Serious Organised Crime Agency v Azam & Ors

These are proceedings for recovery orders brought under Part 5 of the Proceeds of Crime Act 2002. The claimant, the Serious Organised Crime Agency, asserts that the first respondent, Amir Aziz, acquired property through unlawful conduct, in particular drug dealing and money laundering between 1997 and 2002. He then moved to the United Arab Emirates. The second to sixth defendants are his relations who are alleged to hold property so acquired. On 22 September 2012 it was ordered that the trial of the action should begin on 15 July 2013 with an estimate of 10 days. It was further then ordered that two applications made by Mr Azam should be heard in February or March 2013. It was later agreed that two further matters should be determined at that time. In consequence the applications were listed before me on 27 February. It emerged that the only issues which the court was requested by Mr Jonathan Lennon for Mr Azam to determine at this stage, were the following:

It was a term of the property freezing order made under section 245A of POCA by Silber J on 22 February 2010 that the balance of funds held in an account with KBL European Private Bank in Luxembourg should be brought within the jurisdiction. It appears that as a result of the freezing order the Luxembourg court itself made an order freezing the monies. It seems that on 4 October 2011 a further order of the English High Court was made relating to the transfer of the monies. In any event they were released from Luxembourg and are now held in a bank account in the name of Mr Azam’s solicitor and subject to the order of the High Court.

In Perry the Supreme Court held on an appeal against the making of a worldwide freezing order made under the Proceeds of Crime Act that ‘the High Court of England and Wales had no jurisdiction under Part 5 [of POCA] to make a recovery order in relation to property outside England and Wales. It follows that the court had no jurisdiction to make the worldwide property freezing order that was made in this case’ - paragraph 78 of the judgment of Lord Phillips. It is therefore accepted by SOCA that the orders which were made here in relation to the Luxembourg monies should not have been made. They were, however, made in accordance with the law as it was then believed to be, at least by the court making the orders and by SOCA. There is thus far no difference between the positions of SOCA and Mr Azam.

It is SOCA’s case that the orders were nonetheless valid orders in the sense that they were duly made by the court and no appeal was made against them and no application was made to set them aside. The present issue arose only after the monies had been transferred within the jurisdiction of this court and after the law had been determined by the decision in Perry. It is the primary case of SOCA that the monies were therefore validly transferred to the jurisdiction and that Mr Azam’s application must fail. Mr Lennon accepted that the orders here were not automatically discharged by the decision in Perry and that an order of the court was required to set them aside.

Mr Andrew Sutcliffe QC for SOCA relied on the decision of the Sir Nicholas Browne-Wilkinson V-C in Hillgate House Ltd v Expert Clothing Service & Sales Ltd [1986] 1EGLR 65 as a demonstration of the working of the law in this regard. There a landlord obtained an order for forfeiture and took possession of the premises. The order was set aside by the Court of Appeal. The tenant then sued the landlord for damages alleging wrongful entry. The action failed. The Vice-Chancellor stated:

“… when an order is in force, and so long as it is in force, it has to be obeyed and is in law correct. It is true that it may be subsequently altered on appeal; but unless and until it is altered, it is an order of the court and acts done under it are lawful.”

I was referred by Mr Lennon to R (Cook) v SOCA [2010] EWHC 2119 (Admin), [2011] 1 WLR 144. In that case search warrants were obtained and property was seized. SOCA later conceded that the execution of the warrants and the seizure had been unlawful. Some of the property was returned and some was not. It was then purportedly re-seized. It was held by the Divisional Court that there was no power to re-seize property before it had been returned. The distinction between that case and the present is that the initial seizure in Cook did not take place pursuant to an order of the court. I do not consider that it assists Mr Azam.

The distinction between what may be called administrative action and action pursuant to an order of a court and therefore protected by that order was recognised by the House of Lords in R v Governor of Brockhill Prison ex parte Evans (No 2) [2001] 2 AC 19. The case concerned the calculation of a release date. A prison governor had calculated the applicant’s release date on the basis of the law as it was thought to be. The law was then stated by the Divisional Court in a way more favourable to the applicant. She claimed damages for false imprisonment and her claim was upheld by the Court of Appeal and the House of Lords. The prison governor had sought to rely on the order of the Crown Court committing her to prison as a defence for his action. Lord Slynn stated at page 26:

“It is accepted that false imprisonment is a tort of strict liability. Equally clearly deprivation of liberty may be shown to be lawful or justified. It may be so for example where it is pursuant to an order of a court or pursuant to the exercise of statutory powers. Here the court did not specify the release date and the sentence of two year’s imprisonment had to be read subject to the governor’s duty to calculate the release date.”

Lord Hope stated at page 33:

“I do not think that the situation which arose in this case can be compared with those where the defence of justification is advanced on the ground that the alleged tortfeasor was acting within the four corners of a warrant which had been issued to him by the court.”

I should mention AN v Secretary of State for the Home Department [2010] EWCA Civ 689 cited by Mr Lennon. It concerned control orders. It was held by the Court of Appeal that the claimants’ control orders should be quashed ab initio rather than treated as being of no effect only from the dates when they were revoked. They had been revoked by the Secretary of State as a result of the decision of the House of Lords in Secretary of State for the Home Department v AF (No 3) [2009] UKHL 28. Although the orders had been made by the court on the application of the Secretary of State, it was held that they were essentially administrative and the Secretary of State could not rely on the principle that an order retains its validity until set aside: I refer to paragraph 24 of the judgment of Maurice Kay LJ. I do not consider that the case assists here.

Mr Lennon cited Cadder v HM Advocate [2010] UKSC 43, [2010] 1 WLR 2601. This was a Scottish appeal. The accused was convicted of criminal offences following trial. On appeal to the House of Lords he successfully argued that evidence of his interview should have been excluded because he had not had access to legal advice. That conclusion was contrary to the law of Scotland as it had been previously thought to be. The question arose as to the retrospective effect of the House’s decision on other cases. In paragraph 68 of his judgment Lord Hope stated:

“On the contrary, I think that there are strong grounds for ruling today,….., that the decision in this case does not permit the re-opening of closed cases. Cases which have not yet gone to trial, cases where the trial is still in progress and appeals that have been brought timeously (….) but have not yet been concluded will have to be dealt with on the basis that the person who is detained must have had access to an enrolled solicitor before being questioned by the police, unless in the particular circumstances of the case there were compelling reasons for restricting this right. As for the rest, I would apply Murray CJ’s dictum that the retrospective effect of a judicial decision is excluded from cases that have been finally determined: A v Governor of Arbour Hill Prison [2006] 4 IR 88, para 36.”

Lord Rodgers agreed in paragraph 102 that the new statement of the law could be applied in the appellant’s case and to other cases that were still alive, but not to convictions in completed cases which had been obtained on the basis of the law as it had been previously stated.

Cadder was dealing with a situation much different to the present. It was dealing with an appeal against a conviction which had been obtained, in part, on the basis of evidence which should have been excluded. So it was, I think, straightforward to conclude that the conviction must be set aside unless there was no real possibility that the jury would have reached a different verdict if the evidence had not been before them. The importance of this part of Cadder lies in the dicta that it was only in on-going cases that the new statement of the law could be relied on: it could not be used to resurrect concluded cases. The significance of that in the present case would be in its application to any attempt to set aside the order for the transfer of the Luxembourg monies to the control of the English court.

Mr Lennon submitted that as the present case had not reached trial, the court should apply Perry and set aside the order. In my view that would be to apply the letter of Cadder to a situation very different to that in Cadder, and contrary to the spirit of Cadder. The real intent of this part of the decision Cadder is to prevent matters which have been concluded being re-opened by reason of a re-statement of the law. Here, although the case is on-going, the matter of the Luxembourg monies was concluded by their transfer and should not now be re-opened. There was, of course, no appeal against the order.

It is also as well to have in mind that Cadder says nothing about the lawfulness of an act done pursuant to an order of the court, which, it subsequently emerges, should not have been made. So even if Cadder was to be applied as Mr Lennon submitted, it would not assist Mr Azam.

I conclude that in this case the monies were lawfully brought within the jurisdiction, and that there are no grounds for returning them to Luxembourg.

I was not addressed on the point, but it seems clear to me that, if the order for the remission of the monies was to be treated as of no effect or otherwise to be ‘undone’, the right course would be to restore the position before the monies were remitted. That would mean placing them back under the control of the Luxembourg court. That is not at all what Mr Azam wants.

I was informed that the Court of Appeal recently heard submissions in an appeal from SOCA v Hyams & Others, and I was invited to consider whether I should reserve my judgment until judgment had been given on that appeal. As I understand it the appeal concerned the position of a freezing order following the making of a recovery order. That is a different position to that here.

A further matter which I should mention is that it is likely that the effect of the decision in Perry as to worldwide freezing orders will retrospectively reversed when the Crime & Courts Bill currently before Parliament comes into force in, probably late April or May of this year. As I have concluded that the monies should not be released, that would not alter the outcome of this application. Had I been minded to decide the application in favour of Mr Azam, I would have had to decide whether in anticipation of the expression of the will of Parliament I should delay my decision. If I had delivered a decision in favour of Mr Azam, an appeal by SOCA would have been likely to be determined following a change in the law fatal to Mr Azam.

The issue was clarified as a narrow one: could a disclosure order made for the purpose of a civil recovery investigation be used to obtain evidence to build a case against a respondent that he had been involved in unlawful conduct, or was that contrary to the second part of the decision in Perry?

The relevant order was identified as that made by Walker J on 14 August 2009. These proceedings had not then been commenced. The order was stated at its head to be a disclosure order pursuant to section 357 of POCA. The respondents to the order were named as 5 building societies or banks, an estate agent, Simon & Co Solicitors, and ‘any other individual or entity specifically associated to Amir Azam, Kalsoon Amir, and property identified as relevant to the civil recovery investigation conducted by the Serious Organised Crime Agency’. The order stated:

“This order is made for the purposes of a civil recovery investigation being carried out by SOCA, the nature of which is as follows;

To determine whether all or any of the property held by or on behalf of Amir Azam is recoverable property or associated property under the Proceeds of Crime Act 2002.”

The order authorised SOCA:

“to give to any person it considers may have relevant information a notice in writing requiring that person to do any or all of the following, with respect to any matter which SOCA considers to be relevant to the civil recovery investigation set out above:

(a)

answer questions ….

(b)

provide information …..

(c)

produce documents ….

that are relevant to a civil recovery investigation being conducted by SOCA.”

The notice in question, which was apparently dated 19 November 2010, was addressed to the Saunders Law Partnership. They were solicitors acting for Mr Azam and still do so. The relevant part stated:

“Pursuant to the terms of the Disclosure Order you are required to disclose all documentation (with the exception of legally privileged material) held by Saunders Law Partnership relating to the prosecution of Mr Amir Azam the United Arab Emirates in March 2007.”

Material was duly provided which related to the prosecution of Mr Azam in the UAE. He was convicted there of drug dealing and money laundering. The drugs conviction was set aside on appeal, apparently on the ground that the prosecution had failed to prove that certain material which had been seized was cannabis. SOCA wish in these proceedings to adduce evidence relating to the UAE proceedings on a similar fact basis to support its case that in the earlier period covered by its claim Mr Azam was drug dealing and money laundering. I heard no argument as to how far the evidence may be available for that purpose other than the limited argument to be considered in this judgment. I have not been asked to look at the material in question. The main evidence relied on by SOCA at the English trial will be surveillance evidence obtained in England.

Section 357 is in Part 8 of POCA, which is headed ‘Investigations’. Section 341, defines ‘a confiscation investigation’, ‘a civil recovery investigation’, ‘a detained cash investigation’, ‘a money laundering investigation’ and ‘an exploitation of proceeds investigation’. So the Part covers those five kinds of investigation. This case involves the second. Section 341(2) provides:

“341(2) For the purposes of this Part a civil recovery investigation is an investigation into –

(a)

whether property is recoverable property or associated property,

(b)

who holds the property, or

(c)

its extent or whereabouts.”

I note the use of ‘or’.

The definition of ‘recoverable property’ is found in section 304(1):

“304(1) Property obtained through unlawful conduct is recoverable property.”

‘Associated property’ is defined by section 245(1). I need not set it out.

So, combining section 341(2)(a) with section 304(1), a civil recovery investigation may be an investigation into whether property is property obtained through unlawful conduct.

I should also at this point refer to section 240 which sets out the general purpose of Part 5 of POCA – ‘Civil recovery of the proceeds etc of unlawful conduct’:

“240(1) This Part has effect for the purpose of –

(a)

enabling the enforcement authority to recover, in civil proceedings before the High Court or Court of Session, property which is, or represents property obtained through unlawful conduct,

(b)…. .

(2)

The powers conferred by this Part are exercisable in relation to any property (including cash) whether or not any proceedings have been brought for an offence in connection with the property.”

In Gale v SOCA [2011] UKSC 49 the Supreme Court had to consider whether the civil recovery procedure was in breach of Article 6 of the ECHR because it might involve a finding of unlawful conduct to the civil standard of proof. In paragraph 4 of his judgment Lord Phillips stated:

“4.

In order to recover property under Part 5 SOCA has to prove that it was obtained by unlawful conduct, or that it is property obtained in place of such property. Section 241 defines unlawful conduct as being conduct which is unlawful under the criminal law of the country in which it occurs, whether this is the United Kingdom or elsewhere. The section requires the court to decide “on a balance of probabilities” whether it is proved that any of the matters alleged to constitute unlawful conduct occurred. Section 242 provides that in deciding whether property was obtained through unlawful conduct it is not necessary to show that the conduct was of a particular kind if it is shown that the property was obtained through conduct one of a number of kinds, each of which would have been unlawful conduct. It is not necessary to prove that individual items of property were derived from specific offences.”

With that introduction I come to section 357:

“357(1) A judge may, on an application made to him by the relevant authority, make a disclosure order if he is satisfied that each of the requirements for the making of the order is fulfilled.

(2)

No application for a disclosure order may be made in relation to a detained cash investigation or a money laundering investigation.

(2A) …

(3)

The application for a disclosure order must state that –

(a)

… or

(b)

the property specified in the application is subject to a civil recovery investigation and the order is sought for the purposes of the investigation.

(c)

…

(4)

A disclosure order is an order authorising an appropriate officer to give any person an appropriate officer considers has relevant information notice in writing requiring him to do, with respect to any matter relevant to the investigation for the purposes of which the investigation is sought, any or all of the following:

a.

answer questions …

b.

provide information …

c.

produce documents …

(5)

Relevant information is information (whether or not contained in a document) which the appropriate officer concerned considers relevant to the investigation.

(6)

….. .

(7)

In this Part “relevant authority” means –

(a)

in relation to a confiscation investigation, a prosecutor; and

(b)

in relation to a civil recovery investigation, a member of SOCA’s staff or the relevant Director.

(c)

….. .

(8)

and (9) …. .”

Section 358 contains requirements for the making of a disclosure order. 358(2)(b) is relevant:

“358 (1) ….

(2)

There must be reasonable grounds for suspecting that

(a)

…

(b)

in the case of a civil recovery investigation, the property specified in the order is recoverable property or associated property;

(c)

….”

Section 360 prevents statements made by a person in response to a disclosure order from being used in evidence against them in criminal proceedings. This protection does not apply in respect of confiscation proceedings.

In Perry the second question which the Supreme Court had to consider was whether ‘the authority given by a disclosure order to give notices only applies to notices given to persons within the jurisdiction’ – paragraph 91 of the judgment of Lord Phillips. He referred to the fact that the Act imposes criminal sanctions on those who do not comply with a notice, which, he said, in the case of persons outside the jurisdiction would be a particularly startling breach of international law. He concluded: ‘For this reason alone I consider it implicit that the authority given under section 357 can only be exercised in respect of persons who are within the jurisdiction.’ – paragraph 94. It does not appear that any other attack had been made on the notices in that case.

The notice in question here was served on the Saunders Law Partnership within the jurisdiction, and so the ratio of this part of the Supreme Court’s decision in Perry is not relied on.

The evidence in the application for the disclosure order in Perry described the property subject to the investigation as any property held by Mr Perry including monies in or passing through bank accounts held by him, his wife or adult daughters. Lord Phillips stated in paragraph 90:

“90.

The order made by Judge Kay was addressed to all those named in the application notice… and conferred authority on SOCA in the general terms of section 357(4). The property referred to by Miss Ewing in her application was described in the most general terms. The purpose of the application, as explained by her, appears to have been to enable SOCA to carry out a roving commission aimed at identifying any property that might be the proceeds of Mr Perry’s criminal conduct.”

Notices were issued which, inter alia, required information relating to any assets of Mr Perry anywhere. Having set out the terms of some notices Lord Phillips stated:

“The exercise carried out by Miss Ewing seems to go beyond the purpose of a civil recovery investigation as defined in section 341(2). That investigation, as I understand the relevant provisions, relates to property whose existence has already been identified. Similar questions arise in relation to the scope of the disclosure order and some of the notices served under it as I have raised in paras 79 to 83 above in relation to the scope of the freezing order. Under section 357(4) the authority conferred by a disclosure order is restricted to enquiries “with respect to any matter relevant to the investigation for the purposes of which the order is sought”. It is questionable whether this authority extends beyond seeking information about property whose existence has already been identified. Mr Jones has not, however, sought to challenge the scope of the order or of the notices issued under it.”

In paragraphs 79 to 83 of his judgment which follow his conclusion in paragraph 78 that the High Court had no jurisdiction to make a recovery order in relation to property abroad, Lord Phillips had stated:

“79.

The foundation of the jurisdiction conferred under Part 5 of POCA is the existence of property believed to be the proceeds of crime The existence of such property enables SOCA, as the enforcement authority, to serve a claim form on the holder of the property and on any other person who SOCA thinks holds associated property, even if that person is outside the jurisdiction, if SOCA wishes the property to be the subject of a civil recovery order – see section 243. Section 243(3) requires the property to be specified or described in the form in general terms.

80.

Section 245A, …, sets out the requirements of a property freezing order. Subsection (2)(a) states that a property freezing order is one that “specifies or describes” the property to which it applies.

81.

The property freezing order obtained in this case set out schedules of property to which the order applied. But the order was not restricted to specific property. It provided that the prohibition on disclosure of assets

“applies, but is not limited to, the following categories of assets:

(1)

all real property, including, but not limited to the properties listed at Schedule 1 to this Order;

(2)

the balances standing to the credit of any bank and/or building society account;

(3)- (6) …….”

It is questionable whether these general descriptions “specify” or “describe” property as required by section 245A.

82.

The property freezing order also required all the PFO appellants, together with the other respondents to the property freezing order, to disclose all their worldwide assets. It is not clear to me how the court had jurisdiction to make such an order. Part 8 of POCA expressly deals with disclosure, which is the subject of the DO appeal.

83.

If this Court is invited to make a revised property freezing order in which property is described in terms as general and speculative as have been adopted in this case it will require to be satisfied that they fall within the scope of section 245A. If the Court is invited to include in the freezing order an order for disclosure of assets it will require to be satisfied that it has jurisdiction to do so.”

I do not know what, if any, decisions the Supreme Court made as referred to in paragraph 83. However there is nothing in the passages quoted to suggest that Lord Phillips had in mind disclosure relating to unlawful conduct.

Mr Lennon also relied on the decision of the Divisional Court in R (Horne and Others) v Central Criminal Court [2012] EWHC 1350 (Admin). The court was here concerned with search warrants and a disclosure order made under sections 352 and 357 of POCA respectively and a confiscation investigation. The targets of the warrants and order were a convicted criminal’s wife, girlfriend and eldest son. Confiscation proceedings against him had failed to realise his hidden assets. The main point was whether the conclusion of confiscation proceedings barred a subsequent confiscation investigation. The court held that it did not. The court held that it must be satisfied that the purpose was a proper purpose, namely to obtain information as to the whereabouts of the criminal’s benefit, and it held that it was so satisfied: paragraphs 21 and 29 of the judgment of Moses LJ.

In reaching the decision in Horne the court applied the decision of the House of Lords in R v Southwark Crown Court ex parte Bowles [1998] AC 641. The House there had to consider section 93H of the Criminal Justice Act 1988 as inserted by section 11 of the Proceeds of Crime Act 1995. The House held that the Crown Court could only make an order under the section for the production of material for the purpose of assisting in the recovery of proceeds of criminal conduct and not for the purpose of investigating criminal offences: the true and dominant purpose of the application must be the former. This was in the context of confiscation proceedings.

In considering Horne the definition of a ‘confiscation investigation’ must be kept in mind. By section 341(1) :

“341(1) For the purposes of this Part a confiscation investigation is an investigation into –

(a)

whether a person has benefited from his criminal conduct, or

(b)

the extent of whereabouts of his benefit from his criminal conduct.”

In my judgment it was open to SOCA to use the disclosure order of 14 August 2009 to obtain information which related to Mr Azam’s criminal conduct. The reason is that the investigation involves establishing that property is recoverable because it was obtained by unlawful conduct. That requires SOCA to establish that Mr Azam was involved in unlawful conduct. That is amply demonstrated by the proceedings in Gale – if demonstration is needed. The position is different with a confiscation investigation because of the difference in definitions and the different nature of confiscation investigations. That difference in turn stems from the difference between civil recovery proceedings and confiscation proceedings. There is nothing in Perry to affect this.

Lastly, I should record that Mr Sutcliffe submitted that even if SOCA had not been entitled to obtain the evidence, it now had it and was entitled to use it. Had I been against him as to the obtaining of the material, I would have left that further question to be determined by the trial judge.