Tuesday, December 08, 2015
How couples can protect their assets in confiscation proceedings
The confiscation regime operating under the Proceeds of Crime Act 2002 is deliberately designed to be harsh to the point of being accused by many of being unfair. Defendants find themselves in a position where they are faced with reverse burdens of proof and assumptions which are heavily weighed in favour of the state recovering a large quantity of assets.
What about the situation where a wife owns assets that are sought to be recovered against the husband? A question that many a defendant asks is: ‘How can my wife protect her assets from confiscation?’
Often the Prosecution in the statement asserting what assets are liable for confiscation (under s.16 of POCA) will assert that assets held by a married individual are 100% owned by the defendant against whom the order is sought.
This assertion will in many cases be incorrect. Where an asset is owned within a relationship or marriage (for example the matrimonial home) then the asset will often be partially owned by the partner. In these circumstances the state is not entitled to recover the asset owned by the partner and the partner should act to protect their assets. A recent change in the law means that an application by a partner or other person to secure their assets from a confiscation order should be made at an earlier stage than under previous legislation.
In order to properly secure their interests and protect assets from confiscation the partner should seek representation which is separate from that of the defendant against whom confiscation is sought. It is important that such representation is by a specialist in this area as the law is complex and specialised and changes in the legislation and case law occur on a regular basis.
How can a partner protect their interests in confiscation proceedings?
In R v Rowsell  EWCA Crim 1894 it was stated that in the context of POCA “the court cannot ignore ordinary rules of property and trust law without specific statutory authority” in these circumstances a partner with any interest in such property should seek to show an interest under the standard law of property.
On successfully establishing an interest in the properties the realisable amount against the defendant will not include the partner’s interest. This is subject to the partner being able to avoid the tainted gift provisions.
The ideal position would be for the partner to be able to point to being the legal and beneficial owner of the property, this would normally involve pointing to ownership documents in order to show a part share in the property. However the fact that the property is not held in the name of the person asserting the interest is not a bar to the interest being held in law as an equitable interest.
Neither the fact that the defendant and partner are not married nor the possibility that the properties are in the sole name of the defendant provides a bar to establishing the necessary interest required to take the properties, or at least a partial interest in them, outside of the scope of the amount claimed by the prosecution.
Following the Jones v Kernott  UKSC 53 and Stack v Dowden  UKHL 17 line of case law the position is that whether married or not a couple who buy a property in joint names without expressly setting out their individual beneficial interests can be presumed to have beneficial ownership that is a mirror of legal ownership, namely 50/50, but that this presumption can be rebutted by evidence of a different common intention between the pair. Beneficial ownership is considered to be reflective of legal ownership subject to a contrary common intention.
Re Ali  EWHC 2302 confirmed the legal ownership starting point and placed the burden of disproving the starting point upon the party seeking to establish that the beneficial interest is otherwise held.
When should a partner assert interest in Confiscation proceedings? Confiscation or enforcement?
Prior to 2015 the position was that the third party lacked locus-standi in the confiscation aspect of the proceedings (Norris  UKHL 34 and s51(8) POCA 2002), this therefore meant that the third party issue was typically part of the question of enforcement. The role of the third party at the confiscation stage would be confined to being called as a witness. This was reflective of the confiscation order being attached to an amount rather than specific property.
However, from 1st June 2015, The Serious Crime Act 2015 has amended the Proceeds of Crime Act 2002 on this point with the addition of s.10A(1), which states that where it appears to a court making a confiscation order that there is property held by the defendant that is likely to be realised or otherwise used to satisfy the order, and a person other than the defendant holds, or may hold, an interest in the property, the court may, if it thinks it appropriate to do so, determine the extent (at the time the confiscation order is made) of the defendant's interest in the property.
It also states under s10A (2) and (3) that the court must not exercise the power conferred by subsection (1) unless it gives to anyone who the court thinks is or may be a person holding an interest in the property a reasonable opportunity to make representations to it. A determination under section 10A is conclusive in relation to any question as to the extent of the defendant's interest in the property.
In considering the defendant’s interest in the property at the Crown Court, the effect of s.10A is to provide a statutory footing for moving the question of third party interests to the confiscation stage. Subject to providing the potential third party interest holder with the opportunity to make representations, the court will, in determining the defendant’s interest, also determine that of the third party.
What evidence should be sought?
Re Ali read in conjunction with Jones and Kernott and Lloyds Bank Plc v Rosset  1 A.C.107 identifies themes of evidence and inquiries that would go to establishing the partner’s beneficial interest. These include, evidence of express agreement, evidence that indicates a common understanding, and a broad, holistic, assessment of the course of dealings between the defendant and the partner, from which an intention can be established or imputed that the partner has an interest. R v Perry  EWCA Crim 2316 highlights the importance of an evidential basis to support both the time at which the interest was acquired and the method of obtaining the interest.
Examples of possible evidence that could be gathered here would include records of legal title, agreements about beneficial interest, conversations about beneficial interest, evidence about the relationship such as the contributions financially and to family life of the partner, and evidence to ensure that the acquisition of the beneficial interest of the partner is sufficiently separate from proceedings to avoid a tainted gift allegation. For example, in Gibson v RCPO  2 WLR 471 a wife’s beneficial interest in the family home which was purchased, prior to the commission of the offence, in joint names was not displaced by her knowledge that mortgage payments were made with the proceeds of crime, it was held that due to her providing consideration in the form of raising the children and the upkeep of the house there was no gift.
When making a s.10A determination the court can, in accordance with s.18A, make an order requiring the third party to provide information, this has the force of a Court order in the same way that s18 would over a defendant. Non-compliance results in the drawing of such an inference as the court considers appropriate, most likely an adverse one. In accordance with s.18A(9) the information provided under S.18A is not admissible in criminal proceedings.
As can be seen this area of the criminal law is by no means straightforward and pulls in strands from the law of property and equity and trusts in order to enable the Court to come to a decision in respect of property ownership.
Although the law is purposefully harsh under confiscation regimes the door is open for a spouse or partner to claim and gain a beneficial interest in property if the correct assertions are made which are supported by evidence. As the price of the average property in the UK approaches many hundreds of thousands of pounds the stakes are very high as a successful application can ‘ring-fence’ a large proportion of assets therefore making them immune from confiscation.
If you find yourself facing confiscation proceedings or if you are a spouse or partner who is worried that you may lose your assets due to confiscation proceedings you should seek expert legal advice as soon as possible. Quentin Hunt is a barrister who specialises in confiscation proceedings and the protection of 3rd party interests in confiscation proceedings. You may contact Quentin for a free no obligation conversation about your case.