Re L
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE KENNETH PARKER,Mr Justice Hickinbottom |
| Judgment Date | 23 June 2010 |
| Neutral Citation | [2010] EWHC 1675 (Admin),[2010] EWHC 1531 (Admin) |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 23 June 2010 |
| Docket Number | Case No: DTA/43/2009 |
[2010] EWHC 1531 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION ADMINISTRATIVE COURT
THE HON MR JUSTICE HICKINBOTTOM
Case No: DTA/43/2009
In The Matter Of
Simon Gurney (instructed by Southerns) for the Applicant
Alex Mills (instructed by CPS Proceeds of Crime Unit) for the Crown
Hearing dates: 18 June 2010
Introduction
The Applicant, L, seeks a certificate of inadequacy under section 17 of the Drug Trafficking Act 1994 in respect of his outstanding liability under a confiscation order made under section 2 of that Act by the Recorder of Burnley, His Honour Judge Bennett, in Burnley Crown Court on 27 May 2004. The application raises the important issue of how gifts caught by the Act should be treated in applications for a certificate of inadequacy.
The Relevant Statutory Provisions
The confiscation provisions of the Drug Trafficking Act 1994 (and earlier statutes, in similar terms) have been substantially overtaken by the Proceeds of Crime Act 200However, where orders have been made under the 1994 Act, the scheme of that Act continues to apply. All statutory references in this judgment are to the 1994 Act, unless it appears otherwise.
Under the Act, where a defendant appears to be sentenced for a drug trafficking offence and the Crown seeks a confiscation order under the Act, the court is bound to determine whether the defendant has benefited from drug trafficking (section 2(2)). If it so determines, then the court is required to go on to determine “the amount to be recovered”, and make a money order against the defendant in that sum (section 2(4) and (5)).
The amount of the order is the amount the court assesses to be the value of the defendant's proceeds of drug trafficking (section 5(1)). However, by section 5(3):
“If the court is satisfied that the amount that might be realised at the time the confiscation order is made is less than the amount the court assesses to be the value of his proceeds of drug trafficking, the amount to be recovered in the defendant's case under the confiscation order shall be
(a) the amount appearing to the court to be the amount that might be so realised; …”
“Amount that might be realised” is defined in section 6 (1):
“For the purposes of this Act the amount that might be realised at the time a confiscation order is made against the defendant is
(a) the total of the values at that time of all the realisable property held by the defendant less
(b) where there are obligations having priority at that time, the total amount payable in pursuance of such obligations,
together with the total of the values at that time of all gifts caught by this Act.”
“Realisable property” is defined in section 6(2) as:
“(a) any property held by the defendant; and
(b) any property held by a person to whom the defendant has directly or indirectly made a gift caught by this Act.”
By section 8(1), a gift is “caught by this Act” if, amongst other things, “it was made by the defendant at any time since the beginning of the period of six years ending when the proceedings were instituted against him.…”
Section 17(1) provides for circumstances in which the value of property as found by the court on making the order proves to be over-optimistic:
“If on an application made in respect of a confiscation order by [the defendant or an appointed receiver] the High Court is satisfied that the realisable property is inadequate for the payment of any amount remaining to be recovered under a confiscation order, the court shall issue a certificate to that effect, giving the court's reasons.”
By section 17(3), where a certificate is granted, then the Defendant can apply to the Crown Court for the amount to be recovered under the order to be reduced.
All of those provisions relate to the amount of the confiscation order. The Act incorporates a number of provisions to facilitate enforcement of that order. A restraint order may be made against anyone restraining that person from dealing with any “realisable property” as defined in section 6(2), i.e. including any gifts caught by the Act (section 26). A charging order may be made on any such property for securing payment of funds due under a confiscation order (section 27): and a receiver may be appointed in respect of such property to realise assets towards sums due under a confiscation order (section 29). Furthermore, by section 9, the order may be enforced in the magistrates’ court against the defendant as if it were a fine imposed by the Crown Court, which itself is enforceable as a fine imposed by the magistrates’ court (section 41(1) of and schedule 9 to Administration of Justice Act 1970). One possible means of enforcement is by way of warrant committing the defaulter to prison (under section 76 of the Magistrates’ Courts Act 1980).
Background Facts
The confiscation order in respect of which the Applicant now seeks a certificate of inadequacy under section 17 was made following the Applicant's conviction on 19 December 2003 of conspiring to supply drugs, for which he received a substantive sentence of 3 years’ imprisonment. One of the Applicant's alleged co-conspirators was W, a woman with whom he had had an earlier relationship and with whom he had a young child. In respect of W, she pleaded guilty to simple possession: the charge of conspiracy to supply was ordered to lie on the court file: and no confiscation order was made against her.
However, on 27 May 2004, a confiscation order was made against the Applicant by Judge Bennett, who found that the Applicant had benefited from drug trafficking. He assessed the value of the benefit obtained by the Applicant to have been £122,404.18 and determined that “the amount that might be realised when the confiscation order was made” was £26,711.53. An order was consequently made in these terms:
“On 27 May 2004 the [Applicant] was ordered:
Confiscation Order under s2 Drug Trafficking Act 1994 for £26,711.53 or in default to serve 18 months’ imprisonment consecutive to any term of custody which [he] is liable to serve for the substantive offence…”
The Applicant sought to appeal against that order, but, following an oral hearing, the Court of Appeal refused leave on 21 November 2006.
Of the £26,711.53, the majority was at the time of the confiscation hearing already in the hands of the authorities in cash, but £12,183 represented a payment made by the Applicant to W in the following circumstances.
In September 2002, after the relationship between W and him had ended, the Applicant paid £10,000 to W by way of a deposit on a property in Colne, together with £2,183 in solicitor's fees for the purchase. The property was purchased and registered in the sole name of W, and the Applicant has never lived there. W did not work, and had had no income since having the child. Both L and W claimed that this advance was a gift, and was part of the Applicant's support of W and their child. They accepted that the gift was “caught by the [1994] Act”, in that it had been made within 6 years before the commencement of the confiscation proceedings (section 8). The Crown appear at one stage to have suggested that the advance was not a gift at all (paragraph 8 of the section 11 statement, 4 February 2004).
At law, the advance could have been either (i) an unconditional, outright gift, or (ii) an advance to assist the purchase of the property for the joint benefit of the Applicant and W. In the former case, the Applicant would have divested himself of all interest in the money, and would have had no interest in the property. It is trite law that, once an unconditional gift has been made, a donor cannot retrospectively attach a trust to it. However, in the latter case, if the Applicant advanced monies for the joint purchase of the property, then the usual presumption of a resulting trust in his favour would have applied. In those circumstances, the general principle is that the legal title is held on trust for the purchasers in the proportions in which they contributed to the purchase price. The purchasers have a concurrent interest in the property such that they can claim their due proportion on any future sale of the property.
The nature of the advance was considered to an extent at the 27 May 2004 confiscation hearing. The judge asked (at page 3A-B of the transcript) whether he was being requested “to make a formal finding that [the Applicant's] interest in the house is limited to £12,183”. All three counsel —representing the prosecution, the Applicant and W respectively —agreed that that was the case. The judge then “declared that the interest of [the Applicant was] in the sum of £12,183 so, if the house is sold, that's the sum that she will owe to [the Applicant]”. That appears confused because, if the advance had been a gift, the Applicant would have had no interest in the property: and if it had been a resulting trust, then the interest ought to have been, not the sum advanced, but a part of the value of the property pro rata to the sum advanced as a proportion of the value at the time of purchase.
If the Applicant did have an interest in the property, he has failed to take all reasonable steps to realise that interest and hence he would not be entitled to a certificate of inadequacy. However, before me it was common ground between the Applicant and the Crown that the advance was a gift. Further, on the evidence before me, it is still W's view that it was a gift. In a letter of 2 March 2005, she indicated to the Crown that the money was given to her by L, and she had no intention of...
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R v William Godley
...a gift includes property not in the power or control of the defendant: see R v Liverpool Magistrates Court ex parte Ansen [1998] 1 All ER 692; Re L [2010] EWHC 1531 at [17] – [30]. 42 Section 74 (10) provides as follows: "(10) A gift (including a gift made before the commencement of this Pa......