Revenue & Customs Prosecutions Office v May & Anor

Under the confiscation provisions of the Criminal Justice Act 1988, property may be treated as realisable property where it is held through a company or trust for the direct or indirect benefit of the defendant. Company-law and trust-law obstacles do not prevent recovery, subject to the statutory protection of third-party interests and the requirement to give interested persons a reasonable opportunity to make representations.

Where a third party is registered as holding title, the prosecutor bears the burden of proving the defendant’s beneficial interest. The issue is determined by ordinary civil procedures. Findings made in the confiscation proceedings bind the defendant, but do not bind other persons claiming an interest under section 80(8).

The Prosecutor sought a declaration that Larkfield Limited was not the true or sole beneficial owner of a London flat previously identified as part of Raymond May’s realisable assets following a confiscation order made by the Crown Court.

Larkfield, a Bahamian company whose shares were held by corporate trustees for the Magle Settlement, claimed that the flat belonged beneficially to Peter Gleeson and had been purchased with trust funds. The Prosecutor alleged that May had provided the funds and was the beneficial owner.

The principal issues were whether the statutory confiscation regime permitted recovery of property held through a company or trust, and whether the Prosecutor had proved May’s beneficial ownership. Other third-party claims were settled or conceded.

1. The claim succeeded. The Prosecutor proved on the balance of probabilities that the flat was realisable property belonging beneficially to Mr May. Larkfield’s claim therefore failed.
2. Under sections 80 and 82 of the Criminal Justice Act 1988, once property is identified as relevant realisable property, the court may recover it from a company or trust where it is held for the direct or indirect benefit of the defendant. The statutory purpose and detailed provisions are not confined to assets that are themselves the proceeds of the offence. That limitation would allow assets to be protected by transferring them into trusts before the crime was committed.
3. The ordinary rules concerning resulting trusts, sham trusts and corporate personality do not prevent the statutory powers being exercised. The statutory scheme is subject to the protection in section 80(8) and the requirement in section 82(4) that other persons may retain or recover the value of property held by them.
4. Following Re Norris [2001] 1 WLR 1388, where a third party is registered as holding title, the Prosecutor bears the burden of proving the defendant’s relevant interest. The third party’s defence is determined by ordinary civil procedures. Findings made by the Crown Court bind the defendant, but do not bind third parties claiming ownership under section 80(8).
5. It was appropriate to determine the beneficial ownership issues even though the trustees and other persons connected with the trust were not parties. They knew of the proceedings and had ample opportunity to participate. Larkfield had itself placed the true ownership and funding of the flat in issue.
6. The court accepted the evidence that Mr May negotiated the purchase, provided the relevant telephone number and represented that he was buying through an Isle of Man company. The surrounding trust and company documentation, together with the absence of reliable evidence that Mr Gleeson had supplied the purchase money, supported the conclusion that Mr May’s assets were used to acquire the flat.
7. The approach in Re H [1996] 2 All ER 391 and Re D [2006] EWHC Admin 254 was consistent with the statutory focus on identifying, protecting and realising assets properly treated as those of the defendant.

First-instance proceedings. No appeal from this judgment is stated.