Gale and another v Serious Organised Crime Agency

Civil recovery proceedings under Part 5 of the Proceeds of Crime Act 2002 do not determine a criminal charge. The enforcement authority may therefore prove unlawful conduct on the balance of probabilities, as section 241(3) expressly requires.

A previous acquittal does not prevent an independent civil court from considering the same evidence under a civil standard. Article 6(2) may become relevant where the later proceedings are sufficiently connected with the criminal case or the court imputes criminal liability in language which undermines the acquittal.

The court’s broad costs jurisdiction includes reasonable investigative costs incurred by an interim receiver where that investigation was integral to civil recovery proceedings. This does not determine whether the receiver’s management costs are recoverable.

SOCA obtained a recovery order under Part 5 of the Proceeds of Crime Act 2002 for property worth about £2 million held by David Gale and his former wife. The High Court, in [2009] EWHC 1015 (QB), found on the balance of probabilities that the property derived from drug trafficking, money laundering and tax evasion. Mr Gale had previously been acquitted of drug trafficking in Portugal, while proceedings in Spain had been discontinued.

The Court of Appeal, [2010] EWCA Civ 759; [2010] 1 WLR 2881, rejected the appellants’ human-rights challenge. It also allowed SOCA’s cross-appeal and held that its recoverable costs could include the interim receiver’s investigative remuneration.

The issues were whether article 6(2) required the alleged unlawful conduct to be proved beyond reasonable doubt and whether the investigation costs were costs of or incidental to the civil recovery proceedings.

1. Both limbs of the appeal were dismissed unanimously. Lord Phillips gave the leading reasons on the standard of proof, with Lord Mance, Lord Judge and Lord Reed agreeing. Lord Brown agreed with those reasons, and Lord Clarke and Lord Dyson reached the same result. Lord Clarke gave the leading judgment on costs, with the other members of the court agreeing.

2. Part 5 proceedings under the Proceeds of Crime Act 2002 were civil in classification, nature and consequence. They operated against recoverable property and neither determined nor punished a particular criminal offence. Section 241(3) therefore validly required SOCA to prove unlawful conduct on the balance of probabilities. The contrary obiter opinions in R v Briggs-Price [2009] UKHL 19 were not accepted; the common ground in the opinions of Lord Phillips, Lord Brown and Lord Mance in that case supported use of the civil standard.

3. Mr Gale’s Portuguese acquittal did not prevent the English court from considering evidence used in Portugal. The civil recovery proceedings were free-standing and had no procedural connection with the Portuguese prosecution. Their evidence also ranged substantially beyond that prosecution. The reasoning in Geerings v The Netherlands (2007) 46 EHRR 1222 did not establish that every allegation of criminal conduct in confiscation or recovery proceedings had to be proved beyond reasonable doubt.

4. Lord Dyson explained that otherwise civil proceedings may fall within article 6(2) if their relationship with criminal proceedings is sufficiently close or if the later court imputes criminal liability in language which casts doubt on an acquittal. Lord Clarke expressly agreed that the trial judge had made no such imputation. The judge had determined whether the appellants’ wealth was obtained through unlawful conduct, rather than whether Mr Gale committed the particular Portuguese offences.

5. On costs, section 51 of the Senior Courts Act 1981 conferred a broad jurisdiction over costs of and incidental to proceedings. The interim receiver’s investigation was essential to identifying recoverable property and assembling the evidence required for SOCA’s claim. Reasonable sums paid by SOCA for that work were therefore recoverable in principle as litigation costs.

6. The ordinary rule that a receiver looks to receivership assets for remuneration did not govern this statutory scheme. A Part 5 interim receiver had no general power of sale or lien over the assets, was paid by SOCA, and had a statutory investigative function. SOCA v Wilson [2009] NICA 20 was disapproved. Recovery remained subject to detailed assessment and the prohibition in CPR rule 44.4(1) on costs unreasonably incurred or unreasonable in amount. The court left the recoverability of management costs open.

1. United Kingdom Supreme Court: The appellants’ appeal was dismissed on both the standard-of-proof and investigation-costs issues: [2011] UKSC 49 .
2. Court of Appeal: The appellants’ challenge to the civil standard was rejected. SOCA’s cross-appeal was allowed, and the interim receiver’s investigative remuneration was held recoverable in principle as costs: [2010] EWCA Civ 759 ; [2010] 1 WLR 2881 .
3. High Court: Griffith Williams J made a civil recovery order but refused to include the interim receiver’s investigative remuneration in the costs payable by the appellants: [2009] EWHC 1015 (QB) .