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Crown Prosecution Service v Richards and Another [2006] EWCA Civ 849

Appeal against lump sum order in ancillary relief proceedings allowed, where family assets were the proceeds of drug trafficking.

Court of Appeal: Thorpe and Moses LJJ and Hedley J (27 June 2006)

Appeal against lump sum order in ancillary relief proceedings allowed, where family assets were the proceeds of drug trafficking.

This case concerned two sets of concurrent proceedings in relation to a convicted drug dealer and his ex-wife, who were divorced in June 2004: in the Administrative Court, the judge heard an application for a restraint order in proceedings under the Drug Trafficking Act 1994 which covered the whole of the husband's assets; and, in the Family Division, the same judge considered the wife's claims for ancillary relief under the Matrimonial Causes Act 1973 (MCA 1973) for herself and for the child of the family, born in February 2001.

The judge made the following findings: (1) the net value of the four properties of which the husband was the beneficial owner, including the former matrimonial home where the wife and child were still living, was £431,000; (2) the wife had an interest in the property, by reason of a gift from her parents, quantified at £35,750; (3) all the family assets (other than the gift) were the proceeds of drug trafficking; and (4) the wife must have known that the money comprising the family assets was tainted, as she 'knew that the husband was involved in criminal activities'. It followed that all of the family assets (other than the gift) were susceptible to confiscation under the drug-trafficking legislation.

Accordingly, the judge ordered the sale of all the properties, declared that the wife was entitled to £35,750, ordered a lump sum of £39,250 in favour of the wife, and subjected the remaining assets to a restraint order.

The Crown Prosecution Service (CPS) appealed against the lump sum order made by the judge, raising the following question: 'how does the court resolve the conflict between a public policy imperative to deprive offenders of the fruits of their crime and the requirement that dependants are provided for after divorce when the only funds available for both are the same?'.

Held, allowing the appeal, that the judge had been wrong to make the lump sum order.

Even though the judge had found that all the assets were tainted as the proceeds of drug dealing, and despite the fact that he reminded himself of the relevant passages from Customs & Excise Commissioners v A & Another, A v A [2003] Fam 55 (known as Re MCA), he failed to appreciate the significance of the decision in Re MCA, which clearly anticipated, in a case such as this, that assets should not be distributed.

Further, the court considered, as the judge had done, the value to be ascribed to the wife's present and future care of the child of the family. It noted that, in MCA 1973, s 24, the reference is to property to which 'the party is entitled'; while the husband remained 'owner' of the assets, pending confiscation, he had in reality forfeited 'entitlement', and this was another sad example of the fact that the court cannot protect children from every consequence of their parents' behaviour.

Consequently, the order for a lump sum of £39,250 in the ancillary relief proceedings would be set aside, and the restraint order varied accordingly.

Read the full text of the judgment