Perry & Ors v Serious Organised Crime Agency (Rev 1)

The Court of Appeal held that Part 5 of the Proceeds of Crime Act 2002 permits a court in England and Wales to make a civil recovery order in respect of recoverable property situated outside the United Kingdom. The court construed key provisions of POCA (notably s.316(4), s.243 and s.266) as giving Part 5 an extraterritorial reach and concluded that a recovery order vests recoverable property in the trustee for civil recovery wherever the property is situated. The practical effect of vesting differs according to the law of the place where the property is located: domestically a vesting order will usually give the trustee both legal and equitable title, whereas for property abroad the trustee obtains a personal right against the respondent and whatever remedies or rights the foreign law provides. The court rejected arguments that various perceived lacunae in Part 5 or the absence of express overseas enforcement machinery (or express parallels with insolvency rules) showed that Parliament did not intend extraterritorial effect.

Background and parties:

• SOCA obtained a worldwide freezing order under section 245A of POCA in proceedings against Mr Israel Perry and others. The appellants challenged the inclusion within that freezing order of property situated outside England and Wales on the ground that Part 5 of POCA did not permit a civil recovery order in respect of property abroad.
• The Administrative Court (Mitting J) rejected the appellants’ challenge and refused to vary the freezing order; the appellants appealed to the Court of Appeal.

Nature of the application and relief sought:

• Issue on appeal: whether courts in England and Wales have the power under Part 5 of the Proceeds of Crime Act 2002 to make a recovery order vesting recoverable property situated outside the jurisdiction in the trustee for civil recovery.

Issues framed by the court:

1. Does section 316(4) and related provisions in Part 5 give the domestic court power to vest recoverable property wherever situated?
2. If so, what is the legal effect of a vesting order in relation to property situated abroad?
3. Do lacunae in Part 5, the absence of express foreign enforcement mechanisms (or express analogues to insolvency provisions), or provisions such as s.286 (Scotland) demonstrate that Parliament did not intend extraterritorial effect?
4. How does the Strasbourg Convention and Part 11 of POCA interface with Part 5 and overseas enforcement?

Court’s reasoning (concise):

• The court read the statutory definition of property in s.316(4) (“property is all property wherever situated”) together with the service provisions (eg s.243) as plainly permitting Part 5 proceedings and recovery orders in respect of property situated abroad.
• The court accepted that the practical consequences of vesting overseas property differ from vesting domestic property: where property is abroad the trustee’s rights are primarily personal against the respondent and otherwise dependent on the foreign law governing the property; English statutory protections that operate domestically (eg the full effect of s.269) cannot be taken to displace foreign law.
• The court rejected the argument that Parliamentary silence or other statutory gaps demonstrate an intention to limit Part 5 to domestic property. Many of the perceived gaps are explicable once it is recognised that the domestic vesting effect will be subject to foreign law when property is abroad.
• The court treated s.286 (Scotland) as a provision addressing limits in Scots law and not as a device that negates the wider extraterritorial scope of Part 5 in the other jurisdictions. Analogies with insolvency law and authority on jurisdiction to make in personam orders affecting foreign-situated property supported the conclusion that a recovery order is not an exorbitant exercise of jurisdiction.
• The court also observed that international instruments such as the Strasbourg Convention and Part 11 of POCA provide mechanisms for overseas co-operation and enforcement where appropriate.

Outcome: the appeal was dismissed; the Court of Appeal affirmed that courts in England and Wales have power under Part 5 to make recovery orders in respect of property outside the jurisdiction, but emphasised that the trustee’s practical rights in such property depend on the law of the place where the property is situated.

Appeal dismissed. The Court of Appeal held that Part 5 of the Proceeds of Crime Act 2002 authorises a court in England and Wales to make civil recovery orders in respect of recoverable property wherever situated. The court explained that vesting property in the trustee gives a personal right against the respondent in all cases and, when the property is abroad, only such proprietary or enforcement rights as the law of the place where the property is situated supplies; perceived gaps in the statute and separate Scottish provisions do not undermine that conclusion.

Appeal from the Administrative Court (Mitting J) decision reported at [2010] EWHC 1711 (Admin); Mitting J had refused to vary a worldwide freezing order. Related prior Court of Appeal consideration of disclosure issues in SOCA v Perry and others [2010] EWCA Civ 907 [2011] 1 WLR 542 is discussed in the judgment. This judgment is reported as [2011] EWCA Civ 578.