Tchenguiz v. Director of the Serious Fraud Office  EWCA Civ 472, 15 April 2014 – read judgment
This judgment is a neat illustration of how important it is to keep the concepts of public law and private law unlawfulness separate – they do not necessarily have the same legal consequences.
It arose thus. The Tchenguiz brothers are high-profile businessmen, and they did not take kindly to being arrested and bailed on charges of fraud at the behest of the SFO. They sought judicial review of the search and arrest warrants. In due course, the Divisional Court ( EWHC 2254 (Admin)) held that the SFO had made material non-disclosure and factual misrepresentations to the judge which vitiated the grant of the warrants, and the brothers have brought a substantial follow-on claim for damages – £300 million according to another recent judgement here.
So the Tchenguiz brothers have established unlawfulness, but, as we shall see, this does not automatically entitles them to damages.
At the end of its judgment, the Divisional Court had made an order declaring the warrants “unlawful” and transferring any actions by the claimants for damages to a judge in the Queen’s Bench Division. The claimants then set out heads of damage pursuant to this order. The SFO’s response was to admit liability for trespass to land in consequence of the order quashing the search warrants, and for any consequential losses.
The SFO then thought about things further, and changed its mind. It sought to withdraw its admission about trespass and in June 2013 was allowed by Eder J to do so: see here – principally on the ground that there was no trespass at the time of carrying out the warrants because, at that time, the warrants were valid on their face as they had not (yet) been set aside by the Court.
The current decision of the CA is against one element of Eder J’s ruling, namely his finding that the principle of res judicata operated to exclude any defence by the SFO to the appellant’s private law claim in trespass. Res judicata means that the issue has been decided before and therefore cannot be re-litigated.
So the question became whether either in its judgment or in its order the Divisional Court disposed of the issue of liability at common law for trespass to land in favour of the claimants.
The claimants submitted that there was no such concept as public law unlawfulness that is distinguishable from unlawfulness for all other purposes. So swept up in the finding of unlawfulness was any trespass claim.
Pitchford LJ summarised the issue in this way:
If “unlawful” means unlawful for all purposes the order disposed of any subsequent claim for trespass between the same parties. If, on the other hand, the law recognises a distinction between unlawful in a public law sense and unlawful in the private law sense, the issue in this appeal will be whether, as Eder J found, the Divisional Court transferred to …. the QBD all questions relating to the claim for damages, including the consequences in private law of entry upon land pursuant to a warrant that had been quashed. 
He then explained this latter distinction, approving at  a statement in a leading textbook (De Smith’s Judicial Review, 7th Edition) that
“A finding by a court that a public authority, in performing a public function, has breached a ground of judicial review does not of itself provide a basis for entitlement at common law to compensation … To recover damages, a recognised cause of action in tort must be pleaded and proved – such as negligence, the tort of breach of statutory duty, misfeasance in public office, false imprisonment or trespass. So while in some cases it may be a necessary condition, it is never a sufficient one for the award of damages that the act or omission complained of be “unlawful” in a public law sense.”
Public law unlawfulness entitles someone to challenge the order made by a judge, here the search warrant. Private law liability for damages of those acting under the authority of a judge in its execution is a different thing. Hence, public law unlawfulness is a term recognised by the law and
is apt to distinguish between public and private law consequences of an act unlawful in public law.
It was then but a short step for the Court to decide that the word “unlawful” in the Divisional Court’s order meant no more than “public law unlawful”, and hence it remains open for the SFO to argue before the judge in due course that there was no trespass because the warrant was still valid at the time the claimants’ premises were entered – it can take a private law point.
Patten LJ agreed with these views about public law unlawfulness. Vos LJ agreed with the result.
This conclusion means that all issues as to damages still have to be determined between the brothers and the SFO, including of course any claims under the Human Rights Act. Whilst the trespass claim may not survive the SFO point made about the order’s validity unless and until set aside, there is far more life in the claim for damages under the Human Rights Act. A good example is Infinis, discussed in my post here, where there was no common law claim, but the claimants has lost “possessions” under A1P1, and therefore had an HRA claim once unlawfulness was established . It will be doubtless said by the Claimants that the unlawfulness found by the Divisional Court is sufficient to torpedo any attempt by the SFO to rely on justification for its action as a defence to an HRA claim for damages.
Anyway, one firmly to watch.
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