25 June 2018

Background

The interested party (the authority) applied to the defendant Crown Court for, and obtained, warrants to search and seize material from various premises to further an investigation into possible fraud by the claimants. The warrants permitted the seizure of computer equipment such as servers, laptops, usb sticks and mobile phones.

The warrants were executed and data storage devices with a capacity of 53 terabytes were seized. Subsequently, the contents of thee seized devices were imaged, copied, backed-up and the physical devices were returned. The (copied) data which was on the servers of the investigating authorities exceeded 200 million documents and included about 770,000 audio recordings of telephone conversation.

The claimant applied to the defendant, under s 59 of the Criminal Justice and Police Act 2001 (the CJPA 2001) for return of physical property, hard copy documents, and data stored and backed-up on the authority’s systems. The judge refused to make any direction about the copied data held by the authority. The claimants sought judicial review.

Application dismissed.

Issues and decisions

(1) Whether the duty to ‘return’ seized property in the CJPA 2001 s 53 applied to retained data which was copied from seized computer storage devices which were, following copying, restored to their owners.

Data copied from computer devices did amount to seized property which, in principle, was capable of being returned including through deletion or destruction (see [17], [129] of the judgment).

There were three issues to consider: (i) whether the data that had been copied was seized property; (ii) if so, whether it was property belonging to the claimants; and (iii) if so, whether it was capable of return (see [70], [129] of the judgment).

The CJPA 2001 s 63 covered an officer who, finding a (hard copy) document during a search, took an immediate (on site) photocopy or even an officer who took the original away and photocopied it. Since, applying s 63, the copy amounted to seized property, it was capable of being subject to the statutory duty to return it. There was no doubt that s 63(1)(a) addressed hard copies and there was no basis in principle or policy for distinguishing between a hard copy and a soft, electronic (stored) copy. The fact that case law treated a computer or phone as a single item did not undermine that analysis (see [73], [75], [129] of the judgment).

Applying a purposive construction of the CJPA 2001, the act of copying created a new property that had been seized from the original owner. It was not easy to conceptualise how copied data that was stored on a third parties server could be returned (see [76], [77], [129] of the judgment).

If the copied data was properly to be considered seized property, it had been Parliament’s intent that it should, at least in principle, also be capable of being returned. Applying a purposive construction of the CJPA 2001, there were two ways to resolve the issue. First, return might be construed as including within it the idea that no trace or residue of the returned property was to be left with the authority who was returning it. As such, the only way in which copied data could be returned was by: (i) restoration of the device in which the data was stored; and (ii) destruction of the copy (the trace). It was true that return did not naturally or easily also embrace destruction. However, that construction accorded with Parliament’s intent and achieved the practical justice identified as the interpretative lodestar (see [82], [83], [129] of the judgment).

Second, the question of removal or destruction could be addressed by the Crown Court, under the CJPA 2001 s 59(5). There was power under s 59 for a court to order deletion of copied material. Construing the CJPA 2001 to confer that power on the court was consistent with Parliament’s intent that a careful balance was to be struck between the ability of investigators to investigate in the public interest and the right of individuals to be safeguarded against the exercise of intrusive powers (see [84], [129] of the judgment).

In principle, the duty of the seizing authority did extend beyond restoration of the physical device and could include copies of data extracted from seized items of property. However, that conclusion did not mean that in every case the court would necessarily order the return or destruction of copied data. That depended upon the reasonable practicability of the act of separation of the data (see [88], [129] of the judgment).

R (on the application of A and another) v Central Criminal Court and another; C and another v Central Criminal Court and another [2017] All ER (D) 138 (Jan) applied; R (on the application of Faisaltex Ltd) v Preston Crown Court [2008] All ER (D) 201 (Nov) considered.

(2) Whether the reasonable practicability of separation test, in the CJPA 2001 ss 53 and/or 59, was based upon: (i) physical/technical capability; or (ii) a broader practical capability.

The judge had been correct to conclude that the test of reasonable practicability had been the broad practical test and not the narrower test of technical or physical separation (see [17], [129] of the judgment).

The reasonable practicability test which permeated the relevant provisions was not confined to physical or technical considerations. Those might play a part in the analysis, but they were by no means the only criteria for assessment. The judge had been correct in his analysis that to compel the authority to conduct a search of the sort demanded by the claimant would have been hugely time consuming, expensive and disruptive, and for no discernible good reason (see [97], [98], [129] of the judgment).

(3) Whether the judge had acted irrationality in accepting the authority’s submissions and evidence as to reasonable practicability.

The judge had not erred in his analysis of the facts and he had come to the correct conclusion (see [17], [129] of the judgment).

No criticism could be made of the judge. He had been best placed to form a conclusion about the dispute before him. The judge had had conduct of all prior proceedings, and had been well aware of the facts and matters that the authority had been investigating. He had heard extensive submissions spanning two days on the issues. The judge had read the surrounding witness statements. The court would only interfere if it could be established that the judge had acted outside of his (broad) margin of appreciation, had taken into account irrelevant matters, had failed to take account of relevant matters or had erred in law. He had done none of those things (see [105], [129] of the judgment).

The judge had also been entitled to accept the authority’s submissions that, in order to comply with the application made by the claimants, it would need to divert very substantial human and manual resources to the task. Not only had the judge been (well) within his margin of discretion, but he had been correct (see [106], [129] of the judgment).

(4) Whether the claimants had had a right to a record of what was seized, under s 21 of the Police and Criminal Evidence Act 1984 (PACE 1984), and, if so, whether one had been provided.

The argument under PACE 1984 s 21 was misconceived (see [17], [129] of the judgment).

First, that was not an application which had been advanced to the judge. Therefore, it was not a criticism that could be made of the judgment which was the subject of the judicial review. That reason, alone, sufficed to reject the argument. In any event, the duty to provide a search record pursuant to PACE 1984 s 21 had been a duty falling upon the body executing the warrants, which had provided the necessary search records. If the claimants’ case was that the records provided had been inadequate, under PACE 1984 s 21, they could have challenged the actions, but they had not. The present proceedings, which were a claim for judicial review against defendant, focused upon an entirely different defendant (see [115], [129] of the judgment).

In any event, PACE 1984 s 21(1) was a duty to provide a record of what was seized and there was no authority for the proposition that that particular statutory duty extended to the provision of a composite item-by-item breakdown of the contents of a computer disc (see [116], [129] of the judgment).

(5) Whether relief should be refused because it lacked utility and because the claimants could, and should, instead have exercised rights and remedies in the Crown Court under the CJPA 2001 s 59.

Notwithstanding substantial concerns as to the utility of the claim, on the issues of construction arising, the High Court was the proper forum for determination of the dispute (see [17], [129] of the judgment).

Barring one point, it would have been agreed with the authority that there had been alternative remedies open to the claimants which they should have exploited instead of embarking upon the present judicial review, and that the present claim had been part of an overall litigation strategy to tie the authority up and stymie the ongoing investigation. The one point was that the issue of law as to the test to be applied under the CJPA 2001 s 59 had been decided against the claimants by the judge and that had barred them from the relief that they had sought. Had they been right in law, that would have had a dramatic effect upon the investigation. Following the ruling of the judge, there had been nowhere else for the point of law to be tested save the High Court by way of judicial review (see [126], [129] of the judgment).

Philip Marshall QC and Matthew Morrison (instructed by Weightmans LLP) for the claimants.

Andrew Thomas QC and Sarah Morgan (instructed by Cheshire West and Chester Legal Services) for the authority.

Karina Weller - Solicitor (NSW) (non-practising).

Data copied from computer devices, pursuant to lawfully obtained warrants, amounted to seized property which was capable of being returned, including through deletion or destruction, and the reasonable practicability of separation test, in ss 53 and/or 59 of the Criminal Justice and Police Act 2001, was the broader practical capability test, and not the narrower test of technical or physical separation. The Divisional Court, in dismissing the claimants’ application for judicial review of the defendant court’s refusal to order return of the copies, further held that the judge had come to the correct conclusion as to reasonable practicability.

The appellant appealed against orders for his extradition to the Czech Republic to serve a sentence for seven offences of theft (or attempted theft) of electronics and similar property. Further information indicated that he was sought for a hearing to determine only whether to activate the sentence of two years’ imprisonment which had been suspended. The issue for determination was whether a conviction European arrest warrant (EAW) was capable, in principle, of covering a request by a judicial authority for return of a requested person to face proceedings to decide whether or not to activate a suspended sentence of imprisonment as a result of the commission of further offences. The Divisional Court, in dismissing the appellant’s appeal, held that s 2(5)(b) of the Extradition Act 2003 covered the situation of a requested person whose extradition was sought to face a hearing to decide whether (or not) to activate the custodial element of a past conditional sentence. An EAW for the extradition of a requested person to face a hearing to determine whether to activate an existing conditional suspended sentence was properly categorised as a conviction warrant, under s 2(5)(b) (see [1], [6], [7], [11], [22], [40], [41] of the judgment).

Istanek v District Court of Prerov, Czech Republic [2011] All ER (D) 125 (Jun) applied; Goluchowski v District Court in Elblag, Poland; Sas v Circuit Court in Zielona Gora and District Court in Jelenia Gora, Poland [2017] 2 All ER 887 applied; Samet Ardic. Request for a preliminary ruling from the Rechtbank Amsterdam. Reference for a preliminary ruling — Urgent preliminary ruling procedure — Police and judicial cooperation in criminal matters — European arrest warrant — Framework Decision 2002/584/JHA — Surrender procedures between Member States — Conditions for execution — Grounds for optional non-execution — Article 4a(1) of Framework Decision 2009/299/JHA — Arrest warrant issued for the purpose of executing a custodial sentence — C-571/17 considered; Criminal proceedings against Tupikas C-270/17 considered; Criminal proceedings against Zdziaszek C-271/17 considered; Imre v District Court in Szolnok (Hungary) [2018] All ER (D) 79 (Feb) considered.

John Crawford (instructed by HP Gower Solicitors) for the appellant.

Daniel Sternberg (instructed by Crown Prosecution Service) for the judicial authority.

Karina Weller - Solicitor (NSW) (non-practising).

Section 2(5)(b) of the Extradition Act 2003 covered the situation of a requested person whose extradition was sought to face a hearing to decide whether (or not) to activate the custodial element of a past conditional sentence. Accordingly, the Divisional Court dismissed the appellant’s appeal against orders for his extradition to the Czech Republic, as the European arrest warrant for his extradition to face a hearing to determine whether to activate an existing conditional suspended sentence was properly categorised as a conviction warrant.

Background

The appellant insurer, Axa Insurance UK (Axa), was the subject of fraudulent claims for £85,000 by the respondents, a fake law firm and its officers, in respect of two road traffic accidents. The fraud was sophisticated, well planned and brazen, and involved serious abuse of process of the court. However, it was discovered prior to Axa paying out on the fraudulent claims.

Following proceedings against the respondents in deceit and unlawful means conspiracy, Axa was awarded compensatory damages in the sum of £24,954.31. The judge, however, dismissed the claim for exemplary damages. He noted that the profit sought to be gained (the £85,000) was entirely by means of abstracting money from the insurer and the profit and compensation would be identical. Moreover, it was nothing to the point to say that if the fraud had succeeded the profit would have been far larger than the compensatory damages were when it failed. Accordingly, it did not fit into the second category of cases where exemplary damages might be awarded, as identified in Rookes v Barnard ([1964] 1 All ER 367): namely, cases where the defendant’s conduct had been calculated by him to make a profit for himself which might well exceed the compensation payable to the claimant. Axa appealed.

Appeal allowed.

Issues and decisions

Whether the judge had erred in failing to award exemplary damages.

Exemplary damages remained anomalous and the exception to the general rule. It was therefore inappropriate to extend the circumstances in which they could be awarded beyond the three categories of case identified in Rookes (see [25] of the judgment).

In the present case, the criterion established in the second category of cases identified in Rookes had been clearly satisfied. The respondents’ object had been to extract large sums from the insurers through fraudulent insurance claims in circumstances where, if the fraud had been discovered before it succeeded, any compensatory damages would be limited to the costs of investigating the fraud, which would in all probability be a much lesser sum (see [26] of the judgment).

The judge’s analysis that the profit and the compensation had been identical had looked at the matter through the wrong end of the telescope and had overlooked that the second category required the Court to analyse the position prospectively when the tort was committed, at which time the tortfeasor might or might not ultimately achieve the profit it sought to achieve (see [27] of the judgment).

Further, his thought that exemplary damages in the secondary category would only be awarded when the profit made by the wrongdoer could not be fully recovered by the victim through an award of compensatory damages, imposed an unjustified limitation on the second category of case (see [28] of the judgment).

Still further, it was nothing to the point that criminal proceedings could have been brought (and indeed had been brought against the third respondent). According to established law, the existence of criminal proceedings and, in particular, confiscation proceedings did not affect the award of exemplary damages if appropriate. Nor would the availability of contempt of court proceedings adversely affect the award of exemplary damages (see [33], [34] of the judgment).

The preferred approach for exemplary damages to be available in the second category was that the wrongdoer had calculated that the profit to be made from the wrongdoing might well exceed any compensation he had to pay the claimant (see [31] of the judgment).

Given: (i) the respondents had chosen not to place before the court any evidence of their means; (ii) the seriousness of the conduct of the respondents; and (iii) the need to deter them and others from engaging in ‘cash for crash’ fraud, the appropriate award of exemplary damages was that each of the first, second and third respondents should be liable to pay £20,000 (see [35] of the judgment).

Exemplary damages of £20,000 was awarded against each of the respondents (see [36] of the judgment).

Rookes v Barnard [1964] 1 All ER 367 applied; Ramzan v Brookwide Ltd [2012] 1 All ER 903 applied; Borders (UK) Ltd v Metropolitan Police Comr [2005] All ER (D) 60 (Mar) considered.

Brian McCluggage (instructed by DAC Beachcroft Claims Limited) for Axa Insurance UK.

The second respondent appeared in person.

The first and third respondents did not appear and were not represented.

Paul Mclachlan Barrister.

In proceedings arising from a sophisticated and well planned motor accident fraud, the judge had erred in holding that Axa Insurance UK had not been entitled to exemplary damages. Accordingly, the Court of Appeal, Civil Division, allowed the appeal and awarded exemplary damages of £20,000 against each of the respondents.

Background

The claimant was made subject to a curfew restriction between the hours of 23.00 and 07.00 for a period between 3 February 2014 and 14 July 2016, pending potential deportation. Such curfew was imposed by those acting on behalf of the appellant Secretary of State purportedly pursuant to the provisions of para 2 (5) of Sch 3 to the Immigration Act 1971. It had, however, been accepted that, in the light of subsequent Court of Appeal authority, there was no power to impose a curfew under those provisions. Consequently, the curfew was unlawfully imposed. The issue arose about whether the claimant was entitled to damages for false imprisonment in respect of the time during which he was subject to the unlawful curfew. The trial judge decided that he was and assessed the damages at £4,000. The Secretary of State appealed against the decision that the claimant was entitled to damages for false imprisonment. The claimant cross-appealed against the amount of the award of damages, proposing a figure approaching the region of £30,000 as an appropriate compensatory award. That submission acknowledged that the fact that the claimant was being confined in the hours of night-time only and in his own home was a discounting factor, however a figure of £4,000 was, much too low and was plainly wrong

Appeal and cross-appeal dismissed.

Issues and decisions

Whether the claimant had been entitled to damages for false imprisonment.

The principle issue was whether the was voluntary compliance with the notice of restriction. On the evidence, the claimant was during the curfew hours operating under constraint. He would not have so acted were it not for the notice of restriction, backed by the threat of criminal sanction and by electronic tagging (see [77], [79] of the judgment).

It was in apposite to say that the claimant had the ability to leave his house. The claimant was already falsely imprisoned in his own home. It could, indeed, be an entirely appropriate description of his situation, in those hours, as being under a sort of ‘house arrest’. That house arrest, by virtue of recent case law was unlawful (see [82] of the judgment).

The appeal of the Secretary of State would be dismissed (see [88] of the judgment).

R (on the application of Gedi) v Secretary of State for Home Department [2016] All ER (D) 140 (May) applied.

(2) Whether the award of damages should be increased.

Many cases involving an assessment of damages for false imprisonment in an immigration detention context had to be decided by reference to its own facts and circumstances (see [90] of the judgment).

The present case was very different from the usual run of cases of assessing damages for false imprisonment in an immigration detention context. Those almost invariably involved round-the-clock detention in an immigration removal centre or prison (see [91] of the judgment).

In the present case, the restrictions on the claimant’s liberty self-evidently were by no means complete or total for the entirety of each day. His loss of liberty was of a far lesser order than that of someone wrongly remanded in custody. During the hours of 07.00 to 23.00 he was free to come and go as he wished. He could associate with whomsoever he chose. He was subject to no constraints or restraints of any kind whatsoever in that period. He was not subject to any detention regime or prison rules. He could, in effect, do as he pleased (see [93] of the judgment).

Even during the hours of the curfew restriction the claimant was free to move around in his own home. The judge had found that the effect of the curfew only restricted the claimant’s activities ‘to a degree’ in that there were occasions when he could not attend community gatherings or parties as he wished. There had been no finding that the curfew interfered with the claimant’s chosen lifestyle in some kind of wholesale way (see [94] of the judgment).

In that regard, the judge had also been entitled to bear in mind that in point of fact the claimant had felt himself justified in absenting himself, and had unilaterally absented himself, without permission on quite a significant number of occasions (and also had obtained permission from the Home Office for relaxation of the curfew on other occasions). That, overall, had caused him some anxiety: but it contributed only ‘to a very limited degree’ to the depression he was already experiencing. Further, that was not an ‘initial shock’ kind of case. Thus, overall, the judge had found, on the evidence, that the actual adverse effects on the claimant were relatively limited over the two and a half year period (see [95] of the judgment).

Accordingly, t could not be said that the judge had erred in principle in failing to take a starting-point figure appropriate for ‘full’ wrongful detention before discounting for the significantly more limited restraint on liberty involved in the night-term home curfew as imposed in the present case. The judge had given ample reasons for his conclusion, had not left out of account relevant considerations nor had he taken into account irrelevant considerations. It could not be said that an award of £4,000, in the circumstances of the case, was plainly wrong such that the court should interfere (see [97] of the judgment).

AXD v Home Office [2016] All ER (D) 88 (Jul) considered; R (on the application of Belfken) v Secretary of State for the Home Department [2017] All ER (D) 134 (Jul) considered.

Robin Tam QC and Emily Wilsdon (instructed by the Government Legal Department) for the appellant.

Dinah Rose QC and Jude Bunting (instructed by Saunders Law) for the respondent.

Tara Psaila Barrister.

The claimant had been ‘falsely imprisoned’, having been made subject to an illegal curfew between the hours of 23.00 and 07.00 for a six month period by the Secretary of State. The Court of Appeal, Civil Division, further held that a figure of £4,000 was an appropriate award of damages for the illegal detention.

Background

The first applicant, Liberty Mutual Insurance Europe plc (Liberty), was a public limited company registered in England and Wales. Liberty underwrote insurance and re-insurance business from its registered office in London and its branches across Europe, and was currently planning for the consequences of the UK leaving the EU on 29 March 2019. In that regard, it sought to become a ‘Societas Europaea’ (SE), namely a European company, in accordance with Council Regulation (EC) No 2157/2001 (the Regulation). To give effect to that intention, the second applicant company (LSM Lux) was incorporated in Luxembourg with the intention that it would merge with Liberty. LSM Lux did not trade and had limited assets and liabilities. The terms of the merger between LSM Lux and Liberty (together, the companies) provided for the latter to acquire all of the assets and liabilities of LSM Lux, and for Liberty to become an SE with the name ‘Liberty Mutual Insurance Europe SE’ (LMIE SE). LSM Lux would then cease to exist by operation of law in accordance with the Regulation.

Under art 26(2) of the Regulation, each merging company had to submit to the competent authority, a certificate referred to in art 25(2) within six months of its issue, together with a copy of the draft terms of merger approved by that company. In April 2018, a notary public in Luxembourg issued a certificate under art 25(2) in relation to the pre-merger acts and formalities concerning LSM Lux, and on 4 May, the Chief Registrar issued a certificate in relation to Liberty.

Article 26 of the Regulation provided, so far as material, that ‘(1) The legality of a merger shall be scrutinised, as regards the part of the procedure concerning the completion of the merger and the formation of the SE, by the court, notary or other authority competent in the member state of the proposed registered office of the SE to scrutinise that aspect of the legality of mergers of public limited-liability companies’. The companies applied to the court, under art 26, effectively seeking a declaration and confirmation that they could bring the proposed merger into effect.

Application allowed.

Whether the requirements of art 26 of the Regulation had been satisfied. The court considered some of the features of art 26 of the Regulation and the form of order that it was appropriate to make where it was satisfied of the matters required by that article.

The function of the court under art 26 was to scrutinise the legality of the merger ‘as regards the part of the procedure concerning the completion of the merger and the formation of the SE’; the court was not asked to scrutinise the legality of the merger as regards the part of the procedure involving the pre- merger acts and formalities, because those matters were not within the phrase quoted above, and because they had been conclusively attested by the certificates under art 25(2) (see [7] of the judgment).

Article 26(4) could possibly be read in two ways; one way was to read it as referring to the original formation of the company and that way presented no problem. The other way was to read it as referring to the formation of the SE, but the SE would only be formed following the completion of the formalities under art 26 (see art 27). If art 26(4) was to be read as referring to the formation of the SE, then it would have to be read as meaning that the SE ‘will be’ formed in accordance with the law of the present jurisdiction (see [8] of the judgment).

In the present case, all of the requirements of art 26 had been satisfied. In accordance with art 26(2), the companies had provided the two certificates under art 25(2) within the relevant six-month period and they had also provided the draft terms of merger approved by both companies. The certificates meant that it had been conclusively attested that the pre-merger acts and formalities had been completed (see [6]-[8] of the judgment).

As regards art 26(3), the court was satisfied that the companies had approved draft terms of merger in the same terms. Further, as regards art 26(3), on the evidence, there were no arrangements for employee involvement, because neither company had any employees and art 26(3) did not require there to be arrangements for employee involvement where there were no employees (see [7] of the judgment).

As regards art 26(4), the court was satisfied that Liberty had been originally formed in accordance with the law of the jurisdiction of England and Wales and that the SE would be formed in accordance with the law of the jurisdiction of England and Wales (see [7] of the judgment).

Having been satisfied as to the requirements of art 26(2), (3) and (4), consideration was given to whether there was any other issue as to ‘the legality of [the] merger’, for the purposes of art 26(1), in the context of the fact that it appeared that LSM Lux had been specifically formed in order to allow Liberty to use the merger provisions in the Regulation and become an SE. Following the reasoning in authority, even if the involvement of LSM Lux was merely a means to enable the company to produce the intended result under the Regulation, the steps which had been taken, and which would be taken, came within the ambit and terms of the Regulation and did not infringe the principle of abuse of rights in accordance with the European jurisprudence (see [7] of the judgment).

Accordingly, the companies were free to take steps to bring the proposed merger between them and the formation of LMIE SE into effect, the consequences of which would take effect on the registration and formation of LMIE SE by the Registrar of Companies of England and Wales (see [8] of the judgment).

Easynet Global Services Ltd v Secretary of State for Business, Energy & Industrial Strategy [2018] All ER (D) 167 (Jan) followed.

Order accordingly.

Andrew Thornton (instructed by DLA Piper LLP) for the companies.

Carla Dougan-Bacchus Barrister.

The Companies Court allowed an application by Liberty Mutual Insurance Europe plc (Liberty) and LSM Luxembourg plc SA, pursuant to art 26 of Council Regulation (EC) No 2157/2001, concerning a proposed merger between the two companies to allow Liberty to become a ‘Societas Europaea’ (SE), namely a European company, in preparation for the consequences of the UK leaving the EU on 29 March 2019. The court held that all the requirements of art 26 had been satisfied and it ordered that the companies were free to take steps to bring the proposed merger between them, and the formation of Liberty Mutual Insurance Europe SE, into effect.