National Crime Agency v Leahy & Ors

The court may vary or discharge a property freezing order under section 245B of the Proceeds of Crime Act 2002 by exercising a broad discretion on familiar interlocutory principles. The balance of convenience must be assessed in the statutory context, including the public interest in preserving suspected recoverable property, the duration and burdens of the order, valuation uncertainty, potential future appreciation, and statutory compensation safeguards. In contested civil recovery proceedings under Part 8, specific disclosure may be ordered instead of standard disclosure where the pleadings identify the issues and the order is fair and proportionate. Costs budgeting may also be ordered where substantial factual disputes and oral evidence make costs management appropriate.

The National Crime Agency brought a civil recovery claim under sections 243 and 266 of the Proceeds of Crime Act 2002 concerning 43 properties and rental income. A property freezing order made under section 245A covered 41 properties at the time of the application. The defendants sought its discharge, or alternatively the release of 14 properties in return for paying money into court.

The court also determined whether the Part 8 proceedings should require standard disclosure under CPR 31.6, whether witness statements should be exchanged sequentially, and whether costs budgets should be ordered.

1. The application to discharge or vary the property freezing order was refused. Section 245B conferred a general discretion. Without deciding whether the point was governed in every case by the same principles as a commercial freezing injunction, the court assessed the balance of convenience.
2. The defendants’ financial and personal difficulties were substantial, but the order had already been varied to facilitate the property business. The court also considered the compensation safeguard in section 283 of the Proceeds of Crime Act 2002.
3. The balance nevertheless favoured continuation. The proposed valuation was uncertain, particularly for a mixed portfolio during the Covid-19 disruption. There was also a significant risk that releasing the properties in exchange for a valuation would allow the defendants to benefit from future increases in property value if the Agency ultimately succeeded.
4. The court declined to require standard disclosure under CPR 31.6. Although the claim involved serious disputed allegations and extensive investigative material, the pleadings had identified the issues and the defendants already possessed substantial documentation. Simultaneous exchange of evidence followed by specific disclosure on reasonable requests was fair and proportionate. SOCA v Pelekanos [2009] EWHC 2307 was materially different in its procedural circumstances.
5. Witness statements were to be exchanged simultaneously. Costs budgets were ordered because the Part 8 proceedings involved substantial disputes of fact and were likely to require oral evidence, with disclosure dependent on the requests made.