Neutral Citation Number: [2010] EWCA Civ 143 Case No: A2/2009/1013 IN THE HIGH COURT OF JUSTICE COURT OF APPEAL (CIVIL DIVISION) ON APPEAL FROM THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION MR JUSTICE HOLROYDE HQ07X04240 Royal Courts of Justice Strand, London, WC2A 2LL 26/02/2010 B e f o r e : LORD JUSTICE RIX LORD JUSTICE WILSON and SIR SCOTT BAKER ____________________ Between: RONALD OLDEN Appellant - and - SERIOUS ORGANISED CRIME AGENCY Respondent ____________________ (Transcript of the Handed Down Judgment of WordWave International Limited A Merrill Communications Company 165 Fleet Street, London EC4A 2DY Tel No: 020 7404 1400, Fax No: 020 7404 1424 Official Shorthand Writers to the Court) ____________________ Ivan Krolick (instructed by Mjp Justice Limited) for the Appellant Kennedy Talbot (instructed by Legal Department, Serious Organised Crime Agency) for the Respondent Hearing date: 30TH NOVEMBER 2009 ____________________ HTML VERSION OF JUDGMENT ____________________ Crown Copyright © Sir Scott Baker: 1. This appeal, which is brought by the permission of Aikens LJ, raises issues under Part 5 of the Proceeds of Crime Act 2002 ("The 2002 Act") in relation to property alleged to be or to represent the proceeds of the unlawful conduct of Mr Olden. On 25 March 2009, following a hearing lasting 7 days, Holroyde J allowed an application by the Serious Organised Crime Agency ("SOCA") and made a recovery order in respect of the following assets: (1) The legal and beneficial interest in Flat 4, Plas Dyffryn, Parc-y-Bryn, Aberystwyth, SY23 2DI; (2) The legal and beneficial interest in 1, Side Street, Penparcau, Aberystwyth, SY23 1BS; (3) The credit balance in accounts numbered 60068124 and 60068116 at the National Westminster Bank in the name Messrs Bishop and Light, solicitors; (4) A B K Carnival residential caravan at Aberystwyth Holiday Village; (5) A Mitsubishi Shogun, registration number Y104 ENN; (6) The proceeds of sale of a Mazda, registration number CU52 XPA held in a Nationwide Building Society account number 65221326 in the name of Mr Olden. 2. The judge also made various ancillary orders that are not directly relevant to this appeal. On 31 March 2009, following further argument the same judge made possession orders in respect of 1, Side Street, the residential caravan and Flat 4. 3. The background to the present civil proceedings is that in February 2006 Mr Olden was convicted in the Crown Court at Cardiff of 3 counts of obtaining property by deception, 17 counts of obtaining money transfers by deception and 2 counts of obtaining services (the use of bank accounts) by deception. He was sentenced to a total of 4 years imprisonment but his conviction was set aside by the Court of Appeal (Criminal Division) on 9 March 2007 on the ground that his conviction was unsafe because he had been unlawfully arrested and that the interview and searches that followed from that arrest were unlawful. The material discovered by the police in interview and by the subsequent searches was of considerable importance in the case and the appeal therefore had to succeed. 4. Following the decision of the Court of Appeal (Criminal Division) the Assets Recovery Agency ("the ARA") received a referral from the South Wales Police and successfully applied to the High Court for a property freezing order to replace the restraint order that had been imposed by the Crown Court. The broad nature of the civil proceedings was that Mr Olden had been engaged in unlawful conduct in the form of mortgage frauds and other deceptions and that the ARA was entitled to bring civil recovery proceedings under Part 5 of the 2002 Act to retrieve what he had obtained. The case was largely about mortgage transactions and the adoption of false identities by Mr Olden. Having been made bankrupt in 1998, he bought properties in one of three false names, with mortgage advances under those false names using false employment references. 5. The judge disbelieved much of what Mr Olden said in evidence and found in favour of SOCA in respect of all the assets which were said to be recoverable property and ordered that he deliver up possession of all those assets to the trustee for civil recovery (forthwith in respect of everything other than the flat in which he lived and after a short period of time in respect of that flat). Background to the Legislation 6. Before turning more specifically to the material legalisation it is desirable to say something about the relationship between criminal prosecution and the recovery of unlawfully obtained property under the 2002 Act. 7. The present claim was started by the Director of the ARA in January 2008. At that time the 2002 Act was in unamended form. On 1 April 2008 the ARA and the Director of the ARA were abolished by the Serous Crime Act 2007 and the ARA's functions were transferred to SOCA, a statutory body itself created by the Serious Organised Crime and Police Act 2005 ("the 2005 Act"). The Home Secretary issued guidelines to the ARA in 2005 as required under the original unamended legislation and to SOCA in 2009 as required by the amended legislation. 8. Part 1 of the 2002 Act created the ARA and the Office of the Director whose functions are set out in section 2. Neither the ARA nor its Director was ever a prosecuting authoring. They were given certain powers under the 2002 Act but had no power to conduct a prosecution or a criminal investigation. As Collins J put it in Director of the Assets Recovery Agency v He and Chen [2004] EWHC 3021 at para 13: "Thus, the approach of the Director must be to let criminal proceedings take precedence, as it were, and only act if such proceedings are either not being taken or for any reason may have failed, if notwithstanding their failure or the inability for whatever reason to take them, she takes the view that she can establish within the requirements of the Act that the property in question was unlawfully obtained." 9. The Secretary of State's guidance reflected section 2 (6) which provided that it must indicate that the reduction in crime is in general best secured by means of criminal investigations and criminal proceedings. 10. SOCA is a non-departmental public body sponsored by but operationally independent of the Home Office. It is directly accountable to the Government and is headed by the Director General. 11. SOCA's powers and functions are set out in sections 2 – 5 of the 2005 Act. It is responsible, inter alia, for the gathering, storing, analysing and dissemination of information relevant to the prevention, detection, investigation or prosecution of offences or to the reduction of crime by other means or the mitigation of its consequences. Its function is in relation to crime at large, and not just to serious organised crime as it provides information to police forces, special police forces and other law enforcement agencies in the discharge of their functions. SOCA is not a prosecuting authority, there are however provisions in the legislation for the sharing of information between SOCA and prosecuting authorities. In the 2005 Act as originally enacted SOCA had no role in relation to civil recovery. 12. The Serious Crime Act 2007 ("the 2007 Act") made a number of important changes. By section 74 (1) the ARA and Office of its Director were abolished. Schedules 8 and 9 of that Act were brought into effect. 13. Schedule 8 Part 2 is headed "Transfer of Civil Recovery Functions". The scheme of this Part is to transfer the functions of the Director of the ARA to SOCA. By paragraph 91 of Schedule 8 Part 2 the definition of "enforcement authority" in the 2002 Act is amended so that the enforcement authority for England and Wales becomes SOCA, the Crown Prosecution Service, the Revenue and Customs Prosecutions Office and the Serious Fraud Office. 14. Schedule 8 Part 4 is headed "Transfer of Investigative Functions". It amends Part 8 of the 2002 Act. The power of the Director of the ARA to obtain investigative orders shifts to SOCA and the other above-mentioned enforcement authorities. Paragraph 114 requires the Secretary of State to issue a code of practice governing the exercise of the powers of SOCA to use the investigative powers under Part 8 of the 2002 Act. Such a code has been issued. 15. Other amendments to the 2002 Act include the replacement of section 2 with section 2A. Section 2A provides that a relevant authority, of which SOCA is one, must exercise its functions under the Act in the way which it considers best suited to the reduction of crime, and in doing so must have regard, in the case of SOCA, to any guidance issued by the Secretary of State. Section 2A (4) mirrors the old section 2 (6) and is in identical terms. 16. Section 74 and Schedules 8 and 9 of the 2007 Act came into force on 1 April 2008. Departmental guidance under section 2A(4) of the 2002 Act, which was much more extensive than the Secretary of State's original guidance to the Director of the ARA, was issued on 5 November 2009. 17. The philosophy of the legalisation remains that the public interest is best served by giving priority to criminal proceedings where they can be brought and it is in the public interest to bring them. The guidance gives a non-exhaustive list of circumstances where civil recovery proceedings might be appropriate and this includes in paragraph 5(f) cases in which there has been a prosecution that has not resulted in a conviction.