Serious Organised Crime Agency v O'Docherty (aka Mark Eric Gibbons) & Anor

A final civil recovery order is not re-opened merely because a later judicial decision gives the governing statute a different construction. Re-opening under rule 52.17 requires real injustice, exceptional circumstances and no alternative effective remedy. The fact that an available point was not taken, and that the order was correct on the law then understood, prevents those conditions being met.

Where property has vested in the trustee under a civil recovery order, it ceases to be recoverable property. An existing property freezing order may continue until set aside or revoked, but section 245B(4) of the Proceeds of Crime Act 2002 requires its variation if the court decides that property has ceased to be recoverable. A later change in legal interpretation does not invalidate an order that was valid when made or excuse its breach.

SOCA obtained a property freezing order over assets held by Mr O’Docherty and Manncherty SL, including overseas property. Kenneth Parker J later made a final civil recovery order, declaring the assets recoverable and vesting them in a trustee for civil recovery: [2011] EWHC 3332 QB.

After the Supreme Court’s decision in Perry [2012] UKSC 35, the respondents sought to remove overseas property from the freezing order. Judge Spencer varied the order accordingly and refused SOCA’s application for powers of attorney over foreign property. SOCA appealed. The respondents also sought to re-open the earlier refusal of permission to appeal the civil recovery order and to challenge a committal order for contempt.

The central issues were the effect of Perry on pre-existing final orders and whether the statutory power to vary a property freezing order required the exclusion of overseas assets.

Decision

1. By a majority, Leveson LJ, with whom Richards LJ agreed, dismissed SOCA’s appeal against Judge Spencer’s variation order, although for different reasons. Mummery LJ dissented on that issue. The court also dismissed the respondents’ application to re-open the earlier refusal of permission to appeal and their proposed appeal against the committal order.

2. The civil recovery order of Kenneth Parker J was a final determination. Its liberty-to-apply provision supplied enforcement mechanisms only; it did not make the declaration that the property was recoverable provisional. The refusal of permission to appeal could therefore be re-opened only under rule 52.17 of the Civil Procedure Rules 1998. A subsequent construction of the statute in Perry [2012] UKSC 35 was neither exceptional nor a real injustice. The territorial point could also have been raised in the original proceedings or permission application.

3. The majority held that, once the civil recovery order vested the property in the trustee under section 266(2) of the Proceeds of Crime Act 2002, section 308(2) meant that it ceased to be recoverable property. A new statutory freezing order could not then be obtained because the good-arguable-case condition was unavailable. The existing order nevertheless remained effective until set aside or revoked. On an application to set it aside, section 245B(4) required its variation to exclude property which had ceased to be recoverable. The judge was thus entitled to exclude the overseas property and to refuse powers of attorney sought solely in relation to it. The court did not decide what steps the trustee might take to enforce the subsisting civil recovery order abroad.

4. The late challenge to King J’s variation order could not be made indirectly through the committal appeal. The order was valid when made and when breached. The later decision in Perry did not undermine the legitimacy of the order or the gravamen of the contempt. The court distinguished Motorola Credit Corpn v Uzan (No 2) [2003] EWCA Civ 752 and refused an extension of time, in any event rejecting the appeal on its merits.

5. Mummery LJ would have allowed SOCA’s appeal. In his view, the ancillary freezing order should have remained in force while the unvaried final civil recovery order subsisted. That view did not command the court.

• Court of Appeal (Civil Division): SOCA’s appeal from Judge Spencer’s variation order was dismissed by a majority. The court also dismissed the application under rule 52.17 of the Civil Procedure Rules 1998 and the proposed appeal from the committal order.
• High Court (Queen’s Bench Division): Judge Spencer varied the property freezing order to exclude overseas property and refused SOCA’s request for powers of attorney over foreign assets.
• High Court (Queen’s Bench Division): Kenneth Parker J made a civil recovery order declaring domestic and overseas assets recoverable and vesting them in a trustee for civil recovery: [2011] EWHC 3332 QB. The Court of Appeal had refused permission to appeal that order on 17 May 2012.