High Court Judgment Template - Doughty Street …€¦ · IN THE HIGH COURT OF JUSTICE ... (NCA) from the High Court seeking the ... They are civil proceedings as a matter of domestic

Neutral Citation Number: [2016] EWHC 255 (Admin)

Case No: CO/5844/2014

POCA No 9462 of 2011

POCA No 3380 of 2015

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

ADMINISTRATIVE COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 12/02/2016

Before :

MR JUSTICE EDIS

- - - - - - - - - - - - - - - - - - - - -

Between :

NATIONAL CRIME AGENCY Applicant

- and -

GEDIMINAS SIMKUS

VOLODYMYR KURACH

LINA KURACH

THE COMMISSIONER OF POLICE OF THE

METROPOLIS

Respondents


- and -

ARSHID KHAN

ASIF KHAN

ASAD KHAN

CYBER PROPERTY DEVELOPMENTS

LIMITED

MOHAMMED SADIQ GHULAM

Respondents


- and -

MICHAEL ANTHONY JARDINE

MARCIA TERESA JARDINE

DOMINIC LUKE MICHAEL JARDINE

TERESA ELIZABETH JARDINE

AND 8 CORPORATE RESPONDENTS

Respondents

- - - - - - - - - - - - - - - - - - - - -

- - - - - - - - - - - - - - - - - - - - -

Rupert Bowers, Q.C. (instructed by Hodge Jones & Allen) for Mr Simkus,

Jonathan Lennon instructed by Rahman Ravelli for Mr Ghulam and for the Jardine

Respondents

James Fletcher (instructed by the National Crime Agency) for the Applicant in the case of Mr

Simkus

Andrew Sutcliffe QC and Sarah Harman (instructed by the National Crime Agency) for the

Applicant in the case of Ghulam and Jardine

Hearing dates: 20th

and 21st January 2016

- - - - - - - - - - - - - - - - - - - - -

Approved Judgment

Judgment Approved by the court for handing down. NCA v Simkus; NCA v Ghulam; NCA v Jardine

Mr Justice Edis:

1. In each of these cases I am considering an application by a respondent to an order

obtained by the National Crime Agency (NCA) from the High Court seeking the

discharge of that order. I heard the first case, Mr Simkus’ application, on the 20th

January 2016 and the second and third cases, the Ghulam and the Jardine applications

on the 21st January 2016. Mrs. Justice Cheema-Grubb ordered that the two cases

heard on the 21st January 2016 should be heard together and Mr Simkus’ application

was listed before me on the day before that hearing administratively because it had

been appreciated, as is the case, that the three cases involve some common issues.

The orders were made under Part 5 and Part 8 of the Proceeds of Crime Act 2002 (the

Act) and the submission is made in each case that the procedure by which the NCA

obtained the order was inappropriate. The cases are entirely separate and are being

addressed at the same time only because of the similarity of the issues. In Ghulam

and Jardine the challenge is to a disclosure orders (DO) made under Part 8 of the Act.

In Simkus it is to a property freezing order (PFO) made under Part 5 of the Act.

2. I propose to identify the statutory regimes involved and to address the common issues

in principle and then to deal with each case separately and give my decision, applying

those principles. The issues are as follows

i) All 3 cases: are PFOs 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?

ii) In Ghulam and Jardine: is the DO too wide because it is capable of requiring

disclosure relating to property which is not specified in it? For reasons which

will appear, I will call this the “roving commission” submission.

iii) Ghulam only: is a DO liable to be set aside where the evidence on which it

was granted is either not served at all on the person affected by it, or served in

a redacted form?

iv) Jardine only: are the arguments in support of (i) above strengthened by

material non-disclosure in a case where it is accepted that the non-disclosure is

not so grave as to require the discharge of the DO?

v) Simkus only: Is an order granted on an application made by the NCA without

notice where no good reason exists why the application cannot be made on

notice liable thereby to be discharged?

vi) Simkus only: was the PFO application by the NCA an abuse of process, given

that the CPS had decided not to pursue confiscation in criminal proceedings

based on the same evidence?


vii) Simkus only: should the PFO granted by Mr Justice Jay be set aside for

material non-disclosure by the NCA and, if so, should a new PFO be granted

now that civil recovery proceedings have been started?

3. The NCA is the enforcement authority which may take civil recovery proceedings

under Part 5 of the Proceeds of Crime Act 2002 (“the Act”) against any person who it

suspects holds recoverable property. Recoverable property is property that has been

obtained through unlawful conduct or property that represents such property. The

proceedings must be brought in the High Court and are dealt with in the

Administrative Court. They are civil proceedings as a matter of domestic law,

although I was told that there is a case pending in the European Court of Human

Rights in which that position is being challenged. The NCA may apply for a PFO to

prevent the property being dissipated whether before or after starting proceedings for

a civil recovery order. Before taking such proceedings, the NCA will generally

conduct an investigation. Its investigatory powers are contained in Part 8 of the Act.

They include the power to seek a DO.

The Investigation: Part 8 of the Act

4. Part 8 provides investigatory powers for different types of investigation but I will only

deal with them where they are in pursuit of a civil recovery investigation. An

investigation of this kind is usually designed to identify criminal cash and to trace it

into any property into which it has been converted. It is not designed to establish the

criminal conduct of any individual and the extent to which that person may have

benefited from that conduct. That is the function of criminal proceedings and

confiscation proceedings following conviction under Part 2 of the Act. Of course,

evidence concerning the conduct of individuals will be relevant to determining

whether any particular property is recoverable and not infrequently those whose

crimes have generated the recoverable property will remain in control of it, sometimes

having good title to it in law. Any recovery order will deprive those people of their

assets. Those people have been referred to in argument as the “targets” of the

investigation and subsequent proceedings. Their property rights are engaged both as a

matter of domestic law and Article 1 Protocol 1 of the Convention. Procedural

fairness to them is therefore required as a matter of principle.

5. Part 8 of the Act provides a toolkit of investigatory powers. A precondition of the

exercise of any of them is the existence of an investigation of a defined kind. A civil

recovery investigation is one of the types of investigation for which Part 8 powers can

be used and this kind of investigation has been in existence in each of the three

present cases. The Act was amended with effect from 1st June 2015 by the Crime and

Courts Act 2013 in circumstances which I will address below, but the statutory regime

before that amendment applies to investigations started before that date which was the

case in each of the present cases. It defined a civil recovery investigation by s.341(2)

as

“….an investigation into

(a) whether property is recoverable property or associated

property,

(b) who holds the property, or


(c) its extent or whereabouts.”

6. The amendment reads as follows

“…an investigation for the purpose of identifying recoverable

property or associated property and includes investigation into-

(a) whether property is or has been recoverable property or

associated property,

(b) who holds or has held property, or

(c) what property a person holds or has held, or

(d) the nature, extent or whereabouts of property.”

7. It is now plain that an investigation qualifies for the use of the Part 8 powers where its

purpose is to find out whether any recoverable property exists or has existed. One

issue which I have to resolve is whether the amendment merely makes the previous

meaning of the provision plain beyond argument or whether it changed the law. The

same issue arises in relation to s.341A, introduced at the same time as the amendment

to section 341(2). This reads

“341A Orders and warrants sought for civil recovery

investigations

Where an application under this Part for an order or warrant

specifies property that is subject to a civil recovery

investigation, references in this Part to the investigation for the

purposes of which the order or warrant is sought include

investigation into-

(a) whether a person who appears to hold or to have held

the specified property holds or has held other property,

(b) whether the other property is or has been recoverable

property or associated property, and

(c) the nature, extent of whereabouts of the other property.”

8. The powers available include production orders, search and seizure warrants,

disclosure orders, customer information orders, and account monitoring orders. In

civil recovery proceedings all these powers require the grant of an appropriate order

by a High Court Judge. A Code of Practice must be prepared under s. 377 of the Act

and those exercising the Part 8 powers have a statutory duty to comply with it. The

Code to which I have been referred is that published in June 2015, but neither side

suggested that it was different in any relevant way from its predecessors. The Code is

not binding on the court, but it is admissible in proceedings and the court may take

any failure to comply with it into account in determining any question in the

proceedings.


9. Of those Part 8 tools, I am only directly concerned with DOs. Whereas the

production order and the search and seizure warrant are orders of a kind which is

familiar from other jurisdictions, the DO is not. It is an order which may be made if

the judge is satisfied that each of the requirements is met: s. 357(1). The requirements

are set out in s. 358 which has also been amended. In civil recovery investigations

started prior to 1st June 2015 they are that there must be reasonable grounds for

suspecting that

i) the property specified in the application for the order is recoverable property or

associated property;

and for believing that

ii) information which may be provided in compliance with a requirement

imposed under the order is likely to be of substantial value (whether or not by

itself) to the investigation; and

iii) it is in the public interest for the information to be provided having regard to

the benefit likely to accrue to the investigation.

10. The June 2015 amendment to this provision affected only the first of the

requirements, which now requires that there must be reasonable grounds for

suspecting that

i) the person specified in the application for the order holds recoverable property

or associated property,

ii) that person has, at any time, held property that was recoverable property or

associated property at the time, or

iii) the property specified in the application for the order is recoverable property or

associated property.

11. A DO is defined in s. 357(4). As

“an order authorising an appropriate officer to give to any

person the appropriate officer considers has relevant

information notice in writing requiring him to do, with respect

to any matter relevant to the investigation for the purposes of

which the order is sought, any or all of the following:

(a) answer questions, either at a time specified in the notice

or at once, at a place so specified;

(b) provide information specified in the notice, by a time

and in a manner so specified;

(c) produce documents, or documents of a description,

specified in the notice, either at or by a time so specified

or at once, and in a manner so specified.”


12. Relevant information is defined as information which the relevant officer considers to

be relevant to the investigation.

13. A person is not bound to comply with a requirement imposed by a notice given under

a disclosure order unless evidence of authority to give the notice produced to him.

This is quite a significant provision because it appears to govern what must be

provided to a person on whom a notice is served. It also appears to provide that

where evidence of authority is produced, the notice is binding. DOs from time to time

contain a provision giving liberty to the NCA not to serve the evidence on which it

relied in obtaining the DO, and one issue which I have to resolve is whether that is

lawful. Parliament has specified one thing which must be given, but has remained

silent on whether the evidence relied upon must be served. The statutory requirement,

in practice, is met by serving a copy of the DO with the Notice.

14. There are the usual provisions governing compulsory interview powers which (1)

prevent the answers being admissible in criminal proceedings except in very limited

circumstances and (2) provide that failure to comply with the requirements imposed

under a disclosure order is a summary offence and making false statements in

purported compliance is an offence triable either way. Although the offence creating

section refers to a requirement under a DO, the order itself imposes no requirements.

The order gives an officer authority to impose requirements. The requirements are

contained in the Notice the officer is authorised to give, and not determined by the

court. The level of judicial oversight of the operation of the order is quite limited.

15. Rather oddly, there is no statutory right for a person served with a Notice to apply to

set it aside or vary it, and no right either to vary or set aside the DO under which it is

made. This is the effect of s. 362. Only section 362(1) applies to DOs. S. 362(2), (3)

and (4) do not. These sub-sections create a rule making power as to practice and

procedure, provide a right to any person affected by the Order to set it aside, and a

power in the court to vary or set it aside. They apply to DOs in aid of other kinds of

investigation but not civil recovery investigations by virtue of s. 362(5). Counsel

were not able to explain a reason for this peculiar provision and I have not been able

to think of one. Sensibly, it appears to have been largely ignored in practice.

Although Rules of Court cannot be made, a Practice Direction was issued in 2003 and

remains in force. DOs always contain a term informing the recipient of a Notice that

there is a right to apply to a court to vary or discharge it. It is likely that a judge

would refuse to make them otherwise, as a matter of discretion. If an application is

made, it is considered and decided by a judge who assumes, without objection, that

there is a power to vary or set aside a DO. I am considering two such applications in

this judgment. The NCA has not submitted that I do not have the power to grant

them, should that be the proper result.

16. The Notices given under the DO will vary greatly in their impact on the “target” of

the investigation. Often they will be served on banks and other financial institutions

and the target may be entirely unaware that any investigation is taking place. In this

respect they resemble production orders against third party holders of material.

However, when the Notices are given to a “target” who may be (or have been) the

owner, or at least holder, of suspected recoverable property the impact is quite

different. They may require that person to submit to interview. Failure to comply is

an offence. They may require production of documents. Although answers to

interviews are excluded from most criminal proceedings by section 360, documents


produced under a requirement are not excluded from such use by statute. Various

adjectives have been used to describe these orders (“Draconian” and “intrusive” to

name but two) and Mr Lennon, who has appeared to argue Mr Ghulam’s case and the

Jardines’ case, uses the word “imperium” to describe the wide investigatory powers

granted to an officer of the NCA when one of these orders is made. What actually

occurs when a DO is made is that the court

i) surrenders its ability to consider each separate intrusion into the rights of the

“target” which exists in respect of documents and other evidence when

production orders or search and seizure warrants are sought; and

ii) confers a power on an authorised officer to require a person to answer

questions or provide information on pain of imprisonment. By statute such a

power extends to any relevant information and information is relevant if the

officer asking the question or seeking the information considers it to be so.

17. It is unnecessary to characterise this power by any pejorative adjective. Parliament

has conferred it and it is subject to high level of judicial oversight to the extent I have

described. The making of such an order broadly puts the NCA in a similar position

to, for example, the Director of the Serious Fraud Office exercising investigatory

powers by notice under section 2 of the Criminal Justice Act 1987. The Director of

the SFO does not require judicial approval to use those powers. The DO is a powerful

weapon to further the legitimate public interest in deterring and preventing organised

crime. It is not necessarily consequent on a criminal conviction (although it may be)

but no deprivation of property occurs by the making of a DO that only takes place

following civil recovery proceedings in which the person affected has a full

opportunity to test the evidence and which requires proof that any property recovered

is recoverable or associated property. What is necessary, when considering the

procedural issues raised in this case, is to appreciate that this is an order which confers

a significant power on the executive and which is capable of leading to serious

adverse consequences both as to liberty and as to property rights of those who are

affected.

18. The principal submission made by Mr Lennon on behalf of Mr Ghulam and the

Jardines, as he said in oral argument, is that DOs should not be granted on the papers.

He says that there ought to be a hearing before the judge. He says that this level of

judicial scrutiny is required given the character of the DO. Mr Bowers QC makes a

similar submission in respect of PFOs in the case of Simkus. If upheld, these

submissions would change the current practice and perhaps require reconsideration of

a large number of existing orders. I shall explain the current practice and review the

materials on which the submission relies.

The paper procedure in the Administrative Court

19. I understand that some years ago discussions took place which resulted in the

development of a practice whereby the court agreed that applications of this kind

should usually be made on paper. This is confirmed by the evidence filed in he

Ghulam and Jardine cases by the NCA. Neither the court nor the NCA can find any

record of any such direction or agreement. Nevertheless, there must have been such a


discussion because the applications very frequently are made and determined on

paper, without a hearing.

20. This practice is not recorded in the Practice Direction on Civil Recovery Proceedings,

which provides as follows in respect of PFO applications:-

“5.3

The application may be made without notice in the

circumstances set out in –

(1) section 245A(3) of the Act and article 147(3) of the Order

in Council (in the case of an application for a property freezing

order);

And as follows in respect of DO and other Part 8 applications:-

8.2

The application may be made without notice.

Hearing of the application

11.1 The application will be heard and determined in private, unless

the judge hearing it directs otherwise.”

21. Section 245A(3) governs PFO applications and says that they “may be made without

notice if the circumstances are such that notice of the application would prejudice any

right of the enforcement authority to obtain a recovery order in respect of any

property.” This will usually mean that there is a risk of dissipation of the assets if the

holder of the assets has notice of the application. Because a civil recovery order is a

remedy in rem granted in respect of identifiable and recoverable property, it will not

be granted if no such property is within the reach of the NCA. Dissipation therefore

prejudices the right to obtain the order and not merely the ability to enforce it.

22. Section 362(1) governs DO applications and provides that they “may be made ex

parte to a judge in chambers.”

23. The Act therefore permits PFO applications to be made without notice, and DO

applications to be made ex parte to a judge in chambers. The Practice Direction does

not contain a provision requiring PFO applications to be heard in private unless the

judge hearing it directs otherwise, but it does so in relation to DOs. That paragraph in

relation to DOs appears to contemplate a hearing, which is not the same as an

application on paper. Paper applications are always private and it would make no

sense for a judge to order that one should be dealt with in public.

24. Generally where an application is made without notice it will usually be appropriate

that it should be heard in private. The same circumstances are likely to justify both

results. In my judgment the difference in the statutory language between section

245A(3) and 362(1) is without significance. In the case of both PFOs and DOs they

may therefore, by statutory authority, be determined on an application made without

notice and in private. The Practice Direction is in somewhat different terms as

between the two types of order to reflect the statutory language but that also is in my

judgment not significant. Applications without notice and in private are permissible


in both cases where giving notice or hearing the case in public would be likely to

frustrate the purpose of the application. Whether that is so or not is a matter for the

court and not the NCA, to be determined as the first question when the judge

considers the application.

25. I should explain how the paper procedure works in the Administrative Court. Work is

allocated to the judges sitting in that jurisdiction by the Administrative Court Office.

Every day at least one judge is assigned to deal with applications on paper, and at

least one other judge will deal with immediate applications. Immediate applications

are urgent paper applications. There is therefore adequate judicial time available to

deal with paper applications. Similar applications in the Crown Court under Part 2

are sometimes put into a busy list at short notice when the judge may have limited

time to read the material. They are sometimes, however, done at a hearing when the

prosecution will attend, represented by an advocate, and the exchanges with the judge

will be tape recorded. Where that happens, the party affected by the order will be able

to see the transcript of what occurred when the order is served. This serves the

purposes of fairness and open justice.

26. Mr Sutcliffe QC suggested that Mr Lennon’s submissions involved a suggestion that a

paper application was a “rubber stamp”. Mr Lennon disavowed any such submission.

A paper application is certainly not a rubber stamp. The judge will read the papers

and scrutinise the order and apply the Act. The judge will do this conscientiously and

will be fully aware of the effect of the order sought. The judge has the option of

directing a hearing if in any doubt. The judge will not, however, have the benefit of

the assistance of an advocate in a paper application unless a skeleton argument signed

by an advocate accompanies it, which is not usually the case. The judge will not be

able to ask for an assurance that the advocate has considered the disclosure obligation,

which I deal with below, and not be able to probe the answer. The judge will not give

a judgment, but may give brief reasons and may give directions. The judge will

inevitably have less time to consider the evidence than those who compiled it, and

will of course not know anything which is not included in it. For these reasons the

assistance of an advocate at a hearing may be helpful in some cases.

The duty of disclosure generally and in its impact on the need for a hearing

27. There is a general duty in civil proceedings on a party applying for a without notice

order to make full and candid disclosure of all material facts. This applies to paper

applications and is an important safeguard in all without notice applications. A

litigant pursuing a purely private interest in litigation is required to fulfil this duty,

and the obligation is no less on a public authority such as the NCA pursuing the

public interest. The principles applicable in ordinary litigation were explained in

Brinks Mat v Elcombe [1988] 1 WLR 1350, per Ralph Gibson LJ (at 1356-1357 and

omitting his references to authority):

In considering whether there has been relevant non-disclosure

and what consequence the court should attach to any failure to

comply with the duty to make full and frank disclosure, the

principles relevant to the issues in these appeals appear to me to

include the following.


(1) The duty of the applicant is to make a full and fair

disclosure of all the material facts.

(2) The material facts are those which it is material for the

judge to know in dealing with the application as made:

materiality is to be decided by the court and not by the

assessment of the applicant or his legal advisers.

(3) The applicant must make proper inquiries before making

the application. The duty of disclosure therefore applies not

only to material facts known to the applicant but also to any

additional facts which he would have known if he had made

such inquiries.

(4) The extent of the inquiries which will be held to be proper,

and therefore necessary, must depend on all the circumstances

of the case including (a) the nature of the case which the

applicant is making when he makes the application; and (b) the

order for which application is made and the probable effect of

the order on the defendant.

(5) If material non-disclosure is established the court will be

"astute to ensure that a plaintiff who obtains [an ex parte

injunction] without full disclosure . . . is deprived of any

advantage he may have derived by that breach of duty”.

(6) Whether the fact not disclosed is of sufficient materiality to

justify or require immediate discharge of the order without

examination of the merits depends on the importance of the fact

to the issues which were to be decided by the judge on the

application. The answer to the question whether the non-

disclosure was innocent, in the sense that the fact was not

known to the applicant or that its relevance was not perceived,

is an important consideration but not decisive by reason of the

duty on the applicant to make all proper inquiries and to give

careful consideration to the case being presented.

(7) Finally, it "is not for every omission that the injunction will

be automatically discharged. A locus poenitentiae may

sometimes be afforded" The court has a discretion,

notwithstanding proof of material non-disclosure which

justifies or requires the immediate discharge of the ex parte

order, nevertheless to continue the order, or to make a new

order on terMs

"when the whole of the facts, including that of the original

non-disclosure, are before [the court, it] may well grant . . .

a second injunction if the original non-disclosure was

innocent and if an injunction could properly be granted

even had the facts been disclosed:"


28. The duty in the context of applications for restraint orders in criminal proceedings

was considered by the Court of Appeal (Civil Division) in Jennings v Crown

Prosecution Service [2005] EWCA Civ 746, [2005] 4 All ER 391. Laws LJ said this:

[55] This approach has been generally followed by the court in

exercising the jurisdiction given by s 77 of the 1988 Act, and

analogous and predecessor provisions. Thus the court has

imposed a duty on the shoulders of the Crown to make

disclosure of material facts, if it seeks a restraint order without

notice, just as a claimant in a private civil suit must do if he

seeks a freezing order without notice. Now, it is important to

recognise the reality of these applications. As Mr Mitchell

frankly told us they are always, certainly routinely, made

without notice. The reasons are obvious enough. The

respondents to such applications are usually charged with or

suspected of serious crimes involving large sums of money or

money’s worth. The risk of dissipation will generally speak for

itself. That is no doubt reflected in Legatt LJ’s comment in Re

AJ: ‘In the ordinary case, the prosecution would no doubt be

unwise not to proceed ex parte.’

[56] It seems to me that there are two factors which might point

towards a different approach being taken to without notice

applications for restraint orders in comparison to applications in

ordinary litigation for freezing orders; but they pull in opposite

directions. First, the application is necessarily brought

(assuming of course that it is brought in good faith) in the

public interest. The public interest in question is the efficacy of

s 71 of the 1988 Act. Here is the first factor: the court should be

more concerned to fulfil this public interest, it that is what on

the facts the restraint order would do, than to discipline the

applicant – the Crown – for delay of failure of disclosure. But

secondly, precisely because the applicant is the Crown, the

court must be alert to see that its jurisdiction is not being

conscripted to the service of an arbitrary or unfair action by the

state, and so should particularly insist on strict compliance with

its rules and standards, not least the duty of disclosure.

[57] The court needs to have both these considerations in mind.

But they do not, I think, promote some distinct and separate test

for the exercise of the s 77 jurisdiction. They are relevant

factors which in his good sense the judge will consider and

weigh as they arise case by case.

29. Malabu Oil and Gas Limited v. Director of Public Prosecutions was an application to

discharge a restraint order granted in support of an Italian investigation by mutual

legal assistance. The case is in the Southwark Crown Court, but the application was

referred to be heard by a High Court Judge. I heard extensive argument from leading


counsel on both sides and reserved judgment. It was handed down on 15th

December

2015. I cited the passage from Jennings set out above and went on to say:

48. At [64] of Jennings Longmore LJ added this

The fact that the Crown acts in the public interest

does, in my view, militate against the sanction of

discharging an order if, after consideration of all the

evidence, the court thinks that an order is

appropriate. That is not to say that there could never

be a case where the Crown's failure might be so

appalling that the ultimate sanction of discharge

would be justified.

49. Lloyd LJ agreed with both judgments and they are

therefore to be read together. It appears to me that Laws LJ

was not suggesting that the two factors he identified pull in

opposite directions and therefore cancel each other out, leaving

the matter to be judged as if it were a private law freezing

application in a civil case. The public interest in making

restraining orders in appropriate cases is likely to weigh more

heavily than the need to enforce high standards in those who

make the application. Whether this is so in an individual case

will depend on a variety of factors including the culpability of

the failures in disclosure. There are other sanctions for non-

disclosure apart from discharging an order which should

otherwise stand. Costs and professional disciplinary

proceedings are likely to be sufficient in most cases to ensure

high standards. It would be a matter of grave concern if the

CPS failed to disclose relevant matters when making ex parte

applications on a regular basis. Disclosure is at the heart of so

much of the work of that organisation that failures ought not to

occur and, where they do, they should be explicable by

something other than a desire to secure an order by any means

possible. If those expectations are disappointed in any case,

discharge may be appropriate. I consider that Longmore LJ’s

addition to the judgment of Laws LJ in Jennings on this

question accurately states the likely approach of the courts to

this issue.

30. In Re Stanford International Bank (in liquidation) [2010] EWCA Civ 137 at

paragraph 109, Hughes LJ gave a classic account of the duty of disclosure in a

comparable context to the present:

191. Whilst I respectfully agree with the view expressed by

Slade LJ in Brink's Mat Ltd v Elcombe [1988] 1 WLR 1350

that it can be all too easy for an objector to a freezing order to

fall into the belief that almost any failure of disclosure is a

passport to setting aside, it is essential that the duty of candour


laid upon any applicant for an order without notice is fully

understood and complied with. It is not limited to an obligation

not to misrepresent. It consists in a duty to consider what any

other interested person would, if present, wish to adduce by

way of fact, or to say in answer to the application, and to place

that material before the judge. That duty applies to an applicant

for a restraint order under POCA in exactly the same way as to

any other applicant for an order without notice. Even in

relatively small value cases, the potential of a restraint order to

disrupt other commercial or personal dealings is considerable.

The prosecutor may believe that the defendant is a criminal,

and he may turn out to be right, but that has yet to be proved.

An application for a restraint order is emphatically not a routine

matter of form, with the expectation that it will routinely be

granted. The fact that the initial application is likely to be

forced into a busy list, with very limited time for the judge to

deal with it, is a yet further reason for the obligation of

disclosure to be taken very seriously. In effect a prosecutor

seeking an ex parte order must put on his defence hat and ask

himself what, if he were representing the defendant or a third

party with a relevant interest, he would be saying to the judge,

and, having answered that question, that is what he must tell the

judge. This application is a clear example of the duty either

being ignored, or at least simply not being understood. This

application came close to being treated as routine and to taking

the court for granted. It may well not be the only example.

31. In Director ARA v Kean [2007] EWHC 112 (Admin) a property freezing order

obtained by the Asset Recovery Agency was not discharged despite it having been

obtained by non-disclosure and innocent misrepresentation at a without notice

hearing, because the agency's misjudgement had not been serious. On somewhat

different facts to the present, it had also been contended that the proceedings were an

abuse of process as constituting an attempt to re-litigate an issue that had already been

decided by a court of competent jurisdiction. Stanley Burnton J held that this

submission required a broad, merits-based evaluation of all the circumstances and

found no abuse of process as a result of such an exercise. He justified that approach

by reference to authority, and I will apply that approach. Abuse of this variety is not a

matter of strict technicality. It is akin to issue estoppel or res judicata but it is free

from the technical rules which govern the applicability of those concepts. That is why

it exists. It was designed to serve the interests of justice where no other tool for doing

so existed. I shall apply this approach to assessing the consequences of any non-

disclosure in Simkus and in Jardine. Stanley Burnton J said this about the

consequence of non-disclosure in this class of case:

55 The ARA exercises its powers in the public interest. If the

Property (and the proceeds of its mortgage) were indeed

obtained with the proceeds of crime, it is in the public interest

that Mr Kean should be deprived of them. That possible result

should not be put at risk by reason of a lack of care or

misjudgement on the part of the ARA which is far from serious.


In this connection, I refer to the judgments of the Court of

Appeal in Jennings v CPS [2005] EWCA Civ 746, especially at

[56], [57], [62] and [64].

32. Foskett J at first instance in Serious and Organised Crime Agency v. Perry and others

[2010] 1 WLR 910 at paragraphs 83 and 84 said this:-

83 If one compares the procedures adopted in respect of other

orders that potentially intrude significantly into the lives of

individuals, the procedure normally involves an oral application

before a judge, the interchanges between the judge and counsel

being recorded and such reasons, if only brief, that the judge

gives for the making of the order are also recorded. In the

criminal context where the Crown seeks permission not to

disclose material that is otherwise discloseable on the grounds

of public interest immunity, an application is made by counsel

to the judge in chambers where the proceedings are recorded.

In some criminal cases (and others), arrangements are made for

special counsel to be briefed. In the civil setting, ex parte

applications for freezing orders and associated disclosure

orders are attended by counsel or solicitor advocates and a

record is made of what occurs. Not merely is a record made for

future reference should it become necessary, but the presence

of a representative on behalf of the applicant enables the judge

to raise any issues and concerns that the judge may have about

what is proposed. That facility does not readily present itself

when a “papers only” application is made. Of course, a judge

may decline to deal with the application in that way and invite

the presence of the applicant and its representatives, as the

present practice apparently envisages. However, there may be

an understandable reluctance, when large sums of money which

may represent the proceeds of crime are involved, not to make

the order sought immediately because of a perception that delay

might in some way result in the dissipation of those assets. In

this case Judge Kay QC was led to believe that the

“investigation will continue to be fast-paced”: see para 73

above. This is the kind of indication that may operate as an

incentive to make the order sought.

84 I merely raise for consideration whether the present practice

should govern every application made for a disclosure order or

whether, following consultation, there may be some cases

where an oral (albeit ex parte) application to a High Court

judge, with SOCA's legal representative and the maker of the

witness statement attending, is thought to be the better course.

33. The duty of counsel at a hearing of this kind is to assist the Judge with understanding

the relevant parts of the papers which have been filed. In the absence of such a

hearing, there is an increased risk that the Judge may not identify all the salient points.


I consider that an application on the papers will be suitable for some cases and not for

others. The larger and more complex the case and the greater the difficulty in relation

to disclosure the more likely it is that it will be desirable for a hearing to take place at

which the NCA can instruct a competent advocate to assist the court. That assistance

will take the form of advancing the NCA’s case, but also drawing the judge’s

attention specifically to any facts which he or she ought to know before making an

order and to any authorities which give rise to an argument against the making of the

order. This may reduce the amount of reading complex documentation which is

required and save judicial time. The hearing will be recorded and any reasons which

the Judge gives for the decision will be available to the parties. It will also necessitate

the involvement of a lawyer in making the application which should reduce the scope

for procedural complaint after the order is made and, in the long run, save costs.

34. It appears to me that the obligation on the NCA to give disclosure of material which

may tell against its application is connected with the type of hearing which an

application requires. The professional duty of the advocate appearing at a hearing is a

protection for the person against whom the order is sought. It will assist the court in

making a proportionate order. In Malabu, which concerned an order in support of a

criminal investigation, I suggested that a Disclosure Document is desirable in making

such an application so that the judge can see what disclosure issues have arisen, what

approach has been taken, and who has taken it. This will also simplify any

applications to discharge on the basis of non-disclosure because there will be no scope

for argument about whether a fact was disclosed or not. If the “fact” is the result of

an inference drawn from complex documentation such arguments are entirely likely.

All those working in this sphere are likely to be familiar with the prosecution duty of

disclosure in criminal cases and will appreciate the nature of the duty. That duty is

satisfied in criminal cases by the police and CPS working together in a defined way,

and seeking advice from counsel where necessary. Formal documents are generated.

There is no reason why the disclosure duty in the present context should be taken any

less seriously, although it can be fulfilled by a less formal procedure. In this area, civil

proceedings, I accept that submission by Mr. Sutcliffe QC on behalf of the NCA that

the matter can and should be dealt with in a section of the witness statement by the

investigator but would expect an account of a more structured approach than a mere

assertion that the investigator is aware of the duty and has complied with it.

35. This is not to cast doubt on the professional or ethical standards of the NCA either in

these cases or generally. I have no doubt that their lawyers are involved in the

making of applications and in giving advice about them. I also have no doubt that

they are conscientious and competent. However, the decisions in R (Golfrate

Property Management Ltd & Adam) v. Southwark Crown Court [2014] EWHC 840

(Admin) and R (Rawlinson & Hunter Trustees) v. Central Criminal Court; R

(Tchenguiz) v. Director of the Serious Fraud Office [2012] EWHC 2254 (Admin)

show that the court cannot and must not assume that all applications are well-founded

because of the identity of the applicant. Fairness to the target, open justice, and the

importance of getting it right first time so as to avoid the costly consequences of

inappropriate orders all require the court to be satisfied by clear and cogent material

that an order is appropriate. I deal further with these two decisions below.

The application to vary or set aside

36. Section 245B grants the Court a wide discretion in respect of PFOs as follows:-


(1) The court may at any time vary or set aside a property

freezing order.

(2) …

(3) …

(4) If the court decides that any property to which a property

freezing order applies is neither recoverable property nor

associated property, it must vary the order so as to exclude the

property.

(5) Before exercising power under this Chapter to vary or set

aside a property freezing order, the court must (as well as

giving the parties to the proceedings an opportunity to be

heard) give such an opportunity to any person who may be

affected by its decision.

(6) …

37. I have already observed that section 362(3) and (4) does not apply to DO proceedings

in aid of civil recovery investigations. Otherwise, they would give a right to apply to

vary or discharge a DO and would also confer power on the court to make such an

order. In the absence of a statutory power, the practice is to include a provision in the

DO allowing an application to set aside. This is invariably done in civil proceedings

in the High Court when an order is made without notice. Given what I have said

about the nature of the DO, it would be quite unacceptable to make these orders

without allowing the person affected to make an application to be heard on the merits.

38. The jurisdiction to vary or discharge is not a review of the decision to grant the order,

still less an appeal. This is one reason why the judge making an order on the papers

gives only brief reasons, if any reasons at all. The judge hearing an application on

notice to vary or discharge the without notice order is not in any way bound by the

approach of the first judge. If reasons have been given, the second judge will take

them into account but must exercise his or her own discretion to ensure that the

appropriate order is made. Otherwise, the necessary equality of the parties before the

court is not maintained. The respondent is at a disadvantage because of an order

made at a hearing of which he had no notice. This is not acceptable.

The duty to give reasons

39. It does not follow that no reasons should be given merely because the application is

on paper. Neither does it follow that there will be a full judgment merely because

there is a hearing without notice. Unless the judge has identified some difficulties in

the application it is likely that very little will be required by way of reasons in either

case. If the order is granted it will be because the judge has decided on the evidence

that

i) It was appropriate to proceed without notice;

ii) It was appropriate to deal with it on paper or at a private hearing;


iii) The statutory test for the grant of the order is met.

40. Golfrate, cited above, at paragraph 26, is authority for the proposition that judges

should give reasons and also for the approach I have suggested at paragraph 40

above:-

“We re-iterate, hopefully for the last time, that HMCTS must

make the necessary resources available so that the Resident

Judge at the Crown Court can discharge his responsibility for

ensuring that arrangements are in place for these difficult and

important applications to be dealt with properly. Judges must

therefore be provided with the papers promptly, be accorded

the time required to read the papers, to hear the application, and

to provide written reasons; as this court has observed in other

contexts it is far, far better that time is afforded for an initial

application to be subject to rigorous scrutiny in a complex case

such as this; the consequences of failing to accord the judge

time is that much more time-consuming and expensive

proceedings have to be undertaken by way of a review. ”

41. The duty to give reasons was also stated in Tchenguiz, cited above, at paragraphs 202-

208. The context was somewhat different, but the principle is very clear.

42. For these reasons, I consider that the law does require reasons to be given. How

extensive they are will depend upon the case. They may often be very brief, but will

be none the worse for that.

Conclusion on paper applications, without notice hearings and the duty to give reasons

43. For the reasons given above, I reject the submission that these orders should never be

granted on a paper application. There will often be no difficulty in reaching a proper

conclusion on consideration of the papers. This is not a rubber stamp but the result of

a proper consideration of the application by a judge. The target of the order will

always have a right to apply to set it aside when it is brought to his notice.

44. In my judgment the NCA should carefully in each case consider whether the

application is suitable for determination on paper. In any case where disclosure has

presented any real difficulty and in most cases involving very complex documentation

the NCA should seek a hearing. Where the NCA decides that a hearing is desirable,

the case should be dealt with in that way. I was informed that in one of a recent case

the Administrative Court Office expressed surprise when the NCA did ask for a

hearing. In my judgment if a party making a without notice application requests a

hearing, that request should be granted. This will not necessarily involve more

judicial time because a competent advocate properly performing the task of making

such an application will be able to summarise bulky documentation fairly. The

hearing will be recorded and the process therefore reviewable. If the NCA and

HMCTS allocate resources to these cases at this early stage, there should be cost

savings subsequently, as explained in Golfrate.

45. Equally, the judge will be astute to consider the suitability of the paper procedure

before making any order. No substantial delay should be caused by sending an urgent


message to the NCA requiring attendance. The judge should not hesitate to take this

course where there is a clear reason for doing so.

46. Having said that, I anticipate that most orders will continue to be made on paper,

particularly if a clear and structured approach to disclosure is taken when the papers

are prepared. The witness statement should expressly explain what approach has been

taken to disclosure and what material has been disclosed as a result of that duty. It

should also identify the points which are properly to be made by the NCA putting its

“defence hat” on as required by Hughes LJ in Stanford. On any challenge it will

therefore be clear whether the order was made on paper or at a hearing what was done

and not done further to that duty.

47. These applications may be heard in private and without notice. They do not have to

be. The court will need to be satisfied in each case that the procedure is proper and

fair and pays proper regard to the public justice rule and fairness to any person

affected by the order. Almost invariably a DO will be made after such an application.

Very frequently the same will apply to a PFO. If there is no immediate risk of

dissipation of assets (because they are safe in the immediate future) notice should be

given. This may arise in various ways, and was the case in Malabu to which I have

referred above.

48. Judges are well used to giving succinct and clear reasons for decisions taken on paper.

In my judgment such reasons should be given in cases of this kind, just as in any

other. The failure to give reasons will not justify any appeal or result in the order

being set aside on its own. This also applies to a decision to deal with the matter on

paper, or to hear it ex parte. The remedy in each case is an application to vary or set

aside which will be heard inter partes and which will result in reasons being given.

The reason why the absence of reasons does not render the right to apply for a

discharge nugatory is that on any such application the second judge will not be bound

by those reasons or limited to deciding whether the DO was a reasonable one for the

first judge to make. The second judge will review the matter afresh. The absence of

reasons, though undesirable, does not render that process impossible.

Disclosure of evidence on giving Notice under a DO

49. I have said above that the availability of the right to apply to vary or discharge DOs

and PFOs is important to the way in which they are made. The court will make

important orders of this kind without hearing from the persons affected because their

rights are protected by the ability to make an application. If that ability is to be real,

the person exercising it must know the case against him, her, or it. It is surprising

therefore that the NCA contends that it is entitled, in the case of Ghulam, to serve a

redacted version of the statement on which it relied when the DO was made in 2011.

The evidence suggests that the NCA regards it as routine to refuse to serve the

evidence on a target and made an exception in Ghulam’s case in going as far as it did.

50. This problem arises in other contexts where (usually) the police wish to obtain an

order from the Crown Court to assist in an investigation and do not wish to reveal the

material on which they relied in obtaining the order. This may be because to do so

would tip off a suspect, endanger an informant, or reveal other sensitive material. In

search warrant applications the issue was canvassed in Golfrate at paragraphs 17 and

18. The court said that it was for the court to decide what redactions, if any, could be


made on PII grounds. It was impermissible for the party who obtained the order to

refuse to disclose the evidence. In BskyB v. Central Criminal Court [2014] 1 AC 910

the Supreme Court decided that a journalist against whom a production order was

sought was entitled to see the evidence on which the police relied. That was an

application inter partes and the purpose of allowing the journalist to be heard was

frustrated if he did not know what the evidence was. Closed procedures are only valid

if explicitly mandated by statute. The Article 10 rights of the journalist were engaged

in the application and he was therefore entitled to see the evidence. Third parties who

are served with Notices under a DO to produce documents, such as banks, are not in

the same position as a “target”. A provision in a DO enabling the NCA not to serve

the evidence on recipients of Notices in that category is plainly lawful and may

operate to protect the interests of the target. Such a body may have no interest in

seeing the evidence and can, if the case merits it, apply for a variation. That amply

protects such rights of the third party holder of information as are engaged. This is

important because frequently Notices will be given to third parties while the

investigation is covert and its existence is not known to the targets. Orders of the

present kind during the covert phase of the investigation are, in my judgment,

necessary and appropriate. For the target of a PFO or DO, however, Convention

rights are plainly engaged. I consider that a provision entitling the NCA to withhold

the evidence from such a person is invalid. The evidence must be served at the time

when the order comes to the attention of the target. In a PFO this will usually be very

soon after it is made. In the case of a DO it may not be for a long time, while the

investigation proceeds covertly. The right to apply to vary or set aside is integral to

the fairness and proportionality of such orders and is not a real right unless the target

knows the basis on which the order was made. This will usually be apparent from the

evidence on which the NCA relied. The reasons given by the judge in making the

order will commonly refer to that evidence and will not seek to summarise it. If the

NCA wishes to serve a redacted version of the evidence, as it did in Ghulam in this

case, those redactions should be approved by the court as in Golfrate. Mr. Sutcliffe

submits that the redactions can be made by the NCA without judicial approval and the

matter can be considered by a court only if there is a dispute which renders that

necessary. I am sympathetic to the need to avoid unnecessary applications. However,

in my judgment the right of a party to see the evidence against him is fundamental and

following BskyB it is a right which can only be infringed by a lawful process.

Golfrate is authority for the proposition that a court can approve the redaction of

material, but not for the proposition that the executive agency which obtained the

order can do so. Such applications can certainly be dealt with on paper and are likely

to require only a witness statement setting out what it is sought to redact and why. In

my judgment, it is likely that the existence of an order permitting service of a redacted

version of the evidence by a judge will make applications to vary or discharge on this

ground less likely than otherwise would be the case. The party affected will know

that the redacted material has been considered by a judge and that its withholding has

been authorised.

51. In her witness statement in the Ghulam application of 18th

December 2015, Ms Donna

Doherty, a lawyer employed by the NCA says that it is also “entirely usual practice

for a DO to contain a provision giving the NCA permission not to serve the

supporting evidence when serving the Order.” She gives 4 reasons for this


i) That a large number of people may be served with Notices under the DO thus

increasing the risk of dissipation.

ii) That potential targets may be tipped off and alerted prematurely to the

investigation leading to the destruction of evidence.

iii) The personal and sensitive personal information should not be served on

financial institutions and other professionals.

iv) The risk that investigative methods may be revealed to those on whom Notices

will be served.

52. I do not agree that it is appropriate to seek to withhold the evidence from targets for

any of these reasons. I accept the third reason given by Ms Doherty as valid, but that

does not concern targets. The first and second reasons must be accommodated by

careful operational planning so that the investigation becomes overt at a time which

reduces the risks so far as possible. The fundamental rule that a party is entitled to

know the evidence against them means that these risks always exist and can only be

minimised not eliminated. It will be for Parliament to amend the Act in order to

produce the result contended for, if it is thought right. A power to make an order on

the basis of evidence which the target has not seen, and never will see, is wholly

exceptional. I am not persuaded either that the need to protect investigative methods

is a valid consideration. The rule which I consider exists only extends to the evidence

on which the NCA has relied. That evidence should be drafted with the rule in mind.

The investigative methods are not usually highly sensitive and, if they are,

consideration can be given to describing them, if at all, in very general terms in the

evidence. The court has power to approve redactions on PII grounds where the

method by which the material was obtained is sensitive which will readily be granted

in cases where it is the material which matters and not how it was obtained.

The breadth of the DO

53. In the cases of Ghulam and Jardine the submission is made that the DO is invalid

because it enables the NCA to find out what recoverable or associated property a

target may hold or may have held. It is not limited to investigating the whereabouts

of ascertained property, the existence of which is already known to the NCA.

54. The argument relies on a dictum of Lord Phillips of Worth Matravers PSC in Serious

and Organised Crime Agency v. Perry and others [2012] UKSC 35; [2013] 1 AC 182

at [90]:-

“The exercise carried out by Miss Ewing seems to go beyond

the purpose of a civil recovery investigation as defined in

section 341(2). That investigation, as I understand the relevant

provisions, relates to property whose existence has already

been identified. Similar questions arise in relation to the scope

of the disclosure order and some of the notices served under it

as to those that I have raised in paras 79 to 83 above in relation

to the scope of the property freezing order. Under section

357(4) the authority conferred by a disclosure order is restricted

to inquiries “with respect to any matter relevant to the


investigation for the purposes of which the order is sought”. It

is questionable whether this authority extends beyond seeking

information about property whose existence has already been

identified. Mr Jones has not, however, sought to challenge the

scope of the order or of the notices issued under it. He has

made a more fundamental attack on SOCA's authority to issue

the notices.”

55. This is, as is plain from the passage itself, not part of the reasoning which led to the

result of the appeal and is therefore not strictly binding. It is persuasive, however, and

in the ordinary way highly persuasive. In a nine judge court, six judges expressed

their agreement with Lord Phillips, four of them without adding anything. The issue

before the Supreme Court concerned the extra-territorial reach of the orders under the

2002 Act and not the question dealt with in the passage just cited. No judge

expressed any view about that passage, one way or the other. I was told that the point

was not actually argued before the Supreme Court and the passage caused

consternation at the NCA which considers that it is wrong. I have set out at

paragraphs 5-10 above the subsequent amendment of the Act which puts the matter

beyond doubt, but that amendment does not apply to any of these investigations which

were all started before the date at which the law was changed. I therefore have to

decide whether Lord Phillips was right as the law stood prior to its amendment.

56. In my judgment the issue is one of statutory construction and the provisions must be

read having regard to the statutory purpose and also to the fact that the Act confers

significant powers on the executive and the court which engage Convention rights of

those affected.

57. The statutory purpose is the deterrence of crime, in particular serious and organised

crime. The civil recovery order furthers that purpose by taking the proceeds of such

crime out of circulation. This has the effect that it is no longer available to fund

further crime and that the crime, whoever committed it, ultimately did not pay.

58. By section 358(1) as it was before amendment a DO could only be made if there were

reasonable grounds for suspecting that the property specified in the application for the

order is recoverable property or associated property. It follows that some property

must be specified in the application. It does not follow, however, that once that

condition is satisfied, the investigatory powers are limited to that specified property.

The answer to that is to be found elsewhere, by considering the powers themselves.

59. A DO is as order which enables the officer to give a Notice seeking information (by

one means or another) which is relevant to the investigation for the purposes of which

the order is sought, see section 357(4). It follows that the scope of the powers is

defined by the scope of the investigation which it exists to support. A civil recovery

investigation is defined at section 341(2) in the terms set out at paragraph 5 above

prior to amendment.

60. Recoverable property is defined in section 304

304 Property obtained through unlawful conduct


(1) Property obtained through unlawful conduct is recoverable

property.

(2) But if property obtained through unlawful conduct has been

disposed of (since it was so obtained), it is recoverable property

only if it is held by a person into whose hands it may be

followed.

(3) Recoverable property obtained through unlawful conduct

may be followed into the hands of a person obtaining it on a

disposal by—

(a) the person who through the conduct obtained the

property, or

(b) a person into whose hands it may (by virtue of this

subsection) be followed.

61. Although associated property may be the subject of recovery proceedings, it does not

thereby become recoverable. The provisions relating to that subject do not assist in

the present question.

62. In Serious Organised Crime Agency v Azam [2013] EWHC 627 (QB), Sir Raymond

Jack said

“24. So, combining section 341(2)(a) with section 304(1), a

civil recovery investigation may be an investigation into

whether property is property obtained through unlawful

conduct.”

63. Such an investigation may be started where the NCA is able to specify property in its

application which is reasonably suspected of having been obtained through unlawful

(criminal) conduct. There is no statutory warrant for confining the investigation to

that specified property. The purpose of the investigation is to ascertain what

recoverable property can be identified and where it might be. Section 341(2)(c)

allows investigation into the extent and whereabouts of the property, which suggests

that the investigation is not limited to property of which the NCA has substantial

detail at the time of the application. A power to investigate only what is known is a

very limited and unusual investigative power. Investigations are usually conducted in

order to discover that which is not known. Similarly, it is not necessary that the NCA

should specify at the outset who holds the property, otherwise it would not be given a

power to find that out by section 341(2)(b). I note that Lord Phillips said only that the

existence of a power to investigate property whose existence had not already been

identified was “questionable”. It would seem to be an unnecessary restriction to

afford such extensive investigatory powers as these and to limit their use as is

suggested. If the NCA investigate recoverable property and happen upon evidence of

further recoverable property while they are doing so, why should they not use their

powers to investigate that too? If the NCA identifies a person who is suspected to be

the holder of recoverable property, why should it be prevented from enquiring of that

person what other property he or she holds? There would frequently be suspicion that

such a person’s holdings were the proceeds of crime at least until the investigation


showed otherwise. I can find no indication in the 2002 Act that Parliament intended

the powers to be restricted in the way contended for and am not prepared to interpret

the powers so as to imply one. It appears to me that the power granted is a wide one

and that the statutory purpose explains why that is so.

64. I therefore conclude that the NCA construction of its powers pre-June 2015 is correct

and that the 2015 amendment had the effect of making express what was previous the

position. I therefore reject the submission that the orders in this case were too wide.

Case 1: Ghulam

65. I have concluded above that the application for a DO should only be made without

notice where there is a good reason for doing so. It will very frequently be the case

that such good reason exists. That is because the NCA will plan to use the powers

under the DO to obtain documents and information from third parties to form a

complete picture before they decide on whom Notices should be served after a PFO

has been obtained to protect the property from dissipation. This plan would be

rendered purposeless if the targets were informed before the covert phase of the

investigation that it was contemplated. For this reason an application for a DO will

usually be dealt with without notice, whether it is dealt with at a hearing or on paper.

66. In this case the order was in support of an investigation which was at an early stage.

It remained covert for years after the order was granted. The DO was made on 7th

October 2011 and the PFO (also ex parte) not until 21st July 2015. It was soon after

that second order that Mr Ghulam became aware of the investigation. The application

was made on the basis of a witness statement from Mr Gareth Jones, an investigator,

dated the 29th

September 2011, which I have seen only in its redacted form. It sets out

the nature of the investigation and makes it plain that it would be inappropriate to

hold a hearing on notice. He also makes a practical point which is that at the stage of

applying for a DO, it was not known how many Notices would be given under it, or to

whom. Therefore it would not be possible to conduct a hearing on notice to all those

to whom Notices may be given. There may be people identified in a DO application

on whom no proceedings are ever served because the investigation reveals that it

would not be appropriate. A hearing on notice to such people at this early stage is not

obviously necessary and would carry a clear risk that the nature and focus of the

investigation would become widely known. In fact there was no submission in the

Ghulam case that the application for the DO should have been on notice.

67. I consider that this was a case which was properly dealt with on paper by the Judge.

It was not a particularly complex case and no real complaint is made about disclosure.

The disclosure duty was complied with by the NCA without a hearing being required.

68. It does not appear that reasons were given by the judge who made the order, but I

have said above that this fact is not generally enough, on its own, to justify the

discharge of the DO. Reasons should be given but their absence does not invalidate

the order.

69. I have rejected above the submission that the order was too widely drawn.

70. I consider that the evidence on which the DO was granted ought not to have been

redacted without application to the court. Nothing now turns on this because it is not


suggested that the DO could not properly have been made on the basis of the

unredacted evidence and matters have moved on considerably since the DO was first

made.

Case 2: Jardine

71. I consider that the application for the DO was properly made without notice for the

same reasons I have given above in respect of Ghulam.

72. I also consider that the application was properly dealt with as a paper application. In

this case the disclosure duty is invoked by Mr. Lennon on behalf of the Jardines.

That, as I have said, does raise a question about whether a hearing would have been

more appropriate. The disclosure complaints are set out by Mr. Lennon in paragraphs

24-26 of his Skeleton Argument dated 23rd

November 2015. The evidence served on

behalf of the NCA had alleged that Michael Jardine was associated with an organised

crime group “headed by Robert Dawes, John Dawes and their father Arthur Dawes”.

They were said to have been associated with Gary Hardy. John and Arthur Dawes

and Gary Hardy had relevant convictions. The point is made that Michael Jardine has

never met either John or Arthur Dawes and there is no evidence to connect him with

Gary Hardy. The point is also made that Robert Dawes has not been convicted of

drug dealing. Therefore the senior figure with whom Michael Jardine did have a

connection has no conviction for drug dealing. It is said that this was substantial non-

disclosure, not sufficient to justify the discharge of the DO as a free-standing ground

but relevant to whether the order was validly made, having been made at a hearing at

which such disclosure may well have been given by the advocate. It appears to me

that non-disclosure is either so “appalling” to quote Longmore LJ in Jennings that it

requires discharge of the DO or it is largely irrelevant to the validity of the DO.

Therefore, I do not think that these criticisms of the procedure have any validity in the

absence of any submission that they justify discharge of the DO. In any event, I do

not consider that the complaints are well-founded. The evidence of Mr. Alastair

Boyles in support of the application is lengthy and detailed. It made it quite clear that

Robert Dawes has not conviction for drug dealing. It referred to evidence given at the

trial of his brother and father which implicated him in drug dealing although he was

not a defendant in the trial and gives details of the criminal convictions which he does

have. The link between Robert Dawes and Michael Jardine is detailed and no such

link is alleged with John Dawes, Arthur Dawes or Gary Hardy. There is also

information about Michael Jardine’s connections with other organised crime figures.

Mr. Jardine had admitted having known one major Irish drug dealer for 10 years. The

material relied on is very clearly set out in the evidence and the points made as non-

disclosure points are apparent from it (indeed they are really comments about it).

This is not a case where the facts only emerge by inference from complicated

transactions. I am sure that they were sufficiently apparent to the judge reading the

statement.

73. Although in some cases the use of the description “organised crime group” as

established fact may be objectionable, it is not so here. That is because it was a fact

established by the convictions of John Dawes, Arthur Dawes and Gary Hardy. The

NCA’s evidence had exhibited press reports of their trials to show the relevance of

their convictions. This is not an unreasonable way of establishing such facts at an

application of this kind. These are civil proceedings and the Civil Evidence Act 1995

applies. The rules governing press reporting of criminal trials are strict and it is


reasonable to infer that they are substantially accurate and reliable so that weight can

be given to them.

74. I therefore reject the submission that this case ought to have been determined at a

hearing because of the non-disclosure submission. It appears to me that it was very

suitable for paper determination.

75. I have rejected the other generic submissions in the main part of the judgment above.

Case 3: Simkus

Introduction

76. By an Application Notice dated 10 November 2015 the First Respondent Gediminas

Simkus applied for the discharge of the PFO sought by the NCA and granted on

consideration of the papers by Mr Justice Jay on 16 December 2014. The application

for the PFO was supported by a witness statement of Anita Kelly dated 15 December

2015 and her accompanying exhibits. She is a financial investigator and member of

staff at the NCA. That application was made while Mr Simkus was awaiting sentence

in the Crown Court and while his assets were the subject of a restraining order made

in the Crown Court for the preservation of his assets pending confiscation proceedings

under Part 2 of the Proceeds of Crime Act 2002. Such proceedings did not, in the

event, occur.

77. In summary Mr Simkus submits that the PFO should be discharged because (a) the

PFO proceedings are inappropriate given the way in which confiscation was dealt

with in the Crown Court and the Court should decline to hear them and (b) the

application for the PFO should not have been made without notice or without a

hearing, and there were failures in the duty of full and frank disclosure. I have

discussed the principles applicable to (b) above and will not repeat them here. The

“abuse by re-litigation” issue arises only in this case and is dealt with entirely in this

part of the judgment.

78. The Application is resisted by the NCA. In summary, the NCA submits that the

proceedings are appropriate as they are in keeping with the legitimate aims of

seeking to preserve assets pending a final determination as to whether those assets

have been obtained through conduct contrary to the criminal law. The NCA denies

that it is re-litigating issues already decided or of abusing the process of the Court.

Furthermore, the order being sought without notice was justified and there were no

failures in the duty to make the Court aware of all material factors which would have

affected its decision.

79. Since this application was issued, the NCA has issued a claim for civil recovery.

This is supported by a substantial body of evidence which it is unnecessary for me to

review in this judgment, since the grounds of challenge to the PFO are based on

procedural fairness and not on the merits of either the application for the PFO or the

civil recovery claim. For present purposes I am proceeding on the basis that there

was material before Mr Justice Jay which justified the making of the PFO and that the

civil recovery proceedings are properly constituted.


The PFO

80. The terms of the PFO as subsequently amended can be summarised as follows:

i) It applied to assets held by the following respondents: Gediminas Simkus,

Volodymyr Kurach, Lina Kurach and the Commissioner of Police of the

Metropolis (because cash seized by the police was paid into police bank

accounts).

ii) Paragraph 2 indicated that the PFO took effect upon the discharge of an

existing Restraint Order made in the Crown Court.

iii) Paragraphs 5-6 prevented the Respondents from dealing with a variety of

assets and in the case of Mr Simkus restrained him from dealing with:

a) The balance of Barclays account 63805034

b) Cash seized from him by the police and held by them in a bank

account amounting to £85,220

c) A Smart Car vehicle KW08 TOV

iv) Paragraph 11 permitted the Respondents to seek variation or discharge of the

order. This effectively informed them of their right under section 245B of the

Act and gave procedural directions for the making of any such application.

Background to the PFO Application

81. In the autumn of 2012 Lloyds Banking Group (“Lloyds”) informed the police that

some of their commercial customers had been subject to a malware attack. Customers

would open an attachment to an email and unwittingly download a program which

loaded a “pop-up” window onto the customers’ computer screen when they attempted

to use internet banking. The pop-up requested the users’ bank details, which the

fraudsters then obtained, allowing them to transfer sums from the bank account.

Lloyds estimated a loss to their customers of approximately £850,000 of which they

were able to recover £250,000. Analysis of the malware on the victims’ computers

suggested other Banks’ customers were also targeted.

82. On 10 December 2013 Mr Simkus and Mr Kurach were arrested on suspicion of

committing money laundering and fraud offences. Mrs Kurach, the third respondent,

was also arrested but no prosecution was pursued.

83. The criminal case against Mr Simkus and Mr Kurach was that they acted as “mules”

for the crime group behind the attacks by opening bank accounts using false identities


and using those accounts to receive the proceeds of crime. Money was moved

between accounts in order to launder it before it was withdrawn in cash. Some of the

proceeds of crime from the Lloyds victims ended up in accounts controlled by Mr

Simkus and Mr Kurach.

84. On 15 January 2014 His Honour Judge Gledhill QC granted a Restraint Order

against assets held by the Respondents pursuant to section 41 of the Proceeds of

Crime Act 2002.

85. On 6 May 2014 Mr Simkus and Mr Kurach pleaded guilty to a single count of

Conspiracy to Defraud. The Indictment alleged a conspiracy to obtain £851,565.09

by fraud against customers of Lloyds between 7th

March 2011 and 11th

December

2013. In its application for the PFO the NCA made the Court aware that Mr Simkus

admitted receipt of two separate payments totalling £44,688.70. The Basis of Plea

was exhibited to the witness statement which was before Mr Justice Jay. Mr Kurach

also admitted involvement in fraud and receiving the proceeds of crime on a more

limited basis than had been alleged against him.

86. A Newton hearing was held on 24-25 November 2014 to enable the Court to

determine the Defendants’ criminality. Mr Simkus’ solicitors had obtained and

served an Expert Report from a forensic accountant which was exhibited by Ms

Kelly. The expert, Mr Mesher, was asked to trace funds and review the prosecution

evidence. He traced the sum of £44,688.70 to Mr Simkus. He found the difference

between unidentified deposits into Mr Simkus’ accounts and Mr Simkus’ gross

declared income to be £297,514.05. He concluded that Mr Simkus had received

£208,490.03 from third parties into accounts opened by him in various false names.

Ms Kelly set this out in her witness statement for the PFO application.

87. The Newton hearing was resolved in favour of Mr Simkus and an agreed basis of

sentence was produced and signed by counsel. Ms Kelly had received an unsigned

draft of this document on 2nd

December 2014, two weeks before the application for

the PFO. It recorded that the prosecution accepted that Mr Simkus fell to be

sentenced for conspiracy to defraud by acting as a “mule” in respect of two

transactions totalling £44,688.70 and that the period of his involvement was less than

6 months. This meant that the “criminal lifestyle” provisions of Part 2 of the Act did

not apply. A confiscation order could only be made in the sum of £44,688.70. This

could be satisfied out of the cash held by the police, the balance of which would have

to be returned to Mr Simkus. Ms Kelly did not tell Mr Justice Jay any of the

information which I have set out in this paragraph. She said only this:-

“It is understood that, because of the amendment to the wording of the

Indictment, the criminal lifestyle criteria under section 75 of the 2002 Act are


not met. In the circumstances, the MET are not pursuing confiscation

proceedings.”

88. This was misleading. The Indictment as amended clearly alleged a period of

offending in excess of 6 months, and the criminal lifestyle criteria were met. It was

not, therefore, because of the amendment to the indictment that the lifestyle

provisions did not apply. It was the result of the Newton hearing and the agreed basis

of sentence which followed which had this effect. That is why confiscation

proceedings would have resulted in confiscation of a far smaller sum than the

prosecution had contended was Mr Simkus’ true benefit from crime.

89. On 26 November 2014 the case was referred to the NCA to consider whether civil

recovery proceedings could be brought against the restrained assets. I infer that this

was because of the result of the Newton hearing and the agreed basis of sentence

meant that the CPS or the police had decided that no confiscation proceedings should

be brought. I infer that they felt that the NCA would be able to do better than this by

proceedings under Part 5 of the Act and therefore made the referral. I have not been

told in terms why this was, nor have I seen any documents passing between the

prosecution and the NCA concerning the referral. The claimant contends that they

were acting jointly at this time, but Ms Kelly denies this and says that all decisions

in relation to the criminal prosecution were made by the CPS and the police, and all

decisions in the civil recovery proceedings by the NCA.

90. Therefore on 15 December 2014 the NCA made an ex parte application for the PFO.

According to the application notice, the basis for the application being made without a

hearing and without notice was that, “the assets to which the application relates are

believed to be at imminent risk of dissipation for the reasons given in the witness

statement of Anita Kelly”. As to that, she said this:-

“The assets to which this application relates are currently protected by the

Restraint Order. However, the discharge of that Order is believed to be

imminent. Moreover, the NCA has no control over when this will occur. In

light of the MET’s decision not to pursue confiscation proceedings, an

application to discharge could be made at any time and, in particular, before

the sentencing hearing on 23rd

December 2014. Such an application could be

made by the prosecution or the defence.

“Once the Order has been discharged, I believe that there is a high risk that the

Respondents would seek to dissipate the assets…

“I believe that if notice were given to the Respondents of this application,

there would be a considerable risk that the Restraint Order could be discharged

and the previously restrained assets will be dissipated outside the jurisdiction.”

Events After the PFO Application

91. Sentencing took place on 23 December 2014 and Mr Simkus was sentenced to 32

months imprisonment. The Court was informed that the Crown did not wish to


pursue confiscation proceedings and that the Restraint Order should be discharged.

The judge declined to do that, instead requiring the application to be made in writing.

This was done, and on 20th

January 2015 HHJ Gledhill QC discharged the Restraint

Orders. The PFO came into effect.

92. On 14 May 2015 Mr Simkus was deported to Lithuania.

93. On 15 November 2015 (almost a year after the PFO application) Mr Simkus made

this application to discharge the PFO.

94. On 11 December 2015 the NCA applied for civil recovery against the assets on the

basis that it contends that it can prove on the balance of probabilities that the assets

have been obtained through unlawful conduct.

The re-litigation abuse submission

95. Part 5 of the Proceeds of Crime Act 2002, provides for the civil recovery of the

proceeds of unlawful conduct. Section 240 is an important section in the present

context and provides, with the most significant part underlined:-

240 General purpose of this Part

(1) This Part has effect for the purposes of—

(a) enabling the enforcement authority to recover, in civil

proceedings before the High Court or Court of Session,

property which is, or represents, property obtained through

unlawful conduct,

(b) enabling cash which is, or represents, property obtained

through unlawful conduct, or which is intended to be used in

unlawful conduct, to be forfeited in civil proceedings before a

magistrates' court or (in Scotland) the sheriff.

(2) The powers conferred by this Part are exercisable in relation

to any property (including cash) whether or not any

proceedings have been brought for an offence in connection

with the property.

96. The Explanatory Notes to this section say, among other things:-


Subsection (2) makes clear that civil recovery and cash

forfeiture proceedings may be brought whether or not

proceedings have been brought for an offence in connection

with the property. Cases where criminal proceedings have not

been brought would include cases where there are insufficient

grounds for prosecution, or where the person suspected of the

offence is outside the jurisdiction or has died. Cases where

criminal proceedings have been brought may include cases

where a defendant has been acquitted, or where a conviction

did not result in a confiscation order. However, section 308

makes clear that property is not recoverable if it has been taken

into account in deciding the amount to be paid under a

confiscation order.

97. In ARA v. Kean, cited above, Stanley Burnton J also said this in the context of the re-

litigation form of abuse:-

“43 In the first place, the ARA is not to be identified with the

CPS. True, both are emanations of the Crown. True, both are

concerned with crime and its proceeds. But they have different

objects, powers and discretions. In this connection I refer to the

judgment of Collins J in T at [20]. Those differences are

reflected in the difference between the object of the CPS's

participation in the Chancery proceedings and the ARA's claim.

In the Chancery proceedings, the object of the CPS was to

prevent Mr Kean acquiring title to the Property. The present

proceedings start from the position that he has title, and seek to

show that he acquired it with the proceeds of crime.”

98. The Attorney General’s Guidance on Asset Recovery Powers provides:

In any case where proceeds of crime have been identified

but…. a conviction has been secured but no confiscation has

been made, relevant authorities should consider using the non-

conviction bases powers available [under POCA].

99. While confiscation proceedings are in personam against the Defendant to determine

whether he has benefited from unlawful conduct and then determining the value of his

assets (irrespective of their derivation) in order to calculate an order that he must pay

back, civil recovery proceedings are in rem against the assets themselves.

100. The difference between the regimes was clearly set out by Lord Phillips in the

opening paragraphs of the Supreme Court judgment in Gale v SOCA [2011] UKSC

49. SOCA was the predecessor of the NCA in the implementation of this regime:


1 The Proceeds of Crime Act 2002 (“POCA”), as amended by

the Serious Organised Crime and Police Act 2005, is designed

to prevent the enjoyment of the fruits of criminal activity. Part

2 focuses on the criminal. To the extent that it is proved, in the

manner prescribed, that a criminal has benefitted from criminal

conduct, a levy can be made upon his assets, whether or not

those assets are themselves the product of his criminal conduct,

by a process inaccurately described as “confiscation”. A

conviction of the criminal is a precondition to the power to

confiscate.

2 Part 5 concentrates on the fruits of crime themselves. The

Serious Organised Crime Agency (“SOCA”) is given the task

of tracking down and recovering the fruits of criminal activity,

whether they remain in the hands of the criminal or have been

passed on to someone else – subject to exceptions for which

POCA makes provision. The fruits of criminal activity can be

recovered under Part 5 whether or not anyone has been

convicted of the crime or crimes that have produced them.

Discussion and conclusion on abuse

101. The NCA application for the PFO specifically alleged that Mr Simkus had been

engaged in additional frauds beyond those which he had admitted in the criminal

proceedings. This was because he was in possession on arrest of fake passports and

because numerous accounts had been opened in those identities with large sums of

cash received. Funds passing through accounts under his control far exceeded Mr

Simkus’ known legitimate income. It was clear that the NCA was seeking to

investigate and perhaps advance the whole prosecution case and that it did not limit

itself to the admissions made by Mr Simkus. I deal with disclosure of the expected

outcome of the criminal proceedings to Mr Justice Jay below, but for the purpose of

deciding whether the application for the PFO was (and the application for a civil

recovery order is) an abuse of the process of the court I approach the issue on the

basis of all that I know. I will conduct a broad merits based evaluation of all the

circumstances to determine whether these proceedings should stop now, from which it

would follow that they should never have started.

102. There are technical differences between the Part 2 and the Part 5 regimes. I have

identified some of them above. The NCA submits that they are so completely

different in their aim and method that the technical requirements of what I shall call

“re-litigation abuse” are not met. I do not accept this, because I do not think that this

form of abuse is technical in its nature. I also do not think that they are so different

that these differences are automatically an answer to the allegation of abuse. They are

different methods of appropriating the value of the proceeds of crime. Such fine

distinctions do not address the real force of this variety of abuse which is derived

from the need for finality in litigation and from the injustice in proceeding against a

person for the same thing over and over again. Nemo debet bis vexari is a Latin

maxim which means just that: no-one should be troubled twice for the same cause. I

have indicated that I will consider this variety of abuse in the present context,

following Stanley Burnton J. I do this despite my doubt as to its applicability here.


The whole point of Mr Simkus’ argument is that the NCA’s case was not litigated in

the Crown Court. He claims that it should have been, if it were ever going to be. He

therefore argues not that he should not be vexed twice by it, but that he should never

be vexed with it at all. By its conduct in the criminal case, he says, the CPS deprived

the NCA of access to a statutory power conferred on it in the public interest by

Parliament. It stretches the rule for civil litigation found in Henderson v. Henderson

as explained in Johnson v Gore Wood & Co [2002] 2 AC 1 a long way to import it

from ordinary civil litigation between private parties to the present entirely different

context. Nevertheless, despite this doubt, I shall apply it in the way that I have

described. I shall, of course, take these factors into account in my broad merits based

evaluation.

103. Mr Simkus was not troubled with confiscation proceedings in the criminal

prosecution, except that his assets were the subject of a restraining order. The

prosecution decided not to pursue him under Part 2. They did that because they

thought they would recover more money for the public if the NCA proceeded under

Part 5 for the reasons I have explained. I have no doubt that although each body took

its own decisions they did so in a way which was designed to maximise the benefit of

their work to the public. That is what they are for. The suggestion made by Mr

Bowers QC who appears for Mr Simkus that in acting in concert these bodies may

have been acting reprehensibly in some way is misconceived. The issue is whether, in

acting as it has in the light of what had happened in the Crown Court, the NCA was

guilty of abusing the process of the court. If the overall effect on Mr Simkus of what

has been done is unjust then a stay will be granted. If not, then not.

104. The prosecution accepted a factual basis for sentence which, if it represented the

whole of the criminality which generated the three assets which are the subject of the

proceedings against Mr Simkus, would preclude the NCA application from

succeeding. However, no assurance was ever given by the prosecution about the

impact of the acceptance of the plea on Mr Simkus’ ability to retain those assets. All

that was said was that confiscation proceedings would not be pursued. By the time

that was said to the court (24th

December 2014) Mr Simkus’ solicitors had been

served with the PFO. Given that there was a large sum of cash in a police bank

account at the time when the factual basis for sentence was agreed, and that no

assurance was given to Mr Simkus about it, his advisers were probably not at all

surprised to see the PFO when it was served. There is no basis for any finding that

Mr Simkus was lulled into a false sense of security or in any way subjected to any

disadvantage by what occurred. On the contrary, the deal which was done on his

behalf was very beneficial. Not only did the sentence reflect an early plea to two

fraudulent transactions only, but the criminal lifestyle provisions were avoided which

meant that he was not required to pay a very large sum of money with a substantial

prison term in default. The assumptions required by Part 2 of the Act in a criminal

lifestyle case can lead to very damaging results for people in Mr Simkus’ position. It

is possible that he may thereby be ordered to pay an order which he does not have the

means to pay. A civil recovery order cannot have that consequence and is not

accompanied by a prison sentence in default. Instead of those serious adverse

consequences, two of his assets which do exist may be forfeited in civil proceedings.

Even if he had been warned of this possibility when agreeing his basis of sentence he


would certainly have been well advised to act exactly as he did. It is also clearly

relevant that he entered his plea months before these events and was, in the end,

sentenced on his own basis. He plainly did not enter that plea in reliance on any

assurance or misplaced belief about the future of the relevant assets. There is no

injustice to him in the NCA seeking to use a procedure established by the Act. If the

NCA can prove its case the result will be to deprive him of the proceeds of crime.

That case will only be litigated once.

105. Where Parliament provides two different procedures which are available to the state

in respect of the same subject matter, see section 240(2) of the Act, it is for the state to

choose which to use. The state ought to choose the procedure which will produce the

greatest benefit to the public, providing that no injustice is caused to the respondent.

That is its duty, and that is what has happened here.

106. I therefore reject the submission that these proceedings are an abuse of process

because of the aspect of re-litigation which is involved. I consider that it is entirely

misconceived. I of course leave open the question which might arise if there are

confiscation proceedings in the Crown Court and civil recovery proceedings where

the same assets are alleged to be part of the available amount for the purposes of

confiscation and said to be recoverable property for civil recovery purposes. Even in

the stronger case than the present where an issue has been litigated and decided by a

court, the approach to abuse of process by re-litigation is not as hard edged as Mr.

Bowers QC’s submission would suggest. In Arthur JS Hall v. Simons [2002] 1 AC

615 at 702F-703D Lord Hoffmann said this:-

Hunter v Chief Constable of the West Midlands Police [1982]

AC 529 shows that, superimposed upon the rules of issue

estoppel and the Civil Evidence Act 1968, the courts have a

power to strike out attempts to relitigate issues between

different parties as an abuse of the process of the court. But the

power is used only in cases in which justice and public policy

demand it. Lord Diplock began his speech, at p 536, by saying

that the case concerned:

"the inherent power which any court of justice must

possess to prevent misuse of its procedure in a way

which, although not inconsistent with the literal

application of its procedural rules, would nevertheless be

manifestly unfair to a party to litigation before it, or

would otherwise bring the administration of justice into

disrepute among right-thinking people. The circumstances

in which abuse of process can arise are very varied; those

which give rise to the instant appeal must surely be

unique. It would, in my view, be most unwise if this

House were to use this occasion to say anything that


might be taken as limiting to fixed categories the kinds of

circumstances in which the court has a duty (I disavow

the word discretion) to exercise this salutary power."

I, too, would not wish to be taken as saying anything to confine

the power within categories. But I agree with the principles

upon which Lord Diplock said that the power should be

exercised: in cases in which relitigation of an issue previously

decided would be "manifestly unfair" to a party or would bring

the administration of justice into disrepute. It is true that Lord

Diplock said later in his speech, at p 541, that the abuse of

process exemplified by the facts of the case was:

"the initiation of proceedings in a court of justice for the

purpose of mounting a collateral attack upon a final

decision against the intending plaintiff which has been

made by another court of competent jurisdiction in

previous proceedings in which the intending plaintiff had

a full opportunity of contesting the decision in the court

by which it was made."

But I do not think that he meant that every case falling within

this description was an abuse of process or even that there was

a presumption to this effect which required the plaintiff to bring

himself within some exception. That would be to adopt a

scheme of categorisation which Lord Diplock deplored. As I

shall explain, I think it is possible to make some generalisations

about criminal proceedings. But each case depends upon an

application of the fundamental principles. I think that Ralph

Gibson LJ was right when, after quoting this passage, he said in

Walpole v Partridge & Wilson [1994] QB 106 , 116a that

Hunter's case [1982] AC 529 decides "not that the initiation of

such proceedings is necessarily an abuse of process but that it

may be".

The procedural issues

107. As I have recited above, Ms Kelly did inform the Mr Justice Jay in her first witness

statement

i) That there were criminal proceedings in which confiscation proceedings were

not to be taken.

ii) That there was a Restraint Order in place in the criminal proceedings.

iii) That Mr Simkus had pleaded guilty to two instances of fraud totalling

£44,688.70 although the prosecution had alleged greater culpability than this.

The basis of plea and the expert report were exhibited to her statement and

were disclosed to the Judge.


iv) That her investigation to sought to establish that the assets held by Mr Simkus

were the result of unlawful conduct which had not been proved in the criminal

proceedings although she had no more evidence than the police/CPS had

procured. It followed that she was proposing to investigate criminal conduct

which had been alleged and proved in the criminal proceedings. Unless she

was intending to go beyond what had been proved in the Crown Court, she

was wasting her time. That had already been done.

108. What Ms Kelly did not say was that the prosecution had agreed to sentencing taking

place on the basis asserted by Mr Simkus, and had decided not to institute

proceedings under Part 2 of the Act because that acceptance meant that they would be

limited to recovering only the sum which they had proved that he had obtained,

namely £44,688.70. She did not alert the court to the argument that the basis for

sentence undermined the factual cogency of NCA’s case.

109. The claimant’s submission on non-disclosure boils down to the contention that “the

NCA failed to tell the Court that the factual basis of its application had already been

litigated in the criminal proceedings and that the criminal court had rejected the case

advanced by the Crown.” It has not been established to my satisfaction that the

Crown Court did reject the Crown’s case. The Crown Court refused an adjournment

so that the Crown could investigate and challenge the evidence of an expert witness

called on behalf of Mr Simkus. A hearing took place in which that witness gave

evidence and was hardly challenged. By some process after that the parties came to

terms as to the basis of sentence. That would not have been either necessary or

appropriate if the judge had decided the facts on which he would sentence in a ruling.

110. It is accepted by the NCA that the “Agreed Basis for Sentence” was not placed before

the Court on the PFO application, although the NCA had received an unsigned copy.

It was open to it to make an enquiry of the CPS to ascertain whether the unsigned

copy represented the Crown’s position for sentencing, and I have not been told

whether that was done or not.

111. The NCA submits that this could not be a material non-disclosure because the precise

sentencing basis for Mr Simkus plea to conspiracy would not have affected Mr Justice

Jay’s decision under s245A POCA in deciding whether there was a good arguable

case that the money in the bank account, the cash seized by police and the Smart

motor vehicle were obtained by any persons’ unlawful conduct (the Smart car is not a

subject of the civil recovery proceedings and no further consideration needs to be

given to it). I do not understand this submission. The fact that the Crown had

decided it could not prove any further unlawful criminal conduct against Mr Simkus

to the criminal standard may well have been relevant to the judge’s decision on what

he thought the NCA had a prospect of proving on the civil standard. It could not be

decisive, but whether it was relevant was a matter for him to decide and not the NCA.


On one view (wearing Hughes LJ’s “defence hat”) it might be, and that is enough to

require its disclosure. I conclude that greater candour was required about the state of

the criminal proceedings as they then stood. As far as Mr Justice Jay knew, the

Crown might have succeeded at the Newton hearing and Mr Simkus may have been

due for sentencing on a basis entirely consistent with the NCA’s case in the proposed

civil recovery proceedings. He was not told that this was so, but allowed to believe it

might be.

112. Mr Simkus is able to advance an argument before me based on R v. Lunnon [2005] 1

Cr App R(S) 24 and R v. Lazarus [2005] 1 Cr App R(S) 98 which explained the

relationship between findings of fact at trial or sentence and findings made in

subsequent confiscation proceedings. The “rule” is that where the Crown makes an

admission of fact as to the involvement of the defendant in crime for the purposes of

sentence without reserving its position in any subsequent confiscation proceedings it

may be unjust to apply the statutory assumptions without reference to the concession

by the Crown. As it was put in Lunnon

Once the Crown had made a concession, unless and until it was

withdrawn, there would be an apparent injustice in the court's

ignoring it for the purposes of a confiscation hearing. At least,

when the court stood back to consider the risk of injustice, a

fully reasoned explanation would be required as to why the

statutory assumptions should apply.

113. This was an argument which would have been available to Mr Simkus before Mr

Justice Jay had the full position been explained to him. In this case, the CPS did not

make any qualification to its concession for the purposes of confiscation proceedings

because it did not intend to pursue any. I have already conducted a broad merits

based evaluation of the justice of the case and it follows from that that I do not

consider that this argument could have succeeded if it had been made. The statutory

assumptions in a criminal lifestyle case have the consequence that a substantial

default term of imprisonment will be imposed and, frequently, served. Civil recovery

proceedings do not have that consequence. They may result in the forfeiture of

existing assets and do not require a defendant to pay a sum of money when there may

be no evidence that he actually has the means to do so. Moreover, Parliament has

decided that the CPS and the NCA are different bodies with different functions. A

concession by one in one set of proceedings should not bind the other unless,

following a broad merits based evaluation, that is what the justice of the case requires.

I do not believe that there is any carry over of the heavily qualified “rule” in Lunnon

and Lazarus into the present context. The conduct of the state towards the defendant

must be evaluated in the way I have described and a remedy granted if required.


114. I have come to the conclusion that there was non-disclosure. I am asked in that event

to continue the PFO or to make another one in the same terms. The NCA says:

i) The non-disclosure was inadvertent and there is no suggestion of mala fides.

ii) There has been no prejudice against Mr Simkus (he was able to continue

withdrawing living expenses despite being in custody and having returned to

Lithuania)

iii) If Mr Simkus really had any complaint about non-disclosure in respect of the

PFO application, it is contended that it would have made such application

sooner (Mr Godden confirms that the PFO was served on him on 19 December

2014 and the witness statement and exhibits in support on 22 December). In

the circumstances, it has taken Mr Simkus almost a year to make the

application. Indeed, as the PFO only came into effect upon the discharge of the

Restraint Order, there was plenty of time to make an application before it came

into effect on 20 January 2015.

iv) The assets should be frozen pending determination as to whether they have

been obtained from unlawful conduct because the NCA has now applied for a

Civil Recovery Order.

v) The assets would almost certainly be dissipated if the PFO against Mr Simkus

is discharged because he is out of the jurisdiction. This would render any

ultimate successful claim for Civil Recovery nugatory.

115. I have concluded that there was non-disclosure of a material fact but that it was not so

grave or, to use the word of Longmore LJ, “appalling” that the order should be

discharged. In taking this decision I attach substantial weight to the public interest in

the continuation of the order. I take the view that it was serious, because it seems to

me that the decision to seek an ex parte hearing in this case was a balanced one

because of the extensive dealings between the Crown and Mr. Simkus in the Crown

Court. It was appropriate, as I have found, but it obviously meant that careful and full

disclosure had to be given of the actual state of play in the criminal proceedings. The

failure to mention the outcome of the Newton hearing and to obtain and supply the

agreed basis of sentence is to my mind inexplicable. I am told that it was inadvertent

and that “there is no suggestion of bad faith”. I do not know why it happened. The

only explanation I have received is in the statement of Ms. Kelly who says that she

did not disclose the basis of sentence because she only had an unsigned copy. This is

not an adequate explanation. A signed copy or at least confirmation that the


document was agreed could have been obtained by a phone call to the CPS. I make

no finding of bad faith, but I do think that this failure is one which should not and

would not have happened if those preparing the application had been fully informed

and had properly applied their minds to the disclosure issue. In the end, the points

which proper disclosure would have made available to the judge are not in my

judgment points which mean that the PFO would not have been made anyway, as I

have explained. That is not the test for the disclosure duty but it is relevant to whether

the PFO should be discharged.

116. I accept submissions (ii)-(v) made by the NCA and set out at paragraph 114 above.

There are now civil recovery proceedings in place which I have not stayed as an abuse

and which will therefore be tried. They will be rendered academic if the order is not

continued. Mr Simkus is a convicted criminal resident abroad. He has brought this

application because he wants to have the assets. If he gets them, they will no longer

be available to satisfy any order which will be made. The PFO was served on him

before it came into effect and provided liberty for him to apply to vary or discharge it

which is a full procedural safeguard against any injustice caused by material non-

disclosure in this kind of situation. If his point is a good one it could and should have

been taken before the PFO ever came into effect. I therefore decline to discharge the

PFO. I do not think that it matters whether I act in this way, or whether I discharge

the PFO and make a new one. The court has a general discretion to make an

appropriate costs order to reflect the justice of the case whichever course is taken. I

am satisfied that there should be a PFO in the present form and will therefore refuse

the application to vary or discharge it. I will return to this subject when I deal with

costs.

117. I have already dealt with the other procedural points. The existence of the restraint

orders militated against the making of an order ex parte but this was disclosed to the

judge who proceeded to make the order on the papers. That was a decision which was

a reasonable one for him to make. Other judges may have taken another course, but

this does not invalidate the PFO. Otherwise the procedural points are fully addressed

above in the first part of this judgment.

Costs.

118. Mr Simkus seeks a further exclusion from the PFO to meet legal costs associated with

the making of this application. When the PFO was made, it contained an exclusion

allowing him to spend up to £3,000 plus VAT so that he could take legal advice in

relation to the PFO, prepare a statement of assets in accordance with paragraph 7A.3

of the Practice Direction – Civil Recovery proceedings and if so advised apply for this

order to be set aside or varied. The costs of and occasioned by the application for the

PFO were reserved.

119. On 22nd

June 2015 Mrs. Justice McGowan amended the PFO so that the exclusion

was increased to £10,000 plus VAT for the same purposes. The costs of the

application were costs in the case. The NCA was ordered to obtain and pay for a

transcript of the hearing of 16 June 2015 including the judgment of Mrs. Justice

McGowan. The transcript of the hearing is on Casetrack as CO/5844/2014 and the

judgment and post judgment discussion is available as [2015] EWHC 2345 (Admin).

It does not appear that the following provision of the Practice Direction was drawn to

the attention of the judge:-


7A.5

The court will normally refer to a costs judge any question

relating to the amount which an exclusion should allow for

reasonable legal costs in respect of proceedings or a stage in

proceedings.

120. The present written application seeks an exclusion to allow payment of a costs

liability of £27,269.85. This was amended orally at the hearing. Nevertheless, if

allowed, it will make a substantial inroad into the restrained sums which will

otherwise, if a civil recovery order is made, be paid to the public purse.

121. It appears to me that the first thing I should do is to make an order for costs as

between the parties in relation to these variation proceedings and I should deal also

with the costs of the application to Mrs Justice McGowan. She ordered that they be

costs in the case. This might either

mean that the successful party in the civil recovery proceedings should be the

receiving party or that successful party in the substantive application to vary or

discharge the PFO should get the costs. The transcript does not make it entirely clear

which she had in mind and I will hear submissions about that in due course. I note

that the costs of the application before Mrs. Justice McGowan were said at that time

to be £6,000. This is a substantial amount for an application of that kind and the issue

concerning her costs order is therefore significant.

122. It also appears to me that the application before her was for an exclusion of £18,000

plus VAT to include the costs of the substantive application. She allowed only

£10,000. It may be arguable that she has therefore already determined the costs issue

which I am now being asked to revisit. I will also wish to compare the material which

she had with the present application to ascertain why the written application before

me claims (in round figures) £10,000 more than was thought to be necessary in June

2015.

123. I will therefore not rule on the exclusion application until I have heard further

submissions in the light of my dismissal of the application to vary the PFO and my

finding that the NCA was guilty of non-disclosure. Both of these things are capable

of sounding in costs.

124. When I consider this matter further, I will require the material which was placed

before Mrs. Justice McGowan by the parties. I will also require a statement of assets

from Mr Simkus as defined by the 7A.3 of the Practice Direction which is up to date.

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High Court Judgment Template - Doughty Street …€¦ · IN THE HIGH COURT OF JUSTICE ... (NCA) from the High Court seeking the ... They are civil proceedings as a matter of domestic