In Chatwani4, the Divisional Court has confirmed that state agencies applying for search warrants have a duty to make full disclosure to the court and the court should take an inquisitive approach when considering any such application.
The Chatwani brothers were under investigation by the National Crime Agency (NCA) for suspected money laundering. In the course of its investigation, the NCA devised a plan to capture “unequivocal evidence” of the suspected wrongdoing in order to enhance any future prosecution of the claimants. The plan was to arrest the claimants in a “deliberately boisterous way” in order (1) to remove them from premises which the NCA intended to search and (2) enable covert recording devices to be installed at the premises to capture self-incriminating comments which it was hoped would be made by the claimants following their release.
In order to obtain the search warrants, the NCA was obliged to make an application to a magistrates’ court, pursuant to the requirements contained in Part 2 of the Police and Criminal Evidence Act 1984. In formulating its plan, the NCA had formed the view that it was critical that as few people as possible knew its details. Consequently, the applications for the warrants failed to include any detailed information on the investigation and simply asserted that the statutory test had been met.
Notwithstanding obvious failings, the magistrates granted the applications and issued the search warrants.
The judicial review application
The claimants commenced judicial review proceedings in the High Court to challenge both the arrests and the search warrants.
In the judicial review hearing, counsel for the NCA accepted that the approach taken by the officers showed a “fundamental misconception as to the role of the court” in applications for warrants and accepted that the search warrants were therefore unlawful. Nevertheless, as the NCA intended to apply for an order, pursuant to section 59 of the Criminal Justice and Police Act 2001 (CJPA), to retain the seized material, it asked the High Court for permission to retain the material pending such an application (under section 59(6) CJPA, a Crown Court judge may permit retention of material seized pursuant to an unlawful warrant, thereby allowing investigatory agencies a “second chance”).
The Court’s decision
Mr Justice Hickinbottom was of the view that the claimants’ position had considerable force and that it was difficult to believe that an organisation such as the NCA would suffer from such “systemic ignorance” of the rules. On the evidence, however, the court was not satisfied that bad faith had been demonstrated, rather, there had been a “fundamentally misconceived approach to [the] warrants”.
The court accepted that there existed grounds for the officers to believe that indictable offences had been committed, such that the issue of warrants may have been appropriate, but any such evidence had not been provided to the magistrates. It was the task of the magistrate (or in complex cases a circuit judge) to determine whether the requirements of the statutory test had been met. The NCA appeared to have, in the court’s words, “abrogated that role to itself”.
The court emphasised that the magistrate is not there simply to review the reasonableness of a decision of an officer that the statutory criteria are met. It is critical that the court itself is satisfied that the test is met. This will involve “detailed, anxious and intense scrutiny” by the court. The duty is on the state agency to place all relevant material before the court in order that this analysis can be carried out. This goes beyond the ordinary civil disclosure standard, and involves a duty of candour.
The failures in the instant case rendered the warrants unlawful. The court concluded that the conduct of the NCA was such that it would not be permitted to retain the benefit of the unlawful searches. Although the court did not conclude that the officers had acted in bad faith it considered that the NCA had acted with “patent and egregious disregard” or “indifference to the constitutional safeguards” in relation to the warrants. In the view of the court, the errors were grave and “went to the very root of the statutory scheme”. Accordingly, the court compelled the NCA to return the seized material and deliver or destroy any copies, schedules or other work product derived from the seized material.
In his summer budget, the Chancellor of the Exchequer announced that HMRC is to be provided with £800m of extra funding over the next five years to combat tax evasion and non-compliance. HMRC hopes to treble prosecutions for tax evasion by the end of the current parliament. As raids on premises are often essential in order for HMRC to gather the necessary evidence it will need in a criminal prosecution, it is likely that it will be applying to the courts for ever increasing numbers of search warrants. In making such applications, HMRC must comply with its duty to make full and proper disclosure to the court which is tasked with deciding the application. Failure to comply with this obligation will leave the legality of any warrants subsequently issued open to challenge by way of judicial review.
This case also acts as a timely reminder that the second chance provided by section 59 CJPA, will be denied to state agencies in circumstances where its failings are sufficiently egregious.
It is important that anyone who is the subject of a search warrant executed by HMRC obtains urgent advice from a lawyer with the appropriate expertise in this area.
The decision can be read here.