Qualte & Ors v The Crown Court At Preston

A local authority’s power to prosecute under section 222 of the Local Government Act 1972 is broad, but its exercise requires consideration of the interests of inhabitants of its area. Those interests must be engaged over and above their interests as ordinary citizens, although relevant considerations are not confined by geography. The relationship between section 222 and ancillary investigative powers, and the extent of the general power of competence under section 1 of the Localism Act 2011, may therefore be arguable even where the alleged offenders are locally based but the victims are distributed nationally. A production-order application under the Proceeds of Crime Act 2002 is lawful where its true and dominant purpose is a genuine money-laundering investigation. The fact that the material may also assist a related fraud investigation does not invalidate the application.

The claimants sought permission for judicial review of production orders made by the Recorder of Preston under sections 345 and 346 of the Proceeds of Crime Act 2002. The orders concerned banking records obtained during an investigation by Trading Standards North West into alleged fraudulent mis-selling of energy contracts.

The claimants argued that Cheshire West and Chester Council lacked power to conduct the investigation or apply for the orders, and that the true purpose of the applications was to obtain evidence for a fraud investigation which should have proceeded under section 9 of the Police and Criminal Evidence Act 1984. Permission was also sought to join further interested parties and for disclosure.

1. The renewed application was allowed on Ground 1 and refused on Ground 2. The BES parties were joined as interested parties. No disclosure order was made.

2. Ground 1 was arguable. Section 222 of the Local Government Act 1972 gives a local authority a broad discretion to prosecute where this is expedient for promoting or protecting the interests of its inhabitants. However, the alleged criminality must have an actual or potential impact on those inhabitants as such, rather than merely affecting them as ordinary citizens. Relevant considerations are not strictly geographical and may include broader policy considerations.

3. The court considered that it was arguable whether Cheshire West and Chester Council had properly considered the interests of local inhabitants, and whether those interests were sufficiently affected by a nationwide sales campaign whose alleged offenders were locally based. The Recorder had given little reasoning on that issue and had made no finding about the impact of the alleged fraud on local inhabitants. The interaction between sections 222 and 111 of the Local Government Act 1972, and the scope of section 1 of the Localism Act 2011, were also arguable.

4. Ground 2 failed. The applicable question was whether the true and dominant purpose of the production-order application was to support a money-laundering investigation. R v Southwark Crown Court ex parte Bowles [1998] AC 641 was materially different because the former statutory regime did not permit production orders to be used for investigating money-laundering offences. Section 345(2) of the Proceeds of Crime Act 2002 had reversed that restriction.

5. The Recorder had accepted evidence that the dominant purpose was to support a genuine money-laundering investigation. The possible use of the material in the related fraud investigation was not a legal bar. There was no arguable error of law in that conclusion, and the renewed application for permission on Ground 2 was dismissed.

• High Court (Administrative Court): permission granted on Ground 1 and refused on Ground 2. The applications to join interested parties and for disclosure were determined as stated in the judgment.
• Recorder of Preston: production orders were made under sections 345 and 346 of the Proceeds of Crime Act 2002.
• High Court (Administrative Court): permission had previously been refused by Ouseley J by order dated 8 February 2019.