Fresh View Swift Properties Ltd v Westminster Magistrates' Court

Hearing date 14 March 2023

Approved Judgment

On 28 April 2022, District Judge Minhas sitting in Westminster Magistrates' Court ordered the forfeiture of £67,372.51 (and accrued interest) lying in an HSBC account No. 23802671 (“the HSBC account”) held in the name of the claimant Fresh View Swift Properties Limited (“the forfeited sum”).

The claimant seeks judicial review of that decision on three grounds:

(1) The forfeiture decision was unlawful because the District Judge directed herself that the whole of the proceeds of an unregistered MSB is recoverable property, including customer money remitted through that business. Whereas, she should have directed herself that only the fees paid to such a business are recoverable property.

(a) The sums remitted are not obtained “by or in return for unlawful conduct”, (within the meaning of Part 5 and section 242(1) POCA) merely by reason of the MSB not being registered ( ARA v John [2007] EWHC 360 (QB)) (Ground 1(a))

(b) Sums paid to an MSB for remittal are not (without more) obtained by that MSB but remain the customers money throughout ( Ground 1(b)).

Ground 2

The forfeiture decision was unnecessary and disproportionate under Article 1 of Protocol 1 ECHR within the meaning of the Supreme Court in R v Waya [2013] 1 AC 294.

The claimant is Fresh View Swift Properties Limited (“Fresh View”). The defendant is the Westminster Magistrates' Court. The first interested party is the Commissioner of the Metropolitan Police (“the Commissioner”). The second interested party is Felix Allen Adiegwu (“Felix A”), the director of Fresh View at the time of the relevant transactions. The third interested party is the sister of Felix A. Mr Christopher Adiegwu is the current director of Fresh View, and spoke for Fresh View at the hearing before the District Judge. Fresh View was not represented by counsel at the hearing before the District Judge.

The forfeiture proceedings related to a series of transactions whereby the forfeited sum was “transferred” by the claimant from Nigeria to the UK through an unlicensed MSB operated by Michael Kaleajaiye (“Michael K”). The forfeited sum was part of a larger sum of £149,338 transferred from accounts controlled by Michael K, or paid by him in cash, to the claimant between 18 July 2019 and 18 October 2019.

On 4 October 2022 Heather Williams J granted permission on Ground 1(a) and refused permission on Grounds 1(b) and 2. Ground 2 has been orally renewed before me and heard rolled up with Ground 1(a).

I am therefore only concerned with Grounds 1(a) and 2.

Ground 1(a)

Under Ground 1(a) the question I have to answer is whether the forfeited sum was, as a matter of law, “recoverable property” for the purposes of Part 5 of the Act.

Part 5 of the Act is headed “Civil recovery of the proceeds etc. of unlawful conduct”. The relevant provisions of Part 5 for the purposes of this case are as follows:

Section 304(1):

“Property obtained through unlawful conduct is recoverable property…”

Section 242(1):

“A person obtains property through unlawful conduct … if he obtains property by or in return for the conduct.”

Section 241(1):

“Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part.”

Section 241(2):

“Conduct which:

(a) occurs in a country or territory outside the United Kingdom and is unlawful under the criminal law applying in that country or territory, 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.”

Section 303Z14(4):

“The court … may order the forfeiture of the money or any part of it if satisfied that the money or part – (a) is recoverable property, ….”

Section 305:

“ Tracing property, etc

(1) Where property obtained through unlawful conduct (“the original property”) is or has been recoverable, property which represents the original property is also recoverable property.

(2) If a person enters into a transaction by which:

(a) he disposes of recoverable property, whether the original property or property which (by virtue of this Chapter) represents the original property, and

(b) he obtains other property in place of it,

the other property represents the original property.

(3) If a person disposes of recoverable property which represents the original property, the property may be followed into the hands of the person who obtains it (and it continues to represent the original property).”

The question I have to answer is, therefore: Was (i) property (ii) obtained (iii) by 1 (iv) conduct which was (v) unlawful?

There is no authority that specifically addresses the meaning of these words as they are used in Part 5 of the Act. The decisions of Director of Assets Recovery Agency v John [2007] EWHC 360 (QB) and R (on the application of Campbell) v Bromley Magistrates' Court [2015] EWHC 3424 are not analogous and do not tell me what these words are to be taken to mean. Further, the authorities on Part 2 of the Act in my judgment do not help to answer the question. Part 2 concerns a completely different scenario – confiscation in criminal proceedings following a conviction – and uses different language and concepts to those in Part 5.

In my judgment, the meanings of these words are clear.

I address each of the requisite five elements in turn.

i) Property. A forfeiture application under Part 5 of PoCA is an action against the property itself as an in rem proceeding.

Such an application is always against an identified asset in specie. Where it is money in an account, that money must have been previously frozen. Where an order is made, it is against that money in that account. It is not a judgment for a general, liquidated sum.

Such an in rem process was well-described in United States v. Contorinis 692 F.3d 136, 146 (2d Cir. 2012), where the civil forfeiture regime is much the same as ours:

“In civil forfeiture, the United States brings a civil action against the property itself as an in rem proceeding – ‘it is the property which is proceeded against, and … held guilty and condemned as though it were conscious instead of inanimate and insentient.’ …”

ii) Obtained. ‘To obtain’ means to come into possession of something. The use of the past participle means that in the past someone came into possession of the property. The use of this verb does not carry with it an implication that that person either gained ownership of the property or necessarily derived benefit from it.

In this case it is agreed that there are two possible obtainments:

(a) The placement by, or on behalf of, the claimant into Michael K's Nigerian Bank Account of about 40 million Naira, being the sterling equivalent of £67,372.21;

(b) The placement of the sum £67,372.21 into a UK bank account of Michael K.

At the start of the hearing it was the Commissioner's case that the relevant obtainment was a combination of (a) and (b), although by the conclusion of the hearing it was clear to me that Mr Talbot KC was, correctly, focussing on (b).

iii) By: the word “by” when used in a phrase as a preposition, signifies who or what has done something, or how something has been done. To be precise, the word forms a prepositional-adverbial phrase describing how something has happened. Here the happening is the obtainment and the cause is the unlawful conduct.

iv) Conduct: the obtaining of the property must have been by a person's conduct. “Conduct” is a noun which means, according to the OED, “the action of conducting or leading … the action of the person or thing that leads”. The use of the word “conduct” in s.242 in my judgment therefore requires demonstration of some human action or steps to a particular end.

v) Unlawful: the conduct must have been unlawful. Where it occurred in any part of the United Kingdom it is unlawful conduct if it is unlawful under the criminal law of that part. If it occurred overseas it must be contrary to the criminal law of the overseas place and, if it had occurred in a part of the UK, must be contrary to the criminal law of that part. As this is an action in rem it does not matter who was guilty of unlawful conduct. The only requirement is that the property was obtained by someone's unlawful conduct.

I emphasise, as stated above, that while the words require that the property must have been obtained by the unlawful conduct of an individual they do not require that individual to have owned the property at any point or for that individual to have benefitted from the transaction in any way.

In this case, the operation by Michael K of an unlicenced MSB is a criminal offence under Regulation 56(1)(b) and 86(1) of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (SI 2017 No. 692) which respectively provide that a person must not act as a MSB unless he or she is registered and that a breach of this registration requirement is a criminal offence.

In contrast, there is no formal evidence that the payment by, or on behalf of, the claimant of 40 million Naira to Michael K in Nigeria was a crime in that country (although I can take judicial notice that it may well have been).

The payment of...