24 March 2009

International fraud and asset tracing litigation - Spring: Olupitan & another v. Director of the Assets Recovery Agency

[2008] EWCA Civ. 104

Facts of the Case 

O was convicted of conspiring to defraud computer and mobile telephone companies and was sentenced to 18 months imprisonment.  In separate civil proceedings commenced by the Director, the High Court confiscated two houses in Northolt, Middlesex, one owned by O absolutely and another owned by O and his partner.  The confiscation was on the grounds that they represented the proceeds of unlawful conduct and were thus recoverable property within the meaning of the Proceeds of Crime Act 2002.  The Appellants appealed to the Court of Appeal contending (inter alia): 

  • The High Court should have identified the specific criminal offences from which the two properties derived.
  • The Appellants claimed the Court should have given credit for improvements made to one of the properties and also the part repayment of the mortgage on that property from lawful sources.  
  • There was no evidence to support the finding the property had been obtained by money laundering.  

The Decision

Carnwath, LJ delivering the main judgment held the legislation did not require specific criminal offences to be identified as the source of the property in issue.  It was sufficient if the Director was able to point to particular kinds of unlawful conduct by and in return for which the property was obtained.  The provisions of the Civil Procedure Rules relating to the particularity with which allegations of fraud need to be pleaded had no application in this case which was subject to the particular statutory framework of Part 5 of the Proceeds of Crime Act 2002.  Here the Director alleged O had committed immigration offences, acquisitive criminal offences, mortgage fraud and laundered the proceeds of these in addition to cheating the public revenue.  This was quite sufficient indication to O of the case he had to meet.  The fact that one of the properties was jointly owned with the other Appellant did not assist them as the judge found the Second Appellant's contribution to the purchase of that property was funded by the First Appellant's own unlawful funds.  The Court of Appeal therefore upheld the High Court's decision to confiscate the two properties.  Both parties were ordered to pay the Director's costs of the proceedings (O on the indemnity basis).

Points of Interest

Part 5 of the Proceeds of Crime Act 2002 provides a means where by the Asset Recovery Agency (now part of the Serious and Organised Crime Agency) may recover property representing the proceeds of unlawful conduct by means of civil proceedings.  This remedy is available to the Court even if there have been no criminal proceedings against the owner of the assets in question or even if such criminal proceedings have failed.  There have been few reported cases on Part 5 but this case illustrates the determination of the courts to give effect to the legislative purpose of the Act by depriving those who have committed unlawful conduct of the fruits of that conduct.  Given the lower standard of proof in civil proceedings namely proof on the balance of probabilities rather than beyond reasonable doubt, a claim under Part 5 may well succeed where criminal prosecution resulting in a confiscation order would inevitably fail. 

Category: Article