Scottish Sheriff Court Decisions

SHERIFFDOM OF GLASGOW AND STRATHKELVIN AT GLASGOW

 

 

NOTE BY SHERIFF A E SWANSON

 

in causa

 

The Scottish Ministers,

Civil Recovery Unit c/o 25 Chambers Street,

Edinburgh, EH1 1LA

 

Minuters

v

 

Omar Sharif

 

Defender

 

Glasgow 27 July 2011

 

The case called before me on 6 July 2011 for a diet of proof. On the Minuters' motion, of consent, the diet of proof was discharged and the action dismissed. The Minuters moved for the expenses of the action to be dealt with on a no expenses due to or by basis and that motion was opposed. I heard submissions from Mr Collins for the Minuters and Mr Farrell for the Defender.

 

The Minuters' submission

 

Mr Collins invited me to dispose of the action with no expenses due to or by on the basis of the approach adopted by the Court of Appeal in England in the case of Regina (Perinpanathan ) v City of Westminster Magistrates' Court and another [2010]EWCA Civ 40 ("Perinpanathan"). The point has not been argued in Scotland before and I was asked by parties to write on the question as it has some importance for the regime of cash forfeiture in Scotland in general. Mr Collins contention was that, based on the Perinpanathan case, my starting point should be a no expenses due to or by disposal.

 

The history of the matter is as follows. The cash in question was detected during a search of the Defender's home undertaken in terms of a warrant granted by the Sheriff at Glasgow under section 23 of the Misuse of Drugs Act 1974. The search did not disclose drugs or drugs related paraphernalia. It did, however, disclose a quantity of cash and a number of bank deposit slips which evidence the placing of sums in excess of £39,000 into an account in the name of a third party between the dates of 1 March 2010 and 1 October 2010. The money was seized in terms of section 294 of the Proceeds of Crime Act ("POCA") on the basis of reasonable suspicion of unlawful conduct. In terms of section 295 of POCA that money was initially detained for a period of 48 hours. An application was then made by the Procurator Fiscal to the Sheriff at Glasgow for that period to be extended for a period of three months. The Court was satisfied that the statutory test had been met and the application was granted.

 

The Civil Recovery Unit act as law agents for Scottish Ministers in the use of their Part 5 powers. The Ministers entered the process by way of Minute on the basis that investigations to that point had done nothing to dispel the reasonable suspicion. The action was warranted on 7 January 2011 and after sundry procedure it called before me on 6 July 2011 for proof.

 

The Scottish Ministers had elected to take the case to proof on the basis of two arguments. Firstly, on the basis of the same information that had satisfied the Sheriff in granting a warrant and in granting the detention application, Ministers believed that the Defender was involved in heroin dealing. Secondly they believed that the Defender was working here illegally. He was a failed asylum seeker. From the documentation found and from certain admissions made by the Defender the Ministers concluded that the Defender was involved in the commercial supply of khat, a leaf used by East Africans. It is not a controlled substance.

 

Forfeiture was sought on the basis of the intelligence and the documents and admission which suggested that the Defender earned around £40,000 per annum from the supply of khat which Ministers considered was equivalent to a fulltime job. The Defender's position was that the money was savings which he had made from the benefits he received from the UK Border Agency. The Defender received £432 per week. This money was for the purchase of food, clothing and other sundries, Council tax, utilities and housing costs being paid for separately. The Defender supports a wife and eight children.

 

In the week running up to the proof Ministers concluded that the case could not be sustained and advised the Defender's agents of their intention to dismiss the action. The reasons for this change of attitude were threefold.

 

Firstly whilst the intelligence picture suggests that the Defender is a "bad egg" and associates with people involved in the supply of drugs there were only two logs implicating the Defender himself in heroin dealing. The Ministers' expert police witness told them that this was insufficient to sustain an inference of long term involvement in drug dealing. This information was only available to those advising the Ministers on 21 June 2011. The reason why the information had come so late was that, for reasons of resources, whilst the existence of an intelligence picture is confirmed at the outset the detail in relation to that intelligence is only confirmed in the lead up to proof. It was suggested to me that given the Civil Recovery Unit handle over 700 cases each year, 65% of which involve Strathclyde Police, the resources available simply could not cope unless this practice was adopted.

 

Secondly, the Ministers' position in relation to the Defender's ability to save from his benefits proceeded upon mis-information provided by the UK Border Agency. Mr Collins had precognosced an officer from the Agency who had advised that the Defender would receive his benefits by way of a pre-paid card known as an azure card. The Defender's position was that he received cash. The UK Border Agency subsequently confirmed that they had given Mr Collins incorrect information and that the Defender did indeed receive cash from them. Since 2003 the Defender has received £153,664.18 in cash.

 

The third point is that there is no evidence to refer the cash found in the Defender's home to payments made to a third party involved in the supply of khat. 5/1/6 of Process shows payments made of £39,728.30 from 1 March 2010 The Ministers' position remains unchanged i.e. that payment on this scale represents a contravention of his immigration status but the Defender says that profit from the enterprise is donated. There is authority to suggest that a Regulatory offence (which this would be) is not sufficient to justify the forfeiture of cash.

 

On the basis of all these factors the Ministers decided not to proceed to proof. Although the normal rule would be that expenses follow success on the basis of the English authority the presumption should be that no costs should be awarded. I was entitled to take into account all relevant factors including financial hardship in reaching my decision.

 

On the question of financial hardship Mr Collins was able to advise me that the Scottish Legal Aid Board ("SLAB") had confirmed that if a finding of no expenses is made the statutory charge would be applied. The money released from detention would be treated as a recovery or preservation of money which would mean that the Defender had to pay himself for his defence. In Mr Collins' submission Ministers acted reasonably and properly and as required in the discharge of their Part 5 duties. In relation to the error made by the UK Border Agency a view was taken at an early stage. In that respect this case is on all fours with Perinpanathan. The only issue to dissuade me from following Perinpanathan would be financial hardship and the Ministers do not believe that the Defender can show prejudice. The Defender is making savings from the cash benefits received which are supposed to be at subsistence level and all other outlays are taken care of. He has declared the savings to be for his return to Somalia. However the benefits paid out are not supposed to be a financial cushion. The Defender has exhausted all his rights of Appeal and is only still here because of criminal prosecutions pending against two of his sons. No financial hardship will be suffered.

 

The Defender's submission

 

Mr Farrell did not dispute the facts as narrated. It is important to understand that the Defender's position has been on record since the section 297 Minute was lodged in December 2010. Those averments are not skeletal and give a detailed statement of the Defender's position at the time and as it remains. The Defender denies categorically that he is involved in illegal drug use. He is a non-commercial supplier of khat to the local Somali community in Glasgow. The community consists of some 200 people. Khat cannot be purchased in Glasgow but is available in London. The Defender came to an arrangement to collect money from the Somalis in Glasgow and pay this through the bank account to the khat supplier. A small profit is made on each sale. That money is used for the benefit of the community. Specifically it is used to rent a hall in Eglinton Street on the south side of Glasgow which is used as a community hall and café. The money pays for utilities and for tea and coffee. There is no charge made for attendance. For that reason the Defender's income has consisted of mass cash payments ever since he arrived 7 years ago.

 

The savings he has made are pretty small. His wife has been able to save money from the household budget even if the theory says she couldn't. It is part of Somali culture to save but the other imperative is the Defender's precarious presence in the UK. His application for asylum has been refused so he is liable to be removed at any time. He will face destitution in Somalia. The legal costs will be in the region of £2000 to £2500 so his savings will be halved if no award of expenses is made.

 

Mr Farrell accepted that in terms of the Perinpanathan case the starting point for me was a no expenses disposal. The factors which he invited me to take into account against that are as follows. First is the financial hardship point with which he had already dealt. The second issue is whether the action was predicated on mis-information. The Ministers have conceded that the information from the UK Border Agency was incorrect. According to Mr Farrell the azure card is only used for single people and families are paid in cash. The third factor is the Ministers' practice in relation to the investigation of cases. Whilst Mr Farrell understands the practical imperative, the argument that the Ministers do not have the resources to look closely at each case when it comes in simply does not stand up to scrutiny. Once a litigant embarks on court procedures whatever the circumstances the Court is entitled to have some confidence that the pleadings can be proved. Otherwise there is little point in the procedures adopted in relation to pleadings and the conduct of actions.

 

The other facts and circumstances which I was invited to take into account were the Ministers' adopted tactics in relation to the litigation. Where tactics don't work there should be consequences. The Minsters' first tactic was to challenge the competency of the original Minute. Mr Farrell resisted this on the basis that to allow the original Minute to be lost and another substituted would have had consequences for Legal Aid. That tactic failed in any event when a proof was fixed. The second tactic was that the Ministers wrote to SLAB trying to get the Defender's grant of legal aid withdrawn. That tactic also failed because SLAB decided that they did not want to get involved. In Mr Farrell's submission the fact that the Ministers threw in the towel once preparations for proof were underway was also relevant.

 

In reply Mr Collins said that Mr Farrell did not understand the forfeiture system. Once the cash has been detained the Procurator Fiscal is functus. Section 297 then comes into play and the money is thereafter detained under section 298(4). The issue about the competency of the Minute was not therefore a tactic but a real point which was dealt with pragmatically on 15 April 2011 when the Minute was treated as the Defender's section 298 Answers. In relation to SLAB Mr Collins said that as the legal aid application had been made at the time of the section 295 proceedings the application was intimated to the Procurator Fiscal and Ministers never received intimation. The Minsters' letter had simply been designed to point out that the usual opportunity to lodge objection had not been afforded to Ministers. As far as the misinformation point is concerned the Ministers stand by the averments in Condescendence 2 relating to diamorphine and khat. That position is correct and true. The problem which the Ministers had was that the quantity of intelligence was not such as to allow the expert police witness to draw an inference from it. Perinpanathan says that no expenses is an appropriate disposal where the enforcement authority has acted with bona fide, reasonably and honestly. Immediately the further information cane to light the Ministers acted so they have been consistent.

 

Mr Collins invited me, if I was not with him on his submission, to confine any award of expenses to the expenses occasioned by the Minute for Forfeiture. Mr Farrell was concerned that that meant he had no recovery against the Procurator Fiscal but Mr Collins position on that was that the Procurator Fiscal had been successful in his application so no issue of expense arose.

 

 

Applicable statutory provisions

The provisions of the Proceeds of Crime Act 2002 ("POCA") governing the civil recovery of the proceeds of unlawful conduct are contained in Part 5. Sections 240 and 241 are so far as relevant as follows:

 

240. General purpose of this Part

240.

(1) This Part has effect for the purposes of -

(a) ...

(b) enabling cash which is, or represents, property obtained through unlawful conduct, or which is intended to be used in unlawful conduct, to be forfeited in civil proceedings before a magistrates' court or (in Scotland) the sheriff.

(2) The powers conferred by this Part are exercisable in relation to any property (including cash) whether or not any proceedings have been brought for an offence in connection with the property.

 

241. 'Unlawful conduct'

241.

(1) Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part.

(2) Conduct which -

(a) occurs in a country outside the United Kingdom and is unlawful under the criminal law of that country, and

(b) if it occurred in a part of the United Kingdom, would be unlawful under the criminal law of that part

is also unlawful conduct.

(3) The court or sheriff must decide on a balance of probabilities whether it is proved -

(a) that any matters alleged to constitute unlawful conduct have occurred, or

(b) that any person intended to use any cash in unlawful conduct.

 

Chapter 3 deals with the recovery of cash in summary proceedings. Section 294 and the following sections provide as follows:

 

294. Seizure of cash

294.

(1) A customs officer or constable may seize any cash if he has reasonable grounds for suspecting that it is -

(a) recoverable property, or

(b) intended by any person for use in unlawful conduct.

(2) ...

(3) ...

 

 

295. Detention of seized cash

295.

(1) While the customs officer or constable continues to have reasonable grounds for his suspicion, cash seized under section 294 may be detained initially for a period of 48 hours.

(2) The period for which the cash or any part of it may be detained may be extended by an order made by a magistrates' court or (in Scotland) the sheriff; but the order may not authorise the detention of any of the cash -

(a) beyond the end of the period of three months beginning with the date of the order,

(b) in the case of any further order under this section, beyond the end of the period of two years beginning with the date of the first order.

(3) A Justice of the Peace may also exercise the power of a magistrates' court to make the first order under subsection (2) extending the period.

(4) An application for an order under subsection (2)-

(a) in relation to England and Wales and Northern Ireland, may be made by the Commissioners of Customs and Excise or a constable,

(b) in relation to Scotland, may be made by the Scottish Ministers in connection with their functions under section 298 or by a procurator fiscal

and the court, sheriff or justice may make the order if satisfied, in relation to any cash to be further detained, that either of the following conditions is met.

(5) The first condition is that there are reasonable grounds for suspecting that the cash is recoverable property and that either -

(a) its continued detention is justified while its derivation is further investigated or consideration is given to bringing (in the United Kingdom or elsewhere) proceedings against any person for an offence with which the cash is connected, or

(b) proceedings against any person for an offence with which the cash is connected have been started and have not been concluded.

(6) The second condition is that there are reasonable grounds for suspecting that the cash is intended to be used in unlawful conduct and that either -

(a) its continued detention is justified while its intended use is further investigated or consideration is given to bringing (in the United Kingdom or elsewhere) proceedings against any person for an offence with which the cash is connected, or

(b) proceedings against any person for an offence with which the cash is connected have been started and have not been concluded.

(7) ...

(8) An order under subsection (2) must provide for notice to be given to persons affected by it ...

 

297 Release of detained cash

297

(1) This section applies while any cash is detained under section 295.

(2) A magistrates' court or (in Scotland) the sheriff may direct the release of the whole or any part of the cash if the following condition is met.

(3) The condition is that the court or sheriff is satisfied, on an application by the person from whom the cash was seized, that the conditions in section 295 for the detention of the cash are no longer met in relation to the cash to be released.

(4) A customs officer, constable or (in Scotland) procurator fiscal may, after notifying the magistrates' court, sheriff or justice under whose order cash is being detained, release the whole or any part of it if satisfied that the detention of the cash to be released is no longer justified.

 

298. Forfeiture

298.

(1) While cash is detained under section 295, an application for the forfeiture of the whole or any part of it may be made -

(a) to a Magistrates' Court by the Commissioners of Customs and Excise or a constable,

(b) (in Scotland) to the sheriff by the Scottish Ministers.

(2) The court or sheriff may order the forfeiture of the cash or any part of it if satisfied that the cash or part -

(a) is recoverable property, or

(b) is intended by any person for use in unlawful conduct.

(3) But in the case of recoverable property which belongs to joint tenants, one of whom is an excepted joint owner, the order may not apply to so much of it as the court thinks is attributable to the excepted joint owner's share.

(4) Where an application for the forfeiture of any cash is made under this section, the cash is to be detained (and may not be released under any power conferred by this Chapter) until any proceedings in pursuance of the application (including any proceedings on appeal) are concluded.

 

Section 302 also has some relevance.

 

302. Compensation

302.

(1) If no forfeiture order is made in respect of any cash detained under this Chapter, the person to whom the cash belongs or from whom it was seized may make an application to the magistrates' court or (in Scotland) the sheriff for compensation.

(2) If, for any period beginning with the first opportunity to place the cash in an interest-bearing account after the initial detention of the cash for 48 hours, the cash was not held in an interest-bearing account while detained, the court or sheriff may order an amount of compensation to be paid to the applicant.

(3) The amount of compensation to be paid under subsection (2) is the amount the court or sheriff thinks would have been earned in interest in the period in question if the cash had been held in an interest-bearing account.

(4) If the court or sheriff is satisfied that, taking account of any interest to be paid under section 296 or any amount to be paid under subsection (2), the applicant has suffered loss as a result of the detention of the cash and that the circumstances are exceptional , the court or sheriff may order compensation (or additional compensation) to be paid to him.

(5) The amount of compensation to be paid under subsection (4) is the amount the court or sheriff thinks reasonable, having regard to the loss suffered and any other relevant circumstances.

 

 

 

 

 

 

 

Discussion

 

The general approach to expenses

 

The general rule is that expenses follow success. The principle is set out in Maclaren: Expenses in the Supreme and Sheriff Courtss at p. 21 thus: "The principle upon which expenses are awarded is, that if any party is put to expense in vindicating his rights, he is entitled to recover it from the person by whom it was created, unless there is something in his own conduct that gives him the character of improper litigant, in insisting on things which his title does not warrant."

 

The general rule can be departed from in circumstances where the interests of justice so demand. The most recent Scottish case to discuss the general rule and the circumstances in which it should be departed from is a decision of Lord Hodge in the case of Verathon Medical (Canada) ULC v Aircraft Medical Limited [2011] CSOH 60. In that case, which was a patent infringement action, there was what could be described as mixed success. Lord Hodge refused the pursuers' application to amend their patent, assoilzied the pursuers from the conclusions of the counterclaim in which the defenders sought to challenge the validity of the pursuers' patent, and granted the defenders absolvitor in the action for infringement of the pursuers' patent. The pursuers sought the expenses of the counterclaim and the defenders sought the expenses of the counterclaim and the principal action.

 

Lord Hodge was satisfied after hearing submissions that "to hold that expenses follow success would be to take too narrow a view of the relevant circumstances." That was because the counterclaim was the result of the infringement action and had it had not been for the infringement action, the defenders would not have challenged the validity of the pursuers' patent in the courts of the United Kingdom. The judge noted that a significant minority of the time taken in the proof was devoted to the challenge to validity alone. However he found that to be of limited importance because he held that the infringement action brought about the counterclaim and that the counterclaim would have succeeded if the pursuers had been correct in their interpretation of their patent. In such circumstances Lord Hodge was satisfied that it would accord with justice if the defenders were to be awarded a significant proportion of their expenses in relation to the counterclaim.

 

It is therefore accepted that I have a discretion in relation to expenses which allows me to depart from the general rule in certain circumstances. Parties in this action went further in their submissions in suggesting that in actions of this sort where public authorities are exercising their powers of enforcement a different presumption applies entirely. I was encouraged by both parties to take as my starting point the Court of Appeal decision in Regina(Perinpanathan ) v City of Westminster Magistrates' Court and another [2010]EWCA Civ 40. Whilst not binding upon me I was invited to treat the case as being highly persuasive. The question of expenses which arises in this case has not been argued in Scotland before. As I have noted above, however, the approach taken to expenses in Scotland allows me in any event to entertain a no expenses due to or by outcome in appropriate circumstances. There is therefore no presumptive principle inconsistent with the principles discussed in Perinpanathan which would preclude me from adopting that approach.

 

 

The Perinpanathan decision

 

In the case of Bradford Metropolitan District Council v Booth 164 JP 485, which was an appeal against vehicle licensing decisions, Lord Bingham CJ enunciated principles in relation to costs "in questions of this kind." In the case of Perinpanathan the Court held that the principles enunciated by Lord Bingham should apply to the exercise by the police of their powers of forfeiture. Lord Neuberger justified this in his judgement by saying that by the way he expressed himself Lord Bingham intended to refer to any case where the police or a regulatory authority was carrying through what was essentially an administrative decision. Lord Neuberger understood that to mean the performance by the police or regulatory authority of one of its regulatory functions and where the question of costs was governed by section 64 of the Magistrates' Courts Act 1980. That section affords the magistrates a discretion to make such order as to costs as they think just and reasonable.

 

Lord Bingham set out the following principles:

"1. Section 64(1) confers a discretion upon a magistrates' court to make such order as to costs as it thinks just and reasonable. That provision applies both to the quantum of the costs (if any) to be paid, but also as to the party (if any) which should pay them.

2. What the court will think just and reasonable will depend on all the relevant facts and circumstances of the case before the court. The court may think it just and reasonable that costs should follow the event, but need not think so in all cases covered by the subsection.

3. Where a complainant has successfully challenged before justices an administrative decision made by a police or regulatory authority acting honestly, reasonably, properly and on grounds that reasonably appeared to be sound, in exercise of its public duty, the court should consider, in addition to any other relevant fact or circumstances, both (i) the financial prejudice to the particular complainant in the particular circumstances if an order for costs is not made in his favour; and (ii) the need to encourage public authorities to make and stand by honest, reasonable and apparently sound administrative decisions made in the public interest without fear of exposure to undue financial prejudice if the decision is successfully challenged."

Lord Bingham's principles were followed in a number of subsequent cases most notably in a case involving the disciplinary functions of the Law Society, Baxendale-Walker v Law Society [2008] 1WLR 426. As a result of that decision Stanley Burnton LJ stated in the Court of Appeal that the Bradford case was binding upon them. Whilst there was some dispute about the effect of Baxendale-Walker all of the judges were satisfied that the rationale lying behind cases such as the Bradford cases applies equally to cases concerned with forfeiture.

Lord Neuberger expressed the point thus:

"So far as principle is concerned, the judgement of this court in [Baxendale-Walker] has given strong support to the notion that Lord Bingham's three principles should apply where a regulatory body is reasonably carrying out its functions in court proceedings, at least where the rules of that court contain no presumption or principle that costs follow the event. The effect of the reasoning is that, just because a disciplinary body's functions have to be carried out before a tribunal with a power to order costs, it does not follow that there is a presumption that the tribunal ought to order the disciplinary body to pay the costs if it is unsuccessful, and that, when deciding what order to make, the tribunal should approach the question by reference to Lord Bingham's three principles. It is hard to see why a different approach should apply to a regulatory or similar body carrying out its functions before a court - unless the rules of that court have any presumptive principle inconsistent with those principles, such as CPR 44.33 (2). Indeed, given that section 64 applies in this case, as it did in Booth's case [2000]COD 338 , it seems to me that this case can be said to be, if anything, a stronger one for applying Lord Bingham's principles than in .[Baxendale-Walker]. If we were to hold that Lord Bingham's principles did not apply in a case such as the present, the proper approach to the question of costs in regulatory matters would be fairly seen to be incoherent, or at least inconsistent."

 

"The principles appear to me to be well founded, as one would expect bearing in mind their source. In a case where regulatory or disciplinary bodies, or the police, carrying out regulatory functions, have acted reasonably in opposing the grant of relief, or in pursuing a claim, it seems appropriate that there should not be a presumption that they should pay the other party's costs. It is not as if the other party would have no right to recover costs in such a case: as Lord Bingham made clear, one must take into account "all the relevant facts and circumstances of the case", and in particular "the financial prejudice to the particular complainant if the order for costs is not made in his favour". However, it has not been suggested by either party to this appeal that weight should be given in this case to any points other than those I have discussed. In other words, if, as I consider to be the case, Lord Bingham's principles apply in this case, it is not suggested on behalf of the appellant that the Magistrates or the Divisional Court reached the wrong conclusion.

The effect of our decision is that a person in the position of the appellant, who has done nothing wrong, may normally not be able to recover the costs of vindicating her rights against the police in proceedings under section 298 of POCA , where the police have behaved reasonably. In my view, this means that Magistrates should exercise particular care when considering whether the police have acted reasonably in a case where there is an application for costs against them under section 644 . It would be wrong to invoke the wisdom of hindsight or to set too exacting a standard, but, particularly given the understandable resentment felt by a person in the position of the appellant if no order for costs is made, and the general standards of behaviour that can properly be expected from the police, it must be right to scrutinise their behaviour in relation to the seizure, the detention, and the confiscation proceedings, with some care when deciding whether they acted reasonably and properly."

 

 

 

 

Scrutiny of the Ministers' behaviour

 

In assessing whether the Scottish Ministers in their dealings with this matter had acted reasonably and properly in relation to the seizure, the detention, and the confiscation proceedings, I took as my starting point the information relied on in the original application to detain the money seized in terms of section 295. The sheriff who dealt with the application from the Procurator Fiscal required to be satisfied either that there were reasonable grounds for suspecting that the cash was recoverable property or reasonable grounds for suspecting that the cash was intended to be used in unlawful conduct and that its continued detention was justified while its derivation was further investigated or consideration given to bringing proceedings against any person for an offence with which the cash is connected.

 

The application set forth the relevant averments thus:

 

" The reasonable grounds were:-

 

(i)Police Intelligence

Police attended at the Defenders home address under a warrant issued at Glasgow Sheriff Court pursuant to the Misuse of Drugs Act. Several intelligence logs stated that the Defender was supplying heroin. Intelligence also stated that the defender was selling JAAT from his home address"

 

(ii) Circumstances in which the cash was found

Following from the above a search of the Defenders address produced (in terms of cash) $410 in notes from the defenders shirt pocket, £135 was taken from a purse in a wardrobe. Also recovered was a further £500 in cash, £80 in cash and $6,800. The search also uncovered numerous bank receipts---- showing daily deposits of between £300 and £1000 being paid into a bank account in the name of [a third party]

 

(iii) interview of the Defender

[various averments]"

 

 

The Sheriff granted the application and issued an interlocutor dated 29 October 2010 to that effect. Thereafter, the application having been intimated to the Defender in terms of said interlocutor, a Minute of Release for the Defender was lodged in terms of section 297. That Minute sets out a number of admissions in relation to the search, the money recovered and the statements made by the Defender at interview. It goes on to state the Defender's position in relation to the purchase of khat for the Somalian community, what is done with the small profit made on sale and how the Defender saves from the NASS payments he receives. The averments also explain why the defender holds cash in US dollars. The Defender's position was that there being no reasonable grounds for the Pursuer to continue to detain the cash it should be released. On 17 January 2011 a hearing was assigned on the Minute (for 4 March 2011) and intimation ordered.

On 19 January 2011 the Scottish Ministers lodged a Minute in terms of section 298. That Minute was received, the Scottish Ministers sisted as a party and a Hearing also fixed for 4 March 2011 in respect of its craves. That Minute sets out the grounds in substantially the same form as the original application. It states inter alia that " prior to 27 October 2010 officers of Strathclyde Police had received reliable and coherent intelligence indicating that the Defender was actively involved in the supply of both diamorphine and "khat"."

On 4 March 2011 the Defender's Minute was withdrawn and a Hearing fixed for 25 March 2011. On 25 March 2011 the Sheriff allowed that Minute to be received of new, allowed amendment of it, allowed the Minuters to answer it and fixed a Hearing on 15 April 2011. On 15 April 2011 an evidential Hearing was allowed and fixed for 6 July 2011. The Scottish Minsters thereafter took the decision to dismiss the application in the circumstances outlined by Mr Collins in his submission which has brought the matter before me to determine the question of expenses.

Clearly the test for seizure of the money and the detention of it had been satisfied at the earlier stages of the action. The question for me is whether, in all the circumstances of the case, the Scottish Ministers acted reasonably and properly in relation to the seizure, the detention, and the confiscation proceedings.

It is clear that there are two different standards of evidence required to satisfy the different stages of an enforcement action. The sheriff who deals with the original application requires to be satisfied that there is sufficient information to satisfy the test set out in section 295. That stage of the proceedings is an interim measure only and I can see that what is sufficient to satisfy the court in relation to an interim measure may well be different from what is required to satisfy the court on a balance of probabilities when it comes to consider the final position. The averments relating to the police intelligence at the early stage are sufficient to satisfy the test set out above. However the court would expect a sufficiency of evidence at the proof stage to satisfy it that the averment about diamorphine and khat set out in the Minute had been proved. The Minuters took the view, albeit at a late stage, that they could not satisfy that test as the evidence when investigated pointed only to two intelligence logs implicating the Defender in heroin dealing. I take the view that that was a responsible attitude to adopt and that the Minuters acted reasonably and properly in the circumstances. It is unfortunate that it was only when preparing for proof that this information came to light but it would be unreasonable to expect the Minuters to investigate every point fully before an averment is made about it. Responsible officers of court need to ensure that there is substance to the position adopted on record but the Minuters are in no different position here to other litigants coming before the court. It is often the case that the final detailed analysis of the evidence takes place in the run up to proof. In an ideal world perhaps that exercise should be conducted at the outset but very few litigants have the resources to do that. It is a reasonable approach for a public body to adopt which is also charged with preserving its resources.

I also consider the approach taken by the Minuters in relation to the money paid to the Defender by the UK Border Agency to be reasonable. Mr Collins had precognosced the official from that Agency in order to ascertain the position. On the information received initially he made averments about the Minuters' belief that the Defender was working in the UK illegally. Reasonable grounds existed on the basis of that information for suspecting that the cash was recoverable property or was intended to be used in unlawful conduct. As soon as the Minuters were aware that the information from the official at the UK Border Agency was incorrect they decided that that part of the case could not be sustained. In addition there was no way of linking the cash found in the Defender's residence with the supply of khat. Given the concession made by Mr Collins that this Regulatory offence would not, even if proved, have justified forfeiture the point is moot. The Minuters could only have properly sought forfeiture if, having proceeded to proof, the first averment about drug dealing had been proved. However their conduct in relation to the illegal working was not unreasonable in all the circumstances.

I do not find substance in Mr Farrell's submission that I should take into account the way in which the Minuters conducted the litigation. It appears that the Defender's Minute for Release of the money detained in terms of section 295 was lodged just before the Minuters entered the action and sought forfeiture in terms of section 298. In those circumstances I do not find the Minuters' position in relation to the competency of the Minute or the approach to SLAB to be unreasonable. In a practical sense the point was resolved when the section 297 Minute was allowed to be treated as the section 298 Answers and the action proceeded on that basis. The Defender suffered no additional expense in relation to that matter because of the approach taken.

In all the circumstances of this case I am satisfied that Scottish Minsters acted honestly, reasonably, properly and on grounds that reasonably appeared to be sound, in exercise of their public duty.

Financial hardship

In terms of the Perinpanathan case I must also take account of the financial prejudice to the Defender in the particular circumstances of this case if an order for costs is not made in his favour.

The Defender's position from the outset has been that the money seized represents savings which he and his wife have made over a number of years from NASS benefits. When the money was first seized a sum of £125 was returned to the Defender to ensure that he had sufficient funds to buy groceries for his family. Most of the money seized was in US dollars. The Defender's position was that he had converted the sterling paid to him in benefits into dollars both for investment purposes and because dollars are a recognised currency in Somalia. He averred that savings were being made in the event that a decision was made to return the family to Somalia.

The Minuters aver that the benefits paid to the Defender are subsistence benefits and that savings of any substance from such benefits are seldom, if ever, achieved. All other outlays are paid at public expense. In his submission Mr Collins stated that the benefits paid are not supposed to be a financial cushion for return to Somalia.

In the Perinpanathan case Lord Justice Brunton noted that the costs were a "relatively modest sum in comparison with the amount of cash at stake." In this case I was advised by Mr Farrell that the costs which SLAB would seek to recover represented about 50 % of the sum seized. That is a relevant consideration in assessing financial hardship and in other circumstances the loss of 50 % of the sum seized might have persuaded me that the Defender would suffer financial hardship. However I am conscious of the fact that the money which the Defender received was provided by the state to make sure that he and his wife and eight children had subsistence resources to maintain them whilst awaiting the outcome of their asylum application in the UK. Over and above the benefits received of £388 per week the Defender's rent and utility bills were paid by the public purse. Somewhat against the odds the Defender claims to have made savings from the benefits with a view to assisting the family on their return to Somalia.

If no award of expenses is made in the Defender's favour I was advised that SLAB will seek to recover costs from the sum seized. That is a situation in which a public body will be seeking to recover from funds originally made available by another public body. In considering the question of financial hardship to the Defender against that background, I find that the reduction of the sum by the return of money to the public purse does not constitute financial hardship to the Defender in all the circumstances.

Decision

Following the Court of Appeal in Perinpanathan and taking into account all the relevant facts and circumstances, including any financial prejudice to the Defender, I find the actions of Scottish Minsters in pursuing this action to be a reasonable exercise of their functions and Part 5 powers. It seems appropriate that there should be no presumption that the Minuters should pay the Defender's costs where they were reasonably carrying out their functions in court proceedings and then decided, in a reasonable and proper fashion, to dismiss the action. It is of course appropriate to scrutinise the conduct of Ministers in the circumstances of each case before the court and to test the strength of the case averred. However, I am also conscious of the need to encourage public authorities to make and stand by reasonable decisions, based on advice from officers of the court, to dismiss any application before the court in circumstances where in the public interest they consider it appropriate to do so, without fear of exposure to costs.

I will grant the Minuters' motion for the expenses to be disposed of on a no expenses due to or by basis.

 

 

 

 

Sheriff Alayne E Swanson

Glasgow

27 July 2011