Civil Recovery: an Appraisal

Peter Alldridge

University of Manchester, October 2014

The perceived problem

‘... it simply is not right in Modern Britain that millions of law-abiding people work hard to earn a living, whilst a few live handsomely off the profits of crime. The undeserved trappings of success enjoyed by criminals are an affront to the hard-working majority.’

Tony Blair, foreword to Cabinet Office Performance and Innovation Unit, Recovering the Proceeds of Crime (London, Cabinet Office 2000)

The Procedure – Proceeds of Crime Act 2002 Part 5

In rem action for “property which is, or represents, property obtained through unlawful conduct”, is in the hands of someone other that a bona fide purchaser for value.

Powers to freeze seize &c (POCA ss.243 et seq) interim trustee

Strong investigatory powers (POCA ss. 340 et seq)

Proprietary right to be conferred by court (like bankruptcy) on a trustee on success of action.

“Recovery”? “Civil”?

“Ce corps qui s'appelait ... le saint empire romain n'était en aucune manière ni saint, ni romain, ni empire.”

Voltaire, Essai sur l'histoire generale et sur les moeurs et l'espirit des nations, Ch. 70 (1756)

v.t. L. recupero recuperare re and capio, to take.

1.To regain; to get or obtain that which was lost; as, to recover stolen goods; to recover a town or territory which an enemy had taken; to recover sight or senses; to recover health or strength after sickness.

“David recovered all that the Amalekites had carried away.” 1 Samuel ch 30. (King James Version) OED

“Civil Recovery”- Rationales1. to prevent the criminal committing further

crimes; or

2. because the criminal has no proper title to property obtained by crime; or

3. because the fact that the property was obtained by crime implies that the State acquires a proprietary interest in them; or

4. to deter crime by removing the financial incentive to commit it; or

5. wouldn’t it be nice if …?

6. because it makes people feel better.

The Human Rights Issues

Article 6 - are “civil recovery” proceedings criminal proceedings in disguise?

First protocol - is the civil recovery procedure an disproportionate interference with individual property rights?

Walsh v Director, Assets Recovery Agency [2005] NICA 6Decision: Civil recovery is not governed by

Article 6.2 and 6.3, because it does not involve a criminal charge.

The reason in Walsh

Dealing with Lord Bingham’s advice in McIntosh v HMA and the supposed analogy with confiscation

But Mr McCollum focussed on the statement that the confiscation proceedings did not involve any inquiry into the commission of drug trafficking offences and suggested that, if such an inquiry had been required, the Privy Council would have held that the respondent had been charged with a criminal offence. Again we do not accept that submission. We do not regard the fact that there was no inquiry into drug trafficking offences as pivotal to the decision. (Kerr LCJ, para 26)

Critique

Lord Bingham in McIntosh says confiscation is not covered by article 6.2 and .3 because there has already been a conviction.

Kerr LCJ in Walsh says Article 6.2 and .3 don’t apply to civil recovery because civil recovery is just like confiscation.

BUT there is no conviction in civil recovery.

Lord Bingham in McInstosh v HMA para “There are a number of compelling reasons why [someone subject to confiscation proceedings] he would not be … regarded [as being subject to a criminal charge for the purposes of Article 6].

(1) The application is not initiated by complaint or indictment and is not governed by the ordinary rules of criminal procedure.

(2) The application may only be made if the accused is convicted, and cannot be pursued if he is acquitted.

(3) The application forms part of the sentencing procedure. (4) The accused is at no time accused of committing any crime other than that which permits the

application to be made. (5) When, as is standard procedure in anything other than the simplest case, the prosecutor lodges

a statement under section 9, that statement (usually supported by detailed schedules) is an accounting record and not an accusation.

(6) The sum ordered to be confiscated need not be the profit made from the drug trafficking offence of which the accused has been convicted, or any other drug trafficking offence.

(7) If the accused fails to pay the sum he is ordered to pay under the order, the term of imprisonment which he will be ordered to serve in default is imposed not for the commission of any drug trafficking offence but on his failure to pay the sum ordered and to procure compliance.

(8) The transactions of which account is taken in the confiscation proceedings may be the subject of a later prosecution, which would be repugnant to the rule against double jeopardy if the accused were charged with a criminal offence in the confiscation proceedings.

(9) The proceedings do not culminate in a verdict, which would (in proceedings on indictment) be a matter for the jury if the accused were charged with a criminal offence.

Does it differentiate Confiscation from Civil recovery?(1) The application is not initiated by complaint or indictment and is not

governed by the ordinary rules of criminal procedure. (2) The application may only be made if the accused is convicted, and

cannot be pursued if he is acquitted. (3) The application forms part of the sentencing procedure. (4) The accused is at no time accused of committing any crime other than

that which permits the application to be made. (5) When, as is standard procedure in anything other than the simplest case,

the prosecutor lodges a statement under section 9, that statement (usually supported by detailed schedules) is an accounting record and not an accusation.

(6) The sum ordered to be confiscated need not be the profit made from the drug trafficking offence of which the accused has been convicted, or any other drug trafficking offence.

(7) If the accused fails to pay the sum he is ordered to pay under the order, the term of imprisonment which he will be ordered to serve in default is imposed not for the commission of any drug trafficking offence but on his failure to pay the sum ordered and to procure compliance.

(8) The transactions of which account is taken in the confiscation proceedings may be the subject of a later prosecution, which would be repugnant to the rule against double jeopardy if the accused were charged with a criminal offence in the confiscation proceedings.

(9) The proceedings do not culminate in a verdict, which would (in proceedings on indictment) be a matter for the jury if the accused were charged with a criminal offence.

Applies to Confiscation

Applies to Civil Recovery

Y Y

Y N

Y N

Y Y

Y N

Y N

Y N

Y Y

Y Y

Aftermath

Application for leave to appeal to HL refused. (House of Lords minutes 7 July 2005, 17th Report from the Appeal Committee, para 12.)

ECHR appeal failed: Walsh v United Kingdom [2006] E.C.H.R. 1154

Now SOCA v Gale [2011] UKSC 49; [2010] EWCA Civ 759

ECHR conclusions

Civil recovery is covered by 6.1 but not necessarily 6.2 and 6.3

A1P1 will not usually be a problem (as in confiscation – Waya,  [2012] UKSC 51 Ahmad  [2014] UKSC 36).

But …

• Adequacy of the civil/criminal distinction as a human rights axiom: continuum or binary opposition?

• Human rights culture and the State as avoider: ‘creative compliance’ by the State

Proof of what?

Proceeds of Crime Act 2002 s.241-2

241 “Unlawful conduct”

(1) Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part.

(2) Conduct which—

(a) occurs in a country outside the United Kingdom and is unlawful under the criminal law of that country, and

(b) if it occurred in a part of the United Kingdom, would be unlawful under the criminal law of that part,

is also unlawful conduct.

(3) The court or sheriff must decide on a balance of probabilities whether it is proved—

(a) that any matters alleged to constitute unlawful conduct have occurred, or

(b) that any person intended to use any cash in unlawful conduct.

242 “Property obtained through unlawful conduct”

(1) A person obtains property through unlawful conduct (whether his own conduct or another's) if he obtains property by or in return for the conduct.

(2) In deciding whether any property was obtained through unlawful conduct—

(a) it is immaterial whether or not any money, goods or services were provided in order to put the person in question in a position to carry out the conduct,

(b) it is not necessary to show that the conduct was of a particular kind if it is shown that the property was obtained through conduct of one of a number of kinds, each of which would have been unlawful conduct.

The Standard of proof

241 (3) The court or sheriff must decide on a balance of probabilities whether it is proved-

(a) that any matters alleged to constitute unlawful conduct have occurred, ...

Types of Evidence – (i) Unaccounted wealth/lifestyle

33 In SOCA v Gale [2009] EWHC 1015 Griffith Williams J.

“14 ... While a claim for civil recovery may not be sustained solely upon the basis that a respondent has no identifiable lawful income to warrant his lifestyle, the absence of any evidence to explain that lifestyle may provide the answer because the inference may be drawn from the failure to provide an explanation or from an explanation which was untruthful (and deliberately so) that the source was unlawful”.

10 While there is no burden on a respondent to provide answers, clearly, if an answer is not provided to an important question, and the court is satisfied that the respondent had the knowledge to answer the question and chose not to, an inference adverse to that respondent may be drawn but any decision as to a failure to answer must have regard to delay, which must be ruled out as a possible explanation for the failure to answer before any adverse inference may be drawn.

Types of Evidence (ii) (SOCA v Gale [2009] EWHC 1015)

1. his criminal record from his youth until when he was 32 years old together with his criminal associates;

2. police intelligence material which reveals that he was suspected of drug trafficking in the United Kingdom before he emigrated to Spain and on his return to the United Kingdom between 2001 and 2005;

3. an attempt to breach the Interim Receiving Order within days of service by opening a new bank account in the name of Mrs Peel with a transfer of 167,000 Euros from a Solbank account;

4. the compromise of proceedings bought in Ireland to restrain funds which were the proceeds of crime;

5. his access to funds, not identified by the Interim Receiver or disclosed to the Interim Receiver, which he has used to fund his living expenses from July 2005 to date.

Types of Evidence (iii) Illegally obtained evidence

 Olden v SOCA [2010] EWCA Civ 143 (Evidence excluded in criminal trial under s.78 PACE admitted in civil recovery proceedings).

 CPR 32.1(2) gives the court power to exclude evidence that would otherwise be admissible. That power must be exercised in accordance with the overriding objective in Part I of the CPR to deal with cases justly [...] ;. .. the exercise of the court's power involves balancing any unlawfulness against the importance of the court reaching the correct decision on the basis of all the evidence available.

Types of Evidence (iv) Privilege against self-incrimination?

Pre claim form - ‘criminal’ phase - no privilege but answers not admissible in criminal proceedings. (Proceeds of Crime Act 2002 s. 000)

Post claim form - ‘civil’ phase – no privilege arising only from the fact that the defendant would face civil recovery proceedings. (Belton v Director ARA NI [2006] N.I.C.A. 2)

The Right to legal representation

Squirrell v Natwest [2005] EWHC 664

Proceeds of Crime Act 2002 (Legal Expenses in Civil Recovery Proceedings) Regulations 2005 SI 2005 No. 3382

Proceeds of Crime Act 2002 245C(5) and 252(4). Proceeds of Crime Act 2002 (Legal Expenses in Civil Recovery Proceedings) (Amendment) Regulations 2008 No. 523

Institutional Framework

ARA to SOCA to NCA

Anthony King & Ivor Crewe, The Blunders of Our Governments (Oneworld, 2013) ch 11.

Do we now have better results or just worse data?

Some questionsFinancial Success?

£48 million was collected in 2012-13 from civil recovery, cash forfeitures and tax recovery on criminal proceeds. (NAO Confiscation Orders HC 738 2013-14, 50% to prosecution p. 22 ).

Constitutional significance – incidence of the duty to explain oneself to the State

What are good (cash?) and bad (tax?) areas?

Would it be a good policy for a net (properly costed) break-even?