Back in 1980, when the UK statutory jungle was a lot less dense, Lord Diplock noted in Duport Steels Ltd and others v Sirs and others [1980] 1 All ER 529 the constitutional doctrine of the separation of powers:
Plus ça change! Roll forward then to 2 May 2007 when the Draconian powers of the Serious Organised Crime Agency (SOCA) - a body orbiting substantially outside judicial reach - found themselves under the beady judicial eye of the Court of Appeal in R (UMBS Online Ltd) v Serious Organised Crime Agency [2007] EWCA Civ 406. And, thanks to the independent reviewing power of the courts, the long arm of the law proved sufficiently flexible to winkle-out an injustice.
In essence SOCA had refused consent to a bank to operate accounts held by the Claimant's payment process company which essentially stalled the Claimant's relevant business operations. The case concerned the application of Part 7 of the Proceeds of Crime Act 2002, Part 7 of which deals with money laundering. As Ward LJ pointed out, sections 327, 328 and 329 of the 2002 Act '. . .make it an offence to engage in a range of activities such as concealing, or being concerned in arrangements dealing with, or acquiring, using or possessing criminal property, which, as defined by s.340, is property which constitutes a person's benefit from criminal conduct and the offender knows or suspects it'. Section 328, in particular provides that it is an offence if a person:
'. . .enters into or becomes concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person'.
Therefore, a bank would commit an offence if it were to permit ordinary banking business to be conducted in respect of funds suspected to be criminal property unless that bank had made an authorised disclosure under section 338 and received the appropriate consent under section 335. It is an offence under sections 330 to 332 for a person not to disclose to SOCA that he knows or suspects that another is engaged in money laundering. And under section 333 it is an offence for anyone who knows or suspects that a protected or authorised disclosure had been made to disclose anything which would prejudice any investigation into the suspected criminal conduct (tipping off).
As indicated, when the bank sought consent to conduct ordinary banking business in respect of the accounts in question SOCA refused this. The Claimant's solicitors consequently wrote to SOCA requesting that they revisit the matter and highlighting the profoundly damaging effect of the situation on the Claimant's business and reputation and that if left unchecked would inevitably kill the Claimant's business completely. However, SOCA refused to revisit the refusal of consent in the absence of a further request for consent from the bank and a change in circumstances.
Judicial review was refused at first instance by Lloyd Jones J since he considered that no arguable case had been established to his satisfaction. However, the Claimant fared better on appeal.Ward LJ noted that SOCA was 'an immensely powerful statutory body whose decisions have the consequence of imperilling private and business banking activity based, initially, on no more than a reported suspicion of money laundering'.
He went on to make the point that if the proper balance is to be struck between undue interference with personal liberties and the need constantly to fight crime then 'the least that can be demanded of SOCA is that they do not withhold consent without good reason'. And since SOCA accepted that they must keep the matter under review they must give consent when there is no longer any good reason for withholding it. SOCA 'can and must act independently of a request from anybody'. A request from the person directly affected by the freezing of the account must, in the view of Ward LJ trigger the duty to look at the matter again. It was:
'. . . absurd for SOCA to suggest that they can only act on a request from the Bank. The Bank may no longer be interested in the matter. The Bank has done its duty by reporting its suspicion and now it may simply sit on its hands and take care not to operate the account until the expiry of the moratorium. It is not directly affected but its customer is and the customers of the customer are. They are entitled to ask SOCA to review the matter and SOCA are obliged to do so.'
Alsatia was the name once given to the London precinct of Whitefriars, which was formerly a sanctuary for debtors, lawbreakers and criminals generally. Sedley LJ observed that in setting up SOCA, the State set out to create its own Alsatia, in the sense of 'a region of executive action free of judicial oversight'. However, despite the will of Parliament in this area, the justice of the common law can provide a bulwark against executive tyranny. As Sedley LJ indicated:
'Although the statutory powers can intrude heavily, and sometimes ruinously, into civil rights and obligations, the supervisory role which the court would otherwise have is limited by its primary obligation to give effect to Parliament's clearly expressed intentions. But, except where the statute prevents it, the scheme must also accommodate what Byles J in Cooper v Wandsworth Board of Works (1863) 14 C.B.N.S. 180 called the justice of the common law. That is the duality we have sought to recognise in deciding this case.
No-one doubts that in the public interest the state needs to arm itself (and thereby all of us) against sophisticated criminals and terrorists. However, power can be an intoxicant and can easily become oppressive in its execution. This case demonstrates that whilst Parliament may enact a tough measure launched to hover beyond the reach of much traditional review firepower, the courts remain astute to intervene wherever possible to prevent any arbitrary, oppressive or unconstitutional exercise of state power.
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