King v Director of the Serious Fraud Office

The House of Lords held that the Crown Court’s power to make restraint and disclosure orders in response to an external request under the Proceeds of Crime Act 2002 (External Requests and Orders) Order 2005 (SI 2005/3181) is confined to property in England and Wales. Articles 6, 7 and 8 of the Order require that the external request "concern" and "identify" relevant property in England and Wales before the Crown Court may make a restraint order; once so confined, the ancillary powers (for seizure, receivership and disclosure under article 8(4) and related provisions) operate within the jurisdiction only. The court rejected the submission that identification of property in England and Wales is merely a gateway to a worldwide restraint, and held that a disclosure order could not properly extend to property situated abroad.

The court construed section 447 of the Act and the Order in their context and gave them their natural meaning: the Order creates a coherent scheme limited to property in England and Wales and provides no machinery for exercising those powers outside the jurisdiction. Extrinsic materials and international instruments did not require or justify an extra‑territorial construction.

Background and parties:

• The respondent, Mr King, a British subject resident in South Africa, was charged in South Africa with numerous offences including fraud and money laundering. The South African prosecuting authority (the NPA) sent a Letter of Request dated 9 May 2006 to the United Kingdom Central Authority seeking restraint orders over assets said to belong to Mr King and certain "Alter Ego Entities". The Letter of Request exhibited a draft Crown Court order (a standard form supplied by the appellant) that purported to restrain the defendant in respect of assets wherever situated.
• In the Crown Court Judge Wadsworth QC made a restraint order and a disclosure order on 31 May 2006 which, by the terms of the drafted order, purported to prohibit dealing with assets "whether they are in or outside England and Wales".

Procedural history:

• Mr King unsuccessfully sought discharge of the orders before Judge Wadsworth on 23 April 2007 and then appealed. The Court of Appeal allowed Mr King’s appeal on 18 March 2008 to the extent of restricting the orders to property in England and Wales ([2008] EWCA Crim 530). The Director of the Serious Fraud Office appealed to the House of Lords.

Issues framed:

• Whether the Crown Court had jurisdiction under the Order (SI 2005/3181) made under sections 444 and 459(2) of the Proceeds of Crime Act 2002 to make restraint and disclosure orders that extended to property outside England and Wales;
• Whether the identification of relevant property in England and Wales in an external request operates only as a gateway to a worldwide restraint or instead confines the court’s powers to property in England and Wales; and
• Whether a disclosure order could lawfully require disclosure of assets outside the jurisdiction.

Reasoning and decision:

• The House of Lords analysed the statutory scheme. Section 447 of POCA defines "external request", "external order" and "relevant property" and states that "property is all property wherever situated"; but the Order itself provides a Part dealing with giving effect to external requests in England and Wales and repeatedly requires that the external request concern and identify relevant property in England and Wales (articles 6, 7 and 8, among others).
• The court held that read as a whole the Order forms a coherent scheme whose powers operate in respect of property in England and Wales only. Article 8 permits a restraint order prohibiting dealing with relevant property identified in the external request, and articles dealing with seizure, receivership and enforcement operate to preserve and realise property within the jurisdiction. The Order contains no mechanism to exercise those powers extraterritorially; had Parliament intended worldwide effect the Order would have included express machinery analogous to section 74 of POCA for requesting assistance abroad.
• The House rejected the argument that identification of property in England and Wales is merely a "gateway" to worldwide jurisdiction. The definition in section 447 that property may be "wherever situated" must be read in context; where articles and provisions refer to property in England and Wales they refer only to property there situated. The court also observed that the draft order used by the NPA was inappropriate for an external request and rejected any finding that the NPA intended a worldwide restraint. Consequently the court held that a worldwide disclosure order was also unjustified.

Relief sought:

• The appellant sought to overturn the Court of Appeal’s restriction of the Crown Court orders to property in England and Wales and to vindicate the wider orders made by Judge Wadsworth.

Result:

• The House of Lords dismissed the Director’s appeal and upheld the Court of Appeal’s decision restricting the restraint and disclosure orders to property in England and Wales.

This was an appeal by the Director of the Serious Fraud Office against the Court of Appeal’s restriction of Crown Court restraint and disclosure orders to property in England and Wales. The House of Lords dismissed the appeal. The court held that the Order (SI 2005/3181) and the relevant provisions of the Proceeds of Crime Act 2002 must be given their natural meaning: they authorise orders only in relation to relevant property in England and Wales, and provide no machinery for exercising the powers in respect of property abroad. Consequently the disclosure order could not lawfully extend to assets outside England and Wales.

Crown Court (Judge Wadsworth QC) — restraint and disclosure orders made 31 May 2006; application to discharge refused 23 April 2007. Court of Appeal Criminal Division allowed Mr King’s appeal on 18 March 2008, restricting orders to property in England and Wales ([2008] EWCA Crim 530). Appeal to the House of Lords dismissed ([2009] UKHL 17).