Gibson v HM Revenue and Customs Prosecution Office
| Jurisdiction | England & Wales |
| Judge | Lord Justice May,Lady Justice Arden,Lord Justice Wall |
| Judgment Date | 12 June 2008 |
| Neutral Citation | [2008] EWCA Civ 645 |
| Docket Number | Case No: C1/2007/1950 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 June 2008 |
[2008] EWCA Civ 645
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
MR JAMES GOUDIE QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice May
Lady Justice Arden and
Lord Justice Wall
Case No: C1/2007/1950
Miss Julie Case (instructed by Messrs Frank Howard) for the Appellant
Mr D.A. Bartlett and Mr R. Jones (instructed by Revenue & Customs Prosecution Office) for the Respondent
Hearing dates : 10 th April 2008
On the 21 st May 1999, Gene Gibson, whose application for permission to appeal the judgment and order now before the court this court dismissed on 10 th April 2008, was convicted of conspiracy to import large quantities of cocaine between 1 st October 1996 and 27 th March 1998. He was sentenced to 25 years imprisonment. He had been arrested on the 27 th March 1998 on a private aircraft arriving at Birmingham Airport from Dusseldorf. His co-defendant, Mr Halford, who was also convicted, was the pilot. They were both directors and shareholders of an air freight company, Venuetime Ltd. 49.7kgs of cocaine was found on the plane. There was evidence of 37 or 38 flights from Dusseldorf either to Liverpool or Birmingham. HH Judge Ensor was later to be persuaded in confiscation proceedings against Mr Gibson in the Manchester Crown Court that there were 35 importations of Class A Drugs and that Mr Gibson's benefit from drug trafficking for the purpose of the Drug Trafficking Act 1994 was in excess of £38 million.
1. The confiscation order was made on the 29 th March 2000. The judge determined that the realisable amount was £5,430,671.00 and made an order requiring Mr Gibson to pay that amount within 12 months, with a term of six years imprisonment in default of payment. Of this amount, £5m was a sum determined by the judge as representing hidden assets. Mr Gibson had produced no documents to support his assertions, and the judge decided that Mr Gibson had not disclosed the true extent of his realisable assets. The £5m was arrived at by a necessarily broad assessment, which had regard to the scale of the conspiracy and the amount of money which Mr Gibson appeared to have for his hobby or business of motor racing. The balance was the total of the value of a number of specific assets. These included a property at 50 Cartier Close, Warrington, which was Mr and Mrs Gibson's matrimonial home. The judge valued this property at at least £51,431 which represented the net proceeds of sale after repayment of an outstanding mortgage. In including the net value of the property in full, the judge observed that it was in joint names, and that it would be open to Mrs Gibson to challenge its full attribution to her husband in proceedings in the High Court – see section 31(4) of the 1994 Act and In Re Norris [2001] 1 WLR 1388.
2. Mr Gibson's appeal against his sentence was dismissed by the Court of Appeal Criminal Division on the 8 th December 2004. Leave to appeal against his confiscation order was refused. An application for leave to appeal against his conviction was abandoned. He remains in prison. He appeared by video link from prison to make the application for permission to appeal which this court refused.
3. There were proceedings in the High Court to enforce the confiscation order. In March 2006, Mrs Marion Gibson, the appellant, was joined to enable her to contend, as she did, that she was the beneficial owner of 50% of the equity in the matrimonial home. She also claimed to have a 50% interest in three endowment policies effected in joint names to support the mortgage, and in two bank accounts also in joint names. No separate issues arise in relation to the endowment policies and the bank accounts from those which arise in relation to the matrimonial home.
4. The Revenue and Customs Prosecution Office opposed Mrs Gibson's contentions. On 19 th June 2007, Mr James Goudie QC, sitting as a Deputy High Court Judge, decided that Mrs Gibson's beneficial interests in each of these assets was 12.5%. He awarded Mrs Gibson 25% of her costs, since she had succeeded as to 25% of her claim to 50% interests. Mr Goudie's judgment is at [2007] EWHC 1405 (Admin). He had written evidence from the prosecution and had heard oral evidence from Mrs Gibson. Mr Gibson did not attend or attempt to adduce evidence.
5. Mr and Mrs Gibson had bought 50 Cartier Close in 1990 and it was registered in their joint names. Mr Goudie referred at some length to the opinion of Baroness Hale of Richmond in Stack –v- Dowden [2007] UKHL 17, noting her observation that cases in which joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interests will be very unusual. He saw nothing to suggest that Mr and Mrs Gibson's intent at the time the property was purchased was that Mr Gibson should have a greater beneficial interest than 50%. Nor had he seen anything to suggest that their initial intention subsequently changed. As between themselves, therefore, Mrs Gibson was the beneficial owner of 50% of the equity in the property. The prosecution do not challenge this on this appeal and Mr Bartlett accepted that the burden is on the prosecution to displace Mrs Gibson's apparent beneficial interest – see Norris at paragraph 25. Mr Goudie stated that, if this had been a contest between Mr and Mrs Gibson in the Family or Chancery Divisions in which Mr Gibson was asserting that Mrs Gibson's apparent 50% interest belonged to him in whole or in part, he would reject his claim. That was not, however, an end of the matter. Mr Gibson's interest, be it his initial 50% or a subsequently enhanced interest, was subject to the confiscation order. The contest was now between the public interest and Mrs Gibson. The key question was whether public policy or the 1994 Act made any difference and, if so, what difference.
6. There was no doubt that Mr Gibson at least from 1993 had proceeds of crime on a huge scale; and that, between 1993 and 1998, large cash sums were paid into accounts from which mortgage payments and payments under the endowment policies were made. There were also funds from legitimate income of Venuetime which may have been sufficient to cover this expenditure. Applying paragraph 20 of the Court of Appeal judgment in R –v- Ginwalla [2005] EWCA Crim 3553, Mr Goudie found that, at least from 1993, tainted money was to be taken to have been used to fund the payments. Half of these were referable to Mrs Gibson's interest. In the passage in Ginwalla to which Mr Goudie referred, Richards LJ said that, where a person has a mixed income, partly legitimate and partly the proceeds of crime, it would be wholly artificial to try to separate out the source or sources of any individual payment. To engage in a tracing exercise would be a much too narrow approach in that case, although there might be circumstances in which it would be appropriate.
7. The issue was as to the effect of the taint on Mrs Gibson's half interest. It had to be considered whether she knew that the money was tainted, and if she did, whether that mattered. As to her knowledge, Mrs Gibson had given oral evidence. Mr Goudie found her an evasive witness whose evidence was not credible on this topic. He found that she was well aware that a lot of cash, some of which she handled, was washing around the Gibson household well beyond that for which there may have been a legitimate explanation. He found that she had guilty knowledge, which in the context means that she knew that money used to pay the mortgage was not legitimately earned.
8. Upon this finding the prosecution submitted that Mrs Gibson's beneficial interests in the home, the endowment policies and the bank accounts were available for confiscation in two ways. First, there was a matter of public policy; and, second, under section 8 of the 1994 Act.
9. Taking the second of these first, section 8 of the 1994 Act concerns gifts caught by the Act, and would apply to gifts within the period 1992 to 1998 whether they were tainted or not. By section 6(1), the amount which may be realised for the purposes of a confiscation order includes the total value of all gifts caught by the Act. Mr Goudie held that the relevant payments were not gifts, because Mrs Gibson provided consideration by bringing up the children and looking after the home. The prosecution accept this finding for the purposes of this appeal. Accordingly, Mrs Gibson cannot be deprived of her 50% interests by this or any other statutory provision.
10. As to public policy, however, Mr Goudie held that the taint of which Mrs Gibson had guilty knowledge should be taken into account against her, having regard to the general scheme of the 1994 Act and irrespective of Section 8. He reached this conclusion relying on two Family cases, which in my judgment do not sustain the conclusion.
11. The two decisions are Customs and Excise Commissioners –v- A [2003] Fam 55; [2002] EWCA Civ 1039 and CPS –v- Richards [2006] 2FLR 1220; [2006] EWCA Civ 849. These were each cases in which a husband had been convicted of drug trafficking offences and there were confiscation proceedings against them. Each of the wives applied in ancillary relief proceedings under the Matrimonial Causes Act 1973 for a property adjustment order or a lump sum payment from assets of the husband. In CPS v Richards, it was successfully contended by the prosecution that public policy required that drug dealers were deprived of the fruits of their crimes and that those...
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