Civil Recovery & Property Freezing Orders

Civil recovery proceedings are a method to recover the proceeds of crime whereby an enforcement authority can recover the property’s value obtained through unlawful conduct. In the United Kingdom, civil recovery proceedings are undertaken according to the powers contained in the Proceeds of Crime Act (POCA) 2002. Section 5 of the POCA act deals with civil recovery proceedings in civil courts.

Most civil recovery proceedings are brought by the NCA but other prosecuting agencies also exercise such powers.

The state has the power to bring proceedings in the High Court under Part 5 of POCA for the recovery of property held by an individual or a company on the basis that property is suspected of having derived wholly or in part from the proceeds of criminal activity.

A High Court action can be brought against any individual or company if the evidential basis for such proceedings exists and it may be brought at the end of a criminal trial when a defendant has been acquitted.

The important point is that the prosecuting agency does not need to successfully obtain a criminal conviction in order to pursue the recovery of assets in the civil court.

If the prosecuting agency issues High Court civil recovery proceedings, and it can be shown ‘on a balance of probabilities’ that the assets represent the proceeds of crime, the court will make a Civil Recovery Order forfeiting the assets.

Civil recovery proceedings are focused on the assets and not on the individual. The prosecuting agency is not looking to apportion blame or seek a conviction, it is looking to recover property that has been obtained from the proceeds of crime.

As a result, civil recovery proceedings can be brought against an individual or company having no involvement in the unlawful conduct but appears to have benefitted from it.

The first step in civil recovery proceedings involves the prosecuting agency applying to the High Court for a PFO.

The application is made without notice to the individual or company that is the target of the PFO. A High Court judge, sitting in private, will decide whether to grant the application for a Property Freezing Order.

If granted, the effect of the PFO is to freeze all property (UK and worldwide) and bank accounts.

The PFO will contain provisions requiring the individual or company to provide detailed financial disclosure.

The PFO allows the prosecuting agency to freeze all assets whilst it conducts an investigation into the financial affairs of the individual or company. On conclusion of the investigation it can decide whether to issue formal civil recovery proceedings in the High Court.

Our team of freezing order investigation solicitors have significant experience in advising clients served with a Property Freezing Order and the assistance we can provide includes:

• The Property Freezing Order will make provision for the allocation of ‘reasonable living expenses’ to the individual. We will liaise with the prosecuting agency and negotiate the amount of the allowance on your behalf
• The Property Freezing Order also contains a provision to allow ‘reasonable legal expenses’ to be paid from the frozen assets. Again, we will negotiate with the prosecuting agency for the release of funds to cover legal expenses
• In both the above circumstances, if the prosecuting agency is unwilling to allow the exclusion of such funds from the frozen assets, we can advise on the merits of making an application to the court to rule on such matters
• We will review the Property Freezing Order and offer the most appropriate advice. The advice may result in a defence application to the High Court to discharge or vary the Property Freezing Order

The prosecuting agency will seek to identify all ‘recoverable property’ which includes all property obtained through unlawful conduct and all assets which represent such unlawful conduct.

Recoverable property includes real property such as residential property, land and commercial property as well as money in bank accounts, share portfolios etc.

The Property Freezing Order will extend to all recoverable property whether it is held by the company, individual or by a third party such as family, friends and business associates.

Get in touch with our experienced team of frozen assets defence solicitors to get immediate help.

If the Property Freezing Order is not discharged as detailed above, the prosecution agency investigation will continue as will the High Court litigation.

The High Court will set a timetable for the management of the case to include disclosure of evidence, service of witness statements and other related matters.

There are usually opportunities to discuss matters with the prosecuting agency (usually the NCA) with a view to negotiating a settlement. We have significant experience in negotiating settlement discussions and can guide clients through this protracted process.

Alternatively, if a favourable settlement cannot be reached, the matter will proceed to trial before a High Court Judge.

Civil Recovery Orders and Property Freezing Orders are issued by the High Court and there are significant differences between the rules that apply in the civil court compared to the criminal court.

There appear to be some favourable advantages to the prosecuting agency commencing civil proceedings under Part 5 of POCA compared to the additional burden of commencing uncertain criminal proceedings and a conviction before criminal POCA proceedings can be pursued.

The main differences are as follows:

• To commence proceedings under Part 5 of POCA, no criminal charge or conviction is required
• In civil recovery proceedings there is no jury. The trial will be heard by a judge in the High Court sitting alone
• A lower standard of proof is required. In the High Court the prosecuting agency will need to prove its case ‘on the balance of probabilities’ as opposed to ‘beyond reasonable doubt’ in the criminal courts
• The rules on evidence can be less restrictive in the High Court than in a criminal court