National Crime Agency, R (on the application of) v Westminster Magistrates' Court

On an application to set aside an account freezing order, the court must reconsider, on all material then before it, whether there are reasonable grounds for suspecting that the statutory conditions are met. A change of circumstances is not a precondition to that power. The court must then exercise its discretion lawfully and fairly, having regard to the statutory scheme, the conduct of the enforcement agency and any fairness concerns.

Applications to vary an order require a separate evaluative assessment. The court must consider reasonable living expenses, other available assets and the risk of undue prejudice to forfeiture proceedings. A sanctions licence does not bind the court, enlarge its powers or determine whether funds are intended for unlawful conduct.

Following sanctions imposed on Petr Olegovich Aven, the National Crime Agency obtained without-notice account freezing orders under the Proceeds of Crime Act 2002 in respect of accounts operated by Ingliston Management Ltd and Lodge Security Team Ltd.

The companies applied to Westminster Magistrates’ Court to set aside or vary the orders. The District Judge refused to set them aside but permitted specified payments corresponding to a Treasury licence issued under the Russia (Sanctions) (EU Exit) Regulations 2019.

The companies challenged the refusal to set aside the orders. The NCA challenged the variation. The central issues were the correct statutory approach to setting aside an account freezing order and the proper approach to exclusions from such an order.

1. The set-aside decision. The claim by Ingliston Management Ltd and Lodge Security Team Ltd succeeded. Under section 303Z4 of the Proceeds of Crime Act 2002, the threshold for setting aside an account freezing order is the same as that for making one under section 303Z3: whether the court is satisfied that there are reasonable grounds for suspecting that money in the account is recoverable property or intended for unlawful conduct.
2. A court may need to evaluate an updated and evolving factual matrix. It must consider the statutory threshold afresh, but a change of circumstances is not a legal precondition to entertaining the application. The District Judge unlawfully imported that restriction by analogy from other statutory schemes.
3. The District Judge did not apply the statutory test to the facts, make necessary findings or give adequate reasons. The errors were fundamental. The decision could not be upheld on the basis that only one lawful outcome was available, because the issues were fact-sensitive and evaluative.
4. The variation decision. The variation order also had to be set aside because it depended materially on the unsustainable refusal to set aside the orders. Applications for exclusions under section 303Z5 require consideration of reasonable living expenses, the applicant’s ability to meet them from other available assets, and whether granting the exclusion would cause undue prejudice to forfeiture steps.
5. A Treasury licence under the Russia (Sanctions) (EU Exit) Regulations 2019 merely exempts specified transactions from criminal consequences under the sanctions regime. It does not confer a power or duty to make those transactions, bind the court, limit its powers under POCA or determine whether the funds are intended for unlawful conduct.
6. The judgment and variation order of 18 July 2022 were set aside. The set-aside application was to be remitted for a fresh hearing de novo, and the variation application was to be reconsidered if still pursued.

This was a first-instance judicial review of decisions made by Westminster Magistrates’ Court. The High Court set aside the District Judge’s refusal to discharge the account freezing orders and the associated variation order, with the applications to be reheard in the Magistrates’ Court.