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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 >> H, R (on the application of) v Commissioners of Inland Revenue [2002] EWHC 2164 (Admin) (23 October 2002) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2002/2164.html Cite as: [2002] Po LR 350, [2002] STC 1354, [2002] BTC 459, 75 TC 377, [2002] EWHC 2164 (Admin), [2002] STI 1395

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IN THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		23 October 2002

Mr Justice Stanley Burnton:

Introduction

1. On 16 August 2001, officers of the Inland Revenue went to the home address of the Claimant and his family in Bristol and executed a warrant issued pursuant to the provisions of section 20C of the Taxes Management Act 1970 (“the TMA”), authorising them to enter those premises and search them. On the same day similar warrants were executed at the homes of the Claimant’s business partner and at their offices, but those searches have no direct relevance to the issues before me.
2. The Claimant and his family were in France on holiday when the Revenue officers arrived. They contacted the Claimant’s father-in-law, to whom I shall refer as P, who had keys to the house. He came to the Claimant’s house and read the warrant. He opened the door to the officers, and remained to see what happened, and to secure the house when the search had been completed.
3. The items of interest to the officers included an Imac (i.e. an Apple Mackintosh) computer of the Claimant and a PC used by his son. In circumstances that I shall have to consider below, P signed an agreement (“the agreement”) authorising the imaging (i.e., the copying) of the hard drives (also referred to as the hard disks) of both computers at the Claimant’s home, and if it proved impossible to complete the process at the premises, their removal for the imaging to be completed elsewhere. The terms of the agreement are set out in the annex to this judgment.
4. Later that morning, at 09.54, P managed to speak to H on the telephone. The telephone at the house was then passed to Roger Dillon, the Team Leader of the Revenue officers conducting the search, and he spoke to H. The Revenue contend that in the course of that telephone conversation H approved the signing of the agreement by P on his behalf.
5. It proved impossible to image the hard drive of either computer at H’s home. Later that day, both computers were removed by the Inland Revenue officers. On 21 August 2001 the hard drive of the Imac was imaged and that computer was subsequently returned to H. However, pending the determination of these proceedings the image has not been read. The hard disk of the PC is damaged and has not yet been read. It has been retained by the Defendants. The computer itself together with a new hard drive has been returned to H.
6. H does not challenge the lawfulness of the issue of the warrant under section 20C. He does not dispute that the Inland Revenue officers had reasonable cause to believe that there might be information stored on the hard drives of the Imac computer that “might be required as evidence for the purposes of proceedings” in respect of “an offence involving serious fraud in connection with, or in relation to, tax”. I shall refer to such information and documents as “incriminating”.
7. However, it is common ground the hard drive of the computer also contained data of no relevance to any offence. In these circumstances, H contends:

(a) That section 20C did not confer authority on the Inland Revenue officers to copy the entirety of the hard drive of the computer. In the absence of an agreement with H, at most they were entitled to examine the contents of the hard drive in the course of their search and to require the copying or printing of any file or document they found that might be required as evidence for the purposes of relevant proceedings, pursuant to section 20C(3A). In other words, they were required to sift the contents of the hard drive during their search and select the material that was incriminating.

(b) That P did not have H’s authority to enter into the agreement.

(c) That he, H, did not ratify or approve the agreement during the course of his telephone conversation with Mr Dillon.

(d) That in any event the agreement was signed by P in circumstances in which the Inland Revenue officers had failed to make full disclosure of the advantages to the Revenue of the agreement; and that the Revenue are therefore not entitled to rely on it.

(e) Although the agreement is not binding on H, by agreeing in clause 5 that the imaging and removal of the computer were not a seizure and removal within the terms of section 20C(3) of the Taxes Management Act 1970, the Inland Revenue officers are precluded from relying on their powers under that provision.

8. Each of these contentions is disputed by the Commissioners.
9. Identical contentions are raised by H in relation to his son’s PC. In the case of that computer, however, Mr Newman QC, on behalf of H, sought to argue that in any event the officers could not have had reasonable cause to believe that anything on its hard drive might be required as evidence within the meaning of section 20C(3)(b).
10. I should make it clear that H is a man of hitherto good character, and that the fact that he did not take issue with the lawfulness of the warrant or the reasonable beliefs of the Inland Revenue officers does not indicate any acceptance that there were grounds for any such beliefs. There are difficulties in raising such issues when a claimant has not had access to the confidential material which led to the issue of the warrant.

The statutory provisions

11. Section 20C of the Taxes Management Act 1970 provides, so far as is relevant:

“(1) If the appropriate judicial authority is satisfied on information given on oath by an officer of the Board that-

(a) there is reasonable ground for suspecting that an offence involving serious fraud…in relation to tax…has been…committed and that evidence of it is to be found on premises specified in the information; and

(b) in applying under this section, the officer acts with the approval of the Board given in relation to the particular case,

the authority may issue a warrant in writing authorising an officer of the Board to enter the premises, if necessary by force, at any time within 14 days from the time of issue of the warrant, and search them.

…

(3) An officer who enters the premises under the authority of a warrant under this section may-

(a) …

(b) seize and remove any things whatsoever found there which he has reasonable cause to believe may be required as evidence for the purposes of proceedings in respect of such an offence as is mentioned in subsection (1) above; and

(c) search or cause to be searched any person found on the premises whom he has reasonable cause to believe to be in possession of any such things;

but no person shall be searched except by a person of the same sex.

(3A) In the case of any information contained in a computer which is information that-

(a) an officer who enters the premises as mentioned in subsection (3) above has reasonable cause to believe may be required as evidence for the purposes mentioned in paragraph (b) of that subsection; and

(b) is accessible from the premises,

the power of seizure under that subsection includes a power to require the information to be produced in a form in which it can be taken away and in which it is visible and legible.”

12. Section 20CC is headed “Procedure where documents etc. are removed”; curiously, however, the word “document” does not appear in it. Subsection (3) provides:

“Where anything which has been removed by an officer of the Board … is of such a nature that a photograph or copy of it would be sufficient –

(a) for use as evidence at a trial for an offence, or

(b) for forensic examination or for investigation in connection with an offence,

it should not be retained longer than is necessary to establish that fact and to obtain the photograph or copy.”

Section 20D(3) provides:

“… in sections 20 to 20CC above ‘document’ means, subject to (irrelevant), anything in which information of any description is recorded.”

The application of the statutory provisions to a computer

13. Mr Newman submitted that these provisions conferred no authority on an officer to remove a computer or a hard disk for the purpose of subsequently sifting through the files on it in order to identify those which were, or might be, evidence of a relevant offence. He relied on the decision of the Divisional Court in R v Chesterfield Justices, ex parte Bramley [2000] QB 576, on what he submitted were the materially identical provisions of the Police and Criminal Evidence Act 1984. He also referred to, and relied upon, internal guidance issued by the Commissioners which made it clear that it was not competent for officers to remove a computer from the premises of a suspected person without first examining the relevance of each file found on it. The practical difficulties caused by the lack of a power to remove a computer in order to copy its hard disk will be remedied when section 50 of the Criminal Justice and Police Act 2001 comes into force. Section 50 of the 2001 Act is as follows:

“50. Additional powers of seizure from premises

(1) Where –

(a) a person who is lawfully on any premises finds anything on those premises that he has reasonable grounds for believing may be or may contain something for which he is authorised to search on those premises,

(b) a power of seizure to which this section applies or the power conferred by subsection (2) would entitle him, if he found it, to seize whatever it is that he has grounds for believing that thing to be or to contain, and

(c) in all the circumstances, it is not reasonably practicable for it to be determined, on those premises –

(i) whether what he has found is something that he is entitled to seize, or

(ii) the extent to which what he has found contains something that he is entitled to seize,

that person’s powers of seizure shall include power under this section to seize so much of what he has found as it is necessary to remove from the premises to enable that to be determined.

(2) Where –

(a) a person who is lawfully on any premises finds anything on those premises (“the seizable property”) which he would be entitled to seize but for its being comprised in something else that he has (apart from this subsection) no power to seize,

(b) the power under which that person would have power to seize the seizable property is a power to which this section applies, and

(c) in all the circumstances it is not reasonably practicable for the seizable property to be separated, on those premises, from that in which it is comprised,

that person’s powers of seizure shall include power under this section to seize both the seizable property and that from which it is not reasonably practicable to separate it.

(3) …”

14. Mr Ainley submitted that the decision in Bramley was to be distinguished by the difference in statutory provisions and the fact that there the court was considering the seizure and removal of paper documents. He submitted that different consideration arise in relation to a computer. He relied on the recent decision of the Divisional Court in R (on the application of Paul Da Costa & Co) v Thames Magistrates Court [2002] EWHC 40 (Admin), [2002] STC 267, decided after the date of the search in the present case. In Da Costa, the court was concerned with the provisions of the Value Added Tax Act 1994; Mr Ainley submitted that there was no material distinction between the relevant provisions of that Act and those of the Taxes Management Act.
15. In Bramley, the search warrant had been issued pursuant to section 8 of the Police and Criminal Evidence Act 1984. The claimant was suspected of fraud. He established that the search of his premises had been unlawful. He also complained that the police officers executing the warrant had seized and removed, together with other documents, material that was the subject of legal professional privilege. The police officers had done so, apparently, so that they could sift through the totality of what they had removed in order to determine what they were entitled to retain and what was the subject of privilege, which would have to be returned. Mr John Goldring QC, as he then was, who appeared for the Attorney-General, put the issue to be decided by the Court as follows:

“To what extent, if at all, are the police entitled to sift documents on site in respect of which legal privilege is claimed by or on behalf of the occupant? To what extent, if at all, are the police entitled to remove such documents from the site for later sifting, either by them or on their behalf?”

16. Section 19 of PACE provides, as far as is material:

“(2) The constable may seize anything which is on the premises if he has reasonable grounds for believing –

(a) that it has been obtained in consequence of the commission of an offence; and

(b) that it is necessary to seize it in order to prevent it being concealed, lost, damaged, altered or destroyed.

(3) The constable may seize anything which is on the premises if he has reasonable grounds for believing –

(a) that it is evidence in relation to an offence which he is investigating or any other offence; and

(b) that it is necessary to seize it in order to prevent the evidence being concealed, lost, altered or destroyed.”

17. However, those subsections are subject to subsection (6):

“(6) No power of seizure conferred on a constable under any enactment (including an enactment contained in an Act passed after this Act) is to be taken to authorise the seizure of an item which the constable exercising the power has reasonable grounds for believing to be subject to legal privilege.”

18. Section 19(4) provides:

“The constable may require any information which is contained in a computer and is accessible from the premises to be produced in a form in which it can be taken away and in which it is visible and legible if he has reasonable grounds for believing - (a) that - (i) it is evidence in relation to an offence which he is investigating or any other offence; or (ii) it has been obtained in consequence of the commission of an offence; and (b) that it is necessary to do so in order to prevent it being concealed, lost, tampered with or destroyed.”

Similarly section 20(1) provides:

“Every power of seizure which is conferred by an enactment to which this section applies on a constable who has entered premises in the exercise of a power conferred by an enactment shall be construed as including a power to require any information contained in a computer and accessible from the premises to be produced in a form in which it can be taken away and in which it is visible and legible.”

Lastly, section 16(8) of PACE is relevant:

“A search under a warrant may only be a search to the extent required for the purpose for which the warrant was issued.”

19. Kennedy LJ said, in relation to section 19(6), at 585:

“The restriction may well apply to material held on a computer. The constable may have reasonable grounds for believing that some of it is subject to legal professional privilege. If so he cannot seize the computer or the disk, or any ‘image’ of it but he can require all other relevant information to be produced in a form in which it can be taken away, and in which it is visible and legible. And of course, depending on the circumstances, a simple claim to legal professional privilege may well not constitute reasonable grounds for believing any of the computer information to be subject to legal professional privilege.”

20. This observation was confined to material that is reasonably believed to be the subject of legal professional privilege, which was the subject of the specific prohibition in section 19(6). If there is information on a computer that is the subject of privilege, the seizure of the computer may be regarded as involving the seizure of that information, and therefore of a privileged item. In the present case, it is not suggested that any of the information or data on either computer was the subject of legal professional privilege.
21. Kennedy LJ dealt separately with the removal for later sifting of paper documents. He said, at 586:

“9. Sifting and removal for sifting

Clearly, as it seems to me, the statute envisages that in any ordinary case those who execute the warrant will search at the premises for what they require.

In order to decide how much of the available material falls within the scope of the warrant the searchers will have to look at documents, as was accepted by this court in Reg. v. Leeds Magistrates' Court, Ex parte Dumbleton [1993] Crim.L.R. 866, where Leggatt L.J. said:

‘I do not consider that in attempting to sift or sort the documents at the applicants premises the police were acting beyond their powers. It was their duty to sort the documents that they were entitled to seize from the remainder, even if some of the other material turned out to consist of special procedure material or to be legally privileged.’

But if there is a lot of material, and it is not possible to sort reasonably quickly and easily the material that is relevant (i.e. within the scope of the warrant) from that which is not, what is to be done? Can the constable who is executing the warrant do a preliminary sift at the premises where the documents are stored, and then take all, or a large part of the material away to sort it out properly elsewhere? Common sense suggests that the answer to that question should be in the affirmative, with the owner of the material or his representative having a right to be present when the sorting takes place, and meanwhile the material being stored in sealed containers, but that is not what the statute says. To my mind if the material is taken from the premises searched, other than by agreement, it is "seized," as was said by Slade L.J. in Reynolds v. Commissioner of Police of the Metropolis [1985] Q.B. 881, 895f. And the only right to seize is that to be found in section 8(2) of the Act, which, subject to section 19(2)(3) and (4), is restricted to items for which a search has been authorised by the warrant.

If a constable executing a warrant seizes items which when examined are found to be outside the scope of the warrant, and not covered by section 19, even if he acts in good faith I find in the statute no defence to an action for trespass to goods based on that unjustified seizure, and in some cases the award of damages could be significant (e.g. if the documentation erroneously seized was critical to the maintenance of a solicitor's practice, or the ongoing operation of a large business).

The argument I have just set out was one of the arguments addressed by the Court of Appeal in Reynolds v. Commissioner of Police of the Metropolis. There the warrant had been obtained under section 16(1) of the Forgery Act 1913, which entitled the officer executing it to search for any forged document, seal or die ‘and if the same shall be found on search, it shall be lawful to seize it.’ There, as in the Police and Criminal Evidence Act 1984, the statutory power to seize would appear to be restricted to the items identified in the warrant, but the court rejected that literal approach (see Slade L.J., at pp. 895-896). In that case the court held that, after some preliminary sifting at the premises where the documents are found, an officer who is executing a warrant can (per Slade L.J., at p. 896d) remove from the premises files, books, bundles or documents which at the time of removal he reasonably believes contain (i) forged material (in the present case that would be material within the scope of the warrant) or (ii) material which may be of evidential value as showing that the owner is implicated in some other crime (now dealt with in section 19(2) and (3) of the Act of 1984). Clearly that is persuasive, but: (1) section 16(1) of the Forgery Act 1913 differs from the Act of 1984 in that the material seized is carried before "a justice of the county or place in which the warrant was issued, to be by him disposed of according to law." There is therefore a quick and effective remedy available if the officer who executes the warrant goes beyond its terms; (2) as Waller L.J. said in Reynolds v. Commissioner of Police of the Metropolis [1985] Q.B. 881, 889: ‘Searching and taking away papers is an invasion of liberty and such action must be carefully scrutinised.’ The same point is made in article 8 of the European Convention for the Protection of Human Rights and Fundamental Freedoms (1953) (Cmd. 8969); (3) in Reg. v. Southwark Crown Court, Ex parte Gross (unreported), 24 July 1998, a case concerned with legal professional privilege, another division of this court held that it was not permissible under the Act of 1984 to remove documents from the premises for sifting. There is no reference in the judgments to Reynolds v. Commissioner of Police of the Metropolis, which may not have been cited, and for reasons which appear below I venture to doubt part of what was decided in Ex parte Gross, but the approach to the statutory wording does seem to me to be correct.

To put the matter in terms which would meet the requirements of the Convention it seems to me that if in a democratic society it is necessary for the prevention of crime to invade privacy to a greater extent than is spelt out in the Act of 1984, then the limits of the invasion must be spelt out in the statute or in some regulations or code made thereunder, and there must be a convenient forum available for dealing with disputes: cf. Niemietz v. Germany (1992) 16 EHRR 97. Meanwhile, in order to defend the right to privacy, I see no escape from the proposition that the words of the statute should be strictly applied.”

22. It is to be noted that in this passage Kennedy LJ addressed the problem that arises when there is too much material at the premises being searched to determine reasonably quickly what material is within the scope of the warrant. He was not addressing the question whether a specific item is within the scope of the warrant. On one view, that is the issue I have to determine in the present case. Turner J agreed with the result set out in Kennedy LJ’s judgment; Jowitt J agreed except on points that are not relevant to the issues I have to decide.
23. The decision in Bramley was taken as authority for the proposition that even where no question of legal professional privilege arises, in the execution of a search warrant it is unlawful to seize and remove a computer if it is reasonably believed by the constable that the data on it is both incriminating and non-incriminating, since the power of seizure applies only to the former. In effect, this is to regard a computer as a divisible item, or as a container of separate items, i.e. the files representing the data in question. Advice was given to the Board of Inland Revenue to this effect, and internal guidelines drawn up that made it clear that the hard disk of a computer could lawfully be imaged or removed only by agreement. The Board’s report entitled “Seizure processing & examination of computer based evidence” dated 29 December 1999 included the following passages:

“1.3 The Changing Law

As a result of the decision in R v Chesterfield Justices and Chief Constable of Derbyshire, ex parte Bramley … it appears that it is no longer correct to image the all data [sic] held on a computer found at a search location and for this imaged data to be subsequently sifted and/or analysed by THE CFT. [The Computer Forensic Team of the Special Compliance Office of the Inland Revenue.] An officer conducting a search under the authority of a S20C warrant must have reasonable cause to believe that any computer data seized may be required as evidence of an offence involving serious fraud in connection with or in relation to tax. The officer cannot reasonably believe that the entirety of the computer data is relevant and therefore seizure of (or copying of) all the data must mean that material has been seized outside the authority of the warrant. To have reasonable cause to believe that the computer material is relevant, the seizing officer will need to have examined it. The implication being that searches of computers will need to be conducted and completed on site. This does not prevent the imaging and removal of computer data by agreement with an appropriate person at the search location.

….

The conduct of searches in the course of the execution of a warrant obtained under S20C Taxes Management Act 1970 is now subject to reappraisal. A trio of cases:

R v Customs and Excise ex parte Popely and another [1999] STC 1016

R v Chesterfield Justices and Chief Constable of Derbyshire ex parte Bramley (The Times, 10 November 1999), and

R v Inland Revenue Commissioners ex parte Tamosius & Partners (a firm) [1999] STC 1077

have developed the law relating to the conduct of searches and the resolution of disputed claims that legal professional privilege attaches to material discovered during the course of a search.

Prior to these decisions, a S20C search of any computer thought to hold evidence was effected by the imaging of the data storage system (whether hard drive or other media) of that computer. The imaged data would then be analysed off site and at a later date by the Special Compliance Office Computer Support. A consequence of imaging all the data on the computer is that material irrelevant to the investigation is uplifted as well as possibly a subset of material that is potentially privileged whether or not relevant.

The judgment in ex parte Bramley will alter this practice. Kennedy LJ … held that section 8(2) Police and Criminal Evidence Act 1984 (‘PACE’) was the only authority for the seizure of material during a search conducted under the authority of a warrant under section 8(1). Section 8(2) is limited by section 16(8) [only search to the extent required for the purposes for which the warrant was issued] and subject to section 19. Under section 19(2) and 19(3) seizure of material is permitted if the constable has reasonable grounds for believing, inter alia, that it is evidence in relation to an offence which he is investigating or any other offence. Even where there may be large quantities of material to consider the constable must have formed reasonable grounds for deciding what was relevant. There was no power to take material from the search premises for later sifting to determine what might be relevant. Kennedy LJ also thought that the prohibition in section 19(6) on the removal of material reasonably believed by the constable to be subject to legal professional privilege, may extend to material held on computer. If the constable had reasonable grounds for believing that privileged material might be held on the computer this would prevent seizure of the computer or disk or any ‘image’ (see page 6 judgment). Turner J … agreed with Kennedy LJ. He recognised the practical difficulties that flowed from this construction of the relevant PACE provisions but declined to imply into the search power a power to remove material for later sifting. Turner J suggested that primary legislation was required to address this problem.

The consequence for S20C searches is clear. The power to seize and remove material is set out in section 20C(3)(b). The searching officer must have reasonable cause to believe the material may be required as evidence. There is nothing in S20C that authorises the removal of material for later sifting to determine what might be relevant. There is no authority in S20C(3)(b) for the imaging of the entire computer data storage system as this, prima facie, must entail the seizure of material that is irrelevant. The search officer cannot hold a reasonable belief that all the image data might be relevant. Material will therefore have been uplifted outside the authority given by statute. This, per Bramley, may result in an action for trespass to goods and liability in damages …

Leading counsel has been asked to consider how searches of computers should be conducted in light of these cases. Counsel’s view is that the imaging of computer data for removal and later sifting is outside the scope of the authority under S20C(3). Searches of computers must be completed on site. If necessary this may mean maintaining a presence at the search location for the duration of the warrant and seeking supplementary warrants if the search has not been completed. Counsel has suggested that technical solutions be explored to see if it is possible to conduct computer interrogations in a speedier manner.”

24. It was common ground before me that the other two cases in the trio mentioned in this report do not add to the law as stated in Bramley itself, and do not require separate consideration.
25. The practical difficulties established by the decision in Bramley led the Board to produce a standard form of agreement by which persons the subject of search warrants would authorise the copying of the hard disks of their computers and if necessary the removal of their computers for later examination or copying of the disk. Such an agreement was signed by P in the present case, and I shall have to consider its effect. Those practical difficulties also led to the enactment of Part 2 of the Criminal Justice and Police Act 2001, and in particular section 50, referred to above, which applies to searches under section 20C of the TMA.
26. Mr Newman referred me to what was said by the Home Secretary in Parliament during the debates on the Bill that when enacted became the 2001 Act:

“Part III (of the Bill: Part II of the Act) will further bolster the powers of law enforcement agencies by modernising powers of seizure. The Bill gives the police and other law enforcement agencies powers to seize material and remove it for sifting elsewhere. The new measures address two separate issues. They deal with the problems identified in the Bramley judgment, which brought into focus the difficulties faced by the police and other investigators when the material that they are entitled to seize is mixed with a collection of material to which that entitlement does not apply.

Sometimes, those investigating a crime may not know to which part their entitlement applies, especially when the material is stored electronically. In the Bramley judgment, the divisional court recognized the defect in the law, but said that it could be overcome only by making changes in primary legislation. The Bill removes those difficulties by giving police and other law enforcement agencies power to remove material from premises for examination where constraints of time or technology make it not reasonably possible to carry out the process on the premises.”

(Hansard, 29 January 2001, columns 41-42.)

27. The 2001 Act is not yet in force. While the Home Secretary’s statements to the House of Commons in the debates on the Criminal Justice and Police Bill may, in due course, be admissible under the principle of Pepper v Hart [1993] AC 593 to resolve an ambiguity in the Criminal Justice and Police Act 2001, they cannot be relevant or admissible for the purpose of interpreting previous legislation. The beliefs or assumptions of Parliament are not an admissible aid to the interpretation of previous legislation. As Lord Radcliffe said in Inland Revenue Commissioners v Dowdall, O’Mahoney & Co Ltd [1952] AC 401 at 426:

“The beliefs or assumptions of those who frame Acts of Parliament cannot make the law.”

28. The Da Costa case was decided by the Divisional Court on 25 January 2002, after the date of the search in the present case. The searches and seizures in that case had been authorised under the provisions of the Value Added Tax Act 1994 (“VATA”). Paragraph 10 of Schedule 11 to that Act authorises the issue of a warrant to search premises if specified conditions are satisfied, and provides that:

“… any person who enters the premises under the authority of the warrant may –

(a) take with him such other persons as appear to him to be necessary;

(b) seize and remove any documents or other things whatsoever found on the premises which he has reasonable cause to believe may be required as evidence for the purpose of proceedings in respect of a fraud offence which appears to him to be of a serious nature;

….”

Section 96 of VATA provides that “‘document’ means anything in which information of any description is recorded”.

29. During the course of the searches, officers of the Customs and Excise took an image of each of the two hard disks on the computer server of the claimant firm, and possession was also taken of some of the computers themselves. The information on the server and the computers included non-incriminating information. The claimants disputed the lawfulness of the search warrant, and also contended that the officers had not been entitled to image the hard disk or to remove the computers, on the ground that by doing so they copied and removed material that was not within the scope of the warrant. The Divisional Court rejected this contention. Kennedy LJ gave the only judgment, with which Hallett J agreed. In relation to the issues raised in connection with the computers he said, at paragraph [19] at 273:

“The criticisms of the searches

[19] Mr Knowles’ (counsel for the claimants) next complaint is that the search was rendered unlawful by the seizure of a large quantity of material which fell outside the terms of the warrant. He points out that the inquiry did not extend to the relationship between Da Costa and its clients, as was made clear in the briefing given to search officers, but, it is said, ‘thousands of clients’ files were seized’. This was really a complaint in relation to computer imaging, as is clear from Mr Knowles’ skeleton argument. For the purposes of this judgment I accept that the images incorporated a vast number of documents relating to the firm’s clients, and held by it subject to a duty of confidence, but I was not impressed by Mr Knowles’ submission that the searching officers could simply have asked a partner or someone in authority at the firm to print off relevant files.

[20] Mr Coppel, for the Customs and Excise, accepts that an image was taken of each of the two hard disks on the firm’s computer server. He goes on to point out that a computer hard disk is a single storage entity which falls within the definition of a ‘document’ in section 96(1) of the 1994 Act because it is something ‘in which information of any description is recorded’. Thus a hard disk may be seized and removed pursuant to the power to seize and remove documents to be found in paragraph 10(3)(b) of Sch 11 provided that it contains material which the searching officer at the time of the search has reasonable cause to believe might be required as evidence in relation to the suspected offence or offences, and it is not even suggested that that requirement was not satisfied in this case. The officer is not required to extract from the hard disk just the information he believes may be required, nor is it practicable for him to do so. Imaging was much less intrusive than seizing the hard disks. It was apparently agreed to by a partner, who I accept did not have authority to waive professional privilege on behalf of clients. If the result was that the Customs and Excise obtained amongst other things information in relation to clients of the accountancy practice that is no more objectionable than if they had for good reason taken possession of a leather bound ledger much of which contained information of a similar kind. For the reasons given by Mr Coppel I accept that no complaint can be sustained in relation to the imaging procedure which was adopted. Although Mr Knowles complains in his skeleton argument that other items were seized which fell outside the terms of the warrant, that complaint was not pursued in oral argument, probably because, as explained by Mr Coppel in his skeleton argument, each item of material complained of was clearly material which the authorised officer at the time of the search did have reasonable cause to believe might be required in evidence in relation to the suspected offence. Accordingly I need say nothing about the seizure of those other items.”

30. Mr Newman criticised Kennedy LJ’s comparison of the computers with a leather bound ledger. He said that unlike such a ledger, a computer contains distinct files, each of which may be separately accessed, copied or printed. He submitted that the more accurate comparison is with a filing cabinet. Provisions such as section 20C of the TMA do not justify the seizure and removal of an entire filing cabinet that includes irrelevant and non-incriminating material: the officers conducting the search are restricted to seizing incriminating material only. Mr Newman pointed out that Bramley was not cited to the Court in Da Costa, and was not referred to in the judgment. He suggested that it was decided per incuriam. He submitted that in any event I was bound to follow Bramley because the statutory provisions in that case were indistinguishable from those of the TMA, whereas those of VATA were different. In VATA, the right to seize relates to “documents or other things”, and as Kennedy LJ accepted, by reason of section 96(1) of that Act, the hard disk of a computer is a “document”. In the TMA, by contrast, the right to seize relates to “any things whatsoever”. The “things” to which section 20C applied, he submitted, were the individual incriminating files on the computers at H’s home, and not the whole of the computer or their hard disks, which included non-incriminating and irrelevant “things”.
31. Mr Ainley submitted that Da Costa was indistinguishable from the present case, and required me to hold that section 20C entitled the Inland Revenue officers to remove both of the computers found in H’s home.
32. Consideration of these submissions involves consideration of the nature of a computer and of the data and documents stored on it. For this purpose it was not suggested that any distinction is to be made between a computer and its hard disk, at least where, as in the present case, the hard disk is not readily removable: the data is stored on the hard disk of the computer, and removal of the hard disk from the computer and taking it to the offices of the Inland Revenue would have the same effect, so far as the seizure of irrelevant information is concerned, as removing the entirety of the computer. For present purposes I can also ignore the fact that the hard disk also contains the operating system of the computer and other software.
33. The data on the hard disk is stored in magnetic form. Although the data may be regarded for some purposes as contained in separate files, they are all stored on the same physical object, namely the hard disk. Files may be copied to a floppy disk or other storage medium. They may be removed from the hard disk by a “cut and paste” onto another storage device, but this process alters accessibility to the data on the hard disk; which, if not obliterated becomes non-referenced data as described in the next paragraph. Files cannot be removed from the hard disk physically.
34. Furthermore, the data on the hard disk includes data, referred to as non-referenced data, that is not accessible or indeed visible with ordinary software. For present purposes, non-referenced data may be regarded as data originally in a file, or part of a file, that has been deleted. Deletion of a file normally does not remove from the hard disk all of the data of the file: the effect of deletion is that the file ceases to exist for the purposes of (i.e. is not visible to or accessible by) the operating system of the computer. The data on the deleted file may remain on the hard disk, and may be recovered with the use of suitable software.
35. There may also be embedded data on the hard disk. Embedded data is described in the statement of Ian Smith, a Forensic Computer Officer of the Inland Revenue (which is not disputed) as follows:

“(3) Embedded Data

This is data that is contained within a file but cannot be accessed by simply opening the container file. This occurs when multiple data items are stored in a single file. This is common with email, databases, accounts and personal organiser applications where many individual emails, records, transactions or addresses are stored in a single file. The format of these composite files is usually such that an individual item cannot be identified and extracted without using specific software.”

36. There may also be distributed data on the disk. Mr Smith describes such data as follows:

“(4) Distributed Data

This is data that has elements stored in more than one file. This occurs commonly with database and accounts applications. Company names may be stored in one file, transactions in another and an index tying the two together in another file. The format of these files is usually such that an individual item cannot be identified and extracted without using specific software. Similarly the elements of the data usually cannot be brought together to recreate the information without using specific software.”

Lastly, there may be encrypted data on the disk. Mr Smith describes it as follows:

“(5) Encrypted Data

This is data that has been protected so that only someone with the correct password or other access details can access the data. This includes files that are password protected, files within an encrypted container file, sections of accounts, databases or other applications that are password protected and encrypted emails. If the correct access details are not known then the encryption must be broken or circumvented to access the data. Weak protection can be defeated in a few minutes, medium protection takes a few days or weeks and strong protection takes months, years or centuries to defeat rendering some data effectively unrecoverable.”

37. These facts show that the comparison of a hard disk with a filing cabinet is inexact and may be misleading. For some purposes no doubt the files on a hard disk may be regarded as separate documents. But a hard disk cannot be regarded as simply a container of the files visible to the computer’s operating system. It is a single object: a single thing. I see no basis, therefore, for a computer not being considered a “thing” within the meaning of section 20C(3)(b) of the TMA. If there is incriminating (in the normal sense of the word) material on the hard disk, and if it is assumed that the hard disk is not copied, the computer itself may be used, and may be required, as evidence in order to prove the existence of the incriminating material on the defendant’s computer. The fact that there is also on the hard disk material that is irrelevant, and not evidence of anything, does not make the computer any less of a thing that may be required as evidence for the purposes of criminal proceedings.
38. Furthermore, it is to be noted that in a case such as the present, where it is known that there is non-incriminating information stored on the computer, there is no power under the TMA or any other statute for Inland Revenue officers to copy the entirety of the hard disk of a computer during the course of a search without the agreement of the owner of the computer. Section 20CC(3), which I think must be read as impliedly authorising the making of a copy, applies only to something that has been removed as the result of a search. It follows, in my judgment, that something may be “required as evidence” for the purposes of subsection (3)(b) even though it may be copied subsequently and the copy admissible in evidence: for otherwise the power and duty under Section 20CC(3) could never arise. Lastly, subsection (3A) creates a power, not a duty, and cannot preclude an officer from removing a computer in circumstances in which he reasonably believes that the exercise of that power is impractical or that it may not adequately elicit all of the information that may be evidence for the purpose of the relevant proceedings.
39. For these reasons, even if I were free to do so, I would not differ from the conclusion reached by the Divisional Court in Da Costa. In any event, I do not think that Da Costa is distinguishable. While it is true that for the purposes of VATA a hard disk is a “document”, it is equally a “thing”, and in my judgment would be subject to the power of seizure in paragraph 10(3) of Schedule 11 to that Act even without the extended definition of “document”. Bramley is distinguishable: to the extent that it concerned computers, it concerned the problem that arises when the information on a computer includes material that is subject to legal professional privilege. That circumstance raises different issues that I do not have to address. I think it unlikely that when he gave judgment in Da Costa Kennedy LJ had forgotten his own judgment in Bramley. It is far more likely that he did not refer to it because he considered it to be irrelevant to the different issues in the later case.
40. It follows that I disagree with the view taken, following Bramley, that that part of the judgment relating to paper documents was applicable to material stored on a computer. In my judgment, if an Inland Revenue officer who enters into premises under the authority of a warrant under section 20C finds a computer, and he has reasonable cause to believe that the data on the computer’s hard disk may be required as evidence for the purpose of relevant proceedings, he may seize and remove that computer even though it also contains irrelevant material. The officer should then make a copy of the hard disk (i.e. cause the hard disk to be imaged); when that has been done, the computer must be returned pursuant to section 20CC(3). In coming to this conclusion, I take into account the need to interpret powers of search and seizure restrictively, for the reasons set out by Kennedy LJ in his judgment in Bramley. In my judgment, the provisions of section 20C are clear and in cases in which no question of legal professional privilege arises are capable of being operated in a practical manner in relation to computers.
41. Mr Newman sought to raise a separate issue in relation to Mr H’s son’s computer. He submitted that there was no evidence that any Inland Revenue officer has reasonable grounds to believe that any data on its hard disk might be required as evidence for the purpose of proceedings. This issue had not been raised in the Claim Form or in the Claimant’s evidence. It had not been signalled in advance of the hearing. As a result, the Defendant’s evidence did not address it. Had the issue been raised, doubtless questions of public interest immunity would have arisen. Since it had not previously been raised, I declined to permit Mr Newman to raise it.

P’s authority to enter into the agreement permitting removal of the computers

42. P signed the agreement in his capacity as “parent/father-in-law of Mrs H and Mr H and keyholder”. These capacities, did not, either individually or collectively, confer authority on him to dispose of or to deal with any of the contents of the home of Mr and Mrs H; and Mr Ainley did not suggest that they did. It is not suggested that H had conferred any authority on his father-in-law to enter into the agreement on his behalf before it was signed. P therefore had no implied, ostensible or actual authority to enter into the agreement on behalf of H, and it was not, when entered into, binding on him.
43. To be fair to those carrying out the search at H’s home, there was, as is normal, a team at the Special Compliance Office in Bristol controlling the search operations. The team included Clive Stephens, a Deputy Director of the Inland Revenue, Special Compliance Office, who was in overall charge, and an Inland Revenue solicitor, Mr Malcolm McHaffie. Either shortly before or after P signed the agreement, Mr Dillon rang Control and sought confirmation that as H’s father-in-law and keyholder he was in a position to sign the agreement. He was told that P could validly sign it. Mr McHaffie was not consulted about that advice. It was incorrect.

Did H ratify the agreement?

44. Both H and Mr Dillon were cross-examined about their telephone conversation at about 09.54 on the morning of the search. Mr Dillon’s evidence of the relevant part of the telephone conversation, in paragraph 20 of his witness statement, is as follows:

“Although neither my note book nor that of Mr Fallon record the fact, I recall telling (H) that (P) had signed an agreement to image the hard drives in the computers in the house and that his response was either ‘fine’ or ‘OK’ or words to that effect. He certainly did not object to (P) giving this authority and his only concern appeared to be that we did not make a mess in the house. …”

45. In cross-examination, Mr Dillon confirmed his recollection that he told H that P had signed an agreement authorising the imaging of the computer and its removal, and that H said “OK” or “that’s fine” or the like.
46. H’s evidence is that he was not told of the agreement signed by his father in law relating to the computers during the course of the telephone conversation in question. It follows that he did not authorise or ratify the agreement during the course of that conversation.
47. If the oral evidence of Mr Dillon and H stood alone, I should prefer that of Mr Dillon. H admitted that his recollection was “something of a blur”, and that he was “bemused”. This is not surprising, given that he was on holiday with his family in Paris when he learnt of the search, and the impact of the news must have had on him. Mr Dillon, on the other hand, gave his evidence in a straightforward and credible way.
48. However, their oral evidence does not stand alone. Sean Fallon, an investigator with the Special Compliance Office, was present at the search and was the designated note-taker for Mr Dillon. He was present with Mr Dillon during the telephone conversation and made a note of it. The note appears to summarise what Mr Dillon said to H. It does not mention a computer or the agreement signed by P. Mr Fallon gave evidence. He struck me as a careful officer who would appreciate the importance of any discussion of the computer and the agreement signed by P. After he had spoken to H, Mr Dillon telephoned Mr Stephens at Control. Mr Stephens kept a note of their telephone conversation. Mr Dillon told Mr Stephens that H had telephoned from France. Mr Stephens’ note of the telephone conversation does not refer to computers or to the agreement signed by P or to H having approved that agreement. Mr Stephens has no independent recollection of Mr Dillon’s telephone call to him. Mr Dillon’s own notebook makes no reference to the telephone conversation. Given that all the Inland Revenue Officers concerned appreciated the importance of the agreement and of its approval by H, in view of the absence of any record of that approval, I have concluded that, on the balance of probabilities, Mr Dillon’s recollection must be incorrect. I therefore find that H did not ratify or approve the signing of the agreement by P.
49. Mr Newman also submitted that even if there had been a conversation in the terms set out in Mr Dillon’s witness statement, it would not have amounted to an approval of, or ratification of the agreement signed by P. If I had found that the conversation did take place as described by Mr Dillon, I would have held that it amounted to a ratification of the agreement signed by P.
50. Mr Newman also submitted that the Inland Revenue should be precluded from relying on the agreement on the ground that Mr Dillon did not make full disclosure of the consequences of the agreement, and of its advantages for the Inland Revenue, before obtaining P’s signature. In particular, he complained that Mr Dillon had not explained to P that by imaging the hard disks of the computers, the Inland Revenue would be able to examine information on deleted files that they would not be able to obtain by accessing the computers at H’s home without imaging the hard disks. I accept that Mr Dillon did not make clear to P this advantage of the imaging of the hard disks. However, a reasonably high degree of computer expertise is required in order to know of this advantage of imaging a hard disk; and a reasonably high degree of understanding on the part of the person entering into the agreement is required if such information is to be understood and acted on by him. Mr Dillon’s evidence of what he told P is as follows:

“I explained to (P) that the easiest way to deal with the data on those computers was for him to sign an authority for the Revenue’s computer specialist to image the hard drives of the computers and for the data to be extracted at a later date from the imaged drives. The alternative course of action being to access the hard drives of each computer and view each and every file to determine whether it contained information that contained or may contain evidence of a fraud against the Revenue. Such an exercise would take a considerable amount of time and could necessitate the Revenue seeking an extension to the warrant, which was currently valid until 23:59. (P) carefully read and then signed the ‘computer agreement’ to allow the Revenue to image the hard drives or where there were difficulties in doing so, take the computer away.”

51. It is not suggested that Mr Dillon sought to mislead P. Clause 1 of the agreement is clear. There is no evidence that, if P had been given fuller information as to the benefits to the Revenue of the imaging of the hard disks of the computers, he would have declined to sign the agreement. In my judgment, the information given to P was sufficient and if the agreement were binding on H, there would be no factual basis to preclude the Revenue from relying on it.

The effect of clause 5 of the agreement

52. Clause 5 of the agreement is set out below. I do not know why it was inserted into the agreement: it has no obvious useful function from the point of view of the Revenue or of the person entering into the agreement. Although in terms it evidences only an understanding on the part of P, in a bilateral agreement it must be taken to evidence a mutual understanding that the imaging and removal of the computers was not a seizure and removal within the terms of section 20C(3) of the TMA. Mr Newman submitted that that agreement on the part of the Inland Revenue was effective, albeit that the agreement as a whole was not binding on H, and that the Defendants could not therefore rely on their statutory power of seizure. He emphasised the importance of public authorities being held to their agreements. My Ainley disputed this submission: he submitted that the agreement did not prevent the operation of the statute or the Revenue’s reliance on it. He also relied on the anomaly of the Revenue’s statutory powers to seize a computer being displaced by an agreement that was not binding on the owner of the computer.
53. Neither Mr Newman nor Mr Ainley was able to cite any authority relevant to this issue. In these circumstances, the issue must be addressed from first principle.
54. Section 20C makes lawful that which would otherwise be unlawful. If a public authority does that which Parliament has enacted to be lawful, I do not think that that authority can by agreement render its action unlawful. On the other hand, if the result of the agreement is that the public authority acts in a way that is not protected by the statute, ex hypothesi the statute cannot protect it from liability if the agreement is ineffective.
55. In the present case, the lawfulness of the search warrant is not challenged. For present purposes, it must be assumed that one or more of the officers who entered H’s home found there something, namely each of the two computers, that he had reasonable cause to believe might be required as evidence for the purposes of relevant proceedings. If so, he was entitled to seize and remove those computers. The word “seize” connotes a taking of something without the consent of, or against the will of, the person entitled to possession. If a Revenue officer did seize and remove the computers, the fact that he or the Defendant agreed with someone who was not the owner of the computers that there was not a seizure and removal is to my mind irrelevant. If P had been the owner of the computers, there would have been no seizure of a computer, since both computers were removed with his consent; and therefore section 20C did not operate. But vis à vis H, who was the owner of the computers and (subject to the statutory powers under consideration) the person entitled to possession of them, and who did not agree to their being taken away, there was a seizure and removal of the computers within the meaning of section 20C. That seizure and removal were therefore lawful.

Conclusion

56. It follows that the Revenue officers were entitled to remove the two computers from H’s home. Pursuant to section 20CC, they were entitled to image the hard disk of the Imac, and are now entitled to seek to image or to access the damaged hard disk of H’s son’s PC. They are entitled to examine the images of the hard disks for the purpose of investigating whether they are in fact evidence of serious tax fraud.
57. The application for judicial review will be dismissed.


 
ANNEX

Agreement

1. I, (P), in the capacity of (position) parent / father-in-law of Mrs (H) and Mr (H) and keyholder at (address) voluntarily consent to Officers of the Inland Revenue Special Compliance Office imaging the entirety of the hard drive or drives or other electronic data storage media of or associated with any of the computers on any of the premises occupied by me and/or the said company. I agree to the removal from the premises mentioned above of said images for later examination by the Inland Revenue Special Compliance Office and I am aware that I or a representative may be present during that subsequent initial examination.

2. In the event that it proves impossible to complete the imaging process at the premises, I agree to the removal of such equipment as is needed to complete the process. I further understand that the Inland Revenue Special Compliance Office undertake to return the equipment as soon as is practical after the process is completed.

3. I further agree to the seizure and removal of back up disks, back up tapes of other electronic storage media that are associated with but not an integral part of the computers referred to above. I understand that these will be removed without detailed examination and I am aware that I or a representative may be present during the subsequent initial examination.

4. In the event of any claim of Legal Professional Privilege (LPP) being made in relation to an item covered by this agreement I confirm that independent Counsel, as nominated by the Attorney General, shall be appointed to determine the validity of such a claim. Any item which independent Counsel concludes is in fact the subject of LPP will not be examined by the investigators in this matter.

5. I understand that the said imaging and removal at this stage, and any removal of equipment at paragraph 2 above, is not a seizure and removal within the terms of Section 20C(3) Taxes Management Act 1970.

Signed …

Dated …