United Kingdom House of Lords Decisions

Southwark Crown Court, Ex Parte Bowles, R v. [1998] UKHL 16; [1998] 2 All ER 193; [1998] 2 WLR 715; [1999] Crim LR 220 (2nd April, 1998)

LORD GOFF OF CHIEVELEY

My Lords,

    I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hutton. For the reasons he gives I would dismiss this appeal.

LORD SLYNN OF HADLEY

My Lords,

    I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hutton. For the reasons he gives I would dismiss this appeal.

LORD STEYN

My Lords,

    I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hutton. For the reasons he gives I would dismiss this appeal.

LORD CLYDE

My Lords,

    I have had the advantage of reading in draft the speech prepared by my noble and learned friend, Lord Hutton. For the reasons he gives I too would dismiss this appeal.

LORD HUTTON

My Lords,

    This appeal concerns the relationship between section 93(H) of the Criminal Justice Act 1988 and section 9 of, and Schedule 1 to, the Police and Criminal Evidence Act 1984 ("PACE") and the purpose for which the police may obtain an order under the former section.

The background

    Mrs. Karen Bowles is an accountant. Amongst her clients were a Mr. and Mrs. Peaty who ran a company, Associate Business Management Ltd. ("ABM"). Mr. and Mrs. Peaty faced charges of dishonesty connected with the running of ABM The essence of these charges was that ABM purported to be a management consultancy business which recruited redundant executives on payment of a joining fee of £7,500 in return for an assurance by ABM of an income from existing clients of the company of between £25,000-£40,000 per annum, but the executives who joined this scheme received no income. It was further alleged that ABM had received a sum in excess of £750,000 from the joining fees and that the bulk of this sum had been used for the personal and private benefit of Mr. and Mrs. Peaty. Since 1991 ABM's accounts had been prepared by Mrs. Bowles. It was alleged that these accounts failed to account properly for either the income or the expenditure of the company and that information supplied by the company to Mrs. Bowles had been either bogus or misleading.

    The police applied to the circuit judge sitting at the Crown Court at Southwark for a production order against Mrs. Bowles under section 93H of the Criminal Justice Act 1988, and on 29 March 1996 His Honour Judge Jackson made a production order against Mrs. Bowles requiring that she:

 "should give a constable access to and supply such originals and copies as may be necessary of the material to which the application relates, namely all files, documents and accounts and other records used in the ordinary course of business (howsoever recorded) . . . paid cheques, inter-account transfers, telegraphic transfers and correspondence . . . in relation to her dealings with ABM and any other material relating to [Mr. or Mrs.] Peaty."

    Mrs. Bowles has at all times behaved with the utmost priority. She was anxious to cooperate with the authorities but she was advised by her lawyers that, although the police were entitled to the material which she held relating to the affairs of ABM, that entitlement arose under section 9 of PACE and not under section 93H of the Act of 1988. Accordingly Mrs. Bowles brought an application for judicial review to quash the production order, and on 17 October 1996 the Divisional Court made an order setting aside the order of the circuit judge.

The relevant statutory provisions

    Part VI of the Criminal Justice Act 1988 contains provisions which empower the courts to confiscate from convicted persons in certain criminal cases the proceeds of offences committed by them and to make restraint orders prohibiting persons from dealing with property which may be the subject of a confiscation order.

    Section 93H was inserted in Part VI of the Criminal Justice Act 1988 by section 11 of the Proceeds of Crime Act 1995. The material parts of section 93H are as follows:

 "(1) A constable may, for the purposes of an investigation into whether any person has benefited from any criminal conduct or into the extent or whereabouts of the proceeds of any criminal conduct, apply to a Circuit judge for an order under subsection (2) below in relation to particular material or material of a particular description.

 (2) If, on such an application, the judge is satisfied that the conditions in subsection (4) below are fulfilled, he may make an order that the person who appears to him to be in possession of the material to which the application relates shall -


  (a) produce it to a constable for him to take away, or

  (b) give a constable access to it,


 within such period as the order may specify.


  This subsection has effect subject to section 93J(11) below.


 (3) The period to be specified in an order under subsection (2) above shall be seven days unless it appears to the judge that a longer or shorter period would be appropriate in the particular circumstances of the application.

 (4) The conditions referred to in subsection (2) above are -


  (a) that there are reasonable grounds for suspecting that a specified person has benefited from any criminal conduct;

  (b) that there are reasonable grounds for suspecting that the material to which the application relates -


   (i) is likely to be of substantial value (whether by itself or together with other material) to the investigation for the purposes of which the application is made; and

   (ii) does not consist of or include items subject to legal privilege or excluded material;


   and


  (c) that there are reasonable grounds for believing that it is in the public interest, having regard -


   (i) to the benefit likely to accrue to the investigation if the material is obtained, and

   (ii) to the circumstances under which the person in possession of the material holds it,


  that the material should be produced or that access to it should be given.


 (5) Where the judge makes an order under subsection (2)(b) above in relation to material on any premises he may, on the application of a constable, order any person who appears to him to be entitled to grant entry to the premises to allow a constable to enter the premises to obtain access to the material.

 (6) An application under subsection (1) or (5) above may be made ex parte to a judge in chambers.

 (7) Provision may be made by Crown Court Rules as to -


  (a) the discharge and variation of orders under this section; and

  (b) proceedings relating to such orders.


 . . .

 (12) In this section -


  (a) 'excluded material', 'items subject to legal privilege' and 'premises' have the same meanings as in the Police and Criminal Evidence Act 1984; and

  (b) references to a person benefiting from any criminal conduct, in relation to conduct which is not an offence to which this Part of this Act applies but would be if it had occurred in England and Wales, shall be construed in accordance with section 71(4) and (5) above as if it had so occurred."

    Section 9(1) of PACE provides:

  "A constable may obtain access to excluded material or special procedure material for the purposes of a criminal investigation by making an application under Schedule 1 below and in accordance with that Schedule."

    Section 14 of PACE provides:

 "(1) In this Act 'special procedure material' means -


  (a) material to which subsection (2) below applies; . . .


 (2) Subject to the following provisions of this section, this subsection applies to material, other than items subject to legal privilege and excluded material, in the possession of a person who -


  (a) acquired or created it in the course of any trade, business, profession or other occupation or for the purpose of any paid or unpaid office; and

  (b) holds it subject -


   (i) to an express or implied undertaking to hold it in confidence; . . ."

    The material parts of Schedule 1 to PACE are as follows:

 "1. If on an application made by a constable a circuit judge is satisfied that one or other of the sets of access conditions is fulfilled, he may make an order under paragraph 4 below.

 2. The first set of access conditions is fulfilled if -


  (a) there are reasonable grounds for believing -


   (i) that a serious arrestable offence has been committed;

   (ii) that there is material which consists of special procedure material or includes special procedure material and does not also include excluded material on premises specified in the application;

   (iii) that the material is likely to be of substantial value (whether by itself or together with other material) to the investigation in connection with which the application is made; and

   (iv) that the material is likely to be relevant evidence;


  (b) other methods of obtaining the material -


   (i) have been tried without success; or

   (ii) have not been tried because it appeared that they were bound to fail; and


  (c) it is in the public interest, having regard -


   (i) to the benefit likely to accrue to the investigation if the material is obtained; and

   (ii) to the circumstances under which the person in possession of the material holds, it,


  that the material should be produced or that access to it should be given.


 3. The second set of access conditions is fulfilled if -


  (a) there are reasonable grounds for believing that there is material which consists of or includes excluded material or special procedure material on premises specified in the application;

  (b) but for section 9(2) above a search of the premises for that material could have been authorised by the issue of a warrant to a constable under an enactment other than this Schedule; and

  (c) the issue of such a warrant would have been appropriate.


 4. An order under this paragraph is an order that the person who appears to the circuit judge to be in possession of the material to which the application relates shall -


  (a) produce it to a constable for him to take away; or

  (b) give a constable access to it,


 not later than the end of the period of seven days from the date of the order or the end of such longer period as the order may specify."

The judgment of the Divisional Court

    Before the Divisional Court the submission advanced on behalf of Mrs. Bowles was that section 93H was directed solely towards assisting in the recovery of the proceeds of criminal conduct and that it had no application to the investigation of crime as such. The submission advanced on behalf of the Director of Public Prosecutions was that under section 93H a production order could be made not only for the purpose of an investigation into the extent or whereabouts of the proceeds of any criminal conduct but also for the purpose of an investigation into whether a crime involving financial gain had been committed by a particular person. The Divisional Court rejected the latter submission and in his judgment (with which Gage J. agreed) Simon Brown L.J. stated [1997] 2 W.L.R. 936, 941:

 "In my judgment, therefore, it would be wrong to construe the words in section 93H(1) 'an investigation into whether any person has benefited from any criminal conduct' for all the world as if they were synonymous with 'an investigation into whether any conduct from which a person has benefited was criminal', effectively the construction for which (counsel for the Director of Public Prosecutions) contends."

The learned Lord Justice then held that it was less than clear that the predominant reason why the police sought the documents held by Mrs. Bowles was with a view to their obtaining restraint orders and confiscation orders rather than further investigating Mr. and Mrs. Peaty's alleged criminality, and that accordingly the production order should be quashed.

    It appears that after the hearing before the Divisional Court criminal proceedings against Mr. and Mrs. Peaty were discontinued. Consequently Mrs. Bowles decided that she no longer wished to be represented in these proceedings but, on this appeal, in addition to hearing submissions from Mr. Temple Q.C. on behalf of the appellant, the Director of Public Prosecutions, the House also had the advantage of hearing submissions from Miss Montgomery Q.C. as amicus curiae.

The construction of section 93H

    My Lords, viewed in isolation and apart from their context, the words in section 93H "an investigation into whether any person has benefited from any criminal conduct" are capable of being read to mean "whether any person has committed a crime which has benefited him", and this is the construction which Mr. Temple submitted should be given to them. However, I consider that Simon Brown L.J. was right to hold that in the context of Part VI of the Criminal Justice Act 1988 and of the Proceeds of Crime Act 1995, which inserted section 93H in Part VI, section 93H is concerned with an investigation into the proceeds of crime to assist the authorities to obtain information which may enable an application to be brought for a restraint order or a confiscation order. Thus the heading of Part VI of the Act of 1988 is "CONFISCATION OF THE PROCEEDS OF AN OFFENCE", and the long title of the Proceeds of Crime Act 1995 is:

 "An Act to make further provision for and in relation to the recovery of the proceeds of criminal conduct; to make further provision for facilitating the enforcement of overseas forfeiture and restraint orders; and for connected purposes."

The heading of section 93H itself is "Investigations into the proceeds of criminal conduct." It is also relevant to observe that the words in section 93H "whether any person has benefited from any criminal conduct" echo the words in subsection (1A) of section 71 of the Act of 1988 (which was substituted by section 1(2) of the Proceeds of Crime Act 1995) which provides that before a confiscation order can be made against an offender:

 "The court shall first determine whether the offender has benefited from any criminal conduct."

    I consider that the contrast between the wording of section 9(1) of, and Schedule 1 to, PACE and the wording of section 93H gives further support to the view that section 93H does not relate to the investigation of a crime for the purpose of obtaining evidence to prosecute an offender, but relates to an investigation as to what has happened to the proceeds of criminal conduct for the purpose of obtaining information relevant to the making of a restraint order or a confiscation order. Section 9(1) refers to obtaining access to material "for the purposes of a criminal investigation" and Schedule 1, para. 2(a)(iv), refers to reasonable grounds for believing that "the material is likely to be relevant evidence", whereas the wording of section 93H does not refer to a "criminal investigation" or to "relevant evidence", and subsections (2) and (4)(a) of section 93H require the judge to be satisfied that "there are reasonable grounds for suspecting that a specified person has benefited from any criminal conduct".

    I further consider that the Proceeds of Crime Act 1995 itself recognises the distinction between a criminal investigation into the commission of an offence and an investigation into the proceeds of criminal conduct. Sections 21 and 22 of PACE contain provisions relating to access to, and copying of, seized material by a third party, and to retention of seized property by a constable. Section 15(2) of the Act of 1995 provides:

  "For the purposes of sections 21 and 22 of the Police and Criminal Evidence Act 1984 (access to, and copying and retention of, seized material) an investigation into whether any person has benefited from any criminal conduct or into the extent or whereabouts of the proceeds of any criminal conduct shall be treated (so far as that would not otherwise be the case) as if it were an investigation of, or in connection with, an offence."

Therefore, although the words in brackets "so far as that would not otherwise be the case" acknowledge that there may be a degree of overlapping, section 15(2) implicitly recognises that an investigation under section 93H differs from an investigation of, or in connection with, an offence.

    If the argument on behalf of the appellant were correct and section 93H should be given the wide construction for which the appellant contends, the effect would be that where the police wished to obtain access to material to investigate a criminal offence involving the obtaining of money or other property, they would have to make an application under section 93H and not under section 9(1) of PACE, because by virtue of para. 2(b) of Schedule 1 to PACE an application under section 9(1) cannot be granted if there are other methods available for obtaining the material. In Reg. v. Crown Court at Lewes, Ex parte Hill (1991) 93 Crim.App.R. 60, 65-66 Bingham L.J. referred to the careful balance in PACE between two public interests and the detailed and complex provisions of the Act designed to maintain that balance. He said:

  "The Police and Criminal Evidence Act governs a field in which there are two very obvious public interests. There is, first of all, a public interest in the effective investigation and prosecution of crime. Secondly, there is a public interest in protecting the personal and property rights of citizens against infringement and invasion. There is an obvious tension between these two public interests because crime could be most effectively investigated and prosecuted if the personal and property rights of citizens could be freely overridden and total protection of the personal and property rights of citizens would make investigation and prosecution of many crimes impossible or virtually so.

  "The 1984 Act seeks to effect a carefully judged balance between these interests and that is why it is a detailed and complex Act. If the scheme intended by Parliament is to be implemented, it is important that the provisions laid down in the Act should be fully and fairly enforced. It would be quite wrong to approach the Act with any preconception as to how these provisions should be operated save in so far as such preconception is derived from the legislation itself.

  "It is, in my judgment, clear that the courts must try to avoid any interpretation which would distort the parliamentary scheme and so upset the intended balance. In the present field, the primary duty to give effect to the parliamentary scheme rests on circuit judges. It seems plain that they are required to exercise these powers with great care and caution. I would refer to the observation of Lloyd L.J. in Maidstone Crown Court, Ex parte Waitt [1988] Crim. L.R. 384 where he said:


  'The special procedure under section 9 and Schedule 1 is a serious inroad upon the liberty of the subject. The responsibility for ensuring that the procedure is not abused lies with circuit judges. It is of cardinal importance that circuit judges should be scrupulous in discharging that responsibility.'"

    As Simon Brown L.J. observed in his judgment in the Divisional Court [1997] 2 W.L.R. 936, 939-940, the safeguards protecting the rights of citizens are less stringent in section 93H than in section 9 of, and Schedule 1 to, PACE:

 (i) applications under section 93H can be made ex parte; paragraph 7 of Schedule 1 requires that applications under section 9 must be made inter partes;

 (ii) section 9 applications must relate to a "serious arrestable offence"; no such requirement arises under section 93H;

 (iii) a section 9 order can only be made where there are "reasonable grounds for believing" (para. 2(a)(i) of Schedule 1) that an offence has been committed; section 93H involves a lower threshold test, which is that there are "reasonable grounds for suspecting" that a person has benefited from criminal conduct;

 (iv) applications under section 9 are limited by the requirement in para. 2(b) of Schedule 1 that other methods of obtaining the material have failed or have not been tried because they were bound to fail, but such a restriction does not apply to section 93H.

    In my opinion it was not the intention of Parliament in enacting section 93H to take away, in respect of the investigation of criminal offences involving the obtaining of money or other property, the safeguards to the citizen given in the detailed provisions of Schedule 1 to PACE. Accordingly I would reject the broader interpretation which the appellant submits should be given to section 93H.

    Sections 29, 30 and 31 of the Criminal Justice Act 1993 inserted sections 93A, 93B and 93C in the Criminal Justice Act 1988 which create offences in respect of money laundering. Section 93A relates to assisting another to retain the benefit of criminal conduct, section 93B relates to the acquisition, possession or use of property representing proceeds of criminal conduct, and section 93C relates to concealing or transferring proceeds of criminal conduct. At first sight the words of section 93H might be read to authorise an investigation into whether some of the elements of an offence under section 93A or 93B or 93C existed in order to obtain evidence for a prosecution. But whilst an investigation can be ordered under section 93H into benefit from criminal conduct or into the extent or whereabouts of the proceeds of such conduct, I am of opinion, for the reasons which I have stated, that an investigation cannot be ordered under section 93H for the purpose of investigating whether a crime has been committed under any of these three sections.

Determining the purpose for which an application is made

    A further point was considered by the Divisional Court which was stated by Simon Brown L.J., at p. 942, in this way:

 "What then is the touchstone by which to decide whether a section 93H application should be made by the prosecuting authority and, other conditions being satisfied, granted by the court? I can find no better way of expressing it than to say that the question to be asked is this: what is the dominant purpose of the application: Is it for criminal investigation purposes--to determine whether an offence has been committed and, if so, to provide evidence of that offence--or is it to determine, in respect of criminal offending--although not necessarily a specific offence which the prosecution already has reasonable grounds for believing (rather than merely suspecting) has been committed--whether, and, if so, to what extent, someone has benefited from it, or the whereabouts of the proceeds."

Mr. Temple submitted that, if the only purpose for which an order could be made under section 93H was for an investigation into the proceeds of criminal conduct, there was nevertheless no need to introduce the test of dominant purpose into the matters to be considered by a circuit judge in determining whether to make an order, and that the only matters as to which the judge need be satisfied (in addition to the matters set out in section 93H(4)) were that the police officer applying for the order had the genuine purpose of investigating the proceeds of criminal conduct and that the application for the order was not a mere device in order to investigate the commission of an offence and to obtain evidence to support a prosecution. Mr. Temple submitted that if the judge were satisfied on these matters, the order should not be refused, even if the granting of it would also enable the police to investigate the commission of a crime.

    My Lords, I would make two observations in respect of these submissions. The first is that if the true construction of section 93H be the one which I have suggested, then I consider that in the great majority of cases the circuit judge will not be faced with a situation where it appears that the police are actuated both by the purpose of investigating the proceeds of criminal conduct and by the purpose of investigating the commission of an offence, and that the judge will only have to consider whether he is satisfied (in addition to the matter specified in section 93H(4)) that the purpose of the application is to investigate the proceeds of criminal conduct. Secondly, in my opinion the nature of the dominant purpose test is well stated in Wade and Forsyth on Administrative Law 7th ed. p. 436:

 "Sometimes an act may serve two or more purposes, some authorised and some not, and it may be a question whether the public authority may kill two birds with one stone. The general rule is that its action will be lawful provided that the permitted purpose is the true and dominant purpose behind the act, even though some secondary or incidental advantage may be gained for some purpose which is outside the authority's powers. There is a clear distinction between this situation and its opposite, where the permitted purpose is a mere pretext and a dominant purpose is ultra vires."

In those cases where consideration may have to be given to the distinction between the two purposes, or where it may appear that the two purposes may co-exist (an example being where the police wish to investigate a case of living on the earnings of a prostitute) I think that there will be little practical difference between applying the test adopted by Simon Brown L.J. and applying the test propounded by Mr. Temple, but if a difference were to result, I consider it to be clear that the dominant purpose test is the appropriate one to apply.

    Accordingly I consider that if the true and dominant purpose of an application under section 93H is to enable an investigation to be made into the proceeds of criminal conduct, the application should be granted even if an incidental consequence may be that the police will obtain evidence relating to the commission of an offence. But if the true and dominant purpose of the application is to carry out an investigation whether a criminal offence has been committed and to obtain evidence to bring a prosecution, the application should be refused.

    I further consider that if the police discover evidence of the commission of an offence in the course of an investigation consequent upon an order properly made under section 93H, the fact that the evidence was discovered in this way would not be a reason for the exclusion of the evidence under section 78 of PACE on the ground of unfairness at a trial where the prosecution sought to adduce such evidence.

The certified point of law

    The point of law of general public importance certified by the Divisional Court is as follows:

 "Should there be imported into section 93H of the Criminal Justice Act 1988 a requirement for the applicant for a production order to show that the dominant purpose of the application is the investigation of benefit from criminal conduct and/or the extent and whereabouts of such benefit?"

In my opinion it is not appropriate to answer this question as it is formulated, because it fails to distinguish between the two separate points which arise for consideration on this appeal. The first point is whether an order should be made under section 93H if the purpose of the police in applying for the order is not to carry out an investigation into whether someone has benefited from criminal conduct or into the extent or whereabouts of the proceeds of criminal conduct, but to carry out an investigation into whether someone has committed an offence and to obtain evidence to bring a prosecution. For the reasons which I have stated, I would hold that an order should not be made for the latter purpose. The second point is how should a circuit judge decide for what purpose the application is brought if that issue arises before him. In my opinion, as I have stated, the answer is that a circuit judge should decide by applying the dominant purpose test as it is described by the learned authors of Wade and Forsyth on Administrative Law. But when a circuit judge applies that test he will do so, not because a requirement for the dominant purpose test has to be imported or read into the words of section 93H, but because it is the test which the law applies where an issue arises as to the purpose or purposes for which a statutory power is exercised or sought to be exercised.

    For the reasons I have given I would dismiss this appeal.