Stewarts have successfully brought an investigation into their client, Calderbrook Construction Ltd (“Calderbrook”) concerning allegations of bribery in connection with Carillion plc (“Carillion”) to an official close.
The investigation by the Lancashire Police specialist Fraud Unit commenced in April 2017. A number of companies were involved in the investigation and included Carillion, Nationwide Building Society (“Nationwide”) and Calderbrook. As part of the investigation, the force was concerned to understand the nature and rationale behind the award of certain construction contracts to subcontractors of Carillion, including Calderbrook.
Calderbrook, an established construction company won an increasing proportion of contracts through various tendering processes involving Nationwide and Carillion. The tender processes included an independently assessed schedule of rates document, Calderbrook were one of a number of contractors admitted to Carillion’s vetted approved supplier trading agreement. It was an agreed fact that all Calderbrook works were competitively priced, delivered on time and executed to the satisfaction of both Carillion and their clients who included the Land Registry, RBS, Virgin Media and Nationwide.
The investigation sought to detect whether there were any other reasons in play for the award of the contracts apart from Calderbrook’s ability to professionally execute the work secured
On 25 July 2017, Lancashire Constabulary applied to Preston Crown Court for four search warrants, including three under s.8 of the Police and Criminal Evidence Act 1984 (“PACE”) to search the home addresses of Matthew Brook, a director of Calderbrook, the business premises of Calderbrook and one special procedure warrant (to cover business confidential material) under s.9 of PACE. The search warrants were executed on 26 July 2017 and large volumes of material were seized and taken away to the Police Station for subsequent examination.
The warrants were successfully challenged by way of Judicial Review. Lord Justice Leggatt ruled that the breadth of the materials authorised to be seized upon the execution of the warrants caused the warrants to be have been unlawfully issued.
The issued warrants purported to give the Police authority to search for and seize:
- All records of communication whether physical, electronic or otherwise, between Michael Emms, Matthew Brook and Martin Brook.
- Electronic communication equipment
- Electronic data storage equipment
- Financial documentation
- Computer equipment
- Mobile communication devices, including telephones and tablets
- Accounting information for Calderbrook, Smiths and Imtech
- Any documentation relating to Calderbrook, Smiths or Imtech.
In dealing with the challenge that the warrants were too widely drafted Lord Justice Leggatt observed that:
“difficult as that task is, it is important that careful thought is given to attempting to make the descriptions as specific as possible. That does not mean that they have to condescend to enormous detail but they must do better than simply to state, for example, “financial documentation”, without more.”
Having found the warrants had been unlawfully issued Lord Justice Leggatt ordered that they be quashed. However, he suspended the operation of the court’s order so as to afford Lancashire Police the opportunity to make an application under section 59 of the Criminal Justice and Police Act 2001 (“CJPA”). The High Court has this power and it is often used in conjunction with an order for the quashing of a search warrant.
An application under s59 must be made to a Crown Court judge and the proceedings are separate to those of the Judicial Review. If successful, a section 59 application may allow the Police to retain material seized as a result of an unlawful search. Whilst the Police did proceed to lodge an application before the Crown Court seeking an order under section 59 in respect of the materials they had seized, those proceedings were overtaken by the fact that the Police and Crown Prosecution Service (“CPS”) agreed to discontinue the investigation into Calderbrook, Matthew Brook and Martin Brook.
Through written submissions made on behalf of Calderbrook, Stewarts were able to successfully demonstrate that the contractual relationship between Calderbrook, Nationwide and Carillion had been fundamentally misunderstood by those investigating the tender awards. In particular, there existed a wealth of contractual documentation and correspondence which when examined closely properly underpinned the awards of the contracts by Nationwide to Carillion and subsequently Carillion to Calderbrook.
A problem flagged by Stewarts as confronting the investigators was the sheer quantity of documentation which needed to be reviewed by Police. Stewarts made requests on behalf of Calderbrook that such a review should and indeed must take place so as to provide further evidential support to the materials already discovered and disclosed. The disclosed material included a wealth of contractual documentation and associated correspondence relating to the awards of the contracts by Nationwide to Carillion and subsequently from Carillion to Calderbrook. This material evidenced honest commercial dealing in respect of awarded contracts. It was pointed out to the investigators that if they wished to rebut the conclusion of honest dealing from the already disclosed evidence then they must conduct extensive searches of the material now held by the liquidators of Carillion, namely PWC.
The investigators were therefore in a position where a section 59 application remained pending before the Crown Court, yet account had to be taken of the fact that to progress the investigation a major review of available evidence in the hands of PWC (the liquidator) would have to be carried out by the investigators. Any such review must take place against the background of the obligations placed upon the investigators by the law (see below) and against the factual context of the prima facie evidence. In assessing the factual context and therefore the scope of the necessary evidential review the investigators were under a duty to recognise the points raised by Stewarts. Specifically this required them to include in the searches of the material held by PWC evidence which showed that detailed tender and contractual relations existed, that there were proper explanations for the contractual awards and that the tendering process and contractual relations between Calderbrook, Carillion and Nationwide had been fundamentally misunderstood.
Notwithstanding the fact that there was in existence a valid section 59 application before the Crown Court, the investigative authority was required to search the evidence in the hands of PWC in order to be able to progress the case. The detailed request by Stewarts, made as it was against the background of a strong inference of honest dealing meant that it was impossible to even start to attempt to rebut the evidence of innocence without conducting a thorough review of the material held by PWC. The consequence of this requirement was that it was improper to peruse the section 59 application until such a review had been undertaken. The reason for the inability to further the section 59 application was that, in light of the strong inference of honest dealing by Calderbrook, it was no longer possible to satisfy the requirement under section 59 that a search warrant would now be granted. The test for the grant of a search warrant requires the investigators to state on oath that there was reasonable cause to believe that an indictable offence had been committed and that the material seized would be of value in investigating that indictable offence.
The investigation was therefore now wholly dependent upon a search of the PWC material and the context of such a search was that the available evidence pointed very strongly to innocence.
In June 2020, following a review of all the materials and the submissions made by Stewarts, the CPS authorised and instructed the Police to inform Calderbrook, Matthew Brook and Martin Brook that the investigation into any suspected criminal behaviour on their part was officially terminated.
The Law – Search Warrants
The police, when seeking to obtain a search warrant of premises apply to the Magistrates’ Court under section 8 of PACE, where they must satisfy the court as to why a warrant should be issued and identify the materials to be searched for and seized. The court will grant a warrant if it is satisfied that there are reasonable grounds for believing:
- that an indictable offence has been committed;
- that there is material on the premises which is likely to be of substantial value to the investigation of the offence; and
- that the material is likely to be relevant evidence and that it does not consist of or include items subject to legal privilege, excluded material or special procedure material.
If satisfied the warrant is issued and the police then have three months within which to undertake the search by executing the warrant.
Of particular interest in the Calderbrook Judicial Review was the breadth of the materials itemised by the search warrants.
Section 15(6)(b) of PACE requires that a warrant “shall identify, so far as is practicable, the articles or persons to be sought.”
As was stated by Lord Justice Treacy in Lee & Ors v Solihull Magistrates Court & Anor  EWHC 3779 (Admin):
“The purpose of the mandatory requirement imposed by Section 15(6)(b) is to enable anyone interested in the execution of a warrant to know what are the limits of the power of search or seizure which is being granted. This is necessary so that such a person can be put in a position to enable him or her to challenge the lawfulness of the seizure of any particular item. Accordingly, it is now well established that the terms of the warrant must be precise and intelligible by reference exclusively to its own terms and not by reference to any other material.”
The course of the case involving Calderbrook serves as a reminder that even where a Judicial Review challenge is successful and a warrant is declared to be unlawful and quashed, section 59 CJIA is available to the police and the CPS, effectively as a second bite of the cherry.
Section 59(6) CJPA permits a judge of the Crown Court to:
“authorise the retention of any property which […] has been seized in exercise, or purported exercise, of a relevant power of seizure […] if that authority is satisfied that the retention of the property is justified on grounds falling within subsection (7)”.
Section 59 (7) includes the provision that:
“(if the property were returned) it would immediately become appropriate (a)to issue, on the application of the person who is in possession of the property at the time of the application under this section, a warrant in pursuance of which, or of the exercise of which, it would be lawful to seize the property…”
The purpose of this section is to allow a police force to remedy its unlawful seizure of the material gained through the execution of a search warrant that is subsequently declared unlawful by a judge of the High Court. Parliament’s use of the word “purported” in section 59(6) CJPA enables an application to be made where a warrant is subsequently quashed by the High Court as, at the time of its execution, the police were purporting to act under the powers granted to them by the warrant obtained from the Magistrates Court. The Crown Court is likely to authorise the retention of the property if the seized material would, once returned, be properly liable to be seized as a result of the execution of a lawful search warrant. There need be no such new warrant in existence; the Crown Court judge is given the task of deciding whether such a warrant would be available, on the facts before her, to be issued.
As the Crown Court judge needs only to be satisfied that there is material justifying a reasonable belief that an indictable offence has taken place these applications have a low threshold to cross.
It is worth noting that whilst not operative in the case relating to Calderbrook, bad faith on the part of the police in seeking the warrant is a ground upon which resistance to a section 59 application may be based. In R (on the application of Chatwani and others v National Crime Agency and another  EWHC 1283 (Admin), Mr Justice Hickinbottom stated:
“However, there may be circumstances in which it is appropriate to deny the agency of all benefit of the illegal search, irrespective of the nature and content of the documents seized. Those circumstances are likely to focus on the agency’s own conduct. If it has acted in bad faith, that is likely to be a compelling reason for not allowing it to retain any benefit from the exercise.”
In addition, and again whilst not a feature of the Calderbrook matter, a failure of the Police or CPS to make significant disclosures to the Magistrate who grants the warrant is a feature which a Crown Court judge is to have regard to when deciding whether to grant a subsequent section 59 application. When considering ex parte applications (of which a warrant is one), Hughes LJ in Stanford International Bank Ltd, Re  EWCA Civ 137 emphasised that, in respect of the applicant:
“it is essential that the duty of candour laid upon any applicant for an order without notice is fully understood and complied with. It is not limited to an obligation not to misrepresent. It consists in a duty to consider what any other interested person would, if present, wish to adduce by way of fact, or to say in answer to the application, and to place that material before the judge. That duty applies to an applicant for a restraint order under POCA in exactly the same way as to any other applicant for an order without notice.”
There is a clear obligation to ensure that, when presenting an ex-parte application, full disclosure of all pertinent facts which argue against the application, must be made to the court. The consequences for a failure to do so may include the denial by the Crown Court of an application to retain property under section 59(6) CJIA.
Before leaving this section to identify the complexities which may arise in this area of law we bring to the reader’s attention the decision in R. (on the application of Windsor) v Bristol Crown Court  EWHC 1899 (Admin). A Judicial Review was brought against warrants issued as a result of applications made by HMRC. The application for Judicial Review of the warrants included a further application that the court order full restrictions on the examination and copying of materials seized during the search exercise which was the subject of the Judicial Review challenge. This the court did. The Judicial Review resulted in the quashing of the warrants and also in a final order being issued by the High Court which prohibited HMRC from examining, using or copying the materials it possessed as a result of the execution of the unlawful search warrants. HMRC launched an application under section 59 CJPA in the Crown Court to retain the materials unlawfully seized. HMRC also brought an application before the High Court to seek to vary the final order which precluded HMRC from examining, using or copying seized material. HMRC wished to examine such material to assist it with the section 59 CJPA application in the Crown Court as, by the terms of the High Court order, it was prohibited from using the documents seized to show that a warrant would allow them to retain the material which they already possessed. HMRC’s application to the High Court to vary the Order was rejected. The High Court found that at the time of the judgment, in respect of the Judicial Review proceedings and subsequent discussion about the terms of a final order:
“HMRC already had well in mind the making of a section 59 application, and knew, or ought to have known, in particular that copies of some of the seized material might potentially be relevant in such an application. However, counsel then appearing for HMRC …. did not suggest that HMRC might wish to deploy copies of any part of the seized material in a section 59 application.”
Whilst this was not a feature in the Calderbrook Judicial Review the Windsor case highlights the complexity of this area of the law. It puts in sharp relief the importance of observing the legal obligations placed upon police and the CPS when engaging in the obtaining of search warrants and any subsequent section 59 CJPA applications.
The Guidance – Police Investigations
When investigating a suspected criminal offence the police are subject to legal requirements as to the conduct of such investigations.
Particularly relevant to the investigation concerning Calderbrook, as a result of the specific disclosure and highlighting to them of materials which indicated lawful trading and contract acquisition by Calderbrook following completion of detailed tendering requirements, is the Criminal Procedure and Investigations Act 1996 (“CPIA”) Code of Practice (the “Code”).
While the Code expressly applies to police officers, other investigators are required to “have regard” to any relevant provisions of it. Section 3.5 of the Code states that: “In conducting an investigation, the investigator should pursue all reasonable lines of inquiry, whether these point towards or away from the suspect. What is reasonable in each case will depend on the particular circumstances. For example, where material is held on computer, it is a matter for the investigator to decide which material on the computer it is reasonable to inquire into, and in what manner.”
This guidance is re-emphasised by the Attorney General’s Guidelines on Disclosure December 2013, which provides that:
“A fair investigation involves the pursuit of material following all reasonable lines of enquiry, whether they point towards or away from the suspect”
Relevant material to an investigation is defined at Section 2.1 of the Code as having:
“some bearing on any offence under investigation or any person being investigated, or on the surrounding circumstances of the case, unless it is incapable of having any impact on the case.”
This is reiterated in the CPS Disclosure Manual which provides at Chapter 4 that:
“Material which may be relevant to an investigation is defined in the Code of Practice as anything that appears to an investigator, or the OIC or the disclosure officer, to have some bearing on any offence under investigation or any person being investigated or the surrounding circumstances, unless it is incapable of having any impact on the case.”
“It is important for investigators and prosecutors to remember that the duty under the CPIA Code of Practice is to “pursue all reasonable lines of enquiry including those that point away from the suspect”. Lines of enquiry, of whatever kind, should be pursued only if they are reasonable in the context of the individual case. It is not the duty of the prosecution to comb through all the material in its possession – e.g. every word or byte of computer material – on the lookout for anything which might conceivably or speculatively assist the defence. The duty of the prosecution is to disclose material which might reasonably be considered capable of undermining its case or assisting the case for the accused which they become aware of, or to which their attention is drawn.”
In addition to the above, the CPS has produced a document designed to support and guide prosecuting lawyers and police called “Frontloading Disclosure”. In that guidance, the CPS state:
“In any serious or complex case the CPS prosecutor will not authorise charging, notwithstanding the strength of the evidence, unless the disclosure exercise has been front loaded.
Front loading of Disclosure requires a thinking approach to casework. It requires the Prosecutor to satisfy themselves pre-charge that the investigator has complied with their core duties to follow all reasonable lines of enquiry and to record, retain and reveal under the CPIA Code.
It is important to check that the Disclosure Officer has applied the correct tests for relevance and disclosure and that the descriptions on the draft schedules are adequate.
The prosecutor also needs to satisfy themselves that the investigator has complied with the terms of the AG Guidelines on Disclosure and in particular, the guidelines on the handling of digital material.”
The police and CPS must, when investigating the commission of a suspected criminal offence give due consideration to their legal duty to obtain all potentially relevant evidence, their duty to consider evidence not only which confirms any case theory but which tends to weaken any case theory held and/or which tends to establish the innocence of the suspected party, and their duties to ensure that they are in position to disclose such material.
These factors are to be kept under continuous review by the investigators and the CPS. They can, and in the investigation of Calderbrook did, result in a decision to stop a criminal investigation.
Notwithstanding the fact that there was a section 59 CJPA application lodged with the Crown Court, the police and CPS acted quite properly, in the full knowledge of the fact that their decision would exonerate Calderbrook, Matthew Brook and Martin Brook from any allegation of criminal behaviour, in terminating their entire investigation. The submissions made by Stewarts which contributed to this decision relied upon the legal obligations placed upon investigators and prosecuting lawyers, set out in this article.
The team at Stewarts believe that the obligation to investigate away from a case theory, coupled with the context of evidenced lawful acquisition of contracts by way of complex tender submissions and a careful explanation of the relationship between Calderbrook, Carillion and Nationwide led to a proper evaluation of the merits of the investigation and the end of the investigation.
The result has been that the submissions we made we believe did contributed materially to clearing the names of our clients, Calderbrook, Matthew Brook and Martin Brook and to re-establish their hard-earned exemplary character and reputations.
Matthew Brook, Calderbrook comments:
“We are delighted by the outcome of this matter. Calderbrook has always ensured that it has robust systems and controls in place and we pride ourselves in winning work based on our solid track record of completing projects on time and within budget. The hard work undertaken by Stewarts to clear my and Calderbrook’s name is truly appreciated.”
Martin Brook comments:
“Calderbrook’s name and reputation within the industry has been tarnished by this misplaced investigation, as has my own. It is only correct that both I and Calderbrook have been vindicated, following a thorough review by Stewarts of the facts and documents. I pride myself on my work ethic and accountability, and know that Matthew Brook and Calderbrook can now focus on the business.”
David Savage, Partner, Stewarts comments: “Stewarts’ successful representation of Martin Brook, Matthew Brook and Calderbrook is clear testament to the solid track record exhibited by these individuals in their corporate dealings. There is an obligation on the police to follow all reasonable lines of enquiry and, with our guidance, it was only right that they concluded that Martin, Matthew and Calderbrook had not engaged in any wrongdoing.”
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