Complainers: Smith, QC; Simpson & Marwick

Minuters: Summers, QC; HBJ Gateley Wareing (Scotland) LLP

Respondent: Dr A Brown, AD; The Crown Agent

26 June 2009

Introduction

[1] The complainers are a firm of solicitors (hereinafter referred to as "DWS"). The minuters are SCL. Prior to September 2005 SCL was a client of DWS and remained so until sometime after the execution of the search warrant on 2 and 3 April 2007 which is the subject of the Bill of Suspension. On 21 September 2005 a warrant was granted by the Sheriff at Kirkwall for the search of premises occupied by SCL and on 27 September 2005 a search was carried out at these premises in execution of the warrant. As a result of that search substantial quantities of documents were recovered including correspondence between SCL and DWS. The number and volume of documents recovered are such that they apparently fill two rooms where they are being analysed as part of an investigation into possible criminal proceedings. On 14 March 2007 the respondent, on the instructions of Crown counsel, applied to the Sheriff of Grampian Highland and Islands at Aberdeen for a warrant to search the premises of DWS. The petition seeking the warrant narrated that there were reasonable grounds for suspecting that SCL and the directors and employees of that company had committed a money laundering offence and that SCL was subject to a money laundering investigation. The petition further alleged that there were reasonable grounds for suspecting that DWS had committed a money laundering offence and were subject to a money laundering investigation. The respondent's depute addressed the sheriff in support of the petition and provided him with information in support of the statements that there were reasonable grounds for suspecting that DWS had committed a money laundering offence. For the purposes of this Opinion it is unnecessary to specify the basis of these suspicions and in view of the fact that criminal proceedings are still in contemplation it is inappropriate to do so. Suffice it to say that the reasons are canvassed in the sheriff's report to this court and are apparently sufficient on which to base reasonable grounds for suspicion. Having heard the respondent's depute, the sheriff granted the warrant complained of. It authorised the search of the premises of DWS and the seizing and retention of certain material other than items subject to legal privilege. The material to be seized and retained was likely to be of substantial value, whether by itself or not, to the money laundering investigations.

[2] On 2 and 3 April 2007 the search warrant was executed at the premises of DWS in Aberdeen and considerable quantities of documents were removed. On 10 May 2007 the Bill of Suspension was lodged, an order for service granted and a hearing fixed for 14 May 2007. Following agreement between DWS and the respondent the documents seized from DWS were passed to the Justiciary Office for safekeeping and the court appointed a commissioner to supervise the copying of such documents as DWS required for immediate use. In February 2008 the documents were uplifted by police officers in error along with other documents and, thereafter upon their return to the court, were damaged in a flood. On 26 May 2008 counsel for DWS met with an Advocate depute to discuss the erroneous uplift of the material and other matters. On 25 July 2008 the court ordered DWS and the respondent to lodge skeleton arguments and also ordered intimation of the Bill of Suspension and Answers to SCL. SCL lodged formal answers and on 19 August 2008 were ordered to lodge skeleton arguments. In August 2008 Notes of Argument were lodged by all parties, as a result of which counsel for the complainers advised the Advocate depute that there might exist other relevant correspondence in the possession of the Crown. Following upon that discussion, the Advocate depute received additional correspondence recovered from the files of SCL as well as information about the proceedings before the sheriff when he granted the warrant which is the subject of the Bill of Suspension. In particular it appeared that the procurator fiscal depute had not been in possession of a copy of a specific letter to which she had referred in her submissions to the sheriff and therefore had not provided the sheriff with a copy of it. Nor did she have a copy of documents referred to within that letter. In the circumstances it was considered that it would have been desirable for the procurator fiscal depute to have had that correspondence and to have provided it to the sheriff for his consideration. Accordingly on 30 September 2008 the Advocate depute advised the representatives of the complainers and of the minuters that the Crown would no longer oppose the Bill and would arrange for the return of all material taken from the offices of DWS. On 3 December 2008 at the hearing of the Bill of Suspension the Advocate depute conceded that the Bill should be passed solely on the basis that the hearing before the sheriff on 14 March 2007 was procedurally inept as outlined above. The Advocate depute also conceded that an award of expenses was competent but opposed any award of expenses made on an "agent and client" basis. Although the interlocutor records that the Advocate depute conceded that an order for expenses should be made against the Crown, it was explained that it did not reflect the position of the Advocate depute at the time.

Hearing on Expenses

[3] The Appeal Court reserved the question of expenses and remitted the matter of determination of expenses to a single judge. The submissions on behalf of the complainers were wide-ranging. In summary, counsel for the complainers maintained that there was no basis for the warrant being granted in the first place and in any event the concession ultimately made by the Advocate depute resulting in the passing of the Bill should have been made at the outset of the proceedings. A targeted production order should have been sought rather than a warrant to search the complainers' premises. The respondent had failed to provide any reason for not doing so. When the police officers arrived in execution of the warrant granted by the sheriff, the complainers claimed privilege but were advised that the items were being taken under the direction of the Crown. Although the expenses sought only related to the period since the Bill had been lodged, it was appropriate to look at the procedure adopted by the respondent before the Bill was lodged. In all the circumstances an award of expenses should be made in favour of the complainers against the respondent: it was not open to the Crown to claim immunity from expenses on the basis that the Crown represented the public interest (Benedetto v The Queen [2004] 1 WLR 500). The appropriate scale of expenses should be on the agent and client scale. Counsel for the complainers submitted that the conduct of the Crown in seeking the warrant was so reprehensible that the award of expenses should result in the entire cost of the litigation being met by the Crown. It was alleged that the Crown had acted oppressively and had caused DWS significant disruption to their business. The actions of the procurator fiscal depute in failing to produce the correspondence to the sheriff amounted to oppression. Normally the award of expenses in litigation was on a party and party basis but the court had a discretion to award the higher scale where the unsuccessful party had acted unreasonably. (British Railways Board v Ross and Cromarty County Council 1974 SLT 274).

[4] Counsel for the minuters adopted the submissions made on behalf of the complainers but emphasised that the privilege attaching to the documents was the client's privilege and the complainers were merely the custodians of the minuters' privilege. In correspondence with their solicitors the minuters had disclosed their activities with candour and had not expected the correspondence to be seized. Had it not been for the warrant granted in 2005 for the search of the minuters' premises this issue would not have arisen. The minuters had now taken steps to set aside that warrant and had recently lodged a Bill of Suspension in that regard. The minuters had a separate interest. The court had ordered service upon them and they had elected to enter the process.

[5] In response the Advocate depute explained that the concession that the Bill should be passed was based upon the procedure before the sheriff. He did not concede that the search warrant should not have been sought in the first place. Reasonable grounds existed and continued to exist for the Crown seeking such a warrant. It was not appropriate in this case to seek a production order because there had been reasonable grounds for suspecting that SCL and persons associated with DWS had all been involved in money laundering. Where there were reasonable grounds for suspicion involving solicitors, it was appropriate to obtain a warrant. In the circumstances no privilege attached to the communications between DWS and SCL. In relation to the possible award of expenses the interlocutor dated 3 December 2008 erroneously recorded a concession by the Crown that an order for expenses should be made against the Crown. This error had been drawn to the attention of Justiciary Office shortly after the date of the interlocutor. The Crown opposed any award of expenses in favour of SCL and sought modification of expenses awarded in favour of DWS. It was not appropriate to equiparate civil proceedings in Scotland with criminal proceedings when an award of expenses was being considered. In criminal proceedings there was the additional consideration that representatives of the Crown acted in the public interest. The Crown must be entitled to prosecute crime in the public interest without fear of an award of expenses. The Court should be cautious in its reliance upon English authorities because these relate to a jurisdiction where expenses are usually awarded in favour of the successful party in criminal proceedings. The usual practice in Scotland in Bills of Suspension is that where expenses are awarded they are modified. As regards DWS I was invited to follow that usual practice. The award of expenses on any other basis in criminal proceedings in Scotland is exceptional and requires to be justified. The issue is a matter for the discretion of the court but that discretion should be exercised in accordance with normal practice. Departure from the norm of modification had only arisen where there was some fundamental nullity or error in the proceedings or where the proceedings were nimious and oppressive. Even in those cases where the court awarded full expenses, they were the judicial expenses of process on a party and party basis. The most recent authority on the question of expenses was Lawrie & Symington Ltd & Others v The Procurator Fiscal, Lanark & Others
[2009] HCJAC 50.

Discussion

[6] As Lord Carloway observed in Lawrie & Symington Ltd & Others v The Procurator Fiscal, Lanark & Others the court has the power to award full expenses in proceedings for review but that has rarely been done in recent years. The almost invariable practice of the High Court is to modify expenses in such proceedings (Gallagher, Petitioner 1990 JC 345). In appropriate cases the court may refuse to modify an award of expenses, particularly where there has been oppression or where the proceedings involve a fundamental nullity. Essentially the question of whether to award expenses and, if so, whether to modify them is a matter for the discretion of the court taking into account the whole circumstances of the case.

[7] Although counsel for the complainers and the minuters relied upon legal privilege attaching to the records of DWS relating to SCL, I do not consider that in this case it is of any assistance to me in the exercise of my discretion. In the first place the records may be excepted from privilege because of the alleged illegal act by SCL (money laundering) and the direct involvement of DWS or one of their partners. As Lord President Emslie observed in Micosta SA v Shetland Islands Council 1983 SLT 483 at page 485:

".... it is not surprising that correspondence between the party and his law agent relating to these (fraudulent) transactions was denied the privilege conferred by the general rule."

Lord President Emslie also quoted with approval the observation of Lord President McNeill in Munro v Fraser (1858) 21 D 103 at 107 to the following effect:

"A party is entitled to have advice, and to communicate with his law adviser confidentially, and such communication is not to be laid open except in particular circumstances and questions. Of course fraud supersedes all rules."

On the basis of the information presented to the sheriff, outlined in his report and elaborated before me, it seems to me improbable that privilege would attach to the communications between SCL and DWS concerning SCL's alleged criminal activity which was the alleged source of the funds under investigation. In any event the petition presented to the sheriff sought a warrant to seize and retain any material "other than items subject to legal privilege" and a warrant was granted in those terms. In these circumstances, as the sheriff observes in his report, the warrant which he granted did not confer the right to seize any item which, as a matter of fact or law, was subject to legal privilege.

[8] The second issue canvassed before me was whether it had been inappropriate to seek a warrant to search the premises of DWS when section 380 of the Proceeds of Crime Act 2002 ("the 2002 Act") enables the Crown to seek a production order which is a less draconian measure. Section 380(5) defines a production order as an order requiring the person specified in the order as appearing to be in possession or control of material either to produce that material to a proper person for him to take away or to give the proper person access to the material within the period specified in the order. Section 380(6) stipulates that the period specified in the production order must be a period of seven days beginning with the day on which the order is made unless it appears to the sheriff that a longer or shorter period would be appropriate in the particular circumstances. Section 387 of the 2002 Act permits a sheriff to issue a search warrant if he is satisfied that either of the requirements for the issuing of such a warrant is fulfilled. These requirements are specified in sub-section (5) and are alternative requirements. The first has no application in the present case but the respondent maintains that the second alternative that section 388 is satisfied in relation to the warrant has been fulfilled. Section 388 is in the following terms:

"(1) This section is satisfied in relation to a search warrant if -
(a) subsection (2) applies, and

(b) either the first or the second set of conditions is complied with.

(2) This subsection applies if there are reasonable grounds for suspecting that -

...

(c) In the case of a money laundering investigation, the person specified in the application for the warrant has committed a money laundering offence.

(3) The first set of conditions is that there are reasonable grounds for believing that -

(a) any material on the premises specified in the application for the warrant is likely to be of substantial value (whether or not by itself) to the investigation for the purposes of which the warrant is sought,

(b) it is in the public interest for the material to be obtained, having regard to the benefit likely to accrue to the investigation if the material is obtained, and

(c) it would not be appropriate to make a production order for any one or more of the reasons in subsection (4).

(4) The reasons are -

(a) that it is not practicable to communicate with any person against whom the production order could be made;

(b) that it is not practicable to communicate with any person who would be required to comply with an order to grant access to the material or to grant entry to the premises on which the material is situated;

(c) that the investigation might be seriously prejudiced unless a proper person is able to secure immediate access to the material.

(5) The second set of conditions is that -

(a) there are reasonable grounds for believing that there is material on the premises specified in the application for the warrant and that the material falls within subsection (6), (7) or (8).

(b) there are reasonable grounds for believing that it is in the public interest for the material to be obtained, having regard to the benefit likely to accrue to the investigation if the material is obtained, and

(c) any one or more of the requirements in subsection (9) is met.

....

(8) In the case of a money laundering investigation, material falls within this subsection if it cannot be identified at the time of the application but it -

(a) relates to the person specified in the application or the question whether he has committed a money laundering offence, and

(b) is likely to be of substantial value (whether or not by itself) to the investigation for the purposes of which the warrant is sought.

(9) The requirements are -

(a) that it is not practicable to communicate with any person entitled to grant entry to the premises;

(b) that entry to the premises will not be granted unless a warrant is produced;

(c) That the investigation might be seriously prejudiced unless a proper person arriving at the premises is able to secure immediate entry to them."

I reject the submission by senior counsel for the complainers that the requirements of section 388 were not satisfied. The basis for that submission was that the second set of conditions had not been and could not be complied with, without reading into section 388(9)(c) the implication that the purpose of securing immediate entry was to seize the material within the premises. While I consider that there may be force in that submission because sub-section (4)(b) distinguishes between an order to grant access to material and an order to grant entry to premises on which the material is situated, it is unnecessary for me to determine that issue because the requirements of section 388 are otherwise met. There is no doubt that sub-section (2) has been satisfied and it seems to me that the first set of conditions has also been complied with. On the basis of the information provided to the sheriff I consider that there were reasonable grounds for believing that material on the premises of DWS specified in the application for the warrant was likely to be of substantial value to the investigation into the money laundering allegations relating to SCL and DWS and that it was in the public interest for the material to be obtained, having regard to the benefit likely to accrue to the investigation. I also consider that it would not have been appropriate to make a production order for the reason specified in subsection (4)(c) namely that the investigation might be seriously prejudiced unless a proper person is able to secure immediate access (my emphasis) to the material.

[9] I also reject the submission on behalf of the complainers that the respondent failed to specify in the petition seeking the warrant the detailed grounds for the suspicion that the complainers and minuters had committed the offence of money laundering. As the sheriff observes in his report (paragraph 18) the respondent followed the normal practice of averring that there were reasonable grounds for suspicion. In accordance with practice it is common for the procurator fiscal to elaborate on these grounds in the hearing before the sheriff. In some cases that elaboration involves a police officer giving evidence on oath but in other cases it simply involves the procurator fiscal explaining the basis upon which the suspicion is founded. (Birse v MacNeill 2000 JC 503). The sheriff explains in his report that the petition specified both the complainers and the minuters as persons against whom there were reasonable grounds for suspicion that they had committed a money laundering offence. In the sheriff's opinion there were clear grounds for suspicion in respect of SCL but the grounds for suspicion in respect of DWS were less clear. Although the sheriff considered that there might be an innocent explanation for the comment in the letter from the partner of DWS that the recipient of the letter should find a suitable secure location for the retention of the letter, he also thought that it was an unusual piece of advice to have a in letter between a solicitor and client dealing with the matters referred to in the letter. Even if there had not been reasonable grounds for suspecting that DWS had committed a money laundering offence, I agree with the sheriff that if such grounds existed in respect of SCL that was sufficient to entitle the sheriff to grant the warrant to search the premises of DWS. In all the circumstances I reject the submission on behalf of DWS, and adopted on behalf of SCL, that there was any fundamental error in the respondent seeking the warrant complained of. Moreover, it seems to me that, on the basis of the sheriff's report, the sheriff would have granted the warrant even if he had been provided with copies of all of the correspondence. That would not have affected the issue of there being reasonable grounds for suspecting that SCL had committed a money laundering offence and that documents in furtherance of the investigation into that alleged offence might be recovered from the premises of DWS.

[10] As there was a legitimate basis for seeking the warrant to search the premises of DWS and as the only reason for setting aside that warrant was on the basis that the hearing before the sheriff was procedurally inept, there are no circumstances meriting an award of the whole expenses of process against the respondent in favour of either the complainers or the minuters, far less an award of expenses based upon agent and client, client paying. It is unnecessary for me to determine whether an award of expenses on such a basis would ever be appropriate in criminal proceedings and I reserve my opinion on that matter. Suffice it to say that in the present case, even if this had been a civil litigation, I would not have been persuaded that the conduct of the respondent was such as to merit an award of expenses against the respondent on an agent and client, client paying basis. It seems to me that this case is no different from any other in which there has been a procedural irregularity requiring a warrant to be set aside. Indeed, the irregularity in the present case arose because the procurator fiscal depute was acting on the basis of emailed instructions from Crown Office. The email quoted what its author considered to be the relevant parts of correspondence. It was not unreasonable for the procurator fiscal depute to seek a warrant on that basis and it is understandable why she elected to rely upon instructions from a senior official without insisting upon copies of all the relevant letters to enable her to place them before the sheriff. Nevertheless, the Advocate depute considered that she ought to have done so and that her failure to do so amounted to a procedural irregularity. It seems to me that such an omission is at the lower end of culpability and there does not appear to me to be any justification for departing from the normal rule that any expenses awarded in favour of either of the parties should be modified (Lawrie & Symington Ltd & Others v The Procurator Fiscal, Lanark & Others).

[11] In the course of his submissions the Advocate depute invited me to make no award of expenses in favour of SCL while awarding modified expenses in favour of DWS. I have considered whether it would be appropriate for me to make no award of expenses against either party in view of the interlocutor dated 3 December 2008 in which it is recorded that "an order for expenses should be made against the Crown". Although the Crown took issue with that interlocutor in correspondence with the Justiciary Clerk, its terms have not been altered and it does not seem to me to be appropriate, even if it were competent, to reach any view which is contrary to that interlocutor and does not reflect the apparent concession. Accordingly I have concluded that the appropriate course would be to make an award of expenses in favour of each of DWS and SCL. However the issue then arises as to whether any distinction should be drawn between them when I fix an appropriate figure for modification. It seems to me that it would be appropriate to draw such a distinction. DWS initiated the proceedings by lodging the Bill of Suspension which was presumably drafted by counsel. They have been parties to the proceedings throughout and attended all procedural hearings whereas SCL received intimation of the Bill of Suspension and Answers following the interlocutor of 25 July 2008 as a result of which they lodged skeleton answers. The Note of Argument for SCL essentially adopted the Note of Argument for DWS and on 2 September 2008 added submissions in respect of the warrants dated September 2005 for the search of SCL's premises. These warrants had not been challenged by SCL at the time they were granted but are now subject to a challenge following the lodging of a Bill of Suspension by SCL in or about May 2009. The involvement of SCL is minimal and while I do not agree that the modification should be assessed at Nil, I consider that it should approximate to the level of expenses awarded when the Crown presents a Minute in terms of section 188 of the Criminal Procedure (Scotland) Act 1995. No figures were provided to me of the expenses incurred by SCL but I derive some guidance from Lawrie & Symington Ltd & Others v The Procurator Fiscal, Lanark & Others as to modification figures, albeit in different circumstances. In this case it seems to me that it would be appropriate to modify the expenses awarded to SCL to the sum of £200.

[12] DWS have undoubtedly incurred more expense. As I have observed they initiated the proceedings by lodging the Bill of Suspension and appeared at procedural hearings. The Note of Argument lodged on behalf of DWS is more substantial than the Note of Argument for SCL. Having said that, there was no hearing on the merits of the case. Senior counsel for DWS advised me that the expenses to date amounted to £75,000 although no specification of how that expense arose was provided to me. Apart from the total sum, the only information that I was given was that the expenses included a fee for a meeting between counsel for DWS and the Advocate depute. It seems to me that it would be inappropriate to penalise the Crown for having meetings with representatives of accused persons or other litigants when the court actively encourages them to do so. It must be remembered that the award of expenses is intended to reflect only the court proceedings. In the absence of detailed figures for drafting the Bill of Suspension, attendance at a few formal hearings and drafting a Note of Argument I require to take a broad approach. Adopting that approach I modify the expenses awarded to DWS to the sum of £1,250.

[13] Accordingly DWS will be found entitled to the expenses of the proceedings in the Bill of Suspension from the respondent, modified to £1,250 and SCL will be found entitled to their expenses from the respondent modified to £200.