CO/2226/2014 
Neutral Citation Number: [2014] EWHC 4028 (Admin)

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION 
DIVISIONAL COURT 
Royal Courts of Justice 
Strand
London WC2A 2LL 

Wednesday, 29 October 2014
 
B e f o r e:
 
LORD JUSTICE AIKENS 

MR JUSTICE MITTING 

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Between: 
KHAJAG KOUYOUMJIAN 
First Claimant
SARKIS KOUYOUMJIAN 
Second Claimant 
v 

HAMMERSMITH MAGISTRATES' COURT 
First Defendant
METROPOLITAN POLICE 
Second Defendant
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Mr Rupert Bowers and Ms Abigail Bright (instructed by Byrne and Partners) appeared on behalf of the Claimants
The Defendant did not appear and was not represented
Mr Nicholas Mathers (instructed by the Metropolitan Police) appeared on behalf of the Interested Party
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J U D G M E N T
LORD JUSTICE AIKENS:  

The Background to the Claim 
1.	This is a claim for Judicial Review of a decision of District Judge Jennifer Edwards to grant four search warrants pursuant to S.8 of the Police and Criminal Evidence Act 1984 on 13 February  2014.  The warrants were executed on 22 February 2014.  I will set out in a little more detail some of the circumstances leading to the application and what happened subsequently in a moment.  In short, the material seized consisted of four laptop computers, one desktop computer, various smartphones and hard copy documents.  They were taken from the business premises of the Claimants in the present proceedings. 
2.	The application for Judicial Review was issued on 14 May 2014.  The Claimants are brothers.  The first is a director of several companies and he runs a property portfolio as well.  The Second Claimant, whom I shall refer to as Sarkis, is a disqualified director but he assists his brother in running various companies.  Sarkis is disqualified from being a company director until 2015.  The companies are broadly concerned with restaurants and their turnover is about £3 million per annum.
3.	The claim for Judicial Review challenged both the issue of the warrants and their execution.  The relief sought is set out in section 7 of the Judicial Review claim form and is as follows: 
"1) A declaration that the entry, searches and seizures made pursuant to the warrants were unlawful.  
2)  An order quashing the warrants.
3)  A mandatory order for the return of all material seized and the destruction of any copies taken and an order that no use be made of any knowledge gained as a result of examining the material seized under the warrants. 
4)  Damages.
5)  Costs."
4.	An Acknowledgment of Service was made by the Respondents on 4 June 2004.  In section D of that form it stated: 
"Although the Defendant will not be contesting the claim for judicial review. [sic] The Defendant does not agree to return the seized material to the Claimants at this time.  
The Defendant will be seeking to agree an order with the Claimants to include a time period in which the return of the currently seized material is stayed pending any order of the Crown Court under s.59 of the Criminal Justice and Police Act 2001, under which Act the Defendant will be issuing an application.  The Defendant requests the court allows a period of time for the parties to seek to agree the terms of such an order." 
5.	In fact, nothing very much happened until 5 September 2014.  On that date the Director of Legal Services of the Metropolitan Police sent a letter to the solicitors acting for the Claimants.  It made various proposals based upon the intention of the Metropolitan Police to apply to the Crown Court under S.59(5)(b) of the Criminal Justice and Police Act 2001 ("the CJPA") for an order that all the material that was obtained in the execution of the four warrants should be retained by them.  Such an application was eventually issued on 9 October 2014.
6.	The present position of the parties is that Mr Mather, on behalf of the Metropolitan Police, accepts that certain relief should indeed be granted to the Claimants.  I can deal with these by reference to a draft order which has been prepared by Mr Bowers on behalf of the Claimants.  Paragraph 1 is an order that the claim be allowed.  That is agreed.  Paragraph 2 is an order that the search warrants issued by the First Defendant (that is the Hammersmith Magistrates' Court) on 13 February 2014 in relation to the relevant premises be quashed.  That also is agreed.  The third order proposed is that the entries, searches and seizures made pursuant to the quashed warrants are declared unlawful.  There is no dispute about that.  Nor is there any dispute that there should be an order that no use should be made of any knowledge gained as a result of the execution of of the quashed warrants.  It is also agreed that the Second Defendant should pay the Claimant's damages in the sum of £5,000 and that the Second Defendant should pay the Claimant's costs.
7.	So far as the last is concerned, we understand that there is a costs schedule that has been served by the Claimants on the Second Defendants, but the court has not seen it, so how costs might be dealt with is a matter that will have to be considered hereafter.
The Dispute: Section 59 of the Criminal Justice and Police Act 2001 
8.	The sole issue in dispute is whether there should be an order as proposed in paragraph 4 of the draft order that Mr Bowers has prepared.  That states: 
"All material seized under the quashed orders and any copies made thereof shall be delivered to the offices of the solicitors for the claimants within 14 days of the date of this order."
9.	Mr Mather, on behalf of the Metropolitan Police, says that such an order should not be made in view of the pending application under S.59(5)(b) of the CJPA.  Section 59 of the CJPA provides:
"59.   Application to the appropriate judicial 
   authority.
 (1) This section applies where anything has been seized in exercise, or purported exercise, of a relevant power of seizure. 
 (2) Any person with a relevant interest in the seized property may apply to the appropriate judicial authority, on one or more of the grounds mentioned in subsection (3), for the return of the whole or a part of the seized property. 
 (3) Those grounds are— 
 (a) that there was no power to make the   seizure; 
 (b) that the seized property is or contains an item subject to legal privilege that is not comprised in property falling within section 54(2); 
 (c) that the seized property is or contains any excluded material or special procedure material which — 
 (i) has been seized under a power to        which section 55 applies;
 (ii)is not comprised in property  falling within section 55(2) or (3); and
 (iii)is not property the retention of which is authorised by section 56; 
 (d) that the seized property is or contains  something seized under section 50 or 51 which does not fall within section 53(3); 
    and subsections (5) and (6) of section 55 shall apply for the purposes of paragraph (c) as they apply for the purposes of that section.
 (4) Subject to subsection (6), the appropriate judicial authority, on an application under subsection (2), shall — 
 (a) if satisfied as to any of the matters mentioned in subsection (3), order the return of so much of the seized property as is property in relation to which the authority is so satisfied; and 
 (b) to the extent that that authority is not so satisfied, dismiss the application. 
 (5) The appropriate judicial authority — 
 (a) on an application under subsection (2);
 (b) on an application made by the person for the time being having possession of anything in consequence of its seizure under a relevant power of seizure, or 
 (c) on an application made— 
 (i) by a person with a relevant interest in anything seized under section 50 or 51, and 
 (ii)on the grounds that the requirements of section 53(2) have not been or are not being complied with,
    may give such directions as the authority thinks fit as to the examination, retention, separation or return of the whole or any part of the seized property.
 (6) On any application under this section, the appropriate judicial authority may authorise the retention of any property which — 
 (a) has been seized in exercise, or purported exercise, of a relevant power of seizure, and 
 (b) would otherwise fall to be returned, 
    if that authority is satisfied that the retention of the property is justified on grounds falling within subsection (7).
 (7) Those grounds are that (if the property were returned) it would immediately become appropriate — 
 (a) to issue, on the application of the person who is in possession of the property at the time of the application under this section, a warrant in pursuance of which, or of the exercise of which, it would be lawful to seize the property; or 
 (b) to make an order under — 
 (i) paragraph 4 of Schedule 1 to the 1984 Act, 
 (ii)paragraph 4 of Schedule 1 to the Police and Criminal Evidence (Northern Ireland) Order 1989 (S.I. 1989 1341 (N.I. 12)), 
 (iii)section 20BA of the Taxes Management Act 1970 (c. 9), or 
 (iv)paragraph 5 of Schedule 5 to the Terrorism Act 2000 (c. 11), 
    under which the property would fall to be delivered up or produced to the person mentioned in paragraph (a).
 (8) Where any property which has been seized in exercise, or purported exercise, of a relevant power of seizure has parts (“part A” and “part B”) comprised in it such that — 
 (a) it would be inappropriate, if the property were returned, to take any action such as is mentioned in subsection (7) in relation to part A, 
 (b) it would (or would but for the facts mentioned in paragraph (a)) be appropriate, if the property were returned, to take such action in relation to part B, and 
 (c) in all the circumstances, it is not reasonably practicable to separate part A from part B without prejudicing the use of part B for purposes for which it is lawful to use property seized under the power in question, 
    the facts mentioned in paragraph (a) shall not be taken into account by the appropriate judicial authority in deciding whether the retention of the property is justified on grounds falling within subsection (7).
 (9) If a person fails to comply with any order or direction made or given by a judge of the Crown Court in exercise of any jurisdiction under this section — 
 (a) The authority may deal with him as if he had committed a contempt of the Crown Court; and
 (b) any enactment relating to contempt of the Crown Court shall have effect in relation to the failure as if it were such a contempt. 
 (10)The relevant powers of seizure for the purposes of this section are — 
 (a) the powers of seizure conferred by sections 50 and 51; 
 (b) each of the powers of seizure specified in Parts 1 and 2 of Schedule 1; and 
 (c) any power of seizure (not falling within paragraph (a) or (b)) conferred on a constable by or under any enactment, including an enactment passed after this Act. 
 (11)References in this section to a person with a relevant interest in seized property are references to —  
 (a) the person from whom it was seized;  
 (b) any person with an interest in the property; or 
 (c) any person, not falling within paragraph (a) or (b), who had custody or control of the property immediately before the seizure. 
 (12)For the purposes of subsection (11)(b), the persons who have an interest in seized property shall, in the case of property which is or contains an item subject to legal privilege, be taken to include the person in whose favour that privilege is conferred."
10.	For present purposes, I am going to make an assumption, although this may be open to argument in a higher court and, indeed, we are told is about to be argued in the case of     R (Panesar and others) v Central Criminal Court and HMRC [2014] EWHC 2821 (Admin), either in the Court of Appeal Civil Division or the the Supreme Court, depending on which has jurisdiction.  The assumption is that the Crown Court has jurisdiction under S.59(5)(b) of the CJPA to order the retention, by a police authority, of material that was seized by the police pursuant to the execution of a search warrant that was unlawfully obtained and executed.  
11.	Mr Bowers submits that this court should grant the remedy of immediate return of all the material for a number of reasons.  Mr Mather submits, in short, that in the circumstances this court should not do anything to preclude the application of the Metropolitan Police under S.59(5)(b).  The first submission of Mr Bowers is that the warrants were obtained without the Applicant giving full disclosure for the reasons for wanting the material.  The second is that there has been such dilatoriness by the Defendants in the course of these proceedings and in pursuing the S.59 application that, in the exercise of the court's judgment, it should not countenance the fact that the Metropolitan Police now wishes to pursue its S.59 application.  The third ground, broadly speaking, is that even now there has not been full and frank disclosure by the Metropolitan Police as to the circumstances under which the S.59 application is to be made and its purposes.  All those grounds are resisted by Mr Mather.  
The Facts leading to the application for Search Warrants 
12.	The history is broadly as follows: the application for a search warrant was made by then Detective Sergeant Brien of the Metropolitan Police.  In the form of the application for a search warrant under heading (2), "The investigation", it indicated that this matter had been:
" . . . a long‑term pro‑active investigation into an organised criminal network involved in the importation and supply of cocaine and other controlled drugs, the subsequent distribution of the imported goods and the laundering of the proceeds."
13.	Under subheading (b) of heading (2), in answer to the question, "Why do you believe the offence(s) under investigation have been committed?" the document states: 
"Since 2012 the Specialist Organised and Economic Crime Command at the Metropolitan Police have investigated the activities of overlapping organised Criminal networks, which have shown clear evidence of them conspiring together and with others to import, traffic and distribute large quantities of Cocaine (Class A controlled substances) with intent to distribute across London and the home counties."
14.	That section then goes on to refer to a number of people. In the third paragraph it states that a person, who is identified as Antoine Hajjar, had various UK company directorships and that in interview he had stated that several of those companies were set up for another associate, who is the Second Claimant in the current proceedings, that is to say Sarkis Kouyoumjian.  
15.	The application form goes on to state that Mr Hajjar had stated that he knew nothing of the company activity, except that he would be told by Sarkis when money was in the associated bank accounts (also set up by Mr Hajjar) and when to withdraw the money in cash before handing it directly to Sarkis.  Mr Hajjar further stated in interview that all the company documentation, chequebooks, and so forth, were held by Sarkis.  The document goes on to say that another associate of Sarkis had been arrested and various searches then taken place.  It it also indicates that investigations demonstrated some links with a company belonging to the First Claimant.
16.	In item (3) of the application, under the heading "Material sought", there is a long list which includes not only controlled drugs but mobile phones and SIM cards, computers, financial documentation, documentation relating to distribution, supply, importation, evidence of fraud and evidence of being concerned in prostitution/trafficking for exploitation, amongst others that are there identified.
17.	In paragraph (7) of the form, which is headed "Search with additional persons", under subheading (a), "Which other persons do you want to take part in the search?" it identifies that staff from the Department of Business, Innovation and Skills should take part.  The reason for that is given as: 
"Company director offences are believed to be also taking place."
18.	Under paragraph (9), "Declaration", it states:
"(a) this application discloses all the information that is material to what the court must decide, including anything that might be reasonably be considered capable of undermining any of the grounds of the application, and
(b) the contents of this application are true."
19.	The District Judge made the order and in doing so she said:
"No specific additional information was provided but the officer was able to explain the links between the main suspects and the premises.  There is evidence of a major and well‑established conspiracy to import Class A drugs . . . substantial amounts of money, with the associated fraudulent offending and money laundering.  This warrant is necessary and proportionate in every respect."
20.	It is to be noted that neither in the body of the application form, (particularly heading (2) "The Investigation") nor in the reasons given by the judge, is there any reference to, in particular, offences which can be broadly described as fraud offences.  However, it is right to point out that under the heading (1) "Offences under investigation" of the application form it does identify not only drugs offences but also conspiracy to defraud, offences contrary to the Company Directors Disqualification Act 1986 as well as drugs offences.  In the application the premises to be searched were identified, which included the office addresses of Sarkis in central London.
The Execution of the Warrants and Subsequent Events 
21.	As I have said, the warrants were executed on 21 February 2014, on the business premises under the control of the First Claimant.  From those premises four laptop computers were seized.  They were all for business use and contained various information about staff and bank details.  As I have already stated, other items including personal mobile phones, SIM cards, company chequebooks, cash books and other material such as memory sticks were also taken.  So, too, was a Dell computer hard drive.  The home address of Sarkis was also searched pursuant to a warrant and two laptop computers were taken from that, including one belonging to the Second Claimant's wife.  Other materials such as memory sticks were also taken.  
22.	Sarkis was subsequently interviewed on 25 February 2014 at Hammersmith police station.  An appointment was made with DS Brien for Sarkis to attend, voluntarily, the police station the following day and he did so.  There he met DS Brien and also someone called Tracey Collett of the Department of Business, Innovation and Skills.  Sarkis was arrested for conspiracy to commit benefit fraud dating back to 2007.  He was interviewed at length with regard to his knowledge of an individual, to whom I have already referred, Mr Antoine Hajjar, with whom it was said that a mortgage fraud had been committed.  
23.	The interview went on to investigate Sarkis' involvement with a number of companies and individuals and it was put to Sarkis that he was in breach of his undertaking that he had given, as a disqualified company director, that he would not act as such until 2015.  There was, it is stated in the statement of facts of Mr Duncan McDonald, a solicitor in support of the Judicial Review application: 
"No mention of any involvement with the importation, supply or distribution of controlled drugs, nor the laundering of the proceeds of such drug supply."
24.	Sarkis was released on police bail and he has subsequently been bailed until today.  Mr McDonald says in the last paragraph of his statement:
"Having examined the material returned by the police, it is clear that the computers, company documentation, financial documents and other material relate to the legitimate running of the companies listed and referred to above."
25.	I should explain that what has happened in the course of the proceedings is that various copies have been taken of all the material seized by the police, and it is in relation to all those copies that the order for delivery up is now sought by the Claimants.
The S.59 CJPA application 
26.	That is the background to the original warrants.  As I have said, the application under S.59(5)(b) of the CJPA was made on 9 October 2014.  That application is made by Andrew Brien, who had by now become acting Detective Inspector Andrew Brien of the Metropolitan Police Service Serious and Organised Crime Financial Investigation Unit.  In the application it identifies the offences under investigation as the following:
" ‑ Fraudulent trading contrary to S.993 of the    Companies Act 2006 
‑ being concerned with the promotion/formation/management of a company whilst disqualified, contrary to S.13 of the Company Directors Disqualification Act 1986 . . .  
‑ theft, contrary to the Theft Act 1968 
‑ fraud by false representation contrary to S.2 of the Fraud Act 2006 
‑ conspiracy to defraud contrary to S.12 of the Criminal Justice Act 1987 
‑ perverting the course of justice contrary to common law."
27.	Under the heading "Material sought" it refers to a list of material which constitute the copies that had been taken from the various laptop and desktop computers, memory sticks and other electronic material and some hard copy material which had originally been seized under the four search warrants issued in February of this year.  It is stated that the material will contain some matter that is subject to legal professional privilege or which is "excluded material" or "special procedure" material, within the meaning of those terms, as defined in the Police and Criminal Evidence Act 1984.  It is confirmed that such material is not sought under the application.  The order sought in this S.59 application is stated to be "to enable the retention and inspection of" the material set out in the application.  There is reference to S.59(5) and the application refers to the fact that there is a pending decision of this court as to whether or not the warrants executed were unlawful and that, pending that decision, the material would fall to be returned.
28.	In support of that application there is a document that is headed "Information in support of an application under S.59 of the CJPA 2001".  This is also made by acting Detective Inspector Brien and is dated 19 October 2014.  This document goes through some of the history of the matter.  It refers to the application for the search warrants in February of this year under S.8 of the Police and Criminal Evidence Act 1984.  The document states that there has been an investigation of various criminal networks since 2012 in relation to drug importation and distribution.  The document states: 
"A strand of this investigation has evolved from a drugs investigation into one involving long term fraud via the use of UK registered companies.  Because of this, the investigation is being led in partnership with the Department of Business, Innovation and Skills.  Currently the offence is being investigated in relation to this strand are the following . . . "
29.	The document then sets out seven types of offence.  Those are all the offences that are identified in the application form, plus:
"Aiding, abetting, counselling and procuring a subject of a disqualifications order contrary to S.13 of the Company Directors Disqualification Act 1986."
30.	There is no reference in this document to the fact that the application for the search warrants in February before the Magistrates' Court did not concern all those offences (although, of course, it did refer to some of them) but was concerned principally with drugs offences.  
31.	The document goes on to say that the items that are sought will be of great value to the investigation and this is explained by reference to various letters and other documents.  We understand from the explanation that has been given to us by Mr Bowers and Mr Mather that what has happened is that the police and investigating authorities have obtained these letters and other documents from other sources.  What the police hope to be able to do, by means of interrogating computers, iPhones and memory sticks, et cetera, is to investigate the provenance of various documents obtained from other sources in order to demonstrate that they are connected with various suspects, but in particular Sarkis, in order to demonstrate that offences under the provisions that I have identified are likely to have been committed by him and, doubtless, others as well.  That is the object of the exercise.
Should the order for delivery up be made? 
32.	In those circumstances, the question that we have to ask ourselves is whether or not this court should grant the unconditional order that is sought by Mr Bowers on behalf of his clients.  We asked in the course of argument whether or not there was any authority which deals specifically with the question of what factors this court should take into account when deciding whether or not it should grant such an order in circumstances where there is a pending application by the police authority to retain material under S.59(5)(b) of the CJPA.  Mr Bowers told us that, so far as he was aware, there was no specific authority on this point.  There are other authorities which deal with the ambit of the jurisdiction under S.59(5)(b), but there are none which appear to deal with this particular issue plainly, other than perhaps one which is known as AC, RC, BK, GST v Nottingham and Newark Magistrates' Court and HMRC [2013] EWHC 3790 (Admin).  That is a decision of this court where the judgment of the court was given by King J.
33.	However, it does seem to me that this particular point is not dealt with squarely by King J, although he does make reference to the fact that what this court might find to be the background and circumstances of the original application for a search warrant and what has happened subsequently could well be relevant to the pending S.59 application: see paragraph 40 of his judgment.  That, as it seems to me, is not quite the point that we have to deal with.
34.	Mr Bowers submitted that, amongst the factors which this court might consider, are, first, whether this court has been misled in any way by the relevant authority, here the Metropolitan Police; secondly, what were the reasons for any such misleading information, if any; thirdly, the conduct of the authority during the course of the proceedings brought to set aside the grant of the original search warrant and its execution; fourthly, the basis upon which the relevant authority seeks to retain the material it now has in its possession and what that material is.  Lastly, he submits that the court should balance the unlawfulness with respect to the original search warrants against the prospects of an application under S.59(5)(b) by the relevant police authority.
35.	I understand that Mr Mather did not seriously challenge the proposition that such factors can be taken into account.  However, he submitted that in circumstances where the Crown Court plainly has the jurisdiction to grant an order when the material was seized under an unlawful search warrant under S.59(5)(b), (at least as the authorities stand at present), then in the circumstances of this case there is no proper basis upon which an unconditional return of the material should be made.
36.	I consider first the question of whether or not this court has been misled.  I accept, and indeed the contrary was not suggested by Mr Bowers, that there is no question of bad faith on the part of the Metropolitan Police in this case.  However, I am, I have to say, very disturbed at the way in which matters have unfolded before this court.  The position was, at the time that the original search warrants were sought, that the aim of the search was in relation to material which was said to be highly relevant to an investigation concerning the importation and distribution of Class A drugs, in particular, cocaine.  I accept, of course, that there was reference in the application to other offences, but it was in the context of drugs offences, as is plain from the way the matter was explained by the District Judge, as she noted in giving her reasons for acceding to the request for the four search warrants.  
37.	However, in a very short time it is clear that the emphasis had fundamentally shifted.  There was no reference to drugs in the interview of Sarkis.  It seems there was a continuing criminal investigation which changed its focus entirely from drugs towards financial matters in a broad sense.  The short point is that there has been no explanation whatever until 2.15 this afternoon as to why this occurred and when it occurred.  Mitting J in the course of argument this morning asked Mr Mather if he could explain why there had been this fundamental change to which I have just referred.  Mr Mather took some instructions, which he said had been taken over the telephone.  He told us after the luncheon adjournment that the drugs aspect had not been pursued because, as a result of other individuals being interviewed, a decision was taken that there were insufficient links to connect Sarkis (and, indeed, the First Claimant, as I understand it), with drugs issues.  Mr Mather frankly accepted that he could not say when or where or how or by whom that decision had been made.  The position is that this change is not referred to in any document that is before this court on this application, nor is it referred to, as I have indicated, in the application for the retention of the material pursuant to section 59(5)(b).
38.	In those circumstances, it seems to me that up until the very last moment at least, this court has been misled as to the true position.  What is more, the Crown Court has been misled in so far as material is before the Crown Court for the pending S.59 application.  The reasons for this change have not even now become clear because, as I have said, Mr Mather is unable to go any further into the matter.  
39.	The position with regard to the conduct of these proceedings is, to say the least, unsatisfactory, in the light of what I have just said.  So, too, is the basis upon which it is said that the police authority should now be able to retain material pending the S.59 application.  
40.	When it is accepted that search warrants were obtained unlawfully and which were not executed lawfully, then the prima facie position must be that all material that was seized as a result of those unlawful search warrants should be returned.  It is up to a party who wishes to justify retaining that material to do so.
41.	In my judgment, in the circumstances of this case, I would not grant the Metropolitan Police authority the opportunity to make their section 59(5)(b) application, given the history of this case.  I am, of course, fully aware of what was said by Foskett J in the case of R (Panesar) and others v the Central Criminal Court and the Commissioner for Her Majesty's Revenue and Customs [2014] EWHC 2821 (Admin)  at paragraph 35, namely that those who are suspected of crime should not be put in a better position than they otherwise might be if material were to be returned.  However, that general principle must, in my judgment, give way to the particular circumstances of particular cases.  
42.	In all the circumstances of this case, I have concluded that the order that is sought by the Claimants should be granted and that is what I would propose.  
43.	MR JUSTICE MITTING:  I agree for the reasons that my Lord has given.  This case demonstrates the importance, for police officers who have applied or propose to apply for an order under S.59 to a Crown Court and meanwhile seek to retain that which has been unlawfully seized, of fulfilling the duty of candour owed by a public authority to this court.  It is essential, in the circumstances which have been described, for the police to explain, subject to any operational requirements which may prevent the material being disclosed to the other party, why precisely the apparent radical change of target has occurred.  Should these circumstances occur again in future, I trust that police officers will fulfil the duty of candour which is plainly imposed upon them.  Because it was breached in this case, I agree that the order should be as my Lord has indicated.