The Court of Appeal in (1) Robert Tchenguiz (2) R20 Ltd v Director of the Serious Fraud Office [2014] EWCA Civ 472 has held that where search warrants obtained by the Serious Fraud Office (‘SFO’) had been declared unlawful in judicial review proceedings, estoppel did not operate to prevent the SFO from raising defences to a private law claim in trespass.

Key points

  • The Court of Appeal held that the law recognises the concept of public law unlawfulness. This term is apt to distinguish between public and private law consequences of an act unlawful in public law.
  • There is a distinction to be drawn between public law unlawfulness entitling the person affected to challenge the order made by a judicial authority, and private law liability for damages for those acting under judicial authority in its execution.
  • In order to obtain damages claimants need to show there is a private law cause of action entitling them to damages because winning a judicial review on public law grounds is not in itself sufficient to obtain damages.

Background

In 2011 Robert Tchenguiz and R20 Limited (the ‘Appellants’) started judicial review proceedings against the Director of the SFO. They challenged the SFO’s decision to apply for search warrants relating to a home and business address, the Central Criminal Court’s decision to grant the warrants and the City of London Police’s decision to arrest and bail Mr Tchenguiz on suspicion of fraud offences.

In July 2012 the Divisional Court quashed the search warrants and declared the entries, searches and seizures conducted pursuant to the warrants to be unlawful. Any actions by the Appellants for damages were ordered to be transferred to the Queen’s Bench Division (‘QBD’) and a directions hearing for further conduct of the action was ordered.

During the course of the claim the SFO admitted liability for trespass to land in consequence of the order of the Divisional Court quashing the search warrants. However, the SFO subsequently sought to withdraw this admission.

Following a hearing in June 2013, Eder J held that the principle of res judicata did not operate to exclude any defence by the SFO to the Appellants’ private law claim in trespass and the SFO should be granted permission to withdraw the concession on liability for trespass to land.

Main issues in the appeal

The Appellants appealed against Eder J’s decision on the estoppel issue. They argued that the declaration made by the Divisional Court, namely that the entries, searches and seizures conducted pursuant to the warrants were unlawful, also determined the issue of liability for trespass upon the Appellants’ land in execution of the unlawful warrants. It was therefore not open to the SFO to seek to re-litigate the issue in the proceedings transferred to the QBD. The only remaining issues in the private law claim by the Appellants for trespass were causation and quantum of damages. The Appellants argued that there was no such concept as public law unlawfulness that was distinguishable from unlawfulness for all other purposes.

The Court of Appeal’s decision

The Court of Appeal dismissed the appeal. Pitchford LJ gave the lead judgment.

Under the principle of res judicata, it was common ground between the parties that where an issue had been determined between them in one set of proceedings by a court of competent jurisdiction, they were, subject to appeal, bound by the court’s decision and could not seek to re-litigate the issue. Thus, the issue for the Court of Appeal was whether the judgment or order in the judicial review determined the issue of liability at common law for trespass to land.

The Court considered the Appellants’ argument that there was no such concept as public law unlawfulness that was distinguishable from unlawfulness for all other purposes, which was key to understanding the consequences of a successful judicial review.

The effect of this argument was that, if “unlawful” in the Divisional Court’s order meant unlawful for all purposes, the outcome of the judicial review also disposed of any subsequent claim for trespass between the same parties and based on the same facts. If, on the other hand, the law recognised a distinction between unlawful in a public law sense and unlawful in the private law sense, the issue was whether, as Eder J found, the Divisional Court transferred to the QBD all questions relating to the claim for damages, including the consequences in private law of entry upon land pursuant to an unlawful warrant.

The majority of the Court of Appeal found that there was a distinction to be drawn between public law unlawfulness and private law liability for damages. Public law unlawfulness was a term recognised by the law and was apt to distinguish between public and private law consequences of an act unlawful in public law.

The Appellants’ judicial review claim did not include a private law claim for damages in trespass. The making of a declaration of unlawfulness on public law grounds did not imply any intention by the Court to make a finding of private law liability. On the contrary, had that been the Court’s intention, the matter would have been raised in argument and addressed in the Court’s judgment and order.

Pitchford LJ concluded that Eder J had been manifestly right to find that no estoppel operated to prevent the SFO from raising either of the defences on which it proposed to rely.

Comment

This case is notable for the distinction made between the concept of public law unlawfulness and unlawfulness for all other purposes. It illustrates how an act which may be unlawful in public law will not necessarily amount to a private law wrong. In practical terms, although the warrants obtained by the SFO were eventually quashed in successful judicial review proceedings, in any private law claim in trespass it was still open to the SFO to defend the claim. Whether the defences themselves have any merit will be a matter for the court considering the trespass claim. The case is therefore a stark reminder that claimants cannot ordinarily obtain damages as a result of winning a judicial review – a separate cause of action which gives rise to damages is required.