Director of the Assets Recovery Agency v Robert Alan Kean (2007)
A property freezing order obtained by the Assets Recovery Agency was not discharged despite it having been obtained by non-disclosure and innocent misrepresentation at a without notice hearing, because the agency's misjudgement had not been serious and a broad, merits-based evaluation of all the circumstances found no abuse of process.
The applicant (K) applied for a discharge of a freezing order that had been granted at a without notice hearing on the application of the Assets Recovery Agency. The agency had obtained a freezing order over a house owned by K on grounds that it had been purchased with the proceeds of crime, namely drug trafficking, on the basis of a witness statement from the agency's investigator (N). In earlier, separate Chancery proceedings, K had obtained a declaration that he was the beneficial owner of the house on the grounds that he had built it with an associate (M) to whom he had paid £70,000 in building costs and £10,000 for the house to be transferred into K's sole ownership. Another associate had forged documents transferring ownership of the house to a company that was subsequently dissolved and as a result the legal title vested in the Crown as bona vacantia. In the Chancery proceedings, the CPS's defence merely put K's claim to beneficial ownership to proof, but counsel for the CPS put it to K in cross-examination that the house had been bought with the proceeds of crime. The judge rejected that allegation and found that K had paid the £10,000 to M. K submitted that the freezing order should be discharged because (1) the agency's allegation that the frozen property represented the proceeds of crime had been rejected in the Chancery proceedings and to raise the allegation again was an abuse of process under the principles set out in Johnson v Gore Wood & Co (A Firm) (2002) 2 AC 1 , (2001) 2 WLR 72 ; (2) at the hearing in which the freezing order was granted, N's witness statement had contained material misrepresentations and had failed to disclose relevant evidence.
(1) The agency was not to be identified with the CPS. In the Chancery proceedings, the object of the CPS had been to prevent K from acquiring title to the property, whilst the instant proceedings started from the position that K held that title and the agency sought to show that he acquired it with the proceeds of crime. Also, the Chancery proceedings had made no findings about the source of the £70,000 that K had paid in cash to M. Applying a broad, merits-based judgment that took into account the interests involved, the agency claim was not an abuse of process, Johnson applied. (2) The account of K's criminal record in N's witness statement had been misleading in some respects and N ought to have brought the judgment in the Chancery proceedings to the attention of the judge who granted the freezing order. However, such non-disclosure and innocent misrepresentation would not necessarily lead to the discharge of an order obtained without notice. In the instant case, the making of the order had not caused hardship to K and discharging it would permit K to dispose of the property. The agency exercised its powers in the public interest and if the property had indeed been acquired with the proceeds of crime, the possible result of depriving K of the property ought not to be put at risk by reason of a misjudgement on the part of the agency that was far from serious, Jennings v Crown Prosecution Service (2005) EWCA Civ 746 , (2006) 1 WLR 182 applied. Accordingly, the freezing order would not be discharged.