South Yorkshire Police, R (on the application of) v Sheffield Crown Court & Anor

Mr Justice Stewart: Overview

1. The Claimant (“the Chief Constable”) seeks an order quashing an order made by HH Judge Moore QC at the Sheffield Crown Court on 8 April 2013. Judge Moore ordered that 37 tonnes of granulated copper and 7 skips be returned to the 2 nd Defendant (“AR UK”) and made an order of costs in favour of AR UK. The Chief Constable’s case is that Judge Moore did not have power to order the return of the property to AR UK under section 59 of the Criminal Justice and Police Act 2001 (“ The Act ”); alternatively, if he did have power, his decision was Wednesbury unreasonable. In any event the Chief Constable submits that the order made for costs in favour of AR UK was wrong. Background

2. On 13 April 2012 the South Yorkshire Police obtained a search warrant from the Sheffield Magistrates’ Court to enable them to search AR UK’s premises. The warrant was executed and there was a three day search of the premises between 17 April 2012 and 19 April 2012. 148.5 tonnes of granulated copper and 17.6 tonnes of pre-granulated copper were seized. Some other property was also seized. Officers from the interested party (“BT”) were present at the search and indicated to the police their belief that the seized property belonged to BT.

3. I understand that this was not an unusual operation since the theft of metal from utilities companies and others has become a real problem. Police forces nationally have cooperated with companies such as BT to identify and seize stolen cable and other metals.

4. AR UK’s initial response was via their solicitors on 4 May 2012 in which they wrote to the Claimant threatening a judicial review application asserting that the warrant and its execution were illegal. However, in June 2012, AR UK (and William Firth, a Director of AR UK) issued an application for the return of the copper and other items. The application was made under section 8 of the Police and Criminal Evidence Act 1984 (“PACE”) and section 59 of the Act . The basis of the application was that the warrant was defective. The application for “Return of Seized Property” was made to the Crown Court at Sheffield.

5. The case was listed at the Crown Court on 5 July 2012 and was adjourned due to lack of court time. On 21 August 2012 the case came before Judge Moore. He adjourned it pending a decision of the Crown Prosecution Service (“CPS”) as to whether to charge the two directors of AR UK with a criminal offence. AR UK supplied evidence of legitimate trading invoices.

6. On 9 November 2012 BT wrote to South Yorkshire Police claiming ownership of both the granulated and pre-granulated copper seized from AR UK’s premises. [They also indicated that 25 tonnes of copper cabling were identifiable as BT property and that was, shortly afterwards, returned to BT].

7. The case again came before Judge Moore on 11 March 2013. The CPS had still not charged the directors with any alleged offence. Judge Moore adjourned the case for a full hearing on 8 April 2013. Also in March 2013 (i) BT’s letter of 9 November 2012 (sent to South Yorkshire Police) was forwarded to AR UK and (ii) South Yorkshire Police informed BT that the Police Property Act 1897 proceedings would be instituted by the Police.

8. By a summons dated 26 March 2013 the Police summonsed AR UK to the Sheffield Magistrates’ Court on 17 May 2013 in relation to an application under the Police Property Act 1897 to determine the ownership of the property. The 17 May 2013 date was a listing date only. The summons was served by the police on AR UK by letter dated 4 April 2013, which was received on 5 April 2013. On that date the solicitors for the police issued an application in the Sheffield Magistrates’ Court, for declaration of ownership in respect of the 148.5 tonnes of granulated copper.

9. Meanwhile, on 3 April 2013, AR UK’s directors, Kerry and William Firth, were charged with conspiracy to handle the proceeds of crime. The Relevant Provisions of the Act

10. The relevant provisions of the Act are set out in the Appendix to this judgment. The Hearing on 8 April 2013

11. The Claimant’s case in outline is that the hearing on 8 April 2013 was the application made by AR UK and William Firth for the return of the property on the basis that “there was no power to make the seizure”. The application stated “the warrant was obtained unlawfully” and “the officers did not have reasonable grounds to believe that “the property” amounted to stolen property or obtained as a consequence of the commission of a crime or evidence relating to an offence.” Therefore, according to the Chief Constable, the expectation was: (i) If the court found, pursuant to section 59 of the Act , that the Police had unlawfully seized the property, then the court would direct that the property would be returned to AR UK/Mr Firth or (ii) If the court determined the property was not unlawfully seized, the Chief Constable would retain possession of the property, its ownership being disputed by AR UK and BT. This issue of ownership would then be determined potentially in the Magistrates’ Court in the Police Property Act 1897 proceedings.

12. Prior to 8 April 2013 the statements before the court were: • Philip Grosvenor (Consultant/Company Secretary to AR UK) 23 May 2012 • Paul Burkinshaw (AR UK’s solicitor) 4 July 2012 • Detective Sergeant Dimberline, 11 July 2012.

13. The Chief Constable’s case is that on 8 April 2013 AR UK changed its application to one for return of property pursuant to section 59(3) (d) of the Act on the basis that an unreasonable length of time had now passed and that a charging decision had only just been made; therefore the Learned Judge should make a decision as to “the property”. This change of application was made without notice to the Chief Constable or the Court. The Chief Constable says he was not in a position to meet the arguments and leave had to be obtained from the judge to call evidence from DS Dimberline (the officer in the case in the criminal investigation) as to what steps he had taken to make enquiries as to the ownership of the property. In fact the section 59(3) (d) basis had been indicated by AR UK at the hearing on 8 March 2013 and no procedural argument was raised by the Chief Constable before me.

14. The court was made aware that BT were not present and were not in a position to make representations. BT do raise procedural arguments in relation to the judge making a determination in their absence. I deal with these later.

15. BT say that they were notified by the Chief Constable some two to three weeks prior to the 8 April 2013 hearing that an application had been made by AR UK. BT were not informed of the hearing date until the morning of 8 April 2013 and had not been provided with any papers related to the application. BT say that had they been provided with the papers they would undoubtedly have concluded that the application concerned the legality of the warrant.

16. No finding was made by Judge Moore that any of the property was unlawfully seized outside the terms of the warrant. Nevertheless, he made the order for the return of some 25% of the total granulated copper pursuant to section 59(3) (d), thereby acceding to AR UK’s application (as varied). The Material Parts of the Judge’s Rulings

17. DS Dimberline gave evidence and the judge accepted his evidence. The judge found that DS Dimberline put in a report to the CPS in May 2012, well within the period of reasonable practicability envisaged in section 53(2) of the Act . Subsequently when AR UK made their application they included several legitimate suppliers’ invoices. The officer interviewed several of the suppliers and submitted the material to the CPS. The officer came to the conclusion that the bulk of the material seized was not legitimate. The officer’s evidence was summarised by the judge as “ he would be inclined to agree that it was unlikely that every single sack of granulated copper was, in fact, stolen. It was much more likely that some was legitimate, but that the vast majority …was likely to be stolen, but he told me, frankly, he could not say how much. ” The officer also said that the material was not being kept for evidence but because of questions of ownership.

18. Turning to the law, the judge said “ ” He then reviewed the fact that BT had written a letter dated 9 November 2012 registering an interest in the 148 tonnes of granulated copper. He noted that BT had not applied to the Crown Court, which they could have done under section 59 gives anybody with a relevant interest in the seizure the right to apply to this court. section 59 . He continued “ In relation to the fact that this material may or may not be stolen, that is a legitimate question for me. In relation to whether it is actually BT’s or whether BT have an interest, that is not of concern to me unless and until BT join in this application, which they have not done and because if they did that, of course, we would see what their evidence was, upon what it was based and whether, indeed, they were talking about all of this material or just some of this material. Accordingly I ignore the possibility that BT may be able to prove an ownership of this material, because they have not done so. ”

19. As to the Act he said “ the Court’s power, interestingly, is expressed as a duty in that ” section 59(4) says that “the Court shall, if satisfied as to any of the grounds, order the return of so much of the seized property in relation to which the court is so satisfied”. In other words, if I find, on balance of probabilities, that not all of the property is stolen property, then I am under a duty, the word is not “may” it is “shall” to order the return of such amount of the property as I believe may be legitimate. He said that he was concerned directly with the 148 tonnes of granulated copper and possibly, if there is going to be any order here, to add to the order the skips. He then said: “ I am satisfied that the material was lawfully seized in accordance with the wording of the search warrant….I accept that the police acted within section 53(2) and wrote a timely report to the CPS in May 2002 (sic). It is unfortunate that the CPS dragged their feet for 11 months. The police acted reasonably in checking the legitimate suppliers and as a result of that they genuinely believed, I find, that a considerable amount of this stuff must be stolen; certainly on the balance of probabilities it is likely to be stolen and that is good enough for today’s purposes….I also accept the senior officer’s expertise that it may well be that a proportion of this, beyond the fanciful, is likely to turn out to be genuine…it seems to me that there is a “chunk” of this material that is very unlikely to be proven to be stolen goods. It also seems to me likely that there is a much bigger “chunk” that is likely to be proven to be stolen. However, copper is a very valuable commodity and it is unfair on the Applicant that the court does not have a go at apportioning the difference between that amount of property which the police can legitimately hang on to and that which they should return, pursuant to the statute. Doing the best I can, I find that at least one quarter of the 148 tonnes is likely to turn out to be legitimate. It may be that much more will be, but I am safe, I believe, at a quarter and that properly balances the interest both of the public in the sense of the prosecution and the applicants. ” The First Ground

20. The first ground which logically arises is contained in BT’s “Grounds in Support of the Application.” It is said that Judge Moore had no power to make the order he did because the property clearly fell under section 56(2) and (3) of the Act . It is important to analyse the structure of the Act . As the Explanatory Notes make clear, the powers of seizure contained in sections 50 and 51 were extended so as to entitle the police to seize material and then sift it elsewhere. As the judge found, the property [namely for the purposes of this application, the 148 tonnes of granulated copper] was lawfully seized by the police from AR UK’s premises (under section 50 of the Act ). Section 53(2) imposes a duty on the police to ensure that an initial examination of the property is carried out as soon as reasonably practicable after seizure, the examination being confined to whatever is necessary for determining how much of the property falls within section 53(3) . Anything which, upon that examination, does not fall within sub section (3) should be separated from the rest of the seized property and returned as soon as practicable thereafter. Property does not fall to be returned under section 53(2) to the extent that “it is property the retention of which is authorised by section 56 ” ( section 53(3) (b)). Section 56(1) authorises the retention by the police of property lawfully seized if that property falls within section 56(2) or (3). Most relevant to this case is section 56(2) . This provides: “(2) Property falls within this sub section to the extent there are reasonable grounds for believing – (a) that it is property obtained in consequence to the commission of an offence; and (b) that it is necessary for it to be retained in order to prevent it being concealed, lost, damaged, altered or destroyed.

21. Section 59 deals with applications for return of the whole or part of seized property. By Section 59(2) “any person with a relevant interest in the seized property may apply”. The application is to the appropriate judicial authority, which under section 64 means a judge of the Crown Court. Therefore, as the judge noted, BT would have been entitled to apply to the court. “A person with a relevant interest” is defined by section 59(11) as the person from whom it was seized, any person with an interest in the property, or any other person who had custody or control of it immediately before seizure.

22. The potential grounds for an application are in section 59(3) . The relevant ones here are: (a) there was no power to make the seizure or (d) the seized property is or contains something seized under section 50 or 51 which does not fall within section 53(3) .

23. There is no doubt that the initial thrust of AR UK’s application was under section 59(3) (a): i.e. no power to make the seizure. The judge found this not made out. However, from the excerpts from his rulings set out above, he decided in favour of AR UK, seemingly under section 59(3) (d).

24. The judge’s first key decision was that he said that if he found on the balance of probabilities that not all the property was stolen property, then he was under a duty to order the return of such amount of the property as he believed may be legitimate. This in my judgment was an error. The actual question for him to determine under section 59(3) (d) was whether the seized property was or contained something seized “which does not fall within section 53(3) ”. By section 53(3) (b) the judge could not order the return of property whose retention was authorised by section 56 . The correct question under section 56(2) was: were there reasonable grounds for believing that it was property obtained in consequence of the commission of an offence and that it was necessary to be retained in order to prevent it being lost, damaged, altered or destroyed. In other words the judge should have asked himself whether he was satisfied on the balance of probabilities that the seized property (or part of it) did not fall within those parameters. Unfortunately, Judge Moore did not follow the (somewhat labyrinthine) statutory trail.

25. The distinction between the judge’s test i.e. (i) whether on the balance of probabilities all of the property was stolen property and the true test i.e. (ii) whether on balance of probabilities there were no reasonable grounds for believing that the property was obtained in consequence of the commission of an offence is of importance. The officer’s evidence had been that the police case was that all of the 148 tonnes was stolen, or at least a lot of it. He accepted that he would not be surprised if a chunk of it was legitimate but he ended up saying “ that may come out in – in due course when – further sort of things are brought to a court and for me to look at, but at the moment I have to go with the statements and the evidence I have got .” From this it appears to me that there were reasonable grounds for believing that the whole of the property was obtained in consequence of the commission of an offence, despite the officer accepting that it may turn out that some of it was legitimate property. The threshold of “reasonable grounds for believing” must be lower than “the balance of probabilities”. In Castorina v The Chief Constable of Surrey [1988] WL 622865 (10 June 1988) the Court of Appeal gave guidance on “reasonable grounds for suspecting” Wolf LJ (as he then was) said “it is critical to note that the section only requires suspicion of guilt, not belief or even prima face proof of guilt.” He then went on to cite from an opinion of Lord Devlin as to how low a threshold “suspicion” is. Therefore belief is a higher threshold than suspicion but a lower one than the balance of probabilities. As to the second criterion in section 56(2) (b) of the Act , there was no dispute about this by the parties before me. It was fulfilled because the whole purpose of the claim was to seek return for sale.

26. For those reasons Judge Moore’s ruling contained a material error and must be quashed. [I should add that, as to section 56(3) being a separate ground for authorising the retention of the property under section 53(3) (b), this was no part of any of the case argued before the judge. Nor was there any evidence before me to justify this ground. The Second Ground

27. In case I am wrong about the first ground I now turn to the second ground. This is that the Claimant lawfully retained all the property under section 58 of the Act . This ground is relevant only on the assumption that, absent section 58 and in particular section 58(3) , the judge would have been entitled to make an order returning property to AR UK under section 59(4) .

28. Section 58(1) required the police, if they were under an obligation to return the seized property (or any part of it) return it to AR UK being “the person from whom it was seized”. However by virtue of section 58(2) if the police were satisfied that some other person had a better right to the property than AR UK, then the duty to return was to “the person appearing to him to have the best right to the thing in question.” Section 58(3) entitled the police in those circumstances to retain the property seized for so long as reasonably necessary to determine the person to who it must be returned in accordance with sub section (2).

29. The argument of the Chief Constable and BT is that Judge Moore took no account of sections 58(2) and (3), despite the fact that those sections gave the police the power to hold onto the third party property where there was a dispute as to title. I do not agree with this submission. Section 58 enables lawful retention by the police so that they commit no tort of trespass where there is a dispute as to title, but where otherwise there would be an obligation to return the seized goods. Section 59 makes no reference to section 58 . Section 59(3) and (4) make it clear that if any of the grounds under subsection (3) are made out, then the court shall order the return of such of the seized property as is covered by that ground.

30. In this context the question arises as to what is the mandatory nature of the section 59(4) obligation if there are two competing applicants to the appropriate judicial authority under section 59 . This is not expressly provided for. Clearly property cannot be returned to both. It seems to me that if there is more than one applicant, the mandatory duty is to order “return”. Section 59(4) does not state to whom the return should be made. “Return” does not necessarily mean to the person from whom the property was seized, since any person within section 59(2) may apply for return, and under section 59(11) that includes persons other than those from whom the property was seized. It is critical to note that if the Crown Court chooses between two competing applicants it is not determining a property dispute, it is merely determining to whom the goods should be returned. Of course the Crown Court will consider arguments as to who appears to have the better title, but the purpose of section 59 is to give expeditious relief if a ground under section 59(3) is made out. It follows from this (i) that a decision of the Crown Court will not have any res judicata consequences as to ownership (ii) if the Crown Court orders return of goods to one applicant, another applicant may still apply, in appropriate circumstances, for interim preservation of the property pending a full and final civil court determination of title.

31. In any event there was only one applicant here, and that was AR UK. As the judge pointed out, BT did not make an application under section 59(2) therefore, assuming a fair procedure took place, and one that was compatible with Article 6 ECHR and BT’s rights under Protocol 1 Schedule 1 of the ECHR, there was only one applicant to whom the property could and should have been returned, namely AR UK.

32. Therefore Ground 2 fails. The Third Ground: Procedural Fairness

33. Although it is correct that the Claimant was facing an application notice based on section 59(3) (a) (no power to make the seizure) there was no suggestion at any stage by the Claimant that he was not in a position to deal with the basis of the application as put before Judge Moore. Nor was any application for an adjournment sought. The Claimant was allowed to call oral evidence from DS Dimbeline. I find no procedural irregularity vis a vis the Claimant; nor was any contended for before me.

34. BT submit that there was procedural unfairness and breach of Article 6 in that the hearing proceeded in their absence when they had not been: (i) Supplied with any documents relating to the application. (ii) Supplied with documents relating to the criminal proceedings generally. (iii) Informed of the nature of the application. (iv) Informed of the hearing until the day of the same and then only by the Claimants.

35. BT had been notified by the Claimant some two to three weeks before the hearing that AR UK had made an application under section 59 . There is no evidence that they sought to find out the date of the hearing or to be informed by either the Claimant or AR UK in relation to the matters set out in (i) – (iv) above.

36. BT were fully entitled to make an application themselves under section 59(2) . They submit that they had no reason to question the lawfulness of the seizure; but they should have appreciated that once a section 59 application was made, if it was successful the seized property would be returned to AR UK, absent BT making their own application in the Crown Court proceedings. Any reliance which they made upon there being Police Property Act proceedings was misplaced as a matter of law, for the reasons I have dealt with under the Second Ground. Section 59 does not determine ownership but merely, if the appropriate ground(s) is/are made out, return of seized goods to any person with a relevant interest in those goods. Essentially BT left the matter in the hands of the Claimant and took no steps to become involved in the section 59 proceedings, whether as an interested party or as an applicant under section 59(2) . In those circumstances I rule that there was no procedural irregularity on the part of Judge Moore, the material extract from his decision being cited at paragraph 18 above.

37. For the same reasons I dismiss any ground based on Article 6 ECHR or the First Protocol, Article 1. The Fourth Ground: Arbitrary Order

38. In order to address this point it is helpful to set out a summary of the nature of the copper material with which the court was dealing. Such a summary is in written submissions by AR UK’s then Counsel, dated 20 June 2012. They state: “Copper Recycling. The company purchases items and material containing copper…which it then processes in order to extract the copper for onward sales. There are two stages to the extraction process, the first involves breaking down the raw materials into an aggregate state where the copper remains mixed with plastics and other metals (shredding). The second stage involves filtering the shredded material so as to produce granules of copper (of differing grades) for onward sales.” BT informed me that the copper cable is encased in plastic and inside the plastic is paper. The paper can be used to assist in the determination of ownership. Some paper gets through to the granulated copper. In the hearing DS Dimberline said this: “Q. And how – how can you conclude from that, that the whole of the 148 tonnes is – is suspiciously stolen goods, reasonably believed stolen goods? A. I can’t say what proportion is, I just know what I have been given on the statements that there was – um – paper at the side of the granulating machine where the copper was stood.”

39. Under section 59(4) the court is empowered to order the return only of “so much of the seized property as is property in relation to which the authority is so satisfied” i.e. satisfied as to any of the matters mentioned in sub section (3). Essentially two questions arise: (i) was there sufficient evidential basis for Judge Moore to reach a decision that 25% of the seized property should be returned? (ii) If so, in circumstances where the seized property was all mixed together was he lawfully entitled to order the return of a percentage of mixed property?

40. As to the first point, it is to be noted again that the return of property under section 59(4) is only to the extent to which the court is satisfied on the balance of probabilities that the seized property is or contains something seized under section 50 - or 51 which does not fall within section 53(3) in relation to which there were no reasonable grounds for believing that it had been obtained in consequence of the commission of an offence and that it was necessary for it to be retained. In my judgment the evidence did not entitle the judge to take a guestimate. It is somewhat artificial to embark on this question given the judge’s error of law as set out in Ground 1. The officer’s evidence was that the police case was that all of the 148 tonnes was stolen or at least a lot of it. Later in the evidence this occurred: “Q. So you would not be surprised if a chunk of this was legitimate? A. Yeah, on – I can only refer to what I said in the first instance. When –the policy was that only things identified as stolen property---- Q. Yes. A. ----would be recovered and we have statements from BT and Network Rail saying the stuff we – nothing else, just the stuff that we recovered, are stolen items and that’s why I’ve got to stand by the statements that we obtained. Q. I know; you are in an impossible position. But it would not surprise you to find that a third of this is actually legitimate stuff? A. That may come out in – in due course when – when further sort of things are brought to a court and for me to look at, but at the moment I have to go with the statements and the evidence that I’ve got.” That evidence fell well short of justifying a finding that 25% satisfied the statutory test under section 59 .

41. Even if such a finding were justified, what about the fact that the 25% was mixed in with the 75%? BT rely on section 53(3) (c) which permits retention if “it will not be reasonably practicable… to separate (the property) from property taken within (a) or (b). In principle, I do not think there is a problem. Although property rights may be difficult to sort out, the statutory test is in section 53(5) of the Act . This makes it clear that if it is reasonable practicable to separate property “without prejudicing the use of the rest of that property, or a part of it, for purposes for which (disregarding the parts to be separated) the use of the whole or a part of the rest of the property, if retained, would be lawful” – then separation, should occur. In these circumstances the court will order the return of the separable part unlawfully retained. BT’s first submission is that the “use” was for sale. This use would in my judgment, not be prejudiced by the return of the 25%, assuming (i) the judge had applied the right test under section 59(3) (d) and (ii) the assessment of 25% was justified. BT submitted in the alternative that the “use” maybe for BT to prove ownership in this case. Therefore, ordering the return of 25% would prejudice the use of the rest of the property. They submitted that physically taking a random 25% might include a substantial part where there was BT paper labelling and leave more where there was not such paper labelling. This would make it more difficult for BT to prove ownership of that which was left. I do not finally determine this point since it is based on a number of hypotheses which are not made out, primarily that the 25% figure was not in my judgment justified on the evidence. However I would make the following points: (i) Albeit that BT chose not to become an applicant or apply to be heard before the Crown Court, the judge did not go through the statutory steps necessary to consider whether the separation of the property was justified under section 53(3) (c) or consider any prejudice of the use of the rest of the property under section 53(5) . (ii) Nevertheless no arguments were addressed to the judge on section 53(3) (c) or section 53(5) . Costs

42. Judge Moore ordered the Chief Constable to pay AR UK’s costs of the application to be assessed if not agreed. The Chief Constable objected to this order despite the fact that the judge had found that AR UK’s application succeeded to the extent it had done. I have determined that the application should have failed. In those circumstances it seems to me that I must determine the issue of costs afresh, taking into account all the circumstances, including the decision I have made. Determination of those costs and the costs of the appeal will, if not agreed, be dealt with immediately subsequent to the hand down of this judgment. I note only that BT have indicated that they do not seek their costs and that neither of the other two parties seek costs against BT. In their case therefore there will be no order as to BT’s costs.