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HFW awarded indemnity costs against Scottish authorities in Rangers case.

Administrative Court rules that the actions of Crown Office and Police Scotland in obtaining and executing a search warrant at HFW's London offices in December 2015 were "an abuse of state power". The Rangers FC investigators must now pay costs of injunctive and judicial review proceedings pursued by HFW on the indemnity basis.

Background

US corporate restructuring and insolvency specialists Duff & Phelps were engaged in connection with the acquisition by Craig Whyte of Rangers FC in 2011 and its administration in 2012. HFW was subsequently appointed to act for Duff & Phelps in relation to a number of civil disputes arising from the acquisition and administration. At around the same time, officers from Police Scotland began investigating the acquisition by Mr Whyte which led to criminal proceedings being pursued in the Scottish High Court towards the end of 2014.

In the course of their investigation in 2013, Police Scotland seized various categories of privileged documents from our clients. As a result we engaged in lengthy communications with Crown Office and Police Scotland concerning the usual methods for preserving privilege during the execution of search warrants, including the instruction of independent counsel to conduct a privilege review or inviting a court to resolve any dispute about privileged material.

Warrant

Notwithstanding our earlier correspondence concerning the treatment of previously seized privileged material, Police Scotland obtained a further warrant, this time against HFW, on 4 December 2015 at a private hearing before a Sherriff. Without notice to HFW, the warrant was executed in the afternoon of 9 December 2015 by a number of uniformed and plain clothes officers at our London offices. The search and seizure process took some six hours, concluding at 18.45, when a large quantity of documents concerning the civil disputes were removed by the officers. As one might expect, the majority of these documents were privileged. Police Scotland also took away documents that had no connection to the underlying acquisition and administration of Rangers FC. We therefore obtained on the same day an emergency injunction against Police Scotland and Crown Office by way of telephone application hearing made shortly after 21.00. The injunction was served by 23.00.

Injunction and judicial review

We issued judicial review proceedings in the Administrative Court in London at the same time as pursuing a parallel application in the Scottish High Court in Edinburgh. We are not yet in a position to provide further details of our proceedings in Scotland because the criminal proceedings against Mr Whyte are ongoing. The English injunction was continued the following week after a fully contested High Court hearing and all the seized documents were returned to our London office within a week, held by us subject to a privilege review by independent counsel.

The judicial review proceedings were concluded by consent in June 2016 leaving the only issue for determination by the court of whether costs should be paid by the Scottish authorities on the 'standard' or 'indemnity' basis. This issue has now been determined in our favour by the Administrative Court - although contrary to recent press reports, no detailed costs assessment has taken place and the amount of costs payable has not been quantified.

The costs order

The terms of the costs order are striking. Lord Justice Gross and Mr Justice Mitting gave the following reasons as to why the conduct of the Scottish authorities satisfied the indemnity costs requirement of being 'out of the norm':

  • The warrant obtained on 4 December 2015 was of excessive and unlawful width.
  • The warrant contained no provision for dealing lawfully with legally privileged documents.
  • As Crown Office and Police Scotland should have known, the law of Scotland and England requires special procedures to ensure privileged material was not seized.
  • In spite of being forewarned by HFW that privileged material needed special treatment, the warrant contained no provisions for the protection of legally privileged documents.
  • The search and seizure operation was "heavy-handed" and resulted in the seizure of privileged documents and documents outside the scope of the warrant.
  • Taken in the round, the actions of Crown Office and Police Scotland were "an abuse of state power".

Comment

As well as needing simultaneous emergency measures to be taken on both sides of the Scottish/English border in order to prevent Police Scotland taking privileged and irrelevant documents out of the jurisdiction, this case raises complex and important issues concerning cross-border criminal enforcement arising in the context of civil disputes. In the current political climate we can all expect an increase in efforts by competent authorities to seize privileged and other materials in the near future. We will be issuing a more detailed briefing in due course in which we will cover the cross-border issues, what to expect from competent authorities, and how you might deal with search and seizure in the event that it happens to you.

The HFW team was led by Partners James Clibbon and Paul Wordley and included Partners Neil Adams and Simon Clark, Associates Ciara Jackson and Lizzie Gray, and Paralegal Viktorija Afanasjeva.

Counsel were Jim Sturman QC of 2 Bedford Row and Rupert Allen of Fountain Court.

For more information please contact James Clibbon, Partner, on +44(0)20 7264 8787 or james.clibbon@hfw.com, Paul Wordley, Partner, on +44(0)20 7264 8438 or paul.wordley@hfw.com or your usual contact at HFW.

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