Assets Recovery Agency v Jackson & Ors

In civil recovery proceedings, unexplained wealth alone cannot establish that property was obtained through unlawful conduct. The claimant must identify and prove, on the balance of probabilities, a particular kind or kinds of unlawful conduct, although the description may be general. The court may assess the totality of the evidence globally rather than trace each asset to a specific unlawful transaction. Rejected explanations, unusually contaminated cash, criminal convictions, concealment and the absence of credible business records may together provide cogent evidence. Where false information is knowingly supplied to obtain a mortgage, the whole property may be recoverable if the borrowing was essential to its acquisition, subject to the innocent lender’s rights. Civil recovery proceedings are compatible with Convention property and privacy rights where the order strikes a fair balance and is proportionate to the prevention of crime.

The Director of the Assets Recovery Agency brought a claim under Part 5 of the Proceeds of Crime Act 2002 for recovery of properties, cash, jewellery, vehicles and bank balances held by the first respondent. The second respondent settled and took no part in the hearing.

The claim alleged that the assets were obtained through drug dealing or money laundering, with a separate allegation that one property had been obtained through mortgage fraud. The respondent asserted that the assets came from various informal cash-based businesses. The central issues were whether the claimant had proved unlawful conduct and recoverable property, whether the mortgage fraud allegation was established, and whether the court could adopt a global approach to the evidence.

1. Recovery order. The claim succeeded substantially. The court ordered recovery of the claimed property under section 266 of the Proceeds of Crime Act 2002, subject to the mortgage lender’s rights and limited items which the claimant had not proved belonged to the respondent.
2. The interim receiver’s report had special persuasive status because the receiver acted independently under the supervision of the court. It was not binding. The court had to scrutinise the underlying evidence, and the claimant retained the burden of proving recoverable property on the balance of probabilities by cogent evidence.
3. Following The Director of the Assets Recovery Agency v Green [2005] EWHC 3168 (Admin) and The Director of the Assets Recovery Agency v Olupitan [2007] EWHC 162 (QB), the claimant had to identify and prove a particular kind, or one of a number of kinds, of unlawful conduct. A claim based solely on a lifestyle inconsistent with identifiable lawful income was insufficient. The claimant could, however, rely on the whole evidential picture.
4. The court was entitled to adopt a global approach. It was unnecessary to prove a particular unlawful act funding each individual asset. The rejected explanations for substantial cash holdings, the absence of credible business records, the respondent’s convictions, use of aliases and the storage of cash in bags and deposit boxes were relevant cumulatively.
5. The cash contamination evidence was admissible and probative in context. Applying the reasoning in R v Compton [2002] EWCA Crim 2835 and R v Benn [2004] EWCA Crim 2100, the exceptionally high heroin contamination, compared with the database, supported an inference that the notes had been in close proximity to heroin. In combination with the rejected explanations and other evidence, it supported the conclusion that the respondent had engaged in drug dealing.
6. The respondent knowingly supplied false employment and income particulars in his mortgage application. The false declaration obtained the mortgage by deception, and without the mortgage the property would not have been acquired. The whole property was therefore recoverable, subject to the innocent mortgage provider’s entitlement.
7. The order was not incompatible with article 1 of Protocol 1 or article 8 of the Convention. Recovery pursued the legitimate aim of preventing crime and struck a fair and proportionate balance.