Gale & Ors v Serious Organised Crime Agency

In civil recovery proceedings, limitation depends on when the cause of action concerning the property actually sought accrued. The respondent bears the burden of establishing a limitation defence, including any link between the property and a pre-limitation source.

Part 5 of the Proceeds of Crime Act 2002 requires disputed unlawful conduct to be proved on the balance of probabilities. Article 6 does not generally import the criminal standard into these proprietary proceedings. Evidence underlying an earlier acquittal may be considered, provided the court recognises the acquittal and does not cast doubt on its correctness. Costs incurred by an interim receiver investigating and preparing the civil recovery claim may, in principle, be recovered as litigation costs.

The Serious Organised Crime Agency brought civil recovery proceedings under Part 5 of the Proceeds of Crime Act 2002 against David and Teresa Gale. An interim receiver had investigated assets and transactions across several jurisdictions. The judge found that the Gales had acquired property through unlawful conduct and made a recovery order concerning assets valued at approximately £2 million.

The Gales appealed on limitation, Article 6 and the adequacy of the evidence, relying particularly on criminal acquittals in Spain and Portugal. SOCA cross-appealed against the refusal to include the interim receiver’s investigative remuneration and expenses in the recoverable costs. The central issues were the limitation period, the applicable standard of proof, the effect of the acquittals, and the characterisation of the receiver’s costs.

The appeal was dismissed and SOCA’s cross-appeal was allowed.

1. Limitation. The limitation issue had to be approached by identifying when the present cause of action concerning the property sought to be recovered accrued. The burden lay on the Gales to plead and prove that the relevant property, or property which it represented, had been obtained before the limitation period. The claim form did not need to identify whether each asset was original or replacement property. A limitation defence would succeed if the respondent could trace the property to a pre-limitation source, but no such tracing was established here. The concealment issue under section 32 of the Limitation Act 1980 therefore did not arise.
2. Article 6 and standard of proof. Section 241(3) of the Proceeds of Crime Act 2002 expressly required matters alleged to constitute unlawful conduct to be decided on the balance of probabilities. Section 3 of the Human Rights Act 1998 could not justify substituting the wholly different criminal standard. Part 5 proceedings were proprietary civil proceedings directed to recovery of property, not the conviction or punishment of an individual. R v Briggs Price was distinguishable because it concerned confiscation following criminal proceedings under a different statutory scheme.
3. Acquittals and evidence. The Portuguese and Spanish proceedings did not create an issue estoppel or prevent the court from considering the underlying material in the civil recovery claim. The court had to recognise the acquittals and avoid language casting doubt on their correctness. The judge had observed that limitation and had distinguished the different purpose and subject matter of the proceedings. Hearsay in the receiver’s report went primarily to weight. It could be considered with appropriate caution, particularly where factual matters were unchallenged and supported by other evidence.
4. Receiver’s costs. Section 51 of the Senior Courts Act 1981 conferred a wide jurisdiction over costs. The distinctive provisions of Part 5 meant that an interim receiver had no general right to take remuneration from assets vested in the trustee for civil recovery. That did not prevent SOCA, having contractually paid the receiver’s investigative costs, from recovering them as costs of and incidental to the proceedings. SOCA v Wilson was not followed. The sums were in principle recoverable from Mr Gale, subject to assessment if not agreed.

1. Court of Appeal (Civil Division) dismissed the appeal against the recovery order and allowed SOCA’s cross-appeal on the interim receiver’s costs.
2. Queen’s Bench Division Griffith-Williams J made a recovery order against David and Teresa Gale. The decision was appealed to the Court of Appeal.