Our financial remedy practices would be far easier if our clients were squeaky-clean with nothing to hide. But what if that isn’t the case? What if your client has had a run-in with the Police and has a confiscation order made against them? What impact might that have on the divorce proceedings?
First, a bit of background. Under the Proceeds of Crime Act 2002 (‘POCA’) where a person is convicted of an offence the CPS may seek a confiscation order. The Crown Court will consider to what extent the person benefitted financially from the criminal conduct (the ‘recoverable amount’) and will determine the assets that are available to make an order against (the ‘available amount’). A confiscation order will be made setting out the sum that must be paid to the Crown by a certain date. If the amount is not paid, a default sentence will operate.
The CPS can apply to intervene in family proceedings if it believes that any of the available assets are involved. Such was the case in Al & Anor v CPS  EWFC B180 before HHJ Wildblood QC a circuit judge decision but a reminder of the law in this area from a highly experienced and well-respected judge.
H had been convicted of drug-related conspiracy and was serving an 11 year sentence. A confiscation order had been made against him which had not yet been satisfied. W applied under the Matrimonial Causes Act 1973 for a transfer of the family home (the only asset) to her sole name for the benefit of herself and the parties’ children. The CPS intervened on the basis that the family home was an available asset and should go to the Crown under the confiscation order.
The family home was in H’s sole name, he had paid the deposit and the mortgage payments. Firstly the judge had to determine if W had a beneficial interest in the property under ordinary trust principles. He found that she did not. Secondly he had to consider whether he should exercise his powers under the 1973 Act to transfer the family home to W.
He referred to CPS v. Richards  EWCA Civ 849 in which, at para 26, Thorpe LJ set out the relevant test:
“Where assets are tainted and subject to confiscation they should ordinarily, as a matter of justice and public policy, not be distributed. This is not to say that the court is deprived of jurisdiction under the 1973 Act nor to say that no circumstances could exist in which an order would be justified; an example of a seriously disabled child living in specially adapted accommodation was mooted in argument. It is to say that, in most cases, and certainly in this one, the fact that the assets are tainted is the decisive factor in any balance. The error of the judge lay in thinking that the requirement to conduct a balancing exercise meant that in every case, all factors are relevant. In cases such as this the knowledge of the wife, throughout her married life, that the lifestyle and the assets she enjoyed were derived from drug trafficking is dispositive.”
HHJ Wildblood QC found that it was “highly probable” that the deposit for the family home came from criminal conduct and that the mortgage payments had largely been funded by H’s criminal activities. He made the further finding that W was fully aware of H’s activities. In those circumstances he declined to order the transfer of the family home to W. Instead he made only a joint lives order for nominal spousal periodical payments.
Would it have made any difference if W had established a beneficial interest in the family home? It seems not. In CPS v. Richards W had been gifted 13% of the family home. At first instance the judge ordered the sale of all assets in order to meet H’s confiscation order, but reserved to W her 13% share of the home, in part to assist in housing the parties’ child. The appeal by the CPS against the order in W’s favour was successful. The Court of Appeal held that “no assets available should be distributed where, to the knowledge of the applicant seeking relief, they were derived from drug trafficking.”
To finish, some words of warning from HHJ Wildblood QC: “the best advice to any family contemplating behaving in this way is: ‘Don’t do it’.” Take heed!