Serious Organised Crime Agency v O'Docherty (aka Mark Eric Gibbons) & Anor

The Proceeds of Crime Act 2002 (‘the 2002 Act’) is draconian legislation intended to ensure that those who engage in criminal or unlawful conduct, whether in the UK or abroad, should be deprived of the property which is or which represents the proceeds of their crimes or unlawful conduct. Part 5 of the Act deals with cases where there has been no criminal conviction in this country but applies to conduct which is unlawful in the UK or is criminal abroad and would be recognised as criminal here. Where the statutory conditions are satisfied, the court is required to make what is known as a civil recovery order after which the enforcement authority is able to take appropriate steps to enforce it.

Property which may be made the subject of the confiscation process is defined by s. 316(4) of the 2002 Act in these terms:

“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.”

This wide definition and, in particular, the words “wherever situated” had been interpreted as permitting the relevant authorities to pursue proceeds of crime to wherever they are situated, thereby specifically targeting those who move these assets around the world, seeking to keep them hidden from the authorities. That understanding, however, was undermined by the decision of the Supreme Court (reversing the decision of the Court of Appeal and the prior general understanding of the law) in Serious Organised Crime Agency v. Perry (Nos 1 & 2) [2012] UKSC 35, [2013] 1 AC 182 (‘Perry’). The relevant part of the majority decision in the case (Lord Phillips, Baroness Hale, Lord Kerr, Lord Wilson, Lord Reed, Hughes LJ and Lord Brown, Lord Judge and Lord Clarke dissenting) can be summarised from the headnote:

“[N]otwithstanding the definition of ‘property’ in s. 316(4) of the 2002 Act, whether the location of ‘property’ to which a provision of the Act referred was subject to a territorial restriction depended upon the context; that, having regard to the scheme and language of Part 5 of the Act and to relevant principles of international law, the jurisdiction of the High Court of England and Wales to make a civil recovery order applied only in relation to property within England and Wales; and that, accordingly, the court had no jurisdiction under s. 245A to make the worldwide property freezing order, which should be re-drawn so that it applied only to property within the jurisdiction.”

Needless to say, the form of the order in that case, seeking to exercise wide-ranging jurisdiction over property outside England and Wales was not unique to that case. Similar orders had been made in other cases and, in particular, in this case, purported to cover considerable property in Spain and elsewhere. The question which now falls to be decided is what, if anything, can or should be done in relation to these orders, valid at the time they were made, but now far wider in their coverage than the Supreme Court has concluded is consistent with a proper interpretation of the law.

Before dealing with the issues, one submission can be addressed immediately. Mr Andrew Sutcliffe Q.C., on behalf of the Serious Organised Crime Agency (‘SOCA’) made it clear that the Government intends to use the Crime and Courts Bill presently before Parliament retrospectively to reverse the decision in Perry (see Hansard, 14 January 2013, column 636) and that, on the basis that the Spanish court gave effect to the property freezing order (“PFO”), there is every prospect that SOCA will be able to recover the proceeds of the property subject to the civil recovery order. It is sufficient to note that legislative change has not, as yet, been effected; it is irrelevant to the issues of law that now fall to be determined: if authority is required for what seems to me to be a self evident proposition, it is to be found in Willow Wren Canal Carrying Co Ltd v British Transport Commission [1956] 1 All ER 567 per Upjohn J at 569E-G.

Following abortive criminal proceedings in 2001 and 2003 (both of which were stayed as an abuse of process for want of proper disclosure) an investigation undertaken by SOCA into the activities of James O’Docherty concluded that he had obtained an income from drugs which had been laundered through investment in property and some trading and that this income had been supplemented by mortgage frauds. Accordingly, SOCA believed that property held by Mr O’Docherty and Manncherty SL (a company controlled by him) along with property held in the names of others (but in reality belonging to him) was obtained directly or indirectly through unlawful conduct.

On 12 November 2008, on the application of SOCA, Sir George Newman made a PFO under s. 245A of the 2002 Act. It prohibited the respondents to the order (including Mr O’Docherty) “from dealing with the property and assets set out” and required disclosure in writing of certain matters. Paragraph 17 of the Order provides:

“Anyone affected by this Order may apply to the Court at any time to vary or discharge this Order (or so much of it as affects that person) pursuant to section 245B of the Proceeds of Crime Act…”

On 14 April 2011, the terms of the Order were varied by King J following an ex parte application which, if a variation as opposed to a fresh order, should have been made on notice (see s. 245B(5) of the 2002 Act). In the event, Mr O’Docherty was served with the order that afternoon and did not then (or at any time since) seek to set it aside.

On 21-22 June 2011, the trial of the issue came before Kenneth Parker J. Mr O’Docherty instructed leading and junior counsel to apply for a stay of the proceedings as an abuse of process but, when that application failed, the judge was told that counsel had no further instructions and they withdrew from the case. There was no challenge advanced in relation to the merits. Having reserved judgment, on 18 October 2011, Kenneth Parker J had to return to the case when Mr O’Docherty disposed of one of his overseas properties in breach of the property freezing order either as made or varied by King J: he was committed to prison for 9 months for contempt although the warrant has not yet been executed.

On 16 December 2011, Kenneth Parker J gave judgment in the substantive action and decided that SOCA had “proved its claim to the requisite standard of proof” ([2011] EWHC 3332 QB at para. 129). In the course of the judgment, he said:

“In assessing the above evidence it is important to bear in mind that O’Docherty has not in the course of these proceedings taken any steps to seek to rebut the inferences of unlawful conduct that can fairly be drawn from it. He has had ample opportunity to participate substantially in the proceedings. He has deliberately chosen not to do so. …. I do not have the impression that O’Docherty lacks resources when he chooses to take issue with a case put against him (as on the application in respect of contempt of court that was brought by SOCA after the substantive hearing). Rather I feel that, with the help of his legal team, he is seeking to play a long strategic game, keeping his cards as close to his chest as is legally permissible and waiting for an opportune moment at which he and they believe that he might be able to challenge any adverse outcome on the merits of the claim. However, as I have stated, in response to the evidence of unlawful conduct there has been, beyond mere denial, a deafening silence from O’Docherty and his lawyers.”

Essentially, the judge found that, for over two decades, Mr O’Docherty had been engaged in drug dealing and money laundering (the former being the only reliably identifiable source of his income) and that, in the latter 1990s, he started moving his assets (being the proceeds of his crimes) from the UK mainly to Spain but also to France, Switzerland and Dubai. The judge made a civil recovery order pursuant to s. 243 and s. 266 of the 2002 Act and declared that the domestic and overseas property was recoverable; he ordered that it would vest immediately in a trustee for civil recovery who should have such further rights to the recoverable property to which he was or might become entitled under the law of the place where that property was situated (in addition to other powers set out in Schedule 7 of the 2002 Act). He varied the property freezing order so as not to impede the realisation of the recoverable property and required Mr O’Docherty to comply with the trustee in the exercise of his powers.

In addition Kenneth Parker J ordered (“for the avoidance of doubt”) that the property freezing order “shall continue in force”; he granted liberty to apply “for the purpose of giving effect to this Order”. It may well be that these aspects of the order were a consequence of the difference between the effect of the order in this country and abroad. Thus, for property within the jurisdiction, the order vested the property in the trustee in a way that could be directly enforced. The same is not so for property abroad; indeed, although equivalent freezing relief has been granted in relation to Mr O’Docherty’s properties in Spain, it was common ground in Perry that if the trustee sought to bring a civil claim in respect of the property in the state where it was located, his title would not be likely to be recognised: see para. 71 per Lord Phillips.

No attempt was made to appeal the orders of Sir George Newman, King J or, indeed, the order of Kenneth Parker J in relation to the contempt which he found proved. Mr O’Docherty (and Manncherty SL) sought only to appeal the civil recovery order made by Kenneth Parker J and the sole grounds of that appeal were that he was wrong to have refused to stay the case as an abuse of process: permission was refused by Sedley LJ (on the papers) and, when renewed on 17 May 2012, Richards and MacFarlane LJJ took the same view: there was no attempt whatsoever to take a jurisdictional point notwithstanding that Perry had then been argued in the Supreme Court and it is inconceivable that the point at issue was not known to those with an interest in this branch of the law. In the event, the decision in Perry was handed down two months later, on 25 July 2012.

After the decision in Perry, the respondents issued an application to vary the property freezing order so as to exclude the overseas property from that order in accordance with the ambit of the law identified by the Supreme Court: they did not seek to mount an appeal against the committal order made by Kenneth Parker J or to re-open the refusal of permission to appeal from his order of 16 December 2011. At the same time, on the basis that the orders of Kenneth Parker J were final orders which were valid and enforceable (whatever issues might arise in Spain or France), SOCA applied for an order requiring the respondents to sign two powers of attorney over Spanish and French properties.

On 5 October 2012, these applications came before His Honour Judge Spencer Q.C., sitting as a High Court judge. SOCA argued that if Mr O’Docherty wished to contend that the High Court had no jurisdiction to deal with the overseas property, the only proper course was to apply under CPR Part 52.17 (to re-open the final determination of the original application for permission to appeal). Mr O’Docherty and the respondents relied on the ‘liberty to apply’ clauses for variation or enforcement: both were made as part of the continuing proceedings under Part 5 of the 2002 Act, such proceedings not concluding until the last of the property was realised by the trustee for civil recovery: see s. 267 of the Act. They further relied on s. 245B of the 2002 Act (as amended) which provides for variation and setting aside of an order in these terms:

“(1)

The court may at any time vary or set aside a property freezing order. …

(4)

If the court decides that any property to which a property freezing order applies is neither recoverable property nor associated property, it must vary the order so as to exclude the property.”

Judge Spencer dealt with the applications in this way. He noted that no application had been made in relation to the civil recovery order on the grounds that the decision to make that order was final and that recourse would have to be sought from the Court of Appeal; the application was limited to the property freezing order. Having referred to s. 245B of the 2002 Act and identified the submission of Andrew Mitchell QC (for Mr O’Docherty) that the nature of the freezing order was “something of an organism which is subject to growth or pruning at any time”, he went on:

“It seems to me that there is no alternative but to vary the freezing order by excluding from its operation all properties which are outside England and Wales. Mr Hall submits that that would be an unfortunate consequence in that it might enable Mr O’Docherty to dissipate his assets and thus blunt the force of the civil recovery order. All that may be so, but that is the effect of the Act not exercising any control over property outside the jurisdiction. It is a consequence of the legislation as it has been interpreted by the Supreme Court.”

SOCA applied for permission to appeal the order of Judge Spencer to that effect along with the consequential order whereby he refused to issue two powers of attorney necessary to put into effect the recovery of the overseas property. The judge refused permission on the grounds that the result had been dictated by the decision of the Supreme Court. Both permission to appeal along with a continued stay of the operation of the order (initially put in place by Jackson LJ) were granted by Richards LJ on the basis that the grounds were arguable and that it was of general importance to establish the effect of the judgment of the Supreme Court in Perry on the enforceability of civil recovery orders made before that judgment was handed down.

At the same time, two other applications are before the court at the behest of Mr O’Docherty. First, adopting the approach suggested by SOCA, as a precautionary measure, he applies under CPR Part 52.17 to re-open the refusal of permission to appeal dismissed on 17 May 2012 by the full court. Second, although advanced only in the skeleton argument (which, following the hearing, has been followed up by an application for leave to appeal out of time), he seeks to appeal the order of committal made on 18 October 2011 on the basis, first, that the order of King J was irregular and, second, that the committal order was made on the grounds of his failure to comply with what now transpires to be an unlawful extension of the jurisdiction of the court.

On behalf of SOCA, Mr Sutcliffe argues that a subsequent decision of the Supreme Court construing a statute in such a different way as would change the decision in an earlier case does not, of itself, affect the validity of any existing final orders (what he describes as closed cases) or, in the context of this case, did not affect the exercise by Kenneth Parker J of jurisdiction over the overseas property (by making a civil recovery order in respect of it) and his declaration that the property subject to the PFO was ‘recoverable property’. In other words, the subsequent decision in Perry (to the effect that Mr Perry’s overseas property could not be subject to civil recovery proceedings) was simply irrelevant to the case.

As authority for that proposition, Mr Sutcliffe relies on Cadder v HM Advocate General for Scotland [2010] UKSC 43, [2010] 1 WLR 2601, citing with approval the decision of the Irish Supreme Court in A v Governor of Arbour Hill Prison [2006] 4 IR 88 in which Murray CJ observed (at para. 36):

“Judicial decisions which set a precedent in law do have retrospective effect. First of all the case which decides the point applies it retrospectively in the case being decided because obviously the wrong being remedied occurred before the case was brought. A decision in principle applies retrospectively to all persons who, prior to the decision, suffered the same or similar wrong, whether as a result of the application of an invalid statute or otherwise, provided of course they are entitled to bring proceedings seeking the remedy in accordance with the ordinary rules of law, such as a statute of limitations. It will also apply to cases pending before the courts. That is to say that a judicial decision may be relied upon in matters or cases not yet finally determined. But the retrospective effect of a judicial decision is excluded from cases already finally determined. That is the common law position.”

In those circumstances, Mr Sutcliffe argues that Judge Spencer was wrong to consider the extension of the property freezing order by Kenneth Parker J as separate from the remainder of his order or to analyse whether the overseas property identified in the order was ‘recoverable’ and thus subject to the jurisdiction of the High Court because the Court of Appeal had earlier refused an application for permission to appeal the order and it was not for the judge to regard the continuation of the PFO as inherently inconsistent with the Perry decision. The decision in relation to this order (and the civil recovery order) was final and it was his responsibility to treat the order of the court as lawful.

Mr Sutcliffe makes the further point that until the decision in Perry, Part 5 of the 2002 Act containing the provisions for civil recovery had been held to apply to domestic and overseas property and s. 316(4) defining property as “wherever situated” had been given an unrestricted interpretation. The order was thus valid unless and until reversed by a court of competent jurisdiction: that was not a course that was open to Judge Spencer. Rather, Mr O’Docherty would have to bring himself within the authorities that permitted the re-opening of a final decision.

Mr Andrew Mitchell Q.C. for Mr O’Docherty does not challenge the principles set out in Cadder and accepts that procedural bars in support of finality of litigation are generally implemented (for example by refusing to extend time for appeal). He does argue, however, that if a party to litigation needs assistance from the court, such as to litigate over the powers of the trustee, the law must be applied as it is on the date that the matters are being considered. The difficulty with that argument is that if valid, where a litigant wished to challenge the legality of an order however long after any right of appeal had been exhausted, it would prevent enforcement even of a final order until the issue had been determined unless and until recent developments of the law had been considered: a party to litigation would only need to refuse to comply with the order of the court to permit him or her to litigate or re-litigate the issue of legality.

The alternative argument advanced by Mr Mitchell goes back to the terms of the PFO (which specifically provides a liberty to apply) and, even more significantly, s.245B of the 2002 Act (as amended) which permits the court “at any time” to vary or set aside a property freezing order and by s. 245B(4) specifically visualises the possibility that property which has been the subject of a property freezing order is found to be neither recoverable property nor associated property. In those circumstances, the statute mandates a variation of the order to exclude the property.

In order to analyse the effect of these arguments, it is necessary to consider each of the relevant orders which have been made in this case. To summarise again, these are:

The continuing impact of the orders in this case all flow from the decision of Kenneth Parker J on the substantive hearing of the action and I agree with Mr Sutcliffe that logic demands that the first consideration be given to the effect of that order and, in particular, to whether it can now be the subject of appeal. Having dealt with that issue, the conclusion will then be material to the remaining issues in the case.

The Order of Kenneth Parker J is in the following terms (excluding reference to costs):

“1.

The property set out in Appendix A [which includes property in Spain and France] is declared to be recoverable property and shall immediately vest in the Trustee.

2.

The Trustee will have such further rights to the recoverable property to which the Trustee is or becomes entitled under the law of the place where the recoverable property is situated.

3.

The Trustee shall have the powers set out in Schedule 7 of POCA without prejudice to any powers he may have by virtue of statute or implication of law.

4.

The Property Freezing Order dated 12 November 2008 as varied on 14 April 2011 … shall be amended by the addition of paragraph 6A in the following terms:

“Nothing in the Property Freezing Order shall prevent the Trustee exercising his powers under Schedule 7 of POCA in relation to realising the recoverable property or prevent the Trustee and the Respondents from otherwise complying with the terms of this Order”:

5.

[Mr O’Docherty] must co-operate with the Trustee in the exercise of his powers.

6.

Upon the transfer of each item of recoverable property referred to at paragraphs 1-5 and 29b of Appendix A (property situated in the United Kingdom) to the Trustee the Property Freezing Order shall be amended by omitting that property.

7.

For the avoidance of doubt, subject to the terms of this Order, the Property Freezing Order shall continue in force.

8.

There shall be liberty to apply for the purpose of giving effect to this Order. ”

The first point that Mr Mitchell argues is that, because of the liberty to apply contained in paragraph 8, this Order is not a final order because it necessarily includes catering for the needs of the trustee to procure through litigation the right to claim title to the foreign property. I reject that submission. The order contains within it a final determination of status that the court has accorded to the property contained within Appendix A and accords to the trustee powers defined by statute in relation to that property. The remaining parts of the order do no more than provide mechanisms whereby the trustee can give effect to the final determination of the court: this provision does not (and cannot) affect the finality of what Kenneth Parker J determined. As I have identified above, the mere fact that the court might have to provide mechanisms whereby effect can be given to the order of the court does not affect its finality.

On that basis, given that this aspect of the litigation was finally determined when this court refused permission to appeal, it is common ground that in order to re-open the issue, Mr O’Docherty must bring his application within the four corners of CPR 52.17 which identifies the criteria which must each be established before this court will re-open an appeal. These are:

“(a)

it is necessary to do so in order to avoid real injustice;

(b)

the circumstances are exceptional and make it appropriate to re-open the appeal; and

(c)

there is no alternative effective remedy.”

In Guy v Barclays Bank plc [2011] 1 WLR 681, Lord Neuberger MR referred to Taylor v. Lawrence [2003] QB 528 (at para 53) and to the jurisdiction being based on the court’s power to take actions “to maintain its character as a court of justice”; he spoke of the ambit of the power as “very narrow” (at para. 27).

Mr Sutcliffe argues that there was nothing unjust about Kenneth Parker J deciding the application brought by SOCA according to the law as it then stood. As to the possibility of an order (even in the context of criminal proceedings such as those concerned in Cadder) continuing to stand even where it would not now be made because of later case law, this is not unjust, but simply a product of the evolving law. Nor does the preservation of the order and its ongoing enforcement give rise to any violation of Article 1 Protocol 1 of the ECHR: the interference was justified, proportionate and according to law (as it was then understood to be). He also argues that that the circumstances are not exceptional not least because it is not exceptional that an order is made which would not be made at a later point in time because of the evolution of the law.

Mr Mitchell points to the absence of an alternative remedy and the necessity of avoiding real injustice because the Supreme Court has held that it was never Parliament’s intention that the civil recovery order should extend over foreign property: it would, he argues, be unjust to leave in place an order in direct contravention of the will of Parliament. He criticises SOCA for their lack of candour towards the judge on the basis that it should have been made clear that there was a jurisdictional challenge to the right to seek foreign property (ie Perry) so that the court could have considered whether to adjourn the determination of the case until the Supreme Court had handed down its decision.

I say at once that I do not find Mr Mitchell’s reliance on the will of Parliament to be of assistance. If recent pronouncements are anything to go by (which, as I have said, I do not believe to be relevant), what is intended is not necessarily reflected by the present state of the law. What is, however, beyond argument is that in construing what is commonly agreed to be an extremely difficult series of provisions, the Supreme Court have reached a clear conclusion which binds this court for the future. As for the candour of SOCA, it was open to Mr O’Docherty to take part in the case before Kenneth Parker J (as he did when applying to stay the action as an abuse of process) and to take whatever points he wished to advance. The argument advanced before the Supreme Court in Perry was not unknown before the decision: it could have been made a ground of resistance to the claim or, additionally, advanced as a potential argument in support of the application for permission to appeal.

The answer to this aspect of the case is to be found in the observation that the retrospective effect of a judicial decision is excluded from cases already finally determined. There is nothing exceptional about this case: it is no different from that which would obtain in any case where the common law (or the construction of a statute) takes a line which differs from previously decided cases with the result that one or more earlier decisions of the court would be decided differently had the law then been understood in the way that it is now explained. If that fact itself was exceptional, the critically important principle of finality of litigation would be undermined. Once seen in that light and, additionally, it is also recognised that the decision of Kenneth Parker J is a final determination, neither can the re-opening of the decision be said to be necessary to remedy a real injustice: his decision was correctly made in the light of the law as it was then understood to be. In my judgment, the pre-requisites identified in CPR 52.17 for re-opening the decision of the court are not met.

This conclusion is reinforced if attention is focused on the subject-matter of the decision that it is sought to reopen, namely the refusal of permission to appeal.  The only point raised in the application concerned Kenneth Parker J’s refusal of a stay; there was no other challenge to his order.  In particular, no issue was raised about the territorial reach of the order, even though Perry was then before the Supreme Court.  It cannot be said to be necessary, for the avoidance of injustice, to re-open the refusal of permission by reference to a point of law that could have been but was not taken at the time.

On that basis, the civil recovery order remains a binding order of the court. Accepting that to be the case (and it is important to underline that Mr O’Docherty did not initially seek to re-open this appeal but applied only to vary the property freezing order), it is necessary to turn to the other orders which are consequent upon the civil recovery order.

The property freezing order continued by Kenneth Parker J is necessarily consequent upon the civil recovery order that he made: it is the intended mechanism for protecting the assets while the order is put into effect. As a matter of logic, therefore, once it has been determined that the civil recovery order remains in place, the consequential orders intended for the purposes of enforcement of that order should follow. That raises the question whether it is appropriate to exercise the discretionary jurisdiction of the court to keep foreign property frozen at a time when the Supreme Court has found that it falls outside the relevant provisions of the statute. Judge Spencer’s analysis effectively ignores the fact that the order remains valid (and, before him, had not even been challenged): he simply superimposed the decision in Perry onto the consequential orders.

Mr Mitchell argues that this approach can and is justified by reference to s. 245B(1) of the 2002 Act which provides the court with a discretion “at any time” to vary or set aside a property freezing order. Once an application is made and the court is seized of the matter, s. 245B(4) then mandates the way in which the court must proceed in these terms:

“If the court decides that any property to which a property freezing order applies is neither recoverable property nor associated property, it must vary the order so as to exclude the property.”

He argues, therefore, that the court is then deciding whether property is or remains recoverable at the date of the application and, in the context of this case, the Spanish and French properties clearly do not, because of the effect of Perry. He goes on to submit that it is not open to the court to grant SOCA any further relief, whether by granting a power of attorney or otherwise, because that relief itself cannot be granted if there remains no legitimate jurisprudential basis for interfering with Mr O’Docherty’s overseas property.

In my judgment, however, the point goes further than that. Applying the statutory regime, it was not possible to make a property freezing order pursuant to the legislation in relation to the overseas (or, indeed, any) property because s. 266(2) of the 2002 Act provides that the civil recovery order which was made “must” vest the recoverable property in the trustee for civil recovery: indeed, that is precisely what the language of paragraph 1 of the Order “immediately” ordered. At that moment, s. 308(2) of the 2002 Act bites: this provides:

“If recoverable property is vested, forfeited or otherwise disposed of in pursuance of powers conferred by virtue of [Part 5], it ceases to be recoverable.”

Thus, the recoverable property having vested in the trustee, it ceased to be recoverable. With that in mind, it then did not become possible for SOCA to seek a new property freezing order under the 2002 Act because s. 245A(4) provides that the court “may make” such an order if satisfied, inter alia, that “there is a good arguable case … that the property to which the application for the order relates is or includes recoverable property”: see s. 245A(5)(a) of the 2002 Act. The answer to this conundrum is that once the order is made, it remains in force until set aside or revoked and so can remain in place after the civil recovery order.

The explanation is that vesting of the property by virtue of s. 266(2) and the civil recovery order transfers to the trustee the rights to deal with it and appropriate steps can be taken in relation to property to prevent anyone else from doing so. Having obtained these rights pursuant to an order of the court (which in this case is final), the trustee is then in a position to obtain formal title and, to that end, can seek the assistance of the court in order to do so. That includes, if it is appropriate, obtaining relief by means of a freezing order: this relief would not be granted pursuant to the provisions of the 2002 Act but rather relying upon the civil recovery order and the inherent jurisdiction of the court. For property overseas, it will be necessary to engage the domestic courts of the relevant countries in order to obtain appropriate relief. To protect that position, that is a step taken by SOCA in this case in relation to the Spanish properties where, on 14 November 2011, in advance of the decision of Kenneth Parker J, a freezing order was obtained in Marbella.

In this case, Kenneth Parker J did not make a PFO; the existing order continued. It was not suggested that it should be set aside or revoked and that step was not taken. Rather, the judge varied its operation so as to include relaxations and exceptions, otherwise ordering (for the avoidance of doubt) that it was to continue in force which, in any event, it would have done. Once an application was made to set aside the order, however, it was open to the judge to determine whether, as a matter of discretion, it was appropriate to provide additional protection in relation to property which had been vested in the trustee by virtue of the order. Bearing in mind s. 245B(4) of the 2002 Act which mandates variation of the property freezing order if (in the circumstances of this case), it had ceased to be recoverable property, the order in relation to this property (and, potentially, in relation to other property) was entirely justifiable. That, of course, says nothing about the steps that the trustee could take to realise the proceeds of the civil recovery order.

In the circumstances, I would dismiss the appeal against this aspect of Judge Spencer’s order albeit not for the same reasons that he gave. Given that the only need for powers of attorney was to give the trustee power in relation to property outside the jurisdiction (and which is now correctly excluded from the terms of the PFO), he was equally entitled to refuse to grant an application by SOCA to make such orders not least because SOCA no longer had any interest in property that was vested in the trustee. The impact of the decision in Perry on the powers of the trustee does not fall for determination in this appeal.

Without troubling to serve a Notice of Appeal, Mr Mitchell’s skeleton argument seeks to erect what are, in effect two further appeals, first, in relation to the order of King J dated 14 April 2011 and, secondly, in relation to the order of committal made by Kenneth Parker J on 18 October 2011. Mr Mitchell argues that as the order of King J was the foundation for the contempt hearing, without appealing the former, he can rely on his criticisms of it as justifying (or supporting) the latter.

As regards the application to King J, the transcript reveals that, contrary to s 245B(5) of the 2002 Act, it was made without notice; it is also argued that there was inadequate disclosure. As for the failure to challenge this order earlier, Mr Mitchell somewhat disingenuously argues that the transcript has only recently been obtained; he does not suggest that the order was not served on the same day that it was obtained (as SOCA contends). It is abundantly clear that Mr O’Docherty has involved himself in this litigation only to such extent as he has considered it to be in his interests at the time; it was open to him to challenge the order of King J (and to question the way in which it was obtained including by reference to a transcript which it would have been open for him to obtain) two months short of two years ago. Even now, there is no specific appeal brought against it. For my part, I consider it far too late to challenge this order and would reject any attempt to do so either directly or by a side wind through the challenge to the committal.

As for the committal, Mr Mitchell argues that the property freezing order was made without jurisdiction (see Perry) so that the court should exercise its discretion to allow an appeal against the committal for contempt of that order. He puts it that way, relying on Motorola Credit Corpn v. Uzan (No 2) [2003] EWCA Civ 752, [2004] 1 WLR 113, on the basis that where an order is set aside for want of jurisdiction, the finding of contempt of that order may remain but an order of commitment should be set aside. The reasoning behind the ruling as to setting aside the order in that case is complex and of limited relevance to this case; Mr Mitchell relies on the observation of Potter LJ (at para 156):

“Thus, we conclude that the various findings of contempt should stand, despite the fact that in the cases of the second and third defendants we have set aside the freezing and cross examination orders. As to sentence, because we have set aside those orders we do not think that the sentences of imprisonment on the second and third defendants should stand. Nevertheless these were contempts of orders which should have been obeyed unless and until they were set aside…”

This case is very different. At the time the order was made, it was entirely justified in law and nobody suggested the contrary. When the contempt was committed, the order remained entirely valid; again, nobody suggested the contrary. When Kenneth Parker J came to deal with the breach, the order continued to be valid. Mr O’Docherty, who could have sought to set aside the order, or appeared to challenge either the breach or the committal or both, did not choose to take any of these steps. It is only the subsequent change to the law that gives rise to issues of jurisdiction but none of that affects the legitimacy of the order when it was made or the gravamen of the breach.

In the circumstances, I would reject Mr Mitchell’s application to extend time within which to appeal the order of committal although, for the avoidance of all doubt, I would, in any event, have rejected it on the merits.

In the circumstances, I would dismiss the appeal brought by SOCA in relation to the decisions of Judge Spencer, dismiss the application by Mr O’Docherty to re-open the decision of the Court of Appeal refusing permission to appeal the decision of Kenneth Parker J of 16 December 2011 and dismiss the appeal against the committal order of 18 October 2011. Notwithstanding the observations of Mummery LJ, for my part, I do not believe that the effect of this decision is to free up the overseas properties so as to permit Mr O’Docherty to dispose of them. The civil recovery order remains in place: it is for the trustee to determine whether and in what way to enforce it.

Since this judgment was drafted, the Crime and Courts Act 2013 has been passed into law and its provisions have been brought into immediate effect. Further submissions were sought from the parties and it is common ground that these provisions have no impact on the order of Judge Spencer. The parties were not agreed as to whether it could affect the decision regarding the re-opening of the application for permission to appeal the order of Kenneth Parker J. In the event, it is not necessary to resolve that disagreement because my reasons for refusing the application are unaffected.

I agree that the appeals and application before the court should be dismissed for the reasons given by Leveson LJ.

On 25 July 2012 the Supreme Court announced its decision in Serious Organised Crime Agency (SOCA) v. Perry [2012] UKSC 35; [2013] 1 AC 182 (Perry). It held (by a majority of 7-2) that the presumption against the extraterritoriality of legislation meant that civil recovery proceedings in the United Kingdom under Part 5 of the Proceeds of Crime Act 2002 were not available to recover or freeze the proceeds of unlawful conduct, as represented by property situated outside the United Kingdom.

In this judgment, I will refer to Mr O’Docherty as “the respondent”. What impact, if any, does Perry have on civil recovery orders and freezing orders, which were made in other proceedings before 25 July 2012? In this case Perry was the basis of the respondent’s application to cancel the overseas aspect of a property freezing order (PFO) made on 16 December 2011. SOCA, as the enforcement authority, had obtained a continuation of the PFO, which had been granted at an earlier stage in these proceedings. The PFO was ancillary to a substantive final civil recovery order obtained by SOCA at the same time. Kenneth Parker J made both orders on 16 December 2011. He had found as a fact that, for over two decades, the respondent had been engaged in drug dealing and money laundering and had moved the proceeds of his crime from the UK to Spain and other countries in Europe.

The court below granted the respondent’s application to vary the PFO by excluding overseas property and assets from its operation. They had been included in it in accordance with the interpretation of the 2002 Act that prevailed in the courts at the time when the PFO was first made, when it was continued by Kenneth Parker J and down to 25 July 2012. No application has been made to vary the civil recovery order. Yet the respondent has obtained an order giving him access to overseas property and assets in circumstances where (a) it has been found that they are, or represent, property obtained by his unlawful conduct; (b) the respondent does not dispute that finding on this application; and (c) the final civil recovery order, to which the PFO was ancillary, remains in place and unvaried.

I can well understand why SOCA has appealed and why this court granted permission to appeal and a stay. In present times the courts are usually willing to adopt a more purposive approach to the interpretation of legislation and other documents. Reading in, reading down and reading out are commonly used to ascertain their meaning and effect. Indeed, in Perry the Supreme Court rejected a literal approach to the ill-drafted 2002 Act by reading down a very wide expression of territoriality to accord with the presumption against extra-territoriality.

The variation of the PFO by the court below is, to my mind, contrary to fundamental principles of finality, certainty, justice and good sense. In making his order for the respondent’s benefit, the judge concluded that “there is no alternative”, as it “is a consequence of the legislation as it has been interpreted by the Supreme Court.” i.e. in Perry. I do not think that the judge correctly applied Perry or the 2002 Act to the circumstances of this case. It is improbable, to say the least, that the 2002 Act or that its interpretation in Perry was intended to operate so as to benefit a person, who has already been found by the court to have obtained the property by unlawful conduct and against whom a final civil recovery order has been made and continues in force.

With respect to the judge below and to my Lords, there is an available alternative to the order of the judge. It is that, in accordance with well- established principles governing the finality of court orders, Perry applies to applications for civil recovery orders and PFOs post-Perry: but it does not apply retrospectively so as to contradict or invalidate or modify pre-Perry orders, such as those of 16 December 2011. Perry does not require the court to grant a post-Perry application to vary a pre-Perry PFO for the benefit of the respondent. In all the circumstances, such a variation would not be in accordance with the law or with the interests of justice.

The ancillary character of the PFO validly made pre-Perry is a major obstacle for the respondent as long as the final civil recovery order supported by the PFO continues in existence. No variation of the civil recovery order was sought by the respondent or made by the court. Prima facie the ancillary PFO should continue in support of it without variation.

I have read the judgment of Leveson LJ. I agree with him on all points except for the appeal from the variation order. I do not agree that that appeal should be dismissed. I would take a different course: I would allow the appeal, refuse to vary the order of Kenneth Parker J by excluding the overseas property from the PFO either under the liberty to apply or under s.245B of the 2002 Act; and dismiss the respondent’s application with costs.

Leveson LJ has set out the relevant history of the proceedings, the salient facts and the legal materials.

I agree with him that the starting point must be the PFO made by Kenneth Parker J on 16 December 2011. It was an order made by a court of competent jurisdiction. It was made after a hearing and is based on a judgment on the merits for a civil recovery order, which the respondent accepts was a final, valid and binding order. He does not seek to vary it. It is contended that the PFO was not final, as it was liable to variation by the court. The argument is that a variation may, even must, be made, either under a liberty to apply provision in the order itself and/or under the terms of the 2002 Act, to take Perry into account.

The civil recovery order has not been set aside or varied on appeal. Its validity was not challenged by the respondent below. Nor is it challenged by him on this appeal. No application was made to set aside or to vary the civil recovery order declaring property identified in Appendix A to it, both in the UK and overseas, was “recoverable property” and that it should vest immediately in the trustee for civil recovery. The trustee is the person appointed by the court under s. 267 of the 2002 Act to give effect to the civil recovery order. The expression “recoverable property” is defined in s. 304(1) as “property obtained through unlawful conduct.” As I read the civil recovery order the property obtained through unlawful conduct will remain covered by the terms of the civil recovery order, whether or not the PFO is varied.

Since that order was made nothing has changed, save the interpretation of the 2002 Act. According to Perry the definition of “property” in s. 316(4) of the 2002 Act as “property wherever situated” does not include property wherever situated, but only property situated in the UK. Nothing was said in Perry about final orders already made by the courts on the basis of a different interpretation. The general rule against the retrospective effect of judicial decisions on final court orders is clear. It was held in Cadder v.HM Advocate [2010] 1 WLR 2601, which is cited by Leveson LJ at [20], that, at common law, a judicial decision, such as Perry, has a retrospective effect in relation to matters or cases not yet finally determined: but it is excluded from cases already finally determined, either at first instance and unappealed, or unsuccessfully appealed. Mr Andrew Sutcliffe QC appearing for SOCA described those as “closed cases”. He said that Perry was irrelevant in closed cases. While it is true that the Supreme Court interpreted s. 316 (4) of the 2002 Act differently from the way it was previously interpreted by the High Court and the Court of Appeal in that and other cases, Perry has no direct consequences for the validity or terms of an order made on 16 December 2011. It does not in itself enable, let alone require, a closed case to be re-opened or the order concluding it to be re-drawn.

In my judgment, Mr Andrew Mitchell QC for the respondent is not correct in submitting that the decision in Perry dictated the result of the application to vary the PFO; or that the civil recovery order and the PFO were, post-Perry, “unlawful orders” insofar as they purported to apply to the overseas property identified in the order; or that they cannot stand, as being orders founded on a fiction and as tending to undermine the decision in Perry; or that the judge below was bound by Perry and the 2002 Act to conclude that the overseas property was not “recoverable property” for the purposes of the pre-Perry order of Kenneth Parker J.

The respondent’s application seeks to circumvent the final and binding nature of the pre-existing civil recovery order by confining the relief sought to a variation of the PFO, which was continued by that order. It is contended by Mr Mitchell QC that the PFO is a free-standing order. For his contention that the PFO is not final Mr Mitchell QC relies on (a) the express “liberty to apply” contained in paragraph 8 of that order; and (b) the mandatory statutory provisions in s. 245B (4) of the 2002 Act under which, “at any time”, a PFO must be varied, if the court decides that property is not “recoverable property.”

I agree that those provisions, which are discussed further below, might, for example, permit the respondent to adduce fresh evidence to show that property covered by the terms of the PFO was not “recoverable property”, because that evidence established that the property in question was not, or did not represent, the proceeds of unlawful conduct. That is not, however, the basis on which the application to vary is made in this case: not a single finding of Kenneth Parker J in his judgment leading to the civil recovery order and the continuation of the PFO is challenged. This application to vary is based solely on the subsequent judicial development of the case law on interpretation of s.316 (4) of the 2002 Act. Perry alone is relied on. The case is quite simply that the order of 16 December 2011 must be varied, because it has subsequently been held by a higher court in another case that property and assets located overseas are not “property” for the purposes of the jurisdiction to make a civil recovery order or an ancillary PFO. That was the state of the law as at the date when this application to vary was issued and when it was heard: that is the law that the court hearing the application had to apply in determining it.

I agree that, as a general rule, the law to be applied by the court is that in force at the relevant date. It does not follow, however, that judicial decisions should be treated as having retrospective effect on existing substantive and ancillary orders made in other proceedings. The retrospective application of Perry in this case would not be consistent with (a) fundamental general legal principles, (b) authority, or (c) the correct understanding and application of the 2002 Act to pre-Perry orders.

First, the fundamental general principles. They include the principles of finality and legal certainty applicable to orders of the court. A court order is, in general, valid and binding until it is set aside or varied either by the court that made it, because, for example, it contains a slip, or was obtained by fraud, or on appeal, because it is wrong.

Secondly, Cadder is authority for the proposition that, if a final order has been made, it is not liable to be set aside or varied subsequently on the ground that the law has been differently interpreted or applied in another later case. (I will come to the ancillary nature of the PFO below.) The decision in Perry itself did not require the judge below and does not require this court to entertain or grant the application to vary the pre-existing orders in this case. In passing I note that this particular problem did not arise in Perry, in which no civil recovery order had been made. The case was only in its preliminary stages. The ruling was on the power to make a civil recovery order in the future and a PFO prior to that so as to affect property and assets overseas. In other words, it was not a case, as this is, of unmaking a court order already made on the basis of the law as it was then thought to be and on the basis of findings of fact that are not subsequently challenged. Different legal considerations apply once a final order, such as the civil recovery order in this case, has been made.

Just as Perry casts no doubt on the validity of the final civil recovery order that has been made, it does not provide any valid grounds for varying the ancillary PFO continued in support of it. I again emphasise the ancillary nature of a PFO. It may be made either in anticipation of a civil recovery order in due course, or it may be continued in support of a civil recovery order that has been made. A PFO is not, however, a cause of action in itself any more than a Mareva was, or ordinary freezing orders now are. It is made on the basis of and in aid of the substantive relief claimed or anticipated.

Next, the legislation. The submission that the order of 16 December 2011 should be varied is, in all the circumstances, inconsistent with the operation of the 2002 Act and the values embodied in it. The 2002 Act was passed to ensure that those who engage in criminal or unlawful conduct in the UK or abroad should be deprived of the property which is, or represents, property obtained through unlawful conduct. That object is achieved through the machinery of civil recovery orders under s.266 vesting the recoverable property in a trustee for civil recovery and by ancillary PFOs under s. 245A to secure and preserve that property both in advance of and subsequent to the making of a civil recovery order.

Nothing that has happened since 16 December 2011, either in these proceedings or in Perry, has had the effect, as between the parties, of entitling the respondent to contest (a) the facts found in the judgment, or (b) the validity and terms of the final civil recovery order and the continuing PFO ancillary to it, or (c) the vesting in the trustee of the assets and property identified in Appendix A to that order.

As for (c), I would note, tentatively, the nature of the remedy by way of a civil recovery order. Without in any way questioning the authority of Perry, I would observe that trust lawyers, who were conspicuous by their absence from the constitutions of the courts at every stage of the Perry saga, would probably recognise that the civil recovery provisions of the 2002 Act were not aimed at the creation of a fully constituted trust of property obtained through unlawful conduct to be accompanied by a split in the legal and beneficial ownership of property to be held upon a trust.

The use of a “trustee” in the context of recovery of proceeds of crime under the 2002 Act is apt to mislead. It is not used in the 2002 Act in a private law sense. The jurisdiction of the court to make a civil recovery order with ancillary vesting orders does not involve constituting a private trust of property, or a judicial determination of beneficial ownership of property obtained through unlawful conduct, or the determination of title to such property. The principal question for the court under the 2002 Act is to determine, for civil recovery purposes, whether unlawful conduct was the source of the property sought to be recovered. Once it is decided that the property was obtained by unlawful conduct on the part of the respondent the 2002 Act supplies the statutory remedial machinery for conferring on the trustee requisite authority to give effect to the recovery order and to perform the function of recovering the property: see s.267. A trust is a private law institution for holding property for human beneficiaries or public purposes. The “trustee” in the 2002 Act is a part of a remedial mechanism available in public law for the recovery of property derived from a contaminated source.

Thus the effect of the vesting order of 16 December 2011 was that, as against the trustee for recovery, the respondent was prevented from disputing the statutory authority of the trustee to give effect to the civil recovery order in respect of the property and assets identified in the order. In my view, that continues to be the case in relation to all the property identified in it, whether situated in or outside the UK. Under the unvaried civil recovery order the trustee is the person with the necessary authority to take whatever steps are required to recover the property representing the property obtained by unlawful conduct. The respondent’s displacement by the civil recovery order, which remains fully effective, has not been affected by the decision in Perry nor could it be affected by an order varying the PFO as requested in the application.

The respondent proposes a mandatory variation of the PFO, either under the liberty to apply and/or s.245B(4), without having to vary the final civil recovery order to bring it into line with Perry. The proposal is made with the blatant aim of gaining access to property obtained through unlawful conduct without having to vary the pre-Perry valid final and binding civil recovery order. For the court to assist the respondent in this cynical exercise seems difficult to square with the purpose of creating and implementing the special statutory mechanism of the civil recovery order.

Mr Mitchell QC naturally relies on the wording of the express “liberty to apply” in the order to show that the PFO, unlike the civil recovery order, is not final: it is liable to be varied at a later date, if it is decided that the property is not “recoverable property.” He makes a similar and stronger point on the width of the mandatory variation provisions in s.245B(4). It is contended that, in the case of an application to vary, the court is required to apply the law on the interpretation of “property” as at the date of the application. That means the law now laid down in Perry, not the earlier misguided judicial interpretations of the lower courts. On that approach the variation must be granted, because the overseas property was not “property” within the meaning of provisions affecting PFOs and accordingly could not be “recoverable property”.

In a similar vein it is also submitted that there is no statutory basis for keeping the PFO in place because the 2002 Act provides that property vested in the trustee ceases to be “recoverable property.” No appropriate legal basis for making a PFO in respect of it exists.

I cannot agree with those forcefully argued submissions. As already explained, the starting point is that a PFO is ancillary to a civil recovery order. It is not separate from it nor is it a free standing cause of action. As long as the civil recovery order is in place, as this one is, regardless of what was decided in Perry, it would be inconsistent with that order and the basis on which it was made to vary the ancillary PFO. The court would be allowing the respondent access to property obtained through the unlawful conduct on which the civil recovery order was and is based.

I agree with Mr Mitchell QC that s.245B(4) of the 2002 Act is widely worded; but so is s.316(4), which the majority in Perry said was not as wide as it literally seems. “Property wherever situated” does not literally mean “property wherever situated”, because it is subject to an established territoriality principle, according to which it can only mean property wherever situated in the United Kingdom.

In my view, neither the “liberty to apply” nor s. 245B (4) were, despite their generous wording, designed to cater for the case where the only ground for revisiting the earlier order PFO is that of a change of judicial interpretation of the definition of “property” in the 2002 Act.

The scope of s.245B(4) is limited by the context of the fundamental principle that a subsequent change in the judicial interpretation of the law is not in itself a ground for varying or setting aside existing final orders based on a different judicial interpretation of the law as at the time the orders were made. In my view, the same principle applies to orders, such as PFOs, that are ancillary to final orders. The variation provisions invoked to vary the order were designed to deal with such matters as credible fresh evidence coming to light, such as might be admitted on an appeal and establish that what was treated as recoverable property, because it was obtained through unlawful conduct, was not in fact recoverable for that reason. The width of the wording is coloured and confined by the fundamental principles of the finality of court orders and the requirements of legal certainty, coupled with the high degree of probability that there was no intention to legislate inconsistently with those principles. The position is quite simply that the order of 16 December 2011 declared that the identified assets were “recoverable property.” The fact that they were so declared means that they remain “property”, despite the different interpretation of that term subsequently in Perry as regards property situated outside the UK.

In the final analysis, even if the above conclusions are wrong, I would return to the offensive nature of the stance adopted by the respondent in this court and below and ask: was the court legally obliged to entertain this application at all? Without attempting to overturn the serious findings of fact made against him, which formed the very basis of the civil recovery order and the PFO, the respondent submits that the court must allow him to deal with and dispose of the overseas property obtained through unlawful conduct, as if no findings had ever been made about the source of the funds used to acquire that property, and as if there were no subsisting civil recovery order, backed up by a PFO, affecting the overseas property.

Some people might find baffling the suggestion that the court in the “liberty to apply” provision or Parliament in s.245B(4) had intended to equip the respondent with a means of compelling the court to revisit an earlier, validly made court order, so that he can resume enjoyment of the profits of his unlawful conduct in the form of overseas property. It is offensive to a fundamental principle of justice, which has some part to play in all of this, that a person should profit from his own unlawful conduct and also be entitled to require the court to make an order enabling him to do just that.

As for the principle of good sense which, with respect to the judge below and to my Lords, also has some part in all of this, I would suggest that the majority of law-abiding citizens would find it difficult to accept that the court was required by law to grant the respondent a court order varying, for his benefit, an earlier court order that has been lawfully and validly made against him on the ground that property has been obtained through unlawful conduct.

For all those reasons I would allow the appeal against the variation order and dismiss the application to vary with costs.