He Relationship Between Criminal Prosecution and Civil Recovery

Criminal prosecutions, specially paper intensive fraud, corruption and money laundering cases are highly-priced. The fashionable of proof is excessive, the end result is difficult to expect and the device is not frequently supposed to forfeit the proceeds of illegal activity in favour of the State.

Some would possibly think that this explains the advent of unfastened-standing forfeiture complaints and the current conferment of the power to carry them on the prosecuting government.

These sort of powers are not completely new. For example, HM Customs have long had powers to forfeit goods. But wellknown civil healing powers were delivered by Part 5 of the Proceeds of Crime Act 2002.

The lawsuits are began within the High Court and are governed via the CPR. Initially, handiest the Director of the Assets Recovery Agency should deliver them. The ARA turned into abolished and its powers transferred to the Serious Organised Crime Agency in 2007. At the equal time the Crown Prosecution Service, Revenue and Customs Prosecutions Office and Serious Fraud Office have been given the right to convey such civil complaints.

The structure of the civil recovery provisions is that if property is determined with the aid of the Court to have been received by or thru crime or is traceable to crime then the Court have to forfeit it to the State. There are a few exceptions, significantly in which the owner of the belongings is a good faith client to fee with out observe of its crook origin. There are meantime powers to be had to keep belongings, principally the electricity for the Court to make a belongings freezing order, much like a Part 25 freezing injunction.

The use of those powers increases thrilling questions. How should the decision be taken via a prosecutor to behavior a civil case as opposed to a crook one? Will civil lawsuits be used to facet-step the safeguards inside the crook process? Is it proper that extreme criminal activity isn't always marked by means of prosecution and a conviction of the responsible? What are the consequences to civil restoration complaints if crook complaints were introduced?

Prosecuting authorities' decision to conduct civil restoration complaints

The beginning section in Part five of the Proceeds of Crime Act is s.240. This presents:

"General purpose of this Part

240.-(1) This Part has impact for the functions of

(a) permitting the enforcement authority to get better, in civil lawsuits before the High Court or Court of Session, property that's, or represents, property received via unlawful behavior.

(b) [similar in respect of cash forfeiture]

2) The powers conferred by way of this Part are exercisable with regards to any belongings (including coins) whether or not or no longer any lawsuits had been introduced for an offence in connection with the property."

Section 2A of POCA (originally s.2 and transformed whilst the ARA was abolished) sheds some mild at the hierarchy between crook and civil proceedings. By this segment the powers in POCA conferred on SOCA and the prosecuting government must be exercised to reduce crime. The Home Secretary ought to problem steering to SOCA and the Attorney General have to difficulty steering to the prosecuting authorities. That steerage must say that the discount in crime is quality carried out through crook prosecution, rather than civil healing proceedings.

Thus, with the aid of statute it's miles clean that civil restoration lawsuits are secondary to criminal lawsuits. Generally, criminal court cases must be brought if they can. If they can't be brought or were added and fail, civil restoration complaints can properly be considered. So Collins J. In Director of the ARA v He and Chen [2004] EWHC 3021 (Admin) (a case previous to the abolition of the ARA) stated:

"Thus, the method of the Director have to be to allow criminal complaints take precedence, because it had been, and simplest act if such court cases are both no longer being taken, or for any purpose might also have failed if, notwithstanding their failure or the incapability for whatever motive to take them, she takes the view that she can establish inside the necessities of the Act that the belongings in question changed into unlawfully acquired...."

It is critical that the scheme is thought, and that it is apparent that the powers given to the Director are wide-ranging and the purpose at the back of this a part of the Act is, as I have indicated, to allow property which has been acquired by crook conduct to be recovered from the individual or humans who have been worried in that criminal behavior, whether or now not a prosecution has ensued or been a success."

Similar feedback can be located in (1) Satnam Singh v Director of the ARA [2005] 1 WLR 3747 wherein Latham L.J. Said that "Generally speakme the civil system is intended to be subsidiary to the criminal method" and (2) SOCA v Olden [2010] EWCA Civ 143 in which Sir Scott Baker, having considered the adjustments brought approximately the Serious Crime Act 2007, stated "The philosophy of the rules remains that the public hobby is first-rate served with the aid of giving precedence to crook lawsuits where they may be introduced and it is in the public hobby to bring them."

Joint steerage became given via the Home Secretary and the Attorney General to SOCA and the prosecuting government at the 5th November 2009 and may be located on the Attorney General's net-website online. In precis, it says that:-

(1) Criminal prosecution ought to be taken into consideration first.

(2) If the case does no longer meet the standards for prosecution (evidential sufficiency + public hobby), then civil recuperation can be taken into consideration.

(3) In identifying whether the public hobby criteria is met for prosecution, SOCA/the prosecuting government are entitled to take the view that the general public interest is higher served by civil healing court cases.

(4) A crook investigation does not need to be finished earlier than civil recuperation can be taken into consideration.

(5) A crook investigation / prosecution can continue in tandem with a civil recuperation research, however criminal and civil lawsuits can not be carried on on the same time in relation to the same criminal activity.

(6) A prosecution which fails can then bring about civil recuperation.

(7) Civil settlements may be entered into to compromise civil healing court cases, however a ability defendant can not purchase his way out of prosecution through making a civil charge; if the case justifies a prosecution, criminal complaints ought to be introduced.

With the possible exception of absolutely the prohibition on crook and civil lawsuits co-current, the guidance seems practical and according with the statutory regime and the authorities determined beneath it.

It is not clean what is meant within the guidance by using criminal and civil complaints can not be "carried on" "when it comes to the identical criminal activity" at the identical time. If all that is meant is if there are criminal proceedings, then civil healing court cases should not be actively pressed by using litigation, then it is unobjectionable. However, it's far possible to envisage instances in which it's far practical to have as a minimum a civil restoration assets freezing order in pressure at the same time as crook court cases. For example wherein assets derived from crime finished via X is held via Y; X is prosecuted and Y (for whatever cause) is not.

In R v Innospec Limited [2010] EW Misc 7 EWCC (Southwark Crown Court), Lord Justice Thomas sat within the Crown Court to sentence Innospec a business enterprise which had pleaded responsible to corruption. The Crown and Innospec had agreed, subject to approval with the aid of the Crown Court, the quantity of a crook confiscation order: $6.7m. It was additionally agreed between the parties, and might in due route need to be accredited by using the High Court, that Innospec would submit to a civil recovery order for a similarly $6m.

Thomas LJ defined that a prosecutor couldn't agree a specific penalty on this manner and have to never enter into an settlement of this kind once more. The Consolidated Criminal Practice Direction best accepted levels of sentence, in accordance with authority, to be identified. The UK's international duties beneath the OECD Convention on Combatting Bribery of Foreign Public Officials 1997 require the UK to enforce crook sanctions which can be "powerful, proportionate and dissuasive."

Thomas LJ emphasised that corporations responsible of corruption must be dealt with like some other crook defendant. It became "not often suitable" for crook behavior by way of a employer to be treated by using a civil healing order. This become particularly so in the case of corruption, guilt of which should be made patent by way of a crook sanction. There can be room for civil restoration similarly to a satisfactory and the Lord Chief Justice need to bear in mind instructions that would permit the equal decide to keep in mind both at the same time.

Thomas LJ's feedback ought to be visible in context. The context was a organisation in opposition to whom there was a practical prospect of conviction; certainly it had pleaded guilty. Thomas LJ cannot have intended that wherever there may be any evidence of corruption (or for that rely any serious acquisitive crime) then there have to be a prosecution and it might hardly ever be appropriate to bring civil court cases; otherwise Thomas LJ could be encouraging prosecutorial choice making contrary to the Code for Crown Prosecutors. What Thomas LJ must suggest is that where the test for prosecution inside the Code is glad a prosecution must normally comply with.

Construed on this way, Innospec is regular with the Code for Crown Prosecutors and the Joint Guidance. If criminal complaints may be introduced and it's miles within the public hobby to deliver them, they must be added, as opposed to civil court cases. The Joint Guidance allows the prosecuting authorities to take account of the provision of civil recovery whilst finding out whether it's miles in the public hobby to prosecute. But as stated in paragraph 4 of the Joint Guidance:-

"care should be taken now not to permit an individual or body company to keep away from a crook investigation and prosecution through consenting to the making of a civil healing order, in circumstances where a criminal disposal could be justified below the overriding principle that the reduction of crime is typically best served by way of that route, and in accordance with the general public hobby elements in the applicable prosecutors' Code."

The prospect of managing a corruption or different extreme proceeds of crime inquiry with the aid of civil court cases therefore remains open. The SFO, specifically, is probable to see this as appropriate news as it's miles promoting a policy on corruption which inspires self-reporting with the prospect of the case being treated via a civil recuperation order instead of prosecution.

Bringing civil recuperation proceedings where criminal complaints have failed

It is entirely understandable that defendants triumphant in crook complaints are dismayed to be served with a declare shape for civil restoration alleging the equal illegal activity.

However this is expressly supplied for through s.240(2) set out above and, for what it is really worth, supported with the aid of the Joint Guidance.

Further, in a sequence of unbroken instances, to this point at least, the Courts have always held that one of these route is inside the statute.

In Director of ARA v Green and Others [2004] EWHC 3340 (Admin) the submission that wherein crook court cases were stayed as an abuse of manner, it'd be wrong for the ARA Director to deliver civil healing lawsuits turned into rejected by means of Collins J. POCA especially permits restoration lawsuits to be brought whatever fate had befallen earlier criminal proceedings. The ARA Director changed into a separate entity from any prior prosecuting authority. The reality that crook court cases were stayed as an abuse of system did not in itself make it an abuse to pursue recovery complaints inside the High Court.

Similar feedback may be found in Director of the ARA v He and Chen [2004] EWHC 3021 (Admin).

In most of those cases the Court was inspired by the separate role of ARA or SOCA in preference to the function of a prosecutor. So in Olupitan and another v Director of the Assets Recovery Agency [2008] EWCA Civ 104 the Court of Appeal authorised Langley J the trial decide while he stated:

"The Director isn't to be equated with the Crown as prosecutor. The Director is independent with a different function and powers. That role and those powers exist regardless of criminal lawsuits; segment 240 (2) (the 2002 Act)."

And in Serious Organised Crime Agency v Olden (above)the defendant had efficiently appealed to the Court of Appeal against his conviction when you consider that evidence have been unlawfully acquired and ought to not have been admitted. His conviction changed into quashed. Civil recovery lawsuits had been added. The Court of Appeal upheld the trial choose's choice to confess the proof. Reference became made to the cited passage from Langley J's ruling in Olupitan. The Court of Appeal held that the decision to admit the proof turned into one for the trial choose who should take it free from the decisions taken through the crook courts.

All these instances, shop Olden have been wherein the handiest person who ought to bring civil recovery court cases turned into the Director of the ARA. The handiest case determined after the changes introduced about by way of the Serious Crime Act 2007 is Olden. But in Olden the claimant turned into SOCA, no longer the former prosecuting authority, and the Court of Appeal appeared to location some emphasis at the reality that SOCA were now not a prosecuting authority.

Consequently, the conferment by Parliament of civil recuperation functions on the prosecuting authorities calls for reconsideration of whether or not civil restoration court cases can be added via the identical frame which failed in criminal lawsuits.

It is idea that the solution can be found in the statute. S.240(2) especially allows civil proceedings wherein criminal lawsuits have failed. If assets is observed through the Court to be the proceeds of crime, it ought to be made subject to a restoration order (s.266). The trendy of proof is decrease - a balance of chances (s.241(3)). And the Joint Guidance, approved by using s.2A, especially permits civil restoration wherein criminal proceedings have failed. These features through themselves are sufficient for a civil recuperation claimant to be the equal body that formerly unsuccessfully prosecuted the equal defendant.

Any relief for the defendant have to be discovered within the preferred jurisdiction of the High Court, to be had in all moves and diagnosed in CPR Part three.4 to strike out the claimant's case as abuse of procedure. As stated, it is not thought that the bringing of civil proceedings where a prosecution has failed is, by means of itself, an abuse. But it's miles viable to envisage occasions where it is probably. For example, if the prosecuting authority and a defendant attain an agreement as to gain from crime within the making of a confiscation order, it'd properly be an abuse for the identical prosecuting authority to then begin civil recovery proceedings which, at the statistics, cross at the back of that agreement (see through parity of reasoning Lunnon [2005] 1 Cr App (S) 24, where an agreed foundation of plea for sentence limited the Crown's assertions in confiscation court cases thereafter).

Civil healing complaints where there was a confiscation order

POCA makes provision to prevent a couple of restoration. Part 2 of POCA creates the power of the Crown Court to make a confiscation order following conviction. It is an order to pay a sum of money. It is calculated through assessing the quantity of the convicted defendant's "benefit" from crime. Benefit is the fee of the assets received by the defendant (now not retained). It also can be the price of a financial advantage obtained (eg a tax or other liability avoided); and if so, the defendant is taken to have obtained a amount of money to that fee (s.76(5)). The advantage quantity then will become payable as a confiscation order, until the defendant suggests he cannot pay it from his assets. Then the order is constrained to the cost of the defendant's belongings.

POCA makes a truly dismal try to save you unfair civil healing in which there has already been a confiscation order.

First, s.308(nine) provides that property isn't recoverable if it's been taken under consideration by way of the Crown Court whilst finding out someone's benefit for the making of a confiscation order. This is a dreadfully badly idea out statutory provision. Although possibly geared toward stopping double recovery, it is able to prevent any recovery in any respect.

For example, if a defendant is convicted of stealing a portray worth 50,000 which he sells to a fence for 20,000, his benefit is 50,000, that being the cost of the portray on the time he obtained it (s.80). If he has dissipated the 20,000 and has no property, no confiscation order can be made (keep for a nominal quantity) (s.7(2)). But the impact of s.308(9) is that the portray cannot be recoverable belongings. It therefore cannot be the subject of civil healing proceedings inside the fingers of the fence, nor another person who eventually receives it. Further, if the fence sells it on for forty,000, the forty,000 within the hands of the fence might not be recoverable property because the tracing policies in POCA require the brand new belongings to were exchanged for recoverable belongings, which in this situation the portray is not (s.305).

The equal problem arises in which there's a joint acquiring and only one defendant is convicted. A joint acquiring approach each obtains the whole, some thing might also subsequently occur to the belongings (May [2008] 1 AC 1028). So if A is convicted of fraudulently acquiring 1m and passes it to B, who for some thing purpose can not be prosecuted, no civil recovery proceedings may be brought in opposition to B or some other man or woman who subsequently offers with the finances or belongings traceable to it. This is so, even supposing A has no assets and so no confiscation order was made towards him.