Hayes, R v

For Proceeds of Crime Act 2002 section 78(1), consideration for a transfer must be objectively evidenced, attributable to the transfer, and capable of monetary valuation. Non-financial family services are not categorically excluded, but marriage, parenthood and ordinary family support do not by themselves establish valuable consideration. The Crown Court must value the property, identify and value any consideration, decide whether the shortfall is significant, and then apply the statutory calculation. Family-law principles for the fair division of matrimonial assets do not govern the tainted-gifts inquiry in confiscation proceedings.

The appellant had been convicted of conspiracy to defraud. In confiscation proceedings, Cooke J assessed his benefit and made a confiscation order. The available amount included a half interest in a home which the appellant had acquired in joint legal and beneficial ownership with his wife, although he had provided the whole purchase price.

The judge held that the initial acquisition gave the wife a tainted gift. The appellant challenged that conclusion. He argued first that there had been no transfer by him because the spouses acquired their interests simultaneously. Secondly, he contended that his wife’s services as a wife and mother were valuable consideration for her half interest. The central issue was whether such services could constitute consideration under section 78(1) of the Proceeds of Crime Act 2002.

1. Appeal dismissed. The judge was entitled to hold that the appellant made a tainted gift when he funded the purchase of a home placed into the joint legal and beneficial ownership of himself and his wife.

2. The technical transfer argument, although ultimately withdrawn, was untenable. A construction under which a criminal could avoid the tainted-gifts regime simply by funding a purchase in joint names would defeat the statutory purpose. Before completion, the purchase money held by the solicitors was held for the joint purchasers. The appellant thereby transferred or endowed his wife with an interest in that money. The court endorsed Thompson [2015] EWCA Crim 1820 and agreed with the similar approach in Buckman [1997] 1 CAR (S) 325.

3. Section 78(1) requires a comparison between the value of the property at transfer and the value of the consideration. The latter must be objectively capable of assessment in money terms, because section 78(2) prescribes a mathematical calculation. The adequacy of consideration is therefore a statutory issue, unlike the usual common-law contractual inquiry.

4. Non-financial family services may in a suitable case be capable of amounting to valuable consideration. The court rejected an inflexible rule to the contrary. But the asserted services must be rigorously evidenced, attributable to the particular transfer, and capable of monetary valuation. The equitable principles governing beneficial ownership or fair division in family proceedings do not answer that separate confiscation question. Stack v Dowden [2007] UKHL 17 and Jones v Kernott [2011] UKSC 53 concerned a different inquiry.

5. On the facts, the wife had contributed no purchase money, and the ordinary incidents of a short marriage, pregnancy, parenthood and domestic support could not objectively be valued as consideration for half the property. The appellant had also paid the household expenses. The judge’s conclusion that the half interest was a tainted gift was therefore justified.

• Court of Appeal (Criminal Division) — dismissed the appeal and affirmed the finding that the initial joint acquisition gave rise to a tainted gift: [2018] EWCA Crim 682.
• Southwark Crown Court — Cooke J made a confiscation order after finding that the appellant’s wife received a tainted gift on the initial joint acquisition of the property.