Civil recovery under PoCA 2002 & the acquitted defendant
[Be warned - this is an article about civil recovery in court of the proceeds of crime. There is nothing specifically related to general practice accountancy or tax matters in this post!]
Under Part 5 Proceeds of Crime Act 2002 the Crown can pursue civil claims in respect of 'recoverable property' and can seek the forfeiture of 'cash'. Both of these terms have specific meanings in this context.
'Recoverable property' is defined by sections 304 - 310, but the essence is that it is proceeds of crime (or, as the legislation puts it, property obtained through unlawful conduct) and property representing the proceeds of crime. So if I steal a valuable painting that painting is 'recoverable property'. If I then sell the stolen painting the money or asset which I obtain from the sale is 'recoverable property'.
'Cash' is defined in s289(6) and (7). It includes not only notes and coins but also cheques, traveller's cheques, bankers' drafts and bearer shares (but not bank balances).
The key point in proceedings under Part 5 is that the Crown do not have to show that anyone has been convicted of any criminal offence in order to succeed. (The civil recovery provisions of Part 5 of the Act are quite different from the confiscation provisions of Part 2 – which DO require that a person has been convicted of an offence.) Nor do the Crown have to show that the person from whom the asset is being taken is himself the perpetrator of an offence, he may simply be holding an asset which was obtained by the criminal conduct of someone else (although a bona fide purchaser for value is protected). These are civil – not criminal – proceedings and the standard of proof is ‘the balance of probabilities’, see s241(3).
The Crown do not even have to identify a specific offence by which the money or asset was obtained. (In civil recovery proceedings the Crown need not allege the commission of any specific criminal offence but must specify the kind or kinds of unlawful conduct involved.)
Indeed, in relation to cash the Crown may succeed simply by showing that the cash was intended for use in a future crime (s298(2)).
But, apart from that, what the Crown do have to do is satisfy the Court, on the balance of probabilities, that the money or asset in question has been derived from criminal conduct (by somebody who may, or may not, be identified). In the case of 'cash' the Magistrates' Court may then order the cash to be forfeit to the Crown. In relation to other assets the High Court (in England and Wales) may order the property to be vested in a civil trustee who will realise the property for the benefit of the enforcement authority (for example SOCA, the SFO or the CPS).
This raises an interesting technical question. If a defendant has been acquitted of a crime (meaning that it has not been proved to the criminal standard - 'beyond reasonable doubt') can an asset or cash believed to have been derived from that crime be subject to civil recovery (since the lower standard of 'the balance of probabilities' applies in civil recovery proceedings)?
You may remember the notorious case of OJ Simpson in the United States. Mr Simpson was acquitted of the murders of Nicole Brown and Ronald Goldman, but was subsequently ordered by a civil court to pay substantial damages to the Goldman family as he was (in the civil court) held to be liable for Mr Goldman's 'wrongful death'.
Let's consider the case of Peter who has been acquitted of mortgage fraud. Can the Crown now commence civil recovery proceedings against the house he purchased with the mortgage?
Or the case of Gwen who has been acquitted of 'possession of criminal property' in relation to cash of £30,000 which the police found and seized when they searched her home. Can that cash now be subject to forfeiture in the Magistrates' Court?
It seems to have been the view of the (then) government when PoCA 2002 was being debated in the Houses of Parliament that civil recovery proceedings could be pursued in these circumstances. In the House of Lords Lord Goldsmith, speaking for the government, said on 13 May 2002, "We certainly do not accept that, where a criminal case has not resulted in a conviction, civil recovery action should automatically be barred". Later he added, "I do not shrink from the fact that . . . evidence is available in the civil process which would satisfy a court, even though it did not satisfy the criminal process".
But the UK has brought into effect the European Convention on Human Rights, by virtue of the Human Rights Act 1998. The Convention Rights are set out in Schedule 1 to the Act. Article 6(2), reproduced in the Schedule, says simply, "Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law".
But if a person has been acquitted of an offence in the criminal courts can it be right for a civil court to proceed on the basis that actually he is guilty of that same offence?
The European Court of Human Rights (ECHR) has answered that question with a firm, "No".
In the Scottish case of Scottish Ministers v Doig, reflecting a number of ECHR judgments, the court put it this way (at para 24):
"It is perhaps not immediately obvious as a matter of language that article 6(2) could ever be said to apply to proceedings in which a person is not charged with a criminal offence. It is nevertheless clear from decisions of the European Court of Human Rights that article 6(2) may be said to apply, and be said to be infringed, in the course of proceedings which are not criminal in nature but which follow an acquittal in criminal proceedings. In particular a clear strand of authority suggests (a) that article 6(2) would apply if the later proceedings can be said to be sufficiently linked (in particular by law and practice) as to be the consequence, and to some extent a concomitant, of the criminal proceedings in which the person was acquitted, and (b) that the article would be infringed in these later proceedings if it can be said that the court casts doubt on the soundness of the earlier acquittal."
More bluntly in the case of Geerings v The Netherlands the ECHR held (at para 49):
"following a final acquittal, even the voicing of suspicions regarding an accused's innocence is no longer admissible".
The application of this principle to a civil recovery case in the English Courts was demonstrated by the judgment of the Court of Appeal in Gale v SOCA  EWCA Civ 759. (That case was subject to an appeal heard in the United Kingdom Supreme Court in May 2011 in which judgment is awaited. However the Supreme Court is not expected to question the relevance of Article 6(2) to civil recovery proceedings, rather the issue in the appeal is whether the court in the civil recovery proceedings should have adopted the criminal standard of proof.)
The principle might be summarised as - one court cannot treat a person as guilty (even on a balance of probabilities) of an offence of which he has previously been acquitted in another court.
But where does leave Peter and Gwen?
Peter purchased a house with the aid of a mortgage and has been acquitted of mortgage fraud. In these circumstances I cannot see that the Crown can pursue civil recovery proceedings in respect of the house (which Peter has acquired as a bona fide purchaser for value).
Gwen has been acquitted of 'possession of criminal property' in relation to cash found in her home. I would suggest her position is rather different. Suppose the facts of her defence were that the money in question had been passed to Gwen to look after by her friend Alice. Unknown to Gwen, Alice had obtained the money by drug trafficking, but Gwen neither knew nor suspected that the monies were tainted by criminality.
On that basis Gwen would be properly acquitted of 'possession of criminal property' but the cash itself would still be proceeds of a crime (Alice's drug trafficking). So the cash could, I would suggest, be subject to civil recovery proceedings without casting any shadow of doubt on Gwen's acquittal.
It seems to me that there are three sets of circumstances in which civil recovery could properly proceed:
- where the acquitted defendant lacked the mens rea or actus reus for the offence of which he was acquitted but that nevertheless the money or asset concerned is recoverable property (having been derived from an offence committed by someone else) which is able to be traced into the hands of the acquitted defendant;
- where the money or asset concerned has been derived from a different offence committed by the defendant (i.e. an offence of which he has not been acquitted); or
- where (in the case of cash) it is liable to forfeiture as property intended for use in a future crime.
In short, depending upon the circumstances, it may, or may not, be permissible for civil recovery proceedings to be pursued in relation to money or an asset held by an acquitted defendant.
For obvious reasons it is preferable for the defendant's guilt or innocence to be determined in the criminal courts before any cash forfeiture or civil recovery proceedings are concluded (as noted in Harrison, R (on the application of) v Birmingham Magistrates' Court  EWCA Civ 332).