P, Re Criminal Justice Act

On an interlocutory application to vary a restraint order, the court applies the good arguable case test. The relevant question is whether there is a good arguable case that property is held by the defendant or represents a gift caught by Part VI of the Criminal Justice Act 1988. Registered legal ownership does not determine the issue at this stage. The court first considers whether transfers were shams. If not, it considers whether they were gifts or transfers at a substantial undervalue, and whether the statutory timing requirement is met. Whether a gift should ultimately be taken into account is a matter for confiscation proceedings.

The claimant’s three sons applied to vary a restraint order made after the claimant’s conviction for conspiracy to cheat the Revenue. The order was made under Part VI of the Criminal Justice Act 1988 and covered properties registered in the sons’ names and in the names of one son and his partner.

An earlier application had been adjourned pending confiscation proceedings. The Court of Appeal set aside that order and directed that the variation application be heard promptly. The central issues were whether the relevant transfers were shams, whether the claimant retained beneficial ownership, and whether any transfers were gifts or substantially undervalued transactions caught by the statutory scheme.

1. Application dismissed. The applicants did not establish that the properties or sale proceeds should be released from the restraint order.
2. Under sections 74(1) and 77(1) of the Criminal Justice Act 1988, the relevant interlocutory question was whether there was a good arguable case that property was held by the defendant or constituted a gift caught by Part VI. The court did not apply the approach in Stack v Dowden [2007] 2 AC 432 concerning the burden in a final determination, because these were interlocutory proceedings.
3. The court considered the issues sequentially. It first asked whether the transfers were shams, in which event the defendant remained beneficially entitled. Only if there was no good arguable case of sham was it necessary to consider whether the transfers were gifts under section 74(12), including transfers for substantially less consideration than that provided by the defendant.
4. The questions under section 74(10)(a), concerning whether a gift was made after the commission of the offences, and section 74(10)(b), concerning whether the gift should be taken into account, were separate. The latter question belonged to the Crown Court in the confiscation proceedings.
5. The evidence raised a good arguable case against each applicant’s asserted beneficial ownership. The arrangements were inadequately documented, the explanations concerning family loans and payments were not credible, and the evidence indicated that Goodmayes Estates had developed the houses. In James’s case, the transfer of the development plot for £10,000 was substantially undervalued because the defendant or entities he controlled owned the other plots and shared a common redevelopment purpose.
6. The applications of Darren, James and Danny were therefore refused. Leave was given for transcripts of the evidence. Costs were reserved for written submissions.

• Court of Appeal: An earlier order by Mr Andrew Nicol QC adjourning the variation application pending completion of confiscation proceedings was set aside on 25 November 2008. The Court of Appeal directed that the application be heard as soon as practicable.
• High Court (Administrative Court): The renewed variation application was heard and dismissed.