The Queen on the applications of and Others v (1) The Crown Court at Southwark (1st Defendant) (2) The Commissioner of Police for the Metropolis and other Interested Parties (2nd Defendant)
| Jurisdiction | England & Wales |
| Judge | The Lord Chief Justice,Mr Justice Foskett |
| Judgment Date | 25 March 2014 |
| Neutral Citation | [2014] EWHC 840 (Admin) |
| Docket Number | Case Nos: CO/9334 and 11219/2012 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 25 March 2014 |
and
[2014] EWHC 840 (Admin)
The Lord Chief Justice
and
Mr Justice Foskett
Case Nos: CO/9334 and 11219/2012
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Hugo Keith QC (instructed by Addleshaw Goddard and latterly by K & L Gates LLP) for Dr Adam
Imran Khan (instructed by Imran Khan & Partners) for Golfrate
Charles Miskin QC, Paul Ozin and Alex Mills for the 2nd Defendant
The First Defendant and other Interested Parties did not appear
Hearing dates: 29 and 30 October 2013
Lord Thomas of Cwmgiedd, CJ:
This is the judgment of the court to which we both have contributed.
Introduction
Dr Adam and Golfrate Property Management Ltd ('Golfrate') seek in separate proceedings heard together to set aside search and seizure warrants in relation to properties owned or occupied by them. The applications for the warrants were made under s.352 (1) and (6)(b) of the Proceeds of Crime Act 2002 (' POCA 2002') by the Metropolitan Police Service ('MPS') on the basis of an Information prepared by the MPS as a result of a money laundering investigation carried out by them known as "Operation Knabstrupper". That operation was directed at the breach of the sanctions imposed by the EU in 2002 against members of ZANU-PF, the ruling party in Zimbabwe led by President Robert Mugabe. It was the case of MPS that Dr Adam and his UK associates were laundering money in breach of the sanctions regime. The suggestion was that criminal property was obtained from members of ZANU-PF for the purpose of investing in the London property market and the rent thus obtained then being passed back to them. The warrants were granted by HH Judge Higgins on 20 July 2012 after a short hearing.
The grant of the warrants is challenged on six grounds, including, non-disclosure and misrepresentation, the absence of grounds for suspecting Dr Adam was engaged in money laundering, the width of the terms of the warrant and the way the search was conducted.
The background
(i) Dr Adam and Golfrate
Dr Adam is a citizen of Zimbabwe. He is a member of a widely known and wealthy family which is resident in Zimbabwe.
Golfrate is a private company engaged in the business of property management on behalf of clients known to its sole director Mr Harun Aziz. It does not take business from the general public. Most of its clients have been known to Mr Aziz for many years. The property portfolio of Dr Adam was less than 10% of the business of Golfrate.
(ii) The information and the hearing before Judge Higgins
The Information was a 14 page document prepared and signed on 17 July 2012 by DC Ben Irons who is also an accredited financial investigator under POCA attached to the Proceeds of Corruption Unit. Although it will be necessary to refer to the Information in some detail, it is first necessary and convenient to summarise its contents:
i) The remit of DC Irons' unit was to investigate money laundering offences committed in the UK by "politically exposed persons" and their business associates who obtain assets belonging to the State or intended for the State which are tainted as proceeds of crime. The term "politically exposed persons" is derived from Regulation 14(5) of the Money Laundering Regulations 2007 which defines such a person in these terms:
"an individual who is or has, at any time in the preceding year, been entrusted with a prominent public function by (i) a state other than the United Kingdom, (ii) a Community institution or (iii) an international body, or an immediate family member or a known close associate of such a person."
ii) It was believed that Dr Adam had political connections with ZANU-PF and was using UK-based associates and an opaque company structure to launder funds which were criminal property by investing the funds in the London property market. It was believed that the property originated from a number of ZANU-PF officials, many of whom had been on sanction lists compiled by both the US and the EU.
iii) It was believed that Dr Adam held a substantial property portfolio on behalf of Zimbabwean politically exposed persons through a number of companies managed from the Isle of Man; the properties themselves and the rents accrued were managed by Golfrate; it was significant that the bulk of the property was bought after February 2002 – the sanctions date.
iv) The rental income was then passed back to those who had provided the funds.
The information then set out in some detail the matters upon which the MPS relied which in summary were as follows:
i) A misrepresentation by Dr Adam to his bankers, UBS, in undervaluing his property portfolio. It was suggested that Dr Adam had made that misrepresentation because he would not have been able to account for the size of the portfolio or have been in a position to declare the identities of his silent partners.
ii) Dr Adam's trust company, the Sanmahr Trust, had made a loan to a property owning company of £13.5m.
iii) Dr Adam had told UBS that the primary source of his wealth was Quest Motor Group ('Quest') (a renaming of the Leyland franchise in Zimbabwe). It was owned by Leyland Overseas Holdings which was in turn 50% owned by Annandale, a company beneficially owned by Dr Adam. Quest was a significant element in the investigation because it linked Dr Adam to politically exposed persons in Zimbabwe. The basis of the linkage was the receipt of a number of payments through what was described as Quest's "billing company", Accent Finance Ltd ('Accent') whose accounts were managed in Jersey. We set out this allegation in more detail at paragraphs 58 and following.
iv) Mr Billy Rautenbach was, on the basis of intelligence, a partner in Quest. We deal further with this at paragraphs 67 and following.
v) Another private investment company, Accent Finance (Anguilla) Limited ('Accent (Anguilla)') although not beneficially owned by Dr Adam had a close connection with him through Mr Daud Hassam, a director of Leyland Overseas Holdings. It had a bank account with Habib Bank Zurich, London Branch ('Habib Bank').
vi) Habib Bank also operated an account for a company called Ravenscourt Corporation ('Ravenscourt'); an examination of the accounts suggested a corrupt relationship between Dr Adam and Zimbabwean officials. We deal with Ravenscourt at paragraphs 79 and following.
The information then set out the properties in respect of which warrants were sought.
The information noted that it was not anticipated that the police would be seizing legally privileged material and it was thought that the legal correspondence would be transactional in nature. If privileged materials were identified then independent advice would be sought, although there might be a necessity to use powers under s. 50 or 51 of the Criminal Justice and Police Act 2001.
The hearing before the judge lasted 16 minutes beginning at 10:54 and finishing at 11:10 on 20 July 2012. It appears it was one of three applications made to the judge that morning. DC Irons gave evidence on oath simply to confirm the accuracy, on the basis of information and belief, as to what was stated in the Information. The judge gave no reasons for his decision to grant the warrants.
(iii) The execution of the warrants
Starting at 06:30 on 26 July 2012, the search warrants were executed at 9 properties including an address in South-West London where Dr Adam and other members of his family stayed when in England, the home of Mr Hassam, also in South West London, and at properties connected with Golfrate – its offices ('The Glasshouse') and the home of Mr Aziz.
Dr Adam was arrested at 06:45. He was described by the MPS as being calm and cooperative. His home was systematically searched for 11 hours; 40 bags of documents were seized. Dr Adam was interviewed and bailed. Mr Hassam, a director of Leyland Overseas Holdings (as indicated above in paragraph 6(v)) and company secretary of Golfrate, was also arrested later, interviewed and bailed.
(iv) The subsequent proceedings
An application under s.59 of the Criminal Justice and Police Act 2001 was subsequently issued. It was agreed on 10 August 2012 at a directions hearing before Judge Higgins that the issues in dispute should be resolved in this Court.
On 4 September 2012, Golfrate issued proceedings for judicial review; on 19 October 2012, Dr Adam issued proceedings for judicial review.
In the ensuing months permission was granted in both proceedings; there were significant delays because of the late service of evidence by the MPS.
(v) The redactions to the Information
The MPS made very extensive redactions to the information placed before the judge before providing copies to Dr Adam and Golfrate. In the form provided initially, the redactions were so extensive that neither Dr Adam nor Golfrate was able to have any real idea of the case against them.
It is not necessary for us to set out the detailed arguments over the redactions as in the end the police sought to maintain only four minor redactions and did not rely on the material contained in those redactions.
However, we wish to make it clear that if the party obtaining the warrant wishes to redact any part of the Information or any part of the transcript of the hearing before the judge, an immediate application must be made by that party to the court on...
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