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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> HM Customs & Excise v City of London Magistrates' Court & Ors [2000] EWHC 653 (Admin) (17 May 2000) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2000/653.html Cite as: [2000] Crim LR 841, [2000] 1 WLR 2020, [2000] 2 Cr App R 348, [2000] EWHC 653 (Admin), [2000] BTC 5194, [2000] 2 Cr App Rep 348, [2000] BVC 224, [2000] STC 447, [2000] WLR 2020, [2000] 4 All ER 763, [2000] STI 782

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
CROWN OFFICE LIST
DIVISIONAL COURT

		Royal Courts of Justice The Strand London
		17 May 2000

Wednesday 17 May 2000

1. THE LORD CHIEF JUSTICE: Her Majesty's Customs and Excise appeal by case stated against a decision made by a justice of the peace for the City of London on 24 May 1999. On that date the justice made an order against the Customs under section 19 of the Prosecution of Offences Act 1985 and regulation 3 of the Costs in Criminal Cases (General) Regulations 1986.
2. The issue in this appeal is whether the justice had jurisdiction to make such an order, and that turns on whether the proceedings before her were criminal proceedings.
3. On 24 May 1999 an application was made to the justice by the Customs for access orders against three banks and a public limited company under paragraph 11(1) of Schedule 11 to the Value Added Tax Act 1994. In accordance with the guidance given by this court in R v Her Majesty's Customs and Excise, ex parte Asif [1996] Crim LR 725, of which we have a transcript of the judgment delivered on 7 February 1996, notice of the application was given to four respondents, of whom one is represented on this appeal before us.
4. In the case stated the justice helpfully set out the background. On 24 May she made the access orders which Customs sought. There was, however, a brief history before that date. The Customs made their application for these access orders giving notice, as already mentioned, to the four respondents. A date for the hearing of the case was set for 7 May 1999 at 2pm. It was estimated that the hearing would take half a day. Solicitors acting for the four respondents applied to the court for an adjournment on 5 May, contending that a whole day of the court's time would be required to hear the matter and that it would save unnecessary expense if the adjournment were to be agreed. Customs, however, did not agree and thus it was that the applications came before the court for the first time at the specified time on 7 May. On that date the justice who has settled the case was sitting with two colleagues. An application for an adjournment was made by the respondents on the basis that there were pending proceedings in the High Court which could have a bearing on the outcome of these applications. Customs for their part opposed the adjournment, contending that the judicial review proceedings could have no effect on the outcome of the applications. The justices decided to proceed on the afternoon of 7 May 1999, but by the time they reached that conclusion it was clear that there was insufficient time to hear the substantive applications. Thus it was ordered that the hearing should be adjourned to 24 May and that a full day should be set aside for the hearing.
5. At that stage the four respondents applied for an order under regulation 3 of the 1986 Regulations against Customs. That application was also adjourned to 24 May. On 24 May the justice made the access orders which were sought. The application for costs was renewed and she granted it under regulation 3. The order that costs should be awarded under regulation 3 was the subject of argument before her. On behalf of Customs it was argued that costs could not be awarded under regulation 3 since it was a regulation which only applied during criminal proceedings, and the proceedings before the court were not criminal proceedings. On behalf of the respondents it was argued that they were criminal proceedings and that therefore an order could be made.
6. The justice was referred to a body of material which she briefly and helpfully summarised in the statement of case. In paragraph 6 she recorded her opinion in these terms:

"The proceedings before me were criminal proceedings. There being no definition in the 1985 Act or the 1986 Regulations mentioned at 5(iii) above [the Act and regulations already referred to] of 'criminal proceedings' I had to be guided by analogous definitions. I drew assistance from the definition at 5(i) above [of the Contempt of Court Act 1981] and the definition of 'offence' under Section 2 of the Bail Act 1976 (where 'offence' includes 'alleged offence'). I concluded that 'criminal proceedings' included proceedings pursuant to applications for court orders since a pre- condition of making such an order was that I had to satisfy myself that there were reasonable grounds for believing that a particular type of offence had been committed. Accordingly, I decided that I had jurisdiction to make an order under Regulation 3 of The Costs in Criminal Cases (General) Regulations. I then made such an order against the appellant."

7. The question posed for the opinion of the High Court is in these terms:

"Was I correct in concluding that in respect of an application inter partes for access orders under paragraph 11(b) of Schedule 11 to the Value Added Tax Act 1994 I had jurisdiction under Regulation 3 of The Costs in Criminal Cases (General) Regulations 1986 and Section 19 of the Prosecution of Offences Act 1985 to award costs against a party to the proceedings."

8. The legislative background is found in the Value Added Tax Act 1994, section 58 of which provides:

"Schedule 11 shall have effect, subject to section 92(6), with respect to the administration, collection and enforcement of VAT."

9. Section 92(6) has no bearing on the present case. Schedule 11 to the Act is concerned with the administration, collection and enforcement of the VAT regime laid down by the Act, which is entrusted to the care and management of the Commissioners of Customs and Excise. In the Schedule we find a detailed series of provisions governing the administration of VAT and then we come to paragraph 11 which is in these terms:

"(1) Where, on an application by an authorised person, a justice of the peace .... is satisfied that there are reasonable grounds for believing --

(a) that an offence in connection with VAT is being, has been or is about to be committed, and

(b) that any recorded information (including any document of any nature whatsoever) which may be required as evidence for the purpose of any proceedings in respect of such an offence is in the possession of any person, he may make an order under this paragraph.

(2) An order under this paragraph is an order that the person who appears to the justice to be in possession of the recorded information to which the application relates shall --

(a) give an authorised person access to it, and

(b) permit an authorised person to remove and take away any of it which he reasonably considers necessary, not later than the end of the period of 7 days beginning on the date of the order or the end of such longer period as the order may specify.

(3) The reference in sub-paragraph (2)(a) above to giving an authorised person access to the recorded information to which the application relates includes a reference to permitting the authorised person to take copies of it or to make extracts from it."

10. Sub-paragraph (4) refers to information contained in a computer and sub-paragraph (5) provides that paragraph 11 is without prejudice to paragraphs 7 and 10 of the Schedule, which relate to the furnishing of information and the production of documents and the entry and searching of premises respectively.
11. Thus it is plain that, before an order is made under paragraph 11, a justice of the peace must be satisfied that an offence in connection with VAT is being, has been or is about to be committed, and also that information which may be required for the purpose of any proceedings in respect of such an offence is in the possession of a person against whom the access order is sought. It is plain on the language of the paragraph that the order may be sought against the person suspected of committing the offence, but it may be sought also against an entirely innocent party who is not suspected of committing or having committed any offence at all. Such was the case here since there is no suggestion that the banks or the company against whom access orders were sought had committed any offence. There is certainly no requirement that the order should be against a suspected person or that any suspicion should attach to the person against whom the order is sought.
12. The Prosecution of Offences Act 1985 provides in section 19(1) as follows:

"The Lord Chancellor may by regulations make provision empowering magistrates' courts, the Crown Court and the Court of Appeal, in any case where the court is satisfied that one party to criminal proceedings has incurred costs as a result of an unnecessary or improper act or omission by, or on behalf of, another party to the proceedings, to make an order as to the payment of those costs."

13. Subsection (2)(a) makes plain that the regulations may allow the making of such an order at any time during the proceedings.
14. The 1986 Regulations, in regulation 3, echo that language in providing:

"(1) Subject to the provisions of this regulation, where at any time during criminal proceedings --

(a) a magistrates' court,

(b) the Crown Court, or

(c) the Court of Appeal is satisfied that costs have been incurred in respect of the proceedings by one of the parties as a result of an unnecessary or improper act or omission by, or on behalf of, another party to the proceedings, the court may, after hearing the parties, order that all or part of the costs incurred by that party shall be paid to him by the other party."

15. It is evident that both in section 19 and in regulation 3 there is reference to "criminal proceedings", an expression of which no definition is found in the Act or the Regulations.
16. There is a definition in section 15(2) of the 1985 Act of the time at which proceedings in relation to an offence are instituted, but that definition refers to a part of the Act which does not contain section 19, and even there there is no definition of "criminal proceedings". That subsection does however summarise the common understanding as to when criminal proceedings are instituted.
17. It is in my judgment the general understanding that criminal proceedings involve a formal accusation made on behalf of the state or by a private prosecutor that a defendant has committed a breach of the criminal law, and the state or the private prosecutor has instituted proceedings which may culminate in the conviction and condemnation of the defendant.
18. The Customs in this case submit very simply that the application for access orders made against the banks and the limited company on notice to the respondents fell well outside that characterisation of "criminal proceedings". Although it is true that the respondents to whom notice was given were suspected of committing or having committed offences against the VAT legislation, no formal accusation had at that time been made against any of them on behalf of the state or any private prosecutor and there were no proceedings in being which could have led to the conviction or condemnation of any of the respondents. It is true that an information was laid against the respondents after the making of this order and may well have been contemplated on 24 May, but the fact remains that there were no criminal proceedings in being against any of the respondents, let alone the parties against whom access orders were sought.
19. In resisting this appeal counsel for the fourth respondent relies in the main on authority relating to section 18(1)(a) of the Supreme Court Act 1981. That is a general provision to the effect that no appeal lies to the Civil Division of the Court of Appeal from any judgment of the High Court in any criminal cause or matter. The purpose of that statutory provision is to preclude the Civil Division from entertaining appeals with a pronounced criminal flavour. The provision has been broadly interpreted and it has been held that proceedings concerned with obtaining evidence for a criminal prosecution or possible prosecution are criminal causes or matters within that definition. There is a considerable body of authority to that effect of which perhaps one need mention only Bonalumi v Secretary of State for the Home Department [1985] QB 675, [1985] 1 All ER 797.
20. Section 18(1)(a) of the 1981 Act, however, is to my mind a provision which has a purpose wholly unrelated to section 19 or regulation 3. Moreover, it refers to "a criminal cause or matter" and not to "criminal proceedings". I would accept the argument advanced by Mr Barlow for the fourth respondent to this extent: that if the order made by the justice in this case had been made by the High Court and if the question had been whether an appeal against that decision lay to the Civil Division of the Court of Appeal, I could see very powerful grounds for concluding that it was a decision in a criminal cause or matter within the statutory definition against which an appeal would not lie to the Court of Appeal, Civil Division. But that, as I think, is an answer to a question which it is inappropriate to ask. The correct question is whether the Customs' application under paragraph 11 of Schedule 11 to the 1994 Act was a criminal proceeding. Mr Barlow argues that it was. He submits, first, that it was a proceeding and, secondly, that it was criminal. Even if it be accepted that it was a proceeding, it is in my judgment quite plain that it was not a criminal proceeding for the reasons given by the Customs. Although the respondents were suspected of criminal offences, no formal accusation had been made against any of them on behalf of the state or any private prosecutor and there were no proceedings in being which could have led to the conviction of the respondents of any breach of the criminal law or to their condemnation. In my judgment the only answer which can be given to the question posed is "No".
21. It has been suggested on behalf of the fourth respondent that we should remit the matter to the magistrates' court for consideration to be given of a costs order made on an alternative basis, but that would be on a basis which was never argued in front of the court on the earlier occasion and on a basis which in my judgment it would be quite inappropriate to raise for the first time at this stage. I would therefore make no further order.
22. MR JUSTICE MORISON: I agree.
23. MR FISHER: It follows, my Lords, that the order made has been formally quashed?
24. THE LORD CHIEF JUSTICE: Yes.
25. MR FISHER: I am obliged. My Lord, there is one residual matter relating to the question of costs in this court.
26. THE LORD CHIEF JUSTICE: Yes.
27. MR FISHER: My Lord, we would make the application that costs should follow the event in this court and in those circumstances we would ask the court to consider that.
28. THE LORD CHIEF JUSTICE: What do you say about that, Mr Barlow?
29. MR BARLOW: My Lord, all we would say about that is this: that the true respondent to the case is the magistrates' court, not strictly the parties who appeared before the magistrates' court. The position would be that if the magistrates had not entered an appearance before your Lordships there would be no order as to costs, if my learned friend had succeeded. In my submission, that should not be altered merely because my clients, being interested, have entered an appearance before your Lordships. It would be inappropriate for them to pay the costs.
30. THE LORD CHIEF JUSTICE: I think that is a bit mean, Mr Barlow. You ask the magistrates to make an order, they make it, the Customs resist it, they appeal against it and they succeed. Then you say that it was all the magistrates' fault.
31. MR BARLOW: Well, my Lord, it is the magistrates' fault.
32. THE LORD CHIEF JUSTICE: If they were here they would say: "It was all your fault. You should not have asked us."
33. MR BARLOW: My Lord, it is never incumbent upon a decision-maker to accuse the parties in any representation to the decision-maker for the illegality of the decision. Your Lordships have held that the magistrates got the law wrong. It was for the magistrates to get the law right and it was the magistrates who incurred the costs and not my client. That does not mean, having pursued the case stated appeal route, which is strictly between my learned friends' clients and the magistrates -- it is not actually between my clients and the Customs and Excise; we were simply appearing, not in truth as true respondents but as parties who have been served. It is not the usual practice to order such parties to pay the costs. Of course, the magistrates would not have been ordered to pay the costs, even if they had got the law wrong, which your Lordship said they had. So in my submission it is an exercise of discretion that is wholly inappropriate to order my client to pay any of the costs or all the costs.
34. THE LORD CHIEF JUSTICE: Do you want to say anything about your client's means?
35. MR BARLOW: Would your Lordships give me a moment?
36. THE LORD CHIEF JUSTICE: Yes.
37. MR BARLOW: My Lord, I am not instructed to be able to give your Lordship detailed means in relation to my client. I hope your Lordship understood that there are criminal proceedings afoot which involve my client --
38. THE LORD CHIEF JUSTICE: Yes.
39. MR BARLOW: -- which are very complicated proceedings and my client will be privately paying for his defence in those proceedings and that is a drain on his resources as it is.
40. THE LORD CHIEF JUSTICE: I think all the other three respondents are legally aided with nil contributions. Is right that?
41. MR BARLOW: My Lord, our understanding is that only two have legal aid certificates, and we apprehend the third is making application for legal aid, but we do not know the outcome thereof. My Lord, that is the position. As your Lordships know, we have already sought judicial review against Customs and Excise in relation to previous search orders on which we lost and in which we were ordered to pay the costs.
42. THE LORD CHIEF JUSTICE: You were ordered to pay the costs?
43. MR BARLOW: The Popely brothers in this litigation globally -- the allegations -- have previously taken judicial review proceedings to quash search orders.
44. THE LORD CHIEF JUSTICE: And permission to apply was granted but the application was unsuccessful?
45. MR BARLOW: Yes, and the petition to the House of Lords was dismissed.
46. THE LORD CHIEF JUSTICE: Yes. What happened to the costs of those proceedings?
47. MR BARLOW: My Lord, the Popely brothers made the application in relation to the costs -- it was not strictly my client.
48. THE LORD CHIEF JUSTICE: I see.
49. MR BARLOW: What has happened now that proceedings are afoot, my client has to defend himself during the course of those proceedings and, my Lord, he wished to make an appearance before your Lordships today. My Lord, can I put it this way? Dealing pragmatically with it, the costs order obtained in the court below was relatively small. There is a danger that there will be disproportionality to the costs of the appeal to your Lordships and the costs' benefit below. So in my submission it is inappropriate that there should be a costs order against my client either on the basis that the magistrates would not have been ordered to pay so why should my client as an interested party? The second head is that it is disproportionate that my client should be ordered to pay the costs when Customs and Excise considered it a question of principle which they wanted to ventilate. They having the benefit of your Lordship's judgment, they should pay for that, not my client. My Lord, I would ask your Lordship to take that into account in the exercise of your discretion.
50. THE LORD CHIEF JUSTICE: Thank you. Do you want to say anything more, Mr Fisher?
51. MR FISHER: Yes. The judicial review, my Lord, was in fact nothing to do with the fourth respondent. He was not party to it and therefore it does not fall to be considered as a relevant factor in this discussion. What we would say, respectfully, is very simple. My learned friend on behalf of the fourth respondent made his application. We say that it was a misconceived application. We opposed it at the time. He persuaded the magistrates' court to make it and we therefore sought review through case stated and again my learned friend sought to uphold these orders that we say should not have been made and in the event it has emerged that the stance taken by those who instruct me was indeed a perfectly proper one to take. In those circumstances we say that there is no reason at all why costs should not follow the event. They normally would in this kind of situation. If my learned friend was in difficulty, then of course he did not have to come. We would say that, having come and having contested this application, we would say that the costs should follow the event.
52. THE LORD CHIEF JUSTICE: Thank you. Are you in a position to tell us what your costs are? I do not suppose you are?
53. MR FISHER: No, I am not, sorry. My Lord, I would apprehend that the normal order would be that those costs would be taxed if not agreed.
54. THE LORD CHIEF JUSTICE: We conclude that the Customs should be entitled to their costs against the fourth respondent, to be taxed if not agreed.