Robert Tchenguiz and Another (Claimants in HQ12X05106 and HQ13X00672) v Rawlinson and Hunter Trustees Sa and Others (Claimants in HQ12X05082 and HQ13X00414) The Director of the Serious Fraud Office (Defendant to all claims)
| Jurisdiction | England & Wales |
| Judge | Eder J |
| Judgment Date | 14 June 2013 |
| Neutral Citation | [2013] EWHC 1578 (QB) |
| Docket Number | HQ12X05082, HQ13X00414, |
| Court | Queen's Bench Division |
| Date | 14 June 2013 |
[2013] EWHC 1578 QB
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Eder
HQ12X05082, HQ13X00414,
HQ12X05106, HQ13X00672
and
Mr Bankim Thanki QC, Ms Rosalind Phelps and Mr James Duffy (instructed by Stephenson Harwood LLP) for the R & H Claimants;
Mr Joe Smouha QC, Mr Alex Bailin QC, Ms Alison Macdonald and Mr Anton Dudnikov (instructed by Shearman & Sterling (London) LLP) for the RT Claimants.
Mr Dominic Dowley QC, Mr James Eadie QC, Mr Simon Colton and Mr James Segan (instructed by Slaughter and May) for the Defendant
Hearing dates: 4 and 5 June 2013
Introduction
The background to these present proceedings is to be found in the judgment of the Divisional Court (the "DC Judgment") in judicial review proceedings with Claim Nos CO/4236/2011 and CO/4468/2011 (the "JR Proceedings") delivered on 31 July 2012 with the reference [2012] EWHC 2254 (Admin).
In summary, those JR proceedings concerned the business interests of two individuals i.e. Robert Tchenguiz (RT) and Vincent Tchenguiz (VT) and the companies and trusts through which their businesses are carried on in relation to what was said to be the unlawful entry, search and seizures in March 2011 of the homes of RT and of VT and the offices of R20 and of Consensus Business Group, as well as the arrests and investigations connected to this.
Towards the end of the DC Judgment under Issue 7, the Divisional Court considered what is referred to as "consequential relief". In particular:
" 285. There are consequential claims.
(i) Declaration
286. The claimants sought a declaration that the warrants and searches and seizures consequent upon them were unlawful; they relied on decisions to the effect that this was relief that could be granted. Their entitlement to a declaration was accepted by the SFO.
287. It will be necessary for that declaration to be drafted by the parties with care so that no misunderstandings arise in any other proceedings.
…
(ii) Further conduct of the action
288. It was common ground that this court should transfer the action to the ordinary list of the Queen's Bench Division under CPR Part 54.20 for any civil claims for damages to be pleaded and determined by a judge of the Division.
289. The action will be assigned to a judge who will manage the case, calling upon the assistance of a Master, if necessary, but under the direction of the judge. It may be of assistance if we make agreed directions on the handing down of this judgment for a timetable for pleadings."
Thereafter, the Divisional Court made orders (ultimately sealed on 20 September 2012) in both proceedings in substantially similar forms (the "DC Orders") which provided in material part as follows:
" 1. QUASHES the search warrant issued by HHJ Worsley QC on 7 March 2011 to enter and search [the premises] (hereinafter "the Warrant") on the grounds set out in the judgment, and consequently:
2. DECLARES the entries, searches and seizures conducted pursuant to the Warrant to be unlawful on the grounds set out in the judgment; […]
4. TRANSFERS, pursuant to CPR Part 54.20, any actions by the Claimants and the Interested Party for damages to a judge to be assigned of the Queen Bench's Division;
5. ORDERS that there should be a directions hearing for the further conduct of the action before the assigned judge, such hearing shall be listed in the usual way during the Michaelmas Term 2012, and the Claimants and the Interested Party shall serve heads of claim (so far as they are known) and proposed directions 21 days in advance of the hearing, and the Second Defendant shall serve his response to those heads of claim and proposed direction seven days in advance of the hearing."
These current proceedings are, in effect, those contemplated by paragraph 4 of the DC Orders with the addition of certain other claimants. The trial of such claims is now set to take place between April and July 2014.
In broad terms, there are two groups of claimants i.e. those referred to as the R&H or VT Claimants (represented by Mr Thanki QC and his team); and those referred to as the RT Claimants (represented by Mr Smouha QC and his team). Although they served separate skeleton arguments and orally addressed the court separately, they each generally adopted each other's submissions and, for present purposes at least and unless otherwise stated in this judgment, they stand or fall together.
In summary, the present claimants say that the searches, arrest and investigation and publicity surrounding them had a disastrous effect on their business interests causing very extensive financial losses and reputational harm; and they now seek damages in these proceedings in the total sum of approximately £300 million.
The SFO's "admission" of liability for trespass
Pursuant to paragraph 5 of the DC Orders, the original claimants served Heads of Claim advancing their claims for damages on a number of different grounds including liability for trespass. On 22 November 2012, the defendant (the "SFO") served its Response ("the Response") signed by Leading Counsel which stated in paragraph 2 as follows: " The SFO admits liability for trespass to land in consequence of the order of the Administrative Court quashing the search warrants. It admits liability for any loss of use of the land sustained by the Claimants as a result of the trespass. The SFO denies liability for all other claimed consequential losses."
The SFO's volte face
Thereafter, pursuant to my order dated 5 December 2012, the claimants issued and served their respective Claim Forms and Particulars of Claim; and, on 4 March 2013, the SFO served its Defence together with a separate document entitled "Defendant's Legal Submissions". The SFO there denied liability and, in particular, denied any liability for trespass to land. This was plainly contrary to its earlier admission of liability in its Response. The explanation given by the SFO for this volte face appears from paragraphs 31–32 of the second witness statement of Jonathan Cotton served on behalf of the SFO:
" Reason for the application to withdraw the admission
31. I have raised the circumstances of the making of the admission quoted … above with the Treasury Solicitor's Department, counsel acting for the Defendant at the time and representatives of the Defendant. Without waiving privilege in the relevant communications, I understand that at the time that the Response was drafted and served in November 2012, the Defendant was of the opinion, having taken legal advice, that liability in trespass followed automatically from the Divisional Court's findings and quashing of the warrants. Therefore, the SFO was of the view, at that time, that making the admission was the proper approach to take.
32. However, as the Court will be aware, since the Response was drafted and served, there have been changes to the legal team representing the Defendant in this matter. Without waiving privilege in such matters, it is the case that, as a result of advice received from this new legal team, coming to the matter afresh, the Defendant took the different view that there was, in fact, a legitimate point to take on liability in trespass and that it has good prospects of success. I am satisfied, having made enquiries, that this is the only reason for the Defendant's application to withdraw the admission. The Defendant respectfully requests that it be granted permission to withdraw its admission."
The SFO's grounds for denying liability in trespass
Thus, the present position is that the SFO now seeks to withdraw its earlier admission and to contend that it is not liable for any private law damages for trespass to land. This is on the basis of two main grounds which Mr Dowley QC summarised in his skeleton argument as follows.
Ground 1: The warrants afford lawful justification
i) It is a defence to any claim for a trespassory tort, such as trespass to land or false imprisonment, to show a "lawful justification" for what would otherwise be a trespass. A judicial order authorising the relevant act is a classic example of such a lawful justification.
ii) The searches which are impugned in the trespass claims in the present case were conducted in accordance with judicial warrants. The fact that those warrants were subsequently quashed, and the consequent entries, searches and seizures declared unlawful in public law proceedings, does not deprive the SFO of the defence of lawful justification in respect of any tortious claims. On the contrary, as the Court of Appeal held in Percy v Hall [1997] QB 924, a case concerning arrests under a byelaw which had been declared unlawful in a previous decision (emphasis added):
" The central question raised here is whether these constables were acting tortiously in arresting the plaintiffs or whether instead they enjoy at common law a defence of lawful justification. This question, as it seems to me, falls to be answered as at the time of the events complained of. At that time these byelaws were apparently valid; they were in law to be presumed valid; in the public interest, moreover, they needed to be enforced. It seems to me one thing to accept, as readily I do, that a subsequent declaration as to their invalidity operates retrospectively to entitle a person convicted of their breach to have that conviction set aside; quite another to hold that it transforms what, judged at the time, was to be regarded as the lawful discharge of the...
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Robert Tchenguiz and Another v Director of the Serious Fraud Office
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