Olden v SOCA

The Court of Appeal considered civil recovery under Part 5 of the Proceeds of Crime Act 2002 and held that civil recovery proceedings may proceed and the civil court may admit evidence even if that evidence was unlawfully obtained and excluded in earlier criminal proceedings. The court treated the statutory scheme (notably ss.240, 266, 304, 305 and 307) as permitting civil recovery even where criminal prosecutions have failed and confirmed the trial judge's findings that the respondent's assets were recoverable property.

The court upheld subsidiary findings that (i) an apparent initial stake of about £12,000 was, on the judge's findings, likely to have derived from deception or from a failure to deliver assets to the trustee in bankruptcy and so formed part of recoverable property, and (ii) winnings from spread betting funded by recoverable property fell within the tracing/profits provisions (s.305 and/or s.307) and were recoverable. Finally, the court held that the High Court had no jurisdiction to make the possession order in favour of SOCA; once property vests in the trustee for civil recovery the trustee must pursue possession under CPR Part 55 and not SOCA directly.

Background and parties: The Assets Recovery Agency (later SOCA) obtained a civil recovery order under Part 5 of the Proceeds of Crime Act 2002 against Mr Ronald Olden for several properties, bank balances, a caravan and vehicles said to be proceeds of unlawful conduct (mortgage and identity fraud). Mr Olden's earlier criminal conviction was quashed by the Court of Appeal (Criminal Division) on grounds that his arrest had been unlawful; material obtained after that arrest had been excluded in the criminal trial.

Procedural posture: The civil claim was decided by Holroyde J who made a recovery order vesting the listed assets in the trustee for civil recovery and later (on 31 March 2009) made possession orders. Mr Olden appealed to the Court of Appeal (permission granted by Aikens LJ).

Issues framed by the court: (i) whether evidence obtained following an unlawful arrest and excluded in the criminal trial could be admitted in civil recovery proceedings; (ii) whether the initial £12,000 stake was recoverable property; (iii) whether properties were recoverable despite repayment of mortgage loans or re-mortgage character; (iv) whether winnings from spread betting funded by recoverable property were recoverable; and (v) whether the High Court had jurisdiction to make possession orders in favour of SOCA rather than the trustee and, if so, whether it should have done so.

Reasoning and conclusions: On admissibility, the court emphasised that Part 5 empowers civil recovery irrespective of whether criminal proceedings have been brought or succeeded (s.240(2)) and that the civil court must decide admissibility and fairness in the context of civil procedure (CPR and the overriding objective). The fact that criminal proceedings had excluded the evidence was relevant but did not preclude civil admission; the trial judge had exercised a separate discretion and was entitled to admit the evidence. On the £12,000 stake, the judge found Mr Olden unreliable and that the most probable explanation was deception or concealment from his bankruptcy trustee; on those findings the money and property obtained with it were recoverable (the judge also treated withholding from a trustee as unlawful conduct). On spread betting, the court accepted that money deposited with a spread-betting firm and winnings paid out could represent or be "profits accruing in respect of recoverable property" under ss.305 and 307. On possession, the court held the 2002 Act does not expressly confer a power to make possession orders in favour of SOCA; once property vests in the trustee the trustee must, if appropriate, seek possession by Part 55 procedure. The possession order made in favour of SOCA was therefore unlawful and was set aside.

Wider context: The court noted the statutory policy preference for criminal proceedings but confirmed the statutory design permits civil recovery where criminal processes have failed or not been pursued.

Appeal allowed in part. The Court of Appeal upheld Holroyde J's admission of evidence and his findings that the assets were recoverable property (including the initial stake and spread-betting winnings) under Part 5 of the Proceeds of Crime Act 2002, but it set aside the possession order made in favour of SOCA as unlawful because possession should have been sought by the trustee for civil recovery under CPR Part 55.

On appeal from the High Court, Queen's Bench Division (Holroyde J, HQ07X04240). Permission to appeal granted by Aikens LJ. The Court of Appeal (Rix LJ, Wilson LJ and Sir Scott Baker) delivered judgment on 26 February 2010. Prior criminal appeal: the appellant's Crown Court conviction was quashed by the Court of Appeal (Criminal Division) on 9 March 2007 (as recorded in the judgment).