Merida Oil Traders Ltd, R (On the Application Of) v Central Criminal Court & Ors

The powers in Chapter 3 of Part 5 of the Proceeds of Crime Act 2002 cannot be used to seize or detain instruments created by law enforcement agencies for the purpose of invoking the summary cash-recovery regime. Production-order powers are investigative powers. They cannot be used merely to obtain access to property so that it may be seized and detained.

The statutory scheme must be interpreted to preserve the balance between crime prevention and property rights. Applications made without notice require exceptional justification and full, fair and accurate disclosure. Orders obtained through an abuse of statutory power or serious non-disclosure may be quashed.

Merida, Bunnvale and TICOM held funds in trading accounts with ADM. During a police investigation, the City of London Police arranged for ADM to create cheques representing those balances. The police then obtained without-notice production orders under section 345 of the Proceeds of Crime Act 2002, seized the cheques as cash and obtained detention orders under section 295.

The claimants sought judicial review of the production, seizure and detention decisions. They alleged that the statutory requirements were not met, that the procedure was improper and that the cash-recovery provisions had been used to avoid the safeguards applicable to restraint orders and property-freezing orders.

1. Production orders. The production-order provisions of the Proceeds of Crime Act 2002 require material to be sought for the purposes of an investigation and to be likely to have substantial value to that investigation. Material need not itself be evidence if it assists in gathering evidence. However, the cheques had no investigative value. They were created to enable seizure and detention, not to obtain information. The production orders were therefore outside the scope of sections 345 and 346.
2. Seizure. The lawfulness of seizure under section 294 did not depend on the prior production orders having been lawfully made. Section 294 contained no requirement that access to the cash must have been lawfully obtained. Nevertheless, the police could not lawfully use section 294 to seize cheques which they had engineered into existence for that purpose. The procedure defeated the statutory distinction between suspicious cash and money held in accounts, and was a clear abuse of statutory power.
3. Detention. Section 295 permitted detention only of cash lawfully seized under section 294. It could not authorise detention following an unlawful invocation of section 294. Independently, the same statutory-purpose reasoning prevented the use of section 295 to detain cash created at the police’s instigation for summary recovery.
4. Procedure. The claimants were affected persons under rule 47.5(3) of the Criminal Procedure Rules. There was no proper basis for proceeding without notice. The police also breached the duty of full, fair and accurate disclosure by failing to disclose material matters, including the age and qualifications of the ICE report, the absence of an imminent risk of dissipation, and the police role in creating the cheques.
5. Relief. The production and detention orders were quashed, and a declaration was made concerning the unlawfulness of the seizure. The hearing listed before the magistrates’ court was vacated. A short stay was granted to allow the police to seek, if appropriate, a property-freezing order or restraint order through the ordinary statutory regimes.

The claims were judicial review proceedings challenging orders made by the Central Criminal Court and magistrates’ courts. The Administrative Court quashed the production orders made on 6 May 2016 and the detention orders made under section 295 of the Proceeds of Crime Act 2002.