Assets Recovery Agency v Olupitan & Anor

Under Part 5 of the Proceeds of Crime Act 2002, an enforcement authority must identify the matters constituting particular kinds of unlawful conduct and prove them on the balance of probabilities. It need not prove a specific criminal offence. A lifestyle inconsistent with lawful income is insufficient by itself; the court must assess the whole evidential picture. Property bought with a fraudulently obtained mortgage may be recoverable property, even though the mortgage remains secured and its funds were paid to the vendor. Money laundering may be inferred from the handling of unexplained cash without proving the underlying offence. Statutory protections for innocent parties and Convention rights remain relevant. On the facts, recovery was ordered for two properties and two bank accounts, but not for a third property.

The Director sought recovery orders under Part 5 of the Proceeds of Crime Act 2002 against property and bank accounts associated with Mr Olupitan and Ms Makinde. The alleged unlawful conduct included mortgage fraud, conspiracy to defraud and money laundering. Ms Makinde relied on the statutory protections for good-faith respondents, the good-faith purchaser exception and Convention rights concerning her home.

An earlier application to strike out the claim had been rejected by Mrs Justice Dobbs: [2006] EWHC 1906. The central issues were whether the alleged unlawful conduct and its connection with the assets had been proved on the balance of probabilities, whether the mortgage fraud resulted in acquisition of the property, and whether recovery orders would be just, equitable and Convention-compliant.

Disposition. The claim succeeded in part. Recovery orders were made in respect of the two Abbey National accounts, 157 Wellington Drive and 23 Hazelmere Road. On a sale of Hazelmere Road, Bristol & West was to be repaid the outstanding mortgage and the balance was recoverable. No order was made in respect of 30 Wellstead Road.

1. Under Part 5 of the Proceeds of Crime Act 2002, the Director need not allege or prove a specific criminal offence. The matters said to constitute the particular kind or kinds of unlawful conduct must be identified and proved on the balance of probabilities. A lifestyle inconsistent with identifiable lawful income cannot, by itself, sustain the claim. The approach in The Queen on the Application of the Director of Assets Recovery Agency and Others v Green [2005] EWHC 3168 was followed. The court must assess the whole evidential picture, including the weight added or lost by explanations rejected as untruthful.
2. The mortgage application contained material falsehoods about nationality, ownership, employment, income and insurance details. The fraud was the obtaining of the mortgage. It was unnecessary for the lender’s actual decision-maker to give evidence, and the fact that the mortgage remained up to date did not alter the result. Since the mortgage enabled the acquisition of Hazelmere Road, the property was obtained through unlawful conduct. The argument based on Preddy [1996] AC 815 was not applied in the statutory context of civil recovery.
3. The Director was independent of the Crown prosecutor and was not bound by the prosecution’s concession limiting the period of the criminal conspiracy. The civil court could find, on the balance of probabilities, that the conspiracy was more extensive than the conduct accepted for the criminal conviction.
4. Property obtained through unlawful conduct, property representing it and the relevant attributable portion of mixed property were recoverable. Section 266 required an order where property was recoverable, subject to the statutory just-and-equitable safeguards and Convention rights. Ms Makinde had not acted in good faith or taken relevant steps within section 266, and section 308 did not assist her. In the circumstances, recovery of Hazelmere Road was not a disproportionate interference with her Article 8 rights.
5. A substantive money-laundering offence could be established by inference from the manner in which cash was handled, without proving the underlying offence generating it. The unexplained cash credits, rejected explanations and surrounding evidence justified the inference that money laundering had occurred. The authorities included R v El Kurd [2001] Crim. L.R. 234, R v L,G,Q and M [2004] EWCA Crim 1579 and R v Montila [2005] 1 Cr. App. R 26.

This was a first-instance contested recovery claim. The judgment records that Mrs Justice Dobbs rejected an earlier application by the respondents to strike out the claim: [2006] EWHC 1906.