PTA Template 269C1 - OCT16 - First Appeal (GS:17.10.18)

IN THE COURT OF APPEAL, CIVIL DIVISION

REF: C1/2020/0723 [SEAL]

NATIONAL CRIME AGENCY –v– (1) ANDREW BAKER

(2) VILLA MAGNA FOUNDATION

(3) MANRICK PRIVATE FOUNDATION

(4) ALDERTON INVESTMENTS LIMITED

(5) TROPICANA ASSETS FOUNDATION

ORDER made by the Rt. Hon. Lady Justice Carr On consideration of the appellant’s notice and accompanying documents, but without an oral hearing, in respect of an application for permission to appeal the order of Lang J dated 8 April 2020 ("the order") and a stay of execution

Decision:

Permission to appeal (and application for a stay) refused.

Reasons

The appeal has no real prospect of success and there is no other compelling reason why an appeal

should be heard. The problem facing the Appellant is that it needs to succeed in overturning all of

the Judge’s findings in relation to each statutory requirement for making the UWOs. There is no real

prospect of an appellate court interfering with the findings (in particular in relation to the serious

crime requirement).

Ground 1

First, Lang J correctly applied the “reasonable cause to believe” test. She set out the law regarding

the threshold ([23] – [35]), clearly understood the NCA’s case, and concluded its case was

undermined by the Respondent’s evidence. Second, Lang J’s construction of “effective control” and

“trustee” are not contrary to s.362B(5)(a) and s.1123(3) of the Corporation Tax Act 2010. Lang J

adopted the Appellant’s analysis for the statutory scheme. She then considered the aforementioned

provisions (at [28] – [35]) and correctly concluded that Mr Baker does not have “effective control

over the property” [120]. There are real difficulties in the Appellant succeeding on the construction

of “effective control” that it now advances in relation to Mr Baker’s specific situation. Its

construction is not supported by the statutory language. Further, for the reasons given by Lang J at

[122], it is clear Mr Baker is not a person in whom the property in a settlement, or the management

of that property, is vested.

Ground 2

Lang J found that Mr Baker had no legal or beneficial interest in the property, nor had he been

involved with its purchase. As per Ground 1, he did not “hold” the property. There is no basis upon

which to depart from those findings. Therefore, through a UWO targeted at Mr Baker, the NCA

cannot satisfy the income requirement. This ground is dispensed with satisfactorily at [130] – [139].

With regards to UWO2 and Property 2, Lang J referred to her analysis at [130] – [136] regarding the

correct approach of the income requirement for trustees, etc. In any event, Lang J made a finding at

[208] – [209] that Manrick lawfully obtained a mortgage that was in fact sufficient to obtain Property

2 at its market value. There is no basis for an appellate court to interfere with that finding.

Ground 3

It is clear that Lang J applied the correct statutory test for the income and serious crime

requirements under ss.362B(3) and (4)(b). She used the correct statutory language for concluding

that the income and serious crime requirements had not been met (for example, at [139], [149],

[154], [171]). As stated by the Respondents at [4] of their Statement of Reasons, the terms

“reasonable grounds” and “suspicion” are rudimentary. There is no basis upon which to hold that

Lang J misunderstood the meaning of those terms, or failed to apply them properly to the facts.

First Appeal

Lang J’s comments, for example at [151], do not disclose material errors. They have to be read in

context: it is clear that she understood the threshold that was to be met, and made numerous

references to the phrase “reasonable grounds for suspecting” (for example, at [127], [140], and

[142]).

Lang J referred correctly to the Appellant’s grounds for suspecting that Mr Baker and Manrick’s

known sources of lawfully obtained income would have been insufficient to obtain the property, and

that they (or connected persons) had been involved in serious crime. There is no discrepancy

between how the Appellant characterises its case, and how it was characterised in the judgment.

Lang J carefully set out the Appellant’s reasoning as to why the necessary requirements were met

and why, in each case, the information now available demonstrated that the UWOs were sought and

made on a flawed basis. She was entitled to prefer the Appellant’s case to that of the Respondent

and there is no real prospect on appellate court interfering with her findings.

Ground 4

Lang J’s conclusions based on the material from the Respondents cannot be said to be wrong in

principle or unreasonable on the facts. The Appellant emphasises that the threshold for the making

of UWOs is low. However, there still needs to be sufficient supporting evidence: as Lang J noted at

[64] – [65], UWOs interfere with an individual’s Article 8 rights and must be made in a proportionate

manner. Lang J was fully entitled to conclude, taking into account all the information now available,

that the threshold had not been met. She highlighted some of the key factors not considered by the

Appellant (for example, at [68] – [70] and [178]), having earlier explained why the matters raised by

the Respondents in the 9 August letter undermined the Appellant’s case.

As noted by the Respondents at [5] of their Statement of Reasons, the material had been in the

Appellant’s possession for over six months and was “capable of verification”. The Appellant,

however, had found no positive basis on which to contradict it. Lang J noted the Appellant’s

challenges made to the Respondent’s evidence (eg at [72] and [74]). She was entitled to accept the

letter of 9 August 2019 and enclosures as genuine. It is not properly arguable that there was

anything Wednesbury unreasonable in her approach to the evidence before her. She gave thorough

and detailed reasons why she preferred the Respondents’ case to that of the Appellant. There is no

real basis upon which her conclusions can be impugned.

Ground 5

Lang J correctly stated that complexity does not automatically give rise to a reasonable basis for

suspicion in itself. Otherwise, the approach would be one that failed to recognise that there are

lawful reasons for the existence of complex corporate structures (as set out at [97]). As she stated,

the facts did not give rise to the irresistible inference that the property could only have been derived

from crime. For the reasons discussed in the judgment, there were no reasonable grounds for

suspecting that this was the method by which the property was obtained.

Ground 6

The target of the UWOs in terms of seeking information would be Mr Baker. For the reasons given,

Lang J did not consider that Mr Baker would have any knowledge of the shares sold by RA to DN. The

transfer of shares took place in 2007, and Mr Baker did not take office until 2015. In any event, Lang J

was satisfied by the Respondent’s evidence that JSC Kant is and was a legitimate business, and that

all of RA’s Kazakhstan assets which were the proceeds of crime were confiscated. An investigation

revealed that RA did not transfer any illegally acquired funds or assets to DN. Lang J was entitled to

make those findings, and there is nothing to suggest her decision is wrong. Further and in any event,

her comments at [77] and [78] did not form part of her reasoning as to why the relevant statutory

tests were not satisfied.

I have also considered whether there is a compelling reason for an appeal to be heard. Although this

is a relatively new jurisdiction which may at the appropriate time benefit from further judicial

interpretation, such matters are better addressed in an appeal with a real prospect of success. UWOs

are onerous orders, and in the absence of any real prospect of success, it is not appropriate to

subject the Respondents to the full appellate process.

In these circumstances, the application for a stay falls away.

Information for or directions to the parties

Mediation: Where permission has been granted or the application adjourned:

Does the case fall within the Court of Appeal Mediation Scheme (CAMS) automatic pilot categories (see below)?

Yes/No (delete as appropriate)

Pilot categories: • All cases involving a litigant in person (other than immigration and family

appeals) • Personal injury and clinical negligence cases; • All other professional negligence cases; • Small contract cases below £500,000 in judgment (or claim) value, but not

where principal issue is non-contractual;

• Boundary disputes; • Inheritance disputes. • EAT Appeals • Residential landlord and

tenant appeals

If yes, is there any reason not to refer to CAMS mediation under the pilot? Yes/No (delete as appropriate)

If yes, please give reason:

Non-pilot cases: Do you wish to make a recommendation for mediation? Yes/No (delete as appropriate)

Where permission has been granted, or the application adjourned

a) time estimate (excluding judgment) b) any expedition

Signed:

Date: Carr LJ/17 June 2020 Notes

(1) Rule 52.6(1) provides that permission to appeal may be given only where –

a) the Court considers that the appeal would have a real prospect of success; or

b) there is some other compelling reason why the appeal should be heard.

(2) Where permission to appeal has been refused on the papers, that decision is final and cannot be further reviewed or appealed. See rule 52.5

and section 54(4) of the Access to Justice Act 1999.

(3) Where permission to appeal has been granted you must serve the proposed bundle index on every respondent within 14 days of the date of

the Listing Window Notification letter and seek to agree the bundle within 49 days of the date of the Listing Window Notification letter (see

paragraph 21 of CPR PD 52C).

Case Number: C1/2020/0723