Commissioners of Customs and Excise v A
| Jurisdiction | England & Wales |
| Judge | Lord Justice Schiemann,Lord Justice Judge,Mr Justice Wall |
| Judgment Date | 22 July 2002 |
| Neutral Citation | [2002] EWCA Civ 1039 |
| Docket Number | Case No: C2002/0923 QACE |
| Court | Court of Appeal (Civil Division) |
| Date | 22 July 2002 |
[2002] EWCA Civ 1039
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
(Administrative Court and Divisional Court)
Lord Justice Schiemann
Lord Justice Judge and
Mr Justice Wall
Case No: C2002/0923 QACE
Andrew Bird (instructed by Solicitors for H M Customs & Excise) for the Appellants
Christopher Hames (instructed by Messrs Gosling & Wilkinson) for the Respondents
The issue
The question raised by this appeal by H.M Customs & Excise is whether or not the court is precluded from making a property adjustment order under section 24 of the Matrimonial Causes Act 1973 (MCA 1973), when the property in question (Mr A's interest in the former matrimonial home owned jointly by himself and Mrs. A, and two life insurance policies securing the mortgage on the property) is also the subject of proceedings by HM Customs & Excise to enforce a criminal confiscation order made against Mr. A in proceedings under the Drug Trafficking Act 1994 (DTA 1994), following his conviction and imprisonment for drug trafficking offences.
In a reserved judgment handed down on 18 April 2002, Munby J, in conjoined proceedings under MCA 1973 and the DTA 1994 held that he was not so precluded and made a property adjustment order under section 24 MCA 1973 in favour of Mrs. A, transferring to her Mr. A's interest in the former matrimonial home and the two policies. At the same time, he discharged a restraint order (the equivalent of a Mareva injunction) made by Toulson J on 26 September 1997 under section 26 DTA 1994 in relation to Mr. A's assets. He also discharged the Receiver appointed under section 29(2) DTA 1994 and dismissed an application by HM Customs & Excise for Mr. A's interest in the property and the policies to be included in the realisable property over which the Receiver had been appointed.
In dealing with the issues in this case, I have been assisted by a very helpful concession made (and in my judgment correctly made) on behalf of the Appellant, that if the judge did have the power to make an order under section 24 MCA in the circumstances of this case, no criticism can be made of the manner in which he exercised that discretion. I am, accordingly, able to focus exclusively on the issue which I have identified at paragraph 1 above.
I have also been greatly assisted by the arguments of counsel, and would like to pay particular tribute to Mr. Bird, who has conducted the Appellant's case throughout with both ability and conspicuous fairness.
The Statutory Framework
Before turning to the facts, I need to set out the relevant provisions of MCA 1973 and DTA 1994. I turn firstly to MCA 1973.
The provisions relating to financial relief for the parties to a marriage and their children are contained in Part II of MCA 1973. As the judge pointed out, Part II enables the court to make a wide range of orders, including financial provision orders (that is, orders for periodical payments and lump sums) as well as property adjustment orders, designed, on divorce, to regulate the financial positions of the parties to the marriage. In the instant case, we are concerned only with two sections of MCA 1973; firstly sections 24, sub-sections (1)(a) and (3) of which, where material, read:
"(1) On granting a decree of divorce … or at any time thereafter (whether … before or after the decree is made absolute), the court may make any one or more of the following orders, that is to say —
(a) an order that a party to the marriage shall transfer to the other party … such property as may be so specified, being property to which the first-mentioned party is entitled, either in possession or reversion…….
(3) … where an order is made under this section on or after granting a decree of divorce … neither the order nor any settlement made in pursuance of the order shall take effect unless the decree has been made absolute."
The basis upon which the court exercises its discretion to make financial provision and property adjustment orders is set out in section 25 MCA 1973 which provides, where material, as follows: —
"(1) It shall be the duty of the court in deciding whether to exercise its powers under section 23 [or] 24, … above and, if so, in what manner, to have regard to all the circumstances of the case, first consideration being given to the welfare while a minor of any child of the family who has not attained the age of eighteen.
(2) As regards the exercise of the powers of the court under section 23(1)(a), (b) or (c) [or] 24 … above in relation to a party to the marriage, the court shall in particular have regard to the following matters —
(a) the income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future, including in the case of earning capacity any increase in that capacity which it would in the opinion of the court be reasonable to expect a party to the marriage to take steps to acquire;
(b) the financial needs, obligations and responsibilities which each of the parties to the marriage has or is likely to have in the foreseeable future;
(c) the standard of living enjoyed by the family before the breakdown of the marriage;
(d) the age of each party to the marriage and the duration of the marriage;
(e) any physical or mental disability of either of the parties to the marriage;
(f) the contributions which each of the parties has made or is likely in the foreseeable future to make to the welfare of the family, including any contribution by looking after the home or caring for the family;
(g) the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it;
(h) … the value to each of the parties to the marriage of any benefit which, by reason of the dissolution.. of the marriage, that party will lose the chance of acquiring."
Aspects of MCA 1973 of particular relevance to the instant appeal
In cases of divorce, Part II of MCA 1973 gives the parties to a marriage an unfettered right to apply to the court for financial provision and property adjustment orders. That right is only excluded by re-marriage. MCA 1973, section 28(3) provides that: —
If after the grant of a decree dissolving or annulling a marriage either party to that marriage remarries …. that party shall not be entitled to apply, by reference to the grant of that decree, for a financial provision or for a property adjustment order, against the other party to that marriage.
Even here, provided an application for ancillary relief has been made prior to the decree absolute dissolving the marriage (for example, by a Petitioner in the petition for divorce) the jurisdiction to entertain the application remains open:—see Jackson v Jackson [1973] Fam. 99. However, the right to apply, and the application itself, do not of themselves confer any property rights on the party making the application. Thus Mrs. A's application under MCA 1973 in the instant case, whilst a pending action which gives her the right to apply to the court to prevent premature disposal of Mr. A's interest in the house and the policies, remains, in effect, an invitation to the court to exercise its discretion at some future time to make a property adjustment order under section 24 in her favour: see Harris v Goddard [1983] 1 WLR 1203, 1209D-E per Lawton LJ.
Given both the breadth of the discretion available to the court under section 25 MCA, and the correspondingly wide variety of financial relationships within marriage, it is not surprising that Part II of the MCA 1973 has generated a substantial jurisprudence. We are not, concerned with that jurisprudence in this case. Two points are, however, clear from the provisions of MCA 1973. The first is that since the statute itself identifies remarriage as the only bar to the exercise of the jurisdiction under Part II in cases of divorce, it follows that – to take two examples relevant to this case, neither moral obloquy nor serious criminal convictions represent jurisdictional bars to the exercise of the jurisdiction.
It follows, as Judge LJ points out in paragraph 90 below, that the court plainly has jurisdiction to entertain applications for ancillary relief by drug dealers and the spouses or former spouses of drug dealers. Whether the court exercises its discretion so as to make orders in such cases, is, of course, another matter. However, the primary contention of the Appellant is that the exercise of the jurisdiction under MCA 1973 is effectively ousted by and must take second place to proceedings to enforce orders made under DTA 1994. To establish this proposition, the Appellant must, in my judgment, either demonstrate that it is sound as a matter of statutory construction of DTA 1994, or that it is necessary as a matter of public policy, or that there is authority binding on this court which requires us to give effect to it.
As to the exercise of the jurisdiction to make an order under Part II MCA in a case involving assets acquired by or derived from criminal activities, I would extract the following propositions from section 25 MCA, namely:
(1) the court is not obliged to exercise its powers under section 23 or 24: section 25(1) gives it a discretion to do so;
(2) the fact that one or both of the parties to the marriage had been engaged in or convicted of trafficking in drugs is plainly a material circumstance of the case within section 25(1); and drug trafficking is almost certainly conduct which it would...
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