Rawlinson & Hunter Trustee & Ors, R (on the application of) v Central Criminal Court & Anor

A search warrant for a serious-fraud investigation requires independent judicial scrutiny. The investigator must present the commercial background, alleged criminality and matters weighing against the warrant clearly, accurately and fairly. Where underlying documents are withheld from the judge, the written presentation must be especially comprehensive and reliable.

The judge must personally determine whether the statutory conditions are satisfied and give reasons summarising that analysis. Material errors and omissions invalidate a warrant where a proper presentation would have changed the decision.

Wrongly seized property may be retained only through the statutory procedure under section 59 of the Criminal Justice and Police Act 2001. A production notice cannot circumvent judicial control. Where privileged material is expected, lawyers resolving privilege claims must be independent of the investigating authority.

The claimants sought judicial review of search warrants issued under section 2(4) of the Criminal Justice Act 1987 during an SFO investigation into lending by Kaupthing Bank. They alleged that the SFO had obtained the warrants through serious factual errors, misrepresentation and non-disclosure. They also challenged the arrest and bail of Robert Tchenguiz, the handling of privileged material during the searches, and the SFO's later retention of seized documents through an immediate production notice.

The SFO conceded that the warrants concerning Vincent Tchenguiz and associated interests could not stand. The central questions were whether the remaining warrants were also invalid, whether the arrest and bail were lawful, what safeguards legal professional privilege required, and whether the SFO could retain unlawfully seized property without applying under section 59 of the Criminal Justice and Police Act 2001.

1. The judicial review claims succeeded in part. All the search warrants were set aside. The SFO's presentation failed to explain the relevant commercial background, analyse the transactions fairly, correct serious errors, or disclose matters weighing against the warrants. Had a proper presentation been made, the judge would not have granted them. The possibility that a differently prepared application might have established reasonable suspicion did not justify preserving the defective warrants: [2012] EWHC 2254 (Admin), paras 170–179, 201.

2. An application under section 2(4) of the Criminal Justice Act 1987 is never a formality. The SFO must disclose all material facts, including matters militating against the warrant. In a financial-markets investigation, it must explain the commercial setting and transactions coherently, identify the suspected criminality, obtain appropriate independent verification and disclose the absence of such verification. The judge must personally undertake rigorous and critical scrutiny of the statutory conditions: paras 78–100.

3. A judge authorising a search warrant must give reasons. A short summary of the analytical process will ordinarily suffice, but merely expressing satisfaction does not discharge that duty. The failure to give reasons was not treated as a separate basis for relief because the SFO's presentation was itself fundamentally deficient: paras 202–208.

4. The challenges to Robert Tchenguiz's arrest and bail failed. Under the rule in O'Hara, reasonable suspicion depends on the information in the arresting officer's mind. Apparently reliable information may suffice even if it is later shown to be wrong. No exception arises merely because another investigating authority knew or ought to have known that its information was misleading. A person who procures or directly requests an arrest may instead incur liability. The police had also properly considered the statutory necessity grounds and were entitled to rely on the SFO's information: paras 213–252.

5. Where a search is expected to encounter substantial privileged material, claims to legal professional privilege must be assessed by a lawyer who is, and appears to be, independent of the investigating authority. An SFO employee is not independent for that purpose. Factual disputes about the conduct of the searches were transferred for determination in the Queen's Bench Division: paras 253–267, 288–289.

6. The immediate production notice used to retain material seized under warrants which the SFO accepted were unlawful was itself unlawful. Section 59 of the Criminal Justice and Police Act 2001 supplied the exclusive route for retaining that material subject to judicial control. The SFO had to return the property or apply to the court: paras 268–284.

• High Court (Divisional Court): The court set aside the search warrants, held the immediate production notice unlawful, rejected the arrest and bail challenges, and transferred remaining civil claims to the ordinary Queen's Bench Division list under CPR Part 54.20.
• Permission stage: Mitting J refused permission for both judicial review claims on 26 July 2011. Following applications for renewal, the Divisional Court clarified the issues and permitted the substantive proceedings to continue.