Crown Prosecution Service v MN

In ancillary relief proceedings involving criminal assets, a confiscation order must be taken into account when assessing the parties’ financial resources and obligations. The value of assets tainted by crime cannot automatically be equated with the amount of the confiscation order, since the order may reflect criminal turnover rather than retained profits.

An innocent spouse’s reasonable needs should be met, but ordinary equality of division is not automatically applicable. The spouse may receive less than a pure White v White allocation where necessary to satisfy the confiscation order. Any surplus after the innocent spouse’s reasonable needs have been met may be divided so that the convicted spouse retains some assets. The approach is fact-sensitive and establishes no general formula.

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 of £571,073.38. The application was heard alongside the wife’s ancillary relief proceedings.

The parties agreed that the wife should retain the former matrimonial home, chattels and a lump sum. The principal dispute concerned the allocation of the remaining residue between the innocent wife and the convicted husband, together with the timing and costs of any receivership. The court also considered the effect of the confiscation order on the assets available for distribution.

1. The court ordered a clean break. The wife was to receive Holbein Gardens, the chattels, a lump sum of £28,500 and a further lump sum of £25,000 or one-quarter of the residue, whichever was larger. The husband was to receive the balance of the residue.

2. The confiscation order was a financial obligation to be taken into account under section 25(2)(b) of the Matrimonial Causes Act 1973. Since the wife was innocent, the husband’s criminal conduct could also be relied on under section 25(2)(g). The assets available for distribution could not simply be treated as the gross assets less the amount of the confiscation order.

3. The amount of the confiscation order did not establish the value of assets tainted by crime. A confiscation order was not confined to profits retained from criminal conduct and could extend to money passing through the defendant’s hands. Some of the assets were nevertheless properly inferred to be tainted.

4. The wife’s reasonable needs were to be met. She had no need for the chattels as such, although they could conveniently form part of the fund meeting her needs once the confiscation order was satisfied. An innocent wife was not to be made to pay unduly for her husband’s crimes, but she might receive less than a pure White v White allocation where that was necessary to satisfy the confiscation order and meet her needs.

5. There was no general principle requiring the husband to receive nothing. Where there was a surplus after the wife’s reasonable needs had been met, it could be appropriate to leave the husband with part of it. The division adopted was expressly fact-specific.

6. The appointment of a receiver was deferred until January 2006 to allow the husband a final opportunity to realise two properties. If he failed, a receiver would be appointed and his costs, disbursements and fees would be paid from the assets realised.

7. The husband was ordered to pay three-quarters of the Crown’s costs, having regard in particular to the provisions of CPR 44.3.