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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> An Informer v A Chief Constable [2012] EWCA Civ 197 (29 February 2012)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2012/197.html
Cite as: [2013] 2 WLR 694, [2012] EWCA Civ 197, [2012] 3 All ER 601, [2013] QB 579
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Neutral Citation Number: [2012] EWCA Civ 197
Case No: A2/2011/0523
Mr Ian Glen QC and Mr Gordon Bishop instructed for the Appellant
Lord Faulks QC and Mr Edwin Buckett instructed for the Respondent
Hearing dates: 29 and 30 November 2011
This appeal raises the novel question whether a supplier of information to the police, which led to a criminal investigation, was owed a contractual or tortious duty by the police to exercise reasonable care in the conduct of the investigation so as to safeguard him from economic loss. The relationship between the informer and the police was complicated by the fact that he was not only an informer but became a suspect.
The informer's claim for damages against the police was dismissed by Wyn Williams J after a trial of issues of liability for breach of contract, negligence and misfeasance in public office. The appeal is against the dismissal of his claims for breach of contract and negligence but not against the dismissal of his claim for misfeasance in public office. The trial was conducted entirely in private, and the judge's reserved judgment of 145 paragraphs has not been published. The appeal was also conducted in private, because it was apparent that it would inevitably involve reference to matters which could not be referred to publicly without risk to the appellant, and it would not have been practical to try to divide the hearing into parts. It is understandable that there has not been any published version of the judgment since it is under appeal. However, as a general principle it is highly undesirable for there not to be a published judgment, with sensitive details omitted as may be necessary. Open justice is one of the characteristics of the rule of law. In this case there is the added ingredient of a novel question of law to be decided, which is not a private matter. Since there is no appeal against any finding of fact by the judge in his full and detailed judgment, it will be sufficient for present purposes to provide a summary of the facts which omits all reference to times and places or to the true identities of the people concerned.
I will call the claimant C. As a result of contacting the police he was introduced to two "contact handlers". I will call them H1and H2. They made written records or summaries of their meetings and telephone conversations with him, which the judge accepted were essentially accurate. At the first meeting C said that he had been having financial dealings with a man whom I will call X, but had recently learned that X was involved in criminal activities. This prompted him to inform the police.
According to the record of the first meeting, the police gave him a brief explanation of the steps which they would take to protect his identity. He was also warned that he had no authority to engage in any form of criminal activity. At the trial the police officers did not dispute that there may have been discussion relating to C's and his family's safety and general wellbeing, but the judge found that he was not satisfied that there was any discussion of the welfare of C and his family "which related to or could reasonably have been understood as referring to their financial circumstances".
Within a day or so, authorisation was given under the Regulation of Investigatory Powers Act 2000 (RIPA) for the use of C as a "covert human intelligence sources" (or CHIS). I will come in due course to the provisions of the Act which are relied on by C.
From then onwards C provided a good deal of valuable information to his handlers about the activities of X and others over a substantial period of time. Payments were made to him, the details of which are irrelevant.
Some time after C began to provide information, he signed a set of instructions prepared by the police. The document stated that it was not intended to be legally binding but that the instructions were intended to protect C, his handlers and the information which he provided. Apart from stating that C's identity would be protected, it was silent about any responsibilities of the police.
As a result of C's information, the police began an investigation into the activities of X and others. H1and H2 were not part of the investigating team. H1and H2 were part of a team which handled informers and passed on the intelligence to investigating officers, who belonged to a different department. The separation of functions was deliberate. It was designed to protect the anonymity of the CHIS by limiting knowledge of his identity to his handlers, and at the same time to avoid the risk of the investigators being compromised or manipulated by someone whom they might have cause to investigate as a suspect. These were understandable reasons, but as time went by the separation led to problems.
In the investigation the police used specialist devices to listen to X's conversations with other people including C.
The investigation led to the arrest of a number of X's associates and C anticipated, correctly, that X was likely to be arrested. Around this time C reported to his handlers that X was wanting to talk to him about one of their deals, the circumstances of which suggested the possibility of money laundering by X, whether or not C knew or suspected it.
About the same time there was a change of H1and H2's immediate superior officer. C met the new superior officer with H1and H2. At the meeting C was asked to give details of his financial dealings with X.
At the trial C strongly challenged the accuracy of the police officers' note of the meeting but the judge rejected the challenge. He described C as worldly wise. He considered that C, realising by then that it was only a matter of time before X was arrested, may well have thought it to be in his own best interests to divorce himself from any beneficial interest in any assets resulting from their dealings.
A few weeks later X and others were arrested and charged with serious offences. X's property was searched. The police were concerned to investigate, among other things, whether X and the others who had been arrested had assets which might be the subject of a confiscation application and/or whether they had committed money laundering offences. They obtained a restraint order against X under s 41 of the Proceeds of Crime Act 2002 (POCA).
The investigations included looking into X's dealings with C and the police obtained production orders under s 345 of POCA against C's bankers, solicitors and accountants.
The production orders revealed that C had misled bank staff and his solicitors about his sources of income, and the police learned from the solicitors that C was in the process of attempting to sell assets. C was recorded saying that he was going to go bankrupt and take the money out of the country. The police also had other information which suggested that he was intending to leave the country.
C was arrested on suspicion of money laundering, interviewed and released on bail. Although the handlers had advance knowledge of his arrest from the investigating team, up to that time no officer involved in the investigating team was aware of the identity of the handlers' source.
At the trial, Mr Glen QC on behalf of C accepted that the arresting officer had reasonable cause to arrest him on what he knew, but argued that this was only because the officer was in the dark about C's role as a CHIS. Wyn Williams J rejected this argument. He found that "even upon the basis that the Claimant was known to be a CHIS there was sufficient material available to make it proper to suspect him of having engaged in the offence of money laundering".
A few weeks after C's arrest, there was a meeting between a senior police officer who had oversight of the investigation and a senior police officer who had oversight of the conduct of C's handlers. The purpose of the meeting was to discuss the problems of information sharing and division of responsibilities now that C was both a CHIS and a suspect. The result of the discussion was a written Memorandum of Understanding (MoU).
The main points of the MoU were that –
a.	the handlers would disclose the identity of the CHIS to a named officer in the investigating team, who would not disclose it to others;
b.	the handlers would continue to maintain contact with C as a CHIS and would retain responsibility for "duty of care" issues in relation to him (a reference to the responsibilities of the police under RIPA);
c.	the handlers would not seek to influence the work of the investigating team and would not speak to C regarding his own suspected criminality;
d.	the investigating team would not charge C without first submitting an advice file to the CPS and would notify the handlers when an advice file had been submitted;
e.	the investigating team would provide the handlers with a transcript of C's interview.
The MoU explained the rationale. It referred to the information which C had provided and added:
However, it is right and proper that the CHIS must be investigated for any potential wrongdoing specifically around any money laundering offences. The difficulty is that any subsequent defence by the CHIS would potentially be hampered by the fact that he is a CHIS and therefore his meetings, contacts and information he gave the police could all assist any future defence of himself.
This would be further complicated if, because of this information, the CHIS was acquitted. The other defendants, including [X] may seek to use "evidence" in the CHIS acquittal to their benefit.
The obvious solution therefore is to allow for an independent person to make a judgment based on ALL the facts and perform a balancing test prior to charge. In other words, look at any potential prosecution evidence and balance it against the [handlers'] records…
The obvious way to do this is for an advice file to be submitted to [the] CPS…and for them to view all the…material…The reason this course has been chosen is that it is felt…that if the CHIS were charged then subsequently not prosecuted it would raise considerable suspicion of the CHIS among [X] and others.
The reason no other officer is being involved is one solely related to security…
A few weeks later the officer who had been responsible for C's arrest applied for and obtained a restraint order against C, specifying certain assets. At the same time the police obtained a matching amendment to the restraint order against X. The judge who made the order was told nothing about C's role as a CHIS. Neither the police officer who made the statement in support of the application nor the CPS had been informed of it.
C was aggrieved and upset by the order and complained about it to his handlers. He repeatedly told them over the course of several months that its effect was to put him in dire financial straits and that he was under pressure from people to whom he owed money.
During the same period C's status as a CHIS was terminated but he continued to be in contact with his handlers about his financial concerns.
Four months after the restraint order was made against C, it was varied to permit him to sell certain assets on terms that the proceeds were to be held by solicitors in an interest bearing account. Otherwise the order remained in effect. The solicitors who were then representing C took the view that there was no purpose in applying to set aside the order until a decision had been taken whether C was to be prosecuted. After a further period of four to five months, the CPS decided that no criminal proceedings were to be brought against him. For reasons which are unexplained, several more months passed before the restraint order against C was formally discharged.
C's claim
In his amended particulars of claim C alleged that H1and H2 assured him at their first meeting, and repeatedly on subsequent occasions, that his and his family's personal safety, welfare and livelihood were their first priorities. When he met their superior officer, that officer also assured him that the police would protect him and his family and would ensure that his business did not suffer any adverse consequences by reason of his helping the police in their investigation of X and his criminal organisation.
C alleged that there was therefore a contract by which the defendant undertook a duty to ensure among other things:
that the Claimant's welfare, livelihood and reputation remained free from any adverse consequences arising out of the Claimant's decision to assist and/or cooperate with the police's investigations of [X] and his criminal organisation.
Further or alternatively, C alleged that the defendant "assumed a responsibility" towards him in respect of the same matters and so owed him an equivalent duty of care in tort.
The pleading contained various allegations of breach. The principal complaints related to C's arrest on suspicion of money laundering and the making of a restraint order against him. C claimed that as a result he suffered (a) economic loss through loss of the ability to deal with his assets as he pleased and (b) psychiatric injury in the form of depression and post traumatic stress disorder.
There was no reference in C's pleadings to RIPA or to the Covert Human Intelligence Sources Code of Practice made under it, but in his closing written submissions at the trial Mr Glen relied on the Act and Code to support the proposition that the defendant owed C an implied contractual duty to safeguard C's economic welfare, even if no such express promise was made on behalf of the defendant, and/or a duty in tort to the same effect.
The defence denied that the defendant owed any legal duty to C other than a duty to preserve his confidentiality as an informer. At the trial the defendant's counsel, Mr Buckett, accepted that the defendant owed a duty to C in tort to keep him reasonably safe from physical harm arising from his CHIS status, and that this duty continued after the termination of his status as a CHIS, but he disputed that the defendant owed any duty to C to safeguard his economic interests.
Wyn Williams J accepted that from the outset C was given assurances by H1and H2 that the police would treat his safety and that of his family as a priority. He said that he would be prepared to find that those assurances were intended to be legally enforceable and so gave rise to a contract, but he said that there had never been, nor could there be, any suggestion that any police officer was in breach of an obligation to treat C's safety as a priority. He further found that
"there is no proper factual basis to conclude that the Defendant ever made a promise to the Claimant that the Claimant's livelihood or financial wellbeing would be treated as a matter of priority or otherwise safeguarded by the Defendant".
The judge dealt shortly with the argument that there was an implied term that the defendant would safeguard C's economic interests or take reasonable care not to damage them:
"There is no possible basis to conclude that any term could be implied either to safeguard the Claimant's livelihood or financial well-being or take reasonable care not to damage those interests. This is not the basis of the claim, but in any event such terms would not be necessary to provide "business efficacy" to the agreement; nor would the officious bystander say "of course" if asked whether such terms were part and parcel of the contract."
As to the negligence claim, the judge observed that all the losses claimed were economic except for C's alleged psychiatric injury. He considered that C had to show that the defendant had assumed responsibility for the avoidance of economic loss before a duty in negligence could arise, and that his findings in relation to the contract claim precluded such a finding.
For completeness the judge considered the various allegations of breach. In relation to all but one of the allegations he rejected the argument that the police were negligent. The exception related to the obtaining of the restraint order and its duration. The judge described this aspect of the case as "very difficult and troubling". However, he concluded that an officer who is engaged in activity related to the investigation and suppression of crime is immune from a complaint of negligence as a matter of public policy under the doctrine in Hill v Chief Constable of West Yorkshire [1989] AC 53, unless there was a factual basis for holding otherwise, for example because there had been an assumption of responsibility for the claimant's livelihood or financial wellbeing.
In relation to C's claim for damages for personal injury, the judge held that there was no basis for concluding that any of the acts or omissions about which C complained gave rise to a foreseeable risk of physical or psychiatric injury. It was foreseeable that his arrest and the restraint order might cause him distress and disappointment, but not personal injury.
C's case on appeal
Mr Glen submitted that the judge should have held that the defendant owed a contractual duty to safeguard C's safety and welfare. He founded his argument on the provisions of RIPA and the CHIS Code of Practice and on the conduct of the parties in discussing welfare matters. He submitted that welfare has a broad meaning which included C's livelihood and economic wellbeing.
On the issue of negligence and economic loss, Mr Glen submitted that the judge was wrong to hold that the existence of a duty of care required an assumption of responsibility. The question was whether it was fair, just and reasonable to impose such a duty on the defendant. The judge also took an over-narrow approach to the question of assumption of responsibility by concentrating on what the handlers said to C. The question was not merely whether individual officers undertook such a responsibility. It was necessary to consider the position of the defendant. By authorising C to act as a CHIS the police necessarily assumed a responsibility to take care for his general welfare, including his livelihood.
Mr Glen further submitted that the judge was wrong to apply the Hill principle to the situation in which there was a special relationship between C and the defendant by reason of C agreeing to act and being accepted as a CHIS.
Mr Glen identified five breaches of the defendant's contractual and/or tortious duty:
a.	the obtaining of a production order;
b.	C's arrest;
c.	the interviewing of C after his arrest;
d.	the obtaining of a restraint order without disclosure to the court of C's status as a CHIS;
e.	the duration of the restraint order.
In amended grounds of appeal C contended the judge was wrong to decide the question whether the acts and omissions complained of gave rise to a foreseeable risk of personal injury, because the issues in relation to the contract and negligence claims were limited to whether there had been a breach of duty.
RIPA and the Code of Practice
Part II of the Act regulates the use of certain forms of surveillance and the use of covert human intelligence sources. Section 29 deals with the authorisation of a CHIS.
Section 29(2) sets out various pre-conditions of authorisation of use of a CHIS. One condition is that the authorising officer believes the authorisation to be necessary on one of a number of grounds specified in section 29(3), which include preventing or detecting crime. Another condition, applicable in the case of a private informer, is that the authorising officer believes that arrangements exist which satisfy the requirements of section 29(5). The relevant requirements are that such arrangements are in force as are necessary for ensuring
a.	that there will at all times be a person holding an office, rank or position with the relevant investigating authority who will have day-to-day responsibility for dealing with the source on behalf of the authority, and for the source's security and welfare;
b.	that there will at all times be another person holding an office, rank or position with the authority who will have general oversight of the use made of the source;
e.	that records made by the relevant investigating authority that disclose the identity of the source will not be made available to persons except to the extent that there is a need for access to them to be made available to those persons.
Chapter 4 of the Covert Human Intelligence Sources Code of Practice, made under section 71 of the Act, contains supplementary provisions about authorisation procedures for a CHIS.
Paragraph 4.27 provides:
The person referred to in section 29(5)(a) of the 2000 Act will have day to day responsibility for:
dealing with the source on behalf of the authority concerned;
directing the day to day activities of the source;
recording the information supplied by the source;
monitoring the source's welfare and security.
Paragraph 4.28 provides:
The person referred to in section 29(5)(b) of the 2000 Act will be responsible for the general oversight of the use of the source.
Para 4.36 provides:
Any public authority deploying a source should take into account the safety and welfare of that source, when carrying out actions in relation to an authorisation or tasking, and to foreseeable consequences to others of that tasking. Before authorising the use or conduct of a source, the authorising officer should ensure that a risk assessment is carried out to determine the risk to the source of any tasking and the likely consequences should the role of the source become known…
The Act establishes a confiscatory scheme for the purpose of recovering benefits obtained by an offender from his criminal conduct.
Under sections 345 and 346, where a person is subject to a confiscation investigation and there are reasonable grounds for suspecting that he has benefited from his criminal conduct, a production order may be made against any person who is reasonably believed to be in possession of material likely to be of substantial value to the investigation (subject to there being reasonable grounds for believing the order to be in the public interest, having regard to the likely benefit and to the circumstances under which the material appears to be held).
Under sections 40 and 41, where a person is subject to a confiscation investigation and there are reasonable grounds for suspecting that he has benefited from his criminal conduct, the Crown Court may make a restraint order prohibiting him from dealing with any realisable property held by him. The order may be subject to exceptions, in particular, to make provision for reasonable living expenses and to enable the person to carry on a trade, business, profession or occupation.
It is established case law that a restraint order should not be made unless the judge is satisfied that there is a real risk of dissipation of the assets in respect of which the order is sought.
Unlike a freezing order in civil proceedings, there is no provision for the prosecution to be required to give a cross undertaking in damages. However, under section 72, where (as in this case) a criminal investigation has been started with regard to an offence but has not led to proceedings, the Crown Court may order the payment of such compensation as it considers just to a person who held realisable property and has suffered loss in consequence of a restraint order, provided that
a.	in the investigation there has been a serious default by a [police officer] and
b.	the investigation would not have continued if the default had not occurred.
We are not concerned to construe section 72 and have not heard full argument about it, but I take the expression "would not have continued" to mean "would not have continued to the stage of making the order which has caused the loss in respect of which compensation is claimed".
When the Act was being debated in Parliament, an amendment was moved in the House of Lords to widen the availability of compensation to include cases of negligence rather than serious default, but the Government opposed the amendment and it was not pressed.
There is no challenge by either party to the judge's findings, first, that oral assurances amounting to contractual promises were given by H1and H2 to C that the police would treat his safety and that of his family as a priority, and secondly, that the police officers gave C no wider oral assurances.
C's argument that the court should hold that the defendant owed him a duty to safeguard his economic interests, either by implying a contractual duty or by imposing a tortious duty to that effect, was the same argument advanced under two heads, contractual and tortious. The corner stone of the argument was RIPA and the Code.
Although it might seem logical in a case where a contract has been found to exist between the parties to begin with a contractual analysis, in this case I think that it is more appropriate to begin by considering the position under the law of negligence. The Act and the Code are not directed particularly to contractual relationships. (The Act does not use the language of creating implied contractual terms, as do some statutes, for example in the area of supply of goods and services and customer protection.) If there was a tortious duty of the scope for which C contends, it would be an academic question whether the court should also imply a concurrent contractual duty. Conversely, if the argument for holding that there was such a duty in tort is rejected, there would be no basis for holding that the contract contained such an implied term on the facts found by the judge.
Mr Glen was not able to cite any case reasonably analogous to the facts of the present case in which a duty of care to prevent purely economic loss has been recognised. I emphasise "purely economic loss" because this is not a case where the claimed economic loss is said to have been consequential, for example, on a need for protection by acquiring a new identity or a new place to live. The claimed economic loss was pure economic loss allegedly caused by C's arrest and the obtaining of orders affecting him, which C says ought never to have happened.
In approaching the question whether such a duty ought to be recognised, I accept Mr Glen's submission that the test is not simply to be found in the expression "voluntary assumption of responsibility". In Caparo Industries plc v Dickman [1990] 2 AC 605, 637 Lord Oliver said of the expression that it was
"a convenient phrase but it is clear that it was not intended to be a test for the existence of a duty for, on analysis, it means no more than that the act of the defendant in making the statement or tendering the advice was voluntary and that the law attributes to it an assumption of responsibility if the statement or advice is inaccurate and is acted upon."
I would repeat what I said in Glaister v Appleby-in-Westmoreland Town Council [2009 ] EWCA Civ 1325, in a judgment with which Lord Neuberger, MR and Jacob LJ agreed:
"55. The fact that this is a novel claim is not necessarily fatal because the categories of negligence are never closed. But the Privy Council and the House of Lords have approved the well-known judgment of Brennan J in Sutherland Shire Council v Heyman (1985) 60 ALR 1, 43-44, where he expressed the view that:
"the law should develop novel categories of negligence incrementally and by analogy with established categories, rather than by a massive extension of a prima facie duty of care restrained only by indefinable "considerations which ought to negative, or to reduce or limit the scope of the duty or the class of the person to whom it is owed". "
See Yuen Kun Yeu v Attorney General of Hong Kong [1988] AC 175, 191 and Caparo (618, 633-634).
56. As Lord Oliver observed in Caparo (634), Brennan J was echoing a theme expressed in Hedley Byrne & Co Limited v Heller and Partners Limited [1964] AC 465 by Lord Devlin, whose speech in that case has come to be seen as particularly significant. (See the observations of Lord Goff in Henderson v Merrett Syndicates Limited [1995] 2 AC 145, 178 & ff.) In Caparo (634-635) Lord Oliver cited a lengthy passage from Lord Devlin's speech about the development of the law since Donoghue v Stevenson [1932] AC 562, in which he concluded:
"The real value of Donoghue v Stevenson to the argument in this case is that it shows how the law can be developed to solve particular problems. Is the relationship between the parties in this case such that it can be brought within a category giving rise to a special duty? As always in English law, the first step in such an enquiry is to see how far the authorities have gone, for new categories in the law do not spring into existence overnight."
57. Lord Oliver in an important passage (632-635) observed that the extension of the concept of negligence since the decision in Hedley Byrne to cover cases of pure economic loss had given rise to "a considerable and as yet unsolved difficulty of definition". The postulate of a simple duty to avoid any harm that was, with hindsight, reasonably capable of being foreseen was untenable without the imposition of some intelligible limits to keep the law of negligence within the bounds of common sense and practicality. He observed that those limits had been found by the requirement of what has been called a "relationship of proximity" between the claimant and the defendant and by the imposition of a further requirement that the attachment of liability for the harm which had occurred be "just and reasonable". But it was impossible to identify some common dominator by which the existence of the essential relationship could be tested, and that "to search for any single formula which will serve as a general test of liability is to pursue a will-of-the-wisp". The most that could be attempted is a broad categorisation of the decided cases according to the type of situation in which liability has been established in the past in order to found an argument by analogy.
58. These words needs to be emphasised because there is sometimes a tendency (as the present case shows) to pluck out the words "fair, just and reasonable" as if they provide some comprehensive touchstone. In itself, the expression means little more than that the court should only impose a duty of care if it considers it right to do so. The various speeches in Customs & Excise Commissioners v Barclays Bank plc [2006] UKHL 28, [2007] 1 AC 181 underline the point that the "threefold test" provides no straightforward answer to the question whether in a novel situation a party owes a duty of care (Lord Bingham at 6, Lord Hoffmann at 35-36, Lord Rodger at 53, Lord Walker at 71 and Lord Mance at 93). In considering whether there is sufficient "proximity" to make it just and reasonable to impose a duty of care, the courts examine carefully the nature of the relationship between the parties and begin by considering whether it is reasonably analogous to other cases in which such a duty has been recognised. The court is looking to see whether there is "that special relationship of proximity which is required to give rise to the duty of care" to protect the claimant from economic loss (using the language of Lord Oliver in Caparo at 650F) – which is another way of framing the question posed by Lord Devlin in Hedley Byrne "Is the relationship between the parties in this case such that it can be brought within a category giving rise to a special duty?".
60. For a duty of care to arise, there needs to be something particular about the relationship between the defendant and the claimant, in relation to some particular transaction or activity likely to have economic consequences for the claimant, such that the claimant can properly expect to be entitled to rely on the defendant to safeguard him from economic harm likely to result from want of care on the part of the defendant. This need is reflected by the usage of the words "special duty" or "special relationship". "
The starting point for considering the relationship between the police and a CHIS is its purpose. The principal duties of the police are the prevention and detection of crime. For many years the use of informers has been one of the means used by the police for this purpose. Now that the use of police informers is regulated by statute, section 29(3) provides that the prevention or detection of crime is one of the purposes for which the use of a CHIS may be authorised. The purpose is not to provide the CHIS with an escape route from the legal consequences of any past offence which he may have committed or from the investigation of criminality of which there may be grounds for suspicion. That would be contrary to the public interest in the detection and, where appropriate, prosecution of crime.
In the nature of things the use of a CHIS carries possible risks. There may be risks to the CHIS or his family from third parties if his identity becomes known. There may also be risks to police operations depending on the motives and reliability of the CHIS. Many informers have criminal backgrounds and belong to a criminal social environment. Their motives for giving information to the police may be ambiguous or mixed. Their role may turn out to be less innocent than they would have the police believe. In the present case a senior officer provided some general evidence about such matters from his own experience.
The relationship between the police and a CHIS is a confidential relationship. The confidentiality serves two main purposes. The first is the safety and peace of mind of the CHIS. Acting as a CHIS may be risky and stressful. If the person's identity became known, he or his family might in some cases be exposed to serious injury or death and in less extreme cases to other disturbing forms of harassment. The second purpose is the encouragement of the supply of information to the police by people who are unlikely to come forward unless they can be confident that their confidentiality will be protected.
It is not suggested that the Act or the Code could give rise to an action for damages for breach of statutory duty. They are not framed in such a way as to do so. However, they do show that Parliament was concerned that those responsible for handling a CHIS should have regard to any foreseeable risks to his security and welfare arising from the relationship. That is a significant consideration when considering whether and to what extent it is fair, just and reasonable that the police should be held to owe a common law duty of care to a CHIS.
Consistently with what I have said about the purpose of the use by the police of informers, the prospective harm against which the police may be held to owe a duty of care towards a CHIS has to be limited to risks which are due to his conduct in assisting the police by giving them information about others. If the information raises (or leads to a train of investigation which raises) suspicion of criminality on his own part, the police cannot owe him a duty which would conflict with their duty to the public to investigate it.
The relevant provisions of the Act and the Code do not provide a definition of "security and welfare" or "safety and welfare". The expressions are certainly apt to cover matters of the sort to which I have referred – exposure to risks of death, injury and other forms of harassment. They are risks of a physical nature. The imposition of a duty of care for the safety and welfare of the CHIS in that sense would be consistent with the purpose of the relationship being one of confidentiality. It is in my view just and reasonable that the police should owe a duty of care of that kind.
C's argument is that the police owed him a duty for his welfare of a much broader economic kind. In support of his argument Mr Glen referred to the dictionary definition of welfare, which is capable of including general financial wellbeing.
Construction of a phrase in a statute does not simply involve transposing a dictionary definition of each word. The phrase has to be construed according to its context and the underlying purpose of the provision. The words "security and welfare" have to be read together. I doubt whether Parliament intended "welfare" to be given the broad meaning advanced by Mr Glen, and I do not consider that it would be fair, just and reasonable to hold that the defendant owed a duty of care to C of that scope. The breaches and loss alleged in this case illustrate why this is so.
The first alleged breach was the obtaining of a production order against C's bankers, solicitors and accountants. Mr Glen submitted that this caused serious damage to C's reputation and consequently put a blight on his commercial activities. However, if the conditions of sections 345 and 346 of POCA were met, there was a public interest in obtaining the order. It would not be just or reasonable to place a duty of care on the police for the protection of C's economic interests which might conflict with their responsibility to the public for the investigation of crime and the proceeds of crime, which was the purpose of the order.
The second alleged breach was C's arrest on suspicion of money laundering. Mr Glen said that knowledge of his arrest spread and was damaging to his business interests. Loss of liberty through arrest is obviously an interference with a person's physical welfare and it may also have economic repercussions, but on the judge's findings there were proper grounds for the arrest. It would not be just or reasonable to impose on the police, by reason of C's status as a CHIS, a duty of care for his welfare in deciding whether to arrest and question him, because that would conflict with their duty fully to investigate the conduct in question.
The third alleged breach follows on from the second and concerns the questioning of C after his arrest. I would reject it for the same reason as the second. A point was made by Mr Glen in argument in relation to the interview that C had been forbidden by his handlers to disclose the fact that he was a CHIS. It was suggested that this put C in an unfair position when being interviewed. This complaint was advanced in general terms and the court was not shown a transcript of the interview. If there was substance in the complaint it would have provided a potential ground for excluding evidence of the interview in a later prosecution, but that is a different matter.
The fourth alleged breach was the obtaining of a restraint order against C. I have found this the most worrying part of the case, as did Wyn Williams J. That is because of the failure to inform the judge in the Crown Court about C's role as a CHIS and what he had told his handlers. It was a troubling failure. (I avoid using the word serious to describe it, because "serious default" is a term used in section 72 of POCA and I do not wish to preempt any application which may be made under that section.) A restraint order can have heavy consequences for an innocent person. That is why it has been emphasised by this court in strong terms that the prosecution is under a duty to disclose to the court all relevant matters when applying for such an order: see for example Director of the Serious Fraud Office v A [2007] EWCA Crim 1927 and Stanford International Bank v Director of the Serious Fraud Office [2010] EWCA Civ 137, [2011] 1 Ch 33. In the latter case Hughes LJ said at 191 (in a passage cited by Wyn Williams J):
"…it is essential that the duty of candour laid upon any applicant for an order without notice is fully understood and complied with. It is not limited to a duty not to misrepresent. It consists in a duty to consider what any other interested party would, if present, wish to advance by way of fact, or say in answer to the application, and to place that material before the judge. The duty applies to an applicant for a restraint order under POCA in exactly the same way as to any other applicant for an order without notice. Even in relatively small value cases, the potential of a restraint order to disrupt other commercial or personal dealings is considerable. The prosecutor may believe that the defendant is a criminal, and he may turn out to be right, but that is yet to be proved. An application for a restraint order is emphatically not a routine matter of form, with the expectation that it would be routinely granted. The fact that the initial application is likely to be forced into a busy list, with very limited time for the judge to deal with it, is yet further reason for the obligation of disclosure to be taken very seriously. In effect, the prosecutor seeking an ex parte order must put on his defence hat and ask himself what, if he were representing the defendant or a third party with a relevant interest, he would be saying to the judge, and, having answered that question, that is what he must tell the judge. "
C's role should have been disclosed to the judge for two reasons. It was relevant because, as the MoU had recognised, it could obviously give rise to a line of defence, and this should have been drawn to the judge's attention. It was also potentially relevant to the judge's assessment of the risk of dissipation of assets to know that C was in regular contact with his handlers. If the CPS had been properly informed before making the application, common sense might suggest that the application is unlikely to have been made in view of its potential complications. It may also have been thought unnecessary to do so, because (subject to an argument of Mr Glen to which I will shortly return) the CPS could have still made the application which it made for the amendment of the restraint order against X, and could have given notice of that order to C as a third party affected by it. It should still have disclosed C's status because he would be affected by the order, but the police had material against X independent of that which came from C. Those matters might affect the calculation of any loss which C may have suffered by reason of the order made against him but do not lessen the cause for concern over the non-disclosure.
Unsatisfactory as this aspect of the case is, I do not consider that it is a good reason for holding that the police were in breach of a duty of care to C by their failure to make proper disclosure to the court on the application for a restraint order. The duty to make proper disclosure to the court on a without notice application is a duty imposed by the courts under their inherent powers to regulate court procedures and it applies in both civil and criminal litigation. There is no authority for the proposition that a litigant owes such a duty to an opposing party under the law of negligence. The usual remedy for non-disclosure is for the respondent to apply for the discharge of the order and costs. In civil litigation the respondent may also have a claim for damages under the cross undertaking which an applicant for a freezing order is usually required to provide. Under POCA Parliament has specified in section 72 the circumstances in which a respondent to a restraint order may be entitled to obtain compensation for resulting loss. It would be inappropriate to express a view about the application of that section on the facts of this case, since we have rightly heard no detailed argument about it and it may be a matter for decision by another court. However, Parliament having decided not to make compensation available in cases where there was negligence falling short of serious default, it would not be right for the court to create a right of damages for negligent non-disclosure.
In the course of his argument Mr Glen submitted that the obtaining of an amended restraint order against X, was itself a breach of the defendant's duty to safeguard C's economic welfare because it had the foreseeable, indeed intentional, effect of preventing the disposal by C of assets identified in the order. This would indeed be so if his argument about the scope of the defendant's duty to C is correct, but it shows the objectionable consequences of the argument. It is not disputed that at the time when the police applied for a variation of the restraint order against X they had reasonable ground to suspect that he had benefited from criminal conduct and that X had an interest in the assets identified in the amended order. In those circumstances it was in the public interest for the police to make the application against X which they did, and it cannot be just that they should be under a conflicting duty to protect the economic welfare of C, who at that time was reasonably suspected of being a front for X.
The fifth alleged breach is directly connected with the fourth and concerns the length of time for which the restraint order against C continued in place. If the fourth breach is unsustainable for the reasons which I have given, the same must apply to the fifth.
At the heart of C's economic loss claim is his complaint that he was obstructed by the conduct of the police from dealing with his assets as he intended and that he suffered severe financial consequences. The reason for the obstruction about which he complains was that the police had cause to suspect that the relevant assets belonged to X and were the proceeds of crime. Until the decision was taken by the CPS not to prosecute C, there was a conflict between his financial interests and the public interest in the preservation of property reasonably suspected of being the proceeds of crime. It would not be just or reasonable for the court to place the police under a duty to give priority to supporting C's financial welfare over the public interest in the detection of crime and recovery of the proceeds.
I do not consider that this case requires any general analysis of the principle in Hill, which has been reviewed in a number of later cases, including the decisions of the House of Lords in Brooks v Commissioner of Police for the Metropolis [2005] UKHL 24, [2005] 1 WLR 1495 and Van Colle v Chief Constable of the Hertfordshire Police [2008] UKHL 50, [2009] 1 AC 225. However, there are two cases to which I should refer because their reasoning bears on the present case and is consistent with the conclusion which I have reached.
In Calvely v Chief Constable of Merseyside [1989] 1 AC 1228 claims were brought by police officers who had been suspended during disciplinary investigations which ended with their reinstatement. They alleged that the investigating officers had negligently failed to conduct the investigations properly or expeditiously and they sued for loss of overtime payments which they would otherwise have received during their periods of suspension. The claims were struck out and their appeals were dismissed. Their argument was that a police officer investigating a suspected crime owes a duty of care to the suspect, and that a similar duty was owed by an officer investigating a police disciplinary offence. Lord Bridge, with whose judgment the other members of the Judicial Committee agreed, described the submission as a startling proposition. He said at 1238:
"One must therefore ask the question whether foreseeable injury to the suspect may be caused on the hypothesis either that he has never been charged or, if charged, that he has been acquitted at trial or on appeal, or that his conviction has been quashed on an application for judicial review. It is, I accept, foreseeable that in these situations the suspect may be put to expense, or may conceivably suffer some other economic loss, which might have been avoided had a more careful investigation established his innocence at some earlier stage. However, any suggestion that there should be liability for negligence in these circumstances runs up against the formidable obstacles in the way of liability in negligence for purely economic loss… Finally, all other considerations apart, it would plainly be contrary to public policy, in my opinion, to prejudice the fearless and efficient discharge by police officers of their vitally important public duty of investigating crime by requiring them to act under the shadow of a potential action for damages for negligence by the suspect."
The second case is the decision of the Court of Appeal in Elguzouli-Daf v Commissioner of Police for the Metropolis [1995] QB 335, which was cited with approval in Brooks and Van Colle. It was held that the CPS did not owe a duty of care towards those it prosecutes because of the inhibiting effect which the imposition of such a duty would have on the discharge of the principal duty of the CPS to prosecute crime.
There remains C's claim for psychiatric injury, which Wyn Williams J dismissed on the ground that it was not a reasonably foreseeable consequence of the acts or omissions about which C complained. Mr Glen submitted that this decision was outside the scope of the issues before the judge. I do not agree. I accept the submission of Lord Faulks QC that the question of foreseeability went to the issue of breach of duty, because any duty was necessarily limited to a duty not to cause foreseeable injury. I would also concur with the judge's finding that psychiatric injury was not a reasonably foreseeable consequence of the matters about which C complained.
There is a further reason for rejecting that part of the claim. For reasons already explained, the duty of care owed by the police to C must be limited to protecting him from risks arising from his provision of information about others and cannot properly extend to protecting him from investigation of suspected criminal conduct on his part. The acts which are said to have caused his depressive illness (particularly his arrest and the restraint order) were acts done in the investigation of his suspected criminal conduct.
a.	the relationship between C and the police was a confidential relationship;
b.	the defendant owed a duty of care to protect C from risks to his physical safety and wellbeing to which he was potentially exposed as a result of his activities as a CHIS in providing information about others;
c.	the duty did not extend to protecting C from investigation of suspected criminal conduct on his part;
d.	the duty did not extend to purely economic loss.
The principal question of law to be decided on this appeal is whether the police owed a duty of care to an informer, C. C was, while acting as an informer, arrested and interviewed by the police on suspicion of money-laundering offences. In addition, the police obtained orders for the production of documents and restraining the disposal by him of assets. The restraint order was maintained in force for some 9 months, and caused him significant financial loss. C claims that he could not ever have been prosecuted because of his role as an informer. The police officer who made the application for the restraint order did not know that he was an informer. C contends that, as a result of the negligence of the police (in, for example, not making this information available to the relevant officer), he suffered economic loss and psychiatric injury.
I am grateful to Pill and Toulson LJJ. They have explained the background and the issues with great clarity. I need not repeat what they have said. I will use the abbreviations that they have used.
The House of Lords held in Hill v Chief Constable of West Yorkshire [1989] AC 53 that the police owed no duty of care to individual members of the public for acts committed in the course of investigating or suppressing crime. I will call this "the Hill principle". The Hill principle thus in effect confers immunity (an "investigations immunity"). However, it is now accepted that the Hill principle has limitations. In particular, the police will owe a duty of care if they have assumed responsibility for the matter in question.
There are three great milestones in the development of the Hill principle: Hill itself, Brooks v Commissioner of Police for the Metropolis [2005] 1 WLR 1495, and Van Colle v Chief Constable of the Hertfordshire Police, Smith v Chief Constable of Sussex [2009] AC 225. They are all decisions of the House of Lords. Van Colle and Smith were two conjoined appeals. I shall refer to them as Van Colle as that was how they were referred to in argument, but I will refer only to the issues in the second case.
In Hill, the plaintiff was the mother of the last victim of the serial murderer known as the Yorkshire Ripper. She claimed that, if the Yorkshire Police had not been negligent, the murderer would have been arrested before he went on to kill her daughter. The House of Lords held that the police could be subject to liability in negligence to persons injured as a direct result of the actions of the police or persons with whom the police had a special relationship. However, there was no sufficient relationship between the police and an ordinary member of the public. The House of Lords also held that the police should enjoy immunity for acts done in the course of investigating and suppressing crime. Such immunity was conferred as a matter of public policy. The imposition of liability might, for instance, lead to a "detrimentally defensive state of mind" on the part of the police. Moreover, without the investigations immunity, the human and other resources of the police would be diverted from their role in relation to crime to considering whether investigations had been competently conducted. In Osman v Ferguson, [1993] 4 All ER 344, this court held that the decision in Hill was of general application and extended to a case where the police knew of the identity of the victim.
To put the matter in context, the Hill principle protects the police only against liability in negligence. The police are exposed to a wide variety of other torts for acts done in the course of performing of their duty to investigate crime, such as misfeasance in public office, malicious prosecution, assault, battery or a violation of article 5 of the European Convention on Human Rights.
The second milestone case is Brooks. This concerned a claim by a witness that the police did not treat with him with proper care. The claim was held to be barred by the Hill principle: the duty to the witness, Mr Brooks, could not be separated from the police function of investigating crime. Significantly, both Lord Bingham and Lord Nicholls held that they would be reluctant to endorse the full width of what Hill was thought to lay down (at paragraphs 3 and 6). Although the House re-affirmed the substance of the Hill principle, it also recognised, however, that there could be exceptional cases on the margins of the Hill principle where the principle did not apply (per Lord Steyn at [34]).
At paragraph 30, Lord Steyn set out the reasons for what he called "the core principle" decided by Hill. Pill LJ has set out the relevant passage at paragraph 135 of his judgment. The House of Lords, in the third milestone case, relied extensively on this important passage.
The third milestone case in the development of the Hill principle was Van Colle. The claimant had been injured by his former partner. He had warned the police that he was at risk of an attack but the police took no adequate steps to protect him. His former partner seriously injured him. The House of Lords, Lord Bingham dissenting, applied the Hill principle. It is clear from this case, and from Brooks, that the Hill principle in general applies to shield the police from liability in negligence to both victims and witnesses of crime. The courts do not allow themselves to be sidetracked by the shortcomings of the police in individual cases into undermining the Hill principle.
In each of these milestone cases it has been recognised that there will or may be exceptional cases where the police will incur liability in negligence. It has also been recognised that the width of the exceptions should be decided as cases arise.
One established category of case, however, is where the loss is directly incurred by the act or omission of the police. The police have been held to owe a duty of care where loss directly results from some act or omission of theirs, such as an instruction given to a colleague, or a failure to provide assistance to a colleague or the use of CS gas in premises without fire fighting equipment (see Costello v Chief Constable of Northumbria [1999] ICR 752 and Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242). We are not concerned with this category of case.
A further category of case where the Hill principle does not apply is where, on the true analysis of the facts, the act complained of was not done in the course of investigating or suppressing crime at all but as part of some other function of the police: Gibson v Orr 1999 SC 420, a decision of Lord Hamilton sitting in the Outer House of the Court of Session, cited with approval by Lord Hope in Van Colle.
A third category of case where the Hill principle does not apply is where there is a special relationship between the parties, or, more specifically, an assumption of responsibility by the police to the claimant.
Lord Brown in Van Colle considered that Swinney v Chief Constable of Northumbria Police Force [1997] QB 464, considered below, provided an example of such a case. Moreover, in Van Colle, Lord Hope referred to the fact that Swinney had been distinguished by Lord Hamilton in Gibson v Orr, and accepted that it fell outside the Hill principle (page 623A). The other members of the House, apart from Lord Bingham, agreed with Lord Hope.
An assumption of responsibility could also exist where the police take control of a situation, as where they hold a person in detention in a police cell.
An assumption of responsibility may be by express words. In the analogous field of the liability of the Crown Prosecution Service ("CPS") to a defendant in a criminal case, this is established by Welsh v Chief Constable of Merseyside Police, to which Pill LJ refers at paragraph 139 of his judgment. Lord Brown also refers to Welsh at paragraph 135 of his speech in Van Colle. Welsh was itself distinguished by this court in Elguzouli-Daf v Commissioner of Police for the Metropolis [1995] QB 335. This also concerned the question whether the CPS owed a duty of care to a defendant in the conduct of the prosecution to convey matters to the court. This court recognised that a duty could arise if the CPS had voluntarily assumed responsibility to the plaintiff. In Welsh, Tudor Evans J held that there had been an express assumption of responsibility. Welsh, therefore, remains good law.
The courts may also find an assumption of responsibility on an evaluation of the facts: see the authorities cited by Pill LJ at paragraphs 165 and 166 of his judgment. If there is on the facts a sufficient relationship between the parties, the Hill principle does not apply.
Swinney is the closest case on its facts to the present case. Pill LJ summarises it in paragraph 145 of his judgment. It also concerns a police informer. The position of informers brings in different public policy considerations to those that apply where an ordinary member of the public is concerned. This is because there is a countervailing public interest in the case of informers that they should be protected from harm. Otherwise this source of valuable information would be at risk.
In Swinney the informant had supplied a single, vital piece of information. She did not have the status of a CHIS. Nonetheless, dismissing an appeal against the refusal of the court below summarily to strike out the proceedings, this court held that the case did not necessarily fall within the Hill principle. The full facts were not known. There were competing public policy considerations where an informer was involved. As Ward LJ held at 487:
"… it is incontrovertible that the fight against crime is daily dependent upon information fed to the police by members of the public, often at real risk of villainous retribution from the criminals and their associates. The public interest will not accept that good citizens should be expected to entrust information to the police, without also expecting that they are entrusting their safety to the police. The public interest would be affronted were it to be the law that members of the public should be expected, in the execution of public service, to undertake the risk of harm to themselves without the police, in return, being expected to take no more than reasonable care to ensure that the confidential information imparted to them is protected. The welfare of the community at large demands the encouragement of the free flow of information without inhibition. Accordingly, it is arguable that there is a duty of care, and that no consideration of public policy precludes the prosecution of the plaintiffs' claim, which will be judged on its merits later."
The view of this court in Swinney was, therefore, that the crucial question in establishing a duty of care was whether the Hill principle should be applied in circumstances where its rationale might be outweighed by other public policy considerations.
In defence of the Hill principle, it may be noted that the English courts are not the only courts to confer immunity for police investigative activity. In Australia, it has been considered and applied, albeit with some reservation, in at least two first instance decisions: see, for example, the judgment of Finn J in Rush v Commissioner of Police [2006] FCA 12 (Federal Court of Australia) and more recently that of Penfold J in Crowley v Commonwealth of Australia [2011] ACTSC 89 (Supreme Court of the Australian Capital Territory) (police shooting of person with mental disability who appeared to be acting in a threatening way).
There are reported American cases where decisions made by the police as part of the process of the investigation of crime have been held to give rise to no duty of care to an injured member of the public (Restatement of the Law of Torts, third edition, Volume 1, page 94).
The milestone cases recognise that the result can be harsh. The victim would have the protection of article 2 of the European Convention on Human Rights in so far as the state violated the duty to take reasonable measures to protect his life.
The Supreme Court of Canada, however, has rejected the Hill principle: Hill v Hamilton-Wentworth Regional Police Services Board [2007] 3 SCR 129. The Supreme Court, by a majority, held that the police owed suspects a duty to take reasonable care. The Court reached this conclusion by applying ordinary tort law concepts, such as proximity. It held that there were no compelling reasons to negate the duty of care. It considered that its conclusion was consistent with the Canadian Charter of Rights and Freedoms.
In some civil law jurisdictions, there appears to be no public policy inhibition on imposing liability on the police in connection with the investigation and suppression of crime: see, for example, the decision of the German Federal Supreme Court in BGH LM §839 [fg] BGB No 5, which is contrasted with the Hill principle by R-A. Surma in A Comparative Study of the English and German Judicial Approach to the Liability of Public Bodies in Negligence, appearing in D. Fairgrieve, M. Andenas and J. Bell, Tort Liability of Public Authorities in Comparative Perspective (BIICL, 2002) at pages 379-382.
Lord Steyn held in Brooks that the Hill principle must be judged in the light of the legal policy in this jurisdiction (see paragraph [26] of his speech). I am mindful of that but comparative law suggests a need for caution in applying the Hill principle beyond those situations in which the public policy considerations that underlie it are present. This court would be failing in its duty if it did not consider whether this case fell within the exceptional cases in which liability in negligence is imposed on the police notwithstanding the Hill principle.
The dangers of an over ready application of the Hill principle may be to deprive meritorious claimants of a remedy. The Hill principle has, moreover, been re-affirmed at a time when the tide is running against wide immunities (see per Lord Steyn in Brooks at [27] and [28]). People no longer automatically accept that the police will necessarily act in the interests of the public.
The circumstances that may put a case into one of the exceptional situations, in which the Hill principle does not apply, can arise in the course of investigating or suppressing a crime. The court should not, therefore, assume that the Hill principle applies simply because the reason for police involvement was that there was potential criminal activity to be investigated.
Turning to the facts of this case, the critical facts are in my judgment that C was accepted as a CHIS by the police and fulfilled his obligations to them in that regard. He provided them with important information on a wholly confidential basis. He ran considerable personal risk in doing this. The police had asked him to sign terms and conditions, and he had done this. These terms and conditions stated that they were not intended to be legally binding, but that does not mean that there was no sufficient assumption of responsibility.
In my judgment, there was clearly an assumption of a duty of care by the police to C by virtue of his status as a CHIS. The circumstances in Swinney were accepted in Van Colle to lie outside the Hill principle and these facts are no less compelling.
The passage which I have cited from the judgment of Ward LJ in Swinney raises the question whether there are countervailing policy considerations in the case of an informer which outweigh those reflected in the Hill principle. I consider that there are public policy considerations supporting the assumption of a duty of care in favour of an informer for the reasons indicated by Ward LJ. I further consider that those public policy considerations are capable of excluding the Hill principle in certain respects in appropriate circumstances.
In my judgment, the conclusion that there is an assumption of responsibility by the police to a CHIS is reinforced by the regulatory scheme for the protection of CHISs to be found in section 29 of RIPA.
C could not be accepted as a CHIS unless there were in force arrangements which satisfied section 29(5) of RIPA: see section 29 (2)(c) (both as originally enacted and as amended after the events in issue). Section 29(5)(a) provides that the arrangements had to ensure that a CHIS would have handlers who were responsible for the CHIS's "security and welfare": see section 29(5)(a) of RIPA, which provides:
"(5) For the purposes of this Part there are arrangements for the source's case that satisfy the requirements of this subsection if such arrangements are in force as are necessary for ensuring–
(a)	that there will at all times be a person holding an office, rank or position with the relevant investigating authority who will have day-to-day responsibility for dealing with the source on behalf of that authority, and for the source's security and welfare; ...""
The words "security and welfare" must be given their ordinary meanings in this context. "Welfare" means "well-being". If the CHIS required a new identity as a result of having acted as an informer, the police might have to help him financially become established in a new place. I would not read the word "welfare" as excluding financial well-being.
RIPA does not introduce a claim for breach of statutory duty to informers. But Parliament has not expressed the contrary intention that there should be no liability in damages under the general law. That matter was left to the courts.
The police have responsibility for "security and welfare" of a CHIS at the same time as they are investigating and suppressing crime by other persons. If, however, a CHIS becomes a suspect, he has no special privileges. The terms and conditions that C signed make that clear. He had no assurance that he would not be investigated or prosecuted.
In this case, the real problem occurred because the head of the investigations team, who knew that C was a CHIS, did not convey that information to the officer in charge of the application or prevent him from making the application. If the officer had known that C was a CHIS, it is at least possible that he would have decided not to make the application. (There is, however, no finding by the judge on that issue.) Alternatively, if the officer had had that knowledge and decided nonetheless to make the application, he would have been bound to disclose the fact that C was a CHIS to the court. In those circumstances, it is at least possible that no restraint order would have been made.
However, if the failure by the head of the investigations team to convey the information to his team is within the investigations immunity, it is nothing to the point that the police were careless in not ensuring that the information that he was a CHIS was available to the member of the investigations team who took the steps of which C complains. (I assume without deciding the point that they were careless in this sense.) The whole purpose of the investigations immunity is to protect the police in just this situation. The claims for economic loss and for damages for psychiatric injury would in that event fail, and questions as to whether these are recoverable heads of loss would not arise.
As already explained, the investigations immunity does not extend to acts done otherwise than in the course of investigating or suppressing crime. That point could have been relevant to the question of the delay in lifting the restraint order. If the judge had found that the reason for the delay had not been that the police were conducting investigations, but rather that they had made the decision that the restraint order should be lifted but simply forgot to take the necessary steps, perhaps because they had negligently lost the file, it may be that the Hill principle would not have applied. However, the judge did not make any finding as to the reason for the delay in applying to remove the restraint order. Two further points indicate that this was not a case where the police simply forgot about C. Paragraphs 87 to 91 of the judge's judgment suggest that the police were actively reviewing C's case throughout. Variations were made to the restraint order in that period to ameliorate C's position.
Each of the acts complained of was in fact carried out in the course of investigating a crime. The police had reasonable grounds for suspecting that C had committed an offence. However, it is in the nature of an assumption of responsibility that it may displace the investigations immunity.
As respects the police's application for a restraint order, I would not decide this case on the basis that there was no conflict of interest between the parties in relation to the proper performance of the duty of disclosure to the court. I agree with Pill LJ on this. The police had no choice but to disclose all material facts to the court. Moreover, their failure to do so was a serious breach of their duty to the court.
If the police decide to investigate the activities of a CHIS, their obligations to him are not automatically at an end. This is in certain respects so even if his status as a CHIS is terminated. Their obligation, for instance, to keep his status confidential (unless disclosure is required by law) continues.
The extent to which other obligations owed to a CHIS are affected by the opening of an investigation against him must in my judgment depend on whether it is established that the public policy considerations involved in an investigating crime require those obligations to be displaced.
In the present case, there was evidence from the police that the investigation into C's activities had to take place without any intervention from his handlers and without any disclosure to the officer in charge of the investigation of his status. This was necessary in order to ensure "the independence and integrity" of the investigation. As one police witness put it: "…by not telling [the officer in charge] that [C] was a source, that allowed [the officer in charge] to make up his own mind in respect of what [C's] involvement was". The investigating officer also gave unchallenged evidence that knowledge of C's status at the start of his investigation "would have led [him] to some quite difficult places" when dealing with the investigation.
The potential prejudice to C was to some extent mitigated by the fact that C's status was never revealed. His personal security was preserved. In addition, his well-being was to a significant extent protected by the MoU (see paragraphs 19 and 20 of the judgment of Toulson LJ). The police did not deliberately mislead the court, though I would certainly expect them in future to develop systems which avoid the serious non-disclosure to the court that occurred in this case.
In those circumstances, in my judgment, the public policy underpinning the investigations immunity prevails over that of protecting the CHIS from purely financial harm. That means that the assumption of responsibility imposed on the police was displaced to that extent by the investigations immunity.
It follows that, in those circumstances, in relation to each of the matters of which C complains, namely his arrest and subsequent interview, the obtaining of production and restraint orders against him, and the failure to apply for the restraint order to be lifted, the Hill principle applies.
I agree with Pill and Toulson LJJ (see paragraphs 164 and 80) about C's claim for psychiatric injury.
Finally, as regards the right to seek compensation in section 72 of POCA I agree with what Pill LJ has said at paragraph 163 of his judgment.
For the reasons given above, I too would dismiss this appeal.
In Hill v Chief Constable of West Yorkshire [1989] AC 53, the leading speech was delivered by Lord Keith of Kinkel. The principle established is stated succinctly in the headnote:
"As a matter of public policy, the police were immune from actions for negligence in respect of their activities in the investigation and suppression of crime."
The principle was restated more recently in Brooks v Commissioner of Police for the Metropolis and Others [2005] 1 WLR 1495. In a speech with which Lord Rodger of Earlsferry and Lord Brown of Eaton-under-Heywood agreed, Lord Steyn stated, at paragraph 30:
"But the core principle of Hill has remained unchallenged in our domestic jurisprudence and in European jurisprudence for many years. If a case such as the Yorkshire Ripper case, which was before the House in Hill, arose for decision today I have no doubt that it would be decided in the same way. It is, of course, desirable that police officers should treat victims and witnesses properly and with respect: compare the Police Conduct Regulations 2004 (No. 645). But to convert that ethical value into general legal duties of care on the police towards victims and witnesses would be going too far. The prime function of the police is the preservation of the Queen's peace. The police must concentrate on preventing the commission of crime; protecting life and property; and apprehending criminals and preserving evidence: [authority is stated]. A retreat from the principle in Hill would have detrimental effects for law enforcement. Whilst focusing on investigating crime, and the arrest of suspects, police officers would in practice be required to ensure that in every contact with a potential witness or a potential victim time and resources were deployed to avoid the risk of causing harm or offence. Such legal duties would tend to inhibit a robust approach in assessing a person as a possible suspect, witness or victim. By placing general duties of care on the police to victims and witnesses the police's ability to perform their public functions in the interests of the community, fearlessly and with despatch, would be impeded. It would, as was recognised in Hill, be bound to lead to an unduly defensive approach in combating crime."
At paragraph 29, Lord Steyn recorded the concession of counsel for the Commissioner that "cases of assumption of responsibility under the extended Hedley Byrne doctrine (Hedley Byrne & Co. Ltd v Heller and Partners Limited [1964] AC 465) fall outside the principle in Hill's case." In a concurring speech, Lord Bingham of Cornhill stated, at paragraph 3:
"… I would also be reluctant to endorse the full breadth of what Hill v Chief Constable of West Yorkshire [1989] AC 53 has been thought to lay down, while readily accepting the correctness of that decision on its own facts."
Lord Nicholls of Birkenhead, also concurring, stated, at paragraph 6:
"Like Lord Bingham and Lord Steyn, in reaching this conclusion I am not to be taken as endorsing the full width of all the observations in Hill v Chief Constable of West Yorkshire [1989] AC 53. There may be exceptional cases where the circumstances compel the conclusion that the absence of a remedy sounding in damages would be an affront to the principles which underlie the common law. Then the decision in Hill's case should not stand in the way of granting an appropriate remedy."
The Hill principle has been reiterated in Van Colle v Chief Constable of the Hertfordshire Police and Smith v Chief Constable of the Sussex Police [2009] AC 225. Smith was attacked following the alleged failure of the police to respond positively to reports of persistent and threatening messages received by him from a person with a history of violence. It was held, Lord Bingham of Cornhill dissenting, that the claim disclosed no cause of action. Lord Brown of Eaton-under-Heywood recognised that "the facts of the present case are really very strong" and stated that "it is tempting to provide redress in as meritorious a case as this." The majority declined to do so. The policy considerations stated in earlier cases were repeated. Lord Brown stated, at paragraph 135:
"True it is that in Brooks both Lord Nicholls of Birkenhead and Lord Steyn contemplated the possibility of exceptional cases on the margin of the Hill principle which might compel a different result. If, say, the police were clearly to have assumed specific responsibility for a threatened person's safety—if, for example, they had assured him that he should leave the matter entirely to them and so could cease employing bodyguards or taking other protective measures himself—then one might readily find a duty of care to arise. That, however, is plainly not this case. There is nothing exceptional here unless it be said that this case appears exceptionally meritorious on its own particular facts—plainly not in itself a sufficient basis upon which to exclude a whole class of cases from the Hill principle."
The principle was reaffirmed in the judgment of Toulson LJ in Glaister, paragraphs 58 and 60, cited by Toulson LJ at paragraph 59 of the present judgment. At paragraph 59, Toulson LJ stated that "For a duty of care to arise, there needs to be something particular about the relationship between the defendant and the claimant."
Reference has been made to the decision of Tudor Evans J in Welsh v Chief Constable of the Merseyside Police [1993] 1 All ER 692. A defendant in the Crown Court informed a representative of the CPS that he wanted offences of theft, to which he intended to plead guilty in the magistrates' court, to be taken into consideration when he was sentenced in the Crown Court. That course was followed. The magistrates' court was not informed and the defendant was later arrested when he failed to answer to his bail on those offences. He believed the offences had already been taken into consideration.
It was held, on the assumed facts, that the CPS had a general administrative responsibility as prosecutor to keep a court informed as to the state of an adjourned criminal case, or had in practice assumed such a responsibility and had done so in the plaintiff's case. The relationship between the plaintiff and the CPS was sufficiently proximate for the CPS to owe a duty of care to the plaintiff to see that the magistrates' court was informed that the offences committed by the plaintiff had already been taken into consideration by the Crown Court. Furthermore, it was fair, just and reasonable for such a duty to exist and there were no public policy grounds to exclude the existence of such a duty. Welsh has in common with the present case a failure to provide a court with information about the claimant.
The case was considered in Elguzouli-Daf -v- Commissioner of Police of the Metropolis and Another [1995] QB 335 where it was also held that there was no general duty of care owed by the CPS in the conduct of its prosecution of a defendant. Dealing with Welsh, Steyn LJ, with whom Rose LJ and Morritt LJ agreed, stated, at page 348G:
"They [the claimants' counsel] also sought assistance in the careful reserved judgment of Tudor Evans J. in Welsh v Chief Constable of the Merseyside Police [1993] 1 All ER 692. In that case the judge held, in the context of a striking out application under R.S.C. Ord. 18, r. 19(1)(a), that it was arguable that the C.P.S. owed a duty of care to a defendant to inform the magistrates' court that certain offences had already been taken into consideration by the Crown Court. The C.P.S. failed to do so. That had resulted in the plaintiff's re-arrest and detention. Any judgment of Tudor Evans J. in such a case requires the most careful consideration by us. But Welsh's case must be put in perspective. The judge approached the matter on the basis that the C.P.S. assumed by conduct a responsibility to keep the magistrates' court informed as to the fact that the offences had been taken into consideration. The judge repeatedly emphasised this feature of the case. By contrast the cases before us do not involve any suggestion of an assumption of responsibility by the C.P.S. Ultimately, it seems to me that the decision in Welsh's case is not of assistance on the central point before us. Contrary to the views of the deputy High Court judge in the case before us I do not regard Welsh's case as wrongly decided. But it turned on its own special facts, and in particular on the issue of assumption of responsibility by the C.P.S."
Steyn LJ added, at page 350A:
"Subject to one qualification, my conclusion that there is no duty of care owed by the C.P.S. to those it prosecutes is intended to be of general application. The qualification is that there may be cases, of which Welsh v Chief Constable of the Merseyside Police [1993] 1 All ER 692 was an example, where the C.P.S. assumes by conduct a responsibility to a particular defendant: see Spring v. Guardian Assurance Plc. [1995] 2 AC 296, 317c-318E, per Lord Goff of Chieveley. And it is trite law that such an assumption of responsibility may generate legal duties. But that qualification has no relevance to the cases before us."
In a concurring judgment, Morritt LJ also stated that he did not "wish to be thought to be casting doubt on the decision of Tudor Evans J in Welsh".
Giving the judgment of this court in Desmond v Chief Constable of Nottinghamshire Police [2011] PTSR 1369, in a constitution including Leveson LJ and Toulson LJ, Sir Anthony May P restated, at paragraph 31, the Hill principle:
"… [the CPS] do not generally in the interests of the whole community owe individual members of the public, be they victims, witnesses or those who are prosecuted, a common law duty of care in undertaking and performing their operational duties of investigating, detecting, suppressing and prosecuting crime. The principle is one of public policy which has regard to the practical needs of law enforcement; "
Sir Anthony May also referred, at paragraph 51, to:
"…a relevant supporting consideration … that there is a series of other possible remedies potentially available to [the claimant]."
The court accepted, at paragraph 32, that:
"The modified core principle in Hill may not apply in exceptional circumstances at the margins;…"
For the respondent, Lord Faulks QC also relied on the statement of Lord Rodger of Earlsferry in D v East Berkshire Community Health NHS Trust [2005] 2 All ER 443, at paragraph 100:
"I do not actually find it helpful to bear in mind – what is in any event obvious – that the public policy consideration which has first claim on the loyalty of the law is that wrong should be remedied. Harm which constitutes a 'wrong' in the contemplation of the law must, of course, be remedied. But the world is full of harm for which the law furnishes no remedy."
Lord Rodger provided examples which do not relate to the present facts.
In Swinney v Chief Constable of Northumbria Police Force [1997] QB 464, it was held in this court that it was arguable that a special relationship arose between the plaintiffs and the police through the assumption by the police of responsibility to preserve the confidentiality of information supplied by the first plaintiff, disclosure of which was likely to expose the plaintiffs to a risk greater than the ordinary risk to the general public; that the immunity generally conferred on police officers from actions in negligence in relation to the investigation or suppression of crime had to be weighed against the need to protect the confidentiality of informants and to encourage them to come forward without fear of disclosure of their identities; that it was necessary to make a balanced assessment of all the public policy considerations in order to determine the question of immunity. The appropriate time to make such an assessment was at the trial, it was held. On the facts, the claim later failed.
Peter Gibson LJ stated, at page 485D:
"In agreement with [Lord Keith in Hill] it seems to me properly arguable that an informant, giving in confidence sensitive information to the police, is in a special relationship to the police, that relationship being based on an assumption of responsibility towards the informant by the police, such that, when through the negligence of the police that information is disclosed to criminals, it can result in a valid claim by the informant in respect of consequent damage to the informant."
At page 486D, Gibson LJ considered the case of negligent disclosure of confidential information in that context. He stated:
"For my part, I have difficulty in seeing why the police should be immune in such a case on the ground of public policy, regardless of whether or not the police were, at the time of the negligence, investigating or suppressing crime. But whether or not this is right, it seems to me that the judge was justified in taking the view that in a case of this sort the important public policy considerations asserted by the police must be balanced against the other public policy considerations to which I have referred, and that the appropriate time to do the balancing is at the trial, when all the facts are known to the court."
Ward LJ, at page 487C underlined that "the welfare of the community at large demands the encouragement of the free flow of information without inhibition" and that in Swinney "no consideration of public policy precluded the prosecution of the plaintiff's claim." In Van Colle, Lord Brown, at paragraph 120, cited Swinney, without expressing any doubt about its correctness.
Further written submissions have been received following the court's reference to Commonwealth authority. Lord Faulks rightly draws attention to the statement of MacLachlan CJC in Hill v Hamilton-Wentworth [2007] 285 DLR (4th) 620 (Canadian Supreme Court), where a claim against the police was successful, that:
"The law of negligence does not require perfection of professionals; not does it guarantee desired results … Rather, it accepts that police officers, like other professionals, may make minor errors or errors in judgment which cause unfortunate results, without breaching the standard of care. The law distinguishes between unreasonable mistakes breaching the standard of care and mere "errors of judgment" which any reasonable professional might have made and therefore, which do not breach the standard of care"."
In Rush v Commissioner of Police [2006] 150 FCR 165 (Federal Court of Australia) it was held by Finn J that no duty of care was owed to a suspect whose father had told the police of his possible criminal activities. It was claimed that there was a duty not to use information supplied in a way that would expose the suspect to the risk of the death penalty in Indonesia. The facts are very different from the present case.
In his analysis, Finn J stated that Australian case law "has not unreservedly committed itself to the public policy immunity prevailing in England" (paragraph 99). However, Finn J stated, at paragraph 114, that "The proposed duty would be inconsistent with the duty owed by the [federal police] to the public at large in the conduct of its investigations into the Bali drug trafficking operation". He cited the decision of the High Court of Australia in Sullivan v Moody [2001] HCA 59; [2001] 207 CLR 562, at paragraph 60:
"… People may be subject to a number of duties, at least provided they are not irreconcilable. A medical practitioner who examines, and reports upon the condition of, an individual, might owe a duty of care to more than one person. But if a suggested duty of care would give rise to inconsistent obligations, that would ordinarily be a reason for denying that the duty exists. Similarly, when public authorities, or their officers, are charged with the responsibility of conducting investigations, or exercising powers, in the public interest, or in the interests of a specified class of persons, the law would not ordinarily subject them to a duty to have regard to the interests of another class of persons where that would impose upon them conflicting claims or obligations."
Toulson LJ has identified the relevant facts succinctly. The considerations I mention at paragraphs 157 and 158 below are in my view also relevant to the issues to be determined. Toulson LJ has described the sequence of events and the Memorandum of Understanding (MoU) between the officer with oversight of the handling of C as a CHIS and the officer who had oversight of the investigation (paragraphs 18 to 20). The stresses inherent in the use of a covert human intelligence sources ("CHIS") are set out at paragraphs 60 to 62 of his judgment.
The officer conducting the investigation stated that, when he was informed that C was a CHIS, he continued to run the investigation without any operational contact or information from C's handlers. This was to retain the independence and integrity of the investigation so that it could never be tainted by the allegation that it had been in some way compromised by C's role.
Another officer confirmed in evidence that officers conducting the examination would not be informed of C's status as a CHIS "so that an unencumbered investigation could continue." The investigating officer could make up his own mind about C's involvement. C had been told not to tell anyone he was a CHIS. That instruction included not telling officers who arrested and interviewed him.
Oral evidence was given that "once he [the investigating officer] had made his mind up, then we could step in and speak to the CPS at the appropriate level and say, 'well, OK, fine, but he was providing intelligence in this respect', and that is exactly what we did at a certain time, as you are aware. The end result of all that is that actually he wasn't prosecuted."
Status of a CHIS
The status of a CHIS and the relationships which arise will inevitably present difficulties in this context. There is no doubt in this case C was a CHIS for a substantial period of 20 months and was in close contact with his police handlers throughout, under arrangements regularly made in such circumstances. There was a person with "general oversight of the use made of the source" under section 29(5)(b) of the Regulation of Investigating Powers Act 2000. Section 29(5)(e) provides:
"that records made by the relevant investigating authority that disclose the identity of the source will not be made available to persons except to the extent that there is a need for access to them to be made available to those persons."
The exception would permit disclosure to a judge from whom a restraint order is sought.
It is common ground that becoming a CHIS does not confer a licence to commit crime. If his dealings with the people being investigated go beyond what he is instructed or authorised to do by his handlers, he may himself incur criminal liability, though enforcing a sanction would inevitably present difficulties.
There is no doubt that C played a substantial part in enabling the police to bring to justice those perpetrating substantial frauds. Equally, it is a feature of the case that, as a CHIS, he behaved in an exemplary manner. He cooperated fully with his handlers. He followed their instructions, even to the extent of not informing the police officers who arrested him that he was a CHIS.
It is believed by the respondent that a prosecution of the appellant could not have proceeded in this case. After the restraint order had been made, the handler H1 made a strong recommendation that C should not be prosecuted and that there should be no further proceedings against him to seize assets. Prosecution would have involved the disclosure of matters contrary to the public interest and, rather than permit such disclosure, the prosecution would have been abandoned. It would in any event have had no real prospect of success given the evidence about C's conduct and cooperation with his handlers. Lord Faulks accepted in terms that it was no part of the respondent's case that C had departed from the terms and conditions of his engagement as a CHIS.
C's untruthfulness, as the judge found it at paragraph 49 to be, in relation to beneficial interest in assets, does not bear upon the issues in this appeal. Moreover, the absence of an earlier application on behalf of C to discharge the restraint order is, as Toulson LJ has stated at paragraph 24, unexplained but, against the background described, concern that to seek a discharge would stimulate the police into further action against C was understandable. It was many months before the CPS made clear that no criminal proceedings were to be brought.
The judge found, at paragraph 150:
"For what it is worth I am inclined to the view that C did not engage in criminal activity with X and his associates and that he went to the police as soon as he discovered that X was a criminal. Thereafter, as is acknowledged by the respondent, C provided very valuable information which led to the conviction of serious criminals."
I agree with Toulson LJ's approach to the issues in this appeal, as he has stated at paragraph 56. The question to be decided is whether there was a tortious duty of the scope for which C contends. C was formally engaged as a CHIS and there is no doubt, as conceded and as accepted by the judge, that he was owed a duty of care by the respondent. The issue is whether the duty extended in the circumstances to a duty to prevent financial loss of the kind which arguably occurred. The respondent's case at the trial, accepted by the judge, was that the Hill principle prevented such a duty from arising. It was not part of the respondent's case that the cause of action was incomplete for lack of proof of damage. The extent of such damage was to be determined at a further hearing, if the duty of care was established. It is not suggested, and save in respect to one transaction is not doubted in the judgment, that economic loss, following the imposition of a restraint order, was other than foreseeable, and occurred. The judge accepted that the order had the potential "for causing serious hardship."
In my judgment, the case turns on the respondent's conduct in obtaining the restraint order and the circumstances in which was obtained. While also submitting that the arrest of C created a cause of action, Mr Glen QC, for C, has concentrated, rightly in my view, on the obtaining of the restraint order, which is his best point.
Reference has been made to section 72 of the Proceeds of Crime Act 2002. I agree with Toulson LJ's approach to it at paragraphs 52 and 71. In any event, I would be most reluctant to hold that the limited statutory remedy provided overrides or influences the definition of common law powers and duties in this important area.
I state at this stage that I agree with Toulson LJ's conclusion, at paragraph 80, upon the claim for psychiatric injury. On the limited material before him, the judge was entitled to reach the conclusion he did. I do not accept the submission that further consideration of the issue could be left to a future hearing. It is not open to C, on appeal, to produce material on breach of duty, which includes foreseeability, which were not advanced at the trial.
I agree with Toulson LJ, at paragraph 58, that the question whether a duty of care ought to be recognised is not found simply in the expression "voluntary assumption of responsibility". As stated by Lord Oliver in Caparo Industries plc v Dickman [1990] 2 AC 605 at 637, the question is whether the law "attributes" to an act or acts of a defendant an assumption of responsibility. The judge's conclusions, at paragraphs 109 and 110, appear to be based on an assumption that a defendant must knowingly and deliberately assume responsibility before a duty can arise but in Smith v Bush [1990] 1AC 831, Lord Griffiths stated:
"The phrase 'assumption of responsibility' can only have any real meaning if it is understood as referring to the circumstances in which the law will deem the maker of the statement to have assumed responsibility to the person who acts on the advice". [my emphasis]
That approach is reflected in the more recent decision in Customs & Excise Commissioners v Barclays Bank plc [2007] 1 AC 181. Lord Bingham of Cornhill cited Lord Slynn of Hadley in Phelps v Hillingdon London Borough Council [2001] 2 AC 619, at 654:
"It is not so much that responsibility is assumed as that it is recognised or imposed by law."
Lord Slynn had prefaced that conclusion by stating:
"It is sometimes said that there has to be an assumption of responsibility by the person concerned. That phrase can be misleading in that it can suggest that the professional person must knowingly and deliberately accept responsibility. It is, however, clear that the test is an objective one: Henderson v Merrett Syndicates Ltd [1995] 2 AC 145, 181. The phrase means simply that the law recognises that there is a duty of care."
At paragraph 4 of the Barclays Bank case, Lord Bingham also stated:
"Thus, like Colman J,… I think it is correct to regard an assumption of responsibility as a sufficient but not a necessary condition of liability, a first test which, if answered positively, may obviate the need for further enquiry. If answered negatively, further consideration is called for."
There had undoubtedly been an assumption of responsibility for the safety of the appellant in this case and that was accepted by the respondent. The question is whether, in the circumstances, a deemed assumption of responsibility towards C as a CHIS for economic loss arose; whether the law attributes to the respondent an assumption of responsibility for such loss. The answer may vary as between the actions of the respondent in relation to C as CHIS. C was not a witness, a member of the public seeking assistance, or, in any conventional sense, a defendant; he had the status of a CHIS.
The conduct of the respondent, and his officers, is to be considered in the context of his acceptance that there would inevitably have come a moment at which criminal and associated proceedings against C could not be continued by the police. In agreement with Toulson LJ, I direct attention to the stage at which the restraint order was obtained. The application for it was made weeks after the written MoU between the officer with oversight of the investigation and the officer with oversight of the handling of C as CHIS had been made.
Unlike the allegation of misfeasance in public office, not pursued in this appeal, the respondent is accepted to be liable for the conduct of his police officers. To establish liability, it is not necessary to analyse the role particular officers played or to pin blame on a particular one. It is not now suggested that those who actually obtained the restraint order were aware of the MoU.
The application for a restraint order was made to the court without notice to C and the court was misled by the failure to inform the judge that C was a CHIS. The required candour was absent. As Toulson LJ states at paragraph 71, it has been emphasised by this court in strong terms that the prosecution is under a duty to disclose to the court all relevant matters when applying for such an order. Toulson LJ, at paragraph 71, appropriately cites the judgment of Hughes LJ in Stanford International Bank v Director of the Serious Fraud Office [2011] 1 Ch 33, which dealt specifically with restraint orders. I need cite only one sentence:
"… it is essential that the duty of candour laid upon any applicant for an order without notice is fully understood and complied with. "
In this case the judge rightly found, at paragraph 133, that officers "should have acted in such a way so as to seek to ensure that an application with potential for causing considerable hardship to C was not made without proper disclosure to the judge of all relevant material."
In my judgment, that failure was a serious breach of duty to the court, and there is nothing inconsistent between the existence of that duty and there being a duty to C, a as CHIS. An assumption of responsibility to C to make disclosure to the court can readily be "attributed" or "deemed". The two duties can run together. In the Barclays Bank case, the Customs & Excise Commissioners claimed that the bank owed a duty of care to them with respect to funds subject to freezing injunctions held on accounts at the bank. It was held that a duty did not exist in all the circumstances but, when specifying the factors to be taken into consideration, Lord Mance stated, at paragraph 103:
"A fourth factor to be considered is whether the suggested duty of care to the claimants would be inconsistent with the bank's or the defendants' duty to the court. Clearly it would not. It would complement and if anything reinforce performance of that duty, as Colman J [2004] 1 WLR 2027 recognised in paragraph 63 in his judgment, at p 2052."
A duty can be owed by the police to a CHIS to be candid with a court from which the police are seeking orders against him.
On behalf of C, it was submitted that misleading the judge in an important respect was, given the relationship between C and the respondent, a breach of duty to C. It cannot be excused on the basis that it was an operational decision. The Hill principle cannot apply in its full vigour in the particular circumstances of this case.
It was submitted that this conclusion is not a significant derogation from the core principle in Hill and the public policy considerations which support it. If the respondent engages CHISs, and there is a public interest in his doing so, he assumes responsibilities towards them the extent of which must be considered in the particular circumstances. C was a reliable and successful CHIS who followed the rules in every respect. He could not have been prosecuted. The leader of the team investigating the series of frauds, with C's help, had been made aware, before the application for a restraint order was made, of his status as a CHIS. He should not have been pursued to the extent of obtaining a restraint order by misleading the court in failing to disclose his status, it was submitted. The duty to C included a duty not to obtain a court order without making proper disclosure. To fail to find a duty to C of the scope claimed, and its breach by obtaining a restraint order in this way, would, as Lord Nicholls put it in Brooks, be "an affront to the principles which underlie the common law".
As to whether the judge would have made a restraint order had he not been misled, by the failure to discharge, I cannot read Wyn Williams J's finding, at paragraph 143, as a finding that the judge would have made it in any event. Wyn Williams J stated that "had a restraint been sought it is possible that a judge appraised of all the information available to R would have granted the restraint but, in my judgment, no more than that. It is not possible to predict on balance of probability what a judge would have done. … [Had there been a hearing on notice] who knows what might have followed." I would have put it somewhat more strongly. Had the judge been fully informed of the circumstances, it is most unlikely that a restraint order would have been made.
It is necessary to consider whether the Hill principle overrides so as to prevent a duty of care from arising and it has been accepted in the cases cited that there are exceptions to its application. The claimant in Swinney was a CHIS as is C and the existence of a duty and whether it had been breached was held to be matters of fact for the trial. There has been in this case, as in Welsh, a failure to disclose to a court. Qualifications to the operation of the principle have been stated in Brooks, Elguzouli-Daf and Desmond. Important though the principle of not impeding police conduct is, it does not, in my judgment, operate to create a general immunity in this case. The exception is not only in C's meritorious conduct, on the judge's findings of fact, but in his status as a CHIS.
At paragraph 72 of his judgment, Toulson LJ has expressed concern over the non-disclosure to the judge. Toulson LJ also noted that protection for the public could have been achieved by amending the restraint order against X so as to include relevant assets, giving notice of the amended order to C as a third party affected by it.
While I accept, for present purposes, Toulson LJ's observation at paragraph 73 that: "There is no authority for the proposition that a litigant owes [the duty to make proper disclosure to the court] to an opposing party under the law of negligence", that proposition does not in my judgment provide an answer in the present situation. C cannot be treated as an opposing party; the respondent had entered into a relationship with him as a CHIS.
I do not see C's claim as simply requiring the police to give priority to supporting his financial interest over the public interest in the detection of crime and recovery of the proceeds. Certainly the appellant has a private interest and that is why the present claim is brought. It is, however, brought on the basis that he had a relationship, initiated on behalf of the respondent, with the respondent's officers, and loyally performed by C, to act as a CHIS in an important criminal investigation. It is well recognised that there is a public interest in people acting as CHISs. Unlike Rush, this is not a case where a private interest is set directly against a public interest. There are potentially conflicting public interests. That does not mean that a private duty cannot exist; it does mean that its existence and its scope must be considered in the context of the potentially conflicting public interests. The Hill principle, as construed, does not preclude the existence of a duty to a private person.
There is a public interest operating in parallel with the private interest of C. Of course there is a public interest in police investigation of crime not being impeded by the possibility of claims brought by suspects but that has to be considered in relation to the public interest in employing the services of CHISs and the public interest in courts not being misled by non-disclosure by the police during their investigations.
It was submitted that the Hill principle does not give a carte blanche to police authorities to treat as is convenient to them, and to the extent of failing in their duty to make disclosure to the court, a person with whom they have entered into a relationship as a CHIS. In this case, it was put as generously to C in the MoU as to say that "this CHIS is the reason [the operation] was started."
While it was accepted that a CHIS knowingly accepts risks, and situations could arise in which he cannot, because of the public interest, properly be protected, it was further submitted, that the blatant action of the police in failing to make an important disclosure to the court when an order was sought from the court, does not come into that category of risk and itself was contrary to the public interest.
When taking proceedings against C, the police were embarking on a course of conduct which, it was submitted, both investigators and handlers must have known was a dead end. To proceed, in this case, to obtain a restraint order by failing to make necessary disclosure to the court was a breach of duty to C. Reliance is placed on the judge's finding that the police "should have acted in such a way so as to seek to ensure that an application with potential for causing considerable hardship to the claimant was not made without proper disclosure to the judge of all relevant material." Their conduct showed an unacceptable approach towards a person who has been asked to assume the role of a CHIS, in the way C was. There was a duty to have regard to that role and intervene before the restraint order was obtained. The special relationship was such, it was submitted, that the duty of care, included a duty in relation to economic loss, and there was a breach of that duty when the restraint order was obtained in the manner described.
A special relationship between C and the police existed, and both parties gave effect to it. In such circumstances, the rationale for Hill and cases which have followed it does not operate in its broad formulation. The principle that police activities should not be impeded must be considered in a context in which a longstanding relationship between the CHIS and the police exists and public, as well as private interests, require the position of the CHIS to be protected. In my judgment, the present situation is capable of following within the category of exceptions to the Hill principle recognised in the authorities.
The relationship between the police and their CHIS is inevitably fraught and includes risks on both sides. The rationale for the MoU, set out by Toulson LJ at paragraph 20, itself refers to complications and to operational problems arising from that status. When deciding the issue, the nature of the relationship that had been created between the police and C needs to be examined. However beneficial to the police the relationship was, it involved, and C must have known it involved, considerable risks for him. There was not only the risk of physical injury to him and his family, as to which a duty of care is accepted, but a risk to his own finances in becoming involved in dealings with people suspected by him of being fraudsters.
A CHIS takes the risk that police operational requirements may involve action detrimental to his interests, notwithstanding the information which, in the public interest, he is providing. The police must retain some operational discretion and that may affect the moment at which they are required to take action to protect C. That discretion would cover the decision as to when the CHIS handlers were required, by reason of the special relationship they have created, to notify the investigators of the CHIS's status. In this case, weeks before the restraint order was sought a senior police officer with oversight of the investigation knew of C's status as a CHIS.
A became a CHIS in circumstances where fraud was being investigated. To achieve what his handlers wanted him to achieve he needed to become involved in discussions with fraudsters which brought suspicions on himself. It is accepted that those investigating the fraud, in ignorance of his status, might legitimately arrest him and seek a restraint order against him. The investigators who actually obtained the restraint order did not, on the judge's findings, know he was a CHIS. They were not personally breaching a special relationship with him or their duty to the court. They were not told of C's status, even though weeks had elapsed since the MoU. The police officer with oversight of the investigation knew of C's status as a CHIS well before the application for a restraint order was made by those he was overseeing. He must, or should, have known that a weapon in the armoury of those he was overseeing was an application for a restraint order.
With the benefit of hindsight, he should have conducted a review before a restraint order was sought. It is said by Lord Faulks that the failure to be frank with the court was an innocent failure. In the sense that those who actually applied for it did not known of C's status, that is acceptable but I cannot categorise the application as innocent when the officer with oversight of the investigation did know of C's status and failed to forestall the application by notifying his officers before the restraint order was sought.
If the Hill principle is to be employed by police officers so as to licence them to mislead courts or ignore the legitimate interests of a CHIS they have employed, the principle is not in the public interest. A licence to turn a blind eye to such considerations is equally unacceptable. However, I feel constrained to apply the Hill principle in this case by reason of the weight of authority behind it, expressed quite recently in Van Colle, and because of the uncertainty, on the material placed before the court, and as expressed by the judge, as to the progress of the investigation into fraud, and as to C's position in it, at the time the application for a restraint order was made.
A duty to guard C's financial position would be an extension of the duty to him arising from the relationship. The police had to consider whether C was being straightforward as a CHIS, or whether he was abusing that position, in the financial transactions. In hindsight, it is clear that he was being straightforward but it may not have been obvious at the time. The police had a duty, on behalf of the public, to investigate the fraud and operational requirements were necessarily prominent in the minds of the investigators.
There was, in my judgment, a duty to C arising out of the proximity of the relationship, which extended beyond his physical welfare. It could cover his financial welfare and the claim is based on financial loss. However, when considering the scope and extent of the duty, and the standard of care required, the complexity of the situation needs to be borne in mind.
I would accept that, following the MoU, a discretion remained as to when those conducting the investigation should be told of C's status, given the other factors involved. The need for a discretion arises from the Hill principle and also from the difficulty in weighing the potentially conflicting public and private interests involved. With some reluctance, I have concluded that the failure to notify the front-line investigators of C's status before they made application for the restraint order did not involve a breach of the extended duty to him. Had they proceeded to charge him or, as in Welsh, to detain him, the position might well have been different. While, in my judgment, there is considerable merit in the allegation that the relevant officers should have been told, I am prepared to find that the failure did not amount to a breach of duty to him by the police.
I remain concerned about the failure to inform the court before the restraint order was, without notice, obtained and the serious misleading of the court which occurred. With the experience of this case, I would expect the police to reassess their arrangements with CHISs, and their attitude towards them, particularly when applying for court orders. Following the experience of this case, a result which exonerates lack of candour with the court cannot be assumed. The Hill principle does not give the police a carte blanche to treat courts and CHISs as they please in order to satisfy operational requirements. Conflicting public interests are involved and the status of courts, and also the position of those with whom, in the public interest, they enter into a special relationship, must be considered.
If the Hill principle is to be relied on in other cases involving CHISs, I would expect a better analysis of the prevailing situation and better liaison between the officers with oversight. In this type of case, CHISs, prepared to assist the police, may also require further assurances from the police than, as I accept on the judge's findings, were given to C in this case.