The National Crime Agency v Atkinson & Anor

Under the Proceeds of Crime Act 2002, once property is shown on the balance of probabilities to be recoverable, the statutory scheme strongly favours a civil recovery order. The section 266 exception is narrow. The respondent must establish good faith, qualifying steps taken before or after obtaining the property, lack of notice that it was recoverable, and resulting detriment. The steps must be more than the acquisition itself and must have caused the alleged detriment. The exception is directed towards circumstances akin to proprietary estoppel and will rarely apply. A spouse’s innocent interest in jointly held property does not, without proof of the statutory conditions, prevent recovery of property obtained through fraud or criminal proceeds.

The National Crime Agency sought civil recovery orders under section 243(1) of the Proceeds of Crime Act 2002 in respect of properties, bank accounts and a watch. Mr Atkinson did not admit the unlawful conduct but did not oppose the order. Mrs Atkinson opposed including the matrimonial home, which she jointly owned, relying on the statutory exception in section 266.

The court determined the dispute concerning the property at the first day of the intended trial because of the defendants’ circumstances and the uncertainty that counsel would remain available. The central issues were whether the property was obtained through unlawful conduct and whether Mrs Atkinson established the section 266 exception.

1. The civil recovery order. The court found on the balance of probabilities that Mr Atkinson had engaged in drug dealing, money laundering and mortgage fraud. The matrimonial home had been obtained through mortgage fraud and deposits derived from money laundering the proceeds of drug dealing. It was therefore recoverable property.
2. The statutory exception. The burden lay on Mrs Atkinson to establish the section 266 conditions. She failed to show that she obtained the property in good faith. The evidence instead showed that funds said to come from family members and friends originated from Mr Atkinson or businesses used for money laundering.
3. Section 266(4)(b) required evidence of steps, beyond the mere acquisition of the property, which would not otherwise have been taken and which caused detriment. No such steps were proved. The alleged borrowing related, if anything, to obtaining the property and in any event was not genuine borrowing. There was no evidence that Mrs Atkinson had undertaken or funded later decoration or maintenance, and the security measures were attributable to Mr Atkinson.
4. Section 266(4)(d) consequently could not assist her. Without qualifying steps, there could be no detriment by reason of those steps. The court respectfully agreed with the observations of Andrews J in National Crime Agency v Amir Azam and Others (No. 2) [2014] EWHC 3573 (QB), including that the exception was directed towards a proprietary-estoppel type of situation and would rarely apply.
5. The court therefore made the civil recovery order in the form sought. It was unnecessary to conduct the section 266(6) balancing exercise, although the judge stated that the order would have been justified in any event by the public interest in recovery and the circumstances of the litigation.