Commissioner, sitting alone.
Between	"Prospective Applicant"		Applicant
And	Chief Officer of the States of Jersey Police		Respondent

Advocate W. A. F. Redgrave for the Applicant.

Advocate H. Sharp QC for the Respondent.

judgment

the commissioner:

1.        I sat on 8^th March, 2019, to deal with two applications on the part of the Applicant, namely the further disclosure the Applicant is seeking from the Respondent and the costs arising out of the anonymity judgment. 

Disclosure

2.        The Applicant is the Chief Executive Officer of a company that acts as adviser to a hedge fund which invests, inter alia, in equity positions and financing.  Both the Applicant and the company are named as defendants in a number of class actions commenced in the United States in 2017, in which they are alleged to be involved, with others, in a series of manipulative share issuance - sales transactions in publicly quoted companies, described as "a fraudulent course of conduct".  The allegations are being investigated by the U.S. Securities and Exchange Commission ("the SEC"), the relevant regulatory authority in the United States, but both the Applicant and the company deny that they have acted improperly in any way. 

3.        The Applicant is a discretionary beneficiary of a Jersey proper law trust, which through a wholly owned BVI company has invested in, and received dividends from the hedge fund. In or around July 2018, the Jersey administrators of the BVI company filed a suspicious transaction report, following which a decision to withhold consent to the normal operation of its accounts was taken by the States of Jersey Police, the no consent letter being dated the 31^st July, 2018.  Correspondence then ensued between Advocate Redgrave, acting for the Applicant, and Detective Sergeant Fitzgerald, of the Joint Financial Crimes Unit ("The JFCU"), and following a meeting, Advocate Redgrave wrote on 25^th October, 2018, giving notice that if the JFCU had not reviewed its decision and consented to normal operation of the accounts by Thursday 1^st November, 2018, an application for leave for judicial review would be made immediately thereafter.  Detective Sergeant Fitzgerald responded on 26^th October, 2018, saying that JFCU were obtaining appropriate advice from the Law Officers' Department, and would revert in due course. 

4.        DS Fitzgerald is employed as a supervisor attached to the Financial Intelligence Unit ("FIU") which is part of the JFCU within the States of Jersey Police.  I am going to refer henceforth to "the JFCU".  It would seem that the JFCU did review the matter on 8^th November, 2018, maintaining the no consent, but narrowing its ambit by releasing assets of what appears to be a different trust to that in which the Applicant has an interest. 

5.        The application for leave to seek judicial review was filed on 14^th November, 2018, and recites this as the decision in respect of which relief is sought:-

"The Decision not to accede to the request made on behalf of the Applicant formally to review the SOJP decision to refuse consent to the normal operation of the accounts in question and to reverse it by Thursday 1^st November, 2018."

6.        At that stage, the Applicant and the Applicant's advisers may not have been aware of the review that had taken place on 8^th November, 2018.  It would, in my view, be reasonable and fair to interpret this as an application to review the decision of the JFCU on 8^th November, 2018, to maintain the no consent. 

7.        Leave to apply for a judicial review was granted on 19^th November, 2018, at which point certain privacy/anonymity orders were made and which were renewed by the Court on 8^th March, 2019 (JRC 032). 

8.        Disclosure on behalf of the Respondent was made by way of an affidavit from DS Fitzgerald dated 16^th January, 2019, with documents exhibited thereto, which sets out the background facts and the grounds for the suspicion of the JFCU that the funds concerned represent the benefit of criminal conduct.  It is that disclosure which Advocate Redgrave argues is deficient, but before I go into the further disclosure he seeks, it is relevant to briefly summarise the grounds upon which this application has been brought.  I summarise each ground in turn using the same headings:-

(i)        Ground 1 - illegality - ultra vires.  The Respondent does not have power, as a matter of law, to refuse consent to the normal use of client funds in circumstances where there is no criminal investigation in existence into the disclosed matters which are said to give rise to suspicion, and where there is no immediate prospect of such investigation arising as a result of the disclosure. 

(ii)       Ground 2 - illegality - failure to take account of relevant considerations. The Respondent failed to take into account the following relevant considerations, namely, the fact that there was no criminal investigation in existence or in prospect; the fact that the SEC is not a criminal investigator, nor prosecuting authority; the fact that fifteen months have elapsed since the SEC investigation began without any criminal investigation being opened by any true criminal authority; the fact that no application had been made by the Attorney General for a saisie judiciaire over the funds, and finally, the absence of any compelling public interest reason justifying the removal of the right of the Applicant and the other beneficiaries of the trust to enjoy their normal rights and expectations in respect of property. 

(iii)      Ground 3 - illegality - taking into account irrelevant considerations.  The Respondent took into account irrelevant considerations, namely the existence of the SEC investigation which is not a criminal investigation; the existence of the US class actions civil proceedings, which are highly speculative and in which non-specific allegations of marketing irregularities are made in circumstances where such litigation is a commonplace tactic to secure settlements from companies, there being no cost penalty for losing civil claims in the US; the existence of press reporting about the matters subject to the US civil claims and finally, the inference that the decision was influenced by a belief that it would be desirable to refuse consent in order to preserve funds against the possibility of a future civil judgment or an SEC ruling or some other non-criminal process, which would be a wholly illegitimate use of the power and amount to procuring a civil freezing injunction "by the back door".

(iv)      Ground 4 - irrationality - disproportionality.  The decision is grossly disproportionate in its effect.  Such an interference in the property rights of persons not subject to any Court order or criminal process could only be justified by a compelling public interest. 

(v)       Ground 5 - procedural unfairness - failure to give reasons.  No reasons have been given for the decision not to revise the refusal of consent in circumstances where the JFCU is exercising a quasi judicial function, holding unfettered and indefinite powers and without having issued any public guidance.  Apart from giving brief reasons, it had refused to answer questions put to it in order to understand why the refusal was being maintained.  No disclosure had been given as to the procedure employed when reviewing a no consent decision or the factors to be taken into account.  From the communications received, it can be inferred that certain matters were/were not taken into account but proper reasons have not been given. 

The disclosure sought

9.        The Applicant's complaint is that DS Fitzgerald's affidavit does not assist in understanding the process by which the decision to issue the no consent and later to maintain it were reached.  It is fair to say that in his affidavit, DS Fitzgerald makes no reference to the internal procedures that apply when a SAR is received, other than that by necessary implication, it is delegated to the JFCU and he does not explain how decisions are approached, and reviewed, and by whom.

10.      In his letter of 29^th January, 2019, Advocate Redgrave sought disclosure of:-

(i)        All internal policy statements, guidance, procedures or similar documents setting out how the JFCU approaches the question whether to grant or withhold consent following the making of a SAR; what steps are taken in the normal course to make the decision-making process of the JFCU transparent on this question; how often reviews are undertaken in cases of no consent and the criteria by which a refusal is continued; the extent to which reviews have taken place in the present matter; and the form which those reviews have taken. 

(ii)       Details of any contact with any other law enforcement authority, or other person or body, in connection with the JFCU's response to the matters set out in the SAR, setting out in particular whether any views were expressed by any such third party, as to the desirability of preventing funds from being moved, and/or as to the likely existence of any criminal investigation into the origins of funds in question. 

(iii)      A copy of the SAR, or a full description of all relevant facts and matters asserted with it.

(iv)      A full description of the 'no consent' communication, explaining precisely what it encompasses and what it does not, and why it has been amended.

11.      In its response of 5^th February, 2019, the Law Officers declined to provide this information for reasons which can be summarised as follows:-

(i)        The affidavit of DS Fitzgerald gives the reasons for the JFCU's decision.

(ii)       There is a presumption of regularity in respect of the JFCU's decision.

(iii)      Little attempt had been made to explain the Applicant's request and, accordingly, the relevant test for disclosure had not been satisfied.

(iv)      It appeared that the Applicant was trying to obtain information about any criminal investigation, either current or future, that might concern the Applicant; and

(v)       The Applicant had advanced no proper basis for the disclosure sought and had no need to see the SAR.

12.      The Law Officers' Department confirmed that there is no guidance or protocol as to how the decision to grant or refuse consent should be reached, or the process that should be followed.

13.      Accepting the lack of guidance or protocol, Advocate Redgrave refined his request for disclosure to the following:-

"1)       By close of business on 19 March 2019 the Respondent shall file a further affidavit giving a detailed explanation of the basis upon and process by which the decision under review was made.  Without prejudice to the foregoing the affidavit shall:

i)              Identify the persons who participated in the decision.

ii)             Set out the information available to the decision maker(s).

iii)            Set out all the factors taken into account in making the decision.

iv)            Explain the extent to which account was taken of the nature of class-action securities lawsuits in the United States.

v)             Set out any contact between the States of Jersey Police and any other law enforcement authority, or other person or body, in connection with the decision under review, setting out in particular whether any views were expressed by any such third party as to the desirability of preventing funds from being moved, and/or as to the likely existence of any criminal investigation into the origins of funds in question.

vi)            Identify the timing, nature and content of all communications and meetings conducted by the States of Jersey Police pertaining to the decision under review, exhibiting notes and records of such communications and meetings.

2)        If any information is omitted or redacted from the affidavit or its exhibits on grounds of operational confidentiality this shall be clearly stated and explained."

The law

14.      The starting point is that the ordinary rules in relation to discovery in civil proceedings do not apply to a judicial review, Article 16/7(5) of the Royal Court Rules providing as follows:-

16/7(5)    No order under Rule 6/17 [discovery and inspection of documents] ... may be made unless the Court considers that, for some substantial reason, the application cannot be disposed of fairly unless a document or class of documents is produced for inspection ...."

15.      However, the granting of leave for a judicial review triggers a duty of candour on the part of the authority (and the Applicant) encapsulated in this well-known passage from the judgment of Lord Donaldson MR in R v Lancashire County Council ex p. Huddleston [1986] 2 All ER 941:-

"This development [i.e. the remedy of judicial review and the evolution of a specialist administrative or public law court] has created a new relationship between the courts and those who derive their authority from public law, one of partnership based on a common aim, namely the maintenance of the highest standards of public administration ... The analogy is not exact, but just as the judges of the inferior courts when challenged on the exercise of their jurisdiction traditionally explain fully what they have done and why they have done it, but are not partisan in their own defence, so should be the public authorities.  It is not discreditable to get it wrong.  What is discreditable is a reluctance to explain fully what has occurred and why ... Certainly it is for the Applicant to satisfy the court of his entitlement to judicial review and it is for the Respondent to resist his application, if it considers it to be unjustified.  But it is a process which falls to be conducted with all the cards face upwards on the table and the vast majority of the cards will start in the authority's hands."

16.      The principles to be applied under judicial review proceedings were considered extensively by Beloff, Commissioner, in Larsen v Comptroller of Taxes and States of Jersey [2015] (1) JLR 430, where, having reviewed the jurisprudence, he extracted the following propositions at paragraph 17:-

"(i)      The duty of candour is triggered by the grant of leave or permission which itself demonstrates a judicial view that the application is arguable (see Wade, op. cit., at 552).

(ii)       The core content of the duty is to lay 'before the court all the relevant facts and reasoning underlying the decision under challenge' (Tweed (5) ([2007] 1 AC 650, at para. 54, per Lord Brown of Eaton-under-Heywood) in order to show that they have been considered (Huddleston (3) ([1986] 2 All E.R. at 947, per Sir George Waller)).

(iii)      What the duty of candour requires is axiomatically fact specific.  Its dimensions will depend upon the facts of any particular case (Huddleston, per Sir John Donaldson, M.R. and Sir George Waller).

(iv)      The Respondent's explanation and disclosure must be 'full and fair' (Huddleston, per Sir John Donaldson, M.R.) 'so far as is necessary to meet the challenger' (Huddleston, per Parker, L.J.) not every fact relied on by the Respondent as relevant has to be specified (Huddleston, per Sir George Waller).

(v)       It is pursuant to the duty of candour 'ordinarily good practice' for a public authority to exhibit in its evidence any document of 'significance to its decision' (Tweed ([2007] 1 AC 650, at para. 340, per Lord Bingham of Cornhill)).  The practice may be modified if there are countervailing considerations, e.g. confidentiality (Wade at 556, fn 86) or public interest immunity or legal professional privilege.

(vi)      The Applicant is not, however, to be indulged as a Mr Micawber figure and granted disclosure (or an order that the Respondent file further evidence on some point) in the hope that something may turn up, or to put it in a less literary but more conventional way, to be given the opportunity for a fishing expedition.

(vii)     The Respondent will pay the price if it is insufficiently candid by having adverse inferences drawn against it, or by being penalized in costs, or even, in extreme circumstances, by being punished for contempt (Wade at 554-555).

(viii)    Disclosure in judicial review is not the same or as extensive as disclosure in ordinary civil proceedings.  It is required only where for some substantial reason, the application cannot be disposed of fairly without it (Royal Court Rules 2004, r. 16/7(5)).  See too De Smith, Judicial Review, 7th ed., paras. 16-070- 16-071, at 924-925 (2013).)  It is not necessary 'to flood the court with needless paper' (Tweed ([2007] 1 AC 650, at para. 56, per Lord Brown))."

17.      In that case, Larsen was seeking disclosure of a letter of request in order to ascertain whether it was compliant with the relevant statutory regulations, and Beloff, Commissioner, went on to say this at paragraphs 18 and 19:-

"18     I start from the necessary premise that the grounds for the application have passed the threshold of arguability.  Nonetheless, it is for the Applicants to demonstrate in what way they can claim to be disadvantaged in advancing any point in support of any particular ground because of some perceived shortfall in the Respondents' compliance with their duty of candour, and such demonstration requires identification of the specific arguable point.

19       Advocate Harvey-Hill's submission, attractively advanced though it was, carried within it the seeds of its own destruction.  He argued that, absent disclosure of the letter of request, it was not possible for Mr Larsen (or Volaw) to know whether the letter was compliant with the [relevant regulations] ....

Therefore, he continued, it was not possible for Mr Larsen to know whether the issue of the notices complained of under [the relevant regulation] was lawful.  But it is always for an Applicant to establish that something may have gone wrong.  It is insufficient for him to say that I cannot be sure that everything has gone right.  I scoured both the affidavits of Mr Larsen and Mr Healey, and the grounds in support of the application for leave for any viable assertion that the letter of request was non-complaint so infecting the rest of the procedure and could find none."

Discussion

18.      Advocate Sharp focused on proposition (v) of Larsen, namely that the practice of exhibiting any documents significant to its decision may be modified if there are countervailing considerations such as confidentiality.  He referred to Durant International Corporation, Sun Diamond Limited, Kildare Finance Limited and Macdoel Investments Limited v Attorney General and Federal Republic of Brazil [2006] JLR 112, a case concerned with the Judicial Review of the Attorney General's refusal to disclose two letters of request from the Federal Republic of Brazil, where Sumption JA said at paragraphs 34 and 35:-

"34     The general principles are not, I think, in doubt.  The Attorney General, having invited the appellants to make representations about whether he should disclose information in his possession to the Brazilian authorities, fairness may require him to disclose to the appellants information which they reasonably require in order to respond to that invitation.  If the information is confidential to a third party, the public interest in protecting that confidence has to be balanced against the requirements of fairness to the appellants.  In drawing that balance, the confidential character of letters of request issued in respect of current criminal investigations is entitled to substantial weight.  International practice is that they are kept confidential (see Jones v Doobay on Extradition & mutual Assistance, para. 20-057, at 414 (2005)).  They commonly contain, or are accompanied by, information about the current state of the investigation.  Such information may have an important bearing on the Attorney General's decision whether to supply otherwise confidential financial information in response to the letters and it is clearly desirable that foreign courts and prosecuting authorities should be able to transmit it with proper safeguards against the disclosure of those parts of it which are confidential.  Those authorities have a legitimate interest in withholding that material from the parties under investigation until the investigation is complete.  They may have a legitimate interest in withholding it for longer if there is, for example, a danger that sources will be compromised or potential witnesses intimidated.  Persons under investigation are, in many cases, ruthless and powerful criminals.  It has been said by the Divisional Court in England that the court will ordinarily start from the position that the letter of request relating to a current criminal investigation is not a disclosable document, and that disclosure to the person under investigation of information about the nature of the criminal investigation will generally be enough (see Kennedy, L.J.'s judgment in R. (Evans) v Serious Fraud Office Director (8)).

35       However, before one reaches the stage of balancing the competing requirements of disclosure and confidentiality, the appellants must suggest some plausible ground on which it can be said that they may need to see the letter of request in order to make their representations. ..."

19.      Advocate Sharp submitted that analogous principles should apply in respect of a judicial review of a no consent decision where the JFCU must properly explain the reasons for the decision, but is not obliged to disclose any underlying SAR that may exist or other material if it is confidential in nature.  I note in this respect that Advocate Redgrave is no longer seeking specific discovery of the SAR and in my view such a document is confidential; those filing SARs have a legitimate expectation that such reports will be treated as confidential and in particular not disclosed to the very person whose activities have aroused suspicion.  Advocate Redgrave's request for disclosure is now broader in scope, but he accepts that information can be omitted or redacted on grounds of operational confidentiality, although that, he said, had to be clearly stated and explained. 

20.      Advocate Sharp analysed the request for further disclosure against the grounds of the review.  Ground 1 asserts that because there is no current criminal investigation, the police cannot withhold consent.  DS Fitzgerald has confirmed that there is no current criminal investigation, and also admits that he cannot say that there will be one in the future.  Accordingly, no further disclosure is required for the Applicant to fully advance ground 1, which is essentially a matter of law to be argued on agreed facts.

21.      Grounds 2 and 3 relate to the merits of the decision.  DS Fitzgerald has disclosed the reasons for the decision to withhold consent, and either they are good reasons or they are not.  He expressly acknowledges the Applicant's view that no weight should be given to the fact of a US civil action and he addresses that view in the affidavit, but the Applicant does not need any further evidence about the point in order to be able to make submissions to the Court on the merits of the decision.  

22.      Grounds 4 and 5 he submitted appear to be issues of law that did not require further disclosure. Whilst ground 5 raised an issue about procedure, that, he said, related to an alleged failure to give reasons for the police decision, as distinct from the procedure by which the decision was taken in the first place.

23.      The affidavit of DS Fitzgerald sets out a chronology of the movement of funds within the BVI company and the trust, and then sets out the grounds upon which the JFCU has a suspicion that the funds concerned represent the proceeds of criminal conduct.  It goes on to deal with the approach of the JFCU to the issuing of police consent and stating that it had been busy gathering intelligence from a number of jurisdictions around the world (six in total) and was liaising with overseas authorities who had authority to conduct investigations.  He pointed out that the no consent had been in existence for less than six months, which is a short period of time in the context of potential international money laundering inquiries, and that once they had all the relevant intelligence, and any other relevant information, it would be possible for a tripartite group, consisting of the JFCU, the Law Officers' Department, the newly formed Crime and Confiscation Unit and the Jersey Financial Services Commission to take an informed decision as to whether or not a criminal investigation should be opened.  There had already been two meetings of this tripartite group. It was possible that a criminal investigation would take place overseas. 

24.      In his affidavit, DS Fitzgerald made reference to the Guernsey Court of Appeal decision of The Chief Officer, Customs & Excise, Immigration & Nationality Service v Garnet Investments Limited [Judgment 19/2011] in which it rejected the assertion that the comparable provisions in the Guernsey legislation relating to consent were conferred for the purpose of permitting an informal freeze to be effected on behalf of the police over funds suspected of being the proceeds of crime. Quoting from paragraph 39:-

"39     For the reasons set out above we do not consider it was.  In our opinion the principal purpose of the consent regime was to provide an opportunity to the police to give an exemption from criminal liability by consent but only where it was in the interests of law enforcement to do so; it was not to create an informal mechanism to be used by the police for freezing funds."

25.      The Court of Appeal went on to make these observations in relation to the amount of time a no consent could be maintained:-

"54     Given this history and the desire to avoid criticism on the part of the Guernsey authorities, it would be surprising if it had been intended, through the introduction of the consent provisions as a defence to the money laundering, to place any obligation on the Guernsey authorities to consent to a transaction that might result in funds suspected of consisting of 'dirty money' in the form of the proceeds of crime being paid away from the Bailiwick simply because a particular amount of time had elapsed or because no information had emerged to justify any criminal investigation.

55.      ...

56.      We do not therefore consider it is reasonable to imply into the statutory consent regime in Guernsey any period of time in which consent is to be granted to transact in order to avoid what may in practice be an extended effective freeze, even if we are wrong in our analysis of the purpose of subsection 39(3).  In any case where there is a suspicion that has not been dispelled, the police must be entitled to refuse consent whatever period of time has elapsed.

57       This was the view of Tomlinson J in Amalgamated Metal Trading Limited v City of London Police Financial Investigation Unit and others [2003] EWHC 703 (Comm) at paragraph 27 when he stated in relation to comparable consent provisions (s 93 A (3)(b)(i) of the Criminal Justice Act 1988 as amended) that there can be no obligation on the police to 'justify the withholding of consent ... It seems clear from the section as a whole that the existence of a suspicion is sufficient to ground a proper refusal of consent.'"

26.      In the view of the Guernsey Court of Appeal the remedy for a person in the position of the Applicant was to bring proceedings against the person or entity holding the funds:-

"58     The appropriate remedy for a person in the position of Garnet is to bring proceedings against the person or entity holding the funds.  This enables the status of the funds to be determined by a court in circumstances where (unlike in public law proceedings) evidential issues may be fully explored and the fund owner and the fund holder are represented."

27.      Advocate Redgrave tells me that he will, in due course, argue that Garnet should not be followed in this jurisdiction, but in his view, the JFCU understands very well that refusing consent amounts to a draconian de facto freeze, which should indeed be taken into account.  He referred to the decision of the Hong Kong High Court in Interush v Commissioner of Police HCAL 167/2014 and the decision of the Court of Appeal in the same case, [2019] HKCA 70, that he said showed the importance of the Force Procedures Manual in place in that jurisdiction and which sets out the considerations taken into account when dealing with the issuing of a letter of no consent, and the action to be taken after such a letter has been issued.  No such guidance is available in this jurisdiction and he said it was imperative that all relevant material that did exist be disclosed to enable the Court to assess the process by which its decision was reached.  By way of example, he said the Respondent refused to address the following questions which he said were clearly relevant:-

(i)        Does final responsibility for the decision rest with a senior officer and, if so, at what rank?

(ii)       What information was he/she provided with?

(iii)      Was the decision made in the knowledge that there was/is no live criminal investigation in progress anywhere in the world and that the SEC is a regulatory body only?

(iv)      How well informed are the decision makers about US securities law, UAS civil jurisprudence and/or US civil regulators?

(v)       How much account was taken of the widespread use in the US of speculative class action lawsuits in securities cases?

28.      Advocate Sharp responded that it was difficult to understand why questions (i) and (ii) are relevant to any of the grounds.  The case will turn on the merits of the reasons given, as distinct from the rank of the officer that took the decision.  There was no merit in the allegation that to the extent that a senior officer had taken the decision, he or she was not provided with all the relevant information.  In relation to (iii), the Applicant already knows the answer. DS Fitzgerald has confirmed that there is no live criminal investigation and does not suggest that the SEC is the equivalent investigatory body.  He professed not to understand (iv) and in relation to (v), DS Fitzgerald had expressly acknowledged the Applicant's views about the US class action suit in his affidavit. 

29.      Advocate Redgrave pointed out that in Interush, in addition to referring to these guidelines, the police authority had disclosed some records of the review process.  However, it needs to be borne in mind that Interush involved a systemic challenge, as well as fact specific challenge, in which the applicant in that case was challenging the constitutionality of the no consent regime itself and the propriety of the general decision making processes, which is not the case here.  Leave for judicial review in Interush was refused; a decision upheld on appeal.

30.      At Advocate Redgrave's request, Advocate Sharp had produced statistics as to the number of consents withheld by the JFCU in 2017 and 2018, which showed that in 2017, there were 1,874 SARs in respect of which in four cases consent was withheld, and in 2018, there were 1,807 SARs, in respect of which consent was withheld in 11 cases; a very small proportion in both years.

31.      It is unlikely, said Advocate Redgrave, that the JFCU did not share the suspicion of those who submitted SARs, at least in a substantial number of cases, yet only a small minority were denied consent.  For those cases where consent was issued, was that only because it was in the interests of law enforcement as per Garnet, or were a broader range of factors at play? 

32.      This led into the Applicant's concern that with so much time having elapsed since the SEC started its investigation without a criminal investigation being opened anywhere, the JFCU was being influenced by the SEC to use its no consent powers to freeze funds here, in order to meet any potential civil claims.

33.      Advocate Redgrave argues that without the information he is requesting, even in edited form, the Applicant and the Court are unable meaningfully to evaluate the decision making of the JFCU.  This, he said, extends the presumption of regularity to a point at which it offends the most basic principles of justice.  The absence of any guidance or protocol indicates that there may not be any formal process to guide the exercise of discretion and in view of the gravity of the decision, this would be alarming.  He said it was extraordinary that 20 years after the Proceeds of Crime (Jersey) Law 1999 came into force, no such guidance exists to ensure that the JFCU exercises its powers to refuse consent proportionately, and that the decision making process is properly recorded at every stage.

Decision

34.      I accept the thrust of Advocate Sharp's submissions in relation to the grounds upon which this judicial review is being brought and the specific questions asked by Advocate Redgrave.  I also bear in mind the issue of confidentiality that arises in a case such as this as per Durrant.  The affidavit of DS Fitzgerald shows that on receipt of the SAR, the JFCU has embarked upon an intelligence gathering exercise and is in contact with some six jurisdictions around the world. These are operational matters concerned with law enforcement which it has a legitimate concern to keep confidential and Advocate Redgrave accepts that concern as being legitimate.

35.      It is not being asserted in this application that the procedures within the JFCU are flawed.  The decision is challenged on its merits, and I do not accept it is necessary to look at the procedures within the JFCU in order to understand the grounds upon which the decision was made, as set out in the affidavit of DS Fitzgerald, subject to what I say below. 

36.      The position here is analogous in my view to Larsen, in that it is for the Applicant to establish that something may have gone wrong procedurally, and it is insufficient for the Applicant to say that the Applicant cannot be sure that everything has gone right, in particular because there is no internal guidance for the JFCU against which the process can be checked.  The lack of such guidance does not, without more, enable the Applicant to say that something may have gone wrong.  It does not amount to a substantial reason for ordering the disclosure sought.  I have not seen any viable assertion on the part of the Applicant that something has gone wrong procedurally and in my view the Applicant wishes to scrutinise the JFCU's procedures in the hope that something may turn up, which would enable the Applicant to challenge the decision. 

37.      This case is to be distinguished from Interush, in which it was the constitutionality and the general decision making processes of the Hong Kong Police that was under review, as well as being fact specific.  Leave has not been granted in this case to judicially review the procedures of the JFCU, whether generally or specifically to this case.  

38.      If the order for disclosure sought by Advocate Redgrave was made, the starting point would be that the JFCU would be required to disclose everything it knows and has in relation to this matter, with the onus being upon it to state and explain to the Applicant any omissions or redactions.  That in my view would constitute an unprecedented interference by the Court in the work of this law enforcement agency and this at the very behest of the person who whose activities are under suspicion.  It is for the Applicant to put forward a substantial reason for seeking disclosure from this law enforcement agency and even then the Applicant has to surmount the hurdle of confidentiality. 

39.      I accept that attempting to challenge the decision of the JFCU on its merits by way of judicial review presents considerable challenges to the Applicant, because as Tomlinson J said in Amalgamated Metal Trading Limited v City of London Police Financial Investigation Unit & Others [2003] 1 WLR at paragraph 27:-

"The existence of a suspicion is sufficient to ground a proper refusal of consent."

40.      "Suspicion" was defined in K Limited v National Westminster Bank plc (Revenue and Customs Commissioners and another intervening) [2007] 1 WLR 311 as being where a person thinks that there is a possibility, which is more than fanciful, that the relevant facts exist, subject to the suspicion so formed being of a settled nature.

41.      The difficulties faced by Applicants in case specific judicial review applications of no consent decisions were recognised by the Hong Kong Court of Appeal in Interush, at paragraph 6.44(b), where Hon Cheung JA said:-

"The systemic risk of grave injustice from withheld consent cannot be effectively ameliorated by case-specific judicial review.  It is unlikely that customers can obtain sufficient information about the Police's suspicions to initiate an effective challenge.  Since disclosure will likely prejudice an ongoing investigation into serious criminal activities, applications for specific discovery face rejection on grounds of public interest immunity: R (UMBS Online Ltd), [37].  It is difficult in law and in practice for customers to obtain relief even if wholly innocent of wrongdoing.  So long as the Police can show that it was not Wednesbury unreasonable for them to suspect the funds are proceeds of crime, judicial review is unlikely: Amalgamated Metal Trading v City of London Police [2003] 1 WLR 2711, [27]; Ani v Barclays Private Bank [2004] JRC 69, [22]; Garnet, [67].  Even if these hurdles are surmounted it is likely to take a year or more before proceedings are finally resolved.  By then, the damage will have been done, in many cases irreversibly."

42.      However, I am not rejecting the application in its entirety.  DS Fitzgerald appears to deal with the grounds upon which the original decision to issue the no consent letter was made, but the decision under challenge is in fact that taken at the review that took place on 8^th November, 2018, when the no consent was maintained, but varied.  By that stage, there had been meetings with the Applicant's advisers and information provided which presumably would have been taken into account.  The Respondent's duty of candour extends to laying before the Court the grounds upon which the decision on the 8^th November, 2018, to maintain, but vary, the no consent letter, was made.

43.      Furthermore, under the third ground of review, the Applicant has inferred that the decision of the JFCU has been influenced by a desire to preserve funds against a future civil judgment or against other non-criminal processes under which fines or damages might be required to be paid.  I accept that for the decision to be influenced by such a desire would be of legitimate concern.  Advocate Sharp said he had been through the JFCU files personally and any communication from the SEC to that effect would have been disclosed and, in my view, the mere raising of an inference in this way does not constitute a substantial reason for ordering disclosure of communications between the JFCU and the SEC, in order to enable the Applicant to test whether there might have been such an influence.  However that inference has been drawn by the Applicant and out of fairness to both parties I think it is appropriate that the JFCU should respond to it directly. 

44.      I will therefore order the filing of a further affidavit on behalf of the Respondent setting out the grounds upon which the decision on the 8^th November, 2018, to maintain, but vary, the no consent decision, was made and responding to the inference that the decision has been influenced by a desire to preserve funds against a future civil judgment or against other non-criminal processes under which fines or damages might be required to be paid. 

 Costs

45.      The Applicant was successful in the application for the privacy/anonymity orders made on 19^th November, 2018, to be continued.  The Applicant seeks the costs for that discrete matter, on the standard basis, or alternatively, an order that the Applicant's costs be in the cause, and that the Respondent should bear his own costs in any event. 

46.      Advocate Sharp rightly described this as an unusual application, which is correct in the sense that the Court had to be persuaded to depart from the long-standing principle that all hearings should be in public, and it was important, therefore, for the Court to have the contrary argument before it.  It follows from this that it would have been unhelpful if the Respondent had simply taken a neutral stance, so that the interests of the public, and indeed of the press were not positively asserted. 

47.      In the circumstances, I agree with Advocate Sharp that the fairest order is for these costs to be in the cause, and I so order. 

Authorities

Article 16/7(5) of the Royal Court Rules.

R v Lancashire County Council ex p. Huddleston [1986] 2 All ER 941

Larsen v Comptroller of Taxes and States of Jersey [2015] (1) JLR 430

Durant International Corporation, Sun Diamond Limited, Kildare Finance Limited and Macdoel Investments Limited v Attorney General and Federal Republic of Brazil [2006] JLR 112

The Chief Officer, Customs & Excise, Immigration & Nationality Service v Garnet Investments Limited 19/2011. 

Interush v Commissioner of Police HCAL 167/2014

Interush v Commissioner of Police [2019] HKCA 70

Proceeds of Crime (Jersey) Law 1999

Amalgamated Metal Trading Limited v City of London Police Financial Investigation Unit & Others [2003] 1 WLR

K Limited v National Westminster Bank plc (Revenue and Customs Commissioners and another intervening) [2007] 1 WLR 311