Perry and others v Serious Organised Crime Agency

Part 5 of the Proceeds of Crime Act 2002 does not give the High Court power to make a civil recovery order in respect of property outside England and Wales. The definition of property as property wherever situated is context-dependent. Read with the Act’s structure, its international co-operation scheme and ordinary principles of territorial jurisdiction, Part 5 provides for in rem recovery of property within the relevant United Kingdom jurisdiction.

A property freezing order under Part 5 cannot extend to property which could not be the subject of a recovery order. A disclosure order cannot authorise information notices to persons outside the United Kingdom. Such notices impose positive obligations backed by criminal sanctions, and clear words would be required to give them extraterritorial effect.

SOCA sought to recover assets said to represent the proceeds of fraud for which Mr Perry had been convicted in Israel. It obtained a worldwide property freezing order under Part 5 of the Proceeds of Crime Act 2002 and, separately, a disclosure order under Part 8.

In the property-freezing proceedings, Mitting J held that Part 5 extended to property worldwide: [2010] EWHC 1711 (Admin); [2010] 1 WLR 2761. The Court of Appeal upheld that conclusion: [2011] EWCA Civ 578; [2011] 1 WLR 2817. In the disclosure proceedings, the Court of Appeal majority held that information notices could validly be sent to the appellants while outside the jurisdiction: [2010] EWCA Civ 907; [2011] 1 WLR 542.

The central questions were whether Part 5 permits recovery and freezing orders over foreign property, and whether a disclosure order permits penal information notices to persons outside the United Kingdom.

1. Both appeals were allowed. The property-freezing appeal was allowed by a majority of seven to two. The disclosure-order appeal was allowed unanimously.
2. Per Lord Phillips, with whom Lady Hale, Lord Brown, Lord Kerr and Lord Wilson agreed, Part 5 civil recovery is concerned with property situated within the territorial jurisdiction of the court making the order. Section 316(4)'s reference to property wherever situated does not attach those words to every use of “property”. Its territorial effect depends on context. The definition remains effective because property in the jurisdiction may represent property unlawfully obtained elsewhere.
3. The statutory scheme confirmed that construction. Parts 2 to 4 impose worldwide personal confiscation obligations following conviction, but provide for foreign property to be secured or realised through requests for overseas assistance. Part 5 contains no equivalent mechanism. Its vesting, realisation, registration, third-party protection and exemption provisions are coherent where the property is within the relevant United Kingdom jurisdiction. They would be ineffective or incoherent if Part 5 purported to transfer title to foreign property without a sufficient connection to this jurisdiction.
4. The Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime permits international co-operation in confiscation. It did not support SOCA’s proposed assertion of civil-recovery jurisdiction over foreign property where neither the property nor its holder had a relevant connection with the United Kingdom. Section 286, concerning Scotland, was anomalous and did not justify a different construction for England and Wales.
5. Accordingly, the High Court had no jurisdiction under Part 5 to make a recovery order concerning property outside England and Wales. The worldwide property freezing order had to be redrawn so as to apply only to property within the court’s jurisdiction. The Court left open whether its general descriptions of property and its disclosure requirements otherwise satisfied section 245A.
6. As to disclosure, sections 357 and 359 impose compulsory information obligations enforceable by criminal sanction. Per Lord Phillips, it was implicit that this authority extends only to persons within the United Kingdom. The disclosure order did not authorise information notices to persons outside it.

Lord Reed agreed with Lord Phillips and added observations on the uncertain effect of section 286. Sir Anthony Hughes agreed, while observing that a limited statutory jurisdiction based on a substantial territorial connection might be desirable but could not be achieved by construction. Lord Judge and Lord Clarke dissented on the property-freezing issue, but agreed that the disclosure appeal should succeed.

• United Kingdom Supreme Court: Allowed both appeals: [2012] UKSC 35. The property-freezing appeal succeeded by a majority; the disclosure-order appeal succeeded unanimously.
• Court of Appeal: Dismissed the property-freezing appeal and held that Part 5 extended to property worldwide: [2011] EWCA Civ 578; [2011] 1 WLR 2817.
• Court of Appeal: By a majority, rejected the challenge to information notices served on persons outside the jurisdiction: [2010] EWCA Civ 907; [2011] 1 WLR 542.
• High Court: Mitting J largely refused to vary the worldwide property freezing order: [2010] EWHC 1711 (Admin); [2010] 1 WLR 2761.