The Serious Organised Crime Agency v Azam

An applicant seeking to use property subject to a property freezing order for legal expenses must persuade the court that this would be just in all the circumstances. The applicant does not bear a separate burden of proving that no other assets are available.

The court must refuse an exclusion if satisfied that other assets can meet the costs. Specific grounds for suspecting undisclosed assets may justify resolving evidential doubt against the applicant. Previous concealment, without any specific indication of further assets, is insufficient by itself.

The assessment must give proper priority to the statutory desirability of legal representation, particularly where the State seeks civil recovery of substantially all the applicant’s property.

The Serious Organised Crime Agency brought civil recovery proceedings against Amir Azam under Part 5 of the Proceeds of Crime Act 2002. A property freezing order covered all his known assets. Mr Azam applied to vary that order so that he could fund legal representation in the recovery proceedings.

Globe J refused the application in [2013] EWHC 1480 (QB). The judge found that Mr Azam had deliberately omitted a Luxembourg bank account from his asset disclosure and inferred that he had substantial undisclosed assets available for legal costs.

The central issue was whether an applicant must prove that no other assets are available, and whether the evidence permitted the inference that Mr Azam had further undisclosed assets.

1. Permission to appeal was granted on the first ground and the appeal was allowed. Permission was refused on the second ground. Lloyd LJ delivered the judgment, with which Moore-Bick and McFarlane LJJ agreed.

2. An applicant seeking a legal-expenses exclusion from a property freezing order must persuade the court that permitting expenditure from frozen assets would be just in all the circumstances. If the court is satisfied that other assets are available, whether belonging to the applicant or provided by another person, the exclusion will be refused.

3. The applicant does not bear a distinct burden of proving the negative proposition that no other assets exist. Where evidence provides specific grounds for suspecting undisclosed assets, the court may resolve evidential doubt against the applicant. Where no such indication exists, previous concealment and unreliable evidence do not alone establish that further assets probably exist.

4. The ordinary principles governing freezing orders protecting proprietary claims cannot simply be transposed to Part 5 of the Proceeds of Crime Act 2002. Civil recovery is a State confiscatory process which may extend to every known asset. The court must therefore give proper weight to article 6 and article 1 of the First Protocol, and to section 245 C(6), which gives priority to the desirability of legal representation over the need under section 245 C(8) to avoid undue prejudice to recovery.

5. Globe J was entitled to reject Mr Azam’s evidence and find that he had deliberately concealed the known Luxembourg account. He was not entitled to infer, without a specific evidential pointer, that other substantial assets existed. That inference was speculative.

6. There was consequently nothing to displace the desirability of representation. Having regard to the confiscatory nature of the proceedings, the Convention rights engaged, the absence of reliable evidence of other available assets and Mr Azam’s mental health, it was just to permit frozen assets to fund his representation through trial and judgment. The details and amounts of the exclusions were left for further submissions or agreement.

1. Court of Appeal (Civil Division): Permission to appeal was granted on the first ground and the appeal was allowed. Permission was refused on the second ground: [2013] EWCA Civ 970 .

2. High Court, Queen’s Bench Division: Globe J refused to vary the property freezing order to permit payment of future legal expenses and refused permission to appeal: [2013] EWHC 1480 (QB) .