Serious Organised Crime Agency v Pelekanos
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE HAMBLEN,Mr Justice Hamblen |
| Judgment Date | 02 October 2009 |
| Neutral Citation | [2009] EWHC 2307 (QB) |
| Docket Number | Case No: TLQ/09/0505 |
| Court | Queen's Bench Division |
| Date | 02 October 2009 |
[2009] EWHC 2307 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Before: MR JUSTICE HAMBLEN
Case No: TLQ/09/0505
Ms Claire Dobbin (instructed by SOCA) for the Claimant
Mr Andrew Bodnar (instructed by Lewis Nedas & Co.) for the Defendant
Hearing dates: 27 th July 2009 – 31 st July 2009
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The Claimant, the Serious Organised Crime Agency (“SOCA”), applies for a civil recovery order under Part 5 of the Proceeds of Crime Act 2002 (“ POCA”). It is made on the basis that the following property has been obtained through unlawful conduct:
(i) The property situated at 1A Bridgewater Road, Hertfordshire (and registered in the name of the First Respondent, Mr Pelekanos);
(ii) The property situated at 6 Sheppards Yard, Hemel Hempstead (and registered in the name of Mr Pelekanos) ;
(iii) The property situated at 5 Guards View, Windsor (and registered in the name of the Second Respondent, Miss Michelle Feander) ;
(iv) The property situated at 20b Lower Road, Chorleywood (and registered in the name of the Third Respondent, Miss Tracey Lawrence) ;
(v) Property situated at La Quinta Golf Resort, Marbella, jointly owned by Mr Pelekanos and the Fourth Respondent, Mr Paul Robbins.
The part of the claim which relates to property held or jointly held by Mr Pelekanos, has proceeded by way of a trial. That part of the claim which relates to the property held by Miss Lawrence and Miss Feander has proceeded by way of an application for summary judgment. The application made against Mr Robbins was adjourned by agreement.
Procedural matters
Pursuant to the Practice Direction for Civil Recovery Proceedings a claim for a recovery order “must be made using the CPR Part 8 procedure” (4.1). Any disputed recovery order is likely to involve substantial issues of fact which makes the Part 8 procedure inappropriate. Whilst the Court may order the case to proceed under Part 7, in the present case funding difficulties meant that Mr Pelekanos was never in a position to make that application and the matter has come on for hearing under Part 8. The consequence has been that there has been no disclosure by SOCA, but merely the exhibiting of documents upon which they rely to their witness statements. In a case involving disputed allegations of fraud and other criminal conduct this is unsatisfactory. Had further disclosure been required the consequence almost certainly would have been an adjournment and much wasted costs. If that had occurred, it would to a significant extent have been the consequence of the rigid procedural requirements laid down by the Practice Direction.
Background
This application for a civil recovery order arises from a criminal investigation which was initially commenced in 2004 by Hertfordshire Police into the activities of Mr Pelekanos. As part of that investigation searches were conducted at 1A Bridgewater Road and 6 Sheppards Yard. At the search of 1A Bridgewater Road compact disc cases bearing traces of cocaine and a plastic bag, containing seven ecstasy tablets, were uncovered. Ultimately a decision was taken not to prosecute Mr Pelekanos and the matter was referred to the Assets Recovery Agency (whose functions have since been taken over by SOCA).
The witness statement of Ms Amy Nixon, in support of the claim, describes how police intelligence provided an initial starting point for SOCA's investigation. This intelligence was to the effect that Mr Pelekanos was involved in drug trafficking. SOCA contends that its subsequent investigation into Mr Pelekanos (and in particular his finances) demonstrates that the only inference which can sensibly be drawn from the evidence is that Mr Pelekanos derives his income through unlawful conduct. SOCA further contends that the evidence also demonstrates that it is more likely than not that this conduct is drug trafficking and money laundering. In addition SOCA contends that a further aspect of the claim is that, almost without exception, every mortgage application which Mr Pelekanos made contained false information as regards his income and the source of that income, and that this, of itself, constitutes further unlawful conduct and an alternative basis upon which a recovery order may be made. As the case has developed, mortgage fraud has increasingly become the central focus of SOCA's case.
The Statutory Scheme
Property obtained through unlawful conduct
Section 240(1)(a) provides that the general purpose of Part V of POCA is to enable the enforcement authority to recover in civil proceedings before the High Court property which is, or represents, property obtained through unlawful conduct. Unlawful conduct is defined by section 241 which provides that:
“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(3)(a) provides that the court must decide on a balance of probabilities whether it is proved that any matters alleged to constitute unlawful conduct have occurred.
Section 242 defines what constitutes 'property obtained through unlawful conduct'. Section 242(1) provides that:
“A person obtains property through unlawful conduct (whether his own conduct or another's) if he obtains property by or in return for the conduct.”
In determining what constitutes 'property obtained through unlawful conduct' section 242 provides that:
(1) “In deciding whether any property was obtained through unlawful conduct—
(a) it is immaterial whether or not any money, goods or services were provided in order to put the person in question in a position to carry out the conduct,
(b) it is not necessary to show that the conduct was of a particular kind if it is shown that the property was obtained through conduct of one of a number of kinds, each of which would have been unlawful conduct.”
Recoverable property.
The general interpretation section (section 316) provides that what constitutes “recoverable property” is to be read in accordance with sections 304 to 310 of the Act. Section 304 defines recoverable property as:
“304 Property obtained through unlawful conduct
(1) Property obtained through unlawful conduct is recoverable property.
(2) But if property obtained through unlawful conduct has been disposed of (since it was so obtained), it is recoverable property only if it is held by a person into whose hands it may be followed.
(3) Recoverable property obtained through unlawful conduct may be followed into the hands of a person obtaining it on a disposal by—
(a) the person who through the conduct obtained the property, or
(b) a person into whose hands it may (by virtue of this subsection) be followed”.
By virtue of section 305 property is also recoverable property if it represents property that was originally obtained through unlawful conduct:
“(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.
(2) 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).”
It is this section which permits the tracing of, and the recovery of, any property which was obtained using property which was originally obtained through unlawful conduct.
Section 306 provides that:
“(1) Subsection (2) applies if a person's recoverable property is mixed with other property whether his property or another's.
(2) The portion of the mixed property which is attributable to the recoverable property represents the property obtained through unlawful conduct.
(3) Recoverable property is mixed with other property if, for example, it is used,
(b) in part payment for the acquisition of an asset.”
Section 307 permits the recovery of accruing profits. It is this provision which provides for the recovery of rental income received from a property which is, of itself, recoverable property, although no such claim is made in the present case.
The Court's jurisdiction to make a recovery order is provided for by way of section 266. Section 266 operates so that the making of such an order is mandatory (subject to the limited exceptions set out therein) if the Court is satisfied that the property is recoverable.
Sections 270–272 deal with associated and joint property and what is to happen where the entire property interest is not recoverable property.
In summary, to establish their claim to the properties in question SOCA has to prove that it is or that it represents property which has been obtained “by or in return for”“unlawful conduct”.
The “unlawful conduct” alleged in this case is drug trafficking and/or money laundering and/or mortgage fraud.
Relevant case law
The burden and standard of proof
The burden of proof is on the claimant and the standard of proof is the balance of probabilities. However, the serious nature of the allegations being made and the serious consequences of such allegations being proved mean that careful and critical consideration has to be given to the evidence for the Court to be...
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