What do two suitcases – stuffed with £10 and £20 notes totalling £50,000 – being checked-in from London to Istanbul have in common with a submission of no case to answer and the Proceeds of Crime Act 2002 (“POCA”)?
In late 2008 while Tunjel (T) and Basbaydar (B) – “the respondents” – were travelling to Istanbul, customs officers at Heathrow found £20,000 in T’s bag and £30,000 in B’s. The “twist” in this case was that when the money was seized, no argument was made by the parties in relation to whether the absence of reasonable grounds – that the money was obtained through or intended for use in unlawful conduct – at the time of seizure deprives the court of its power of forfeiture; instead, upon hearing an appeal from the magistrates, the Crown Court made this idea the cornerstone of its ruling.
This was the Secretary of State for the Home Department’s appeal by way of case stated against a decision of the Crown Court that T and B had no case to answer in respect of an application for forfeiture of cash under section 298 of POCA.
Initially, following the seizure and detention of the £50,000 under sections 294 and 295 of POCA, a magistrates’ court allowed the SSHD’s application for forfeiture of the cash.
Subsequently, the respondents appealed to the Crown Court, where the judge found that the respondents had no case to answer because he was not satisfied that the customs officers who had seized the cash had had reasonable grounds for suspecting that it had been obtained through or was intended for use in unlawful conduct. Note: POCA consists of 462 sections and 12 Schedules and the range of legal subjects within it is quite extreme!
Questions for Mr Justice Keith
In the High Court, Keith J considered whether:
(1) When hearing an application under section 298(2) of POCA, the Court had to be satisfied that before seizure the authorities had had reasonable grounds to suspect that the cash had been obtained through or was intended for use in unlawful conduct?
(2) The Court’s satisfaction that there had been reasonable grounds for stopping, questioning and seizure was a condition precedent to the power to order forfeiture?
Sections 294 and 304 of POCA allow a customs officer, a constable or an accredited financial investigator discretion to seize any cash on reasonable grounds upon suspecting that the cash is recoverable property – obtained through unlawful conduct – or is intended for use in unlawful conduct by any other person. Under section 295 the authorities can detain the cash for an initial period of 48 hours following which further detention of the money can be authorised by a magistrate but this can’t be (a) beyond the end of the period of six months beginning with the date of the order; and (b) in the case of any further order, beyond the end of the period of two years beginning with the date of the first order.
For initial detention to be extended, sections 295(5) and (6) in turn respectively require “reasonable grounds for suspecting that the cash is recoverable property” or “reasonable grounds for suspecting that the cash is intended to be used in unlawful conduct.”
Following detention, applications for forfeiture of cash can be made under section 298(1) and section 298(4) provides that until the matter is concluded, appeals included, the cash is to be treated as detained. Section 298(2) allows courts discretion to order forfeiture of the cash or any part thereof if satisfied that the cash is recoverable property or is intended by any person for use in unlawful conduct.
Since the dawn of the Borders, Citizenship and Immigration Act 2009 (“BCIA”), seizure and forfeiture powers vested in customs officers became exercisable by the SSHD through the UK Border Agency.
Keith J held that before granting an application for forfeiture under section 298 of POCA, there was no express requirement for a court to be satisfied that the authorities, before seizing cash, had had reasonable grounds to suspect that the cash had been obtained through or was intended for use in unlawful conduct. Rather, the court’s satisfaction that the cash had been obtained through or was intended for use in unlawful conduct sufficed.
The respondents argued that regardless of how Keith J answered the questions he ought to affirm the finding that there was no case to answer because the Crown Court had made that finding on the merits of the case. Hence the answers to the two questions set out above did not matter. For Keith J this submission lacked merit.
After the detention of the cash, Her Majesty’s Revenue and Customs (HMRC) made an application for forfeiture – following the BCIA the HMRC’s functions of detention and seizure of cash have exercised by the SSHD/UKBA.
Although the magistrates’ court was satisfied that the cash was intended for criminal activity and made an order for forfeiture, T and B’s appeal to the Crown Court resulted in the judge applying the wrong test of the need to have reasonable grounds at the time of seizure for an order of forfeiture to be made. Interestingly, this argument had not been deployed by the respondent’s lawyers. Instead, the Crown Court interpreted the taciturn “standard” answers of the officers – who neither confirmed nor denied whether they were performing random searches or acted on a tip-off – as unsatisfactory enough to rule that T and B had no case to answer.
For Judge Oliver the UKBA’s reliance on the way the money was concealed, contradictions in T and B’s initial oral and later written evidence and the absence of documents to support either version of events was not sufficiently persuasive that the cash was obtained through or intended to be used in unlawful conduct. On the facts alone, in the absence of a tip-off, the inference that the cash had been obtained through or intended for use in unlawful activity was unjustified.
The approach resulted in the judge’s incorporation of the pre-conditions in sections 294(1) and 295(1) into section 298(2). This made the existence of reasonable grounds for suspecting the origin or intended use of the cash as unlawful a condition precedent for the court to exercise its power of forfeiture. Muneka v Commissioners of Customs and Excise  EWHC 495 (Admin) – where in fact Moses J (as he then was) found to the contrary – and Director of the Assets Recovery Agency v Green  EWHC 3168 (Admin) were applied by Judge Oliver to wrongly conclude that an alternative approach would shift the burden of proof from the UKBA onto T and B because they would not only have to provide an explanation for why they had tried to hide cash in their luggage but also show documents for the money’s source.
For Keith J, at , the authorities “did no such thing.” Yet at  he observed, “it may be that the judge had something quite radical in mind” because “if the original seizure and detention had been unlawful, why should the UKBA be allowed to benefit from that?”
But following R (Hoverspeed Ltd) v Commissioners of Customs and Excise  QB 1041 – where the Court of Appeal found no unfairness in the seizure of the goods, even though their presence had been discovered in the course of an unlawful examination of a car – there was no doctrine in cases concerning the forfeiture of cash which denied the authorities the “fruits of the forbidden tree”. At  the Court noted that, “[i]n the circumstances, it was not appropriate for the court to consider whether Mr Tuncel and Mr Basbaydar had a case to answer.”
Keith J remitted the case back to the Crown Court. However, given what happened with Judge Oliver, counsel for the UKBA – quite understandably – wanted a different bench to deal with the matter. But Keith J did not find this persuasive.
Existing evidence that the cash was sourced through and intended for the supply of drugs was partially already before the Crown Court because the Serious Organised Crime Agency advised a custom’s officer that B had been due to appear in an Istanbul court in October 2009 in relation to supplying 7 and 14 kgs of heroin on two separate occasions.
B had accepted this but the charges were dropped.
With the above information in mind, the UKBA wished to adduce further evidence in order to mount the argument that the respondents intended to use the cash to pay their associates for purchasing heroin. Whether or not this evidence could reasonably have been expected to be called in the Crown Court was critical to the UKBA’s case; thus, it wanted the matter to be heard before a different bench (at ).
In answering “No” to the two questions stated to him, Keith J reversed the Crown Court’s ruling that B and T had no case to answer. In relation to the who would hear the matter it was explained that:
In civil proceedings, it is open to the court to admit further evidence from the claimant after the claimant’s case has closed if it is appropriate to do so. If the case was remitted to Judge Oliver and the magistrate who sat with him, it would be open to them to decide whether, in the light of the subsequent clarification in Angus v UKBA  EWHC 461 Admin [where in an application to a magistrates’ court for the forfeiture of cash, if the kind of unlawful conduct involved could not be identified, whether the property had been obtained through, or was intended to be used in, conduct of one of a number of kinds, each of which would have been unlawful conduct had to be established] of what the law required, i.e. namely that the passages at  and  of Moses J’s judgment in Muneka were per incuriam, the UKBA should be permitted to call evidence which it could reasonably have regarded it did not have to call. That is not for the High Court to decide. It is something which the Crown Court – indeed, the constitution of the Crown Court seized of the appeal – can decide for itself in the light of this judgment.