John Hamilton & Anor v Abigail Marshall Katung & Ors

Payment of a deposit under a contract for the sale of land does not confer an additional proprietary interest in the land. The buyer’s interest is the equitable interest arising from the contract itself, subject to its contractual terms and any valid relief from forfeiture. For Proceeds of Crime Act 2002 purposes, “associated property” requires a proprietary right cognisable in law or equity. Purely contractual rights are insufficient. Where no associated property exists, the recoverable property may vest in the trustee in its entirety, without credit for contractual payments. A buyer’s remedy concerning a penal deposit lies against the seller, not against the enforcement authority standing in the seller’s shoes for civil recovery purposes.

The National Crime Agency brought conjoined civil recovery and possession proceedings concerning residential property purchased by Mr Hussain, whose interest had been accepted to be recoverable property under Proceeds of Crime Act 2002. Mrs Katung had contracted to buy the property and paid a substantial deposit, but failed to complete. The property was subsequently vested in the Trustee for Civil Recovery, and the NCA served notices to complete and rescind before obtaining a possession order.

An earlier appeal concerning possession, relief from forfeiture, proportionality and article 8 considerations was directed to be determined by the High Court with the POCA claim. The central questions were whether Mrs Katung had an interest amounting to “associated property” under section 245 and, if so, whether that interest was itself recoverable property.

1. Outcome. The NCA succeeded on both the civil recovery and possession claims. The existing civil recovery order was treated as vesting the entirety of the property in the Trustee. No credit was due for the deposit payments, and the NCA was entitled to possession and its costs.
2. Nature of the buyer’s interest. On signing the contract, Mrs Katung acquired an equitable or beneficial interest in the whole property. On completion that interest would have crystallised into a legal interest. Failure to complete following a valid notice to complete would cause the beneficial interest to evaporate, subject to any relief from forfeiture.
3. Section 245. Payment of the deposit did not create a separate or additional beneficial interest equivalent to the amount paid. “Associated property” under section 245 means a proprietary right cognisable in law or equity. It does not include purely contractual rights between buyer and seller. The deposit therefore was not associated property, and the whole property remained recoverable property.
4. Penalty and relief from forfeiture. The unusually large deposit was in the nature of a penalty, applying Workers Trust & Merchant Bank Ltd v Dojap Investments Ltd [1993] AC 573. Any relief from forfeiture or repayment remedy lay in personam against Mr Hussain. It was not justiciable against the NCA in the financial claim.
5. Alternative issue. The majority of the payments were made through arrangements amounting to a foreign-exchange business conducted through Mrs Katung’s company to circumvent Nigerian exchange regulations or avoid an unfavourable exchange rate. On the conceded analysis, sums received through an unlicensed exchange business were recoverable property. This issue was unnecessary to the result because the proprietary analysis was decisive.

1. High Court (King’s Bench Division): the present conjoined POCA and possession proceedings were determined at first instance following directions given after the possession appeal was transferred for determination with the civil recovery claim.
2. County Court: DDJ Waite granted possession on 15 September 2021 and refused further time for completion.
3. County Court appeal: HHJ Gosnell dismissed the appeal on 4 April 2022 after granting permission on an article 8 issue.
4. Court of Appeal: Asplin LJ granted permission to appeal and a stay on 2 August 2022. The hearing was later vacated by consent, and Lewison LJ directed that the relevant issues be determined by the High Court sitting at first instance with the POCA claim.