Bhandal v HM Revenue and Customs

Compensation under section 89 of the Criminal Justice Act 1988 requires serious default by a qualifying officer, loss caused by action concerning the restrained property, and satisfaction that the proceedings would not have been instituted or continued without that default. Serious default need not be deliberate: serious negligence or inadvertence may suffice. Allegations of criminal conduct raised in the civil compensation claim are proved on the balance of probabilities, although cogent evidence is required. The claim was dismissed because no serious default was established and, in any event, the prosecution would have been instituted without the alleged default.

The claimant sought compensation under section 89 of the Criminal Justice Act 1988 after an arrest warrant and worldwide restraint order had been obtained in connection with proposed prosecutions for excise duty and VAT fraud and money laundering. The restraint order covered Updown Court, which was later sold following enforcement of the mortgage.

The prosecutions were not pursued after disclosure difficulties concerning an informant and evidential problems surrounding diversion frauds. The claimant alleged serious default by HM Customs and Excise officers and contended that the property loss resulted from the restraint order. The central issues were the statutory requirements for compensation, the standard of proof applicable to alleged criminal conduct in the civil claim, and whether the alleged default caused the loss.

1. Section 89 required serious default by a person within the statutory class, loss suffered in consequence of something done to realisable property under Part VI of the Criminal Justice Act 1988, and that the proceedings would not have been instituted or continued without the default.

2. Serious default did not require deliberate wrongdoing. Serious negligence or inadvertence could suffice where the relevant act or omission was unreasonable in the circumstances. Reliance on counsel’s advice would ordinarily negative default, provided counsel had not been misled by material omissions.

3. The statutory definition of officer did not include the solicitor relied on by the claimant. Nor was the conduct of an officer involved in other prosecutions conduct in the investigation or prosecution of the offences charged against the claimant.

4. The claim was civil, so the balance of probabilities applied when deciding whether the claimant had engaged in the alleged criminal conduct and acquired Updown Court with criminal proceeds. Cogent evidence was nevertheless required for such serious allegations.

5. No serious default was established. The officers responsible for the prosecution were adequately informed of the disclosure difficulties and were entitled to rely on counsel’s advice about extradition. Maintaining the proceedings without returning to the court was not default. Further, the prosecution would have been instituted even without the alleged default. The claim was dismissed.