Admissibility – Civil recovery proceedings – Proceeds of crime

Ronald Olden v Serious Organised Crime Agency: CA (Civ Div) (Lords Justice Rix, Wilson, Sir Scott Baker): 26 February 2010

The appellant (O) appealed against a decision ([2009] EWHC 610 (QB), (2009) Lloyd’s Rep FC 375) making a civil recovery order against him and a decision ([2009] EWHC 822 (QB)), granting the respondent Serious Organised Crime Agency an order for possession in respect of his property.

It was alleged that O had been engaged in mortgage frauds and other deceptions. The judge found in favour of SOCA in respect of all the assets which were said to be recoverable property, including O’s home, and ordered that O deliver up possession of those assets to the trustee for civil recovery. In relation to O’s home, the judge reasoned that, as a result of the recovery order, the property vested in the trustee, so the trustee had the right to possession of it; if O remained in possession, he would continue to profit from crime. Accordingly, on a true construction of the Proceeds of Crime Act 2002, a recovery order could include an order to deliver up possession of the recoverable property. O had been convicted on various counts of deception in relation to the mortgage fraud, but the Court of Appeal set aside his conviction on the basis that the officer who arrested him did not have the necessary suspicion of fraud, so his arrest and the interview and searches that followed from it were unlawful. O argued that (1) given that the appeal court had decided that the evidence obtained following his unlawful arrest ought not to be admitted, it was an abuse of process for it to be admitted in a civil trial in which the same factual issues fell to be decided; (2) the judge had been wrong to find that his winnings from spread betting funded by recoverable property were themselves recoverable. Section 305 of the Proceeds of Crime Act 2002 could not apply, because no property was acquired in place of deposits or payments made by him. Section 307 of the act provided that the ‘further property’ obtained must be ‘profits accruing’, which did not extend to property acquired as a result of effort, skill or knowledge; (3) the High Court had no jurisdiction to make an order for possession; alternatively, if it did have jurisdiction, it should not have exercised it.

Held: (1) Section 240(2) provided that the court’s powers to make a recovery order were exercisable in relation to any property, whether or not any proceedings had been brought for an offence in connection with it. The question of admissibility had to focus on the particular proceedings in hand; the fact that evidence was ruled inadmissible in an earlier criminal trial was nothing to the point when considering its admissibility under the act, Director of the Assets Recovery Agency v Olupitan [2008] EWCA Civ 104, (2008) CP Rep 24 applied and Marcel v Commissioner of Police of the Metropolis [1992] Ch 225 CA (Civ Div) considered. The judge’s overriding consideration was that the proceedings should be fair, pursuant to article 6 of the European Convention on Human Rights 1950, and dealt with justly, in accordance with the overriding objective in the CPR, Jones v University of Warwick [2003] EWCA Civ 151, [2003] 1 WLR 954 applied. There were reasonable grounds for suspecting O of criminal offences justifying arrest: the only criticism was that the police officer carrying out the arrest did not have personal knowledge of those grounds. (2) Section 305 could apply: O opened an account with spread betting syndicates and used recoverable property to do so. He then placed further recoverable property on deposit with the syndicates. Once the money was deposited, it became the property of the spread betting company and gave rise to a set of rights in O. The profits for any sums won and paid to O at any given time were ‘profits accruing in respect of recoverable property’: the words ‘in respect of’ in section 307(1) were broad, and were intended to cover circumstances where otherwise it would have been necessary to use the tracing provisions in section 305. The money was recoverable either by sections 305 or 307. (3) The act contained no express power to make a possession order, and the court should not imply such a power. The act made no provision for the possession of property as opposed to a recovery order. The purpose of a recovery order was to vest the property to be recovered in the trustee. Once the property was vested in the trustee, he could decide to apply for an order for possession, under the provisions of part 55 of the CPR. It would be quite wrong to use any inherent jurisdiction of the court as a vehicle to obtain a possession order in a case like the instant case. The judge’s order was unlawful because it was made in favour of SOCA when an application for a possession order should have been made by the trustee, and because it was made without recourse to the provisions of part 55 of the CPR.

Appeals allowed in part.

Ivan Krolick (instructed by MJP Justice Ltd) for the appellant; Kennedy Talbot (instructed by in-house solicitor) for the respondent.