Syed Ahmed & Anor v Junfang Xu

Under the Criminal Justice Act 1988, property may be realisable even where it is held in a third party’s name, if the evidence establishes that it is beneficially held by the defendant. Property need not be traced to criminality. The court may also treat property transferred to a third party after the offending as a tainted gift, subject to the statutory limits.

Where realisable property is identified and a confiscation order remains unsatisfied, the statutory steer generally favours variation of a receivership order so that the property can be realised. A third party seeking living expenses must provide sufficiently detailed evidence of financial need and available alternative resources.

The defendants had been convicted of conspiracy to cheat the public revenue and were subject to confiscation orders and enforcement receivership proceedings under the Criminal Justice Act 1988. A restraint order was varied to include an HSBC account held in the name of Junfang Xu, the defendant’s wife.

Ms Xu sought discharge of that variation and, alternatively, permission to withdraw £500 per week for living expenses. The Crown applied to vary the receivership order to include the account. The central issues were whether the account balance was realisable property and whether the receivership order should be varied.

1. The Crown’s application was allowed. The receivership order was varied to include the balance in the HSBC account, a declaration was made as to the defendant’s beneficial ownership, and Ms Xu’s applications were dismissed.
2. The account balance was property within section 102(1) of the Criminal Justice Act 1988. The evidence showed that its sole source was rental income from Southlands, a property beneficially owned by the defendant. Ms Xu had no proprietary entitlement to let Southlands, and the defendant had been involved in the letting arrangements.
3. The account was therefore property held by the defendant within sections 74(1) and 102(7), notwithstanding that the account was in Ms Xu’s name. The fact that funds were transferred to the defendant and used for his benefit was a powerful indicator of beneficial ownership.
4. The alternative case based on a tainted gift did not require determination. Had it been necessary, the court would have found that any interest transferred to Ms Xu was a gift caught by section 74, since it was transferred after the offending without persuasive evidence of consideration. This was an alternative observation.
5. The statutory steer in section 82 required the court to exercise its powers with a view to making realisable property available to satisfy the outstanding confiscation order. The relatively small value of the account did not justify refusing the variation.
6. The restraint variation should remain in place because there was at least a good arguable case that the account was realisable property, applying CPS v Compton [2002] EWCA Civ 1720 at [38]. The application for living expenses also failed. Ms Xu had not provided sufficiently detailed evidence of her financial circumstances or established that alternative resources were unavailable, applying the burden of persuasion described in SFO v X [2005] EWCA Civ 1564 at [35].