Ivan Norman v N & CJ Horton Property (a firm)

For an amendment to be permitted, the proposed case must have a real prospect of success. It must be coherent, properly particularised and supported by evidence establishing a sufficiently arguable factual basis. In civil money-laundering allegations under the Proceeds of Crime Act 2002, the test in R v Anwoir applies in full: the circumstances must give rise to an irresistible inference that the property could only have been derived from crime. Suspicious features, individually or collectively, must meet that threshold. Expert evidence cannot replace the judge’s assessment of the underlying facts and the statutory test, and is not reasonably required where the proposed expert merely identifies indicia of money laundering. On the evidence, the alleged loans and payment patterns did not provide a real prospect of establishing the required inference.

The judgment determined three related applications in the Ivan, Dean and Crump claims. The Horton parties sought amendments introducing allegations that loans and related payments formed part of a dishonest money-laundering scheme. In the Crump claim, the claimants sought strike out or summary judgment against the pleaded money-laundering defence. The applications raised the legal test for proving criminal property where no specific predicate offence could be established, whether the pleaded facts had a real prospect of satisfying that test, whether the allegations were adequately particularised, and whether proposed expert evidence was admissible and reasonably required.

1. Applications and applicable threshold. The proposed amendments had to carry some degree of conviction, be coherent and properly particularised, and be supported by evidence establishing a sufficiently arguable factual basis. The same evidential approach applied to the assessment of the pleaded money-laundering case. The court also distinguished the evidence available on summary judgment from the facts assumed on a strike-out application.
2. Money laundering. Sections 327–329 of the Proceeds of Crime Act 2002 are predicated on property already being criminal property. Applying R v Anwoir, the civil test requires proof, on the balance of probabilities, that the circumstances in which the property was handled gave rise to an irresistible inference that it could only have been derived from crime. The wording was not modified in civil proceedings by the more compressed formulation used in SOCA v Namli.
3. Evidence and alleged indicia. The evidence showed that the Horton parties received and used the relevant monies, had knowledge of the loans, and had financial need for them. Direct payments, limited use of intermediaries, short-term movement of funds, informal or unsecured terms, lack of formal documentation, inconsistent descriptions and alleged lies did not, singly or cumulatively, provide a real prospect of satisfying the Anwoir threshold. The explanations concerning overdraft pressures, business funding and the sources of the funds were capable of being innocent.
4. Expert evidence. Although expertise may be established through study and experience, the proposed expert’s evidence did not assist with the legal question whether an irresistible inference arose. His earlier reports applied an incorrect test, and the later report relied on incomplete material. The evidence was therefore inadmissible or, alternatively, neither necessary nor reasonably required under CPR 35.1.
5. The Horton parties consequently had no real prospect of establishing the money-laundering defence or the proposed allegations. The amendment applications were refused and the strike-out/summary-judgment application succeeded in substance. It was unnecessary to decide the alternative particularisation issue.