Civil recovery proceedings under the Proceeds of Crime Act 2002. The experience so far

Pages245-264
Publication Date01 Jul 2006
DOIhttps://doi.org/10.1108/13685200610681779
AuthorAnthony Kennedy
SubjectAccounting & finance
Civil recovery proceedings under
The experience so far
Anthony Kennedy
Head of Legal Case Work, Northern Ireland, for the Assets Recovery Agency,
Belfast, Northern Ireland
Abstract
Purpose – The purpose of this paper is to examine what use has been made of civil recovery
legislation in the first three years of its existence and to explain the legal issues which have been raised
before the courts so far. It also examines the legislative and non-legislative changes to the civil
recovery scheme since it is commencement in 2003.
Design/methodology/approach – The paper uses examples from amongst those cases initiated by
the Assets Recovery Agency and draws on both reported and unreported court rulings.
Findings – The civil recovery cases brought against property by the Assets Recovery Agency may
be classified into six categories: where a potential criminal defendant has died and istherefore beyond
prosecution; where a criminal defendant has been acquitted; where a criminal defendant was convicted
but the confiscation hearing failed; where the respondent is not within the jurisdiction; where the
owner of the property is uncertain; and where a respondent is unprosecutable due to insufficient
evidence.
Originality/value – The paper provides a useful framework for law enforcement agencies which are
considering what type of cases they may useful refer for possible civil proceedings by the Agency. The
paper also sets out for practitioners a useful summary of the civil recovery jurisprudence which has so
far developed.
Keywords Laws and legislation,Civil law, Crimes, Criminal forfeiture,United Kingdom
Paper type Research paper
Introduction
The Proceeds of Crime Act 2002[1] introduced the possibility of civil recovery
proceedings in the United Kingdo m against criminally derived asse ts. Such
proceedings may be taken only by the Director of the Assets Recovery Agency in
England, Wales and Northern Ireland, or by the Civil Recovery Unit on behalf of
Scottish Ministers in Scotland. Such proceedings have now been available for three
years and this paper examines the experience so far, firstly in respect of the categories
of case where civil recovery proceedings have been instituted and, secondly, in respect
of the legal issues which have been raised.
Categories of cases dealt with
There are six categories of circumstances where the Agency has initiated civil recovery
proceedings.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1368-5201.htm
This paper is an expanded version of a lecture delivered at the Institute of Advanced Legal
Studies on 18 January 2006.
Civil recovery
proceedings
245
Journal of Money Laundering Control
Vol. 9 No. 3, 2006
pp. 245-264
qEmerald Group Publishing Limited
1368-5201
DOI 10.1108/13685200610681779
Deceased defendants
When an individual dies they are beyond criminal prosecution. However, this does not
mean that the proceeds of crime are beyond recovery. The Agency has instituted ci vil
recovery action in a number of Northern Ireland cases where the property holder has
met a violent death.
Assets Recovery Agency v. Johnston. Jim Johnston was shot dead outside his
Crawfordsburn home in May 2003 during a loyalist feud. The case was referred to the
Agency by the Police Service of Northern Ireland in the suspicion that Johnston’s
assets had been gained through unlawful activity. After initial investigations, the
Agency searched a number of properties including Johnston’s home where they
discovered a partially assembled bomb and some ammunition. In September 2003 the
High Court was satisfied that the evidence was sufficient to freeze Johnston’s assets,
appointing an Interim Receiver who took possession of them and who was tasked to
carry out an independent investigation on behalf of the Court. The receiver’s report
concluded that all of the property in Johnston’s estate was the proceeds of unlawful
conduct and was therefore “recoverable” under the Act. In September 2004, following
discussions between the Agency and the representatives of Johnston’s estate, the Court
granted a recovery order by consent under which assets valued at approximately
£1.25m were forfeited. This included Johnston’s home, together with a further seven
houses in Northern Ireland, a holiday home in Ireland and a set of commercial premises
in Belfast. A significant investment portfolio was also forfeited. In November 2004,
Johnston’s home was sold by public auction for £410,000. In February 2005, four
properties were sold by public auction, with a further two houses sold by private treaty
for a total of £390,000. In addition a further £100,000 was raised from various
investments, and £86,000 from the sale of two apartments[2].
Assets Recovery Agency v. Warnock. Stephen Warnock was shot dead in 2002. The
Agency instituted proceedings, claiming that property vested in his estate was
recoverable. Warnock had no declared income for tax purposes; he had a substantial
criminal record including offences of theft, robbery, handling stolen goods and
deception and had served some 23 custodial sentences. The evidence established on the
balance of probabilities that he was a senior officer in the Loyalist Volunteer Force, an
illegal terrorist organisation involved in various criminal activities. A mural depicted
him as a Brigadier in that organisation. The evidence adduced by the Agency satisfied
the court that he had been pursuing a criminal lifestyle which had generated
significant sums of money[3].
Assets Recovery Agency v. Daly. Patrick Daly was shot dead in Belfast in 2001. Prior
to this he had a number of criminal convictions dating back to 1983, including
convictions for robbery, theft, serious assaults and firearms offences. The Agency
sought a recovery order in the High Court in March 2005 over assets from his estate
estimated to be worth £180,000. The estate included: a share of a property in Belfast
and all proceeds due to be paid out by an accidental death insurance policy[4]. At the
time of writing, these proceedings had not concluded.
Assets Recovery Agency v. Downey. Paul Downey was abducted from a hotel in 1999
and shot dead. It is believed that he was a mainstream criminal and drug trafficker.
Information received from police indicated that he was also involved in the theft of
farm machinery. The Agency was granted an Interim Receiving Order in the High
Court in 2005 over assets from his estate, the majority of which were in the possession
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