Amalgamated Metal Trading Ltd. v City of London Police Financial Investigation Unit & Ors

An interim declaration should not determine the ultimate question whether money represents the proceeds of crime. That issue requires a final determination between the parties asserting competing rights, based on the evidence and the burden of proof. A police constable’s consent under section 93A of the Criminal Justice Act 1988 may properly be withheld on the basis of suspicion; the police need not establish that the funds are in fact criminal proceeds. A financial institution must ordinarily take its own commercial decision whether to contest proceedings. The court’s discretionary jurisdiction to grant interim declaratory relief is exceptional and does not replace that responsibility.

Amalgamated Metal Trading Limited held approximately US$450,000 for Wavesmetco LLC after closing out trading positions. AMT suspected that the funds might be connected with fraud involving RBG Resources plc and sought the City of London Police Financial Investigation Unit’s consent to payment under section 93A of the Criminal Justice Act 1988. Consent was refused.

AMT issued proceedings seeking declarations that the money was not the proceeds of criminal conduct, initially against the FIU and later against the Serious Fraud Office. The proceedings included an abandoned application for an interim declaration. The SFO applied for a stay, while Wavesmetco sought to introduce a counterclaim for payment of the money. The central issues were whether the proceedings served any legitimate purpose and whether the court should determine the criminal-proceeds question at an interim or final stage.

1. The proceedings against the SFO were stayed. The claim as originally brought against the FIU was misconceived because there was no dispute between AMT and the police about whether the money was criminal proceeds. The police had only been asked whether they consented to payment.
2. Section 93A of the Criminal Justice Act 1988 does not prescribe the basis on which consent must be given or refused. The provision would be unworkable if refusal required the constable to prove, to an unspecified standard, that the funds were criminal proceeds. Read as a whole, a properly founded suspicion is sufficient to justify withholding consent. A public law challenge to the propriety of the constable’s discretion would be a different matter.
3. The court rejected the proposed interim declaration under CPR 25.1(1)(b). Whether the money was the proceeds of crime admitted of a final answer only. It could be determined, if necessary, between the parties asserting rights to the money, on the evidence they chose to place before the court and with regard to the burden of proof. Declaratory relief against the police could also prejudice future criminal proceedings.
4. The Court of Appeal’s decision in Bank of Scotland v A Ltd [2001] 1 WLR 751 was confined to the context in which interim advisory declarations may assist a bank facing a genuine dilemma, particularly where tipping-off issues arise. It did not support using proceedings against the police to obtain a declaration on the ultimate criminal-proceeds issue. Financial institutions must ordinarily decide commercially whether to contest customer proceedings.
5. Wavesmetco was permitted to serve a Defence and Counterclaim substantially in the draft form placed before the court. The court refused to make a final declaration that the money was not criminal proceeds, particularly in the absence of adequate evidence explaining the source of the funds.

The judge added that the judgment did not determine cases in which the tipping-off provisions were potentially engaged.

First-instance decision. The judgment records earlier interlocutory orders by Ouseley J and Andrew Smith J, including refusal of interim declaratory relief, joinder of Wavesmetco, and directions for further pleadings.