Assets - Confiscation - Drug trafficking - Proceeds of crime

Ian Glick QC, Kelyn Bacon (instructed by Herbert Smith) for the appellants; Sydney Kentridge QC, Gerard Rothschild (instructed by Ashurst) for the ­respondents.

Marion Gibson v Revenue & Customs Prosecution Office: CA (Civ Div) (Lords Justice May, Wall, Lady Justice Arden): 12 June 2008

The appellant (G) appealed against a decision that her beneficial interest in various assets which she owned jointly with her husband (H) was 12.5%.

H had been convicted of conspiracy to import large quantities of cocaine. A confiscation order was made against him. H’s realisable assets included the matrimonial home. There were ­proceedings in the High Court to enforce the order, and G was joined to enable her to argue that she was the beneficial owner of 50% of the equity in the matrimonial home. G also claimed that she had a 50% interest in three endowment policies which were effected in joint names to support the mortgage, and in two bank accounts held in joint names.

The judge held that G had guilty knowledge, that is, she knew that money used to pay the mortgage and fund the accounts was not legitimately earned. He held that G’s guilty knowledge of the tainted assets should be taken into account against her, having regard to public policy and the general scheme of the Drug Trafficking Act 1994. In reaching that conclusion, the judge relied on Customs and Excise Commissioners v A [2002] EWCA Civ 1039, [2003] Fam 55, and Crown Prosecution Service v Richards [2006] EWCA Civ 849, [2006] 2 FLR 1220.

The prosecution argued that (1) ­public policy generally should ensure that G did not retain the value of assets which, to her knowledge, had increased by the application of tainted funds; (2) public policy should impute to G and H the intention that G should not benefit from money obtained ­illegally, but that only H should, and effect should be given to that imputed intention by adjusting their beneficial shares; (3) the prosecution should be put in a position equivalent to that of a victim whose money had been stolen and used to fund G and H’s mortgage: such a victim could obtain judgment and a charging order over G’s ­beneficial interest or could trace the stolen assets.

Held: (1) Customs v A and CPS v Richards did not sustain the conclusion reached by the judge. Those cases involved a husband’s assets which were the subject of confiscation proceedings, where the wife was seeking a discretionary order in her favour to transfer the assets to her. The court declined to do so because the assets were tainted and she was complicit. In the present case, G was not applying for a transfer of assets in her favour or any exercise of the court’s discretion. The assets were hers without any court order in her favour.

It was for the prosecution to establish a public policy jurisdiction, entitling the court to confiscate G’s assets when she had not been ­convicted, when no confiscation order had been made against her, and when there was no statutory confiscatory provision in the 1994 act or otherwise on which the prosecution could rely, Customs v A and CPS v Richards ­considered. Although G was not entirely innocent, that in itself could not sustain the confiscatory jurisdiction necessary for the prosecution to succeed against her, Norris, Re [2001] UKHL 34, [2001] 1 WLR 1388, and R v Buckman (Andrew) [1997] 1 Cr App R (S) 325 CA (Crim Div) applied.

The court did not have any power to supplement the existing statutory ­provisions to achieve what the ­prosecution wanted to achieve in ­violation of G’s rights under article 1 ­of protocol 1 to the European Convention on Human Rights. Although, in the ­language of article 1 of protocol 1, the result contended for by the prosecution might be in the public interest, it would not be subject to conditions provided for by the law.

(2) It was quite impossible for the law, in the guise of public policy, to attribute to G and H an intention which they plainly did not have and would never have assented to. The ­prosecution could not, by the language of imputation, achieve a confiscation of G’s assets which the law did not otherwise enable, by imposing on her a notional and fictitious intention.

(3) The prosecution was not a victim in any sense, and absent any statutory provision, it could not reach G’s ­beneficial interest in that way.

(4) G was entitled to a 50% ­beneficial interest in the various assets.

Appeal allowed.