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OUTER HOUSE, COURT OF SESSION
[2021] CSOH 119
P392/21
OPINION OF LORD SANDISON
In the petition of
AVAAZ FOUNDATION
Petitioner
for
Judicial Review of the Scottish Ministers' unlawful policy of delegating responsibility for
Unexplained Wealth Orders
Pursuer: O'Neill, QC, Welsh; Harper Macleod LLP
Respondents (Scottish Ministers): Crawford, QC, Scullion; SGLD
25 November 2021
Introduction
[1]
Avaaz Foundation, the petitioner in this application for judicial review, is a
non-profit organisation based in New York which describes itself as a prominent and
established campaigner in the public interest and a promoter of global activism on a range of
issues including in particular corruption. It seeks certain declarators from the court in
relation to the approach of the respondents, the Scottish Ministers, to Unexplained Wealth
Orders (UWOs), both in general terms and specifically with reference to the potential for an
application to this court for a UWO in respect of heritable property in Scotland said to be
beneficially owned by former United States President Donald J. Trump.
2
Background
[2]
UWOs were introduced into the law of the United Kingdom with effect from
31 January 2018 by amendments made to the Proceeds of Crime Act 2002 (POCA) by the
Criminal Finances Act 2017. In relation to Scotland, and so far as material for present
purposes, POCA sections 396A and 396B provide as follows:
"396A Unexplained wealth orders
(1)
The Court of Session may, on an application made by the Scottish Ministers,
make an unexplained wealth order in respect of any property if the court is satisfied
that each of the requirements for the making of the order is fulfilled.
(2)
An application for an order must--
(a)
specify or describe the property in respect of which the order is
sought, and
(b)
specify the person whom the Scottish Ministers think holds the
property (`the respondent') (and the person specified may include a person
outside the United Kingdom).
(3)
An unexplained wealth order is an order requiring the respondent to provide
a statement--
(a)
setting out the nature and extent of the respondent's interest in the
property in respect of which the order is made,
(b)
explaining how the respondent obtained the property (including, in
particular, how any costs incurred in obtaining it were met),
(c)
where the property is held by the trustees of a settlement, setting out
such details of the settlement as may be specified in the order, and
(d)
setting out such other information in connection with the property as
may be so specified.
...
(5)
The order may, in connection with requiring the respondent to provide the
statement mentioned in subsection (3), also require the respondent to produce
documents of a kind specified or described in the order.
(6)
The respondent must comply with the requirements imposed by an
unexplained wealth order within whatever period the court may specify (and
different periods may be specified in relation to different requirements).
396B Requirements for making of unexplained wealth order
(1)
These are the requirements for the making of an unexplained wealth order in
respect of any property.
3
(2)
The Court of Session must be satisfied that there is reasonable cause to
believe that--
(a)
the respondent holds the property, and
(b)
the value of the property is greater than £50,000.
(3)
The Court of Session must be satisfied that there are reasonable grounds for
suspecting that the known sources of the respondent's lawfully obtained income
would have been insufficient for the purposes of enabling the respondent to obtain
the property.
(4)
The Court of Session must be satisfied that--
(a)
the respondent is a politically exposed person, or
(b)
there are reasonable grounds for suspecting that--
(i)
the respondent is, or has been, involved in serious crime
(whether in a part of the United Kingdom or elsewhere), or
(ii)
a person connected with the respondent is, or has been, so
involved.
(5)
It does not matter for the purposes of subsection (2)(a)--
(a)
whether or not there are other persons who also hold the property;
(b)
whether the property was obtained by the respondent before or after
the coming into force of this section.
(6)
For the purposes of subsection (3)--
(a)
regard is to be had to any heritable security, charge or other kind of
security that it is reasonable to assume was or may have been available to the
respondent for the purposes of obtaining the property;
(b)
it is to be assumed that the respondent obtained the property for a
price equivalent to its market value;
(c)
income is `lawfully obtained' if it is obtained lawfully under the laws
of the country from where the income arises;
(d)
`known' sources of the respondent's income are the sources of income
(whether arising from employment, assets or otherwise) that are reasonably
ascertainable from available information at the time of the making of the
application for the order;
(e)
where the property is an interest in other property comprised in a
settlement, the reference to the respondent obtaining the property is to be
taken as if it were a reference to the respondent obtaining direct ownership of
such share in the settled property as relates to, or is fairly represented by, that
interest.
(7)
In subsection (4)(a), `politically exposed person' means a person who is--
(a)
an individual who is, or has been, entrusted with prominent public
functions by an international organisation or by a State other than--
(i)
the United Kingdom, or
(ii)
an EEA state,
4
(b)
a family member of a person within paragraph (a),
(c)
known to be a close associate of a person within that paragraph, or
(d)
otherwise connected with a person within that paragraph.
(8)
Article 3 of Directive 2015/849/EU of the European Parliament and of the
Council of 20 May 2015 applies for the purposes of determining--
(a)
whether a person has been entrusted with prominent public functions
(see point (9) of that Article),
(b)
whether a person is a family member (see point (10) of that Article),
and
(c)
whether a person is known to be a close associate of another (see
point (11) of that Article).
(9)
For the purposes of this section--
(a)
a person is involved in serious crime in a part of the United Kingdom
or elsewhere if the person would be so involved for the purposes of Part 1 of
the Serious Crime Act 2007 (see in particular sections 2, 2A and of that Act);
(b)
section 1122 of the Corporation Tax Act 2010 (`connected' persons)
applies in determining whether a person is connected with another.
(10)
Where the property in respect of which the order is sought comprises more
than one item of property, the reference in subsection (2)(b) to the value of the
property is to the total value of those items."
In broad outline, then, POCA section 396A permits this court, on an application made to it
by the Scottish Ministers, to pronounce a UWO in respect of particular property if satisfied
of certain requirements. A UWO requires the person holding the property to explain within
a specified period of time the nature and extent of his interest in it and how he obtained it,
and may also require the production of documentary evidence of those matters.
[3]
By dint of POCA section 396B, the court can only make a UWO if it is satisfied of the
conditions therein set out. In relation to a UWO against a "politically exposed person"
(PEP), the court does not need to be persuaded of the existence of reasonable grounds for
suspecting his involvement directly or indirectly in serious crime in the United Kingdom or
elsewhere, but does in every case require to be satisfied that there are reasonable grounds
for suspecting that the known sources of a respondent's lawfully obtained income would
have been insufficient for the purposes of enabling him to obtain the property. If a UWO is
5
not complied with, POCA section 396C provides a presumption that the property to which it
relates is amenable to confiscation in terms of Part 5 of the Act.
[4]
On 27 February 2020 Patrick Harvie MSP asked a question in the Scottish Parliament
of the First Minister concerning the possibility of a UWO being sought in relation to golf
courses said ultimately to be owned by President Trump in Scotland and mentioned a
briefing paper on the subject prepared on behalf of the petitioner (Scottish Parliament
Official Report 27 February 2020, columns 19-20). The First Minister subsequently wrote to
Mr Harvie on 16 July 2020 acknowledging that the briefing paper had been received, but
indicating that any decision as to whether to apply for a UWO was made "on behalf of the
Scottish Ministers by the Civil Recovery Unit (CRU) which reports to the Lord Advocate."
[5]
The briefing paper prepared for the petitioner noted, uncontroversially, that
President Trump was, as the 45th President of the United States of America, a PEP. It went
on to claim that he was the sole or principal beneficial owner of the Trump Organization,
which in turn was the eventual owner of golf courses known as "Trump Turnberry" in
Ayrshire and "Trump International Golf Links Scotland" in Aberdeenshire. It further
claimed that Trump Turnberry had been purchased by the Trump Organization in 2014 for
approximately $60 million US and that the businesses operating it and the Aberdeenshire
course were not profitable and depended on continuing financial support from their
ultimate owners. Observations were made about newspaper reports concerning the amount
of taxes historically paid by President Trump and amounts said to be owed by him, and
argued that there were no reasonable grounds to suppose that known sources of lawfully
obtained income would have been sufficient to enable him, directly or indirectly, to acquire
the properties in Scotland. The full briefing paper is available online and contains much
6
more detail in relation to these and other matters than it is necessary or indeed possible to
refer to in the context of this opinion.
[6]
Mr Harvie returned to the subject of a UWO in relation to President Trump in a
question to the First Minister in Parliament on 12 November 2020 and was informed in
essence that the question of applying for a UWO was one for the Crown Office, operating
independently of the Scottish Ministers (Scottish Parliament Official Report 12 November
2020, columns 11-12). The petitioner was not satisfied that that response was correct in law
and commissioned a joint opinion by senior and junior counsel which confirmed it in its
view. It provided a copy of that opinion to the First Minister in January 2021 and in the
following month Mr Harvie initiated a debate on the subject in Parliament on a motion in his
name (Scottish Parliament Official Report 3 February 2021, columns 73-88). A letter dated
22 February 2021 was then sent to the petitioner by a civil servant in the Defence, Security
and Cyber Resilience Division of the Scottish Government, setting out the view that a
decision whether to apply for a UWO was an operational one for the CRU, which would
decide whether any of the range of investigatory orders available in terms of POCA was
appropriate and would then apply to the court for any such order if it saw fit to do so.
[7]
The petitioner remained dissatisfied with that expression of the Scottish Ministers'
view, in particular the suggestion that any person or body other than Scottish Ministers as a
collectively responsible body could decide whether to apply for a UWO in any particular
case. It further regarded the letter of 22 February 2021 as inconsistent with the government
positions on the matter previously adopted in Parliament, which it regarded as equally
wrong in law. It raised the present petition in May 2021. After preliminary hearings, I
decided that the petition had real prospects of success within the meaning of section 27B(2)
of the Court of Session Act 1988; in other words, that there was a sensible legal argument to
7
be had on the matters raised by the petition; and that, although it had been raised outwith
the time limit for bringing applications to the supervisory jurisdiction of this court under
section 27A(1)(a) of the 1988 Act, it was appropriate for me in the circumstances to exercise
the equitable discretion conferred by section 27A(1)(b) to extend the time limit so as to allow
the petitioner to seek all the remedies set out in the petition ([2021] CSOH 81).
[8]
The declarators sought by the petitioner in Statement 4 of the petition are expressed
as follows:
(a)
Declarator that the sole responsibility for determining whether to apply for
an Unexplained Wealth Order rests with the Scottish Ministers (including the
Lord Advocate) who must act collectively in their determination of whether such an
order should be sought from the Court of Session.
(b)
Declarator that if to any extent the Lord Advocate is involved in any decision-
making concerning whether to apply for an Unexplained Wealth Order,
notwithstanding any prior designation as the Scottish Minister with relevant
portfolio responsibility for the Civil Recovery Unit, the Lord Advocate's involvement
is and only is qua one of the Scottish Ministers, and does not involve the
Lord Advocate's exercise of any of her retained functions as defined at section 52(6)
of the Scotland Act 1998.
(c)
Declarator that the Scottish Ministers may not delegate responsibility for
determining whether to apply for an Unexplained Wealth Order to any other person,
body or department.
(d)
Declarator that the Scottish Ministers are obliged to use their best endeavours
to combat and prevent money laundering and corruption, particularly by individuals
who hold or who have held important public functions.
8
(e)
Declarator that the Scottish Ministers have a duty to seek an Unexplained
Wealth Order in any circumstances where the relevant requirements provided at
section 396B of the Proceeds of Crime Act 2002 are made out.
(f)
Declarator that, by failing to seek an Unexplained Wealth Order in relation to
Donald J. Trump's assets in Scotland, the Scottish Ministers have failed in their duty
and have therefore acted unlawfully.
(g)
Such further orders (including an order for expenses) as may seem to the
court to be just and reasonable in all the circumstances of the case.
[9]
In their answers to the petition, the Scottish Ministers made it clear that decisions on
whether to apply for UWOs were ordinarily taken by civil servants working within the CRU
and acting on behalf of and with the authority of the Ministers. Those civil servants
reported to the Lord Advocate as the Scottish Minister to whom portfolio responsibility for
the CRU had been allocated, rather than to her in her capacity as the head of the system of
criminal prosecution in Scotland. It was accepted that any decision made in relation to
UWOs by the Lord Advocate as the designated Minister with immediate responsibility for
the administration of the UWO regime was a decision for which the Ministers as a whole
were collectively responsible in legal and political terms. The suggestion made by the Fir st
Minister in Parliament on 12 November 2020 that the decision whether to apply for a UWO
was one for Crown Office had been an error which the correspondence of 22 February 2021
had corrected.
[10]
The Ministers' answers also made it clear that as a matter of policy they did not
generally confirm or deny whether POCA investigatory orders, including UWOs, were
being considered, had been considered, or were in the process of being applied for. The
9
Ministers considered that that approach was backed by sound operational reasons,
including the need to avoid compromising investigations which might be underway.
[11]
The court was provided with an affidavit by Nick Flynn of the petitioner swearing to
various details about the Foundation and the current state of the concerns it had in relation
to the matters set out in the petition and the briefing paper already refer red to. An affidavit
from Anne-Louise House, the present Head of the CRU, explaining the operations of the
Unit as relevant to the subject-matter of the petition and the basis for the "neither confirm
nor deny" policy already noted, was also provided.
Petitioner's submissions
[12]
At the substantive hearing of the petition on 26 and 27 October 2021, Mr O'Neill on
behalf of the petitioner invited me to pronounce the declarators prayed for or such variation
thereof as might seem appropriate. Even if the declarators set out at paragraphs 4(a) and (c)
of the petition were now said not to be matters of dispute between the parties, it would
serve the goals of clarity and public accessibility to the law for the court to pronounce the
orders sought. Reference was made to Wightman v Secretary of State for Exiting the EU
paragraph 4(b), it might be possible to narrow its scope so that it only declared that the
Lord Advocate could not lawfully be designated as the Minister with portfolio responsibility
for determining whether to apply for a UWO. Likewise, it might be that the declarator
sought by paragraph 4(e) of the petition was too broadly cast, and that an order declaring
that the Scottish Ministers had a duty to apply for a UWO where the requirements in POCA
section 396B had been made out and an investigative order was the appropriate POCA tool
to use, would be more apposite.
10
[13]
Mr O'Neill submitted that the Scottish Ministers had failed to understand their
proper role in relation to UWOs concerning PEPs, and had misdirected themselves in law in
that regard both in the correspondence cited and in the statements in Parliament. In
particular, the relevant legislation was predicated upon a division between the functions of
the Ministers and the Lord Advocate, so that the latter could not lawfully be allocated
portfolio responsibility for seeking UWOs, either generally or at least in relation to PEPs.
Further, the statutory power in the Ministers to seek UWOs was, properly construed against
the relevant background, in fact a duty to do so in cases where the statutory conditions were
apparently met. Finally, the Ministers could not properly adopt and maintain a "neither
confirm nor deny" policy in relation to what, if any, consideration had been given or
decisions taken by them concerning seeking a UWO in relation to President Trump's
acquisition of the Scottish properties given the facts publicly known about his finances.
Designation of responsible minister
[14]
In developing his argument that the Lord Advocate could not properly be
designated as the Minister responsible for seeking UWOs, Mr O'Neill directed me to various
provisions within the Scotland Act 1998 as amended. Firstly, section 44 defined the
members of the Scottish Government as the First Minister, such Ministers as she might
appoint under section 47, the Lord Advocate and the Solicitor General for Scotland, all to be
referred to collectively as the Scottish Ministers. Section 48(5) of the 1998 Act required any
decision taken by the Lord Advocate as head of the systems of criminal prosecution and
investigation of deaths in Scotland to continue to be taken independently of any other
person.
[15]
Section 52 of the Scotland Act is in the following terms:
11
"52.-- Exercise of functions
(1)
Statutory functions may be conferred on the Scottish Ministers by that name.
(2)
Statutory functions of the Scottish Ministers, the First Minister or the
Lord Advocate shall be exercisable on behalf of Her Majesty.
(3)
Statutory functions of the Scottish Ministers shall be exercisable by any
member of the Scottish Government.
(4)
Any act or omission of, or in relation to, any member of the Scottish
Government shall be treated as an act or omission of, or in relation to, each of them;
and any property acquired, or liability incurred, by any member of the Scottish
Government shall be treated accordingly.
(5)
Subsection (4) does not apply in relation to the exercise of--
(a)
functions conferred on the First Minister alone, or
(b)
retained functions of the Lord Advocate.
(6)
In this Act, `retained functions' in relation to the Lord Advocate means--
(a)
any functions exercisable by him immediately before he ceases to be a
Minister of the Crown, and
(b)
other statutory functions conferred on him alone after he ceases to be
a Minister of the Crown.
(7)
In this section, `statutory functions' means functions conferred by virtue of any
enactment."
[16]
Mr O'Neill noted that that section provided that statutory functions could be
conferred on the Scottish Ministers by that name, and that those functions should be
exercisable by any member of the Scottish Government. Subsection (4) of section 52, read
short, provided for the collective responsibility of the Scottish Ministers in relation to inter
alia acts and omissions of any of them, but subsection (5) stated that that did not apply to
functions conferred on the First Minister alone, or "retained functions" of the
Lord Advocate.
[17]
"Retained functions" of the Lord Advocate were defined by subsection (6) as being
those functions exercisable by him immediately before he ceased to be a Minister of the
12
Crown and those statutory functions conferred on him alone after h e ceased to be such a
Minister. It followed that (in addition to her functions as principal legal adviser to the
Scottish Government) the Lord Advocate might act (a) in her capacity as head of the system
of criminal prosecution, in which case (and in which case only) she would require to act
independently of any other person; (b) as one of the Scottish Ministers, in a way which
would attract collective responsibility for all the Ministers; or (c) in the performance of a
retained function, which would not attract such responsibility for the other Ministers. Ther e
was no requirement to act independently of any other person when acting in the latter two
capacities.
[18]
Mr O'Neill pointed out that POCA's structure was complex and that it was easy to
lose sight of the greater structure in a morass of statutory detail. Properly construed, the Act
gave separate functions to the Ministers and the Lord Advocate. While the overall intent
and object of the Act might properly be described as the prevention of the enjoyment of the
fruits of criminal activity, the mechanisms used to seek to attain that end were not
proceedings at the instance of the Lord Advocate in her capacity as head of the system of
criminal prosecution in Scotland. Indeed, so far as UWOs in relation to PEPs were
concerned, there was no need even for any suspicion of criminality and thus no stigma
attached to the mere fact of a UWO being sought in such cases.
[19]
By way of illustration that functions under POCA were carried out by the
Lord Advocate other than as head of the system of criminal prosecution in Scotland,
Mr O'Neill referred to Part 3 of the Act. That Part related to confiscation proceedings in
Scotland and was designed to prevent the enjoyment of the profits of crime without
necessarily having to show a direct link between any crime and the assets in question. The
statutory function of seeking confiscation orders under Part 3 rested on "the prosecutor"
13
and while that had been construed as an institutional reference to the office of
Lord Advocate, the public prosecutor in the public interest in Scotland HMA v Wright
the Lord Advocate was in point of law exercising "retained" statutory functions falling
within the scope of section 52(6)(b) of the Scotland Act; applications for confiscation orders
were not criminal proceedings and were not instituted or maintained by the Lord Advocate
in her capacity as head of the system of criminal prosecution in Scotland.
[20]
Similarly, Part 5 of POCA dealt with civil recovery proceedings in respect of the
fruits of criminal conduct at the instance of the Scottish Ministers. In Scottish Ministers v
the opinion of the Lord Ordinary, that any involvement of the Lord Advocate in POCA
Part 5 proceedings was simply as a Scottish Minister, not as the head of the system of
criminal prosecution.
[21]
Mr O'Neill noted that a particular statute could confer powers on the Scottish
Ministers in one respect and specifically on the Lord Advocate in another respect, and
argued that in such instances it might well not be permissible for the Lord Advocate to be
designated as the responsible Minister for the performance of the functions conferred by the
statute on the Ministers as a whole. Under reference to Kapri v Lord Advocate [2013] UKSC
Ministers and the Lord Advocate by the Extradition Act 2003, and argued that it would not
be legitimate for the Lord Advocate, if she had been institutionally involved in extradition
proceedings in accordance with the provisions of the 2003 Act, then also to be involved in
the ultimate decision to extradite or not to extradite a person whom such proceedings had
determined could lawfully be extradited.
14
[22]
Building on that argument, Mr O'Neill turned to POCA Part 8, in terms of which
UWOs may be sought by the Ministers from the court, and in particular to section 396D, the
relevant terms of which are as follows:
"396D Effect of order: cases of compliance or purported compliance
(1)
This section applies in a case where the respondent complies, or purports to
comply, with the requirements imposed by an unexplained wealth order in respect
of any property in relation to which the order is made before the end of the response
period (as defined by section 396C(4)).
(2)
If an interim freezing order has effect in relation to the property (see
section 396J), the Scottish Ministers must--
(a)
consider whether the Lord Advocate should be given an opportunity
to determine what enforcement or investigatory proceedings, if any, the
Lord Advocate considers ought to be taken by the Lord Advocate in relation
to the property, and
(b)
determine whether they consider that any proceedings under
Part 5 (civil recovery of the proceeds of unlawful conduct) or this Chapter
ought to be taken by them in relation to the property.
(3)
If the Scottish Ministers consider that the Lord Advocate should be given an
opportunity to make a determination as mentioned in subsection (2)(a), the
Lord Advocate must determine what enforcement or investigatory proceedings, if
any, the Lord Advocate considers ought to be taken by the Lord Advocate in relation
to the property.
(4)
A determination under subsection (2)(b) or (3) must be made within the
period of 60 days starting with the day of compliance.
...
(6)
If there is no interim freezing order in effect in relation to the property--
(a)
the Scottish Ministers may (at any time) determine whether they
consider that any proceedings under Part 5 or this Chapter ought to be taken
by them in relation to the property, and
(b)
the Lord Advocate may (at any time) determine what, if any,
enforcement or investigatory proceedings the Lord Advocate considers ought
to be taken by the Lord Advocate in relation to the property.
...
(9)
In this section `enforcement or investigatory proceedings' means any
proceedings in relation to property taken under--
(a)
Part 3 (confiscation proceedings in Scotland), or
(b)
this Chapter."
15
It may thus be seen that in terms of that section, where a person in respect of whom a UWO
has been made purports to comply with it, and an interim freezing order has effect over the
property to which the UWO relates, then subsection (2) requires the Scottish Ministers to
consider whether the Lord Advocate should be given an opportunity to determine what, if
any, enforcement or investigatory proceedings under Part 3 or Chapter 3 of Part 8 ought to
be taken in relation to that property, and further requires the Ministers to determine
whether they consider that any proceedings under Part 5 should be taken in relation to the
property. Where no interim freezing order has effect over the property, subsection (6)
permits the Scottish Ministers to determine whether to take proceedings under Part 5 and
separately permits the Lord Advocate to determine whether any enforcement or
investigatory proceedings should be taken.
[23]
In Mr O'Neill's submission, such delineation of separate functions as between the
Scottish Ministers on the one hand and the Lord Advocate on the other would be rendered
absurd were the Lord Advocate nominated as the Scottish Minister with portfolio
responsibility to perform the functions of the Ministers in terms of POCA Part 8. In effect,
such a nomination would involve "institutional schizophrenia" because it would requ ire the
Lord Advocate to have a dialogue with herself and would remove the possibility of an
effective division of information availability as between the Ministers on the one hand and
the Lord Advocate on the other. The only proper conclusion to be drawn from section 396D
was that Parliament had impliedly excluded the Lord Advocate from being nominated to
discharge the functions conferred on the Ministers by POCA Part 8, either generally or at
least in relation to the decision as to whether or not to seek a UWO, particularly against a
PEP.
16
[24]
Put another way, it was to be assumed that Parliament would legislate only for the
purpose of bringing about an effective result, and it was for the Executive to recognise and
give effect to that intended result RM v Scottish Ministers [2012] UKSC 58, 2013 SC (UKSC)
139 at paragraph 34, citing Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014 per
Viscount Simon LC at 1022. In the present case, that meant that the Ministers were obliged
to recognise from the terms of section 396D that to appoint the Lord Advocate as the
responsible Minister to discharge their functions under Part 8 would stultify the
differentiation between their proper functions and hers indicated by the terms of the section.
In practice, the Ministers' functions under Part 8 would therefore have to be performed, if
they were to be allocated to a specific Minister, by way of the nomination of the Solicitor
General, the Justice Minister or at any event some Minister other than the Lord Advocate,
albeit the nominated Minister might properly take the advice and counsel of others,
including the Lord Advocate. This was not a suggestion that section 52(3) of the Scotland
Act had been impliedly repealed, notwithstanding that that provision appeared to
contemplate the performance of any function of the Scottish Ministers by any member of the
Scottish Government. That subsection remained in full effect, but what was struck at was
the choice of the First Minister to allocate a portfolio responsibility to the Lord Advocate
which would have the result of bringing about a situation which Parliament cannot be
supposed to have countenanced.
[25]
Another route to the same conclusion was the application by analogy of the
observations by the United Kingdom Supreme Court in R (King) v Secretary of State for Justice
the Scottish Ministers were "statutory office-holders" in the sense discussed in King, and
that the facility afforded in relation to the discharge of the duties of Ministers of the Crown
17
as described in Carltona Ltd v Commissioners of Works [1943] 2 All ER 560 thus did not apply
to them, it sufficed for present purposes that King had noted that the performance of
statutory ministerial functions by particular officials might be inconsistent with the intention
of Parliament as evinced by the relevant provisions, or else simply (in a broad sense)
irrational. Here, it might properly be said for the reasons already given that the
performance by the Lord Advocate of the statutory functions conferred by POCA Part 8
would be inconsistent with the intention of Parliament as evinced in particular by the terms
of section 396D, or else irrational given the supposedly absurd consequences which would
result. Reference was made to Somerville v Scottish Ministers [2007] UKHL 44, 2008 SC (HL)
45 at paragraph 140.
[26]
Nothing was to be gained in this context from examining the corresponding
provisions of POCA for the rest of the United Kingdom, because the different constitutional
and legal arrangements in the other parts of the UK made it impossible to draw any
meaningful conclusion about Parliament's intention as to who should perform the relevant
functions in Scotland.
Nature of the function of seeking UWOs
[27]
Returning to RM v Scottish Ministers, Mr O'Neill next submitted under reference to
paragraphs 46 and 47 of the judgment of the Supreme Court in that case, and to Julius v Lord
Bishop of Norwich (1880) 5 App Cas 214 and Padfield v Minister of Agriculture [1968] AC 1014
that it was necessary to consider not only the words of a statute conferring a power, but also
the general scope and object of the empowering statute, in order to determine whether at
least in certain circumstances an apparent mere statutory power to do something was in
point of law an obligation to do that thing.
18
[28]
Conducting that exercise in the present case, it was necessary to have regard to the
fact that UWOs were part of an armoury provided for use to combat international money
laundering, an exercise which required a high level of international co-operation in order to
be effective. When the United Kingdom was a member of the European Union, directives
(in particular the Fourth Money Laundering Directive 2015/849/EU as consolidated) had
been promulgated to set out base-level standards of what was expected of Member States in
relation to the fight against money laundering. Indeed, the PEP concept itself was founded
in the Fourth Directive as part of a regime of enhanced diligence in relation to such persons,
without any need for a suggestion of criminality.
[29]
More specifically, section 29(1) of the European Union (Future Relationship) Act 2020
now provided that existing domestic law was to have effect with such modifications as are
required for the purposes of implementing in that law the Trade and Cooperation
Agreement between the European Union and the United Kingdom (TCA) so far as not
otherwise implemented and so far as such implementation was necessary for the purposes
of complying with the international obligations of the United Kingdom under the
Agreement. That provision required state entities, including the domestic courts, to
consider what was necessary to comply with the international obligations of the United
Kingdom under the TCA. It was not controversial in modern jurisprudence that judges
could take into account rules of international law binding on the United Kingdom when
interpreting statutes and in developing the common law, so far as they were free to do so:
therein.
19
[30]
The provisions of the TCA of relevance to the question of what was necessary to
comply with the United Kingdom's international obligations under the Agreement were
Articles 186 and 653, which are in the following terms:
"Article 186
International standards
The Parties shall make their best endeavours to ensure that internationally agreed
standards in the financial services sector for regulation and supervision, for the fight
against money laundering and terrorist financing and for the fight against tax
evasion and avoidance, are implemented and applied in their territory. Such
internationally agreed standards are, inter alia, those adopted by: the G20; the
Financial Stability Board; the Basel Committee on Banking Supervision, in particular
its `Core Principle for Effective Banking Supervision'; the International Association of
Insurance Supervisors, in particular its `Insurance Core Principles'; the International
Organisation of Securities Commissions, in particular its `Objectives and Principles
of Securities Regulation'; the Financial Action Task Force; and the Global Forum on
Transparency and Exchange of Information for Tax Purposes of the Organisation for
Economic Cooperation and Development.
Article 653
Measures to prevent and combat money laundering an d terrorist financing
1.
The Parties agree to support international efforts to prevent and combat
money laundering and terrorist financing. The Parties recognise the need to
cooperate in preventing the use of their financial systems to launder the proceeds of
all criminal activity, including drug trafficking and corruption, and to combat
terrorist financing.
2.
The Parties shall exchange relevant information, as appropriate within their
respective legal frameworks.
3.
The Parties shall each maintain a comprehensive regime to combat money
laundering and terrorist financing, and regularly review the need to enhance that
regime, taking account of the principles and objectives of the Financial Action Task
Force Recommendations."
While both Articles provided useful background to the proper construction of POCA, of
particular relevance to the question of whether the POCA function of seeking UWOs fell to
be construed as a mere power or alternatively as a duty to be performed whenever their use
20
appeared necessary and appropriate was the obligation in Article 186 of the TCA on the
United Kingdom to make its best endeavours to ensure that internationally agreed
standards in the financial services sector for regulation and supervision, for the fight against
money laundering and terrorist financing and for the fight against tax evasion and
avoidance, were implemented and applied in the United Kingdom. That obligation related
to the implementation and application of standards or high-level goals, and not merely to
particular matters which the United Kingdom was already under a specific legal duty to do.
[31]
The concept of "best endeavours" was now recognised as a relatively common term
of art setting out an enforceable standard of behaviour in various international law contexts;
United Kingdom (2010) 51 EHRR 9, and the general discussion in KS Energy Services Ltd v BR
Energy (M) Sdn Bhd [2014] SGCA 16. In essence, the concept involved leaving no stone
unturned or doing everything that could reasonably be done in order to achieve the
stipulated outcome.
[32]
Considering that background to POCA Part 8, it was clear that the function of
seeking a UWO was not merely a power enjoyed by the Scottish Ministers, but something
that they were obliged to do whenever that was necessary and appropriate for the purpose
of meeting internationally agreed standards for combatting international money laundering
and tax evasion.
21
The need to apply for a UWO in the present case
[33]
Considering that, on a proper construction of POCA Part 8 in context, the Scottish
Ministers were obliged to apply for UWOs where necessary and appropriate in the sense
already described, and that the petitioner had provided material to the Ministers setting out
a prima facie case that a PEP, President Trump, held property in Scotland with a value of
more than £50,000 and that there were reasonable grounds to suspect that his known sources
of lawfully obtained income would have been insufficient for the purchase of that property,
the Ministers were obliged to present evidence to the court that best endeavours had been
used in this case to uphold the internationally agreed standards referred to in Article 186 of
the TCA.
[34]
Instead, the Ministers had adopted a blanket policy of "neither confirming nor
denying" in relation to the matter; in other words, contrary to the principles of good
governance, justice and propriety, they were declining to put before the court, and thus
presumptively into the public domain, material informing both the question of whether or
not they had indeed taken a decision about whether to apply for a UWO in relation to
President Trump, and the claimed legal and factual basis for any such decision. Given that
the Ministers accepted that the exercise of what they characterised as a discretion to apply
for a UWO was subject to the normal public law duties surrounding and governing the
exercise of such a discretion, their adoption of a "neither confirm nor deny" policy
prevented the petitioners and the court from ascertaining whether or not those duties had
been complied with in the context of their apparent inaction in relation to President Trump.
[35]
The Ministers had failed to provide any adequate justification for that blanket policy,
whereas in point of law they were obliged to put forward a cogent justification for it w hich
could be evaluated by the court, similar to that required in cases where public interest
22
immunity was asserted, if the policy was to be respected rather than treated as a form of
abuse of process. The matter could not simply be taken on trust. Reference was made to
4240 per Maurice Kay LJ at paragraphs 19-20 and to Somerville in the House of Lords at, eg
paragraphs 62-64. The supposed justifications advanced for the "neither confirm nor deny"
policy of the Ministers, contained in the affidavit by the Head of the CRU placed before the
court, were all concerned with the aim of disrupting crime and making Scotland a hostile
environment for criminals, and with avoiding potential dissipation of assets, tipping off or
unnecessary harm to the reputations of individuals under investigation. While there could
be particular cases where those justifications might have some force, none of them did in the
context of UWOs against PEPs, which proceeded without any necessary link to, or
implication of, criminal behaviour. Against the shadowy background into which the
Ministers had chosen to place their processes concerning a potential UWO in relation to
President Trump, the declarator sought by paragraph 4(f) of the petition ought to be
granted.
Respondents' submissions
[36]
Ms Crawford QC for the Scottish Ministers invited me to refuse the petition. In
relation to the declarators sought by paragraphs 4(a), (b) and (c) of the petition, they were
either not expressed in a way that would resolve any live dispute between the parties, or at
any rate should be refused as having no practical effect. Reference was made in this
paragraph 53. The declarators sought by paragraphs 4(d), (e) and (f) of the petition had no
proper foundation in fact or law and should accordingly be refused.
23
Designation of responsible minister
[37]
It was clear from the definitions section for Part 5 of POCA (s. 316) that the Scottish
Ministers were the enforcement authority for that Part of the Act. It should not be lost sight
of that Part 8, dealing as it did with investigatory powers and the like, was essentially
corroborative of the functions which were to be carried out in terms of Part 5. Any statutory
function conferred on the Ministers could, in terms of section 52(3) of the Scotland Act 1998,
be exercised by any member of the Scottish Government. The Ministers were collectively
responsible for the functions of the Government except where th ose functions had been
conferred on the First Minister alone, or else were "retained functions" of the Lord Advocate
1998 Act, section 52(4) and (5). POCA section 396A(1) conferred the power of seeking
UWOs on the Ministers as a whole, not on the First Minister alone, nor on the
Lord Advocate as a "retained function". It followed that that power could be exercised by
any of the Ministers and that their collective respon sibility would thereby be engaged. The
allocation of portfolio responsibility for seeking UWOs to the Lord Advocate in no way
derogated from that collective responsibility; whatever the petitioner may previously have
understood, the Answers to the petition had made it clear that the Ministers as a whole were
legally and politically responsible for the exercise (or non-exercise) of that power.
[38]
Nothing in the submissions advanced for the petitioner was capable of affecting that
simple analysis. In relation to POCA Part 3, Wright had decided only that the reference to
"prosecutor" for the purposes of that Part was a reference to the Lord Advocate as head of
the system of criminal prosecution; she alone was responsible for what was done by the
prosecutor under that Part. In relation to Part 8, sections 396A and 396D clearly conferred
general functions on the Scottish Ministers collectively and also conferred retained functions
24
on the Lord Advocate. There was nothing problematic about that; comparison with the
equivalent Part 8 functions in the rest of the United Kingdom (ss. 362A and 362D) showed
that Parliament had no difficulty with the same entity performing all of the various
functions described in those sections and there was, accordingly, no good reason to suppose
that there was any implication that the Lord Advocate could not similarly perform all of
those functions in the Scottish context, albeit some of them would be performed as her own
retained functions and others as functions of the Ministers as a whole for which portfolio
responsibility had been passed to her. No useful analogy could be drawn from Kapri, an
extradition case which proceeded under an entirely different legislative framework, and
which in any event contained nothing calling into question the analysis of POCA advanced
by the Ministers.
[39]
The Carltona principle applied to the Scottish Ministers: Somerville v Scottish
House were not doubted when the case progressed to the House of Lords, and see also Re
Buick [2018] NICA 26 at paragraphs 16-18. While it was accepted, in accordance with the
principle exemplified in RM, that the Scottish Ministers had to exercise their power to seek
UWOs in accordance with the statutory provisions conferring that power, neither RM, King,
by analogy, for the proposition that any special or restrictive tool for construction of the
conferring powers had to be used. However, standing that section 52(3) of the Scotland Act
provided expressly that statutory functions of the Scottish Ministers should be exercisable
by any member of the Scottish Government, the suggestion that POCA section 396D
impliedly restricted the ability of the Lord Advocate, a member of the Scottish Government,
to exercise any of the functions conferred on the Scottish Ministers by POCA Part 8, fell foul
25
of the presumption against one enactment impliedly repealing another, and of the idea that
any provision of the Scotland Act, as the expression of a constitutional settlement, could
only be repealed expressly. Reference was made to H v Lord Advocate [2012] UKSC 24, 2012
SC (UKSC) 308, per Lord Hope at paragraph 30. Properly construed, nothing in
section 396D, or indeed elsewhere in POCA, operated to prevent the Lord Advocate, as a
member of the Scottish Government, from discharging any of the functions conferred on the
Scottish Ministers as a whole by Part 8 of the Act.
Nature of the function of seeking UWOs
[40]
While it was accepted that Moohan confirmed that judges could and should take into
account rules of international law binding on the United Kin gdom in interpreting statute
and in developing the common law, there was no EU or international obligation requiring
the United Kingdom to have UWOs as part of an anti-money laundering framework. The
Fourth Money Laundering Directive had required Member States to put in place certain due
diligence and related measures which were to be incumbent upon "obliged entities", not
upon the Member States or their emanations. Those requirements had been transposed into
domestic law. While the definition of a PEP in POCA had been imported into domestic law
from European Union law, and money laundering was certainly an area dealt with by that
law, the UWO regime was not a product of European Union law and was not required in
order to enable the United Kingdom effectively and sufficiently to discharge its international
obligations.
[41]
It followed that POCA section 396A did not require to be construed so as to comply
with European Union law. Examining Article 186 of the TCA, the petitioner had not pointed
to any internationally agreed standard requiring that UWOs form part of domestic law, far
26
less that they required to be applied for by ministers, or indeed granted by courts, in every
case where the conditions set out in POCA section 396B were or might be regarded as met.
Indeed, it was explicitly clear from that section that the court retained a discretion to refuse
to grant a UWO even where those conditions were met. There was no good reason to
suppose that, while courts had a discretion whether or not to grant a UWO on an application
for one being made, the Scottish Ministers had no discretion as to whether or not to make an
application in the first place.
[42]
Even if some kind of international obligation based on "best endeavours" could be
discerned to exist in this present context, that concept was not a settled term of art in
international law, and any declarator based on it would be impermissibly vague in domestic
law as a source of legal obligation to seek to achieve a particular result. The international
law cases cited by the petitioners all arose in specific, fact-sensitive contexts in which it was
clear unlike in the present case what was or would be required by the deployment of
"best endeavours".
[43]
While any decision by the Ministers to seek or not to seek a UWO would have to be
taken consistently with the policy and objectives of POCA, there remained within those
parameters a broad discretion in the Ministers as to whether or not to make an applicat ion in
any particular case. POCA Part 8 provided a range of measures which could be used in
support of its policy objectives, and prescribed no hierarchy amongst them. That was a clear
indication of the existence of a discretion as to whether, when and by resort to which
available measures any action under that Part might be taken. The suggestion that there
was any sort of specific obligation on the Scottish Ministers to make an application when the
relevant conditions appeared to be met, and an application for a UWO might be thought by
some to be appropriate, was without a proper basis in law.
27
The need to apply for a UWO in the present case
[44]
The Ministers operated a "neither confirm nor deny" policy in relation to what they
might or might not have considered, or be considering, in relation to potential applications
for UWOs. While that policy was capable of admitting exceptions in suitable circumstances,
no reason for making an exception to it was considered appropriate in the case of
President Trump.
[45]
A variety of policy considerations lay behind the Ministers' decision to "neither
confirm nor deny" what they might have been considering about any particular application
for a UWO. A UWO was not merely an investigatory tool; failure to comply with it gave
rise to a presumption that property had been obtained through unlawful conduct of some
kind and was subject to civil recovery. Whatever the true legal position about the pre-
conditions for applying for and obtaining a UWO, there was in practice a taint of criminality
that might be perceived to attend the process and which risked damaging reputations
unwarrantedly if the Ministers disclosed what they might be considering doing. The
affidavit of the Head of the CRU before the court dealt with various other important
practical matters which supported the "neither confirm nor deny" policy, including the fact
that an application for a UWO could and in practice was likely to be made ex parte so as to
prevent dissipation of assets or destruction of evidence.
[46]
This was a case of a litigant criticising a failure to provide information about what
the Ministers might be doing in relation to someone who was a stranger to the proceedings.
The petitioner had come to court saying that it was able to make a proper challen ge to the
Ministers' apparent inaction in relation to President Trump. That challenge was based on its
argument that the Ministers had an obligation of some kind to apply for UWOs in
28
appropriate cases, and that President Trump's case was such an appropriate case. The
Ministers had engaged fully with the argument that POCA imposed any such obligation on
them but declined to engage with any argument about the merits of an individual case
concerning a third party. Nor should the court do so. This situation was a world away from
cases like Mohamed, in which litigants were asking for information about processes that had
been applied to them personally and where a prima facie case had been made out which
called for an answer from government. This was not a case in which the "neither confirm
nor deny" policy was contrary to good governance or the requirements of open justice.
Discussion and decision
Designation of responsible minister
[47]
The petitioner's argument that the Lord Advocate cannot properly be designated as
the Scottish Minister responsible for seeking UWOs depends upon the validity of two
propositions; firstly, that POCA section 396D does have the effect of impliedly excluding the
Lord Advocate from performing that function and secondly, if so, that the effect of
section 52(3) of the Scotland Act 1998 is capable of being restricted by way of such an
implication.
[48]
In relation to the first proposition, section 396D concerns itself with what is to
happen after a UWO has been granted, and indeed at least apparently complied with. That
is not an immediately obvious source for an implied restriction on who may properly decide
whether to apply for a UWO in the first place. The subsection draws no distinction between
UWOs granted in respect of PEPs and those granted in respect of other persons, which again
might make it an unlikely source of implied limitation of the Lord Advocate's powers in
relation to the former but not the latter.
29
[49]
Turning to its substance, section 396D provides that if an interim freezing order is in
place in relation to the relevant property, certain prompt decisions require to be made. The
Scottish Ministers, being the parties on whose application the UWO will in point of form at
least have been obtained in the first place, are to consider whether to afford the
Lord Advocate the opportunity to decide whether or not to undertake any of the functions
which POCA specifically confers on her, namely to commence Part 3 confiscation
proceedings in relation to the property, or to apply for one or other of various different
types of order that can be sought by her under Chapter 3 of Part 8 as corroborative of
confiscation or money laundering investigations. If that opportunity is afforded to the
Lord Advocate, she then decides whether or not to take any of those actions. The Scottish
Ministers are also required by section 396D to decide, once a UWO has been granted and
apparently complied with, and an interim freezing order is in place, whether they should
undertake any of the functions which POCA confers on them generally, namely to
commence Part 5 civil recovery proceedings in relation to the property, or to apply for one
or other of various different types of order that can be sought by them under Chapter 3 of
Part 8 as corroborative of civil recovery investigations. Corresponding provision is made for
less urgent action on the same lines if no interim freezing order is in place.
[50]
I do not find it possible to discern from section 396D any implicit Parliamentary
intention that the Lord Advocate may not hold portfolio responsibility as the Scottish
Minister concerned with applying for a UWO, whether in relation to a PEP or otherwise. All
that the section in essence says is that once a UWO has been granted and apparently
complied with, the Scottish Ministers are to decide whether to give the Lord Advocate the
opportunity to take the case forward under the POCA functions which are allocated
specifically to her under that Act (and which are thus retained functions in terms of the
30
Scotland Act), or whether to take it forward under the POCA provisions which are allocated
to them generally under that Act, or indeed to take neither course of action.
[51]
The subsection does not specifically envisage any dialogue between the
Lord Advocate and the other Ministers in relation to its subject matter; rather, it simply
requires a decision or decisions to be made as to which further form(s) of POCA procedure,
if any, should be taken in the case once the information sought by the UWO has on the face
of matters been obtained. Nothing in the section expressly or implicitly prevents the
decisions which the Ministers require to make being made by the Lord Advocate as the
Minister allocated that responsibility, and indeed the entire process contemplated by
section 396D might well run more efficiently if that were to be the case. Similarly, while it
would of course be difficult, if not impossible, in a situation where the Lord Advocate
performed the decision-making functions of the Ministers in terms of section 396D on their
behalf, to ensure that information about the case under consideration could be divided up in
a legally or indeed factually effective manner so that some of it would only be known to the
Ministers and some only to the Lord Advocate, there is nothing in the Act that requires such
a division and no reason obvious to me why any need for it should be thought to exist.
[52]
Should the Lord Advocate take a decision which section 396D indicates is one for the
Ministers, then the legal distinction between the functions of the Ministers and of the
Lord Advocate is not elided. A decision taken by the Lord Advocate on behalf of and as one
of the Ministers remains in law a decision of the Ministers as a whole for which they remain
collectively legally and politically responsible. Equally, a decision taken by the
Lord Advocate in the exercise of her retained functions is one for which she alone is so
responsible. The circumstance that in point of fact the same person may be taking those
decisions is not capable of undermining that fundamental distinction as to their legal nature.
31
[53]
I therefore conclude that there is no implication properly to be drawn from the terms
of POCA section 396D that the Lord Advocate cannot properly be designated as the Scottish
Minister responsible for seeking UWOs, whether in relation to PEPs or otherwise. I did not
find the suggested analogy with the law of extradition useful; a question as to what may be
implied by the terms of any particular statute evidently depends on a consideration of the
precise terms of that statute rather than any other statute. The terms of POCA under
consideration bear no relationship to the terms of the Extradition Act 2003, and in any event
there is no judicial decision as to the effect of the division of functions between the Scottish
Ministers and the Lord Advocate under the 2003 Act which might cast any light on the
question in the present case. Nor did I find comparison with the provisions of POCA
dealing with UWOs elsewhere in the United Kingdom to be helpful those provisions
necessarily reflect the very different legal and constitutional arrangements pertaining
elsewhere and provide no sound basis for a decision on the import of section 396D in the
Scottish context.
[54]
Had I been of the view that there was any such implication as was contended for, I
would have required to consider whether it could receive effect, standing the terms of
section 52(3) of the Scotland Act, which straightforwardly provides: "Statutory functions of
the Scottish Ministers shall be exercisable by any member of the Scottish Government".
While Mr O'Neill was anxious to present his argument as one which would simply restrict
the power of the First Minister to allocate the relevant portfolio responsibility to the
Lord Advocate, and not as an argument for an implied pro tanto repeal of section 52(3), there
can be no doubt that, if the argument were to prevail, there would be a statutory function of
the Scottish Ministers (namely, the function of applying for UWOs under POCA
section 396A, at least in relation to PEPs) which would not be exercisable by one member of
32
the Scottish Government, namely the Lord Advocate, and that that would be the case
because of an implication arising from the terms of section 396D. It is difficult to see that
situation as amounting in practice to anything other than an implied partial repeal of
section 52(3) of the 1998 Act. There is a strong presumption against the implied repeal of
legislation which is as recent and as weighty in its subject-matter as the 1998 Act; see H v
Lord Advocate at paragraph 30. It may be, indeed, that implied repeal of any element of the
1998 Act, as a statute setting forth the legal terms of a political constitutional settlement, is
simply not possible in point of law. Accordingly, even had there been at least some basis for
discerning in POCA section 396D an implied intention to derogate from the terms or effect
of section 52(3) of the 1998 Act, such an implication could not have been given the effect
which the petitioner's argument requires of it.
[55]
It follows that there is no proper basis for making any declaration that there exists
any restriction on the ability of the Lord Advocate to perform on behalf of the Scottish
Ministers the functions of the latter in terms of POCA section 396A.
[56]
Turning to the declarators sought by the petitioner concerning the respective
responsibilities of the Scottish Ministers and the Lord Advocate in relation to applying for
UWOs, the first is:
"that the sole responsibility for determining whether to apply for an Unexplained
Wealth Order rests with the Scottish Ministers (including the Lord Advocate) who
must act collectively in their determination of whether such an order should be
sought from the Court of Session."
As explained, there is no live dispute between the parties that sole responsibility for
determining whether to apply for a UWO rests with the Scottish Ministers, who include the
Lord Advocate. There is, however, no need for the Ministers to act collectively in
determining whether to seek a UWO; the effect of section 52(3) is clear that any member of
33
the Scottish Government may make that determination, and I have decided for the reasons
already stated that that member may be the Lord Advocate. There is no dispute that if the
determination is made by one member of the Scottish Government, responsibility for that
determination is collective in nature. The declarator first prayed for accordingly falls to be
refused, primarily because it mis-states the distinction between decision-making and
responsibility for the decisions made, and secondarily because those elements which
correctly state the legal position do not reflect any actual dispute between the parties.
[57]
The second declarator sought by the petitioner concerning the respective
responsibilities of the Scottish Ministers and the Lord Advocate in relation to applying for
UWOs is that:
"if to any extent the Lord Advocate is involved in any decision-making concerning
whether to apply for an Unexplained Wealth Order, notwithstanding any prior
designation as the Scottish Minister with relevant portfolio responsibility for the
Civil Recovery Unit, the Lord Advocate's involvement is and only is qua one of the
Scottish Ministers, and does not involve the Lord Advocate's exercise of any of her
retained functions as defined at section 52(6) of the Scotland Act 1998."
I did not understand any aspect of that proposed declarator to be in dispute, at least by the
stage the petition was answered by the Scottish Ministers. As was said by the Lord
President (Carloway) in Wightman at paragraph 22:
"... there are limits to the general right to a legal ruling. One is that a court should
not be asked to determine hypothetical or academic questions; that is those that will
have no practical effect. In a case where there are no petitory conclusions, the
declarator must have a purpose. There has to be some dispute about the matter
sought to be declared. The declarator must be designed to achieve some practical
result."
Reference may also be made to Keatings at paragraph 53, to the same effect. The declarator
sought in this regard is not a matter in dispute and the prayer in support of it falls to be
refused for that reason. To the extent that the petitioner is able to make out that there was,
34
or appeared to be, a relevant dispute about the matter when it raised the petition, it may
seek to have that reflected in the disposal of the expenses of the process.
[58]
The third declarator sought by the petitioner concerning the respective
responsibilities of the Scottish Ministers and the Lord Advocate in relation to applying for
UWOs is that "the Scottish Ministers may not delegate responsibility for determining
whether to apply for an Unexplained Wealth Order to any other person, body or
department." While it had been understood before the substantive hearing of the petition
that this related to a claimed restriction of the application of the principle in Carltona to the
functions of the Scottish Ministers, and some discussion of that matter took place during the
hearing, ultimately the suggestion for the petitioner was not pressed to that extent, and
simply came to be, as set out above, that the performance of statutory ministerial functions
by a particular minister might be deemed inconsistent with the intention of Parliament as
evinced by implication from statutory provisions. That argument has been dealt with
already.
[59]
There is also an issue about what exactly the word "delegate" might be thought to
mean in the declarator sought. The Carltona principle is not regarded in law as an example
of delegation properly so called. Standing the terms of section 52(3) of the Scotland Act,
whether the performance of a function conferred on the Ministers as a whole by one of their
number to whom that responsibility has been allocated amounts in law to a delegation or
not appears to be an issue of nothing more than semantic significance; if it is a delegation, it
is a delegation which section 53(3) expressly permits. The overall position may correctly be
stated as being that the power to make a decision statutorily confided in the Ministers as a
whole may be exercised by one of their number, and the Carltona principle operates to elide
any distinction between that Minister and civil servants operating under his general
35
direction and responsible to him. Since the terms of the declarator sought either do not
accurately express that position, or at best express it in a clumsy and potentially misleading
manner, the prayer in support of it will be refused.
[60]
Although the court is declining for the reasons stated to grant any of the declarators
sought in Statement 4 of the petition at paragraphs (a) to (c), it may be that the petitioner
will be able to take some comfort from the fact that the legal position about the allocation of
decision-making power and responsibility concerning UWOs as between the Ministers as a
whole and the Lord Advocate is as has been described and is now explicitly clear. It was
apparent that a principal practical driver for the making of the present application to the
court was the belief held firmly by the petitioner that the particular role and responsibilities
of the Lord Advocate in the present constitutional arrangements in Scotland were being
used as a means of deflecting legal and political responsibility for decision-making about
UWOs, and in particular for the decision-making concerning the case of President Trump,
away from the Scottish Ministers in general. While I can and do express no view
whatsoever about the validity of the petitioner's apparent concern in that regard, the
clarification of the legal position achieved by way of the proceedings in this petition ought to
ensure that no scope for confusion about those matters on anyone's part can reasonably
continue.
Nature of the function of seeking UWOs
[61]
I accept that, construed in its context and background (which may include the United
Kingdom's international obligations), a statutory power such as that contained in POCA
section 396A may amount in law to a duty to act, either in general or in specific situations.
The foundation of the petitioner's primary argument in this connection, as shown in the
36
wording of the declarator sought at Statement 4(d) of the petition, is that, via section 29(1) of
the European Union (Future Relationship) Act 2020, the terms of Article 186 of the TCA
impose an obligation on the Scottish Ministers to use their best endeavours to combat and
prevent money laundering and corruption, particularly by individuals who hold or who
have held important public functions. While the Ministers do not remotely seek to deny that
combatting and preventing those social ills are valuable policy goals, they demur from the
suggestion that their legal obligations in those regards are as contended for by the petitioner.
[62]
There are insuperable problems for the petitioner's argument that Article 186 of the
TCA is capable of informing the proper construction of POCA section 396A. Firstly,
Article 186 is not one of those provisions of the TCA which deal with money laundering.
Those types of provision (which include Article 653) are gathered in Title X ("Anti-Money
Laundering and Counter Terrorist Financing") within Part Three of the TCA ("Law
Enforcement and Judicial Cooperation in Criminal Matters"). Title XI of that Part ("Freezing
and Confiscation") contains a variety of provisions dealing with cooperation between the
United Kingdom and the European Union Member States for the purposes of inter alia
investigations and proceedings aimed at the freezing of property with a view to subsequent
confiscation thereof in the criminal context. Article 186, on the other hand, forms part of
Title II ("Services and Investment") of Part Two ("Trade, Transport, Fisheries and Other
Arrangements") of the TCA, and in particular of Section 5 ("Financial Services") of
Chapter 5 ("Regulatory Framework") of that Title.
[63]
The first Article of that Section, Article 182, provides that the Section "applies to
measures of a Party affecting the supply of financial services". Against that background, it
may be seen that when Article 186 talks of "internationally agreed standards" for the fight
against money laundering and terrorist financing and for the fight against tax evasion and
37
avoidance, it is talking about such standards in the financial services sector and not in any
more general context. In particular, it is not addressing any standards in relation to
investigations or proceedings concerning the possible confiscation of property which has
been acquired in the United Kingdom, whether by PEPs or otherwise. Further, the
internationally agreed standards which are specifically identified in Article 186 all deal with
such standards in the financial services sector, such as in the banking, insurance and
securities regulation fields. Insofar as there is reference to unspecified further standards,
both the context of the part of the TCA in which Article 186 is located and the eiusdem
generis principle of construction point towards those standards also being found in the
financial services sphere.
[64]
Further, the petitioner's argument did not point to any specific internationally agreed
standard of relevance to the present case except by direct reference to the notions of "the
fight against money laundering and terrorist financing" and "the fight against tax evasion
and avoidance" mentioned in Article 186 itself. Those are aims, goals or ends, and are
conceptually quite different from the standards (i.e. criteria for judging the quality) of
whatever efforts may be made to achieve those ends. The petitioner's argument based on
Article 186 crucially and erroneously confounds an end with means to achieve that end.
[65]
Finally, while the use of "best endeavours" is a concept which is not so inherently
vague that it could never form the basis of an obligation in international law (any more than
in domestic law), it is likely to leave room for doubt as to its application in at least some sets
of circumstances. In this case, even had I been able to conclude that the Scottish Ministers
were legally obliged to use their best endeavours to combat and prevent money laundering
and corruption, it would have required a most accomplished alchemist to transmute an
obligation couched at that level of generality into a specific duty to seek a UWO in any
38
circumstances where the relevant requirements provided in POCA section 396B were made
out, as envisaged by the declarator sought at Statement 4(e) of the petition.
[66]
Article 653 of the TCA is no more helpful for the petitioner. While located in that
part of the Agreement which does indeed deal with money laundering, corruption and
related subjects, it is in extremely vague terms, requiring the parties to "support
international efforts", to "cooperate" and to "exchange relevant information". Even the
most specific paragraph simply requires the parties to the Agreement to "maintain a
comprehensive regime to combat money laundering and terrorist financing, and regularly
review the need to enhance that regime, taking account of the principles and objectives of
the Financial Action Task Force Recommendations". The petitioner did not suggest that the
United Kingdom did not have a comprehensive such regime, that that regime was not kept
under review, or that it failed to take account of the recommendations referred to. In these
circumstances nothing in Article 653 is capable of providing support for the declarators
sought by the petitioner at Statement 4(d) or (e).
[67]
Ultimately, then, the power conferred on the Scottish Ministers in terms of POCA
section 396A to apply to this Court for a UWO cannot properly be construed as a duty so to
apply in any particular set of circumstances. Rather, decisions as to whether to apply for a
UWO in any particular case, or to pursue one of the other investigatory mechanisms
envisaged by POCA, or to take no relevant action, are matters for the Ministers in the
exercise of a wide discretion. While it was readily conceded by the Ministers that the
exercise (or non-exercise) of the power to seek a UWO, in particular, would be subject to
review on grounds generally available in public law in the course of judicial supervision of
administrative action, the specific nature of that power is not as claimed in the declarator
prayed for at Statement 4(d) and does not extend to a duty of the kind described in the
39
declarator prayed for at Statement 4(e), either as prayed for in the petition or in the form
ultimately suggested by Mr O'Neill. Those prayers accordingly fall to be refused.
The need to apply for a UWO in the present case
[68]
Given that the declarator sought by the prayer at Statement 4(f) of the petition,
namely that by failing to seek a UWO in relation to President Trump's assets in Scotland, the
Scottish Ministers have failed in their duty and have therefore acted unlawfully, is
predicated entirely on the existence of the claimed duty on the Ministers to seek a UWO in
any circumstances where the requirements provided at POCA section 396B are made out
and a UWO appears to be the most appropriate course of action to take, and I have held that
no such specific duty exists, it is apparent that that declarator too falls to be refused.
[69]
The Ministers have properly accepted that their power to apply for UWOs is not one
which is immune to judicial review on a variety of potential grounds, for example were they
to use the power other than for the purposes contemplated by POCA, to take into account
irrelevant circumstances or not to take into account relevant circumstances in making their
decision, to adopt a policy unlawfully restricting their use of the power, or to make a
decision which no reasonable person could make about a potential UWO application. As
Mr O'Neill pointed out, it therefore remains possible that the apparent decision of the
Ministers not to seek a UWO in relation to President Trump's Scottish assets is indeed
attended by some vitiating factor which the Minister's "neither confirm nor den y" policy is
serving to obscure. That is undoubtedly true, though it is equally true that nothing which
the petitioner has pleaded or argued positively suggests that that may be the case.
[70]
While it is naturally disquieting in the abstract that any government entity should
consider itself constrained to maintain any degree of silence in litigation concerning
40
important matters of public administration, it is important to understand specifically in
every case whether such a policy may be justified by the wider demands of good
governance as well as what impact, if any, such silence may have in arriving at a just result
in the litigation. In order fully to understand the role of the "neither confirm nor deny"
policy in the context of this petition it is in the first instance necessary to bear in mind the
respective responsibilities of parties in applications to the supervisory jurisdiction of the
court.
[71]
It is the responsibility of a petitioner only to come to court and seek to challenge
administrative action or inaction on grounds which it may responsibly advance. The
petitioner in the present case has met its obligations entirely in that regard; it has challenged
the Ministers' apparent inaction solely on the basis of the substantial legal arguments with
which I have already dealt. The responsibility of a respondent to an application like the
present is to respond candidly to the case made against it, and again the Ministers have
complied with their obligations in that regard by putting forward their own legal arguments
against those marshalled by the petitioner. What the Ministers chose not to do in the present
case was to put forward any positive case in relation to matters that would have arisen only
if I had found that there was a duty on them to seek a UWO in any circumstances where the
POCA section 396B requirements were made out and a UWO appeared to be the most
appropriate course of action; namely whether those conditions were met in the case of
President Trump. Had I found that such a duty did indeed exist, I would have had to
evaluate the petitioner's claim that those conditions were met and I would have had to do so
without the benefit of any material from the Ministers which might have suggested the
contrary. Viewed in that context, the Ministers' decision not to present any material in
41
support of the view that the conditions were not met could, if the matter had arisen, only
have assisted the petitioner's position.
[72]
It is also important to understand that a person in the position of the petitioner
(indeed any party to proceedings such as these) may, further, seek the aid of the court to
recover material in the hands of its opponents or third parties which may be relevant to the
proper determination of the case being considered. Upon such an application being made to
it, the court determines after hearing all interested parties whether what is being sought is of
at least potential relevance to an existing issue in the case and is not excluded from recovery
by an applicable peremptory legal rule, and if satisfied that such is the case, may make an
order for its production to the court. At that stage, a party ordered to produce such material
may do so and then argue that some good reason exists for that material not to be disclosed,
either in whole or in part, to the litigant seeking it. The court would then assess such an
argument in the specific context of the material in relation to which it was stated and
determine where the appropriate balance lay as between the competing interests which such
arguments invariably raise. That was the exercise which the House of Lords described as
being required when a claim to public interest immunity had to be decided in Somerville v
Scottish Ministers [2007] UKHL 44, the precise nature of the exercise where as here there
may be competing public interests in play being perhaps most fully described by Lord Scott
of Foscote at paragraph 85.
[73]
In the present case, the petitioner no doubt for reasons commending themselves to
it and its advisors did not seek to avail itself of the court's aid to recover any material in
the hands of the Ministers or others which might have cast light on the question of whether
the conditions to which I have referred were made out in the case of President Trump. Had
it done so, the process I have described would have been gone through carefully and the
42
issues of relevancy, the impact of any exclusionary rule and the basis to any claim to public
interest immunity or its analogues would have been considered and determined with the
appropriate degree of specificity to the particular questions raised.
[74]
It is not self-evident that any inquiry into the justification for the "neither confirm
nor deny" policy in the present case would have been determined against the Ministers.
Mr O'Neill criticised the justifications advanced in the relative affidavit by the Head of the
CRU on the grounds that they were apposite, if at all, to cases where a UWO was sought on
grounds of suspicion of direct or indirect involvement in serious criminality, and th at no
such grounds required to be present when a UWO was sought against a PEP. However,
while it is true that the court is not required to be persuaded of the existence of a reasonable
suspicion of serious criminality when considering an application for a UWO against a PEP,
it cannot grant a UWO against a PEP or anyone else unless persuaded that there are
reasonable grounds for suspecting that the known sources of the relevant person's lawfully
obtained income would have been insufficient for the purposes of enabling him to obtain the
property in question. A suggestion that a PEP ought not to have been able to acquire
property from his lawful income raises at least an inference that it may have been acquired
by unlawful income, and the circumstance of a PEP being in receipt of unlawful income in
turn raises the prospect of corruption in whatever public office that PEP holds or held.
[75]
It may be extremely difficult in practice, and particularly at the stage when conduct
is merely being investigated on potentially incomplete information, to draw a clear
distinction between the commission of mere civil wrongs on the one hand and frank
criminal offences on the other. Indeed, I note that the petitioner's own briefing paper,
referred to above, in addition to arguing the point about apparently insufficient lawful
income, goes on to allege the commission of a good deal of what might be described as
43
penumbral criminal activity by persons said to be connected in various ways with
President Trump, the potential relationship of which activity to the income issue remains
unclear. In these circumstances any attempt to draw a bright dividing line between serious
criminal conduct and other varieties of potential wrongdoing in the context of UWOs
against PEPs would be fraught with difficulty and would represent a very uncertain basis
upon which to formulate a governmental policy of openness in one kind of case and
taciturnity in the other. It would be equally difficult to determine on a case-by-case basis
whether to respond substantively to enquiries about any consideration being given to
applying for a UWO against a PEP. For example, if in response to an enquiry as to whether
consideration was being given to applying for a UWO against PEP "A", the Ministers were
to state that no such consideration was taking place, but in response to a similar enquiry
about PEP "B" declined to make any comment, it is clear how their silence in the latter
instance would, rightly or wrongly, be generally interpreted.
[76]
In the event, it was not necessary for the question of the justification or otherwise of
the "neither confirm nor deny" policy to be determined in relation to any specific material
identified by way of an application made during the procedural stages of the petition as
potentially relevant to the just determination of the petition, and when the substantive
issues of law raised by the petition were determined, the question to which it might have
been relevant transpired to be one which did not in point of law arise. It follows that
ultimately the Minister's "neither confirm nor deny" policy could not, and did not, play any
active role in the determination of the petition.
[77]
Finally, I wish to make it clear that I express no view whatsoever on the question of
whether the POCA section 396B requirements were or appeared to be met in the case of
President Trump, or indeed on the question of the identification of the legal criteria which
44
would have had to have been applied had I required to answer that question in the course of
these proceedings. As already noted, those questions did not arise given the view I took on
the merits of the petitioner's legal arguments as to the nature of the Ministers' power under
POCA section 396A. Accordingly, it is unnecessary to address them. Further, for aught yet
seen the Scottish Ministers may still make a UWO application in relation to
President Trump's Scottish assets on grounds bearing a greater or lesser degree of similarity
to those set out in the petition and expanded upon in the petitioner 's briefing paper. For me
to have expressed unnecessarily any kind of view, however oblique, in relation to the
sufficiency of those grounds for that purpose would clearly be unhelpful should such an
application in due course be made.
Disposal
[78]
I shall repel the petitioner's pleas in law, sustain the respondents' second plea in law,
and refuse the substantive prayers of the petition, reserving meantime all questions of
expenses.
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