Privacy International, R (On the Application Of) v The Commissioner for HM Revenue & Customs, Court of Appeal - Administrative Court, May 12, 2014, [2014] EWHC 1475 (Admin)

Resolution Date:May 12, 2014
Issuing Organization:Administrative Court
Actores:Privacy International, R (On the Application Of) v The Commissioner for HM Revenue & Customs

Neutral Citation Number: [2014] EWHC 1475 (Admin)

Case No: CO/4089/2013




Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 12/05/2014

Before :


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Between :

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Mr Dan Squires and Mr Edward Craven (instructed by Bhatt Murphy) for the Claimant

Mr George Peretz (instructed by General Counsel to HM Revenue and Customs) for the Defendant

Hearing dates: 18th and 19th March 2014

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Mr Justice Green :


A. Introduction and issue 1-5

B. Relevant facts 6-27

(1) The initial complaint by Privacy International to BIS. 6-8

(2) The BIS response. 9-13

(3) The Privacy International complaint to HMRC 14-15

(4) The HMRC responses 16-27

a. The Decision letter 17-18

b. The subsequent explanation of the reasons

for the Decision letter 19-23

c. The letters from the HMRC Strategic

Export Referrals Team (SERT) 24-26

d. The update from HMRC 27

C. The position of the activists: Dr Shehabi and Mr Kersmo 28-32

D. The Statutory framework 33-

(1) The statutory prohibition upon disclosure. 35-36

(2) The exceptions to the prohibition - the power

to disclose under section 18(2)(a) and (d) CRCA 2005. 37

(3) The ``functions'' of the HMRC in relation to

export control 38-47

(4) The relationship between CRCA 2005 powers of

disclosure and the Freedom of Information Act 2000 48-51

(5) The margin of appreciation accorded to HMRC 52-62

E. The lawfulness of the Decision: Whether to quash and remit? 63-72

(1) Point 1: Failure to obtain evidence from the

relevant operational unit within HMRC. 64-74

(2) Point 2: Failure to have regard to the actual

complaint letter and accompanying dossier of evidence. 65

(3) Point 3: The Decision letter contains an error law on

its face. 66

(4) Point 4: The ex post facto explanations for the

Decision letter are not admissible to re-write

the Decision. 67

(5) Point 5: The Decision letter read in the light of

the supplementary reasons still reflects an

error of law; it relies only upon abstract

arguments and fails to involve an assessment of

the surrounding facts. 68

(6) Point 6: The update statement does not advance

matters. 69

(7) Point 7: The Decision letter responded to the

request in the wrong letter. 70

(8) Point 8: The position of HMRC generally

reflects internal confusion which undermines

the credibility of its response. 71

(9) Conclusion 72-73

  1. Factors relevant to the exercise of discretion I: The status

    of affected persons 74-131

    (1) The issue 74-76

    (2) Pressure groups / NGO's / the press 77-81

    (3) Victims 82-115

    (4) Witnesses 116-120

    (5) Complainants 121

    (6) Companies investigated:- 122-

    (i) Forewarning the suspect 123

    (ii) Reputation 124-130

    (iii) Confidentiality of information 131

  2. Factors relevant to the exercise of discretion II: Securing

    cooperation and confidence in the system 132-135

  3. Factors relevant to the exercise of discretion III: The right

    to a No Further Action (``NFA'') decision and reasons 136-179

    (1) The issue 136-141

    (2) The position in common law 142-162

    (3) The position under the Framework Decision

    and the Council Directive 163-166

    (4) Article 10 ECHR 167-179

    1. The Invitation to invite the HMRC to issue Guidelines 180-185

  4. Conclusion 186

    A. Introduction and issue

    1. The issue in this case concerns the powers and duties of Her Majesty's Revenue and Customs (hereafter ``HMRC'') to disclose information about its export control functions to an NGO called Privacy International. That organisation has complained about the conduct of a UK company whom it is alleged has supplied ``malware'' to repressive regimes (inter alia in Bahrain and Ethiopia) which has then been used for the covert surveillance of political activists. HMRC, in a decision taken on 9th January 2012 (the ``Decision letter''), stated that it had no power to provide information about its investigations to Privacy International or to any third person, including victims of foreign regimes who used the company's products for surveillance purposes. The issue arising is whether HMRC is correct to say that it has no power or duty to provide information and as to the correctness of the specific explanations it has (subsequently) given justifying that position. An important sub-issue is whether HMRC is required to inform a complainant of the decision it takes as to whether to prosecute or take no further action in respect of a complaint, bearing in mind that in principle decisions not to prosecute may be challenged by way of judicial review and that absent a communication of the decision taken and the reasons therefor a complainant will not know whether a decision has even been taken and will thereby be precluded from seeking to challenge that decision. The principal statute of relevance to this case is the Commissioners of Revenue and Customs Act 2005 (``CRCA 2005'').

    2. The Claimant, Privacy International, was founded in 1990. It is a UK non-governmental organisation dedicated to investigation in relation to privacy at the international level. In particular it focuses upon tackling what it perceives to be the unlawful use of surveillance. Upon occasion it gives expert evidence to parliamentary and governmental committees around the world on privacy issues. It has advised and reported to, inter alia, the Council of Europe, the European Parliament, the Organisation of Economic Cooperation and Development, and the United Nations. In this case it has applied for judicial review on its own behalf but also as, in effect, the champion of the interests of two political activists whom, it is submitted, were the victims of unlawful and criminal surveillance by the security forces of Bahrain and Ethiopia. The Claimant submitted that the equipment used in Bahrain and in Ethiopia by security forces was supplied illegally to those states by Gamma International in breach of export regulations applicable to that company in the United Kingdom. Privacy International submitted complaints not only of a general nature about Gamma International but also specifically in relation to the two activists that I have referred to. In order to explain fully the context to this case it is necessary to set out in some detail the position of these two activists, which I do at section C below.

    3. The Defendant, HMRC, has the statutory duty to enforce the relevant export controls to the types of surveillance products which it is alleged were used against the two activists. The Claimant seeks to quash the Decision letter upon the basis that it reflects a serious misdirection of law since it is plain that in law HMRC has a power to disclose information including about ongoing investigations. Further, it is submitted that when the reasons now (belatedly) relied upon to justify the Decision are analysed they reveal not only an error of law about the very existence of a power permitting the provision of information but also a series of subsidiary errors relating to the relevance of the criteria which should govern the exercise of the statutory discretion which the Claimant submits manifestly exists.

    4. It is only fair to record that in their written and oral submissions in the course of the litigation HMRC has adopted a far more constructive approach than is evident from the Decision letter and from other correspondence arising in this case. HMRC accepts that the Decision letter was badly drafted and might not fully reflect HMRC's true position. HMRC accepts that it does have a power to provide information. In the course of the hearing Mr George Peretz, who appeared for the Defendant, also clarified HMRC's position in a way which narrowed the legal gap between the parties as to the relevance of the different criteria that might need to be evaluated in a given case. Nonetheless, important and significant differences remain arising on the facts of this case. Those differences relate also to the scope and effect of the judgment of the Supreme Court in Kennedy v Charity Commission [2014] UKSC 20 (``Kennedy'') which was handed down during the course of this judicial review and which is also concerned with the principles governing the disclosure of information by public authorities.

    5. Before setting out the facts relating to this application in detail it is necessary at the outset to record an important warning in relation to those facts. I have not heard from Gamma International, the company whose products are at the heart of the complaints made by the Claimant and whose conduct is alleged to amount to a criminal offence. Gamma International was not served as an Interested Party and has not therefore served evidence or made submissions whether in writing or orally. For the avoidance of doubt, therefore, nothing I say in this judgment is to be taken as reflecting any view whatsoever on my part as to the merits of the complaints lodged by the Claimant or those upon whose behalf it acts.

      B. Relevant facts

      (1) The initial complaint by Privacy International to BIS

    6. On 12th July 2012 solicitors acting for Privacy International sent a pre-action protocol letter to the Secretary of State for Business, Innovation and Skills (``BIS'') in relation to an alleged lack of progress in the implementation within the UK of export controls for surveillance equipment. At this point in time Privacy International was acting for itself and not on behalf of any natural person claiming to have been prejudiced by products manufactured and/or supplied by Gamma International. In its letter before claim it summarised the present UK legal position in relation to the Export Control Act 2002 (hereafter ``ECA...

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