Reid, R. v

Quantification of a beneficial interest in property must rest on an objective assessment of the parties’ whole course of dealings. It should not be a mechanical calculation based only on mortgage payments. Substantial mortgage payments by a person without legal title may support an inference that the parties intended that person to acquire a beneficial interest. An appellate court will not rehear factual issues where the judge’s conclusion was open on the evidence. Separate findings of a tainted gift and mortgage payments do not amount to double-counting unless the evidence establishes that the gift funded those payments.

Following convictions for conspiracies to supply class A and class B controlled drugs, Stuart Reid was made subject to a confiscation order under the Proceeds of Crime Act 2002. The Crown Court at Leicester found that he had a 75% beneficial interest in 14 Church Lane, a property legally owned by the intervener, Jayne Griffiths.

Reid and Griffiths appealed against the confiscation proceedings. They challenged the findings that Reid funded the mortgage and acquired a beneficial interest, the quantification of that interest, and the treatment of a separate tainted gift. The central issue was whether the evidence supported Reid’s beneficial interest and, if so, its proper value.

1. Appeal allowed in part. The court reduced Reid’s beneficial interest in 14 Church Lane from 75% to 50%. It consequentially reduced the confiscation order from £1,330,284.20 to £1,167,784.20. The nine-year default term remained unchanged.
2. The challenge to the factual finding that Griffiths could not fund the mortgage failed. The judge had heard the witnesses and considered the evidence over two days. The appellate function was to identify error, not to conduct a fresh factual assessment. The conclusion that the mortgage payments derived mostly, if not wholly, from Reid was open on the evidence.
3. The court upheld the finding that Reid acquired a beneficial interest. Even if the judge had erred in finding that rental income was deliberately diverted in cash, the evidence showed that Reid paid at least 84% of the cash mortgage payments. That made an intention to confer a beneficial interest on him inescapable.
4. However, the 75% quantification could not stand. Jones v Kernott [2012] 1 AC 776 provided authoritative guidance that beneficial shares are quantified by an objective evaluation of the parties’ course of dealings over the relevant period. The judge had to recognise Griffiths’s substantial pre-existing equity as well as Reid’s mortgage payments and wider involvement with the property. A 50% share was just and proportionate.
5. The tainted-gift ground failed. The finding of a separate tainted gift was not inconsistent with the finding that Reid’s mortgage payments gave him a beneficial interest. There was no basis to assume that the whole gift had been applied to mortgage repayments, and therefore no double-counting was shown.

• Court of Appeal (Criminal Division) — in [2019] EWCA Crim 690, allowed the appeals only as to the quantification of Reid’s beneficial interest and varied the confiscation order accordingly.
• Crown Court at Leicester — on 16 September 2016, made a confiscation order against Reid for £1,330,284.20, having found a benefit of £3,081,602.50 and attributed a 75% beneficial interest in 14 Church Lane to him.