Funding Civil Asset Recovery Proceedings from a Property Freezing Order

It is now the National Crime Agency (NCA), formerly the serious Organised Crime Agency (sOCA) which is responsible for bringing civil asset recovery proceedings under the Proceeds of Crime Act 2002. In the first instance, if the NCA has identified property over which it may seek a civil recovery order, it is almost certain to seek to restrain the property by making an application for a Property Freezing Order (PFO). This application will be made without notice (ex parte). The imposition of the Order can be challenged but, in practical terms, if there is any legitimacy to the investigation by the NCA then the PFO will remain in force. If it freezes all assets including bank accounts then the problem of living expenses and legal fees is likely to arise. The issue with legal expenses becomes very much more important if the NCA issues a claim and funds are required to defend it.

 Last summer, the Court of Appeal, in sOCA v Amir Azam [2013] EWCA 970, was asked to consider in what circumstances money subject of a PFO should be released for legal expenses for the purposes of a defending a  claim for a civil recovery order. In an excellent judgment Lord Justice Lloyd set out the position as follows:

1. That the burden of proof is on the Applicant for exclusion for legal expenses to show that justice should permit him to use those funds for that purpose;
2. If other assets are available to the Applicant then the Court should refuse any application to use frozen assets for the purpose of legal expenses;
3. If there is doubt about whether other assets are available then the Court may resolve the dispute either in favour or against the Applicant;
4. But if there is no evidential basis for such suspicion other than, for example, some previously held concern about credibility then the general principle is that funds ought to be made available for legal expenses;
5. There is no specific burden on the Applicant to prove he/she has no other available assets.