National Crime Agency v Davies & Ors (rev 1)

Acquittal in related criminal proceedings does not, without more, prevent civil recovery proceedings under the Proceeds of Crime Act 2002. A property freezing order may be maintained where the enforcement authority establishes good arguable grounds that property is recoverable or associated property. A disclosure order requires reasonable grounds to suspect that the property is recoverable or associated. Alleged non-disclosure or bad faith in obtaining an ex parte order must be established before the court considers whether the wider public interest nevertheless requires the order to remain in force.

The National Crime Agency obtained property freezing and disclosure orders against the applicants and other respondents under sections 245A and 357 of the Proceeds of Crime Act 2002. The orders followed an ex parte hearing before Supperstone J on 16 January 2015.

The applicants had previously faced criminal allegations concerning mortgage applications said to contain false income and financial information. The prosecution subsequently collapsed and earlier guilty pleas were withdrawn. The applicants applied to discharge the civil orders, alleging material non-disclosure, inadequate investigation and, in the case of Shane Davies, bad faith. The central issues were whether the NCA had misled the ex parte court and whether the criminal acquittals prevented the property from being treated as potentially recoverable proceeds of unlawful conduct.

1. The applications to discharge the property freezing and disclosure orders were dismissed. The property freezing order was extended for six months and another respondent was joined.

2. The NCA had disclosed the prosecution response note in full to Supperstone J. Although the judge was not taken to every transcript or to all evidence concerning whether mortgage lenders relied on the representations, the material provided adequately explained the background, the acquittals and their significance. The alleged omission was not a deliberate surgical excision, and bad faith was not established.

3. An acquittal establishes that the applicants were not guilty of the criminal mortgage frauds alleged. It does not, without more, establish that the relevant funds were not the proceeds of unlawful conduct or prevent their recovery under the Proceeds of Crime Act 2002.

4. For a property freezing order, the NCA had to show good arguable grounds that the property was recoverable or associated property. For a disclosure order, it had to show reasonable grounds to suspect that the property was recoverable or associated. Those relatively low thresholds had been crossed. The property freezing order was an interim measure, while the disclosure order enabled the gathering of material for the eventual determination of the civil recovery proceedings.

5. If material non-disclosure or bad faith had been established, the court would still have had to consider whether the public interest required the orders to remain in force. Since neither non-disclosure nor bad faith was proved, that further issue did not require determination.

1. High Court (Administrative Court) — The applications to discharge orders made by Supperstone J on 16 January 2015 were dismissed.