Case Comment: Gale v Serious Organised Crime Agency  UKSC 49
21 Monday Nov 2011
In Gale v Serious Organised Crime Agency, the UK Supreme Court sent a simple message to Strasbourg: if we are duty bound to follow decisions of the ECtHR then, at least in this area, they need to be clearer. A new decision from the Grand Chamber on this point in the near future seems inevitable.
The issue in question is how ECHR, art 6 applies when criminal allegations are being proved in the context of civil proceedings. In the last two years the Supreme Court has grappled with this conundrum in various ways: in relation to control orders; allegations of terrorist financing (SSHD v AF  UKHL 28); compensation for those who have suffered miscarriage of justice (R (Adams) v Secretary of State for Justice  UKSC 18); and criminal conduct as the subject of disciplinary proceedings (R (G) v The Governors of X School  UKSC 30). It arose yet again in this case, in relation to the recovery of the proceeds of crime.
Under the Proceeds of Crime Act 2002, Pt 5, the Serious Organised Crime Agency may bring civil proceedings to recover the proceeds of unlawful activity even if there has been no criminal conviction. S 241 of POCA allows the court to make such an order if it is satisfied that the alleged unlawful conduct occurred to the civil standard – “the balance of probabilities”.
Mr Gale had been acquitted in Portugal of drug trafficking, and criminal proceedings against him in Spain had been discontinued. But, on the application of the Serious Organised Crime Agency under Pt 5 of POCA, Gareth Wiliams J. found that £2m of his assets were the proceeds of drug trafficking, money laundering and tax evasion in the UK, Spain and Portugal. He made an order against Mr Gale in that sum.
When the Serious Organised Crime Agency won that application they also sought costs against Mr Gale. In doing so it included in its litigation costs a further £1m, that related to the costs of the interim receiver who had investigated and reported on Mr Gale’s assets over several years. In most cases a receiver’s costs are not litigation costs. They are normally deducted from the assets in question. Therefore, following earlier authority to that effect, Gareth Williams J. declined to add the receiver’s costs to the litigation costs awarded against Mr Gale.
On appeal, the Court of Appeal rejected Mr Gale’s appeal against the order, but allowed the Agency’s cross-appeal in relation to its litigation costs.
In this case, Mr Gale appealed to the UK Supreme Court on both issues. He claimed that the application of the civil standard in determining that his assets were the proceeds of crime, particularly in the context of his acquittal in Portugal, was a breach of art 6. Further, that the costs of the receiver were not litigation costs.
He lost on both points. Lord Phillips, Lord Brown and Lord Dyson each gave judgments relating to the art 6 issue. Lord Clarke set out the court’s position on the costs issue.
The Article 6 issue
ECHR, art 6 enshrines the right to a fair trial, but in criminal proceedings a person benefits from additional protections, under art 6(2), (3).
Mr Gale argued that the order against him was flawed because the allegations being made were criminal allegations. They should therefore have been subject to those protections, including proof to the criminal standard. Mr Gale relied on two strands of authority – one domestic and one from the ECtHR.
First, in the case of R v Briggs-Price  UKHL 19, Lord Rodger and Lord Neuberger both expressed doubts as to whether allegations of criminal conduct for the purposes of confiscation proceedings could be proved to the civil standard. Their views were obiter, but they appeared to have some support from Lord Brown’s judgment in that case, and Lord Brown was also sitting in this case.
Second, two Austrian cases Sekanina v Austria (1993) 17 EHRR 221 and Rushiti v Austria (2000) 33 EHRR 1331, established that art 6 was breached by applying a civil standard in determining whether a person had committed a criminal offence, when he sought compensation for his detention following his acquittal. The ECtHR had held that the later proceedings were “a consequence and the concomitant” of the criminal proceedings. Accordingly, it infringed art 6(2) to undermine the criminal verdict with a judgment that suggested guilt on the civil standard of proof.
All seven justices held against Mr and Mrs Gale on this point. Lord Phillips gave the lead judgment, with which Lord Mance, Lord Reed, Lord Clarke, Lord Brown and the Lord Chief Justice (Lord Judge), agreed. After a detailed analysis of the Strasbourg authorities, Lord Phillips concluded that the allegations against Mr Gale in the civil proceedings went significantly further and wider than those for which Mr Gale had been acquitted in Portugal. The civil confiscation proceedings were not, on any view, “a consequence and concomitant” of the criminal proceedings. The Strasbourg authorities did not assist Mr Gale.
Insofar as the dicta in Briggs-Price was concerned, Lord Phillips made it clear that although Lord Brown in that case had found that the commission of criminal offences had to be proved to the criminal standard, that could be distinguished from cases where there was no dispute that the property was in the hands of the defendant and he had not adequately explained how he had acquired it. In the latter case the civil standard was sufficient in determining that the property was the proceeds of crime. Mr Gale’s case fell into the latter category. Accordingly, Lord Brown was in the majority in Briggs-Price, which included Lord Phillips himself and Lord Mance. Therefore, in the context of this case, Briggs-Price was authority for concluding that the commission of any offence from which the property had been derived need only be established to the civil and not the criminal standard.
(No doubt, if Lord Brown had disagreed with Lord Phillips’s interpretation of his position in Briggs-Price he would have said so. He did not.)
The need for guidance from Strasbourg
Given that the Strasbourg authorities ultimately did not assist Mr Gale, it is telling that the justices considered those authorities in such detail. The three judgments on the Article 6 issue expressed concern about the Strasbourg authorities in this area.
Lord Phillips, Lord Brown and Lord Dyson all analysed the cases concerning Austrian judgements alongside another strand of ECtHR authority relating to cases from Norway Ringvold v Norway (Application No. 34964/97) and Y v Norway (2003) 41 EHRR 87. In the Norwegian cases, it was not the criminal defendant seeking compensation, but his alleged victim. In those cases the ECtHR held that it was not a breach of Article 6 to apply the civil standard in determining whether an acquitted defendant was culpable for the offence.
Lord Phillips said, at :
“I find unconvincing the attempts of the Strasbourg Court to distinguish between claims for compensation by an acquitted defendant and claims for compensation by a third party against an acquitted defendant . . . This confusing area of Strasbourg law would benefit from consideration by the Grand Chamber.”
Lord Dyson, at  felt more able to reconcile the different strands of Strasbourg cases:
“I would be less critical of the Strasbourg jurisprudence”.
But Lord Brown, at  was unsatisfied with Lord Dyson’s diplomatic turn of phrase:
“Lord Dyson by contrast [with Lord Phillips] “would be less critical of the Strasbourg jurisprudence” – although he does not indicate whether he would exempt it from all criticism and, if not, what concerns he has about it.”
He concluded, at :
“I repeat, however, that what is now required is an authoritative Grand Chamber decision clarifying and rationalising this whole confusing area of the Court’s jurisprudence.”
The costs issue
Lord Clarke gave the single judgement with which the other justices agreed, explaining why the Court of Appeal’s approach was correct.
Lord Clarke took the same pragmatic starting point as Toulson LJ in the Court of Appeal:
“Unless compelled by authority to hold otherwise I would regard costs incurred by the agency in paying the receiver to investigate Mr Gale’s finances and assemble material as costs of the litigation, which Mr Gale ought justly to pay, and I would not see such an order as inconsistent with the statutory scheme.”
The potential hurdle was a judgment of Girvan LJ of the Northern Ireland Court of Appeal in the case of Serious Organised Crime Agency v Wilson. Girvan LJ noted that it has always been a basic principle of receivership that the receiver is entitled to be indemnified in respect of his costs and expenses out of the assets in his hands as a receiver.
Lord Clarke noted that the costs would undoubtedly have been recoverable as costs of the proceedings if the work had been by anyone other than a receiver. He then distinguished the exceptional investigative nature of the role of the interim receiver under Pt 5 of POCA, from that of a receiver in other types of cases. That distinction enabled the Court to reach the pragmatic result that an interim receiver’s cost were litigation costs in a case under Pt 5 of POCA, without undermining the general principle.