Greater Manchester Police, R (on the application of) v City of Salford Magistrates Court

At the interim detention stage under Part 5 of the Proceeds of Crime Act 2002, the question is whether there are reasonable grounds for suspecting that cash was obtained through unlawful conduct. The applicant need not establish that the whole business was unlawful or prove an unbroken chain between the criminal conduct and the cash. It is sufficient that the unlawful conduct may have made a material contribution to acquiring the cash. The issue may remain unresolved while its derivation is investigated. The burden under section 297(3) lies on the person seeking release to show, on the balance of probabilities, that the section 295 conditions are no longer met. Apportionment is more appropriately addressed at the forfeiture stage.

Cash was seized from premises occupied by a garment manufacturer after officers found workers whose immigration status did not permit them to work. The Chief Constable obtained an initial detention order under section 295 of the Proceeds of Crime Act 2002.

The Salford Magistrates’ Court later refused a further detention application and ordered the cash returned. The Chief Constable sought judicial review and a quashing order. The company brought a cross-application for mandatory release. The central issue was whether unlawful employment could have made a material contribution to the acquisition of cash from an otherwise lawful business.

1. Application allowed. The magistrates’ decision of 13 February 2008 was quashed. The form of relief was left to be agreed or determined on written submissions.
2. Under sections 294 and 295 of the Proceeds of Crime Act 2002, the relevant interim question was whether there were reasonable grounds for suspecting that the cash was recoverable property and whether continued detention was justified while its derivation was investigated or related proceedings considered. The Chief Constable was not required to prove that the company’s entire business had become unlawful.
3. The correct approach was whether there were reasonable grounds for suspecting that the cash derived to a material degree from the labour of persons whom it was criminal to employ. A material-contribution approach was appropriate and practicable. The causation issue could remain unresolved at the detention stage, since section 295(5)(a) contemplated further investigation of derivation.
4. Section 297(3) placed the burden on the applicant for release, on the civil standard, to show that the conditions for continued detention were no longer met.
5. Any necessary apportionment was more appropriately addressed at the forfeiture stage. Section 298 concerns whether the cash or any part of it is recoverable property, while section 241(3) requires the relevant matters to be decided on the balance of probabilities.
6. Director of the Assets Recovery Agency v John [2007] EWHC 360 QB contained an expressly obiter observation concerning unlicensed trading, but its limitations meant that it provided only limited support. R v Neuberg [2007] EWCA Crim 1994 concerned a wider statutory test, although its material-contribution reasoning was relevant by analogy.

The judgment describes judicial review of the Salford Magistrates’ Court decision of 13 February 2008. The High Court allowed the Chief Constable’s application, quashed that decision and left the form of relief for agreement or written submissions.