The Chief Constable of Greater Manchester Police v Wright

Section 311 of the Proceeds of Crime Act 2002 requires insolvency-court permission for proceedings for a recovery order and for further detention of cash. It does not require permission to continue cash-forfeiture proceedings under section 298. The omission of section 298 from section 311 is deliberate and cannot be corrected by reading additional words into the statute. Although cash may have vested in a trustee in bankruptcy, section 298(4) prevents its release while forfeiture proceedings remain pending. If the statutory conditions for forfeiture are met, the magistrates’ court retains a discretion whether to order forfeiture. The destination of the cash, including the competing interests of the consolidated fund and the bankrupt’s creditors, may be relevant to that discretion.

Greater Manchester Police applied for permission to continue proceedings in the Preston Magistrates’ Court concerning the proposed forfeiture under section 298 of the Proceeds of Crime Act 2002 of three sums of cash seized from Mohammed Osman Tahir. Tahir had been adjudged bankrupt, and Joanne Sara Wright, his trustee in bankruptcy, argued that the cash had vested in her under the Insolvency Act 1986 and should be paid over to the bankruptcy estate.

The court considered whether section 311 required insolvency-court permission for the pending forfeiture proceedings, whether the cash could be released to the trustee, and what guidance could properly be given to the magistrates’ court.

1. Application dismissed. Proceedings in the Preston Magistrates’ Court were proceedings for forfeiture under section 298 of the Proceeds of Crime Act 2002, not proceedings for a recovery order under section 266 or for further detention under section 295. Section 311 therefore did not require permission from the insolvency court.
2. The omission of any reference to section 298 from section 311 was treated as deliberate. Although the omission’s purpose was difficult to discern, the distinction between detention and forfeiture proceedings was expressly recognised elsewhere, including in section 301(2). The court could not insert a reference to section 298 by applying the principles in Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586.
3. Section 298(4) required the cash to remain detained until the forfeiture proceedings, including any appeal, were concluded. The insolvency court therefore could not order payment of the cash to the trustee in bankruptcy, whether as an independent order or as a condition of permission.
4. Under section 306(1) of the Insolvency Act 1986, the bankrupt’s estate vested in the trustee on appointment. Subject to the statutory exception for trust property, the cash appeared prima facie to form part of the estate. If no forfeiture order were made, it should ordinarily be paid to the trustee for rateable distribution, including to creditors who might be victims of criminal conduct.
5. The magistrates’ court could still make a forfeiture order if satisfied that the cash was recoverable property or intended for use in unlawful conduct. The use of “may” in section 298(2) conferred a discretion. The ultimate destination of the cash was a relevant consideration in exercising that discretion. The court’s observations on that issue were guidance rather than an order determining entitlement to the cash.

This was a first-instance insolvency application. The judgment records an earlier hearing on 20 November 2015, an adjournment to permit evidence from the trustee in bankruptcy, and the substantive hearing on 26 November 2015.