Case of the week: Criminal procedure

The Proceeds of Crime Act 2002 Pt 5 did not give the High Court of England and Wales jurisdiction to impose property freezing orders and disclosure orders in respect of property and persons situated outside the UK.

Perry & Ors v Serious Organised Crime Agency (2012) UKSC 35. Lord Phillips JSC (president); Lady Hale JSC; Lord Brown JSC; Lord Clarke JSC; Lord Judge JSC; Lord Kerr JSC; Lord Phillips JSC; Lord Reed JSC; Lord Wilson JSC; Sir Anthony Hughes. 25 July 2012

Appeals allowed

The appellants appealed against decisions that the High Court of England and Wales had jurisdiction to impose property freezing orders and disclosure orders in respect of property and persons situated outside the jurisdiction.

Perry was a criminal who had been convicted of fraud in Israel.

The appeals arose from attempts by the Serious Organised Crime Agency (Soca) to deprive the appellants of the proceeds of the fraud via a civil recovery order and a worldwide property freezing order under the Proceeds of Crime Act (Poca). It also obtained a disclosure order under s.357.

The Court of Appeal (CoA) had concluded that a recovery order could be made in respect of any form of property, wherever it was situated, without restriction.

The CoA had also held that it was difficult to see why mere presence in, or absence from, the country at the time of delivery of a disclosure order was critical, and concluded that Pt 8 had extraterritorial effect.

The issues were whether the court’s jurisdiction to impose property freezing orders under s.245A applied exclusively to property within the UK and also whether the jurisdiction to impose disclosure orders under s.357 applied only to persons within the UK.

Appeals allowed (Lords Judge and Clarke dissenting)

The High Court of England and Wales had no jurisdiction to make a recovery order in relation to property outside England and Wales.

The words ‘wherever situated’ did not describe the type of property to which Pt 5 applied.

Most provisions of Poca applied only to property within the UK, depending upon the context.

The much wider jurisdiction that Soca argued for was unprecedented.

Under the provisions relating to confiscation in Pts 2, 3 and 4 of Poca, confiscation was ordered ad personam having regard to property worldwide, but UK authorities had no power to secure or realise property that was situated outside the jurisdiction; that was dealt with by s.74.

The disclosure notices had been given to persons who were known to be outside the jurisdiction of the UK.

No authority was required to request information from another person anywhere in the world.

However, s.357 authorised orders for requests for information with which the recipient was obliged to comply, subject to penal sanction.

It was contrary to international law for one country to purport to make conduct in another country criminal conduct committed by persons who were not citizens of the first country.

The authority under s.357 could only be exercised in respect of persons within the jurisdiction.

Poca had been poorly drafted, but its objective was clear: those who engaged in criminal conduct, whether at home or abroad, had to be deprived of the property representing its proceeds.

For the purposes of a civil recovery order under Pt 5, property was identified in identical terms to that which might be made subject to confiscation proceedings in Pt 2.

The expression ‘all property wherever situated’ had to have the same meaning wherever it appeared.

Control mechanisms within Pt 5 ensured that the order might be subject to appropriate conditions to avoid improper extraterritorial effect or infringement of the principle of sovereignty.

Poca did not support the conclusion that Pt 5 was limited to property within the jurisdiction and s.286 confirmed that.

For the appellant Perry & Ors

Serle Court’s Philip Jones QC and Daniel Lightman

Axiom Advocates’ David Johnston QC

Asserson-Law Offices partner Trevor Asserson

For the respondent Soca

Blackstone Chambers’ James Eadie QC and Richard Keen QC

4 Stone Buildings’ Sarah Harman and Donald Lilly

Soca legal department

Commentary

Daniel Lightman

The judgment of the nine-judge Supreme Court in these two appeals has cut back significantly the powers of the Serious and Organised Crime Agency (Soca) and other enforcement authorities in civil recovery investigations made, and civil recovery proceedings brought, under Part 5 of the Proceeds of Crime Act 2002 (Poca) with an overseas element.

First, the Supreme Court has decided there is no jurisdiction for the High Court of England and Wales to make civil recovery orders or property freezing orders under Part 5 of Poca in respect of property outside England and Wales.

Lord Phillips stated that he could see “no compelling reason why Parliament should have wished to confer on Soca a right to seek a civil recovery order in respect of the proceeds of a crime that was not committed within the UK where those proceeds are not within the UK”.

The second appeal concerned Soca’s investigative powers when conducting a civil recovery investigation before it issues civil recovery proceedings.

To assist such investigations Soca can apply for a disclosure order under section 357 of Poca, which authorises it to give information notices to any person whom it considers has relevant information requiring them to answer questions, provide information or produce documents relevant to the investigation.

It is a criminal offence for the recipient to fail, without reasonable excuse, to comply with an information notice.

The Supreme Court decided unanimously that such disclosure orders do not authorise Soca to give information notices to persons who are outside the UK.

Daniel Lightman, Serle Court, was junior counsel for the appellants