R v City of London Magistrates' Court, ex parte Peters and Another
| Jurisdiction | England & Wales |
| Judgment Date | 23 October 1996 |
| Date | 23 October 1996 |
| Court | QBD (Crown Office List) |
Queen's Bench Division (Crown Office List).
Blofeld and Laws JJ.
Robin Mathew QC and Gordon Bennett (instructed by Nathan Silman) for the applicants.
David Barnard (instructed by the Solicitor for Customs and Excise) for the Crown.
The following cases were referred to in the judgment:
R v City of London Magistrates, ex parte Asif VAT[1996] BVC 253
R v Epsom Magistrates' Court, ex parte Bell VAT(1988) 3 BVC 326
R v IR Commrs, ex parte Rossminster Ltd ELR[1980] AC 952
Value added tax - Access orders - Magistrates - Orders obtained by Customs in criminal investigation - Orders obtained ex parte - Whether magistrate had reasonable belief that access orders were appropriate - Whether terms of order too wide - Whether Customs should have put material favourable to applicants before magistrate - Whether Customs justified in obtaining orders ex parte - Value Added Tax Act 1994, Sch. 11, para. 11.
This was an application for judicial review whereby the applicants sought to quash the grant of access orders by a magistrate pursuant to the Value Added Tax Act 1994, Sch. 11, para. 11.
The applicants, Mr and Mrs P were jewellers. Mr P registered for VAT in 1991 as a sole trader. In June 1993 a company was established and also registered for VAT. Mrs P had worked in the business and was a director of the company.
Both applicants were arrested on 30 April 1996 on suspicion of being knowingly concerned in the fraudulent evasion of VAT contrary to the Value Added Tax Act 1994, s. 72. On the same day, premises belonging to the applicants were searched pursuant to a warrant issued by the City of London Magistrates on 26 April 1996. The search had yielded material suggesting that substantial sums which had not been declared had been deposited at Citibank and that a mortgage from Citibank had later been substantially reduced.
An officer, Mr H, applied ex parte on behalf of Customs to the City Magistrates for an access order directed to Citibank under Sch. 11, para. 11 of the 1994 Act. An order was granted on 11 June 1996 which stated that the magistrate was satisfied that there were "reasonable grounds for suspecting" that an offence had been committed under s. 72.
The order required the person authorised by Customs to be given access to a wide range of material including statements of account, ledgers, paid and returned cheques, credit slips, debit and withdrawal slips, records and contents of safety deposit etc.
The applicants contended that the order was defective because the magistrate had given no grounds for believing that an offence had been committed, and referred only to reasonable grounds for "suspecting", whereas the statutory test required reasonable grounds for "believing". Their second argument was that the subject-matter of the order was much too wide and that it should have been limited in time to the period since registration. Their third point was that the information given to the magistrate by Mr H was inaccurate in that he knew that there was a proper reason for the reduction in the mortgage and other explanations for certain alleged discrepancies. The applicants' final submission was that the order should not have been granted ex parte without giving the applicants the opportunity to put their case.
Held, refusing the application:
1. There was evidence before the court to show that the magistrate himself believed that an offence had been committed under the Value Added tax Act 1994, s. 72. While procedural safeguards in relation to the exercise of draconian powers were of very great importance, the statute did not require, in the name of any such safeguard, that an access order should recite the grounds which persuaded the magistrate to make it (R v IR Commrs, ex parte Rossminster Ltd [1980] AC 952 per Lord Wilberforce at p. 1000 and per Lord Dilhorne at p. 1004 followed).
2. The terms of the order were not too wide as regards its subject-matter. The magistrate was entitled to be satisfied and was satisfied that all the documents of the particular description specified in the order were of a type likely to be in the hands of bankers. Although it would have been better to have limited the order to the period since registration, no injustice was done by that omission such as to invalidate the order since no material predating registration was in fact involved (R v Epsom Magistrates' Court, ex parte Bell (1988) 3 BVC 326 distinguished).
3. Customs had not accepted any alternative explanation for the discrepancies and large sums of money had been received which were not put through the books. There was no suggestion that Customs had acted in bad faith or that they had not complied with their obligation to act fairly.
4. Although, ex parte applications should be made rarely, this was a case where an ex parte application was justified. Mr H had told the magistrate that the applicants might have transferred funds abroad or tampered with documents if they had notice of the application for an access order.
Laws J: This judicial review challenge, brought by leave of the single judge, is directed to the making of an access order by the City of London Magistrates' Court on 11 June 1996. It was made or purportedly made pursuant to para. 11 of Sch. 11 to the Value Added Tax Act 1994. By the order, Citibank Private Bank was required to give any person duly authorised by Customs access to all recorded information in its possession concerning the bank accounts of the first and/or second applicants, Mr and Mrs Peters.
The applicants are jewellers. In 1991 Mr Peters registered for VAT as a sole trader. Mrs Peters worked in the business. In June 1993 a company, the Matchpoint Pen Co, was established and also registered for VAT. Mrs Peters is a director of the company. Customs came to believe that Mr and Mrs Peters were failing to declare the true amount of output tax due on their business or businesses. Both were arrested on 30 April 1996 on suspicion of being knowingly concerned in the fraudulent evasion of VAT contrary to s. 72(1) of the 1994 Act. On the same day their premises, Skeynes Park, and also a holiday home in Cornwall, were searched pursuant to a warrant issued by the City of London Magistrates' court on 26 April 1996. This warrant is the subject of separate litigation. Judicial review leave was granted to bring a challenge against it by Dyson J on 15 May 1996. On 5 July 1996 it came before Collins J, who had granted leave in the present case three days earlier. Collins J ordered...
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