Court of Appeal reinforces principle of finality in litigation

The Court of Appeal has held that a civil recovery order and property freezing order made against the respondent's property, including overseas property, were not affected by a subsequent decision of the Supreme Court that the relevant legislation did not have extra-territorial effect. Nor did the Supreme Court decision have any effect on the respondent's committal for non-compliance with the relevant order: Serious Organised Crime Agency ("SOCA") v O'Docherty [2013] EWCA Civ 518.

This decision reinforces the principle of finality in litigation. A judicial decision which establishes a precedent has retrospective effect in the case being decided (since the events in question necessarily occurred before the case was brought) and in other cases which are pending or still to come before the courts. However, it does not have retrospective effect in cases which have already been finally determined. In general, therefore, a party cannot resist enforcement of a judgment or order on the basis of intervening changes in the law, nor can it excuse non-compliance on that basis.

Background

The Proceeds of Crime Act 2002 provides for the court to make a civil recovery order in respect of property "wherever situated" which is or represents the proceeds of crime or unlawful conduct. This had been interpreted as allowing an order to be made in respect of property worldwide, until the Supreme Court held in SOCA v Perry [2012] UKSC 35 that the court's jurisdiction applied only in relation to property within England and Wales.

In this case, a civil recovery order and property freezing order had been made against the respondent which included property in Spain and France. The respondent had also been committed to prison for 9 months for having disposed of one of his overseas properties in breach of the property freezing order, although the warrant had not yet been executed.

After the decision in Perry, the respondent issued an application to vary the property freezing order so as to exclude the overseas property in accordance with the ambit of the law identified by the Supreme Court. The High Court (His Honour Judge Spencer QC) granted the application on the basis that the Act did not apply to property outside the jurisdiction. SOCA was granted permission to appeal, including on the basis that it was of general importance to establish the effect of the Supreme Court's judgment in Perry on the enforceability of civil recovery orders made before that judgment was handed down.

Decision

It was common ground that a judicial decision which sets a precedent in law does not have retrospective effect on cases already finally determined. This principle was established by the Supreme Court decision in Cadder v HM Advocate General for Scotland [2010] UKSC 43. The respondent argued, however, that if a party to litigation needs assistance from the court, such as here to litigate over the powers of the trustee under the civil recovery order, the law must be applied as it is on the date the matters are being considered.

The Court of Appeal rejected that argument. If it were valid, where a litigant wished to challenge the legality of an order however long after any right of appeal had been exhausted, it would prevent enforcement even of a final order until the issues had been determined unless and until recent developments of the law had been considered. A party would only need to refuse to comply with the court's order to permit him or her to litigate or re-litigate the issue of legality.

Nor did Perry affect the validity of the respondent's committal for contempt of the property freezing order. At the time the order was made, it was entirely justified in law, and when the contempt was committed the order remained entirely valid. The subsequent change to the law affected neither the legitimacy of the order when it was made nor the gravity of the breach.  

(The majority of the Court of Appeal upheld the judge's decision to vary the property freezing order, but on technical grounds relating to effect of the provisions of the Act vesting property in the trustee under a civil recovery order, rather than the effect of Perry.)