B e f o r e :
LORD JUSTICE BEATSON
MRS JUSTICE WHIPPLE
|| R (Newcastle United Football Club Limited, Newcastle United Limited, and Newcastle United Football Company Limited)
||- and –
||The Commissioners for Her Majesty's Revenue & Customs
||- and –
||The Crown Court at Leeds
Richard Lissack QC, Robin Barclay, Giles Robertson (instructed by RPC) for the Claimant
Stephen Nathan QC, Andrew Bird (instructed by HMRC) for the Respondent
Hearing dates: 27 – 28 July 2017
Further submissions in writing received on 31 July 2017
HTML VERSION OF JUDGMENT
Crown Copyright ©
Lord Justice Beatson and Mrs Justice Whipple:
- This is the judgment of the court to which we have both contributed.
- The claimants in this judicial review, filed on 7 June 2017, are three companies involved in the activities of Newcastle United Football Club ("NUFC"). Newcastle United Football Club Limited, the first claimant, is a dormant company. Newcastle United Limited, the second claimant, is the holding company which owns the shares in the first and third claimants, and Newcastle United Football Company Limited, the third claimant, is the company that operates the football club and employs professional footballers who play for the club. Save where it is necessary to refer to an individual company, we refer to the claimants as "NUFC".
- The claimants challenge the legality of decisions taken by the Commissioners for Her Majesty's Revenue and Customs ("HMRC") on 19 April 2017 to apply for search and seizure warrants under the Police and Criminal Evidence Act 1984 ("PACE") in connection with a criminal investigation of suspected evasion of Value Added Tax ("VAT"), income tax and National Insurance Contributions ("NICs") by NUFC in relation to payments made to and via football agents, and the decision of HH Judge Jameson QC at the Crown Court at Leeds on 20 April 2017 to issue the warrants. The warrants were executed by HMRC on 26 April 2017 at three premises linked with NUFC: its main office premises at St James' Park, its training ground at Darsley Park, and the home of Mr Lee Charnley, its Managing Director. The warrants authorised access to eight other premises connected with football agents and players associated with NUFC, but there is no challenge in relation to HMRC's access to those premises.
- HMRC has been investigating whether arrangements between NUFC, football agents and players allow the player to evade liability for income tax and employee's NICs, and NUFC to evade liability for employers' NICs and to claim inflated VAT refunds. The investigation is known as "Operation Loom". One of its objects is to ascertain whether payments made by NUFC to football agents purporting to act for NUFC were in fact being made or secretly transferred with the knowledge of NUFC to intermediate and ultimate recipients so as to benefit the player or the player's agent. In such cases, that payment may be a benefit in kind to the player, an employee of NUFC, which NUFC must declare on a form P11D, and in respect of which NUFC must pay employer's NICs, and the player must account for income tax and employee's NICs (for which in many cases the club would in fact account pursuant to its contract with the player). Specific aspects of Operation Loom involved investigating whether the arrangements were structured so that a smaller fee appeared to be paid to the player's agent and a larger fee to be paid to NUFC's agent or, where a single agent represents both NUFC and the player, whether there has been a false attribution of the agent's work such that an unjustifiable proportion of the fee is allocated as undertaken for NUFC; or whether NUFC secretly pays the player and/or his agent out of that larger fee.
- Permission to apply for judicial review was granted by Supperstone J on 22 June 2017. By that date there was already in place an order for interim relief enjoining HMRC from examining the material that was seized from NUFC. Supperstone J continued the interim relief pending the hearing before us. We have continued the interim relief in materially identical terms, pending the delivery of this judgment (or further Order of the Court). As matters currently stand, therefore, HMRC is holding a large volume of information seized from NUFC and Mr Charnley, which information HMRC has not yet examined.
- Supperstone J also ordered that the hearing of this judicial review be expedited given the need for an early decision about the status of the information seized, and the use (if any) to which it could be put by HMRC. In consequence, this hearing was listed for two days towards the very end of the Trinity Term. We have endeavoured to produce this judgment with all appropriate speed during the summer vacation.
- The evidence on behalf of NUFC consists of 6 statements of Adam Craggs, a partner at Reynolds Porter Chamberlain LLP, the claimants' solicitors, dated 15 and 23 May, 7, and 22 June, and 21 and 27 July 2017. The evidence on behalf of HMRC consists of statements of the following members of the Fraud Investigation Service Directorate of HMRC: Richard Stretton, who executed the search warrant at St James' Park and was the senior HMRC officer present at the search; Steven Blackburn, the senior HMRC officer in charge of Operation Loom, both dated 16 June 2017; Lee Griffiths, the HMRC officer who swore the application for search warrants before the Crown Court, dated 13, 24 and 26 July 2017; and Eloise Konieczko, a legal trainee in HMRC's Enforcement and Insolvency Team, dated 16 June and 6 July 2017. The first witness statement of Mr Griffiths (dated 13 July 2017) attached a large number of documents, running to two lever arch files. He explained in his witness statement that these were among the documents in HMRC's possession at the time of the application for the warrants. None of these documents were produced for the judge, although we were shown a number of them.
- At the hearing before us, HMRC sought permission to rely on the witness statement of Christopher Allen dated 13 July 2017. Mr Allen gave evidence about matters which post-dated the issue and execution of the warrants, namely an interview by HMRC officers of Mr Simon Stainrod, a football agent, on 4 May 2017, and exhibited certain emails, handwritten notes and a letter which were seized during a search of the London Stadium (home to West Ham United Football Club, "WHU") on 26 April 2017, in execution of different warrants issued by HHJ Jameson QC on the same day against that club. NUFC formally objected to the admission of Mr Allen's witness statement and the exhibited documents. We reserved our decision on HMRC's application, and (with the consent of NUFC) considered the contents of Mr Allen's witness statement and exhibits de bene esse during the course of the hearing.
- The remainder of this judgment is organised as follows. Part II sets out or summarises the material primary and secondary legislation, and practice and procedure. Part III summarises the facts, the judge's decision, and the execution of the warrants. Part IV summarises the grounds of challenge and gives an overview of the parties' cases. Parts V and VI respectively contain the submissions on the procedural failings and substantive errors alleged by NUFC, and our analysis and conclusions on them. The challenge to the issue of the warrants on the ground that no reasons were given is dealt with at  – . We have concluded that, although the procedure before the judge could certainly have been improved upon, the various procedural points taken by NUFC should be rejected. We also reject the substantive challenges to the warrants, which we have concluded were lawfully issued. In the light of our conclusions, the arguments relating to relief do not arise, and we do not address them. In Part VII, we, however, briefly record our view that, had the warrants not been lawfully issued, the submissions of HMRC as to why any relief beyond quashing them should be refused, appeared to us to have considerable force. Part VIII draws together our conclusions and gives references (at ) to the paragraphs containing our reasons for rejecting the various procedural and substantive challenges.
II. Legislation, and Practice and Procedure:
- In this section, we set out or summarise the material provisions of the Police and Criminal Evidence Act 1984 ("PACE"), the Criminal Procedure Rules, SI 2015 No 1490 as amended by 2016 SI 2016 No 120 ("Crim PR"), and the Criminal Practice Directions made (see  EWCA Crim 1567) by the Lord Chief Justice pursuant to section 74 of the Courts Act 2003 ("the 2003 Act") and Part 1 of Schedule 2 to the Constitutional Reform Act 2005. A central issue in this case concerns the impact of amendments to the Crim PR which came into force on 5 October 2015 and of the Criminal Practice Directions which came into effect at the same time.
(a) The Police and Criminal Evidence Act 1984 ("PACE"):
- Section 9 of PACE establishes a "special procedure" by which access can be obtained to confidential business documents, by making an application under Schedule 1 of PACE for a warrant. The application must be made in writing and supported by information, and questions relating to it must be answered on oath or affirmation. Section 15 of PACE sets out the information which must be set out in any such application.
- By Schedule 1, paragraph 1, a circuit judge may make a production or access order under paragraph 4 if he is satisfied that one or other of the sets of access conditions is satisfied. In the case of a warrant, however, there is a further requirement. As well as being satisfied that one or other of the access conditions is satisfied, the judge must also be satisfied that one of the further conditions in paragraph 14 is fulfilled or that a production or access order made under paragraph 4 has not been complied with.
- It is the first set of access conditions which are relevant in this case. Those conditions are set out in paragraph 2 of Schedule 1. Paragraph 2 provides:
"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; and
(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."
- Because in this case the application was for a warrant to enter and search premises, paragraph 14 of Schedule 1 is also engaged. Paragraph 14 provides four further conditions, one of which, (d), is relevant for present purposes:
"The further conditions mentioned in paragraph 12(a)(ii) above are—
(d) that service of notice of an application for an order under paragraph 4 above may seriously prejudice the investigation."
(b) Practice and Procedure:
- In R (Rawlinson and Hunter Trustees and Others) v Central Criminal Court; R (Tchenguiz and Another) v Director of the Serious Fraud Office and Others  EWHC 2254 (Admin),  1 WLR 1634 (a case to which we will refer as "Tchenguiz") the Claimants challenged the lawfulness of warrants obtained by the Serious Fraud Office under section 2(4) of the Criminal Justice Act 1987 on grounds, amongst other things, that the judge had failed to give reasons for issuing the warrants. The then President of the Queen's Bench Division, Sir John Thomas (sitting with Silber J), gave the judgment of the Court. Having concluded (at ) that the judge should have given reasons when he issued the warrant (as to which, see further below), he turned to matters of practice, and recommended at  that the Criminal Procedure Rules Committee or another ad hoc body should review the procedure on applications for warrants in cases investigated by the Serious Fraud Office.
- In October 2015, Part 47A of the Criminal Practice Direction was introduced. It governs the application for and issue of warrants generally. The Practice Direction was issued by the Lord Chief Justice exercising his power under section 74 of the Courts Act 2003 and Part 1 of Schedule 2 to the Constitutional Reform Act 2005 to give directions as to the practice and procedure of the criminal courts (see  EWCA Crim 1587). Paragraph 47A of the Practice Direction required Crim PR Part 47 and its accompanying forms to be followed, to be adapted if necessary to meet the particular application being made if no specific form existed designed for that type of warrant (see paragraph 47A.5). This was to apply the CrimPR indirectly, so far as applications under Schedule 1 of PACE were concerned: the CrimPR did not apply directly to applications for warrants under that provision. That was because the functions of the Criminal Procedure Rules Committee were limited to making rules in relation to "a specified court or description of courts", (for example in relation to the "criminal courts") or in relation to "specified descriptions of proceedings or a specified jurisdiction": see sections 68 and 69 of the Courts Act 2003, by which that Committee was established. Their functions did not extend to the exercise by a circuit judge of powers such as the power to issue warrants under Schedule 1 of PACE, which the statute expressly vested in him or her as "a circuit judge" and were in that sense "personal".
- However, in response to the President's invitation in Tchenguiz, from 2013 the Criminal Procedure Rules Committee had been considering amendments to the Criminal Procedure Rules, Part 47 which deals with investigation orders and warrants.
- The gap in their powers was filled by section 82 of the Deregulation Act 2015, which came into effect on 26 May 2015 and amended PACE to permit Criminal Procedure Rules to be made to govern the procedure(s) under Schedule 1 of that Act.
- Part 47 of the CrimPR was then amended by the Criminal Procedure (Amendment) Rules 2016 SI 2016 No 120 with effect from 4 April 2016. Specifically, Part 47.2 was amended to provide that a reference to a "court" included a reference to a judge who could exercise the power in question; Part 47.30 makes specific provisions for applications for warrants under Schedule 1 to PACE.
- Sub-paragraph (3) of Crim PR 47.30 provides:
"(3) Where the applicant relies on paragraph 2 of Schedule 1 to the Police and Criminal Evidence Act 1984 ('the first set of access conditions': general power to gain access to special procedure material), the application must—
(a) specify the indictable offence under investigation;
(b) explain the grounds for believing that the offence has been committed;
(c) explain the grounds for believing that the material sought—
(i) is likely to be of substantial value to the investigation (whether by itself, or together with other material),
(ii) is likely to be admissible evidence at trial for the offence under investigation, and
(iii) does not consist of or include items subject to legal privilege or excluded material;
(d) explain what other methods of obtaining the material—
(i) have been tried without success, or
(ii) have not been tried because they appeared bound to fail; and
(e) explain why it is in the public interest to obtain the material, having regard to—
(i) the benefit likely to accrue to the investigation if the material is obtained, and
(ii) the circumstances under which the material is held."
- The "general rules" for applications for warrants in Crim PR 47.26 now include the requirement in 47.26(2)(d) that the applicant give the court an estimate of how long the court should allow to read and prepare for the application and for the hearing. Crim PR 47.25 deals with the exercise of the court's powers. Sub-paragraphs (3) – (5) respectively provide that "the court must not determine an application unless satisfied that sufficient time has been allowed for it"; the applicant has confirmed on oath or affirmation that to the best of his or her knowledge and belief all material information has been disclosed, including circumstances that might reasonably be considered capable of undermining the grounds of the application; and that if the court asks a question about an application, the answer must be on oath or affirmation and the court must arrange for "a record of the gist of the question and reply".
- Part 47A.1 of the Criminal Practice Directions still requires Crim PR Part 47 to be followed and the accompanying forms to be used. But now the Criminal Procedure Rules apply directly to applications under Schedule 1 of PACE. New forms were issued under Part 47 of the Crim PR on 4 April 2016, including one designed for applications under Schedule 1 to PACE (namely Form ENF3312 which is available online).
- Accordingly, since April 2016 the Crim PR and the Criminal Practice Directions have contained guidance on the procedure for PACE Schedule 1 warrants, including standard forms for use in applying for those warrants. In its template format, with expandable blank spaces for the person making the application to insert information addressing the statutory criteria, the application form designed for Schedule 1 PACE applications is 8 pages long. It sets out various questions or statements relating to the criteria set out in PACE and leaves space for the relevant information to be inserted. Each question is followed with words in italics as guidance to completing the application. Five single spaced pages containing "Notes for Guidance for applicants" accompany the form.
- This is the first case we are aware of to come before the Court raising procedural issues since the April 2016 changes came into effect.
III. The facts, the judge's decision, and the execution of the warrants:
(a) HMRC's application:
- HMRC's application to HHJ Jameson QC was signed by Mr Griffiths on behalf of HMRC on 19 April 2017, and countersigned by Stuart James Lucas, a senior investigating officer of HMRC on the same date. It was on the prescribed form to which we have referred. In the application, Mr Griffiths estimated that the court should allow 60 minutes to read the application, and 30 minutes for the hearing.
- We understand that the application relating to NUFC was one of two applications on similar grounds before the judge that day, the other application relating to WHU, in respect of which Mr Griffiths advised reading time of 40 minutes, with a similar period for the hearing. We have not seen the WHU application. We simply note, as is common ground, that the circuit judge was invited to set aside 100 minutes in total to read for the two applications, which were estimated to take a total of 1 hour of court time.
- The application in relation to NUFC was on the prescribed form and its main body in relation to NUFC (excluding appendices) ran to 29 pages of text. The list of premises to be searched, with reasons for seeking a warrant in respect of each, ran to a further 8 pages. The transfer relating to Demba Ba, a Senegalese player, was fully described in the body of the application. We shall return to that at  –  below and we refer to the documents HMRC had at the time of the application at  –  below. There were 8 appendices attached to the applications, covering a further 27 pages. These appendices explained the background to the type of taxes believed to be the subject of evasion by NUFC in words and depicted the fraud diagrammatically. One appendix explained transfers relating to Sylvain Marveaux, Moussa Sissoko, Davide Santon and Papiss Cissé, four other players whose transfers HMRC was investigating at that stage. Another appendix summarised various tripartite negotiations between NUFC, agents and different players, where HMRC alleged that NUFC used the apportionment of agents' fees between club and player as a negotiating tactic. In all, this was a substantial application running to 64 pages.
- In his introduction to the NUFC application, Mr Griffiths explained that HMRC's investigation concerned the suspected evasion of income tax and NICs in connection with payments NUFC made to football agents. Its focus at that time was the signing of five players by NUFC, but Mr Griffiths believed that the practices uncovered in these five transfers were common across many of NUFC's player transfer dealings. The five transfers had taken place in the tax years 2010/2011, 2011/2012 and 2012/2013. NUFC had been subject to a civil tax enquiry for the 2011/2012 tax year, but was believed not to have disclosed all relevant emails in response to HMRC's enquiries at that stage. In response to one of the questions set out on the application form, Mr Griffiths stated that he believed that NUFC had systematically abused the tax system and therefore all payments to agents made by NUFC were potentially the subject of criminal proceedings. He explained that, at the time of the five transfers, Derek Llambias was the managing director of NUFC, and Lee Charnley was the Football Secretary. He noted that Mr Llambias had ceased to be a director of NUFC on 19 June 2013 and Mr Charnley had become the Managing Director of NUFC on 7 April 2014.
- HMRC's position as a matter of generality was set out in the following two paragraphs:
"17. I believe that the contractual arrangements are a sham and do not reflect what actually happened. The club's agents passed on the vast majority of their fees to other agents acting for the players or to associates of the players, or possibly to the players themselves, contrary to Rules H3 and H13 of the FA's agents' regulations. Therein lies the tax loss. By using purported clubs agents as intermediaries to conceal the payments to players and their agents, the players and the club were able to evade IT and NIC respectively by not treating payments to players' agents on behalf of players as taxable benefits enjoyed by the player. The club was also able to reclaim the input VAT on the agents' services that were said to be applicable to the club. If the services were really for the player, the club could not reclaim that VAT.
18. I also believe that on a number of occasions between 2010 and 2013 NUFC entered into tripartite arrangements with the current and new NUFC players and their agents which distorted the value of the agents' fees properly chargeable on the player as a benefit. I believe that the club, agents and the players were complicit in this and that therefore there has been a systematic abuse of the tax system by those involved".
- We turn to the transfer of Demba Ba, who signed for NUFC on a free transfer from WHU on 17 June 2011 and in January 2013 was sold to Chelsea FC. So far as his transfer to NUFC was concerned, the application recited that the documents filed with the Football Association (the "FA") declared a payment of £1.9 million to Simon Allan Stainrod Ltd ("Stainrod"), as the agent said to be acting for NUFC, and £136,500 paid to Alexandre Gontran, as the agent acting for the player. Stainrod is the company though which Simon Stainrod, an agent registered with the FA, trades. The application then recorded that invoices submitted as part of HMRC's inquiry into Stainrod showed that the bulk of the £1.9 million was in fact passed on to a number of parties, via payments made by Stainrod's solicitors, Mishcon de Reya LLP ("Mishcons"). It appeared that these payments were for work done in relation to Demba Ba's transfer, leaving a balance of only £136,500 (the same amount as was paid to Alexandre Gontran) in the hands of Stainrod.
- It is not necessary to set out the allegations and the various payments in detail. It is sufficient to note that after setting out the purpose and scope of the application, and the evidential basis for it, Mr Griffiths set out his conclusions at §35 of the application as follows:
"In summary, it appears that NUFC paid agent's fees for club services of £1.9m in full knowledge that the majority would be passed on to other agents (including unlicensed ones) and to a company associated with the player, thereby bestowing on the player a benefit that would have generated estimated liabilities for [income tax] and NIC of £1,160,383 that ultimately would not be paid. I believe that NUFC must have known that they were using STAINROD to pass on the money to third parties…"
- Mr Griffiths then went on to detail further suspicions arising out of the transfer of Demba Ba to Chelsea FC in January 2013. He detailed the other transfers of players which were under investigation, and the suspected role of Mishcons, indicating that production orders would be sought against that firm in due course.
- In the application, Mr Griffiths sought a wide range of material relating to the transfer and employment of football players by NUFC. He stated that he believed that the material sought would be of substantial value to the investigation. He also stated that he had not tried to obtain the material in any other way and explained what alternative methods he had considered but rejected as bound to fail. (We shall return to this part of the application form and the basis for Mr Griffiths' belief when we come to consider ground 3 at [86ff.] below.) Mr Griffiths explained why he considered that it was in the public interest and proportionate for HMRC to obtain access to the material in this way. He explained that, to mitigate the risk that some of the material may be subject to legal privilege, independent counsel would accompany the officers executing the warrant. He confirmed his belief that service of a notice of an application for a production order may seriously prejudice the investigation and explained why he believed that none of the parties would voluntarily provide evidence of a suspected criminal conspiracy and that advance notice would be likely to result in evidence being destroyed or removed.
(b) The hearing before HHJ Jameson QC:
- This took place on 20 April 2017, the day after the application was signed. The hearing lasted about 45 minutes. HMRC was represented by Counsel, Ms Jo Shepherd. We have been provided with a transcript of that hearing. Mr Griffiths was sworn. The judge said that HMRC had been optimistic in thinking he could read the application form in an hour, but said: "However, I have read it." Mr Griffiths explained the background, and was questioned by the Judge. In answer to one question by the Judge, Mr Griffiths said that he thought email traffic would be the main source of evidence that payments which were badged as being for club services were in fact for the benefit of players. In that connection, he said that HMRC already had emails which tended to show that NUFC knew that other agents were going to be paid in these transfers. The Judge again confirmed that he had read the application. He said that he did not need Mr Griffiths to go through everything, and that he would grant the warrants. He asked where he should sign, and did so. Counsel is not recorded on the transcript as having said anything at all at the hearing.
- On the page in the application form headed "Judge's decision – this record must be kept by the court", there are a number of pre-printed statements for the judge to confirm or delete as relevant. HHJ Jameson QC deleted various options, and then made the following statement:
"I am satisfied that the requirements of paragraph 12 of PACE Schedule 1 are satisfied, including the access conditions in paragraph 2 of that Schedule, and I issue warrants accordingly."
- At that stage, in italicised print, the form states: "Note here any additional findings or reasons for issuing or refusing to issue the warrants(s)". The judge inserted in his handwriting various details about the particular addresses covered by the warrant. He signed that page of the application form and it was date stamped 20 April 2017.
(c) The execution of the warrants:
- The warrants were executed by HMRC on 26 April 2017, starting at 6am. A large number of HMRC officers were involved. The senior officer present during the search at St James' Park was Richard Stretton. At §10 of his witness statement, Mr Stretton says this:
"During discussions with Mr Drew I acknowledged that the wording of the fifth bullet point of the search warrant was widely drafted and I explained that HMRC's focus was on how payments made to agents acting on behalf of both players and the club had been treated for the purposes of claiming Income Tax, National Insurance and VAT liabilities and how this was returned to HMRC".
- Some of the material was sifted on the premises, but, due to the volume of material seized, it was not possible to sift all the material on site. Accordingly, HMRC decided to seize the material under section 50 of the Criminal Justice and Police Act 2001. That provision permits the removal of items in order for them to be sifted off site, if it is not reasonably practicable for sifting to occur on site. 275 files and 19 digital items were removed.
IV. The grounds and the parties' cases:
- The claimants advance five grounds for challenging the warrants. They are:
1) The warrants were excessively wide;
2) There were no reasonable grounds to believe that NUFC was engaged in the suspected tax fraud;
3) Other methods of obtaining NUFC's documents were available;
4) HMRC's disclosure to the circuit judge was inaccurate and incomplete; and
5) The procedure before the circuit judge was inadequate.
- In argument, Mr Lissack QC, who appeared with Mr Barclay and Mr Robertson for the claimants, took ground 4 as part and parcel of grounds 2 and 3. He commenced his challenge on ground 5 (alleged procedural failings). He then turned to ground 2 (no reasonable grounds), then ground 3 (alternative methods), before addressing ground 1 (warrants excessively wide). In his concluding submissions, he placed considerable emphasis on his argument that the court should grant a remedy in the form of a declaration that the search and seizure was unlawful, and should quash the warrants. He argued that the duty of the court under section 31 (2A-C) of the Senior Courts Act 1981 not to do so unless it appeared to it that it was highly likely that the outcome would not have been substantially different if the conduct complained of had not occurred did not avail HMRC in the circumstances of this case. This was because, he argued, we could not be so satisfied. He also argued that HMRC should not be permitted to rely on the power conferred by section 59 of the Criminal Justice and Police Act 2001 to permit a person who had seized property unlawfully to retain the property. His case was that the appropriate remedy in this case was an order for the return of the seized documents, including documents held electronically.
- Mr Nathan QC, who appeared with Mr Bird for HMRC, sought permission to rely on Amended Summary Grounds of Resistance dated 20 July 2017. There was no objection to the amendments save to a new footnote in that document at paragraph 10 (iv) which referred to the material which was exhibited to Mr Allen's witness statement, which was itself the subject of an objection. We shall come back to the footnote when we deal with Mr Allen's witness statement. HMRC resisted the various grounds of challenge, but in the event that we found that there was some defect in the warrants, urged us alternatively not to quash the warrants, relying on section 31 (2A-C) of the Senior Courts Act 1981, or in the exercise of our discretion to refuse a remedy. If we were minded to quash the warrants, he urged us to apply section 59 of the CJPA 2001, as a basis for declining to order return of the documents.
V. Ground 5: procedural failings:
- Ground 5 focuses on procedural failings, which are said to demonstrate that there was an absence of proper judicial scrutiny which renders the warrants unlawful. The centrepiece of Mr Lissack's argument is his submission that the judge failed to give reasons for his decision. But this, he says, must be taken together with three other factors: the lack of reading time available to the judge; HMRC's failure to make available to the judge the documents on which the application was based; and the mistakes made by HMRC in the body of the application which led to an inaccurate picture being painted for the judge. He says that these, taken together, mean that the warrants were not properly scrutinised and NUFC was deprived of the protections afforded by Schedule 1 of PACE, relating in particular to the evidential basis of the application and whether other methods of obtaining the material were bound to fail.
(a) Lack of Reasons:
- NUFC correctly pointed out that the judge did not give any judgment or ruling at the end of the hearing. As the transcript discloses, he simply indicated his willingness to make the warrants in the terms sought, and signed them in the relevant place without giving reasons in writing or orally. Mr Lissack suggested that this was a grave failing on the part of the judge. He relied on a number of cases including R (Wood) v North Avon Magistrates Court  EWHC 3614 (Admin), (2010) 174 JP 157 at  per Moses LJ, but primarily on the statement by the then PQBD, giving the judgment of this court, in Tchenguiz. Sir John Thomas PQBD (at ) stated:
" The judge's duty then is, on the basis of that presentation, to be satisfied personally that what is presented meets the statutory test of reasonable suspicion. It requires careful consideration and rigorous and critical analysis by the judge. … a judge must give reasons. These will be a short summary of the detailed analytical process undertaken by the judge in his scrutiny of the material presented."
This, Mr Lissack argued, is a minimum requirement from which the circuit judge must not deviate. His submissions emphasised in particular the phrase "careful consideration and rigorous and critical analysis".
- HMRC accept that it would have been better if the judge in this case had given a judgment or ruling on the application. That judgment or ruling could have been short, but it would have shown that the judge had indeed considered the relevant factors and was "personally satisfied" (as Tchenguiz requires) that the warrants should be made. Indeed, HMRC point to its instructions to Counsel for the hearing, in which it emphasised the importance of the judge giving reasons, and instructed its counsel to "ensure that the … judge hearing the application articulate[d] adequate reasons for the decision to grant or to refuse the application". The instructions noted that "A lack of reasons or anything else that suggests that the Court has given the application less than vigorous scrutiny does not assist HMRC as it causes difficulty come any future judicial review". Indeed.
- It is not clear why the judge did not give reasons. The transcript does not disclose that either Mr Griffiths or Counsel suggested that he should do so.
- Accepting that it would have been preferable for the judge to have given reasons, HMRC nonetheless rely on case law to maintain that the absence of reasons is not fatal: R (Cronin) v Sheffield Justices  EWHC 2568 (Admin),  1 WLR 752 (and see Cronin v UK (2004) EHRR CD 233) and R (Glenn and Co) v HMRC  EWHC 2998 (Admin),  1 Cr App R 22. In Cronin, the Divisional Court concluded, in the face of a challenge to the justices' failure to give reasons for issuing a search warrant to the police pursuant to section 23(3) of the Misuse of Drugs Act 1971 (reasonable grounds for suspecting drugs offences), that the "obvious inference" was that the justices had issued the warrant on the basis of the material contained in the information provided by the police and had done so on the basis that the requirements of the 1971 Act had been met (see ). Whilst recognising that Art 8 ECHR was engaged, Lord Woolf CJ, with whom Hallett and Stanley Burnton JJ agreed, stated that he was satisfied that interference was justified. He dismissed the challenge, saying this at :
"…The material upon which the warrant was issued is clearly contained in the information and the basis on which the warrant was issued is obvious without any need for the justice merely to repeat that he is satisfied as required by section 23 of the 1971 Act. To require the justice to set out that he was so satisfied would serve no purpose whatsoever."
- The claimant in Cronin took his case to Strasbourg, complaining under Art 8 about the lack of reasons for the issue of the warrant and/or a full record of the hearing. The ECtHR rejected the application on Art 8 grounds as manifestly ill-founded. It did not consider that the applicant's complaints under article 6 (lack of reasons) or Art 13 required any separate consideration and held that the application was inadmissible.
- In Glenn, the Divisional Court (Laws LJ and Simon J) rejected a challenge to a warrant on the ground that the district judge had failed to give reasons. The Court noted (at ) that there is nothing in PACE which requires reasons to be given, that the Court in Cronin had suggested that it was sufficient for a reviewing court to be able to say that there was material on which the issuing court could be satisfied that it was proper to issue the warrant, but that, as a general rule, reasons should be given and recorded contemporaneously (see ). The court concluded (at ) that in that case it was possible to say that the district judge could have been satisfied on reasonable grounds that indictable offences had been committed, such as to justify issuing the warrant. The challenge on grounds of lack of reasons failed: see .
- Alternatively, Mr Nathan suggests that Part 47 of the Crim PR, and the forms therein prescribed overtake, and implicitly overturn, the suggestion in Tchenguiz that reasons must always be given. The judge is now guided to his or her conclusion by the information in and the structure of the form, so that giving reasons would simply be a repetitive and pointless exercise.
- Mr Lissack's response was that there is a material distinction between the facts and circumstances of Cronin and Glenn and the case before us. They both involved straightforward applications for warrants in the face of strong evidence of criminal activity, in circumstances where obvious inferences could be drawn about the reasons for issuing the warrants. This case, he says, is different because it is so much more complex. So far as Mr Nathan's alternative argument is concerned, Mr Lissack submitted that Tchenguiz cannot simply be overruled by the Criminal Procedure Committee, the Crim PR, the Criminal Practice Direction, or the forms, at least not in the absence of clear words signifying that to be the legislative intent.
- We accept Mr Lissack's submission that the Crim PR, the Direction, and the forms prescribed by them do not overrule or overturn the principle about the giving of reasons which was stated in the passage from Tchenguiz set out at  above. It is a passage which reflects similar statements in many cases in this and other contexts, and can be said to reflect a wider common law principle. Although it is generally accepted that there is at present no general common law duty requiring public authorities to give reasons for their decisions, the trend of the law has been to increased readiness to find that a duty to do so arises by implication in relation to particular categories of decisions, sometimes as an aspect of fairness: see for example R v Secretary of State for the Home Department, ex p. Doody  1 AC 531, at 564 -565 per Lord Mustill. There has been particular readiness to imply such a duty in relation to decisions made by professional judges. In Flannery v Halifax Estate Agencies Ltd.  1 WLR 377, at 381, the Court of Appeal stated, albeit in the context of a decision made by a judge after a trial in the county court, and recognising some exceptions, for example where the court's decision is "more often than not a summary exercise of discretion", that a "professional judge owes a general duty to give reasons". The number of exceptions to this duty are progressively decreasing: see de Smith's Judicial Review, 7th ed., §7-088, and the cases cited.
- The recognition that a particular category of decision is subject to a common law duty to give reasons has an impact on the approach of the court to subsequent legislation and regulation about that category of decision. This is because the general approach of the courts is to require that a right conferred or a duty imposed at common law be clearly abrogated by legislation. As Lord Steyn stated, in R v Secretary of State for the Home Department, ex p. Pierson  AC 539 at 587 the context in which primary and secondary legislation is enacted is that of a "liberal democracy founded on the principles and traditions of the common law, and the courts may approach legislation on this initial assumption". See also, in the context of fundamental rights, R v Secretary of State for the Home Department, ex p. Simms  2 AC 115, at 131. There is no express abrogation or restriction in the Crim PR or the Criminal Practice Direction of the duty to give reasons, although, as we observe at  below, one aspect of the form may not be satisfactory. It follows that the Crim PR and the Direction do not overrule or replace the principle about the giving of reasons stated in the passage from Tchenguiz and the other cases concerned with the grant or refusal of a warrant.
- We therefore return to the authorities dealing with reasons in the context of warrants. The importance and practical utility of reasons has been reiterated in many cases over the years since the clear guidance in the context of warrants given over 24 years ago, by Watkins LJ in R v Southampton Crown Court ex p. J and P  Crim LR 962,  COD 286. In summary, reasons are important in order that the complainant will know why his premises have been raided, to ensure the judge is subject to the self-discipline of knowing and recording why the warrant was issued, and because, if reasons are given and recorded when the decision is made, any court considering a challenge to the issue of a warrant will learn the reasons without the fear that they are no more than an ex post facto justification: in the context of warrants, as well as ex p J and P, see R v Lewes Crown Court and another ex p Nigel Weller & Co (12 May 1999), per Kennedy LJ at  –  and Wood per Moses LJ at . Despite the statements in those cases, a surprising number of cases in which it is argued that no or inadequate reasons have been given by Magistrates or Crown Courts continue to come before the Divisional Court. There is also some tension between cases in which no reasons or inadequate reasons have been given in which the Divisional Court, when quashing the decision of a lower court to issue a warrant, has emphasised the importance of reasons for the decision and the need for the lower court to give reasons, and cases in which, despite the absence of reasons, the court has not quashed the decision. But we do not consider that the two lines of cases are inconsistent.
- In the first line of cases, as well as Tchenguiz and the cases to which we referred in the last paragraph, see R (S, F and L) v Chief Constable of the British Transport Police  EWHC 2189 (Admin),  1 WLR 1647 at  –  and , and the later decision of this court (Lord Thomas CJ and Foskett J) in R (Golfrate Property Management Ltd) v Southwark Crown Court  EWHC 840 (Admin),  2 Cr. App Rep. 12 at  and . The statement of Watkins LJ in ex p. J and P was quoted with approval by Kennedy LJ in ex p Nigel Weller & Co, and passages from both cases are set out in S, F and L at  and .
- By contrast, as we have acknowledged, there is a second line of cases which suggest that the failure to give reasons is not fatal to the validity of a warrant, or even that reasons are not required where the obvious inference can be drawn that the decision-maker was satisfied that the statutory criteria were met on the information before him: see Cronin and Glenn, both of which pre-date Tchenguiz, but neither of which appears to have been cited to the Court in that case. We reject Mr Lissack's suggestion that Cronin and Glenn can be distinguished on their facts as "simple" or "non-complex" cases; in our judgment, they illustrate the approach of the Court to any case where a warrant is challenged for lack of reasons, regardless of the underlying complexity.
- The authorities can be reconciled. For the reasons given in what we will refer to as the Tchenguiz line of cases, and indeed also referred to in Glenn at [29(iii)], it is undoubtedly preferable for reasons to be given when a warrant is issued. But the failure to give reasons is not the end of the matter. When faced with a challenge to the warrant on the ground of lack of reasons, the reviewing Court will ask itself the ultimate question, which is whether the statutory test has been applied. If, despite the lack of a fully reasoned decision, the court is able to discern a sufficient basis for the decision to issue the warrant, the challenge will fail: see Glenn at  with which we respectfully agree.
- Tchenguiz, Wood, S, F and L, and Golfrate are consistent with this. In Wood the application was refused save in respect of a vehicle seized which was held unlawful because there was insufficient evidence to show that the vehicle formed part of the fraud investigation. In the other two cases, there were other, substantive, grounds for the decisions to quash the warrants. In Tchenguiz the warrants were quashed on substantive grounds (non-disclosure and material misrepresentation in the information) rather than because of the failure to give reasons. The argument that the failure to give reasons was indicative of a failure by the judge to scrutinise the application was (at ) rejected. The court stated that it did "not accept that this can amount to an independent ground of criticism". In S, F and L, the court stated (at ) that although no formal reasons were given for the grant of the warrants in the cases of F and L, "it was clear from the transcript that [the judge] did consider the applications carefully" and in those two cases "the allegation of a lack of reasons cannot sensibly be made". In Golfrate (at ), the court rejected the submission that the lack of reasons "can give rise to an independent reason for review". It was "in essence part and parcel" of the question whether there were reasonable grounds for suspecting that the defendant had committed a money laundering offence. The court (at ) held that the material relied on in support of the warrant "did not withstand analytical scrutiny".
- Given that Part 47 of the CrimPR requires the use of prescribed forms for Schedule 1 PACE applications, and those forms set out the statutory criteria, discerning the reasoning for the decisions in many cases will be easy. The information will be set out in a logical order, in response to a series of questions which reflect the statutory criteria, with a prompt for the judge at the conclusion of the form as to the issue(s) of which he or she must be satisfied. The position thus differs from that in Wood (at ) where the form used "show[ed] every sign of having been created from two other forms whose purposes [were] different". Simon J (as he then was) stated that reliance on the form where the reasons for the grant of the warrant are in issue would not assist magistrates. But, in the present context, where the form is specifically designed to be used for an application under Schedule 1 of PACE, and the judge has simply signed the warrant, save where there is positive evidence to the contrary, the judge can reasonably be taken to have been satisfied that the information in the application was sufficient to support the various statutory criteria addressed in the form, and thus to justify the grant of the warrant. Indeed, the pre-printed signature page reflects that in terms, by inviting the judge to sign that he or she is satisfied that the requirements of paragraph 12 of Schedule 1 to PACE are satisfied, including the access conditions in paragraph 2 of that Schedule, and that "I issue the warrant accordingly".
- Leaving aside the substantive grounds of challenge, which we consider in Part VI below, we have concluded that this is such a case. It falls within the Cronin and Glenn line of cases, where the court considering an application for judicial review can discern the basis of the judge's decision to issue the warrant, on the basis of the information before him. In the present case, that information was set out in some detail in HMRC's application. We can see from the transcript that HHJ Jameson QC questioned Mr Griffiths about those aspects of the application about which he was unsure, and concluded on the basis of the information provided that he would issue the warrants. The obvious inference which we draw is that the judge was satisfied that the various statutory requirements were met and he signed accordingly. We reject the challenge on the basis of a lack of reasons. The reasoning, in the end, is obvious and adequate, even if not separately stated.
- In the light of the authorities on the importance of reasons we consider that there is one respect in which the present position is not satisfactory. The words printed on the form used for warrants under Schedule 1 of PACE do not invite any form of judgment or ruling to be given by the circuit judge. Further, the invitation which is currently printed for the judge to note any "additional" findings or reasons for issuing or refusing to issue the warrants, tends to suggest that reasons are not required as a matter of routine. The origin of this may possibly lie in the reference by Watkins LJ in ex p J and P to reasons being "sufficient to identify the substance of any relevant information or representation put before the judge in addition to the written information". We would, with respect, invite the Criminal Procedure Rules Committee to consider whether circuit judges should be directed by appropriate words on the form to give succinct reasons, either on the form or in a separate (but also succinct) ruling or judgment, when issuing or refusing to issue a warrant. Such a direction would reflect the President's exhortation in Tchenguiz at , and would demonstrate what we believe already to be best practice (recognised also by HMRC, recalling the terms in which HMRC instructed its counsel at the hearing in front of the judge in this case, and noting the line of authority of which Tchenguiz is a notable recent example). If judges are to be prompted to give reasons, Crim PR Rule 47 may possibly require some amendment. At present, that rule simply states that the Court must keep an adequate record. It does not refer in terms to the need for reasons.
- In summary, we conclude that the failure to give reasons for the decision does not, at least not in itself, amount to a procedural defect vitiating the warrants. The reasons for the issue of the warrants in the present case are apparent from the application, read with the transcript. But, we emphasise the failure to give reasons for the decision was unfortunate, not least because a significant part of the two-day hearing before us was concerned with their absence and the consequences of the judge's failure to give them. We, like the court in S, F and L, are conscious that the circuit judges who deal with applications such as these are often hard-pressed. But as has often been said, reasons need not be elaborate, and the Crim PR emphasise the need for adequate time to be given for the consideration of applications. Giving succinct reasons for the decision should be seen as part of that consideration. Moreover, the structured nature of the application form, addressing as it does each of the statutory criteria, should make the production of succinct reasons for decisions much less burdensome.
(b) Lack of reading time:
- Those making applications for warrants should, when making their estimates pursuant to Crim PR 47.26(2)(d)(i), take a realistic view of the time needed for the judge considering the application will need to read and prepare for the application. Applications vary in complexity. In this case, the application was complex and lengthy. There is no doubt that HMRC's 60-minute time estimate for reading it was inadequate (even if, combined with the West Ham application, HMRC estimated a total of 100 minutes). Both members of this Court spent longer than 60 minutes reading the application. The judge plainly required and apparently took more time: see his opening comment at the hearing that HMRC was "optimistic" in thinking he was going to read it in an hour.
- Mr Lissack suggests that the short time provided for preparation together with the lack of reasons for the decision were indicative of a failure by the judge to scrutinise the application sufficiently. The latter suggestion is precisely that which was rejected in Tchenguiz (see  above). Anyway, this aspect of NUFC's challenge is unsustainable in the light of the judge's statements on two occasions during the hearing that he had, despite the inadequate time estimate, read the application. Mr Lissack did not deploy any material to negative or undermine those statements other than the time taken. In the event, we are satisfied that, despite an inadequate time estimate, the judge's reading adequately prepared him for the hearing. The inadequate time estimate did not, in the end, make any difference.
(c) Was HMRC in breach of its duty of disclosure?
- Mr Lissack complains that, although Mr Griffiths told the judge that HMRC had emails to show that club officials had knowledge that other agents were going to be paid for their involvement in the transfers under investigation, HMRC did not disclose to the judge the emails, or indeed any of the evidence, upon which the application was based. He argues that HMRC made it impossible for the judge to apply the required level of scrutiny to the application for the warrant, by the failure to disclose the relevant documents in this case. Reliance is placed on R (Mercury Tax Group Ltd) v HMRC  EWHC 2721 (Admin),  STC 743 where Underhill J (as he then was) was critical of HMRC's failure to supply copies of the documents, which were said to evidence fraud. He stated (at ) that he found it "surprising" that HMRC had asked the judge "to reach a conclusion about a suspected fraud whose essence depended entirely on the effect of a number of documents without being supplied with copies of the documents in question". He emphasised the need for jealous scrutiny of applications for warrants which, unless properly justified, "represent a gross intrusion on civil liberties". He stated:
"…Such scrutiny will be more difficult, and may sometimes be impossible, if relevant documents are sought to be summarised (however accurately) rather than being supplied to the Court."
- In response, HMRC point to the fact that Underhill J in Mercury Tax Group did not, in fact, quash the warrants on this ground, and that the part of the judgment relied on is obiter dictum. And further, they point to Crim PR 47.30, noting that the Crim PR post-date Mercury Tax Group. That provision requires only that HMRC should "explain" the grounds, not that they should disclose the evidence upon which those grounds are based. (Compare Crim PR 47.29(6) which provides that in applications by the Serious Fraud Office under section 2 of the Criminal Justice Act 1987, "if the court so directs" the applicant must make available the material on which the application is based.)
- We agree with HMRC's arguments on this issue. In Tchenguiz, one of the matters which the then PQBD stated (at ) should be considered by the Criminal Procedure Rule Committee was "whether putting an Information without the underlying documents before the judge is the best practice for cases investigated by the SFO". Although this issue was put to the Committee, and considered by it (see the minute of its conclusions at Crim PRC (13)15§5 and Crim PRC (15)62§3(1)), it did not recommend that primary documentation should be put before the judge. The Crim PR require only that the applicant should explain the basis of its application to the judge. CrimPR 47.30(3), which, see  above, deals with applications under Schedule 1 of PACE requires only that the applicant "explains the grounds".
- We consider that there are good reasons for the rule being couched in these terms. First, by their nature, such applications for warrants are made by public bodies in the course of exercising public functions: see J v. Crown Prosecution Service  EWCA Civ 746,  4 All ER 391 at  –  and  and Director of the Serious Fraud Office v A  EWCA Crim 1927 at  referred to by Underhill J at . Those cases suggest that a judge is entitled to rely on the good faith of the public body. The position may be different in civil proceedings without notice, to which Underhill J referred at  when making the observations we have set out and summarised above. In private law proceedings, the applicant may well be a private entity which is not subject to the same obligations to act in the public interest as those who apply for warrants such as these.
- Secondly, the applications for warrants such as these are subject to various other safeguards, contained within the legislation, which Parliament has deemed sufficient to protect the person named in any warrant: see the conditions in PACE sections 9 -15 of, and Schedule 1 (especially §§2 and 14 of Schedule 1) and those in the Crim PR referred to at  -  and  –  above.
- Thirdly, these are interlocutory applications which must be considered alongside all the judge's other commitments in the Crown Court. In this case the application, its appendices and the underlying evidence was contained in three full lever arch files. Provided the judge is given adequate reading time, hearing times are determined to reflect the anticipated complexity of the application, and the judge is mindful of the requirement in Crim PR 47.25(5) that the court must not determine an application unless satisfied that sufficient time has been allowed for it, we consider that it is sufficient that the application is supported by a sworn statement (on the form) explaining why the public body seeks the warrant. That statement and explanation should be strictly scrutinised. If either is inadequate, the application for a warrant will be refused by the circuit judge.
- For these reasons, there is, in our judgment, no merit in the suggestion that HMRC should have provided HHJ Jameson QC with the evidence on which it relied in making its application.
(d) Factual errors:
- Mr Lissack complains that HMRC made mistakes in the explanations proferred in the application. Some of these have been admitted and accepted by HMRC (but Mr Nathan says that they are inconsequential). Others were identified by Mr Lissack at the hearing before us, and so were not answered in writing by HMRC in advance of the hearing.
- The first mistake was for HMRC to suggest that the First Defendant, Newcastle United Football Club Ltd was the operating company and employer for the club, when in fact that company is dormant; it is the Third Defendant, Newcastle United Football Company Ltd which is the operating company and employer. Little turns on this mistake, which was (we note) was repeated by NUFC itself which issued pre-action applications in the name of the First, instead of the Third Defendant.
- The second mistake was to assert that Mr Charnley was the sole director of NUFC. Mr Charnley was indeed the sole director of the First Defendant; but he was not the sole director of the Third Defendant, because there were two other directors: Mr Graham Carr, the chief scout for NUFC, and Mr Robert Moncur, a former player for NUFC. However, here too, little turns on this mistake, because Mr Charnley was undoubtedly the driving force behind NUFC, and there is little reason to think that HMRC (or HHJ Jameson QC) would have done anything differently if they had realised that Mr Charnley was not the sole director (this is a point which we will return to under Ground 3).
- There were other mistakes in relation to information about how particular documents had been obtained by HMRC in the course of the investigation. These mistakes were identified by Mr Griffiths in a series of supplemental witness statements for this Court. Nothing at all turns on them. In submissions, Mr Lissack identified a further error in the application, namely in the assertion that payments to other agents "would" have contravened Football Association rules, when (according to Mr Lissack) such payments "may" have contravened FA rules, because those rules do permit sub-payments in certain circumstances. Here too, Mr Lissack's complaint lacks merit: HMRC was investigating a criminal conspiracy; that there may have been a legitimate explanation for the payments by Stainrod would not have deflected the investigation (or the application for the warrant, or the judge's response to that application) because the purpose of the investigation was to determine whether or not the legitimate explanation was credible.
- In summary, regrettable though they are, none of the mistakes in the application amounts to a matter of substance. These are just slips; they are not material to the application or its treatment by HHJ Jameson QC. The complexities discussed by Elias LJ in R (Mills) v Sussex Police  EWHC 2523 (Admin),  1 WLR 2199 at  ff. do not arise. In this case, adapting the words of Stanley Burnton LJ in R (Dulai) v Chelmsford Magistrates' Court  EWHC 1055 (Admin),  1 WLR 220 at , approved in Mills, the information which it is alleged should have been given to the judge could not be said to have reasonably led him to refuse to issue the warrant.
(e) Conclusions on alleged procedural failings:
- For the reasons given above, at  and  (reasons);  (lack of reading time);  –  (failure to disclose documentary evidence relied on in application); and  –  (other factual errors), there is no merit in the various procedural points taken by NUFC, whether considered individually or together.
VI. Substantive Failings
- We turn then to consider the remaining grounds, in which NUFC identifies failings of substance in HMRC's application, each of which is said to justify this Court making a quashing order in relation to the warrants (and further relief). We take these in the order in which they were argued before us.
(a) Ground 2: No reasonable grounds to believe NUFC was engaged in the suspected tax fraud:
- We have already rejected the argument that HMRC should have disclosed to the Judge the evidence on which it asserted its belief that NUFC was involved in criminal activity. The remainder of this ground depends on NUFC's argument that the evidence held by HMRC at the time of making the application was insufficient to support any reasonable belief that NUFC was engaged in a dishonest evasion of tax.
- HMRC's application asserted that the focus of its investigations was the transfers of the five named players. As we have stated, the transfers to and from NUFC of one player, Demba Ba, were explained in the body of the application. That player's transfer to NUFC was important because HMRC had obtained evidence from third parties (eg from Stainrod, in the course of a civil tax investigation) that most of the £1.9m paid to Stainrod was distributed to others. These onward payments, combined with Mr Stainrod's assertion in interview with HMRC officers that Mr Charnley had asked him to be involved in the transfer on the basis that the various payments were already agreed, were the mainstay of HMRC's case as set out in the application.
- We have stated (see  above) that the exhibits to Mr Griffiths' first statement in these proceedings included documents held by HMRC at the time of the application. Exhibit LBG1 contained documents held by HMRC at the time of the application relating to the five transfers under investigation. Exhibit LBG2 contained various other documents about NUFC, most of which appear to be in the public domain.
- Mr Nathan took us through some of the documents in LBG1 which evidence the transfer of Demba Ba from WHU to NUFC on 17 June 2011. These included various contracts; between NUFC and the player, the player and Alexandre Gontran, and Stainrod and NUFC. There were further sub-contracts, between Stainrod and Sarl Ba Corporation, Quatorze Management Ltd, Silkee Management Ltd and Zumbada Ventures Corporation (these all being the alleged recipients of the onward payments in relation to the Demba Ba transfer), all purporting to be for services to Stainrod.
- There were also a number of other categories of document. First, there were FA documents, including the AG1 Agent Declaration Form naming Stainrod as agent for NUFC and Gontran as agent for Demba Ba. The form contained the signatures of the agents and Mr Charnley verifying the accuracy of the information provided to the FA and that no other agent was involved. Secondly, there were tax documents, notably Demba Ba's PIID accounting for Gontran's fee of £136,500 as a benefit in kind to the player; Mishcons' bank statements showing the receipt of £1.9 million plus VAT for Stainrod's services on 1 July 2011, and then various payments out in the days following to the third parties. Thirdly, there were emails concerning Demba Ba's departure from WHU, and transfer to NUFC. Fourthly, there were transcripts of interviews by the FA, with each of Mr Charnley, Mr (Demba) Ba and Mr Stainrod; and minutes of interviews by HMRC with NUFC (Mr Charnley and another), and Mr Stainrod.
- The evidence was extensive, running to 150 pages on this transfer alone. On the basis of this material, Mr Nathan invited us to conclude that there was ample evidence to support as reasonable HMRC's belief that the contractual arrangements were a sham, and that offences had been committed. He invited us to conclude that the application was materially accurate in its factual assertions, and that those facts did reasonably support a belief on the part of the relevant officers within HMRC that criminal offences had been committed. We accept that submission, and reject Mr Lissack's arguments to the contrary. The factual assertions set out in HMRC's application are supported by the documentary evidence we have seen.
- As we have stated (see  –  above), there were some errors in the information provided by HMRC in the application, but for the reasons we have given none of those errors was material. It follows that in our judgment, the case advanced in the application was materially correct on its facts. Further, we are satisfied that the evidence and the facts disclosed by that evidence provided reasonable grounds for the belief that NUFC was engaged in criminality. We set out the essential elements of HMRC's case at  ff. above. It is self-evident that "reasonable grounds" for belief are just that. They do not mean that any criminal offence has in fact been committed. There may, at the end of the investigation, turn out to be innocent explanations for what happened.
- We are satisfied that HMRC's case was a coherent one, and signified a belief that was reasonable, based on the material which was in HMRC's possession at the time.
(b) Ground 3: Other methods of obtaining the material were available so that the access condition in §2 of Schedule 1 to PACE was not met:
- Mr Lissack's next complaint was that there were other ways in which HMRC could have obtained information from NUFC which did not involve the intrusive and draconian measure of a search warrant and the seizure of material. He argued that HMRC could not properly assert, as it was required to in the application form (reflecting paragraph 2(b) of Schedule 1 to PACE), that those other methods "were bound to fail". Specifically, he suggested that, if HMRC were concerned that Mr Charnley was involved in unlawful conduct, it was open to it to have issued a warrant against him personally, and simultaneously to apply for a production order against the other two directors of the third claimant against whom HMRC make no allegations of criminal wrongdoing. Mr Lissack submitted that would have secured the information in a less draconian and more proportionate manner. He argued that HMRC's failure to obtain the information in this way was a consequence of its own mistake in thinking Mr Charnley was the sole director of the relevant company, when that was not in fact the case.
- In resisting this argument, Mr Nathan relied on the information given in the application form. In that, Mr Griffiths stated that he believed that NUFC would be unlikely voluntarily to grant access to material which would show that senior figures in the club (such as Mr Charnley and Mr Llambias) were involved in systematic abuse of the tax system. Mr Griffiths recorded that he had considered and dismissed the alternatives:
1) Contacting Mike Ashley, NUFC's owner, with a request for voluntary assistance. Mr Griffiths noted that there were three problems with this option, not least that Mr Ashley would not know which employees were involved and might unwittingly tip them off as he sought to comply with the order.
2) Obtaining production orders against NUFC. Mr Griffiths considered that, given Mr Charnley's suspected role in the fraud, any advance warning of HMRC's intention to recover the material would be likely to result in evidence being destroyed or removed, by Mr Charnley or others at NUFC whose identity was unknown, but who were involved in the criminal conspiracy.
3) Obtaining Production Orders against Mr Ashley. However, Mr Griffiths was concerned that others at NUFC whose identity was unknown might destroy evidence before the Production Orders could be complied with.
- In the application form Mr Griffiths stated that:
"… I conclude that the only way HMRC can guarantee access to the evidence it seeks is by searching for it under a warrant. I believe that on the basis of the facts laid out, and despite the inherently intrusive nature of such a search, a search warrant application is proportionate and necessary in this case."
- Self-evidently, Mr Griffiths did not couch his conclusion in the language of the statute, and did not state in terms that he considered other methods would be "bound to fail". Rather, he stated that the only way that HMRC could guarantee access to the evidence was by way of a search warrant, which in the circumstances he believed to be proportionate and necessary. Mr Lissack focused on this difference between the language of the statute and the language used by Mr Griffiths in the application. He argued that this showed that Mr Griffiths applied the wrong test. He argued alternatively that that there were other workable options available beyond those considered and rejected by Mr Griffiths.
- We stated at  above that the protection in the first set of access conditions in paragraph 2 of Schedule 1 to PACE, including the "bound to fail" requirement in paragraph 2(b)(ii), applies to applications for both production or access orders and for warrants.
- The meaning of "bound to fail" was examined by Aikens LJ and Silber J in R (S, F and L) v Chief Constable of the British Transport Police  EWHC 2189 (Admin),  1 WLR 1647. They stated (at ) that it is the judge, not the investigating officer who has to be satisfied that the access condition relied on is fulfilled. But that did not mean that the belief of the investigating officer is irrelevant, and (at ) they held as follows:
"The second requirement to the first "access condition" is that other methods of obtaining the material either have been tried without success; or have not been tried because "it appeared that they were bound to fail". As to the second part of that requirement, this must mean that the judge has to be satisfied of two things: first, that other methods of obtaining the material have not, in fact, been tried. Secondly, that the reason for not trying to obtain the material by other means was that it appeared to the constable making the application for the warrant that such other means "were bound to fail".
Accordingly, the judge must consider what the investigating officer, in this case Mr Griffiths, believed at the time of the application. This reflects the use in paragraph 2(b)(ii) of the past tense, "appeared" and "were bound to fail", language which, as HMRC argued in the present case, signifies that the reference is to the belief of the officer making the application at the time of the application.
- Where a warrant is sought, Schedule 1 of PACE, as explained in S, F and L, thus requires both the investigating officer and the circuit judge to be satisfied of the need for the warrant, but uses different language in paragraphs 2 and 14. By paragraph 2(b)(ii) of Schedule 1, the investigating officer must, at the time of the application, believe that other less intrusive methods "were bound to fail", and, when the application comes the circuit judge, he or she must consider whether the officer so believed. By paragraph 14 of Schedule 1, the circuit judge must be satisfied that any lesser measure (namely, a production or access order) "may seriously prejudice the investigation". The additional protection in paragraph 14, that the circuit judge must be satisfied that any lesser measure may seriously prejudice the investigation, applies only where the more draconian and intrusive measure of a warrant is sought. That requirement appears directed at the future, whereas, as HMRC emphasised in its written and oral submissions, the use of the past tense in paragraph 2(b)(ii), appears directed at the officer's belief at the time of the application.
- In considering whether the requirements of paragraph 2 have been met, the investigator is obviously not in a position to know for certain what the outcome of any request for voluntary disclosure of documents might be. Nor, in the context of an application for a warrant under paragraph 12, can the investigator know for sure whether a production or access order under paragraph 4 might have been sufficient to secure the documents. Therefore, paragraph 2 cannot, consistently with the purpose of the statute, be read literally: whether a less intrusive measure would, or would not, be "bound to fail" must in the end be a matter of judgment for the investigator, based on his or her knowledge of the investigation so far and the evidence available. It must, in our judgment, be understood to mean that the investigator believes on the basis of the evidence that there is no lesser measure available which is likely to be effective in securing the relevant documents. Plainly, the investigator must have cogent grounds for his belief. In the context of an application for a warrant, where no notice will be given in advance of execution, the belief is likely to be based on the investigator's suspicion that the relevant material will be disposed of or hidden if advance warning is given, and for that reason, any lesser measure (which would mean that the target is put on notice of the investigation) would be an ineffective means of pursuing the investigation. But, as is clearly stated in S, F and L at  –  and  – , a bare assertion of such a belief is insufficient if the basis of that belief is not adequately explained in a focussed application dealing with the actual facts of the case. If the investigator has explained the reasons for so suspecting, in terms that are reasonable and compelling, he or she will have fulfilled the requirement in paragraph 2.
- That interpretation of paragraph 2 fits with the conditions in paragraph 14 (relevant in the context of a warrant), by which the circuit judge must be satisfied that a search without notice is justified. It is the condition in paragraph 14(d) that is relevant in this case. The judge must be satisfied that service of an application under paragraph 4, for a production or access order (being less draconian measures, of which the target will have notice and against which he will have the opportunity to object), may seriously prejudice the investigation. We consider that the contrast between the backward-looking language of paragraph 2 and the forward-looking language of paragraph 14 is not important. The safeguards in both paragraphs are aimed at a common purpose: of ensuring that warrants are only issued where there is no lesser measure which would be effective for the purposes of the investigation. In this case, Mr Griffiths believed that NUFC was involved in tax evasion. We have decided (see  –  above) that, on the material before him, he had reasonable grounds for this belief, and that he explained this to the judge in an application which, with the structured guidance in the form, was focussed and dealt with the actual facts of the case. He believed that the scale of the offending was extensive, involving many different player transfers into and out of NUFC and many different individuals and companies across a lengthy period of time. In sharp contrast to the approach taken by the officers applying for the warrants in S, F and L ...see  above), he set out the basis for his conclusion that only a warrant could guarantee access to the evidence in the application.
- There were three key features in Mr Griffiths' thinking. The first was that Mr Charnley had demonstrated his lack of honesty by misleading the FA officials who had interviewed him. This was founded on Mr Griffiths' view that Mr Stainrod had told the truth in his interview with HMRC, which axiomatically meant that Mr Charnley had not told the truth when he advanced a different story in his interview with the FA. In Mr Griffiths' eyes, Mr Charnley had a track record of dishonesty and could not be trusted. Again, there is a sharp contrast to the circumstances in S, F and L, where no allegation of dishonesty had previously been made about S, a practising solicitor, and there was no evidence that L, one of the firms of solicitors involved had acted in a suspicious way or that S and L would not comply with an order under paragraph 4: see S, F and L at  and . The second key feature in Mr Griffiths' thinking was that there may have been others beside Mr Charnley at NUFC who were involved. That meant that there was a risk that evidence would be destroyed or hidden if those individuals were "tipped off" that HMRC was investigating. In a conspiracy of the nature and extent suspected by HMRC, this was a rational belief. The third key feature was Mr Griffiths' belief that much of the relevant evidence would consist of emails. Evidence in that form, held electronically, would be relatively easy to destroy or hide.
- These three features and the evidence on which they were based, taken together with the entire explanation Mr Griffiths gave in the application, provided a cogent basis for his conclusion that a warrant was necessary.
- Mr Griffiths' thinking also provides the answer to Mr Lissack's suggestion that alternative and lesser measures were available, namely issuing a warrant to search Mr Charnley's premises, and simultaneously seeking the issue of a production order against NUFC having served notice on the other two directors. The problem with this suggestion, which was not considered by HMRC at the time, would have been that HMRC suspected that there were others besides Mr Charnley within NUFC who were involved in the fraud, and so there would still have been a risk that those others would have destroyed or hidden incriminating evidence, once aware of the production order application. This suggestion was not and would not have been an effective means of progressing the investigation. In any event, it appears that the other two directors had little or no involvement in the day to day running of NUFC, so in any event it was highly unlikely that they could have responded to the production order without seeking assistance from Mr Charnley or other staff employed by NUFC.
- HHJ Jameson QC was right to conclude that paragraph 2 of Schedule 1 was fulfilled in this case: it did appear to Mr Griffiths, on reasonable grounds, that other less intrusive methods for obtaining the documents would be bound to fail. Based on the same reasons, HHJ Jameson QC concluded that paragraph 14(d) was also fulfilled, because service of notice of the application might have seriously prejudiced the investigation.
(e) Ground 1: the warrants were excessively wide:
- Finally, Mr Lissack complained that the terms of the warrant itself were unlawfully wide. He focusses particularly on the fifth bullet point which authorised a search for:
"Records, documents, correspondence relating to the calculation of liabilities for, and the payment of, Income Tax. National Insurance Contributions and Value Added Tax, including accounts, draft accounts and working notes."
The time frame for that category of documents was, like the other categories, from 6 April 2010 to the date of the search in April 2017. We have recorded Mr Stretton's account at §10 of his statement at  above. It is clear that Mr Stretton did engage in a conversation with NUFC's representatives about the width of this category of documents. It is not clear whether in fact the warrant was executed, under his supervision, in a manner which was narrower than its terms permitted. HMRC has not been able to consider the material taken away and so could not answer that question at the hearing.
- Mr Nathan resisted this challenge, reminding us of section 15(6) of PACE which requires only that a warrant:
"(b) shall identify, so far as is practicable, the articles or persons to be sought."
He argued that the application, and the warrant based on it, do identify the documents sought by HMRC with adequate precision. He stated that the fifth bullet point is deliberately wide in its ambit, because HMRC's investigation was wide. He relied on Glenn at  as supporting the proposition that a broad enquiry (as this was) will generally justify a broad scope as to the material sought under the warrant. Specifically, he argued that HMRC was trying to understand how NUFC had calculated its liabilities in the relevant tax periods, for income tax, NICs and VAT. Only by considering the final returns alongside the working papers which supported the figures in the returns could HMRC understand what was, and what was not, declared for tax purposes. This information was central to the investigation.
- We agree with Mr Nathan. HMRC did identify, so far as practicable, the documents which it sought. In the context of an enquiry into a suspected tax fraud of the nature and scale described by Mr Griffiths in the application, it was reasonable to seek all of NUFC's returns (or equivalent tax documents) for the years in question, for the taxes in question, together with the working papers which supported them. HMRC needed them to know what had been declared, and to assist in the investigation of whether there had been any deliberate and dishonest under-declaration.
(e) Conclusions on alleged substantive failings:
- For the reasons given in this section of our judgment, we reject the substantive challenges to the warrants. The warrants were lawfully issued.
- In the light of our conclusion that the warrants were lawful, both as a matter of procedure and as a matter of substance, it is not necessary for us to address the arguments relating to relief, which would only arise if there is merit in the challenge.
- Having heard argument on the issue of remedy, we wish to record only that HMRC appeared to us to advance powerful arguments for refusing relief beyond the quashing of the warrants. Specifically, HMRC argued that notwithstanding any defects in the warrants which we might have found, they should be permitted to retain images and copies of the material in any event on the ground that NUFC would have the right to seek exclusion of such material from any subsequent trial, relying on section 78 PACE, and that issue should be left to the trial judge to determine. Mr Nathan submitted that was the correct approach in the light of the observations made in the decisions of this Court in Cook v Serious Organised Crime Agency (hereafter "SOCA")  EWHC 2119 (Admin),  1 WLR 144, R (Cummins) v SOCA  EWHC 2111 (Admin) and R (Anand) v HMRC  EWHC 2989 (Admin).
- HMRC's alternative submission was that no order should be made to return the property seized pending an application by it to the Crown Court under section 59 of the Criminal Justice and Police Act 2001. Mr Nathan submitted that such a course has been approved in a number of previous authorities, in circumstances where a warrant had been quashed as unlawful: see R (Cheema) v Nottingham and Newark MC  EWHC 3790 (Admin), R (Van der Pijl) v Kingston Crown Court (No 2)  EWHC 3040 (Admin) and R (Chatwani) v Birmingham MC  EWHC 1283 (Admin), at  in particular where the Divisional Court recognised that by section 59, Parliament has assigned responsibility for determining issues of retention to the Crown Court.
- In response to these arguments, Mr Lissack submitted that this was one of those rare cases where the Court should deny access to the documents in light of the defects in the warrant, relying in particular on Chatwani and R (Kouyoumjian) v Hammersmith MC  EWHC 4028 (Admin) at . This Court would take some persuading that this was such a rare case, or, given NUFC's acceptance that HMRC had not been guilty of any dishonesty or bad faith, and where the allegations, at their highest, were of mistakes and oversights in the presentation of the material to the circuit judge, that section 59 should not apply.
- Finally, we deal with HMRC's application to adduce the witness statement and accompanying evidence of Mr Allen (see  above), and to rely on the footnote to paragraph 10(iv) of the Amended Summary Grounds (see  above). The material in question was about matters which post-dated the issue and execution of the warrants. It was adduced by HMRC in order to support its case on relief, in the event that we were against HMRC on the validity of the warrants. Given our conclusions set out above, we do not consider Mr Allen's evidence to be necessary or helpful to the resolution of this judicial review; we refuse permission to rely on it. It follows that we also refuse permission to introduce the footnote at paragraph 10(iv) of the Amended Summary Grounds.
- This application for judicial review is dismissed. The warrants were lawfully issued.
- Our reasons for rejecting the procedural challenges to the warrants are given at  and  (reasons);  (lack of reading time);  –  (failure to disclose documentary evidence relied on in application); and  –  (other factual errors). We concluded (see  above) that there is no merit in the various procedural points taken by NUFC, whether considered individually or together. Our reasons for rejecting the substantive challenges to the warrants are given at  –  (ground 2),  –  (ground 3), and  (ground 1) above.
- We would wish to express our gratitude to all Counsel and solicitors involved in this case for the assistance they have provided to the Court.