Perry and Others v Serious Organised Crime Agency [2012] UKSC 35

Summary

The Supreme Court ruled that there is no jurisdiction under the Proceeds of Crime Act 2002 ("POCA") to grant a civil recovery and subsequent freezing order over property outside of the UK.  Further, it held that the Serious Organised Crime Agency ("SOCA") does not have authority to serve notices requesting information under POCA disclosure orders on individuals outside of the UK. This considerably narrows powers in civil recovery proceedings to freeze and recover property outside of the jurisdiction. 

Background

On 24 October 2007 Mr Perry was convicted in Israel of various fraud offences. He was sentenced to ten years' imprisonment and fined approximately £3 million.

Knowing that Mr Perry and his family held funds and property in the UK, SOCA obtained  disclosure orders under which notices, containing penal warnings, were served on Mr Perry, his wife and daughters at Mr Perry's UK address.  SOCA then obtained a worldwide property freezing order against Mr Perry, his family members and associated businesses. Mrs Perry and their daughters resided outside of the UK, in Israel.

Mr Perry appealed the orders in the High Court and Court of Appeal but the appeals were dismissed.

Issues

Nine judges in the Supreme Court, the maximum number to decide any appeal,  considered the wording of POCA to determine whether Parliament had intended to grant jurisdiction to make a civil recovery order or a freezing order in support of it in respect of property worldwide and whether it sanctioned the service of disclosure orders on those outside the UK.

Decision

The Supreme Court found in Mr Perry's favour by narrowing the scope of the extra-territorial application of POCA.

The court held that Parts 2, 3 and 4 of POCA impose a personal obligation in respect of property worldwide; provide measures to secure and release property within the UK; and provide a process whereby requests can be made to other states to take such measures in respect of property located in their territory. Whereas, Part 5 enables recovery in civil proceedings in the UK of property which is or represents property obtained through unlawful conduct. The right is over the property rather than the individual and refers only to UK property.

Lord Phillips, who delivered the main judgment, held that this construction of POCA accorded with arrangements made by the same Act for giving effect to requests from other states in relation to the confiscation of the proceeds of crime. It also accorded with the requirements of a coherent international scheme for confiscation of the proceeds of crime and with principles of public international law.

Sir Anthony Hughes agreed that the appeals should be allowed but added that if it had been possible to construe POCA so as to provide for limited extra-territorial effect for Part 5, he would have done so. He commented that it would make sense for the English courts to have jurisdiction to make a civil recovery order where there was a sufficient link between the UK and the proceeds of crime - for example, where the crime was committed here or the offender is resident here. However, he agreed with Lord Phillips, that was simply not what POCA said.

It was therefore held that there is no jurisdiction under Part 5 of POCA to order recovery of property outside the UK in civil recovery proceedings. It was also held, in relation to the disclosure orders, to be contrary to international law for country A to purport to criminalise conduct which takes place in a different country where the individuals involved are not citizens of country A. It was therefore held that a positive obligation to provide information could not be imposed on persons outside of the UK.

Comment

The judgment provides valuable guidance on the widely drafted provisions of POCA and limits powers in civil recovery proceedings in England and Wales to freeze and recover property outside of the UK.

It was also identified by the Supreme Court judges that, due to an anomaly under Section 286(2) of POCA, the same limitation may not apply to civil recovery orders obtained in Scotland where there may still be power to freeze property abroad.  This is likely to be seen as an unwelcome loophole and one which may lead to amendment of the law.

What the judgment did not address was the extra-territorial effect of the primary money laundering offences under POCA which remain untested.