NCA v Simkus  EWHC (Admin) 255
Procedural Steps for Obtaining Property Freezing Orders and Disclosure Orders in Civil Recovery Proceedings under Proceeds of Crime Act 2002
James Fletcher appeared as Counsel for the National Crime Agency in this case. The judgment considered procedural aspects of Property Freezing Orders and Disclosure Orders.
This article was first published by Lexus Nexus on 7 March 2016.
What was the background to the applications, briefly?
The judgement considered 3 factually different applications by Simkus, Gulham and Jardine for the discharge of a Property Freezing Order (“PFO”) and Disclosure Orders (“DO”) obtained by the National Crime Agency (“NCA”) pursuant to the Proceeds of Crime Act 2002 (“POCA”) by way of ex parte application on the papers.
What issues did this case raise?
The common denominator to all three applications was the question as to whether the procedure adopted by the NCA to obtain the orders was appropriate. In particular, were the PFO and DOs improperly made and liable to be set aside where:
a) They are granted by a High Court Judge in chambers without a hearing after consideration of an application made by the NCA on paper?
b) The Judge granting the order gives no reasons which explain to persons affected by the order why it was made?
There were also a number of discrete considerations relating to the separate applications. In relation to the DOs: were the DOs too widely drafted and should a DO be set aside if the evidence on which it was granted was not served on the person affected by it? In relation to the PFO: was the PFO application an abuse of process, given that the CPS had decided not to pursue confiscation in criminal proceedings based on the same evidence. Secondly, should the PFO be set aside for material non-disclosure?
What were the main legal arguments put forward?
The principal submission made the applicants was that as a matter of principle PFOs and DOs should not be granted on the papers, rather there should be a hearing before a judge. If the Court agreed, the current practice would need to be reviewed and it would open the possibility of having to reconsider existing orders.
What did the High Court decide, and why?
The Court reviewed the current practice of paper applications and explained how paper applications were allocated and considered in the Administrative Court.
The Court noted that when an application was considered on the papers, although there could be no question that the judge would read the papers and consider the application conscientiously, the judge would not have the assistance of an advocate who could assure the judge that the disclosure obligations on ex parte orders had been satisfied.
The Court rejected the argument that without notice applications should never be granted on paper. In respect of each case the applicant would need to carefully consider whether an oral hearing would be more appropriate, suggesting that the more complex and the greater the disclosure obligation, the more desirable that an advocate be instructed to assist the Court.
The Court suggested the production of a “Disclosure Document” by the applicant, so that the judge could see what disclosure issues have arisen, what approach has been taken, and who has taken it. The court envisaged that the document would contain the facts of relevance to the discharge of the disclosure duty. In this way, applications to discharge on the basis of non-disclosure would be simplified because there would be no scope for argument about whether a fact was disclosed or not.
The Court considered that disclosure should be dealt with in a structured section of the witness statement by the Financial Investigator, but that the Court expected more than a mere assertion that the investigator was aware of the duty and has complied with it.
The Court considered that even on paper applications, the Court should give reasons when an order was granted, but noted that the absence of reasons would not, of itself, provide a ground of review.
In respect of the substantive arguments brought in support of discharging the DOs, the Court disagreed with the NCA’s current procedure of not disclosing evidence submitted in support of a DO application to the target, noting that it was a fundamental right that a recipient of a DO could see the evidence against them. The Court considered that in the future the NCA would need to either draft its evidence more carefully, such that it could be disclosed, or be prepared to make an application to the Court to approve redactions on the basis of sensitivity.
The Court also considered that a DO permitted the NCA to investigate to discover what recoverable property a target holds or may have held and it was not limited to property the existence of which had already been ascertained. In the circumstances, the Court refused the discharge applications from Gulam and Jardine.
In relation to Simkus, the Court rejected the submission that the NCA application for a PFO was an abuse by way of re-litigation. The Court noted the fact that the CPS’ decision not to proceed to confiscation had actually put Simkus in an improved position, that factual issues had not already been decided, Simkus had been given no assurance that we would not face a Civil Recovery Investigation and that there was no injustice against him by the NCA using their Statutory powers. The Court considered Simkus’ argument to be entirely misconceived.
Simkus’ secondary argument on material non-disclosure, meriting discharge of the Order was rejected. The Court found that there had been non-disclsoure of a signed agreed basis for sentence and considered that the document should have been put before the judge on the paper application. However the non-disclosure was not so grave as to merit the discharge of the order, in particular, the NCA had now made a claim for Civil Recovery and that if there was no PFO the assets would certainly be dissipated.
To what extent is the judgment helpful in clarifying the law in this area?
The judgment provides a careful analysis of paper applications and how they should be approached by applicants and the Court to ensure fairness to the recipients of Orders. The judgment includes a useful summary of the law relating to the granting of DOs and PFOs and summarises the disclosure duties on ex parte applications.
Are there still any grey areas/unresolved issues lawyers will need to watch out for in this area? If so, how can these be avoided? What are the implications for corporate crime lawyers?
The Court endorsed the paper application procedure, but made clear that serious consideration should be given in more complex cases to having the case listed for hearing. The Court also considered that the Court should give reasons, even on paper applications and the judge suggested that the applicant produce a “Disclosure Document” or at least a detailed section in the witness statement in support setting out the facts to support the disclosure duty.
Lawyers whose clients are in receipt of DOs will be entitled to see the evidence in support of the application and can challenge any redacted sections. Lawyers should also be ready to check the accuracy of the “Disclosure Document” or “Paragraph” in the evidence in support of PFOs and DOs. A paragraph which is mere “lip service” to the disclosure duty will be insufficient; lawyers can expect to see the material facts that need to be disclosed or a set of facts giving rise to an inference that needs to be disclosed. It should make it easier to assess the merits of an application for non-disclosure in relation to applications granted on the papers. However, the Court will continue to consider the public interest in maintaining such Orders, absent appalling breaches.