National Crime Agency & Anor v Odewale & Anor

Under Chapter 2 of Part 5 of the Proceeds of Crime Act 2002, civil recovery requires proof on the balance of probabilities that property was obtained by or in return for unlawful conduct. The enforcement authority need not prove a particular criminal offence, but must establish a causal connection with criminal conduct of a relied-on kind.

Unexplained wealth and absence of legitimate income cannot alone establish recoverability, but may materially support the overall inference. Mixed property is recoverable only to the extent attributable to recoverable property. In tracing, the court may adopt the method most appropriate to the circumstances.

The section 308 defence requires good faith, market value and absence of notice. Notice includes actual notice, deliberate blindness and constructive notice arising where an honest and reasonable person would be put on inquiry.

The National Crime Agency sought civil recovery orders concerning luxury watches, bank-account balances and a personalised registration plate said to derive from identity-theft frauds and money laundering. National Westminster Bank Plc was joined because it claimed proprietary rights in property representing funds fraudulently taken from its customers.

The defendants denied unlawful conduct and relied on legitimate trading, gambling, loans, gifts and property transactions. The principal issues were whether the assets were recoverable property, whether property held by the second defendant had ceased to be recoverable under section 308 of the Proceeds of Crime Act 2002, and whether NatWest was entitled to declarations under section 281.

1. Recoverability. The court found that the disputed assets represented property obtained through identity-theft frauds and subsequent laundering. Under sections 241, 242, 304–307 and 305 of the Proceeds of Crime Act 2002, the NCA was not required to prove a specific offence. It was sufficient to establish on the balance of probabilities that the assets were obtained by or in return for unlawful conduct of a relied-on kind. The defendants’ unexplained wealth, lack of legitimate income, previous fraud convictions, suspicious transactions and implausible explanations materially supported that conclusion.
2. Tracing and mixing. The court applied section 306 and held that the recoverable proportion of mixed property remained recoverable. Tracing under POCA is sui generis, and the court may select the method most appropriate to the facts. It was appropriate to trace legitimate funds to legitimate expenditure where possible and to avoid double counting.
3. Section 308 defence. Good faith and absence of notice are separate requirements. Notice is not equivalent to suspicion for the money-laundering offences or to the unconscionability test in knowing receipt. It includes actual notice, deliberate blindness and constructive notice where the circumstances would put an honest and reasonable person on inquiry. Ms Yadav had actual or constructive notice and had not acted in good faith or provided value.
4. NatWest’s proprietary claims. NatWest was the victim of the relevant frauds because it had reimbursed its customers and borne the loss. Applying Westdeutsche Landesbank v Islington LBC and Re D & D Wines International Ltd, it could trace the misapplied funds into Patek 1 and the proceeds of Patek 5004P. Those sums were not recoverable property under section 281.
5. Disposition. Recovery orders were made for the disputed assets, subject to NatWest’s election as to the tracing route. Patek 1 and the relevant proceeds were declared NatWest’s property and were to be paid to the Bank.

The claim was issued in the High Court on 4 December 2017. The judgment records earlier restraint, property-freezing and disclosure orders, but no appeal from the present decision.