Serious Organised Crime Agency v Gale and another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CARNWATH,LORD JUSTICE TOULSON,Re,LORD JUSTICE AIKENS |
| Judgment Date | 07 July 2010 |
| Neutral Citation | [2010] EWCA Civ 759 |
| Docket Number | Case No: A2/2009/1612 & 1319 |
| Court | Court of Appeal (Civil Division) |
| Date | 07 July 2010 |
[2010] EWCA Civ 759
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
Mr Justice Griffith Williams
Before: Lord Justice Carnwath
Lord Justice Toulson
and
Lord Justice Aikens
Case No: A2/2009/1612 & 1319
HX08X02569
David Lederman QC & Jonathan Lennon (instructed by Rahman Ravelli Solicitors) for the Appellants
Tony Peto QC, John Law & Robert Weekes (instructed by Serious Organised Crime Agency) for the Respondents
Hearing dates: Monday 26 th & Tuesday 27 th April, 2010
This appeal arises out of civil recovery proceedings brought by the Serious Organised Crime Agency (“SOCA”) as the “enforcement authority” under Part 5 of the Proceeds of Crime Act 2002 (“the 2002 Act”). The judge made a recovery order in respect of assets valued at some £2 million against David Gale and his former wife Teresa Gale. On 28 July 2005 Collins J had made an Interim Receiving Order (varied on 25 August 2005) under which Mr James Earp, an insolvency practitioner and partner of Grant Thornton was appointed as Interim Receiver. The findings of his report dated 11 January 2006 formed the basis of the commencement of proceedings for civil recovery on 3 March 2006. His final report was served on 3 July 2008.
For a summary of what he found, and SOCA's consequent claim, it is sufficient to quote the judge's introduction:
“2 In the Report, the Receiver stated he had identified receipts of money into identified bank accounts in the names of DG and TG in the period 1989 to 2005 of about £3 million from “unknown sources” and that between 1989 and 1991, over £1.3 million of this money was transferred by DG and TG into accounts in their name with Allied Dunbar, Isle of Man. He had identified no jurisdiction where, over the last 20 years, DG has declared income for tax purposes. He had been unable to identify any independent documentary evidence of any successful businesses run by DG and/or TG in the United Kingdom or in Spain and DG and TG had not provided any specific addresses for their business enterprises and many of the properties which they asserted they or JP owned. He stated the pattern and quantum of bankings into the Allied Dunbar accounts does not match the history of assets realisations which they have stated occurred in Spain prior to their moving to the United States of America in 1991. He found no evidence of a successful flying related business in the USA or of any documented commercial activity in Portugal once DG and TG had moved there in about 1993. The Executive Summary in the Report concluded:
'We have not identified any independent documentary evidence which would support DG's and TG's assertion that the assets they have accumulated have been derived from legitimate activities. We have not identified evidence of declared income (or tax payments) in the UK, Spain, USA and Portugal which would provide evidence of the means to support the family and allow for the significant accumulation of wealth. There is evidence of unlawful conduct and in particular complex financial dealings indicative of money laundering and concealment. As a consequence, though it is for the Court to decide, it is not unreasonable to conclude that the property and assets have been obtained by unlawful conduct and are recoverable property.'
3 The Receiver identified, as recoverable property, 2 properties in Spain in the name of JP (Las Hortensias and Mezquita) together worth £2,088,000, the proceeds of sale of 120 Hurn Road, Christchurch, Bournemouth (£449,786), £218,302 in 5 frozen bank accounts and motor vehicles and a boat under construction together valued at £57,240. The total value was said to be £2,813,328 but this has been reduced by withdrawals towards living and legal costs and the fall in property values…
4 The claimant's case is that DG's wealth has been acquired through money laundering and tax evasion in the United Kingdom, Spain, Portugal and other jurisdictions and that notwithstanding the discontinuance of criminal proceedings in Spain against DG for drug trafficking (“the 'Hanja' incident”) and his acquittal in Portugal of drug trafficking offences (“the Gale Beach incident”), there is clear evidence of drug offending in the United Kingdom, Spain and Portugal which has contributed to his wealth. It is alleged that TG has played an important part in his money laundering and that assets in her name or in their joint names or in the names of nominees were acquired as a result of his criminal activities. It is alleged that the overall evidence establishes that DG has been leading a life of serial drug trafficking, money laundering and tax evasion; it is alleged that he went to extreme lengths to avoid detection by using:—
• i) a web of lies, false names, multiple passports, nominees and off-shore corporate fronts;
• ii) at least 68 bank accounts both on and offshore and in a number of different jurisdictions which together have received millions of pounds from unidentified sources;
• iii) needlessly complicated bank transfers and
• iv) fleeing his country of residence (from the UK to Spain, from Spain to the USA and from USA to Portugal via the Bahamas) when he feared the authorities were or maybe interested in his criminal activities….”
In a meticulous and comprehensive judgment, to which I pay tribute, Griffith-Williams J reviewed the evidence on which the claim was based, and broadly accepted SOCA's case. He rejected Mr Gale's case that he was “…a genuine businessman who acquired wealth by his honest endeavours in building work, property investment and business ventures of varying kinds…” I quote the judge's general conclusion on the facts:
“I am in no doubt that DG and TG engaged in unlawful conduct – in DG's case, money laundering and drug trafficking, in TG's case, money laundering. There is also evidence of tax evasion in four jurisdictions. They have acquired capital and various assets as a direct consequence of the money laundering and/or drug trafficking but it is not possible to quantify the extent of the tax evasion or to estimate the extent, if at all, that it contributed to their capital wealth. For reasons given during the course of the judgment and below, I am satisfied the Receiver has correctly identified recoverable property. I found DG a witness whose evidence, on the central issues, was wholly unreliable. He was so often demonstrably lying. I am not prepared to believe the evidence of TG insofar as she purported to confirm his account or to explain her involvement; she too was shown to be a liar about matters of real moment. While I am prepared to accept that DG was the moving force behind all criminal conduct, she was hardly ignorant of what he was doing and played her full part in the money laundering.” (para 140)
It is unnecessary to go into much of the detail, since the issues raised by the appeal are relatively limited, albeit important. In summary there are four issues before us, the first three raised by the appeal, and the fourth by the cross-appeal:
i) Whether the claim is statute-barred (“the limitation issue”).
ii) Whether by deciding the factual issues on the balance of probabilities, rather than by application of the criminal standard of proof, the judge contravened article 6 of the Human Rights Convention (“the article 6 issue”).
iii) Whether in any event his conclusions were reasonably open to him on the evidence, having regard in particular to Mr Gale's acquittals in Spain and Portugal of the only criminal prosecutions brought against him (“the evidence issue”).
iv) (On the cross appeal) whether judge was right to refuse SOCA an order against the Gales for the costs paid by the Receiver for his remuneration and expenses (“the costs issue”).
The statute
The scheme of the legislation has been reviewed in a number of decisions of this court. I refer to my own judgment in Olupitan v Director of Assets Recovery Agency [2008] EWCA Civ 104:
“8. Part 5 of POCA 2002 created a new statutory scheme for the recovery in civil proceedings of property obtained through unlawful conduct. Unlike confiscation proceedings under Part 2, the powers are exercisable regardless of any criminal proceedings (s 240(2)). Examples are given in the Explanatory Notes:
“… civil recovery and cash forfeiture proceedings may be brought whether or not proceedings have been brought for an offence in connection with the property. Cases where criminal proceedings have not been brought would include cases where there are insufficient grounds for prosecution, or where the person suspected of the offence is outside the jurisdiction or has died. Cases where criminal proceedings have been brought may include cases where a defendant has been acquitted, or where a conviction did not result in a confiscation order.” (para 290)
Section 240(1) gives power to the Director to recover in civil proceedings property which 'is, or represents, property obtained through conduct unlawful conduct' (s 240(1). Property so obtained is referred to as 'recoverable property' (s 304(1).” (para 8)
The Act was amended in 2005, on the establishment of SOCA under the Serious Organised Crime and Police Act 2005.
“Unlawful conduct” is defined by section 241:
“Unlawful conduct
(1) Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part.
(2) Conduct which—
(a) occurs in a country outside the United Kingdom and is unlawful under the criminal law of that country, and
(b) if it occurred in...
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