Serious Organised Crime Agency v Gale

The Supreme Court considered civil recovery proceedings under Part 5 of the Proceeds of Crime Act 2002 (POCA) and two principal issues: (1) the standard of proof required to establish that property is "obtained through unlawful conduct" under section 241(3) POCA, and (2) whether SOCA could recover investigation costs paid to an interim receiver appointed under section 246 as part of its costs of the civil recovery proceedings.

The court held that Part 5 proceedings are civil in nature and, applying the ordinary civil standard, the court must decide on the balance of probabilities whether the matters alleged to constitute unlawful conduct occurred (section 241(3)). The court rejected the appellants' submission that article 6(2) ECHR (presumption of innocence) requires proof beyond reasonable doubt in Part 5 proceedings, distinguishing Strasbourg authorities relied upon by the appellants and concluding that Geerings v The Netherlands and related authority did not require a contrary result. The court therefore upheld Griffith Williams J's application of the civil standard.

On costs, the court held that reasonable investigation costs incurred by SOCA in instructing and paying an interim receiver (appointed under section 246 and empowered by Schedule 6) were, in principle, "costs of and incidental to" the civil recovery proceedings within the court's wide discretion under section 51 of the Senior Courts Act 1981. The Court of Appeal was correct to allow recovery of those investigation costs subject to proportionality and detailed assessment under CPR.

Background and facts: The Serious Organised Crime Agency obtained a Part 5 civil recovery order against David and Teresa Gale for property valued at about 2 million. Griffith Williams J in the High Court found on extensive factual material that the wealth was derived from unlawful conduct (drug trafficking, money laundering and tax evasion), although David Gale had not been convicted of drug trafficking in the United Kingdom and had been acquitted in Portugal. An interim receiving order had earlier been made under section 246 and the interim receiver produced a lengthy investigatory report which formed the basis of the recovery proceedings.

Procedural posture: The High Court judgment (Griffith Williams J, [2009] EWHC 1015 (QB)) made a recovery order and ordered costs against the appellants but refused to include the interim receiver's investigation costs. SOCA appealed to the Court of Appeal, which allowed recovery of the receiver's investigative costs ([2010] EWCA Civ 759). The appellants appealed to the Supreme Court.

Issues:

• Whether section 241(3) POCA must be read down or declared incompatible with article 6(2) ECHR so that unlawful conduct alleged in Part 5 proceedings must be proved beyond reasonable doubt rather than on the balance of probabilities.
• Whether the court may order that the respondent pay SOCA's costs of the investigation performed by an interim receiver appointed under section 246 (including the receiver's remuneration) as costs of the civil recovery proceedings.

Court's reasoning and conclusions:

• On standard of proof: the court analysed Strasbourg and domestic authority (including Engel criteria) and concluded that Part 5 is civil in character and not a criminal charge for Article 6(2) purposes. The Supreme Court rejected the submission that article 6(2) imposes the criminal standard in Part 5 proceedings and concluded that section 241(3) properly requires the civil standard (balance of probabilities). The court distinguished Geerings and related Strasbourg decisions on their facts and procedural linkage to criminal trials and endorsed the view that, absent a close procedural link or explicit imputation of criminal liability in the civil judgment, article 6(2) does not apply so as to elevate the standard of proof.
• On costs: the court held that the investigatory work performed by the interim receiver under an interim receiving order (section 246 and Schedule 6) was integral to SOCA's bringing of the civil recovery claim. Under the court's broad costs jurisdiction in section 51 Senior Courts Act 1981 and the CPR, reasonable sums paid to the receiver for investigation were in principle recoverable as costs of and incidental to the proceedings, subject to assessment for reasonableness. The court distinguished authorities on receivership under other statutory schemes to the extent they left the receiver to look solely to the receivership assets and emphasised differences in Part 5.

Wider context: The court noted complexities and tensions in Strasbourg case-law on the interaction between criminal acquittal and subsequent civil proceedings, observed that a Grand Chamber consideration would be helpful, but concluded that on the facts and legal structure before it no reading down or declaration of incompatibility was required.

Appeal dismissed. The Supreme Court held that (1) Part 5 civil recovery proceedings under POCA are to be decided on the balance of probabilities under section 241(3), and article 6(2) ECHR does not require proof beyond reasonable doubt in those proceedings in the absence of a close procedural link to criminal proceedings or an imputation of criminal liability; and (2) SOCA may, in principle, recover reasonable investigation costs paid to an interim receiver appointed under section 246 as costs of and incidental to the civil recovery proceedings under section 51 Senior Courts Act 1981, subject to assessment and CPR reasonableness rules.

High Court (Griffith Williams J) judgment: [2009] EWHC 1015 (QB); Court of Appeal: [2010] EWCA Civ 759; appeal to the Supreme Court: [2011] UKSC 49.