Sinclair v Glatt & Ors

Property is “held” by a defendant for the purposes of confiscation legislation where the defendant has any interest in it. A bare legal title is sufficient, although the entire beneficial interest belongs to a third party.

A statutory receiver’s lien for reasonable remuneration, costs and expenses therefore extends to such property. The beneficial owner’s interest affects the value available to satisfy the confiscation order, but does not prevent the receiver from recovering receivership costs from the asset.

In an exceptional case, Article 1 of the First Protocol may limit the costs recoverable from an innocent third party. A merely prospective claim to matrimonial relief gives no present interest capable of postponing enforcement of the lien.

A receiver was appointed under section 77 of the Criminal Justice Act 1988 over assets legally held by a solicitor convicted of money-laundering offences. The confiscation order was subsequently quashed and the receivership discharged. It was later established that the solicitor held certain shares and real property as bare legal owner for members of his family.

Munby J held in [2008] EWHC 798 (Admin) that the receiver’s lien for remuneration, costs and expenses extended to those assets. He also rejected the former wife’s contention that enforcement should await determination of her matrimonial claim or that the receiver should recover from the prosecutor instead.

The central issue was whether property beneficially owned entirely by third parties was “realisable property” and remained subject to the receiver’s lien because the defendant held its bare legal title.

1. The appeals were dismissed, subject to a minor variation of the costs order. Longmore LJ gave the leading judgment. Stanley Burnton LJ agreed, and Elias LJ agreed while adding observations about the potential operation of Article 1 of the First Protocol.

2. Under sections 74 and 102(7) of the Criminal Justice Act 1988, property is held by a person if that person holds any interest in it. A bare legal title is an interest. The legislation expressly distinguishes beneficial interests where it intends them to affect valuation. It therefore does not restrict “realisable property” to assets in which the defendant has a beneficial interest.

3. A confiscation order concerns the value which may be realised. Section 74(4) takes account of competing beneficial interests when that value is determined. Third parties are also protected by opportunities to make representations, seek variation of the receivership order and recover or retain the value of their property. Those protections do not prevent the receiver’s lien attaching to an asset legally held by the defendant.

4. A statutory receiver is treated like a common law receiver unless the legislation provides otherwise. The receiver’s reasonable remuneration, costs and expenses are primarily payable from the receivership assets. That principle applies even where an asset’s entire beneficial interest belongs to a third party. The statutory indemnity against the prosecutor does not confer a discretion to shift costs from available receivership assets.

5. Longmore LJ accepted that Article 1 of the First Protocol might affect the amount recoverable, or the asset from which it was recovered, in an extreme case involving an unconnected third party. Elias LJ likewise considered that the possibility could not be excluded. That question did not arise on these facts.

6. The former wife had no present proprietary interest in the assets. Her hope of obtaining a future property adjustment order did not justify postponing enforcement. Any later transfer would remain subject to the receiver’s lien for charges accrued before the transfer.

7. The order indemnifying Revenue and Customs for its costs of the lien proceedings was contrary to the spirit of its undertaking and was excised by concession. The indemnity concerning the successful claim to the Chessington property did not breach the undertaking because it was not an order for Revenue and Customs’ own costs.

1. Court of Appeal (Civil Division): The appeals were dismissed, except that the indemnity for Revenue and Customs’ costs of the lien proceedings was excised from the order.
2. High Court, Administrative Court: Munby J held in [2008] EWHC 798 (Admin) that the receiver’s lien extended to the shares and property notwithstanding the third parties’ beneficial ownership, and rejected the former wife’s claim to priority or postponement.