Stodgell v Stodgell

Neither an ancillary relief claim nor a confiscation order has automatic priority. Where the claims compete, the court must exercise its discretion by identifying the assets genuinely available for distribution.

An innocent spouse’s non-complicity in the crime is necessary, but not sufficient, for an ancillary relief award from restrained assets. Relief may properly be withheld where the assets exist only because tax and associated penalties were not paid. A spouse’s vested proprietary interest is different: the relevant property is not part of the offender’s realisable assets and does not compete with the confiscation order.

The wife sought permission to appeal from Holman J’s decision that her ancillary relief application could not proceed until an unappealed confiscation order against her husband had been discharged. The husband had been convicted of tax offences. His available assets were insufficient to satisfy the confiscation order, which represented unpaid tax, interest and penalties.

The wife was innocent of the offences and claimed no proprietary interest in the husband’s property. Her claim under sections 21 to 25 of the Matrimonial Causes Act 1973 was for discretionary financial provision, principally a lump sum. The issue was whether her innocence and financial needs provided an arguable basis for awarding her part of assets required to meet the confiscation order.

1. Permission to appeal was refused. Holman J had correctly exercised his discretion in concluding that the wife’s ancillary relief claim could not proceed until the confiscation order had been discharged. Neither an ancillary relief claim nor a confiscation order had automatic priority: Commissioners of Customs and Excise v A [2003] 2 WLR 210 applied.

2. The wife’s innocence was necessary but insufficient. Crown Prosecution Service v Richards [2006] 2 FLR 1220, involving a wife who knew of the criminal conduct and origin of the assets, lay at the opposite extreme. Holman J had expressly distinguished that case.

3. The confiscation order represented tax, interest and penalties which the husband should previously have paid. The family economy and accumulated assets had been maintained by that non-payment. Had those liabilities been met, no assets would have remained. It was therefore immaterial that the properties themselves had not been acquired from criminal proceeds. The same sums could have been recovered through civil proceedings and bankruptcy, leaving nothing for a lump-sum award.

4. The possibility that the wife might require state support was relevant but could not outweigh those considerations. Nor was refusal of relief a punishment of the innocent wife. A spouse may suffer because the other spouse’s conduct has exhausted the assets available for ancillary relief.

5. A vested proprietary interest would have produced a materially different analysis. Property beneficially belonging to the wife would not form part of the husband’s realisable assets and would not compete with the confiscation order. White v White [2000] UKHL 54, concerning the position between spouses, did not resolve the present competition.

6. The alleged existence of surplus hidden assets was speculative. The court could not properly require the receiver to spend public funds searching for assets in the hope that both the confiscation order and the wife’s claim might be met.

7. The Revenue did not pursue its related application concerning Charles J’s earlier authorisation of payments from restrained funds. The court therefore made no determination upon it. The effect of section 69(2)(c) of the Proceeds of Crime Act 2002 on ancillary relief, especially interim periodical payments, was left for a case involving full argument.

1. Court of Appeal (Civil Division): Refused the wife permission to appeal. The Revenue did not pursue its related application concerning payments authorised by Charles J, and that application was not determined.

2. High Court, Family Division: Holman J held that the wife’s ancillary relief application could not proceed until the confiscation order had been discharged.

3. High Court: Charles J had authorised payments from restrained funds, including maintenance pending suit for the wife’s ancillary relief costs. Those orders were subsequently discharged by Holman J.