Crown Prosecution Service v MN

In ancillary relief proceedings involving a confiscation order, the court must account for the order and must not assume that the value of assets representing criminal proceeds equals the amount of the order. An innocent spouse’s reasonable needs remain relevant, but ordinary equality principles may yield to the need to satisfy the confiscation order and achieve fairness. A criminal spouse may receive little or nothing, although a surplus after the innocent spouse’s needs have been met may justify leaving the criminal spouse some assets. The court should not treat these observations as a general formula. Where a receiver is sought to realise assets, a short opportunity may be given for the defendant to sell them himself. If a receiver becomes necessary because of the defendant’s failure to discharge the order, the receiver’s costs may properly be paid from the defendant’s assets.

The Crown Prosecution Service sought the appointment of a receiver under section 80 of the Criminal Justice Act 1988 to realise assets against an unpaid confiscation order. At the same time, the Family Division determined the wife’s ancillary relief claim following the husband’s conviction, sentence and confiscation order.

The parties disputed how five properties, chattels and a disclosed bank account should be divided. The Crown required the confiscation order to be satisfied in full. The wife was innocent of the husband’s offending and sought provision sufficient to meet her needs, while the husband sought the residue. The central issues were the proper treatment of criminally tainted assets, the application of section 25 of the Matrimonial Causes Act 1973, and whether a receiver should immediately be appointed.

The court made a clean-break order under which the wife received Holbein Gardens, the chattels, a lump sum of £28,500, and a further lump sum of either £25,000 or one-quarter of the residue, whichever was larger. The husband received the balance. The confiscation order was to be satisfied in full.

1. For the purposes of section 25 of the Matrimonial Causes Act 1973, the confiscation order had to be taken into account as a financial obligation and, where the wife was innocent, as conduct which it would be inequitable to disregard. The assets available for distribution could not simply be treated as the gross assets less the amount of the confiscation order. A confiscation order may extend to turnover passing through the defendant’s hands, rather than merely retained profits. The value of tainted assets therefore could not automatically be equated with the amount of the order.

2. The wife could not claim an automatic half share of the gross assets under ordinary equality principles. Equally, the husband could not assume that the untainted assets were limited to the gross assets less the confiscation order. The appropriate award depended on the wife’s reasonable needs, the confiscation order, the extent of taint, and the wider factors under section 25. The wife’s needs were met by retaining the former matrimonial home, the chattels and sufficient capital. The court expressly stated that it was laying down no general principle.

3. The chattels were not required as chattels. Had their sale been necessary to satisfy the confiscation order, the court would have ordered realisation notwithstanding the wife’s innocence. They could remain with the wife because the Crown’s demands would be met and because they provided part of the fund needed for her support.

4. The court had power to appoint a receiver and to provide for payment of the receiver’s costs, disbursements and fees from realised assets. It was appropriate to defer appointment until January 2006, giving the husband a short opportunity to realise two properties himself. If he failed, a receiver was to be appointed and paid from the assets, rather than from public funds.

5. Having regard to the husband’s unsuccessful resistance to the receivership issues and CPR 44.3, he was ordered to pay three-quarters of the Crown’s costs. There was no order for costs between husband and wife.

First-instance decision. The judgment describes simultaneous proceedings in the Administrative Court and Family Division, but no earlier appellate decision is stated.