Mundy v Crown Prosecution Service

For a certificate of inadequacy under Drug Trafficking Offences Act 1986, the defendant must prove, on the balance of probabilities and by clear and cogent evidence, that realisable property is inadequate to meet the outstanding confiscation sum.

An asset is not excluded merely because it is difficult or temporarily impossible to sell. The court must distinguish an asset whose nature gives it no present realisable value from an asset with market value whose realisation is delayed by litigation or practical difficulties. Where pending proceedings will determine whether the defendant owns the asset, the defendant cannot establish inadequacy before that issue is resolved.

The applicant had been convicted of conspiracy to produce a controlled drug and was subject to a confiscation order made under the Drug Trafficking Offences Act 1986. A receiver recovered part of the order, leaving £63,032.30 outstanding.

The applicant sought a certificate of inadequacy under section 14, relying principally on a 50 per cent interest in a villa in Spain. Spanish proceedings concerning ownership and possession meant that the villa could not then be sold. The central issue was whether that pending litigation made the applicant’s interest insufficiently realisable for the purposes of sections 5 and 14.

1. Application refused. The applicant failed to prove that his realisable property was inadequate for payment of the outstanding amount.
2. Under section 14 of the Drug Trafficking Offences Act 1986, the applicant bore the burden of showing on the balance of probabilities that the relevant realisable property was inadequate. The authorities required clear and cogent evidence. The court accepted that the English properties had been disposed of and that sums due to the applicant had been paid to the receiver.
3. The applicant held a 50 per cent interest in the Spanish villa. His ex-wife had no interest in it. The fact that Spanish proceedings prevented disposal of the villa until ownership rights were determined did not establish that the interest was impossible to realise. A future court decision would determine whether the applicant’s asserted interest was realisable.
4. The distinction drawn in R v Cornfield and R v Chen was material. Those cases concerned assets whose inherent nature gave them no present realisable value, including pension policies which could not be assigned, surrendered or used to obtain funds. They did not justify assigning a nil value to an asset which the applicant himself asserted had substantial market value.
5. The analysis in R v Modjiri and R v Liverpool Magistrates’ Court ex parte Ansen required practical difficulties in selling an asset to be disregarded where the asset itself retained market value. The absence of later statutory powers to take account of increases in value did not justify giving the unchanged statutory language a different meaning. The application was therefore refused. Future enforcement proceedings were left for the Liverpool Magistrates’ Court.

First-instance application for a certificate of inadequacy under section 14 of the Drug Trafficking Offences Act 1986. The application was refused by the High Court (Administrative Court).