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Cite as: [2005] HCJ 03, [2005] ScotHC HCJ_03, [2005] ScotHC HCJ_3

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Her Majesty's Advocate v. Michael George Voudouri+Trustunion Llc [2005] ScotHC HCJ_03 (10 November 2005)

HIGH COURT OF JUSTICIARY

[2005] HCJ 03

IN1183/03

OPINION OF LORD MACPHAIL

in the cause

HER MAJESTY'S ADVOCATE

Petitioner;

against

MICHAEL GEORGE VOUDOURI

Respondent

And

TRUSTUNION LLC:

Minuters:

________________

Petitioners: Hamilton, A.D.; Crown Agent

Respondent: Belmonte, Solicitor Advocate

Minuters: Targowski, Q.C., M Hughes; Trainor Alston, Coatbridge

10 November 2005

[1] This opinion explains the circumstances in which I made an award of expenses against the Crown in proceedings in which a devolution issue had arisen. I made my decision on 28 October 2005 and said that I would issue an opinion later.

[2] On 23 October 2001 the accused appeared on petition charged with a contravention of section 72(1) of the Value Added Tax Act 1994 and other offences. On 3 June 2003 the Court of Session made a restraint order in terms of section 28 of the Proceeds of Crime (Scotland) Act 1995 ('the 1995 Act') against Trustunion LLC ('Trustunion'), a company based in the State of Delaware. The restraint order interdicted Trustunion from dealing with realisable property and in particular with a dwellinghouse in Bridge of Allan. On 11 May 2004 the accused pled guilty to the contravention of section 72(1) of the Value Added Tax Act 1994 and on 8 June 2004 he was sentenced to four years' imprisonment. Also on 11 May 2004 the prosecutor lodged a statement in terms of section 9 of the 1995 Act and moved the Court to make a confiscation order. A schedule to the statement set forth that the dwellinghouse in Bridge of Allan was among the accused's realisable property. There followed a series of notional diets in the confiscation proceedings. At a notional diet on 12 July 2004 Trustunion lodged answers to the prosecutor's statement and were allowed to enter the proceedings as first-named third party. It is convenient to note here that at a later stage, on 21 February 2005, minutes were lodged on behalf of the accused's wife, Mrs Chrystalia Vidouri, and his two daughters, Georgina and Nicolette Vidouri. At a further notional diet on 23 August 2004 the Court assigned 17 and 18 March 2005 as a diet of proof. At a subsequent diet on 24 January 2005 the Court "ordained the Crown to lodge any productions upon which they intend to rely and a list of witnesses they intend to call prior to 4.00 p.m. on 16th February 2005." The Crown failed to obtemper that order. At a later diet on 21 February 2005 the Advocate depute moved for leave to lodge lists of witnesses and productions at the Bar but the Court made no order in hoc statu with regard to that matter. On 2 March 2005, however, the Court allowed the lists to be lodged, discharged the diet of proof set down for 17 and 18 March 2005, and of new assigned 27 and 28 October 2005 as a diet of proof.

[3] On the same date, 2 March 2005, Trustunion tendered a devolution minute. The Court allowed the devolution minute to be received, determined that the devolution issue set out in the minute might be raised, ordered answers, allowed parties to adjust the minute and answers, and continued consideration of the minute until 11 April 2005. There followed a series of notional diets in the course of which the Crown lodged answers and adjustment took place. At a notional diet on 4 July 2005 the Court assigned 12 July 2005 "as a diet for the hearing of the devolution minute and answers thereto."

[4] Shortly stated, the devolution minute narrates that the dwellinghouse in Bridge of Allan is the property of Trustunion; that after the intimation of the restraint order of 3 June 2003 Trustunion had instructed solicitors who had opened files directed exclusively to the proceedings following upon the restraint order; and that these files included notes by counsel, their solicitors' notes of consultations with counsel, and "information relevant to litigation preparation". The minute goes on to aver that, the Procurator Fiscal having obtained from the Sheriff a search warrant in relation to alleged money laundering offences, officers of H M Customs and Excise attended at the solicitors' offices and other premises and removed files which were protected by legal professional privilege. The minute asserts that certain rights of Trustunion under article 6 of the European Convention on Human Rights have been breached. The answers to the minute contain averments of fact relative to the execution of the warrant and later events, and deny the minuters' averments relative to article 6. They do not, however, give notice of any radical objection to the competency or relevancy of the minute which, if sustained, would result in the dismissal of the minute and thus would elide any need for the leading of evidence.

[5] On 12 July 2005, the date set down for the hearing on the devolution minute and answers, the Court pronounced the following interlocutor:

"The Court having heard Mr Targowski, senior counsel for the minuter Trustunion LLC, and the Advocate depute in reply, of consent of the solicitor advocate for the accused and of counsel for the minuters Chrystalia Vidouri, Georgina Vidouri and Nicolette Vidouri, and in respect that a diet of proof on the devolution minute by Trustunion LLC and the answers thereto has been assigned for 27 and 28 October 2005 at 10 a.m. within the High Court of Justiciary at Edinburgh discharges the diet of proof set down for the 27 and 28 October 2005 in respect of the confiscation order proceedings, of new the Court on the unopposed motion of the Advocate depute assigned the 27 October 2005 at 10 a.m. within the High Court of Justiciary at Edinburgh as a notional diet in the confiscation order proceedings; on the unopposed motion of the Advocate depute, of consent, ordains all parties to lodge in process by 13 October 2005 a list of authorities, a note of the line of argument and a list of witnesses."

[6] By 13 October 2005 the Crown had not lodged a list of authorities or a note of the line of argument. A letter dated 20 October 2005 was sent from the Crown Office to Trustunion's solicitor enclosing a document which the letter described as "a copy of the Crown Submissions on [sic] Outline and List of Authorities". The first page of the document consists of a list of three authorities. The remainder, however, is not an outline of the submissions for the Crown. It consists of a history of the proceedings from 11 May 2004 to 22 February 2005, and refers to the proof assigned for 17 and 18 March 2005 as a future event. There are also three pages of submissions and other notes for consideration by Crown Counsel. The document, apart from the first page, is obviously an internal Crown Office memorandum written at or about the end of February 2005.

[7] The case called before me on 27 October 2005. Trustunion had instructed senior and junior counsel, had lodged a list of 10 witnesses and lists of productions, and were ready to go to proof. The Advocate depute, however, moved for leave to lodge a document consisting of a note of the line of argument and a list of authorities. He tendered the Crown's apologies and stated that the document sent with the letter of 20 October 2005 had not been the note on the line of argument. He explained that that document, and the document which he now tendered, had both been on his personal computer and he had e-mailed the wrong document to the Crown Office. I adjourned the Court until 2 p.m. to enable the Court and the minuters' legal advisers to consider the terms of the new document.

[8] The new document contained a note of three outline submissions on behalf of the Crown. The first submission was that the minute was premature. The calling of witnesses would not assist the Court in assessing whether the documents seized were privileged. A commission should take place to establish which, if any, of the documents seized were privileged. Secondly, the minuters' averments were wholly lacking in specification and should be dismissed. The minuters had failed to specify which of the documents were privileged and the litigation to which they were directed. Thirdly, esto the documents seized were privileged, it did not follow that the minuters' article 6 rights had been breached.

[9] When the Court reconvened at 2 p.m. senior counsel for the minuters moved me to discharge the diet of proof. He pointed out that the minuters were only now being faced with fundamental objections to the proof's taking place. The first and second submissions in the new note of argument had not been adumbrated in the Crown's answers, and were wholly unexpected. The minuters needed time to consider them. They should be added to the pleadings and answered by adjustment, and the Crown's preliminary objections should be argued before proof.

[10] The Advocate depute suggested that the Court should hear the parties in debate on the submissions in the Crown's new note of argument on the following day, 28 October 2005. Senior counsel for the minuters resisted that suggestion and submitted that the diet of proof should be discharged and the Crown should be found liable to the minuters in the expenses of the discharged diet. The minuters had cited nine of the ten witnesses on their list, and several of them were in attendance. One of them had come from Ireland, and had incurred hotel expenses. I decided to allow the new list of authorities and note of argument to be received and to discharge the diet of proof. I also decided that it would not be reasonable to require senior counsel to make submissions on the fundamental issues raised in the new note of argument on 28 October 2005. I appointed parties to be heard further on that date on the question of expenses.

[11] On the following day, 28 October 2005, I heard the argument on expenses. The Advocate depute conceded that an award of expenses against the Crown was competent by virtue of the Scotland Act 1998, section 98 and Schedule 6, paragraph 36. Schedule 6 makes provision in relation to devolution issues. Paragraph 36 provides:

"36. - (1) A court or tribunal before which any proceedings take place may take account of any additional expense of the kind mentioned in sub-paragraph (3) in deciding any question as to costs or expenses.

(2) In deciding any such question, the court or tribunal may award the whole or part of the additional expense as costs or (as the case may be) expenses to the party who incurred it (whatever the decision on the devolution issue).

(3) The additional expense is any additional expense which the court or tribunal considers that any party to the proceedings has incurred as a result of the participation of any person in pursuance of paragraph 6, 17 or 27."

Paragraphs 5 and 6 relate to the intimation of devolution issues in proceedings in Scotland, and provide:

"5. Intimation of any devolution issue which arises in any proceedings before a court or tribunal shall be given to the Advocate General and the Lord Advocate (unless the person to whom the intimation would be given is a party to the proceedings).

6. A person to whom intimation is given in pursuance of paragraph 5 may take part as a party in the proceedings, so far as they relate to a devolution issue."

[12] Senior counsel for the minuters pointed out that rule 40.8(1) of the Act of Adjournal (Criminal Procedure Rules) 1996, as amended, provides that in any case where a devolution issue arises in criminal proceedings, the Court "may make such orders as it considers just and equitable in the circumstances pending the determination of the devolution issue." He referred to H M Advocate v Aldred 1922 JC 13.

[13] Senior counsel submitted that the minuters had had no option but to enter the process in view of the terms of the restraint order. They had never been prosecuted, and they did not have the advantage of legal aid. The circumstances of this case were exceptional. The Crown had already failed to obtemper the interlocutor of 24 January 2005 ordaining them to lodge productions and a list of witnesses by 4 p.m. on 16 February 2005. Now they had failed to obtemper the interlocutor of 12 July 2005 ordaining them to lodge a list of witnesses and a note of the line of argument by 13 October 2005. Nothing had been lodged until 20 October 2005, and then what had been lodged had not been a note of the line of argument. The correct note had not been submitted until after the Court had sat on 27 October 2005. The minuters had cited a number of customs officers to attend as witnesses on 27 October 2005, and their day had been largely wasted. The arguments in the correct note would now have to be included in the pleadings, and answered by the minuters; and then there would have to be some form of debate: the Crown had not suggested that the preliminary objections could somehow be dealt with during the proof. A totally new procedure would now have to be entered upon. The objections should have been intimated in the pleadings: there would then have been a debate instead of an order for proof. The minuters had incurred the expense of making substantial preparations for a proof which now would not take place. Counsel emphasised that he was not suggesting that an award of expenses should be made every time a proof in a devolution minute and answers was discharged: his motion was made in the exceptional circumstances of this case.

[14] The Advocate depute submitted that the whole circumstances should be considered when determining whether to make an award of expenses. Here, there had been a genuine error on his part in sending the wrong document as an attachment to an e-mail addressed to the Crown Office. The wrong document had not been headed, "Note of argument". There had been no indication from the minuters' legal advisers that they had had any difficulty with it. If these had been civil proceedings in the Court of Session, the General Department might have spotted that it was not right. It had not been obvious to him until the previous day that the wrong document had been lodged. Any award of expenses should be dependent upon success. The Court might wish to reserve the question of expenses until the minute had run its course. There might be a question of modification of any award of expenses.

[15] In my opinion the expenses incurred by the minuters in relation to the discharged diet are an additional expense which they have incurred as a result of the manner in which the Crown has taken part as a party in the proceedings for the determination of the devolution issue. It is unnecessary to define the expression "additional expense", but it must include substantial expense necessarily incurred as a result of a serious error or failure by another party to the proceedings. Here, there were two major errors. The first was that the objections raised in the correct note of argument had not been stated in the Crown's answers. If the objections had been stated there, as they should have been, the Court would not have assigned a diet of proof but would have appointed parties to debate. Secondly, there was the confusion over the note on the line of argument. Here, the original mistake was made by the Advocate depute: he explained it with candour and tendered his apologies. That was a simple human error which any user of a personal computer will readily understand. The serious mistake, however, was not the slip by the Advocate depute, but the failure by the Crown Office to notice it. It was not for the minuters' legal advisers or the Justiciary Office to draw the mistake to the attention of the Crown Office. It is very difficult to understand why the error was not identified within the Crown Office, and no explanation has been given. The Crown Office must have lodged and intimated the wrong document without checking it, for the most cursory glance by those responsible for lodging and intimation would have sufficed to make it clear that it was not a note on the line of argument. Nor was it explained why those responsible for preparing the Advocate Depute's papers for the hearing had failed to see that anything was amiss. Further, not only was it the wrong document, it was lodged outwith the time prescribed by the interlocutor of 12 July 2005. No explanation has been offered for the Crown's failure to observe that time limit.

[15] In the result, the minuters have been obliged to prepare for a proof that should never have been assigned, and have done so in ignorance of the radical objections which the Crown proposed to state against them. I am satisfied that in these wholly exceptional circumstances the minuters are entitled to an award of their expenses relative to the discharge of the diet. It is clear from the final words of paragraph 36(2) that it is unnecessary to await the result of the devolution proceedings before awarding expenses. Nothing was said in support of the proposals that the expenses might be reserved or modified. I have left out of account the failure by the Crown to obtemper the interlocutor of 24 January 2005. An award of expenses made in terms of paragraph 36 of Schedule 6 to the Scotland Act 1998 is compensatory in nature: it is not a penalty for such conduct.

[16] I have therefore found the Crown liable to Trustunion in the expenses of the discharged diet of proof set down for 27 and 28 October 2005, and remitted the account of expenses, when lodged, to the Auditor to tax. I have also allowed the Crown 14 days to adjust their answers to the minute, and allowed the minuters 14 days thereafter to adjust their minute. I have appointed parties to be heard at a procedural hearing on 12 December 2005 at 10 a.m. in respect of the devolution minute and answers. In respect of the confiscation proceedings I have allowed a proof on 2 and 3 March 2006, and appointed a pre-proof notional diet on 30 January 2006.