Virdee & Anor, R (On the Application Of) v The National Crime Agency, Court of Appeal - Administrative Court, May 11, 2018,  EWHC 1119 (Admin)
|Resolution Date:||May 11, 2018|
|Issuing Organization:||Administrative Court|
|Actores:||Virdee & Anor, R (On the Application Of) v The National Crime Agency|
Neutral Citation Number:  EWHC 1119 (Admin)
Case No: CO/4157/2017 & CO/5692/2017
IN THE ROYAL COURTS OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
LORD JUSTICE HOLROYDE
MR JUSTICE DINGEMANS
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Jonathan Lennon (instructed by Kaim Todner ) for the Claimants
Andrew Bird (instructed by GLD) for the First Defendant
Hearing dates: 19th April, 2018
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Approved JudgmentLord Justice Holroyde :
This is the judgment of the court, to which we have both contributed.
There are before the court two applications for judicial review. In the first, the claimants Mr Virdee and Mr Trutschler challenge the decision of the defendant National Crime Agency (``NCA'') not to return items seized following what are said to have been unlawful arrests and searches on 26th July 2017. In the second, the claimants challenge production orders issued by judges at the Central Criminal Court (``the CCC'') on 24th May, 16th June and 9th August 2017, in respect of each of which it is alleged that the NCA failed to give full and frank disclosure when applying for the orders. Both claims are brought by permission of Ouseley J, who directed that they be heard together.
Mr Virdee is a director of many companies. One of them is PV Energy Ltd, (``PVE''), a business engaged in the provision of renewable energy and solar power. The ownership of PVE is divided between an investment company and a Swiss company, the Meeco Group. Until 5th May 2017, Mr Virdee was the majority share holder in the investment company. It is now wholly owned by his father. The Meeco Group is owned by the wife of Mr Trutschler. Mr Trutschler is an employee of PVE. In essence, Mr Virdee is concerned with the contractual side of PVE while Mr Trutschler provides technical expertise. PVE has not conducted any business in the United Kingdom, but has entered into engineering, procurement and construction contracts relating to the supply of renewable energy and solar power in a number of other countries.
From about 2014 onwards, PVE was actively interested in entering into such contracts in the Caribbean states of Antigua and Barbuda (``Antigua''), and St Kitts and Nevis (``St Kitts''). A solar energy project was successfully concluded with Antigua. There is no evidence before the court that any contract was concluded with St Kitts. In discussions and negotiations in relation to the contract with Antigua, and a possible contract with St Kitts, Mr Virdee and Mr Trutschler had dealings with the Prime Minister of Antigua, the then Minister of Tourism, Energy and Development in Antigua, and the Prime Minister of St Kitts.
Between 31st January 2015 and 26th January 2017 Mr Virdee's phone calls were being intercepted by the German authorities, who suspected him of involvement in a VAT carousel fraud. A warrant for Mr Virdee's arrest on suspicion of involvement in that fraudulent activity was issued in Germany. The German authorities then issued a European Arrest Warrant. On 10th January 2017, Mr Virdee was arrested at Heathrow Airport pursuant to the latter warrant. He was granted bail pending extradition proceedings. His legal representatives in Germany successfully challenged the German arrest warrant: it was quashed on 28th June 2017, and as a result the extradition proceedings fell away.
In the course of their investigations into the suspected VAT fraud, the German authorities had intercepted telephone calls which caused them to suspect that Mr Virdee and Mr Trutschler may be involved in bribery and/or corruption in relation to the activities of PVE in the Caribbean. Mr Virdee's German lawyers sent to the German authorities, on 1st March 2017, a letter contending that there was no basis for any prosecution by the German authorities in respect of corruption. In relation to PVE's projects in Antigua, the letter stated that: the Antiguan Minister of Tourism had unexpectedly approached Mr Trutschler and demanded a financial contribution in return for the successful mediation of energy projects; Mr Trutschler had rejected this demand; that no further demand was made of Mr Trutschler; the Minister had then made a similar demand of Mr Virdee; Mr Virdee also had ``rejected this request with regard to both nature and amount of the payment''; no financial contributions had been made to the Minister.
On 23rd March 2017 the German authorities provided to the NCA recordings of intercepted phone calls on 7th February, 12th March, 12th July, 5th August, 11th August and 9th November 2016. The German authorities did not provide the NCA with a copy of the German lawyer's letter, but referred to it in the following terms:
``In a communication dated 01 March 2017, the German defence counsels of the alleged perpetrator deny that the result of the above findings are the potential `acts of bribery' by the alleged perpetrator Peter Singh Virdee to the benefit of members of the government (the acting Prime Minster ... in particular) in Antigua and Barbuda. In addition to legal objections brought against these accusations, it is argued, in particular, that it was not the alleged perpetrator and also not Trutschler, but the minister there who made such a `proposal' relevant under criminal law, and that this request was ultimately rejected by the alleged perpetrator and by Trutschler.''
Shortly after receiving this material, the NCA commenced their own bribery/corruption investigation into the claimants.
The court has been provided with transcripts of the recorded phone conversations on the six dates. For the most part, they were conversations between the claimants. On one occasion, they were engaged in a conference call which also involved the Antiguan Minister of Energy. There is no doubt that the transcripts include a number of references to the topic of payments or gifts to government officials. There is however dispute between the parties as to what the transcripts reveal about the claimants' attitude to such payments or gifts. It is submitted on behalf of the claimants that it is clear from the transcripts that although demands were being made of them, they were refusing to involve themselves or PVE in the payment of any bribe or any other corrupt activity. It is submitted on behalf of the NCA that, on the contrary, it is clear from the transcripts that the claimants were ready and willing to pay bribes, and had given at least one gift to a Caribbean politician, but were seeking to negotiate lower corrupt payments than had been demanded of them.
The claimants deny any wrongdoing. It is unnecessary, and would be inappropriate, to go into the detail of the transcripts. It is however necessary, for reasons which will become apparent, to refer to some key passages in them.
A transcript of a conversation between the claimants on 12th March 2016 records Mr Virdee telling Mr Trutschler that he had had ``a serious fight'' when he last spoke to ``our friend''. Later in the conversation Mr Virdee referred to ``our friend'' by the name of the Antiguan Minister of Energy. He complained that ``our friend'' had been saying he needed 2 million, to which Mr Virdee said he had replied -
``What do you mean, `I need 2 million'?, I said `you can't just fucking take 2 million. You can't just say `I need 2 million because I did a lot of gravy and this and you know, you guys are buying volume and that's why there should be more ...'. I said `That's why could afford to get fucked by you guys at 1.5 million on the back of the fact that we are buying volume. Had we not been buying volume, we could not have done that deal at 1.5 million. You go and you get 20, 30 people every day come into your office as Minister of Energy, you show me one of them saying to you they can do the same quality, same product everything for the price we have done it'.''
Mr Virdee also said that ``our friend'' had wrongly claimed that Mr Virdee had promised his mother a car. He said to Mr Trutschler that there had been an occasion when he had been asked for his watch, and had taken it off and given it to the Minister. He continued:
``He gave me my watch back and he said to me `Could you buy my mum a car?' I said `I will think about it.' Then on my next visit he said `You promised my mum a car'. I said `I have no problem in buying you a car, no problem, but I can't be giving you chunks of the money that you are not entitled to beforehand and give money to the party and then go and buy you a car'. I said `yes, we will buy you a car, it is not a problem, but just give us some breathing space.' And he's gone ... and he has gone off on one to the point when he is just very obnoxious conversation and to the point you know I said to him `You know what, go fuck yourself, I'm done with this, I can't be doing with this headache'.''
Later in the same conversation Mr Virdee told Mr Trutschler that the Prime Minister of St Kitts was visiting, and said -
``I am taking him and his entourage out for dinner this evening and then we have an after party, so be ready for a big bill, but in the interim he said he would like a nice watch. I said `okay.' And then he called me this morning and he said `Have you got my watch?', I said `Oh I have got to pick your watch up'. So that is that. I spoke to him last Saturday, last Sunday at the airport hotel when he was in transit to Dubai and he said `Look, I am in favour of this, I will send my minister down', I said `But you telling me you are in favour of it, it doesn't help me, it really doesn't help me in what you are telling me because, you know, I need action behind the words, and at the moment I am not seeing any of that.' And I had a very stiff conversation with him, to the point I said `Listen, you have got another 3, 3 and a half years. In 2 years' time you are going to start your election campaign, you are going to come to me and say `Peter Virdee, I need some election funding' and I am going to say `PM I can't help you, if I have not earned anything from this country' and then you are going to get upset and then we are going to fall out, so it is your call, how do you want to do this. ...
Look, I have someone in the car ... between me and you, I don't want to talk too much on the phone, I am going to have a very frank conversation with him, I mean as frank as I can get, and today's conversation is going to be `Yes we are going to be in St Kitts' or `No, we are not going to be in that region', simple, because I have not got time to go and entertain and go and meet him at airports and take him out for lunches and take eight of them out for dinner, and buy him a watch and buy him this and buy him shoes. I haven't got time for that. Now I don't mind nurturing a relationship, the guy is in power today, and if he ain't going to do nothing for me whilst he is in power, he is not going to do fuck all for me when he is out of power.''
Mr Virdee went on to tell Mr Trutschler that he was on his way to Selfridge's to look for a watch:
``I had my guy out looking yesterday but they are just out of the budget I want to spend on him. I don't really want to be spending more than like 2,000 pound on him, on a watch.''
On 12th July 2016 there was a conference call involving both claimants and the Antiguan Minister of Energy. The transcript records the following exchange between Mr Virdee (V), the Minister (M) and Mr Trutschler (T):
``M: On the St Kitts agreement, how are we going to share that?
V: I don't think you want to be having that conversation on line [M] with the greatest of respect, you might want to have it with DT in person or me in person.
M: No, we can do it right now, I'm on a Vonage, it has nothing to do with Antigua.
V: But we are not on the Vonage.
M: It has nothing to do with Antigua. I am not doing nothing illegal, I'm getting you a job in St Kitts, I just wanted to find out, you know, because DT, when I spoke to DT about that he said that is a decision for you and Peter.
V: That is right, DT spoke to me and you mentioned to me, he said that originally you asked for 50%, then there was 30% and I agreed with you around 1.2 million, I said yes get the battery in and we can increase it. And then on St Kitts we can discuss.
M: No, let's move forward, let's not even go onto St Kitts yet, I never agreed to get a battery first to agree on anything. Antigua was a different thing. That is just sour grapes so let's not even speak about Antigua on the phone. We will speak about that in person so that is not correct, Antigua is something different. Let's speak about St Kitts -
V: Well, we need to sort Antigua out and then we can move on to St Kitts.
M: I don't want to speak on Antigua on the phone. We speak on Antigua in person. Or when you get a secure line you can call me.''
In the conversation which followed, the Minister said he was not a greedy man, and mentioned a possible split of 50-50 or a three-way split. Mr Virdee in response spoke of the amount of money he would have to put up initially and the need to recover his cost of funds. The Minister then said he wanted 10% of the contract price, which he thought was 50 million with a profit element of 13.3 million dollars. Mr Virdee's response was -
``V: 13.3 million. You want 10% of 45 million which is 4.5 million, we are left with 8.5 million, there will be roughly 3 million to take care of what we need to take care of locally, take 2 million, 3 million, whatever it may be.
M: That is too much, come on, give me a break Peter. 2/3 million, come on.
V: He has already asked for two.
V: Our friend.
M: You have no right to be entertaining discussions with him about that, we agreed.
V: I have not entertained a discussion with him. I am just telling you what he has indicated.
M: I mean he can indicate whatever the fuck he wants to indicate.
V: Understood, but -
M: He gets a million, they are lucky.
V: Even if -
M: We are not giving him 2 million dollars Peter, come on, okay, I will determine that, I told you, leave those discussions to me. ... I just prefer to come up with something on gross, if 10% is too much let's come up with something else. Okay. Think about it Peter, we got the incentive to close the thing with St Kitts, think about it. I really got to go. And DT we can speak next week when you come next Wednesday or Thursday morning, but think about it Peter.
V: I don't need to think about this. I'm not going to put in 20 million and walk away with 3.5 million. It doesn't work for me. If DT wants to do it he is more than welcome, if you want to do it, you are more than welcome. I am not front loading and financing and having all the bullshit I've had.
M: But we told you all your financing costs will come out, we said that, DT agreed and I agreed.
V: No, no, you said you want 10% of the gross.
M: Yes. The gross, yes. If 10% is too much we will work on a lower figure.
T: Look, gentlemen, why -
M: I am not working for nothing and you guys walk away with everything like in Antigua, I'm sorry.''
The NCA's applications for production orders:
In the course of their investigations, the NCA sought relevant financial records from a number of financial institutions. The institutions concerned declined, perfectly properly, to provide such material unless ordered to do so. The NCA accordingly made applications to the CCC for production orders pursuant to Section 9 of, and Schedule 1 to, the Police and Criminal Evidence Act 1984 (``PACE''). The applications were made without notice to the claimants. The first application was heard and granted by HH Judge Molyneux on 24th May 2017; the second by HH Judge Joseph QC on 16th June 2017; and the third by HH Judge Leonard QC on 9th August 2017. On each of those occasions a written application was placed before the learned judge concerned, and was confirmed by oral testimony on oath. Each of the written applications contained a similar summary of the reasons why the officer making the application believed that offences under the Bribery Act 2010 had been committed. Each summary referred to Mr Virdee's arrest on the 10th January 2017, and indicated that he was contesting extradition. The first and second applications stated that ``sensitive reliable intelligence'' indicated, amongst other things -
i) that on 12th March 2016 the claimants had discussed ``our friend, the Minister of Energy'' wanting ``two million, a car for his mother and a donation to the party'', and had further discussed Mr Virdee buying an expensive watch for the visiting Prime Minister of Antigua and planning to entertain him that evening;
ii) that on 5th August 2016 the claimants and the Antiguan Minister for Energy and Development had discussed how they were going to share the profits from the St Kitts agreement, that both claimants warned the Minister to be discreet, and that Mr Virdee said he had previously promised the Minister 1.2 million, but the Minister had asked for 1.5 million and had later asked for 10% of the total value of the project, which was too much in Mr Virdee's opinion;
iii) that the claimants had agreed to install solar energy equipment at the personal residence of the Antiguan Minister.
In each of those applications, the ``sensitive reliable intelligence'' was in fact the product of the German telephone intercepts which had been provided to the NCA. The third application was prepared at a later date, by which time the product of the intercepts had been provided by the German authorities to the NCA in evidential form pursuant to an international letter of request. It said that intercept material which had been legally obtained by the German authorities implicated the claimants in conspiring to bribe corrupt officials, indicated that they had discussed bribes demanded by and paid to the Antiguan Minister for Development and the Prime Minister of St Kitts, and included a recording of a conversation between the claimants and the Antiguan Minister negotiating the amount of money due to the Minister personally for introducing Mr Virdee to officials of St Lucia and St Kitts.
In a section of the application form headed ``Duty of Disclosure'', each of the first two applications contained a statement which included the following:
``1) The original information upon which this application relies is based on sensitive intelligence from a reliable source. I have no reason to doubt the accuracy of the intelligence. The intelligence is likely to be subject to a PII hearing should disclosure of it be sought.
2) There are reasonable grounds to believe that a bribe has been paid and this raises an obligation to investigate what may be serious offences under the Bribery Act 2010, as well as associated money laundering offences under the Proceeds of Crime Act 2002.
3) Virdee is likely to say that the payment and gifts do not amount to bribery. I am not aware of any legitimate system in Antigua and Barbuda, St Kitts or St Lucia whereby a fee may be paid to a Government Department or Cabinet Member for the award of a contract.
4) No material has been identified which is considered capable of undermining the grounds of the application.''
In the third application, sub-paragraph (1) above was different.
As we have said, each of the applications was granted.
It is submitted on behalf of the claimants that the officers making those applications to the CCC failed to comply with their duty to make full and frank disclosure. In particular, it is submitted that each application was written in terms which asserted as a fact that at least one bribe had been paid, and each represented the defence case as being likely to be an assertion that ``the payment and gifts do not amount to bribery''. It is submitted that there was a conspicuous failure to make clear that there was no evidence of any bribe or corrupt payment in fact having been made, and that material provided by the German authorities indicated that the claimants' defence to the allegations was likely to be that they had refused to involve themselves in any corrupt activity. On behalf of the NCA, it is submitted that the disclosure made was accurate and sufficient.
The searches of premises by NCA officers:
On or about 20th July 2017 Mr Hart, an officer of the NCA, drafted written applications for search warrants in respect of Mr Virdee's family home in Mayfair; a flat in central London to which Mr Virdee held a key; the business premises of PVE in central London; a Range Rover car used by Mr Virdee; a safety deposit box held by Mr Virdee at a bank; and a hotel room in Mayfair occupied by Mr Trutschler at the material time.
In the event, only the application in respect of the safety deposit box was pursued: it was heard and granted by HH Judge Bevan QC at the CCC on 25th July 2017. The other written applications were not made to the court, because the view was taken by NCA officers that both claimants were to be arrested on suspicion of offences contrary to the Bribery Act, and that other statutory powers of search would be appropriate and sufficient.
The reason for that change of plan has been explained in the witness statement of Ms Reid, an NCA Operations Manager. She and colleagues had on 24th July 2017 received internal training relating to an authorisation process which was to be brought into effect by the NCA from 31st July 2017. That process required that all applications for a search warrant must be made by an officer who had been nominated as a ``Warrant SPOC'' and had completed a Warrant Applicants course. The process was summarised in a flow chart, the first step of which asked if the post-arrest statutory search powers could be used: if they could, there was no need for a search warrant; if they could not, the later steps in the chart related to the application for and execution of a search warrant. Ms Reid indicated in her statement that she and a colleague reviewed the draft applications on 24th July 2017, took advice from a senior lawyer in NCA's legal department and decided that, with one exception, reliance on the statutory powers was appropriate. The exception was the bank safety deposit box, which did not come within the ambit of the statutory powers.
Thus the application to HH Judge Bevan QC was made only in relation to the safety deposit box. On the day it was made, officers involved in the investigation were informed that Mr Trutschler would be arriving in the UK that afternoon. It was therefore possible to try to arrest both claimants at the same time, and there were obvious reasons why the NCA regarded it as desirable to do so.
The arrests were accordingly made on 26th July 2017. Mr Virdee was arrested at his home, Mr Trutschler in his hotel room. The premises and car to which we have referred were all searched, using powers conferred by sections 18 and 32 of PACE (see paragraphs 37-38 below). A substantial quantity of material was seized. Mr Virdee and Mr Trutschler were separately interviewed under caution. They made no comment to the questions they were asked.
The solicitors acting for the claimants immediately complained to the NCA about the arrests and searches. Subsequently, when the solicitors learned that one or more production orders had been granted, they further complained about the inadequacy of the disclosure made to the judges who heard and granted those applications.
The first claim for judicial review (CO/4157/2017) was issued on 11th September 2017. In section 3 of the claim form, the following details were given of the decision to be judicially reviewed:
``The decision of the NCA undated but received in writing not to return items seized following unlawful arrests and searches on 26th July 2017''.
A detailed statement of grounds was attached to the claim form. In section 7 of the form, the remedy sought was stated as follows:
``A declaration that the arrests of the claimants and the searches and seizures of their property were unlawful.
Interim relief by the way of an interim injunction prohibiting the dissemination of any seized materials seized to third parties.
Damages in respect of the above.
An application for an interim injunction may be lodged within the next 48 hours unless the defendant agrees not to share seized materials until the issue of permission for judicial review is resolved''.
Section 8 of the form then indicated that an application was made for interim relief by way of an interim injunction prohibiting the dissemination of any seized materials to third parties. Such an injunction was granted by Jay J, on a without notice basis, on 12th September 2017.
The second claim for judicial review (CO/5692/2017) was issued on 7th December 2017 against both the NCA and the CCC. Section 3 of the claim form initially gave the following details of the decision to be judicially reviewed:
``7/11/17 decision not to accept that material obtained under 9 production orders were obtained unlawfully due to the failure to give full and frank disclosure and the refusal to return/destroy the product from those production orders''.
In relation to each claim, the application for permission to apply for judicial review was considered on the papers by Ouseley J. He granted permission in relation to the first claim on 15th January 2018. In relation to the second claim, his decision dated 2nd February 2018 granted permission conditional upon the claimants amending their claim form and grounds so as to challenge the making of the production orders on the three occasions in 2017, and abandoning their challenge to the NCA decision of 7th November 2017. In an observation with which we respectfully agree, the learned judge said -
``The challenge to the decision of the NCA not to agree that they had acted unlawfully is quite hopeless, and a deliberate attempt to evade the rules in relation to extension of time''.
The claim form and detailed statement of grounds were subsequently amended, so as to identify the challenged decisions as those of the CCC on 24th May, 16th June and 9th August 2017, and the relief sought as ``a declaration that 9 production orders made at three without notice hearings, were obtained unlawfully and the quashing of those orders. The NCA failed to give full and frank disclosure to the judges concerned''.
The NCA contest both claims. The CCC has not played any active part in these proceedings.
The legislative framework:
By section 1 of the Bribery Act 2010, it is an offence for a person to offer, promise or give a financial or other advantage to another person to induce a person to perform improperly a relevant function of activity (defined in section 3 of the Act), or to reward a person for the improper performance of such a function or activity. By Section 6 of that Act, it is an offence for a person to bribe a foreign public official where the intention is to influence a foreign public official in order to obtain or retain business, directly or through a third party, where the foreign official is neither permitted nor required by law to be influenced in their capacity as a foreign public official by the offer, promise or gift. Section 6(3) indicates that a person ``bribes'' if he offers, promises or gives any financial or other advantage. Each of these offences is punishable, upon conviction on indictment, by a maximum sentence of 10 years' imprisonment. It is important to note that under each section, an offence is committed when a relevant offer or promise is made, whether or not any payment or gift is subsequently made.
The applications for production orders were made pursuant to section 9 of the Police and Criminal Evidence Act 1984 (``PACE''), which enables access to be obtained by officers of the NCA, for the purposes of a criminal investigation, to excluded material (including personal records held in confidence) and special procedure material (including business records held in confidence). Section 9 requires that an application be made to a Circuit Judge in accordance with the requirements of Schedule 1. Schedule 1 prescribes two alternative sets of ``access conditions'', one of which must be met if a production order is to be granted. In the present case, the NCA relied upon the first set of access conditions, defined as follows in paragraph 2 of Schedule 1:
``2. The first set of access conditions is fulfilled if -
(a) there are reasonable grounds for believing -
i) that an indictable 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, or on premises occupied or controlled by a person specified in the application (including all such premises on which there are reasonable grounds for believing that there is such material as it is reasonably practicable so to specify);
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;
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.''
``Premises'', for this purpose, include a vehicle: see section 23 of PACE.
Rule 47.10(3) of the Criminal Procedure Rules requires an applicant who relies upon the first set of access conditions (a) to specify the indictable offence under investigation, and (b) to explain the grounds for believing that the offence has been committed. It is a long-established principle that any applicant who is being heard by a Court without notice to the other party must make ``a full and fair disclosure of all the material facts'', see R v Kensington Income Tax Commissioners, ex parte Princess Edmond de Polignac  AC 486 at 514. Materiality is to be decided by the Court. The applicant must make proper inquiries before making the application and material facts include additional facts that would have been discovered if inquiries had been made.
This principle applies to cases involving applications for search warrants and production orders: see R v Lewes Crown Court, ex parte Hill (1990) 93 Cr App R. 60. In In re Stanford International Bank Ltd  EWCA Civ 137;  Ch 33 Hughes LJ said that the applicant must ``put on his defence hat and ask himself, what, if he were representing the defendant or a third party with a relevant interest, he would be saying to the judge''.
The duty is further imposed by rule 47.5(8) of the Criminal Procedure Rules:
``(8) The court must not make, vary or discharge an order unless the applicant states, in writing or orally, that to the best of the applicant's knowledge and belief -
(a) the application discloses all the information that is material to what the court must decide; and
(b) the content of the application is true.''
Turning to powers of search, it is necessary to distinguish between powers exercisable pursuant to a judicial warrant, and powers exercisable without a warrant. As to the former, section 8 of PACE provides (so far as is material for present purposes) as follows:
``8. - Power of justice of the peace to authorise entry and search of premises.
(1) If on an application made by a constable a justice of the peace is satisfied that there are reasonable grounds for believing -
(a) that an indictable offence has been committed; and
(b) that there is material on premises mentioned in subsection (1A) below which is likely to be of substantial value (whether by itself or together with other material) to the investigation of the offence; and
(c) that the material is likely to be relevant evidence; and
(d) that it does not consist of or include items subject to legal privilege, excluded material or special procedure material; and
(e) that any of the conditions specified in subsection (3) below applies in relation to each set of premises specified in the application,
he may issue a warrant authorising a constable to enter and search the premises.
(1A) The premises referred to in subsection (1)(b) above are -
(a) one or more sets of premises specified in the application (in which case the application is for a ``specific premises warrant''); or
(b) any premises occupied or controlled by a person specified in the application, including such sets of premises as are so specified (in which case the application is for an ``all premises warrant'').
(1B) If the application is for an all premises warrant, the justice of the peace must also be satisfied -
(a) that because of the particulars of the offence referred to in paragraph (a) of subsection (1) above, there are reasonable grounds for believing that it is necessary to search premises occupied or controlled by the person in question which are not specified in the application in order to find the material referred to in paragraph (b) of that subsection; and
(b) that it is not reasonably practicable to specify in the application all the premises which he occupies or controls and which might need to be searched.
(1C) The warrant may authorise entry to and search of premises on more than one occasion if, on the application, the justice of the peace is satisfied that it is necessary to authorise multiple entries in order to achieve the purpose for which he issues the warrant.
(1D) If it authorises multiple entries, the number of entries authorised may be unlimited, or limited to a maximum.
(2) A constable may seize and retain anything for which a search has been authorised under subsection (1) above.
(3) The conditions mentioned in subsection (1)(e) above are -
(a) that it is not practicable to communicate with any person entitled to grant entry to the premises;
(b) that it is practicable to communicate with a person entitled to grant entry to the premises but it is not practicable to communicate with any person entitled to grant access to the evidence;
(c) that entry to the premises will not be granted unless a warrant is produced;
(d) that the purpose of a search may be frustrated or seriously prejudiced unless a constable arriving at the premises can secure immediate entry to them.
(4) In this Act ``relevant evidence'', in relation to an offence, means anything that would be admissible in evidence at a trial for the offence.
(5) The power to issue a warrant conferred by this section is in addition to any such power otherwise conferred.
Section 15 of PACE provides safeguards by requiring an application for a warrant to provide certain specified information; and section 16 provides further protection by, amongst other things, limiting the search to ``the extent required for the purpose for which the warrant was issued''. In material part, section 15 provides -
``(1) This section and section 16 below have effect in relation to the issue to constables under any enactment ... of warrants to enter and search premises; and an entry on or search of premises under a warrant is unlawful unless it complies with this section and section 16 below.
(2) Where a constable applies for any such warrant it shall be his duty -
(a) to state -
(i) the ground on which he makes the application;
(ii) the enactment under which the warrant would be issued; and
(iii) if the application is for a warrant authorising entry and search on more than one occasion, the ground on which he applies for such a warrant, and whether he seeks a warrant authorising an unlimited number of entries, or (if not) the maximum number of entries desired;
(b) to specify the matters set out in subsection (2A) below; and
(c) to identify, so far as is practicable, the articles or persons to be sought.
(2A) The matters which must be specified pursuant to subsection (2)(b) above are -
(a) if the application relates to one or more sets of premises specified in the application, each set of premises which it is desired to enter and search;
(b) if the application relates to any premises occupied or controlled by a person specified in the application -
(i) as many sets of premises which it is desired to enter and search as it is reasonably practicable to specify;
(ii) the person who is in occupation or control of those premise and any others which it is desired to enter and search;
(iii) why it is necessary to search more premises than those specified under sub-paragraph (i); and
(iv) why it is not reasonably practicable to specify all the premises which it is desired to enter and search.
(3) An application for such a warrant shall be made ex parte and supported by an information in writing.
(4) The constable shall answer on oath any question that the justice of the peace or judge hearing the application asks him.
We turn next to two statutory powers of entry, search and seizure which arise when a person has been arrested and are not dependent upon the issuing of a search warrant. For convenience we shall refer to these as ``post-arrest powers''. The arrest to which these powers are ancillary must, of course, be lawful. In the context of this case, it is relevant to note the provisions of PACE section 24 as to one of the circumstances in which an arrest may lawfully be made:
``(2) If a constable has reasonable grounds for suspecting that an offence has been committed, he may arrest without a warrant anyone whom he has reasonable grounds to suspect of being guilty of it.
(4) But the power of summary arrest conferred by subsection ... (2) ... is exercisable only if the constable has reasonable grounds for believing that for any of the reasons mentioned in subsection (5) it is necessary to arrest the person in question. (5) The reasons are ...
(e) to allow the prompt and effective investigation of the offence or of the conduct of the person in question.''
Section 32 of PACE empowers a constable to search a person upon arrest. So far as is material for present purposes, section 32 provides -
``(1) A constable may search an arrested person, in any case where the person to be searched has been arrested at a place other than a police station, if the constable has reasonable grounds for believing that the arrested person may present a danger to himself or others.
(2) Subject to subsections (3) to (5) below, a constable shall also have power in any such case -
(a) to search the arrested person for anything -
(i) which he might use to assist him to escape from lawful custody; or
(ii) which might be evidence relating to an offence; and
(b) if the offence for which he has been arrested is an indictable offence, to enter and search any premises in which he was when arrested or immediately before he was arrested for evidence relating to the offence.
(3) The power to search conferred by subsection (2) above is only a power to search to the extent that is reasonably required for the purpose of discovering any such thing or any such evidence.
(6) A constable may not search premises in the exercise of the power conferred by subsection 9(2)(b) above unless he has reasonable grounds for believing that there is evidence for which a search a search is permitted under that paragraph on the premises.''
A further power which arises after a person has been arrested is granted by section 18 of PACE, which so far as is material provides -
``(1) Subject to the following provisions of this section, a constable may enter and search any premises occupied or controlled by a person who is under arrest for an indictable offence, if he has reasonable grounds for suspecting that there is on the premises evidence, other than items subject to legal privilege, that relates -
a) to that offence; or
b) to some other indictable offence which is connected with or similar to that offence.
(2) A constable may seize and retain anything for which he may search under subsection (1) above.
(3) The power to search conferred by subsection (1) above is only a power to search to the extent that is reasonably required for the purpose of discovering such evidence.
(4) Subject to subsection (5) below, the powers conferred by this section may not be exercised unless an officer of the rank of inspector or above has authorised them in writing.
(5) A constable may conduct a search under subsection (1)
(a) before the person is taken to a police station or released ... under section 30A, and
(b) without obtaining an authorisation under subsection (4), if the condition in subsection (5A) is satisfied.
(5A) The condition is that the presence of the person at a place (other than a police station) is necessary for the effective investigation of the offence.
In addition to those two post-arrest powers, a general power of seizure is conferred by section 19 of PACE, which is in these terms -
``(1) The powers conferred by subsections (2), (3) and (4) below are exercisable by a constable who is lawfully on any premises.
(2) The constable may seize anything which is on the premises if he has reasonable grounds for believing -
(a) that it has been obtained in consequence of the commission of an offence; and
(b) that it is necessary to seize it in order to prevent it being concealed, lost, damaged, altered or destroyed.
(3) The constable may seize anything which is on the premises if he has reasonable grounds for believing -
(a) that it is evidence in relation to an offence which he is investigating or any other offence; and
(b) that it is necessary to seize it in order to prevent the evidence being concealed, lost, altered or destroyed.
(4) The constable may require any information which is stored in any electronic form and is accessible from the premises to be produced in a form in which it can be taken away and in which it is visible and legible or from which it can readily be produced in a visible and legible form if he has reasonable grounds for believing -
(a) that -
(i)it is evidence in relation to an offence which he is investigating or any other offence; or
(ii)it has been obtained in consequence of the commission of an offence;
(c) that is necessary to do so in order to prevent it being concealed, lost, tampered with or destroyed.
(5) The powers conferred by this section are in addition to any power otherwise conferred.
(6) No power of seizure conferred on a constable under any enactment (including and enactment contained in an Act passed after this Act) is to be taken to authorise the seizure of an item which the constable exercising the power has reasonable grounds for believing to be subject to legal privilege.''
Each of the officers of the NCA who took part in the arrests and searches relevant to this case was designated, pursuant to section 10 of the Crime and Courts Act 2013, as having the powers of a constable in relation to entry, search and seizure. It is not in dispute that the written authorisation mentioned in PACE section 18(4) was duly obtained.
We now turn to the submissions made in relation to each of the two claims for judicial review.
The submissions of the parties: the first claim
The first claim challenges the NCA's decision not to apply for search warrants in respect of their planned searches of the premises (other than the safety deposit box), but instead to rely on their post-arrest powers. On behalf of the claimants, Mr Jonathan Lennon submitted in writing that this is -
``... the first case which deals directly with whether the authorities should obtain search warrants for planned and extensive searches of the sort carried out in this case or may dispense with the warrant process where arrests are planned''.
Mr Lennon accepted that the evidence filed by the NCA showed that the claimants were in any event to be arrested, and therefore did not submit that the arrests were merely a device designed to trigger the ancillary search powers. There is accordingly no challenge to the lawfulness of the arrests.
There is however a challenge to the lawfulness of the use of the post-arrest powers. Mr Lennon argued that where searches are planned, as was clearly the case here, the correct and normal practice is for the NCA to apply to the court for a search warrant. That procedure has the advantage of providing appropriate protection for the person whose premises are to be searched, in particular because a judge must be satisfied, in advance of the search, that the criteria for authorising it are met. He submitted that those safeguards are absent when the post-arrest powers are used: the safeguards in section 15 apply to any warrant, but not to the powers under sections 18 and 32 of PACE.
Mr Lennon pointed to the fact that the NCA had originally drafted applications for search warrants, in relation to all of the premises to be searched, but subsequently adopted a different approach. He observed that the flow chart to which we have referred sets out the statutory safeguards which come into effect when an application is made for a search warrant, but that all those safeguards are sidestepped and avoided if the question at step one is answered in the affirmative.
As to his submission that an application for search warrants was the correct procedure, Mr Lennon submitted that consideration of the relevant statutory provisions shows a Parliamentary intention that a search warrant should generally be applied for, and that the summary powers of search and seizure consequent upon arrest should only be used when the statutory procedure is not available, for example because the need to make an arrest has arisen unexpectedly. He submitted that instinctively, the use of a search warrant should have priority over the use of post-arrest powers, and that judicial control in advance of a search provides greater protection for the person whose premises are to be searched.
As to his submission that it is normal practice to apply for search warrants, Mr Lennon relied on witness statements filed by Mr Bruce Clark, a solicitor who represents the claimants, and Mr Alan Moore, a former senior detective. Mr Clark, who has practised as a solicitor for many years, stated that in his experience officers in pre-planned arrest and search operations usually come to the premises armed with search warrants, and that what happened in this case was far from usual procedure. He commented that when business premises are to be searched, officers trained in seizing digital devices will attend, because sometimes it is possible to take an image of a hard drive without needing to remove the device from the premises; and that where there is expected to be legally privileged material on the premises, independent counsel may be instructed to attend so that consideration can be given at the scene to whether particular documents can be seized. Mr Moore, who served as a police officer in London for many years and was involved in planning and conducting many searches, similarly stated that the procedure adopted in this case was unusual: in his experience, warrants would generally be obtained in all pre-planned operations regardless of whether an arrest was to be made.
Mr Lennon made submissions to the effect that there are curious features of the German intercepts and that there is a question mark as to their lawfulness. He suggested that the NCA's decision to use the post-arrest search powers, rather than to apply for search warrants, may have been influenced by a concern that they might face problems if the judge to whom the application was made raised any questions about the German intercepts. In this respect, he provided the court with a copy of a ruling by a German court, in which the use of intercepts in the course of the fraud investigation which related to Mr Virdee was held to be unlawful. That ruling, however, related to a woman who was the wife of a suspect, and in an entirely different position from that of Mr Virdee. Mr Lennon was not able to point to any ruling which could be said to be applicable to the intercepting of the phone calls on which these claimants were recorded, and he fairly acknowledged that he could not and did not submit that there had been any knowing impropriety on the part of the NCA in relying on information gained from the German intercepts. We say at once that in our view, there is nothing before this court which casts doubt on the lawfulness of the German warrants. There is no evidence as to the procedure for authorising telephone intercepts in German law and no evidence that the intercepts relevant to this case were obtained in breach of that procedure or were on any other ground unlawful. It follows that there is in our view no basis for any suggestion that the decision to use post-arrest powers was in any way influenced by a desire to avoid judicial enquiry into the source of the intelligence.
Mr Lennon submitted that the change of approach in the present case (from the intention to apply for search warrants to the decision to rely on the post-arrest powers) was the result of the implementation of a new policy. Mr Andrew Bird, for the NCA, contended that it was an operational decision, or alternatively a mixture of an operational and a policy decision. We do not think the distinction is important to the issues in this case: the important question is whether the use of the post-arrest powers was lawful. Mr Lennon accepted that his submissions amounted to a challenge to the lawfulness of a process which began by enquiring if the post-arrest powers were available, and went no further if they were.
Mr Lennon drew our attention to the criticism made of the NCA in R (Chatwani) v NCA  EWCA 1283 (Admin). The NCA in that case were investigating suspected money laundering. They devised a plan which was, in essence, to arrest a number of suspects; to execute search warrants at the suspects' homes and business premises; to take the opportunity to place covert listening devices in the premises; to question the suspects without giving them full disclosure of facts; and then to release the suspects on bail in the hope that the devices would subsequently record incriminating conversations between the suspects. Before the Divisional Court, the NCA conceded that the search warrants had been unlawfully obtained and that the entries, searches and seizures made under the authority of the warrants had been unlawful. The court held that, as a result of ignorance on the part of the officers concerned, there had been grave errors made in the application for the search warrants, and that the officers had disregarded, or been indifferent to, ``the constitutional safeguards within the statutory scheme which they were operating''. Mr Lennon noted that it was as a result of the criticisms in that case that the NCA conducted a review of its procedures for searching premises. He submitted that it would be regrettable if the outcome of that review were a procedure which circumvented the statutory safeguards afforded to a person whose premises are to be searched under the authority of a warrant, by encouraging officers to use the post-arrest powers and not to apply for a search warrant. He challenged any policy to that effect as being unlawful; but he also made a written submission that the searches and seizures in this case were in any event unlawful because ``this was not a case suitable for the summary powers of search and seizure and was a case that cried out for at least some judicial scrutiny''.
Mr Lennon relied on a passage at paragraphs 78-79 of the judgment of Sir John Thomas PQBD in R (on the application of Rawlinson and Hunter Trustees) v Central Criminal Court  EWHC 2254 (Admin),  1 WLR 1634, in which the President spoke of the high constitutional importance of a citizen being ``protected by independent judicial scrutiny from the excesses of allowing an officer of the executive to decide for himself whether to enter property and search''. He further relied on a passage at paragraph 88 in which the President recommended review by the Criminal Procedure Rules Committee of the practice of putting information before a judge without also providing the judge with the underlying documentation. That was a case in which the Serious Fraud Office - which, importantly for present purposes, did not have a statutory power of search equivalent to that given to constables - had applied for a search warrant under section 2(4) of the Criminal Justice Act 1987. Mr Lennon did not submit that the judgment contains any passage to support his submission that in the present case the use of the post-arrest powers was unlawful.
He also relied upon R (Energy Financing Team) v Bow Street Magistrates' Court  EWHC 1626 (Admin),  1 WLR 1316. That was again a case in which the Serious Fraud Office had applied for and obtained search warrants pursuant to section 2(4) of the Criminal Justice Act 1987. The persons whose premises had been searched sought to quash the warrants on the basis that they should not have been applied for, and should not have been granted. The court rejected that challenge, but held that, because an application for a warrant to search premises and seize goods was a serious infringement of liberty, it was always necessary to consider whether some lesser measure may suffice, and that any warrant should be drafted with sufficient precision to enable those whose property was to be searched, and those carrying out the search, to know what might be seized: thus there can be no warrant to authorise a fishing expedition.
Mr Lennon also relied by way of analogy on McE v Prison Service of Northern Ireland  UKHL 15,  AC 908. That was a case in which persons detained in Northern Ireland sought declarations that they were entitled to consult with their legal and medical advisers without being subject to covert surveillance. The Divisional Court held that the Regulation of Investigatory Powers Act 2000 did displace the protection afforded to such consultations at common law, but also held that the relevant Code of Practice, which permitted such surveillance if authorised by a senior police officer, did not provide sufficient safeguards to prevent a breach of the detainees' rights under Art 8 of the Convention. The Divisional Court concluded that such surveillance was unlawful as currently operated, and would require authorisation by a Commissioner, which was the enhanced level of authorisation appropriate to intrusive surveillance. There was an appeal to the House of Lords. Lord Carswell at paragraph 94 summarised the position in the House of Lords as follows:
``The appellants have brought this appeal in order to challenge the finding of the majority of the Divisional Court that RIPA was intended to extend to legal or medical consultations. The respondents did not cross-appeal against the making of the declarations, although their counsel did attempt to argue that the surveillance was proportionate, claiming to be able to do so on the terms of the certificate. The Secretary of State has however stated that she is willing to make an order under section 47(1)(b) of RIPA characterising surveillance of consultations between detainees and their legal advisers as intrusive surveillance, with the safeguards which go with that level of surveillance. If done, this would make consideration of directed surveillance of such consultations superfluous.''
Mr Lennon submitted that the decision in that case is an example of a power being available in law, but the exercise of that power nonetheless being unlawful because of the absence of necessary safeguards. He argued by analogy that the decision provided support for his submission that in the present case, the availability under statute of the post-arrest powers did not mean that it was necessarily lawful for the NCA to exercise those powers.
Mr Lennon accepted in argument that his primary submission can be encapsulated in this way: that save where a law enforcement agency knows that it is necessary to make an urgent arrest, it should always apply for a search warrant rather than relying on the ancillary powers of search. He accepted that there was no decided case to which he could point which directly supported his principal submission.
On behalf of the NCA, Mr Bird submitted that the statutory provisions reveal no preference for one procedure rather than the other. In the present case, he argued, a search warrant was necessary if the NCA were to be able to search the safety deposit box, which was located in the premises of a bank and therefore did not come within the scope of either section 18 or section 32. But in...
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