Crown Prosecution Service v Richards & Anor

Where matrimonial assets are proceeds of drug trafficking and are subject to confiscation, they should ordinarily not be distributed through ancillary relief. The court retains jurisdiction under the Matrimonial Causes Act 1973, but the criminal origin of the assets will usually be decisive.

An applicant’s knowledge throughout the marriage that the family’s lifestyle and assets derived from drug trafficking is a dispositive consideration. The statutory requirement to give first consideration to a child’s welfare does not ordinarily justify diverting such assets from confiscation, whether an order is sought for the spouse or directly for the child. Exceptional circumstances may justify a different result.

The Crown Prosecution Service appealed from concurrent orders made by Bennett J in the Administrative Court and Family Division. The husband had been convicted in the Netherlands of involvement in heroin importation. His English assets were restrained pending Dutch confiscation proceedings enforceable under the Drug Trafficking Act 1994.

In ancillary relief proceedings under the Matrimonial Causes Act 1973, the judge found that all family assets, apart from the wife’s £35,750 beneficial interest, were proceeds of drug trafficking and that she had known of the husband’s criminal activities throughout their relationship. Nevertheless, he awarded her a further lump sum of £39,250, having regard particularly to the housing needs of the wife and their child.

The issue was whether the judge had erred by balancing those needs against the public policy requiring offenders to be deprived of criminal proceeds.

1. Appeal allowed. The judge had erred by failing to give sufficient weight to his finding that all assets beyond the wife’s independent beneficial interest were proceeds of drug trafficking. The lump-sum award of £39,250 was set aside.

2. The decision in Customs & Excise Commissioners v A & Another; A v A [2003] Fam 55 established that confiscation legislation does not remove the Family Division’s jurisdiction under the Matrimonial Causes Act 1973. It nevertheless anticipated that matrimonial assets derived from drug dealing should not ordinarily be distributed where a spouse was engaged or complicit in the criminality.

3. Assets which are proceeds of crime and subject to confiscation should ordinarily, as a matter of justice and public policy, remain available for confiscation. This is not an absolute rule. Exceptional circumstances might justify an ancillary relief order, such as the needs of a seriously disabled child living in specially adapted accommodation.

4. In most cases the tainted character of the assets will be decisive. In this case the wife’s knowledge throughout the marriage that the family’s lifestyle and assets derived from drug trafficking was dispositive. A discretionary balancing exercise did not require every statutory consideration to receive operative weight once that decisive factor had been identified.

5. The obligation under section 25(1) of the Matrimonial Causes Act 1973 to give first consideration to the child’s welfare did not justify the award. Nor could the policy objection be avoided by making an order directly for the child under section 23(1)(f), since the available assets were known by the applicant to derive from drug trafficking.

6. Although the husband remained the legal owner pending confiscation, he had in reality forfeited his entitlement to the criminal proceeds. The court noted that Part V of the Proceeds of Crime Act 2002 can reach proceeds held by persons other than the offender. It left open whether assets received under a fully informed ancillary relief order could successfully be recovered under that Part.

7. The restraint order was varied by substituting £35,750 for £75,000, thereby preserving only the wife’s independently established beneficial interest.

1. Court of Appeal (Civil Division): Permission to appeal was granted and the appeal was allowed. The lump-sum award of £39,250 was set aside and the restraint order was varied to preserve only £35,750 for the wife.
2. High Court, Liverpool District Registry: Bennett J, sitting concurrently in the Administrative Court and Family Division, ordered the properties sold, recognised the wife’s independent beneficial interest and awarded her an additional lump sum of £39,250. The remaining assets were retained under the restraint order.