Serious Organised Crime Agency v Coghlan & Anor

Part 5 civil recovery proceedings are free-standing civil proceedings. A criminal acquittal does not prevent recovery on the balance of probabilities unless the proceedings are procedurally linked. The court may draw commonsense inferences from unexplained expenditure, lifestyle and the handling of property, although absence of lawful income alone is insufficient. Hearsay evidence must be assessed under the Civil Evidence Act 1995, with its weight depending on the circumstances and reliability of the material. Under section 308 of the Proceeds of Crime Act 2002, a transfer of recoverable property to a domestic partner is protected only where the recipient obtains it in good faith, for market value and without notice. A transfer without evidence of value remains recoverable.

The claimant brought civil recovery proceedings under Part 5 of the Proceeds of Crime Act 2002 concerning a house and land jointly occupied by the respondents. It alleged that the first respondent had acquired an interest in the property with proceeds of drug dealing and had used a series of transactions to conceal that interest. The first respondent denied drug dealing and maintained that he had been a tenant before purchasing the property with a 100 per cent mortgage. The second respondent became a joint owner in 2009 and relied on section 308 of the Act. The central issues were whether the property was recoverable property, how contested hearsay evidence should be assessed, and whether the second respondent had acquired her interest for value and in good faith without notice.

1. The Chapel was recoverable property. The court was satisfied on the balance of probabilities that the first respondent had engaged in drug dealing between 1999 and at least April 2004 and that this was the source of his income. The conclusion rested on the evidence of Durr, the respondent’s lifestyle and expenditure, unexplained cash and renovation costs, and the absence of any credible lawful income. The court reached that conclusion without relying on the Lowdham Grange evidence or most of the Gregory evidence concerning drug dealing.
2. Part 5 proceedings are not proceedings to determine or punish a particular criminal offence. They are free-standing civil proceedings. The court may draw inferences from a failure to explain expenditure or from an untruthful explanation, but a recovery order cannot be based solely on the absence of identifiable lawful income.
3. The Lowdham Grange material was formally admissible but received no weight. The selected extracts might not have fairly reflected the underlying conversations. The Durr statement was given weight after considering the matters identified in section 4(1) and (2) of the Civil Evidence Act 1995. The Gregory evidence concerning drug dealing carried very little weight, but its evidence concerning the Chapel was relevant.
4. The first respondent had an earlier beneficial interest in the Chapel which had been concealed through the transactions involving Kayes and Blue Moon. The purchase, development, undervalue sales and later mortgage transaction were inconsistent with a genuine arm’s-length tenancy and supported the conclusion that the property derived from unlawful conduct.
5. Under section 308 of the Proceeds of Crime Act 2002, a transfer to a spouse or domestic partner is not invariably incapable of being for value. However, the second respondent had not shown that she gave market value for the transfer into joint names. The transfer was instead part of the first respondent’s attempt to place the property beyond SOCA’s reach. Her interest therefore remained recoverable.
6. The court ordered that the Chapel be vested in the Trustee for Civil Recovery.

First-instance proceedings. No appellate history was stated in the judgment.