SEARCH AND SEIZURE: DEFENCE TACTICS

Newcastle United has gone on the attack against HM Revenue and Customs over search and seizure.

HM Revenue and Customs (HMRC) staff raided Newcastle’s St James’ Park and West Ham United’s London Stadium in April as part of a fraud inquiry relating to income tax, national insurance and transfer deal payments.

Newcastle United successfully applied for a judicial review of the search-and-seize order obtained by HMRC. At the resulting two-day hearing at London’s High Court, the club argued that the scope of the search warrants was excessively wide and that legal procedures were not followed properly when the warrants were obtained.

At the time of writing this, we do not yet know the decision of the High Court. Until it is made, HMRC officers cannot examine the material seized in the raid. That alone shows the value of a legal challenge to a raid.

Warrants

It is not always possible to challenge the validity of the search warrant. But a proper challenge, in the right case, can take the fight to the prosecution and make sure it does not have it all its own way. That is what Newcastle United has achieved so far.

Most warrants are issued under the Police and Criminal Evidence Act 1984 (PACE) or the Proceeds of Crime Act 2002. When the authorities apply to the court for a warrant, they must state the object of the search and provide sufficient information to show that it is necessary.

There must be reasonable grounds for believing that an offence has been committed and that there is material on the premises likely to be of substantial value to the investigation.

Rules

There are other procedural rules that must be followed regarding the warrant application and the conduct of the search. If these rules are not followed, the warrant may be quashed or the seized property returned. This could prevent the prosecution using what they seized in any subsequent prosecution.

In R (Cook) v Serious Organised Crime Agency (SOCA), SOCA obtained a warrant, carried out the search and seized items but failed to leave schedules to the warrant at the searched premises. This rule breach rendered the seizures unlawful. SOCA had to pay damages and some legal costs – and then start what was an ultimately unsuccessful attempt to re-seize the items.

In a money laundering case, SOCA was again ordered to return seized items but was then able to obtain a Production Order under the Proceeds of Crime Act 2002 to re-seize them. This was possible because of the particular offence being investigated.

The two cases demonstrate the powers the authorities have regarding search and seizure. But they also show that they do sometimes get it wrong – and this offers opportunities to a defence.

Tchenguiz

Tchenguiz v Serious Fraud Office & Others [2012] is arguably the most high-profile case in recent years where the authorities were challenged and beaten regarding search and seizure.

Robert and Vincent Tchenguiz’s premises were searched and arrests were made but the defence then showed that the SFO had failed to check the credibility of information it presented to the court when applying for the search warrants. The case ended with the SFO apologising to the brothers, paying them £4.5 million and being heavily criticised by the court for a lack of understanding and at least one serious factual omission in its application for a warrant.

The brothers had loaned money from the Icelandic bank, Kaupthing. When Kaupthing collapsed, a committee created to recover money owed to the bank appointed accountants and insolvency practitioners Grant Thornton to investigate. Grant Thornton’s report alleged that the bank’s lending to the Tchenguiz brothers was highly irregular and excessive.

The SFO relied on this report completely when applying to the Old Bailey for search warrants. But there were a number of innocent, plausible explanations for what had happened – possibilities that the SFO had simply not considered.

It can often be the case that authorities are sent material, created by others, to demonstrate the ‘guilt’ of those being investigated. Any judge asked to issue a search warrant, however, must be satisfied that there are proper grounds for suspicion.

As a result, the application will never be a rubber-stamping exercise. This means that a defence has plenty of opportunity at this stage to challenge any claims made against their client which they believe to be inaccurate, misleading or not presenting all the relevant facts.

Section 59 of the Criminal Justice and Police Act 2001

If the High Court quashes a search warrant, it usually means the return of the seized material. But Section 59 of the Criminal Justice and Police Act 2001 allows the authorities to apply to the High Court for permission to retain the material for a short time while it re-applies to the Crown Court for, in effect, a new Order justifying the old seizure. In these situations, the Crown Court has a discretion to authorise the retention of the material seized, despite the unlawfulness of the original search.

The court is allowed to do this in circumstances were, if the seized material was returned, it would be immediately appropriate to issue a warrant, under which it would be lawful to seize the property. This basically means the authorities get a second chance to get the application right. In Chatwani v National Crime Agency [2015], it was held that the High Court would only be likely to refuse this if there had been bad faith on the part of the police in securing the warrant.

Conclusion

Courts can and do come down heavily on prosecutors who present a misleading picture to a judge. If a warrant has been obtained unlawfully it can be quashed. Even allowing for Section 59, this sends a signal to the authorities that they too are bound by the law.

A warrant’s quashing can make it harder for the authorities to gain a second search warrant if the court knows they got it wrong last time and the defence is there to argue against it.

The prosecution will always find its search and seizure activity more difficult if the defence is aware of its ability to issue challenges.

Jonathan Lennon is a barrister specialising in serious and complex criminal defence case at Carmelite Chambers in London. He is a contributing author to Covert Human Intelligence Sources, (2008 Waterside Press) and has extensive experience in all aspects of the Proceeds of Crime Act 2002.