Speed read: Jonathan Fisher QC discusses the convergence of civil and criminal procedure in cash forfeiture appeals. The powers are civil in nature but the requirement of underlying criminal conduct and use of the Crown Court, with inadequate procedural rules, leads to an unfortunate conflation of the two systems.
Increasingly, legislatures are deploying the civil process in the fight against financial crime, as an alternative to criminal prosecution. The regime for civil recovery in Part 5 of the Proceeds of Crime 2002 is the high watermark, as enforcement authorities such as the National Crime Agency commence civil proceedings in the High Court to confiscate property which has been obtained through unlawful conduct. There is a parallel regime in Part 5 of the Proceeds of Crime Act 2002 for the forfeiture of cash obtained through unlawful conduct, and here the enforcement authority must commence proceedings in the Magistrates Court. These proceedings are subject to an appeal by way of re-hearing in the Crown Court. The application of the cash forfeiture regime has been expanded in the Criminal Finances Act 2017 to include forfeiture of credit balances held in bank accounts. In these cases, the key area of dispute turns on the provenance of the property in question. The enforcement authority asserts that the circumstances in which the property has come to be held are highly suggestive of criminal activity, and it falls to the owner to present an explanation to the High Court or the Magistrates Court / Crown Court as to the lawful origin of the property which is coherent and credible. Invariably, the enforcement authority will respond by asserting that the owner’s explanation is neither coherent nor credible, and the Court will be required to determine the factual dispute. It is important to understand that under the civil forfeiture regime the enforcement authority is not required to establish the specific type of criminal activity which funded the acquisition of the property. It is sufficient for the enforcement authority to show the type of criminal activity, and no more. Procedures in the High Court for dispute resolution have been developed over hundreds of years, and processes such as the use of pleadings, witness statements, interrogatories, discovery of documents, pre-trial reviews and court directions, are common place. However, neither the Magistrates Court nor the Crown Court are adequately equipped to deal with these matters.
Focusing on the position in the Crown Court, where an appeal by way of re-hearing has been instituted as a safeguard against error in the magistrates Court, Rules of Court need to be made to establish templates for use in cash forfeiture cases. There is, for example, no bespoke notice of appeal to be used when appealing a decision of the Magistrates Court to the Crown Court. There is no provision for the Court to order a pre-trial review, and the Court’s ability to require the attendance of the appellant is uncertain. As a court established by statute, the Crown Court does not have any inherent jurisdiction, and therefore it cannot cure any deficiency in its procedural rules of its own motion. In a cash forfeiture appeal, the Crown Court has no power to require the service of witness statements by either party, let alone pleadings or skeleton arguments, and there is no provision for discovery by either party. There is no power for the Court to order the production of a core bundle, or other useful aids such as a chronology, a dramatis personae, a case summary, and a list of issues. In many small cases in the Magistrates Court and/or on appeal to the Crown Court, none of this will matter. The evidence from an enforcement authority may be very confined.
Typically, a customs officer may give evidence that a person coming through an airport was carrying £10,000 in cash, and he failed to give an explanation as to its source.
But there will be other cases where the amount of cash is much larger, and the owner’s explanation may be complex, especially where it has a commercial background. In one case, a highly successful South African businessman was stopped at an airport with £500,000 in his possession. He asserted that he was side-stepping exchange controls, and the money had a legitimate business origin. In this type of case, difficult issues of law and fact may arise. In these circumstances, a cash forfeiture appeal can be determined fairly in the Crown Court only if the legal representatives for both parties are prepared to participate in sensible dialogue on a consensual basis.
Even if Rules of Court are put in place, the determination of these issues in a criminal court raises broader issues. When establishing the civil forfeiture regime, the government was at pains to explain that an adverse finding leading to confiscation of property would not cast any aspersion on the conduct of the person against whom the order was made. The finding is not a finding of guilt against the property holder, and it should not operate as a stain on character. Civil forfeiture gives rise to proceedings in rem, and not in personam.
But there are many cases where an enforcement authority seeks civil forfeiture of property against a person who is alleged to have obtained the property unlawfully.
In these cases, the whole ambience and physicality of the use of the criminal courts for the determination of a civil dispute is unfortunate. In a recent case in which I was instructed, the Crown Court Judge frequently referred to the National Crime Agency as the prosecutor. It was not the prosecutor. Rather, it was the respondent to a civil appeal. In a similar vein, the Judge repeatedly referred to the property owner as the defendant. Rather, he was the appellant who was pursuing a civil appeal. The usher was uncertain as to where the appellant should sit, attempting to cajole him into the dock in circumstances where he was not accused of the commission of a criminal offence.
The lesson is clear. Whilst there may be sound reasons for deploying the civil process to forfeit the proceeds of crime, where the criminal courts are used as the venue for trial, it is vital that these courts are equipped to deal with cases in a manner which is fair to the enforcement authority as well as the defendant. In the absence of formalised processes and guidance to Magistrates and Crown Court judges about the true nature of the civil proceedings, the risk of injustice is high.
This piece is based on the quarterly commentary published by the Lloyd’s Law Reports: Financial Crime (April 2019) , written by Jonathan Fisher QC.