Panesar (t/a Anami Law), R (On the Application Of) v The Crown Prosecution Service

Factual and Procedural Background

There are three separate but factually related claims for judicial review before the court. The first two claims challenge the lawfulness of decisions made by a Crown Court judge to issue multiple search warrants on 2nd December 2010. The third claim challenges the lawfulness of conditions attached to bail granted by custody officers at two London police stations on 7th December 2010 and the refusal of a Magistrates' Court to vary those conditions. Permission for judicial review was granted in the first two claims and refused in the third.

The common background is an extensive 2010 investigation by Her Majesty's Revenue and Customs (HMRC) into an alleged large-scale diversion fraud involving alcoholic drinks, resulting in evasion of excise duty and VAT. The fraud allegedly involved shipments of alcohol from the UK to bonded warehouses in Belgium and Germany, with duplicate delivery documents used to mislead authorities about the true destination of goods, enabling diversion into the UK market without payment of duty or VAT. The investigation implicated multiple businesses and individuals, including those named in the claims.

On 2nd December 2010, HMRC applied for 31 search warrants under the Police and Criminal Evidence Act 1984, targeting premises of 11 businesses and 18 individuals, including the claimants. The information supporting these applications included detailed annexes outlining the fraud, investigations by Belgian and French authorities, surveillance evidence, and links to buffer companies and missing traders.

Separate but related restraint and receivership orders were obtained on 6th December 2010 against several alleged offenders and businesses involved. Appeals against these orders were determined by the Court of Appeal Criminal Division (CACD) on 8th February 2011, with further hearings before a Crown Court judge (Mackay J) on 22nd February 2011. Both courts found the evidence insufficient to establish reasonable cause to believe criminal conduct had occurred, leading to the quashing of the restraint orders.

The main ground of appeal in the search warrant claims is that, given the findings of the CACD and Mackay J, there were no reasonable grounds before the original Crown Court judge to issue the search warrants. HMRC contested this, arguing the judge could properly conclude reasonable grounds existed based on the totality of evidence, including material not considered in the restraint order proceedings.

The third claim concerns whether custody officers lawfully imposed conditions on bail granted to two individuals arrested in connection with the HMRC investigation. The claimants argued that unconditional bail should have been granted under section 34 of the 1984 Act, but the court found that section 37 applied to all bail decisions by custody officers and upheld the lawfulness of the conditions.

Legal Issues Presented

1. Whether the Crown Court judge lawfully issued search warrants under section 8 of the Police and Criminal Evidence Act 1984, specifically whether there were reasonable grounds for believing that indictable offences had been committed.
2. Whether the findings of the Court of Appeal Criminal Division and Mackay J in related restraint order proceedings, which concluded insufficient evidence existed to establish reasonable cause of criminal conduct, are binding or persuasive in determining the lawfulness of the search warrants.
3. Whether custody officers lawfully imposed conditions on bail granted under sections 34 and 37 of the 1984 Act, or whether unconditional bail was mandatory once evidence was deemed insufficient to charge.

Arguments of the Parties

Appellants' Arguments

• The claimants contended that, following the CACD and Mackay J’s decisions, there were no reasonable grounds for believing indictable offences had been committed, thus the search warrants should not have been issued.
• They argued the evidence before the original judge was not more extensive than that before the restraint order courts and that the court should be bound by those earlier decisions.
• Regarding bail, the claimants submitted that once the custody officer determined insufficient evidence existed to charge, the power to detain or impose conditional bail under section 37 was exhausted and section 34 required unconditional release.
• They also argued there was unlawful fettering of discretion in the bail decision due to pre-prepared briefing notes imposing conditions.

Respondents' Arguments

• HMRC submitted that the issue before the search warrant judge was whether he could properly conclude reasonable grounds existed, not whether the court would itself reach that conclusion.
• They argued the totality of evidence before the search warrant judge, including extensive 2010 material not considered in restraint order proceedings, was sufficient to justify issuing the warrants.
• HMRC contended that the restraint order courts focused heavily on the Belgian investigation material from 2008-2009, whereas the search warrant application concerned a broader operation involving many individuals and companies.
• Regarding bail, HMRC relied on the decision in R (Torres) v Commissioner of Police of the Metropolis [2007] EWHC 3212 (Admin), which held that section 37 applies to every occasion a person under arrest is presented to a custody officer, including the initial arrest, allowing conditional bail.
• They denied unlawful fettering, asserting custody officers took independent decisions despite prosecutorial suggestions on bail conditions.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by identifying that the key legal issue in the search warrant claims was whether there were reasonable grounds for believing an indictable offence had been committed, as required by section 8 of the Police and Criminal Evidence Act 1984. This issue was substantially the same as that considered by the CACD and Mackay J in the restraint order proceedings, where the test was reasonable cause to believe criminal conduct had occurred.

The court found that the evidential material before the CACD and Mackay J was substantially the same as that before the original Crown Court judge who issued the search warrants. Although prosecuting counsel before Mackay J had focused on a narrower part of the evidence (the Belgian investigations of 2008-2009), the entirety of the evidence, including extensive 2010 material, had been available to that court.

The court considered legal principles related to res judicata, issue estoppel, abuse of process, and the obligation to present the whole case in earlier proceedings. It concluded that while no strict issue estoppel applied, it would be an abuse of process to allow HMRC to re-litigate the same issue on the same evidence in a different court. The court emphasized the importance of finality in litigation and judicial economy.

Accordingly, the court held it was bound, in substance if not strictly in form, by the decisions of the CACD and Mackay J that insufficient evidence existed to justify the search warrants. It followed that the original judge could not properly have reached the conclusion that reasonable grounds existed to issue the warrants.

On the bail claim, the court analyzed the statutory framework of sections 34 and 37 of the 1984 Act and the relevant authority from Torres. It rejected the claimants’ argument that section 37 powers are exhausted after the initial bail decision, finding that section 37 applies on every occasion a custody officer considers bail. The court also rejected the fettering of discretion argument, finding no evidence that custody officers failed to make independent decisions.

Holding and Implications

The court granted permission for judicial review in the search warrant claims and quashed the search warrants issued by the Crown Court judge. The court refused permission for the bail claim, holding that the conditional bail granted by custody officers was lawful.

The direct effect of this decision is that the search warrants issued on 2nd December 2010 are invalidated. No broader precedent is established beyond reaffirming the binding effect of prior decisions on substantially the same issues and evidence, and clarifying the application of sections 34 and 37 of the Police and Criminal Evidence Act 1984 to bail decisions by custody officers.