National Crime Agency v Azam & Ors (No. 2)

Part 5 of the Proceeds of Crime Act 2002 establishes a statutory scheme under which the court must make a civil recovery order once property is found to be recoverable, subject only to the statutory safeguards. An innocent recipient of criminal property cannot avoid recovery merely because deprivation would be harsh or because the recipient may have a prospective matrimonial claim. The defence under section 266(3)(a) requires proof of every condition in section 266(4), including detrimental reliance on the expectation of obtaining the property. A prospective claim for financial relief is not a protected possession or legitimate expectation under article 1 of Protocol 1 where it is neither currently enforceable nor sufficiently established.

The National Crime Agency sought civil recovery orders under Part 5 of the Proceeds of Crime Act 2002 concerning properties held by Amir Azam and members of his family. In the earlier trial, the court found Thurza Court and Wheatash Road to be recoverable property.

Kalsoom Sanam, Mr Azam’s former wife, claimed that she was an innocent recipient of Thurza Court and had an interest in Wheatash Road. She relied on the statutory defence in section 266(3)(a), on the Convention-rights safeguard in section 266(3)(b), and on a possible claim for financial relief under Part III of the Matrimonial and Family Proceedings Act 1984. The issues were whether those matters prevented or modified the mandatory making of recovery orders.

1. Mandatory recovery order. Once the court is satisfied that property is recoverable, section 266(1) requires a recovery order. Section 266(3)(a) is not confined to the terms of an order: where its conditions are met and provision concerning the property would not be just and equitable, the court may not make a recovery order in respect of that property.
2. Thurza Court. Kalsoom obtained the registered property in good faith, despite the transfer having been made by a person with only legal title. The beneficial owner intended and procured the transfer as an outright gift. However, she failed to satisfy section 266(4)(b) and (d). She had not shown that, before obtaining the property, she took steps she would not otherwise have taken, or that the detriment caused by recovery arose by reason of such steps. The provision was directed at a proprietary-estoppel-type case involving reliance and detriment. Even where section 266(4) is satisfied, section 266(6) gives no automatic right to retain the property; the court must balance the recipient’s detriment against the enforcement authority’s interest.
3. Convention rights and financial relief. The statutory civil recovery scheme does not, merely because it affects an innocent recipient, violate article 1 of Protocol 1. A prospective claim for financial relief under Part III of the Matrimonial and Family Proceedings Act 1984 was not a sufficiently established, currently enforceable claim and therefore did not constitute a protected possession or legitimate expectation. There was no statutory or settled domestic-law basis for giving such a claim priority over civil recovery.
4. The court refused permission to amend the defence to raise a new article 1 of Protocol 1 case because the application was made at a very late stage and would materially prejudice the NCA. The court was obliged to make recovery orders in respect of Thurza Court and Wheatash Road.