N & CJ Horton Property v Ivan Norman & Conjoined Appeals

In civil proceedings alleging money laundering, the Anwoir test applies in full. Where the precise predicate offence is not identified, the circumstances in which property was handled must give rise to an irresistible inference that it could only have been derived from crime. The civil standard applies to proof of the primary facts and any factual inferences, but does not modify that legal test.

Individual indicia such as circuitous payments, fragmented payments, dormant intermediaries, inadequate documentation or uncommercial loan terms do not, without more, establish the necessary inference. Expert evidence may address recognised hallmarks of money laundering, but an expert may not usurp the court’s function by applying the legal test or expressing an opinion on the ultimate issue.

Master Clark dismissed applications by the Horton parties for permission to amend pleadings in two actions and granted reverse summary judgment in a third. The proposed amendments alleged that Ivan Norman, Dean Norman, Steven Crump and companies associated with them had participated in money-laundering schemes involving loans and payments made through several bank accounts.

The applications concerned whether the allegations had a real prospect of success, whether expert evidence from Mr Tim Care was admissible, and whether the allegations were adequately pleaded. The appeals challenged the Master’s refusal of permission to amend, her summary judgment decision and her refusal to admit the expert evidence.

1. Appeals dismissed. The court affirmed the Master’s Order. The Appellants had no real prospect of proving that the relevant advances were derived from criminal activity or that the Respondents participated in money laundering.
2. The Master applied the correct Anwoir test. The court must first determine the primary facts on the balance of probabilities. If the second limb of Anwoir is relied upon, the circumstances must then support the irresistible inference that the property could only have been derived from crime. The words “irresistible” and “only” materially qualify the test and are not displaced in civil proceedings.
3. The court was entitled to assess the particular payments forming the Respondents’ claims. The wider account transactions were irrelevant unless the Appellants identified the criminal property said to be the subject of the alleged offences under sections 327 to 329 of Proceeds of Crime Act 2002. The pleaded allegations failed to identify that property and therefore failed to give the Respondents adequate notice of the case they had to meet.
4. The alleged hallmarks of money laundering did not establish a real prospect of success. Circuitous payments and the use of CDS and HFR were capable of explanation by the Horton businesses’ overdraft difficulties. Fragmentation, informal documentation, lack of security, uncommercial terms and inconsistent accounts did not, individually or collectively, justify the necessary inference, particularly in light of evidence of legitimate sources of funds.
5. Mr Care’s evidence was inadmissible or, alternatively, unnecessary and unhelpful. He was capable of giving evidence about recognised features of money laundering, but his reports went further by applying a legal test and expressing conclusions that the Respondents had committed money-laundering offences. That was a matter for the court.
6. The court also upheld the alternative conclusion that the money-laundering allegations were defectively pleaded. The Appellants had not identified the criminal property, the relevant conduct, the applicable mental element, or the facts supporting alleged accessory or inchoate offences. The rolled-up pleas of knowledge and suspicion were inadequate.
7. The Order was affirmed. The court indicated that, had the appeals succeeded on merits, an opportunity to cure the pleading defects would have been appropriate. Directions for consequential matters and any application for permission to appeal were left to a further order.

• Chancery Appeals — Appeals from Master Clark’s decision reported at [2024] EWHC 2994 (Ch). The appeals were dismissed and the Order was affirmed.
• High Court, Chancery Division — Applications to amend were dismissed, reverse summary judgment was granted in the Crump action, and expert evidence applications were refused.