Commissioners of Customs and Excise v A
| Jurisdiction | England & Wales |
| Judgment Date | 2002 |
| Date | 2002 |
| Court | Court of Appeal (Civil Division) |
Ancillary relief – Joint property – Matrimonial home and endowment policies – Husband and wife divorcing – Wife seeking transfer of husband’s interests in property and endowment policies – Husband convicted of drug trafficking – Wife entirely innocent – Confiscation order made in respect of husband’s assets – Customs and Excise seeking realisation of husband’s interests to satisfy confiscation order – Whether wife’s rights protected by drug trafficking legislation – Court’s approach in balancing conflicting claims under drug trafficking legislation and matrimonial legislation – Matrimonial Causes Act 1973, s 24 – Drug Trafficking Act 1994, ss 29(6), 31(2) and (4).
The husband and wife lived in a jointly owned matrimonial home (the house) which they re-mortgaged to a building society with the support of two endowment policies. The husband and wife separated, and some time later the wife filed a petition for divorce. She included in the prayer a claim for all heads of financial ancillary relief. A decree nisi was granted. The husband was then arrested for drug trafficking and was convicted. A confiscation order was made under the Drug Trafficking Act 1994 ordering the husband to pay £47,868·22 in default of which he might be liable to serve 21 months’ imprisonment. A receiver was appointed over all the husband’s assets, save for the house and the policies, to enforce the confiscation order. The receiver applied to the High Court for that order to be varied so that the house and the policies be included in the realisable property. The ancillary relief proceedings were transferred to the High Court to be heard together with the receiver’s application. The receiver and HM Customs and Excise accepted that no part of the equity in the house had been acquired with the proceeds of drug trafficking, and that the wife was innocent of any involvement in drug trafficking. The question arose at the hearing whether the court was precluded from making a property adjustment order, transferring the husband’s interests in the house to the wife under s 24 of the Matrimonial Causes Act 1973, where the property in question was also the subject of proceedings to enforce a criminal confiscation order under the 1994 Act. The issue, in particular, was the true meaning and effect of s 31(4) of the 1994 Act and the interaction between it and s 31(2). Those subsections provided: ‘(2) Subject to the following provisions of this section, the powers shall be exercised with a view to
making available for satisfying the confiscation order ... the value for the time being of realisable property held by any person, by means of the realisation of such property ... (4) The powers shall be exercised with a view to allowing any person other than the defendant ... to retain or recover the value of any property held by him.’ The judge held that s 31(2) took effect subject to s 31(4), which safeguarded the right of a third party to continue to enjoy his property in specie; that a third party could bring himself within s 31(4) if he had either an ‘interest’ or a ‘right’ ‘in’ or ‘in relation to’ the relevant property; and that a wife’s claim under s 24 of the 1973 Act could amount to such rights. Accordingly, he concluded that the court was not precluded from making a property adjustment order. HM Customs and Excise and the receiver appealed on the grounds, first, that the judge should have held, both in terms of statutory construction and for reasons of public policy, that confiscation proceedings under the 1994 Act took priority over proceedings for ancillary relief under the 1973 Act; secondly, that the judge had been wrong to construe s 31(4) as giving a third party a right to continue to enjoy his property in specie as opposed to merely protecting the monetary value; and thirdly, that the judge had been wrong in any event to conclude that a claim under the 1973 Act was a ‘right’ or ‘interest’ in property. In the course of argument, counsel for HM Customs and Excise was minded to concede that if an order under s 24 of the 1973 Act and a consequent transfer pre-dated an application to enforce a confiscation order under the 1994 Act, the former would be unassailable and the 1994 Act would not bite.
Held – (1) There was nothing in the provisions of either the 1973 Act or the 1994 Act which required the court to hold that either statute took priority over the other when the provisions of each were invoked in relation to the same property. Both statutes conferred discretion on the court and gave mandatory guidance as to how its powers were to be exercised. Equally, it was not axiomatic that it was more in the public interest to enforce an order under the 1994 Act than to make an order under the 1973 Act: each case had to depend on its own facts. Furthermore, a transfer of property under the 1973 Act did not relieve a drug trafficker of the obligation to satisfy the compensation order under the 1994 Act. Above all, the assumption that the provisions of the 1994 Act excluded the operation of s 24 of the 1973 Act was capable of leading to an injustice which parity between the statutes would prevent. In the instant case, the wife had an entirely genuine interest in the house, and if the 1994 Act took priority a substantial injustice would be done to her in order to garner a sum into the coffers of the state. That was not, on the facts of the instant case, a proportionate outcome, or one which was in the public interest; James v James (15 March 1995, unreported) overruled; Harman v Glencross [1986] Fam 81, Re Peters [1988] QB 871 and Ahmad v Ahmad [1999] 1 FLR 317 considered.
(2) The judge had reached his conclusion on the meaning of s 31(4) of the 1994 Act by reading the words ‘to retain or recover the value of any property held by him’ disjunctively, so that the word ‘retain’ applied to ‘property’, and the word ‘recover’ to ‘value’. That interpretation could prejudice the section’s operation in relation to chattels, but the terms of s 29(6) of the 1994 Act, enabling the court to order any person holding an interest in realisable property in effect to buy out the defendant’s interests in it, meant that such a disjunctive interpretation of s 31(4) did not prejudice its operation in relation to chattels, and in relation to a matrimonial home allowed the 1994 Act to give full weight to a wife or former wife’s right to retain it.
(3) The judge had found that a wife’s claims under s 24 of the 1973 Act could amount to rights in or in relation to property, within the meaning of s 31(4) of the 1994 Act. Although it could not be said that an application for an order under s 24 itself amounted to such a right, it was in any event unnecessary to do so. What mattered was that the wife’s rights in relation to property should be preserved until such time as a court could adjudicate upon them under s 24 of the 1973 Act, and once it had been accepted that neither the 1973 Act nor the 1994 Act had priority over the other, it was unnecessary to identify a claim under s 24 of the 1973 Act as a right in or in relation to property; Harris v Goddard [1983] 3 All ER 242 considered.
(4) The concession which counsel for HM Customs and Excise had been minded to make should not be made, nor was it a sound proposition in law. If the 1994 Act could not bite on transfers that pre-dated an application to enforce a confiscation order, it would allow open season to collusive agreements resulting in court orders under the 1973 Act. Furthermore, there was nothing in the Family Proceedings Rules 1991 to prevent HM Customs and Excise applying to set aside an order under the 1973 Act on the ground, for example, that the court had not been given full disclosure by the parties. The exercise of the jurisidiction of the court should be dictated by the facts of the case, and the respective merits of the two applications.
Per curiam. Judges should bear in mind that the primary function of a first instance judgment is to find facts, to identify the crucial legal points and to advance reasons for deciding them in a particular way. The longer a judgment is and the more issues with which it deals, the greater the likelihood, inter alia, that it will not be possible to identify the crucial matters that swayed the judge and that it will contain something with which the unsuccessful party can legitimately take issue and attempt to launch an appeal.
Decision of Munby J (sub nom Re A, A v A) [2002] 2 FCR 481 affirmed.
Cases referred to in judgmentAhmad v Ahmad [1999] 1 FLR 317, CA.
B, Re (13 May 1991, unreported), QBD.
Bank of Ireland Home Mortgages Ltd v Bell[2001] 3 FCR 134, [2001] 2 FLR 809.
Harman v Glencross [1986] Fam 81, [1986] 1 All ER 545, [1986] 2 WLR 637, [1986] 2 FLR 241, CA.
Harris v Goddard [1983] 3 All ER 242, [1983] 1 WLR 1203, [1984] FLR 209, CA.
Jackson v Jackson [1973] Fam 99, [1973] 2 All ER 395, [1973] 2 WLR 735.
James v James (15 March 1995, unreported), Fam D.
K (restraint order), Re [1990] 2 QB 298, [1990] 2 All ER 562, [1990] 2 WLR 1224.
K, Re (27 May 1999, unreported).
Norris, Re[2001] UKHL 34, [2001] 3 All ER 961, [2001] 1 WLR 1389.
Peters, Re [1988] QB 871, [1988] 3 All ER 46, [1988] 3 WLR 182, CA.
R v Benjafield[2002] UKHL 2, [2002] 1 All ER 815, [2002] 2 WLR 235.
R v Dickens [1990] 2 QB 102, [1990] 2 All ER 626, [1990] 2 WLR 1384, CA.
R v Lee [1996] 1 Cr App Rep (S) 135, CA.
R v Taigel [1998] 1 Cr App Rep (S) 328, CA.
W, Re [1990] TLR 726.
AppealHM Customs and Excise appealed against the judgment of Munby J, dated 18 April 2002 ([2002] EWHC 611 (Admin/Fam), [2002] 2 FCR 481, [2002] Fam 213), whereby he ordered that he was not precluded by the provisions of the Drug Trafficking Act 1994 from making a property adjustment order under s 24 of the Matrimonial Causes Act 1973 in the wife’s favour, and made such an order, transferring to her the husband’s interest in the former matrimonial home and two endowment policies. The facts are set out in the judgment of Schiemann LJ.
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