Serious Organised Crime Agency v Perry
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE MITTING |
| Judgment Date | 28 June 2010 |
| Neutral Citation | [2010] EWHC 1711 (Admin) |
| Docket Number | CO/11592/2009 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 28 June 2010 |
[2010] EWHC 1711 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Before: Mr Justice Mitting
CO/11592/2009
Mr Anthony Peto QC, Mr Tom Weisselberg and Mr Donald Lilly (instructed by SOCA) appeared on behalf of the Applicant
Mr Philip Jones QC and Mr Daniel Lightman (instructed by Asserson Law Offices) appeared on behalf of the 1st, 2nd and 3rd Respondents
: By an application issued on 22 December 2009, the first three respondents to this claim apply for an order limiting a property freezing order made by Cranston J on 28 October 2009 to those assets and that property which is within England and Wales.
The application raises a hard-edged question of principle: can the Serious and Organised Crime Authority (“SOCA”) recover, by proceedings brought under Part 5 of the Proceeds of Crime Act 2002, property obtained through criminal conduct which is situated outside England and Wales? I approach the question by starting with an uncontroversial proposition of law, accepted as such by Lord Bingham in Al-Skeini v Secretary of State for Defence [2007] UKHL 26 at paragraph 11, and by Lord Mance in Masri v Consolidated Contractors International UK Limited (No 4) [2009] UKHL 43 at 10. The proposition is stated in Bennion on Statutory Interpretation, 5th ed. (2008), section 128(1):
“Unless the contrary intention appears, an enactment applies to all persons and matters within the territory to which it extends, but not to any other persons and matters.”
The proposition is sometimes stated in shorthand as “the presumption against extraterritoriality”, per Lord Mance in Masri at paragraph 16.
Perhaps more directly to the point is Lord Phillips' statement of the principle in Société Eram Shipping Co Ltd v Cie Internationale de Navigation [2003] UKHL 30 at 54:
“… it is a general principle of international law that one sovereign state should not trespass upon the authority of another, by attempting to seize assets situated within the jurisdiction of the foreign state or compelling its citizens to do acts within its boundaries.”
In attempting to construe Part 5 of the Proceeds of Crime Act 2002, I therefore start with the presumption against extraterritoriality. Unless Part 5 clearly provides that recovery orders and ancillary orders can be made in respect of property situated overseas, then it is to be presumed that it does not.
The first relevant statutory provisions are as follows:
“ 240 General purpose of this Part
(1) This Part has effect for the purposes of—
(a) enabling the enforcement authority to recover, in civil proceedings before the High Court or Court of Session, property which is, or represents, property obtained through unlawful conduct …
242 “Property obtained through unlawful conduct”
(1) 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.
…
243 Proceedings for recovery orders in England and Wales or Northern Ireland
(1) Proceedings for a recovery order may be taken by the enforcement authority in the High Court against any person who the authority thinks holds recoverable property.
…
266 Recovery orders
(1) If in proceedings under this Chapter the court is satisfied that any property is recoverable, the court must make a recovery order.
(2) The recovery order must vest the recoverable property in the trustee for civil recovery.
…
304 Property obtained through unlawful conduct
(1) Property obtained through unlawful conduct is recoverable property.
…
316 General interpretation
(1) In this Part—
…
“recoverable property” is to be read in accordance with sections 304 to 310 …
…
4) Property is all property wherever situated and includes—
(a) money,
(b) all forms of property, real or personal, heritable or moveable,
(c) things in action and other intangible or incorporeal property.
(5) Any reference to a person's property … is to be read as follows.
(6) In relation to land, it is a reference to any interest which he holds in the land.
…“
It is common ground that, by dint of the definition of “property” as including all property wherever situated, Part 5 covers property obtained through unlawful conduct abroad. Section 242 therefore applies in relation to such property just as much as it does in relation to property acquired by criminal conduct in the United Kingdom.
Mr Peto QC, for SOCA, submits that, as a matter of ordinary language and by applying ordinary principles of statutory construction, if property includes property abroad for that purpose, then the breadth of the definition in section 316(4) is such that it must apply for the purpose of making a recovery order when, at the time when the order is made, and from wherever the property may have been acquired, it is situated abroad.
Mr Jones QC, for the three respondents, concedes that, as a matter of simple language, that must be right, and indeed if the construction of the statute were to stop there, Mr Peto's argument would be unanswerable. Although the principle against extraterritoriality applies, it is clearly rebutted by the clear words of section 316(4).
Mr Jones submits that when one examines the remainder of Part 5, the position becomes not only less clear in favour of such a construction, but clearly against such a construction. He draws attention to the following provisions. First, those which relate to the making of recovery orders rather than to the making of orders which are ancillary to them:
“266 …
(7) A recovery order may sever any property.
…
269 Rights of pre-emption, etc
(1) A recovery order is to have effect in relation to any property despite any provision (of whatever nature) which would otherwise prevent, penalise or restrict the vesting of the property.
(2) A right of pre-emption, right of irritancy, right of return or other similar right does not operate or become exercisable as a result of the vesting of any property under a recovery order.
A right of return means any right under a provision for the return or reversion of property in specified circumstances.
…
271 Agreements about associated and joint property
…
(2) A recovery order which makes any requirement under subsection (1) may, so far as required for giving effect to the agreement, include provision for vesting, creating or extinguishing any interest in property.
…
272 Associated and joint property: default of agreement
(1) Where this section applies, the court may make the following provision if—
(a) there is no agreement under section 271, and
(b) the court thinks it just and equitable to do so.
(2) The recovery order may provide—
(a) for the associated property to vest in the trustee for civil recovery or (as the case may be) for the excepted joint owner's interest to be extinguished, or
(b) in the case of an excepted joint owner, for the severance of his interest.
…
273 Payments in respect of rights under pension schemes
…
(2) A recovery order in respect of the property must, instead of vesting the property in the trustee for civil recovery, require the trustees or managers of the pension scheme—
(a) to pay to the trustee for civil recovery within a prescribed period the amount determined by the trustees or managers to be equal to the value of the rights …
(3) A recovery order made by virtue of subsection (2) overrides the provisions of the pension scheme to the extent that they conflict with the provisions of the order.
…
275 Pension schemes: supplementary
…
(4) A pension scheme means an occupational pension scheme or a personal pension scheme; and those expressions have the same meaning as in the Pension Schemes Act 1993 …
…
282 Other exemptions
…
(3) Proceedings for a recovery order may not be taken against the Financial Services Authority in respect of any recoverable property held by the authority.
(4) Proceedings for a recovery order may not be taken in respect of any property which is subject to any of the following charges—
(a) a collateral security charge …
(b) a market charge …
(c) a money market charge …
(d) a system charge …“
The Proceeds of Crime Act 2002 (Exemptions from Civil Recovery) Order 2003 contain further exemptions: in summary, property forfeited in pursuance of powers conferred by the Customs and Excise Act, and property forfeited under a number of miscellaneous United Kingdom Acts.
When one looks at the provisions relating to ancillary orders, the position becomes, submits Mr Jones, even more clear. A property freezing order made under section 245A(4) has an automatic effect in relation to certain legal process and means of enforcement of property rights:
“ 245D restriction on proceedings and remedies
(1) While a property freezing order has effect-
(a) the court may stay an action, execution or other legal process in respect of the property to which the order applies, and
(b) no distress may be levied against the property to which the order applies except with the leave of the court …
(3) If a property freezing order applies to a tenancy of any premises, no landlord or other person to whom rent is payable may exercise the right of forfeiture by peaceable re-entry in relation to the premises in respect of any failure by the tenant to comply with any term or condition of the tenancy, except with leave of the court and subject to any...
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