Coudrat v HM Revenue & Customs

Reasonable suspicion for arrest may be assessed realistically and need not identify the precise offence at that stage. It is sufficient that the arresting officer knows the factual basis for suspecting knowing involvement in criminal conduct.

For malicious prosecution, reasonable and probable cause to charge requires a case fit to be tried, not a probable conviction. There must be prima facie admissible evidence of each element, but circumstantial evidence may establish guilty knowledge. A later assessment that conviction is unlikely does not itself invalidate the original charge. Malice is not inferred merely because an officer may have misjudged the evidence, where the officer honestly acted to pursue justice.

The appellant was arrested by Customs officers in connection with an alleged missing-trader VAT fraud involving Tecniconsult Ltd. He was charged under section 72(8) of the Value Added Tax Act 1994, but the prosecution was discontinued after counsel advised that there was no realistic prospect of conviction.

He claimed damages for wrongful arrest, false imprisonment and malicious prosecution. The Central London County Court dismissed the claim on 24 June 2004. On appeal, the issues were whether the officers had reasonable grounds for arrest and detention, whether there was reasonable and probable cause to charge and continue the prosecution, and whether the officers acted with malice.

1. Appeal dismissed. The County Court judge’s reasoning on reasonable and probable cause was inconsistent, so that finding could not stand. However, the Court of Appeal reconsidered the evidence and reached the same ultimate result: all three tort claims failed.

2. The arrest was lawful. At the arrest stage it was unnecessary to identify the exact offence. The officers had reasonable grounds to suspect knowing participation in VAT fraud because the appellant was believed to be selling large quantities of mobile phones for a company reasonably suspected of being wholly fraudulent. O’Hara v Chief Constable of the Royal Ulster Constabulary [1996] A.C. 286 did not assist the appellant: the arresting officer knew the factual basis of the other officers’ suspicion, rather than merely knowing that they suspected him.

3. The continued detention was lawful under section 37 of the Police and Criminal Evidence Act 1984. Although the judge had not addressed the statutory limbs expressly, the evidence accepted by him showed reasonable grounds to detain the appellant for interview and to obtain further evidence. Errors in the custody record did not alter that conclusion.

4. For reasonable and probable cause to charge, the proper standard was a case fit to be tried, not a likelihood of conviction: Glinski v McIver [1962] AC 726 HL. The prosecutor had to consider the elements of the proposed offence and have prima facie admissible evidence of each. Plainly inadmissible material should be disregarded, but the prosecutor need not resolve possible discretionary exclusions, test the entire defence, or investigate every assertion made in interview.

5. Section 72(8) of the Value Added Tax Act 1994 permitted a charge where conduct during a specified period must have involved an underlying section 72 offence, despite uncertainty about the particular acts or dates. Circumstantial evidence that the appellant knew of the intended VAT evasion was sufficient to justify the charge, even though it was not strong and was later insufficient to make conviction realistically likely.

6. Malice was not established. The judge had found that the investigating officer honestly believed both in the appellant’s guilt and in the adequacy of the evidence, and acted to pursue justice. Even a mistaken assessment of evidential sufficiency would not, without more, establish malice. Waiting for written confirmation of counsel’s advice before discontinuing the prosecution was also lawful.

• Court of Appeal (Civil Division): dismissed the appeal in [2005] EWCA Civ 616, while correcting the County Court judge’s inconsistent reasoning on reasonable and probable cause.

• Central London County Court: His Honour Judge Ryland dismissed the claimant’s claims for wrongful arrest, false imprisonment and malicious prosecution on 24 June 2004.