National Crime Agency v Jiangbo Hao & Ors

This is my public (open) judgment on an application by Ms Jiangbo Hao and Mr Wenjun Tian, made by Application Notice dated 5 January 2024 (“the Set-aside Application”), to set aside a disclosure order made against the respondents by Johnson J on 27 June 2023 (“the Disclosure Order”) under section 357 of the Proceeds of Crime Act 2002 (“the 2002 Act”). The Disclosure Order was made on the application of the National Crime Agency (“the NCA”), by Application Notice dated 19 June 2023 (“the Disclosure Application”).

Although in this judgment I am dealing with an application by Ms Hao and Mr Tian, namely, the Set-aside Application, to which the NCA is the respondent, these proceedings began with the Disclosure Application, for which the NCA is the applicant and to which Ms Hao, Mr Tian, and various related corporate entities are the respondents. In this judgment, for consistency with much of the background documentation, including the correspondence between the parties, I refer to the NCA as the “applicant” and Ms Hao, Mr Tian, and the related corporate entities named as respondents in the Disclosure Order as the “respondents”.

In a short separate private (closed) judgment, I deal with one aspect of the case, a single, relatively narrow issue, that I have determined should be dealt with in private, having regard to CPR r 39.2.

Ms Hao and Mr Tian are Chinese nationals. They were each born in 1974. They married on 27 January 2014.

On 14 July 2017, Ms Hao applied to the Home Office for entry into the United Kingdom under the Tier 1 Investor Visa Migrant Scheme, with Mr Tian and two of their children applying on the same day to enter as her dependents.

Ms Hao left China for the United Kingdom on 18 August 2018. Mr Tian followed her on 20 September 2019, travelling first to Thailand and then the UK. Ms Hao and Mr Tian live, or have lived, at an address in Hampstead, with their children.

On 11 November 2019, Ms Hao was granted indefinite leave to remain in the UK as a Tier 1 Highly Skilled Investor. On 21 July 2022, Mr Tian was granted indefinite leave to remain. On 31 July 2022, Ms Hao lodged an application to naturalise as a British citizen.

Each of the other respondents is a company associated with Ms Hao and Mr Tian that holds, directly or indirectly, commercial property that the NCA suspects of being recoverable property.

The Disclosure Order was made following a without notice hearing before Johnson J on 27 June 2023 that was conducted in private.

Ms Hao and Mr Tian seek to set aside the Disclosure Order on two principal bases, namely, that:

Ms Hao and Mr Tian also complain that:

Finally, Ms Hao and Mr Tian argue that, even if the court concludes that the Disclosure Order was properly made, the court should use the discretion conferred by section 362(4)(a) of the 2002 Act to discharge it.

The NCA submits that the Set-aside Application should be dismissed for the following reasons:

As permitted by section 362(1) of the 2002 Act and paragraph 8.2 of the Practice Direction – Civil Recovery Proceedings (“the CRP Practice Direction”), the NCA requested that the Disclosure Application be dealt with by a judge without notice to the respondent and without a hearing.

The Disclosure Application was supported by a witness statement dated 16 June 2023 by Ms Anna McClintock (“AM1”), a financial investigator and member of staff at the NCA. Ms McClintock exhibited several hundred pages of documents to AM1.

On 16 June 2023, the papers were placed before Ellenbogen J, who ordered that the Disclosure Application be determined at an oral hearing and made other relevant directions.

As already noted, that oral hearing took place before Johnson J on 27 June 2023 and was held in private. At the hearing, Johnson J made the Disclosure Order, giving his reasons in an ex tempore judgment that also set out his reasons for conducting the hearing in private (“the Judgment”).

On 21 November 2023, the NCA served the Disclosure Order on the respondents, with the supporting evidence required by paragraph 5 of the Disclosure Order served between 22 and 27 November 2023. The transcript of the hearing before Johnson J was served on the respondents on 22 December 2023.

On 10 January 2024, the Set-aside Application was issued by the court, supported by detailed grounds dated 5 January 2024 settled by counsel to the first and second respondents, Mr Nicholas Yeo and Mr Ciju Puthuppally, who represented the respondents at the hearing before me.

On 13 February 2024, in opposition to the Set-aside Application, the NCA filed a second witness statement of Ms McClintock (“AM2”), with a short documentary exhibit.

The NCA sought the Disclosure Order under section 357 of the 2002 Act in support of a civil recovery investigation, pursuant to section 341 of the 2002 Act, that was being conducted by Ms McClintock.

In AM1, Ms McClintock stated that the NCA was approached on 4 August 2021 by the Public Security Bureau (“PSB”) in Changzhi in the People’s Republic of China in relation to an investigation that the PSB was conducting of criminal and financial matters relating to Ms Hao and Mr Tian, who were then living in the UK. The Changzhi PSB had commenced its criminal investigation into the activities of Mr Tian, Ms Hao and others on 26 April 2020. On 5 January 2021, the Changzhi PSB issued warrants for the arrest of Ms Hao and Mr Tian in relation to the financial frauds alleged against them.

The Changzhi PSB has counterpart PSBs in the other provinces of China. The Ministry of Public Security (“MPS”) of China supervises the PSBs. The MPS is both the national policing function of China and the government ministry exercising oversight of day-to-day law enforcement. The Changzhi PSB, through the MPS’s Economic Crime Division, provided information and documentation in support of its request for assistance from the NCA.

The NCA has initiated a civil recovery investigation under section 341 of the 2002 Act in respect of real property and bank accounts of Ms Hao and Mr Tian in the UK specified in AM1. The NCA did so having concluded, on the basis of the information provided by the Changzhi PSB, that there were reasonable grounds to suspect that the real property was obtained with the proceeds of unlawful conduct (as defined in section 241 of the 2002 Act) that had occurred in China and that the contents of the bank accounts were, in whole or part, proceeds of unlawful conduct that had occurred in China.

The Changzhi PSB has alleged that Ms Hao and Mr Tian were involved in unlawful conduct consisting of financial frauds committed by a criminal group headed by Mr Tian. The group consisted of more than 60 individuals, including Ms Hao, who, by the obtaining of fraudulent loans from seven (or eleven) financial institutions, defrauded these institutions out of monies totalling CNY 267.47 billion. CNY (Chinese Yuan) is the basic unit of the official currency of China, which is RMB (Renminbi).

In AM1, Ms McClintock set out the three principal methods by which the frauds were allegedly carried out, using a combination of 1,010 loans taken out by 59 shell companies under the control of Mr Tian, with the assistance of over 60 individuals, including Ms Hao. The fraudulent activity, according to the Changzhi PSB, included the use of fraudulent instruments, the use of forged VAT invoices, the concealment of accounting vouchers and accounting books, and the manipulation of the Chinese stock market in order to (i) inflate various stock prices and (ii) transfer supposed stock earnings to financial institutions using forged financial materials.

CNY 267.47 billion is worth approximately £29 billion. The Changzhi PSB has alleged that circa £1.2 billion of this amount represents the portion of the fraudulent proceeds accruing to the benefit of Ms Hao and Mr Tian. The NCA believes that there are reasonable grounds to suspect that a portion of those proceeds have been used to purchase real property and a portion has been placed as deposits in bank accounts in the UK.

On 1 December 2022, the NCA commenced a frozen funds investigation in relation to Ms Hao (“the First FFI”). According to Ms McClintock in AM1, this came about as follows:

One of the complaints made by Ms Hao and Mr Tian in their grounds supporting the Set-aside Application is that the NCA gave “a wholly one-sided, partisan and misleading account of the evidence from the first frozen funds investigation”. I will deal with the ways in which Ms Hao and Mr Tian say that the foregoing summary was seriously misleading when I summarise their submissions on this point. In AM2 at paragraphs 18-33, Ms McClintock set out further evidence regarding the First FFI, including related proceedings following the making of the Disclosure Order.

In AM1, Ms McClintock also dealt with another strand of the civil recovery investigation, which concerned Dolfin Financial (UK) Limited (“Dolfin”), ostensibly a “wealth management” company. This was the company that Ms Hao instructed to act on her behalf in relation to the validation of her Tier 1 Investor Visa application. From her investigation, Ms McClintock concluded that Dolfin invested in excess of £10 million on behalf of Ms Hao from 28 November 2017 in accordance with the requirements set out by the Home Office for a Tier 1 Investor Visa.

On 30 June 2021, the High Court made a special administration order in relation to Dolfin, appointing two insolvency practitioners from Smith & Williamson (now known as Evelyn Partners LLP) as special administrators to take over responsibility for and management of all of Dolfin’s activities.

From enquiries made with the special administrators, Ms McClintock obtained records from Dolfin documenting Ms Hao’s “source of wealth”, namely, a bank statement provided to Dolfin by Ms Hao suggesting that Mr Tian had transferred some £12 million to Dolfin towards the end of 2015. Ms McClintock also discovered that on or about 20 January 2020 Ms Hao instructed Dolfin to transfer £5 million from her Dolfin UK account to her Dolfin Malta account. In their records, Dolfin purport to verify the source of Ms Hao’s wealth, stating that the £10 million which she invested in the UK as a Tier 1 Investor was gifted to her by Mr Tian for that purpose and was derived by Mr Tian from selling his shares in a Chinese company named Dongsheng International Investment Group Co., Ltd (“Dongsheng Group”) for RMB 200 million (roughly equal to £20 million) in October 2015. This is evidenced by a Memorandum of Deed of Gift signed by Mr Tian on 1 November 2019, which was exhibited to AM1.

Ms McClintock obtained other documents from Dolfin, also exhibited to AM1, supporting the derivation of the funds gifted by Mr Tian to Ms Hao from his sale of shares in Dongsheng Group, which, according to information provided by the PSB to the NCA, was one of 10 shell companies established by Mr Tian in connection with his alleged criminal activity in China.

For the foregoing reasons, the NCA concluded that it had reason to suspect that the monies used by Ms Hao to obtain her Tier 1 Investor Visa were derived from the alleged unlawful conduct of Ms Hao and Mr Tian in China and the documents used to verify Ms Hao’s wealth were forged as part of their alleged financial frauds and used to transfer the proceeds of the fraud into the UK and elsewhere. This meant that the NCA had reason to suspect that Ms Hao and Mr Tian had engaged in the unlawful conduct of money laundering, contrary to sections 327, 328 and 329 of the 2002 Act.

In AM1, Ms McClintock noted that she had discovered through open-source research on the internet that Dolfin was being investigated by the Financial Conduct Authority (FCA). In a First Supervisory Notice issued by the FCA on 12 March 2021, the FCA indicated that it was investigating Dolfin for having operated a scheme designed to enable its clients to obtain Tier 1 Investor Visa in breach of immigration rules and therefore unlawfully. A copy of the relevant Notice is exhibited to AM1. All of Dolfin’s clients participating in that scheme were from the People’s Republic of China. From her investigation into Dolfin, Ms McClintock concluded that there was reason to suspect that Ms Hao and Mr Tian had benefited from allegedly illegal activities of Dolfin, and this was the reason why Dolfin was instructed to act on Ms Hao’s behalf in relation to obtaining a Tier 1 Investor Visa.

In AM1, Ms McClintock provided details of:

In AM1, Ms McClintock noted that the purpose-built student accommodation properties in which Ms Hao and Mr Tian have invested, namely, Property 1 and Property 2, are subject to a charge registered in favour of Gatehouse Bank PLC (“Gatehouse”). Documents provided by Gatehouse to the NCA show that the credit application submitted to Gatehouse in March 2018 on behalf of the fifth and sixth respondents as borrowers states that the fifth and sixth respondents are “wholly owned by Spring Capita Limited, BVI, which in turn is 100% owned by Mr Wenjun Tian”, although this appears to the NCA to be incorrect, with Mr Tian owning each of the fifth and sixth respondents directly.

As at the date of AM1, Gatehouse was owed approximately £13.8 million in respect of its investment financing of Property 1 and Property 2, with repayment of the loan then two years overdue, and Gatehouse on the point of appointing receivers to take over sale of those properties.

In AM1, Ms McClintock stated her belief that there were reasonable grounds to suspect that the investments in commercial and residential properties in the UK (namely, Property 1, Property 2, Property 3, and Property 4), as well as various funds held in UK bank accounts are recoverable property or associated property and that therefore the NCA intended to investigate the circumstances of the UK property investments made by Ms Hao and Mr Tian, the source of the funds used to make those purchases, and the veracity of the information provided by Ms Hao and Mr Tian to their lender, Gatehouse. The information about these matters to be sought by the NCA using the Disclosure Order was likely to be of substantial value to the NCA’s civil recovery investigation in relation to Ms Hao and Mr Tian.

As previously noted, Johnson J heard the Disclosure Application on 27 June 2023. A transcript of the full hearing was included in the bundle for the hearing before me, including the Judgment, which was given ex tempore by Johnson J at the hearing. In the course of preparing this judgment, bearing in mind the wide-ranging criticisms by the respondents of the NCA’s conduct of the hearing before Johnson J, I have carefully reviewed, along with all the other relevant documents, not only the Judgment but also the transcript of the rest of the hearing.

The NCA was represented at the hearing before Johnson J by Mr Andrew Sutcliffe KC and Mr Oliver Newman. As the hearing was without notice, the respondents did not appear and were not represented.

I summarise various findings made and conclusions reached by Johnson J in the Judgment:

In the Judgment at [19], Johnson J set out the text of section 357 of the 2002 Act, which sets out the procedural requirements for the making of a disclosure order and its effect. In the Judgment at [23]-[28], Johnson J addressed the procedural requirements and concluded that these had been satisfied by the NCA.

In the Judgment at [29], Johnson J set out the text of section 358 of the 2002 Act, which sets out the substantive requirements for the making of a disclosure order. Section 358 reads, in relevant part as follows:

“Requirements for making of disclosure order

(1)

These are the requirements for the making of a disclosure order.

(2)

There must be reasonable grounds for suspecting that—

…

(b)

in the case of a civil recovery investigation—

(i)

the person specified in the application for the order holds recoverable property or associated property,

(ii)

that person has, at any time, held property that was recoverable property or associated property at the time, or

(iii)

the property specified in the application for the order is recoverable property or associated property.

…

(3)

There must be reasonable grounds for believing that information which may be provided in compliance with a requirement imposed under the order is likely to be of substantial value (whether or not by itself) to the investigation for the purposes of which the order is sought.

(4)

There must be reasonable grounds for believing that it is in the public interest for the information to be provided, having regard to the benefit likely to accrue to the investigation if the information is obtained.”

In the Judgment at [30], Johnson J set out the definitions of “recoverable property” and “unlawful conduct”. There is no dispute as to his interpretation of these terms.

In the Judgment at [31], Johnson J set out his conclusion that, for the reasons given by Mr Sutcliffe and based on the evidence of Ms McClintock (set out in AM1), there were reasonable grounds for suspecting that the respondents hold or have held recoverable property and/or that the property specified in the application is recoverable property. He noted that the “threshold test of reasonable grounds for suspecting is relatively low”.

In the Judgment at [32]-[34], Johnson J commented as follows on the foregoing conclusion:

“32

I am acutely conscious that the source of the information that the NCA is relying on is the PSB in China. Ordinarily, one would attach significant weight to information provided by the law enforcement agencies of another country. I have not been provided with any sufficient evidential basis in order reliably to calibrate the weight that can be attached to material provided by the PSB. I have not, for example, been given evidence that the NCA have a longstanding relationship with the PSB and have always found its information to be credible and reliable, or that it has never had reason to doubt information provided by the PSB.

33

I therefore consider it appropriate to take a more circumspect approach than might be appropriate in the case of cooperative law enforcement activities with some other countries. Nevertheless, the detail of the information provided by the PSB, the extent to which it is consistent with material in the public domain, the course of the frozen funds investigation and the lack of any apparent motive for the Chinese authorities to provide false information to the NCA in relation to these matters, is such that I am satisfied that the relatively low threshold of reasonable grounds to suspect is met by the material summarised in Ms McClintock’s statement. In particular, Ms Hau [sic] and Mr Tian do not have any apparent political profile, they have not sought asylum in this country, nothing in the open source material or elsewhere remotely suggests a motive for the Chinese authorities to provide false information in respect of them.

34

That being the case, and on the basis of the information that has been provided, Ms McClintock says that the NCA suspects that the property is believed to be or include the proceeds of the unlawful conduct that has occurred in China and that that conduct, if it had occurred in the UK, would have been an offence triable under the criminal law of England and Wales. I consider that the NCA’s suspicion is entirely reasonable, for the reasons I have already given and which are set out in detail in Mr Sutcliffe’s skeleton argument.”

In the Judgment at [35], Johnson J set out why he was satisfied that there were reasonable grounds for believing that the information sought through the Disclosure Order would be of substantial value to the civil recovery investigation. It was reasonably likely that the Disclosure Order would enable the NCA to ascertain when and how Ms Hao and Mr Tian brought money into the UK, the explanations they gave in relation to the money, where it went in the UK, and how it moved through the banking system. It would enable the NCA to identify the source of funds used for the purchases of the various properties and to identify further assets held by the respondents.

In the Judgment at [36], Johnson J set out why he concluded that there were reasonable grounds for believing that it was in the public interest for the information to be provided, having regard to the benefit likely to accrue to the investigation if the information were obtained. A considerable amount of money was allegedly obtained by Ms Hao and Mr Tian by fraud, enabling them to purchase assets in the UK of considerable value. The information sought could possibly enable civil recovery proceedings to be brought to recover such assets, which is self-evidently in the public interest. If it transpired that the respondents had obtained their assets legitimately, then it was also “in the public interest that that … be established [so that they could] enjoy their lawfully obtained property without further interference from law enforcement agencies”.

Johnson J was therefore satisfied that the substantive requirements for the making of the Disclosure Order sought had been satisfied, but he noted that he retained a residual discretion. In exercising that residual discretion, he had regard to the rights of Ms Hao and Mr Tian under the European Convention on Human Rights (ECHR), in particular their rights under Article 8 (right to respect for private and family life) and under Article 1 of Protocol 1 (peaceful possession of property). In this regard, at paragraph 37 of the Judgment, he noted:

“… Any interference with those rights is entirely lawful in that it is justified and permitted by primary legislation, it pursues the legitimate aim of the prevention of crime and it is entirely proportionate to the legitimate aim that is pursued. Further, I will only make an order on terms that enables the respondents to apply to set it aside once they have been served with it and, on any such application, the court can be better informed as to the material on which the respondents rely, including any material on which the respondents rely to suggest that the interference is a disproportionate interference with their Article 8 and A1P1 rights.”

Finally, in the Judgment at [38], Johnson J recorded that the NCA had acknowledged its obligation to make full and frank disclosure and that there were sections dealing with those matters in AM1 and in Mr Sutcliffe’s skeleton argument. Johnson J then made the Disclosure Order.

The procedural history of these proceedings since the making of the Disclosure Order is set out at [18]-[20] above.

According to the evidence of Ms McClintock in AM2, the following events have also occurred since the making of the Disclosure Order:

There appears to be no dispute as to the proper approach to be taken to the Set-aside Application. Relevant principles were set out by Edis J (as he then was) in National Crime Agency v Simkus [2016] EWHC 255 (Admin), [2016] 1 WLR 3481 (QBD).

I am not bound by the reasons given by Johnson J for making the Disclosure Order, although it is appropriate for me to have regard to them. I review the matter afresh in light of the statutory conditions set out in sections 357 and 358 of the 2002 Act: Simkus at [48].

I must exercise my own discretion to ensure that the appropriate order is made. The rights of Mr Tian and Ms Hao under the ECHR are plainly engaged by the making of a Disclosure Order against them, in particular, their rights under Article 8 of the ECHR and under Article 1 of the First Protocol to the ECHR. I must bear those rights in mind as I consider the appropriate order to be made. I bear in mind the comments of Edis J in Simkus at [17] that a disclosure order:

“… is a powerful weapon to further the legitimate public interest in deterring and preventing organised crime. … [It] is an order which confers a significant power on the executive and which is capable of leading to serious adverse consequences both as to liberty and as to property rights of those who are affected.”

In considering whether the Disclosure Order should be discharged due to non-disclosure of a material fact, I particularly bear in mind the guidance given by Edis J in Simkus at [27]-[35]. I must decide whether the non-disclosure was so grave that the Disclosure Order should be discharged. In taking this decision, I should attach substantial weight to the public interest in the continuation of the Disclosure Order, since such an order is only made if (i) the relevant statutory conditions are satisfied and therefore (ii) it is in the public interest to make it (section 358(4)). I bear in mind the following passage from Jennings v Crown Prosecution Service [2005] EWCA Civ 746,[2006] 1 WLR 182 (CA) at [64] (Longmore LJ) (quoted by Edis J in Simkus at [29]):

“The fact that the Crown acts in the public interest does, in my view, militate against the sanction of discharging an order if, after consideration of all the evidence, the court thinks that an order is appropriate. That is not to say that there could never be a case where the Crown’s failure might be so appalling that the ultimate sanction of discharge would be justified.” (emphasis added)

As contemplated by section 362(1) of the 2002 Act and the CRP Practice Direction (paragraph 8.2), an application for a disclosure order may be made without notice. However, as noted by Edis J in Simkus at [47], this does not have to be the case and, in some circumstances, should not be the case. The court will need to be satisfied that it is proper to do so, having regard to the open justice principle and fairness to the person affected by the order. “Almost invariably” a disclosure order application will be heard without notice. If there is no immediate risk of dissipation of assets, then normally notice should be given to the respondent(s). Whether there is an immediate risk of dissipation of assets at the time of hearing the application is a matter for evaluation by the judge hearing the application on the basis of the evidence presented, and a judge on a subsequent occasion hearing an application by a respondent to set aside or vary the disclosure order should give appropriate deference to the original evaluation and be cautious in questioning such an evaluation with the benefit of hindsight, especially when discharge of the order is sought in whole or part on the basis that the application should not have been heard without notice.

Section 362(1) of the 2002 Act also contemplates that an application for a disclosure order may be made in private, and paragraph 11.1 of the CRP Practice Direction states that the application will be heard in private “unless the judge hearing it directs otherwise”. As in the case of an application without notice, whether it is appropriate to hear an application in private will depend on whether the purpose of the application will be frustrated if it is not heard in private (Simkus at [24]), and, of course, there may be other specific circumstances justifying the application’s being heard in private, as contemplated by CPR r 39.2(3).

As to the test for “reasonable grounds to suspect”, the test is subjective, in that it must be based on what was actually in the relevant official’s mind, and objective, in that it must be reasonable on an objective basis: O’Hara v Chief Constable of the Royal Ulster Constabulary [1997] AC 286 (HL) at 298A-B (Lord Hope of Craighead). Although O’Hara was decided in the context of whether a constable had reasonable grounds for suspicion so as to justify arrest, it is uncontroversial that the test should be understood in the same way in the context of 2002 Act proceedings: Re Assets Recovery Agency (Jamaica) [2015] UKPC 1 at [19].

The threshold for reasonable suspicion is not a high one: Hussien v Chong Fook Kam [1970] AC 942 (PC) at 948B. The test is concerned with the existence of grounds for believing that unlawful conduct has occurred and with the reasonableness of those grounds: Re ARA (Jamaica) at [19].

Mr Yeo and Mr Puthuppally, on behalf of the respondents, have mounted a robust challenge to the Disclosure Order. In summary, they submitted that:

In relation to proceeding without notice, Mr Yeo submitted that there was no adequate justification for the NCA to do so for the following reasons:

Mr Yeo submitted that Johnson J was wrong to conclude that there were reasonable grounds for suspicion that Ms Hao and Mr Tian had engaged in unlawful conduct in China for the following reasons:

Mr Yeo submitted that given that there are no reasonable grounds for suspicion that Ms Hao and Mr Tian were engaged in the unlawful conduct alleged by the MPS, namely, loan fraud and related activities, there are no reasonable grounds for suspicion that there is related recoverable property in the UK.

Mr Yeo submitted that, in addition to the foregoing, the NCA is guilty of the following failures of disclosure and misrepresentation:

Mr Yeo submitted that this is not a case of a public authority anxiously seeking to comply with its obligations when proceeding without notice and carelessly making isolated errors along the way. Instead, he submitted, the non-disclosure and misrepresentation by the NCA was profound, affecting many aspects of the case. This is a case where the non-disclosures, individually and cumulatively, are so “appalling” that the Disclosure Order should be discharged and not made afresh.

Mr Yeo submitted that in order for there to be reasonable grounds for suspicion, there must be objective grounds for suspicion. The evidence before Johnson J was not sufficient to overcome the vast material to the detriment of China. Accordingly, he should not have found that there were objective grounds for suspicion that Ms Hao and Mr Tian held recoverable property in the UK, and therefore he should not have made the Disclosure Order.

Finally, Mr Yeo submitted that the court should discharge the Disclosure Order and refuse to make another in the exercise of its discretion, for essentially two reasons. The first reason is that there is too high a risk that the NCA’s civil recovery investigation has been instigated by China as part of its transnational repression of its citizens, Ms Hao and Mr Tian. The second reason is discussed in the closed judgment.

For the NCA, Mr Sutcliffe and Mr Emmanuel Sheppard submitted that the Set-aside Application should be refused for two principal reasons:

In relation to reasonable grounds for suspicion, Mr Sutcliffe submitted that the evidence provided to the NCA by the Changzhi PSB and presented to Johnson J showed then, and continues to show, that there are reasonable grounds for suspicion that Ms Hao and Mr Tian were engaged in unlawful conduct in China and that the proceeds of that unlawful conduct have been used to acquire recoverable property in the UK. Leaving aside the alleged non-disclosures, the respondents’ grounds for setting aside the Disclosure Order are extremely limited, relying on:

In relation to the wider political context in China and material detrimental to China, Mr Sutcliffe submitted that it is clear that Johnson J was aware of the wider political context and the need for caution in assessing the evidence provided by China, as can be seen in the Judgment at [32]-[33], which I have quoted at [47] above. Furthermore, the NCA relied on other material, including the First FFI, also as noted in the Judgment at [33].

In relation to the treatment of Chinese media sources, Mr Sutcliffe submitted that Johnson J was aware of the need for caution, as can be seen in the Judgment at [32]-[33] and from the transcript of the full hearing before him. It was not necessary for the NCA to engage in further more exhaustive research regarding the reliability of Chinese media sources as these issues were obvious, were addressed at the hearing before Johnson J, and are referred to in the Judgment. In AM2, Ms McClintock has explained her approach to the open-source material she obtained. Also, the open-source material was relied on partly because it supported the NCA case that the PSB were not pursuing a political agenda against Mr Tian and Ms Hao.

In relation to the scale of the alleged fraud, Mr Sutcliffe submitted that Johnson J understood clearly that the alleged benefit of the fraud for Mr Tian and Ms Hao was £1.2 billion, rather than the larger figure of CNY 267.57 billion (approximately, £29 billion). This amount is not implausible in relation to a 14-year fraud between July 2006 and April 2020 during which the Chinese economy grew nearly fivefold. It does not undermine there being reasonable grounds for suspicion.

In relation to the material from the First FFI, Mr Sutcliffe submitted that the NCA relied as part of its case that there are reasonable grounds for suspicion on the inconsistency of Ms Hao’s two explanations of the source of the funds in the Sundry Account. It was not necessary for this purpose for the letter from Genting Casinos or the transcript of her interview to have been exhibited to AM1. The failure to exhibit those documents was not a non-disclosure, much less a material one. The explanations were inconsistent, even on the respondents’ case.

In relation to the alleged material non-disclosures on other matters, Mr Sutcliffe made the following submissions:

In summary, Mr Sutcliffe submitted that there were no material non-disclosures to Johnson J or, if there was any non-disclosure that was material, it was not so “appalling” as to require the Disclosure Order to be discharged.

I hope that I have done justice to the detail of the respondents’ many criticisms of the NCA’s Disclosure Application and of the way the NCA presented that application to Johnson J. I have necessarily summarised and have not set out every criticism. Nor will I attempt to deal with each criticism individually. I have, however, intended to deal with each of the areas of criticism, and I hope that I have done so in a way that indicates sufficiently clearly why I have reached my decision on the Set-aside Application.

The NCA estimate that the respondents have made 13 or 14 allegations of non-disclosure against them. Mr Sutcliffe drew my attention to the decision of Males J in National Bank Trust v Yurov [2016] EWHC 1913 (Comm), a case concerning an application by defendants to set aside a freezing order on the grounds that there were multiple material non-disclosures by the claimant when it applied for the freezing order as well as no real risk of dissipation of assets. In Yurov at [15], commenting on the defendants’ numerous allegations of material non-disclosure, Males J observed that:

“A defendant who is unable to make good such a case by reference to his six best points is unlikely to do so by piling up a longer list.”

The respondents rely, however, on the cumulative effect of all of the alleged instances of material non-disclosure as well as on each instance individually.

Dealing first with the objection that there was no adequate justification for the NCA to have applied for the Disclosure Application to be heard without notice, I note that Johnson J dealt with this point in the Judgment at [20]-[21]. His decision that it was appropriate to proceed without notice for the reasons he gave cannot realistically be impeached. The gravamen of the respondents’ objections to the Disclosure Order lies elsewhere.

The gravamen lies in the respondents’ criticisms of the NCA for relying on the evidence provided by China for the reasons I have already summarised, principally, its human rights record and history of transnational repression, and for failing to emphasise these issues, and to provide evidence about them, to Johnson J. However, it is clear that Johnson J was aware of that aspect of the case. No amount of “piling on” of evidence of those matters was necessary.

It is going too far to say, as the respondents appear to do, that it is impossible for the relatively low threshold of “reasonable grounds to suspect” to be surmounted when the source of the information is China, simply on the basis of its human rights record and US and international reports, however credible, that it is engaged in transnational repression. Crime must occur in China, as it does everywhere else. China has outlined allegations of conduct, namely, loan fraud, that would also be criminal in this country. It has provided prima facie evidence of that conduct to the NCA, which the NCA presented to Johnson J.

Absent any further relevant factor, Johnson J was entitled, for the reasons he gave, to accept that prima facie evidence and reach the conclusion that the low bar of “reasonable grounds to suspect” was surmounted so that the Disclosure Order could be made in aid of the NCA’s civil recovery investigation.

The key further relevant factor that might have led Johnson J to the opposite conclusion would be a finding that China’s allegations against Ms Hao and Mr Tian were politically motivated. That is clearly the respondents’ case, but the evidence for it is thin. It certainly does not follow simply from the fact that Ms Hao and Mr Tian are now overseas citizens of China. The highest that the respondents are able to put it in their skeleton argument for this hearing is to refer to “the political context” of the allegations against Ms Hao and Mr Tian. This, in turn, is based on Chinese media articles that allege a political purge of local government officials in Shanxi province, which do not appear to have been targeted principally against Mr Tian although some related allegations of corruption have been made against him. Those allegations, however, are, if anything, consistent with the NCA’s case.

There is no evidence that Mr Tian himself has any form of political profile in China, as a government official or as a political dissident. Nor is there any such evidence in relation to Ms Hao. None was before Johnson J, and none was provided for the hearing before me. No other motive for China to pursue these proceedings against Ms Hao and Mr Tian has been evidenced.

There is a further aspect of this point that I deal with in the closed judgment, but, in short, there was nothing before Johnson J, nor is there before me now, anything that would lead me to conclude that Johnson J was wrong to reach the conclusion he did in the final sentence of the Judgment at [33].

Accordingly, unless there was any other material non-disclosure by the NCA before Johnson J that was sufficiently “appalling” so as to require discharge of the Disclosure Order, his conclusion in the Judgment at [34] must stand.

Before turning to other alleged points of material non-disclosure by the NCA before Johnson J, I address some other points raised by the respondents:

Turning, then, to the other areas of alleged material non-disclosure, having reviewed all of the materials that were before Johnson J, as well as the additional materials provided for the hearing before me, my conclusions are as follows:

As can be seen, I have not found there to be any material non-disclosures by the NCA in relation to its without notice application to Johnson J. There is certainly no non-disclosure that individually is “appalling” or otherwise sufficiently material and grave so as to justify discharging the Disclosure Order. Standing back, and considering matters cumulatively, my view is unaltered.

Reviewing the matters afresh according to the statutory criteria, I am satisfied that the procedural and substantive requirements for the Disclosure Order remain satisfied, essentially for the reasons given by Johnson J, subject to the foregoing discussion.

In relation to the exercise of discretion, I am not persuaded that I should discharge the Disclosure Order or fail to continue it on the basis that there is too high a risk that the NCA’s civil recovery investigation was instigated by China as part of its transnational repression of its citizens. I accept that there appears to be substantial evidence, amounting to a consensus amongst public and private commentators based in Western democratic states, that China does carry on transnational repression of its citizens. But, in my view, there is little or no evidence that China has a motive to do so in relation to Mr Tian and Ms Hao given the apparent absence in the evidence before Johnson J and before me of any significant political profile for either Mr Tian or Ms Hao.

I deal with the other reason put forward by the respondents why I should exercise my discretion to discharge the Disclosure Order in the closed judgment.

As the closed judgment makes clear, the issue dealt within the closed judgment is not decisive. Therefore, my reasons for the decision to refuse to set aside the Disclosure Order are those set out in this open judgment. For the reasons given in this judgment, I dismiss the Set-aside Application and continue the Disclosure Order.

By way of final comment, I reiterate that the test for the making of a Disclosure Order includes that there are reasonable grounds for believing that it is in the public interest for the information sought by the Disclosure Order to be provided. As noted by Johnson J in the Judgment at [36], if, as alleged, substantial amounts of money have been obtained by Ms Hao and Mr Tian by reason of fraudulent conduct in China and used to purchase assets in this country, it is in the public interest for civil recovery proceedings to be brought to recover such assets. Johnson J goes on to observe:

“Conversely, if it transpires that assets have been purchased entirely legitimately, then it is in the public interest that that can be established and the respondents can enjoy their lawfully obtained property without interference from law enforcement agencies.”

If the NCA’s civil recovery investigation leads to civil recovery proceedings, Ms Hao and Mr Tian will benefit from all the safeguards that such proceedings in this country enjoy.