In Criminal proceedings, the prosecution has to prove to the criminal standard, âbeyond reasonable doubtâ, and that should be distinguished from cases where there is no dispute that the property was in the hands of the Defendant, and he has not adequately explained how he had acquired it. In contrast, in civil recovery, the civil standard is sufficient in determining that the property was the proceeds of crime on a balance of probabilities.
Applicable laws:
European Convention on Human Rights, Proceeds of Crime Act 2002, Serious Organized Crimes and Police Act 2005.
Brief Facts:
The Serious Organised Crime Agency (âSOCAâ) obtained an order under Part 5 of the Proceeds of Crime Act 2002 (âPOCAâ) for the recovery of property to the value of ÂŁ2m from the Appellants, David Gale and his former wife Teresa Gale. The order was made on the basis that the court was satisfied pursuant to Section 241(3) of POCA on the balance of probabilities (âthe civil standard of proofâ) that the property was derived from criminal activity in the form of drug trafficking, money laundering and tax evasion, offences for which the Appellants had not been convicted.
the Appellant had been acquitted of drug trafficking in Portugal and criminal proceedings in Spain against him were discontinued.
The Appellants argued that the application of the civil standard of proof, rather than the criminal standard of beyond reasonable doubt, breached their right to a fair trial under article 6 of the European Convention on Human Rights (ECHR). They asked the court either to interpret Section 241 to require the application of the criminal standard of proof, or to make a declaration of incompatibility pursuant to Section 4 of the Human Rights Act 1998.
When the Serious Organised Crime Agency won that application, they also sought costs against Mr Gale. In doing so it included in its litigation costs a further ÂŁ1m, that related to the costs of the interim receiver who had investigated and reported on Appellantâs assets over several years. In most cases a receiverâs costs are not litigation costs. They are normally deducted from the assets in question. Therefore, following earlier authority to that effect, Gareth Williams J. declined to add the receiverâs costs to the litigation costs awarded against Mr Gale.
Issues for Determination:
The issue in question is how ECHR, article 6 applies when criminal allegations are being proved in the context of civil proceedings.
Holding:
Under the Proceeds of Crime Act 2002, Part 5, the Serious Organized Crime Agency may bring civil proceedings to recover the proceeds of unlawful activity even if there has been no criminal conviction. S 241 of POCA allows the court to make such an order if it is satisfied that the alleged unlawful conduct occurred to the civil standard â âthe balance of probabilitiesâ.
At paragraph 118, Lord Dyson observed thus:
The Proceeds of Crime Act 2002 (âPOCAâ) provides for two distinct mechanisms for the recovery of proceeds of crime: (i) confiscation by the Crown Court following conviction (Part 2); and (ii) civil recovery proceedings in the High Court, which may be instituted by the âenforcement authorityâ (The Serious Organised Crime Agency) to recover property which âis, or represents, property obtained through unlawful conductâ (recoverable property) (Part 5). Section 241(1) provides that âconduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that partâ. Section 241(3)(a) provides that the court must decide âon a balance of probabilitiesâ whether it is proved âthat any matters alleged to constitute unlawful conduct have occurredâ.
Lord Clarke noted that the costs would undoubtedly have been recoverable as costs of the proceedings if the work had been by anyone other than the receiver. He then distinguished the exceptional investigative nature of the role of the interim receiver under Part 5 of POCA, from that of a receiver in other types of cases. That distinction enabled the Court to reach the pragmatic result that an interim receiverâs cost were litigation costs in a case under Part 5 of POCA, without undermining the general principle.
The Supreme Court unanimously dismissed the appeal on the Article 6 and the costs issues with Lord Phillips giving the main judgment on the first issue and Lord Clarke on the second. Lord Brown and Lord Dyson adding concurring judgments on the first issue.
In Criminal proceedings, the prosecution has to prove to the criminal standard, âbeyond reasonable doubtâ, and that should be distinguished from cases where there is no dispute that the property was in the hands of the Defendant, and he has not adequately explained how he had acquired it. In contrast, in civil recovery, the civil standard is sufficient in determining that the property was the proceeds of crime on a balance of probabilities.
