Re A; A v A
| Jurisdiction | England & Wales |
| Judgment Date | 2002 |
| Year | 2002 |
| Date | 2002 |
| Court | Queen's Bench 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 in ancillary relief proceedings – 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 interest to satisfy confiscation order – Whether right of wife protected by drug trafficking legislation – Approach to be used in court to balance conflicting claims – Matrimonial Causes Act 1973, s 24 – Drug Trafficking Act 1994, ss 29, 31(2) and (4) – Human Rights Act 1998, Sch 1, Pt I, arts 5, 8, First Protocol, art 1.
The husband and wife were married in 1986. Initially they lived in a property for which the wife provided the deposit. That property was held subject to a declaration of trust whereby the husband and the wife declared that they held the property upon trust for sale as to five thirty-eighths of the gross sale price of the property for the wife and as to the balance of the net proceeds of the sale equally. In 1989, that property was sold and they bought a bungalow (the house). In December 1990, they re-mortgaged the house to the building society with the support of two endowment policies (the policies). On 7 May 1991, the husband and wife executed a deed of trust declaring that they held the house upon trust for sale as to one-tenth of the gross sale price of the house for the wife and as to the balance of the net proceeds equally. For the majority of the time the husband made the mortgage repayments. The husband and wife separated in November 1996 when the husband left the house and in April 1997 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 on 20 June 1997. In September 1997, the husband was arrested for drug trafficking. A judge made a restraint order under the Drug Trafficking Act 1994 in standard form prohibiting the husband from dealing with all his assets, and both the husband and wife from dealing with the house. From the date of the arrest the wife kept up the mortgage payments on the house and the premiums for the policies. On 17 February 1998, the wife, who was wholly innocent of any wrongdoing, gave
notice of her intention to proceed with her application for ancillary relief. On 9 July 1998, the husband was convicted. A confiscation order was made under the 1994 Act ordering the husband to pay £47,868.22 by 5 November 1999 in default of which he might be liable to serve 21 months’ imprisonment consecutive to his other sentence. On 28 May 1999, the decree nisi was made absolute. On 12 October 1999, the judge made an order under s 29 of the 1994 Act appointing a receiver over all the husband’s assets, save for the house and the surrender value of the policies. On 20 July 2000, Customs and Excise applied for that order to be varied so that the house and the husband’s interest in the surrender value of the policies be included in the realisable property over which the receiver was appointed. On 4 October 2001, the judge varied the order to provide that the property and the husband’s interest in the policies be included within the realisable property over which the receiver was appointed with the proviso that the receiver did not have power to take possession of, realise or seize the property or the policies without further order of the court and that the appointment of a receiver was not to affect the legal position of the wife in the drug trafficking proceedings or in her application for ancillary relief. Customs and Excise sought an immediate order for the realisation of the house and the policies and payment out of the proceeds of sale of sufficient to discharge the balance outstanding under the confiscation order in accordance with s 29 of the 1994 Act. The wife commenced ancillary relief proceedings seeking an outright transfer of the husband’s interests in both the house and the policies under s 24 of the Matrimonial Causes Act 1973, alternatively a postponement of any realisation of the husband’s interests either until her death or at the least until such time as she voluntarily chose to vacate the house. The court ordered both the drug trafficking proceedings and the ancillary relief proceedings to be heard together so that the court could determine how to reconcile the conflicting claims of the wife, the husband and Customs and Excise. The central issue concerned the wife’s rights under the 1973 Act and the priority or other relationship between those rights and the enforcement regime under the 1994 Act, in particular, the true meaning and effect of s 31(4) of the 1994 Act and the interaction between that subsection and s 31(2).
Held – Section 31(2) of the 1994 Act took effect subject to s 31(4). Accordingly, in the case of conflict the effect of the 1994 Act was to protect the claims of those whose rights were safeguarded by s 31(4) against the operation of the confiscatory regime. Section 31(2) did not make satisfaction of the confiscation order the overriding objective. In principle s 31(4) safeguarded the right of a third party to continue to enjoy his property in specie. A third party would bring himself within s 31(4) if he had either an interest, or a right, in or in relation to the relevant property. It was not necessary for a third party to have an interest in the relevant property; a right would suffice. Nevertheless, whatever the origin of the right it would not fall within the protection in s 31(4) unless it was something that could properly be said to be a right in or in relation to the property. It followed that the rights of a co-owner of property were in principle safeguarded by s 31(4). Further, 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). The wife’s claim to relief had to be evaluated having regard to the provisions of s 25 of the 1973 Act. Conflicting claims of the wife and the prosecutor then had to be considered applying the principles contained in the European Convention on Human Rights. In that respect, the court had to have regard to the possible penal consequences for the husband if because of the court’s order he was unable to pay the amount to be confiscated. It followed that the court had to exercise its powers in a way which was compatible with the Convention and having regard to a number of potentially conflicting rights and interests: the wife’s respect to her private life and her home under art 8, the husband’s right to liberty under art 5 and his right under art 1 of the First Protocol to use his assets to discharge his liabilities, as well as the interests of the prosecution, representing the public’s interest in the prevention of crime, the protection of health and the protection of the rights and freedoms of potential victims of drug traffickers. Moreover, a proper balance had to be struck between the competing interests of the prosecutor, the husband and the wife according to the general Convention principles of necessity and proportionality, balancing those competing interests in a manner which was consistent with the true intention of the Convention taken as a whole. When carrying out the balancing exercise between the competing parties, it was necessary not only to have regard to the matters as required by s 25 of the 1973 Act, but also all the circumstances of the case. In the instant case, those included the significance of the wife’s financial contribution to the acquisition of the matrimonial homes which was recognised by the husband; the financial impracticability of any move by the wife and the impossibility of the wife being able to buy out enough of the husband’s interest to enable the confiscation order to be satisfied; the fact that the husband was accommodated and that he had made no contribution either to the mortgage or to the premiums for the policies since 1997; and that it was undesirable to realise the policies at a time when their true ‘locked in’ value was not available. Those were all compelling reasons for making such order as would allow the wife to go on living indefinitely in the matrimonial home. Thereafter, the private interests of the wife had to be balanced against the public interest not to water down the imperative need to deter drug trafficking as represented by Customs and Excise. The instant case was an exceptional one as the wife launched her divorce proceedings at a time when she was not merely wholly innocent of any personal wrongdoing but also wholly ignorant of the husband’s criminal activities and long before the enforcement procedures under the 1994 Act were first invoked; further the property was untainted by drug trafficking. In the event, the fact that there was a public interest in the confiscation order being paid and that the husband might risk spending further time in prison if the confiscation order was not paid was insufficient to justify prejudicing the wife. She was, accordingly, entitled to the ancillary relief sought and the application by Customs and Excise would be dismissed.
Cases referred to in judgmentA v C [1981] QB 956n, [1980] 2 All ER 347, [1981] 2 WLR 629.
A, Re [2001] EWHC Admin 773.
Ahmad 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, CA.
Bater v Greenwich London BC[1999] 3 FCR 254, [1999] 4 All ER 944, [1999] 2 FLR 993, CA.
Beer v Higham (a bankrupt) [1997] BPIR 349.
Bremner (a bankrupt), Re [1999] 1 FLR 912.
Browne (formerly Pritchard) v Pritchard [1975] 3 All ER 721, [1975] 1 WLR 1366, CA.
Buchanan-Wollaston’s Conveyance, Re, Curtis v Buchanan-Wollaston [1939] 2 All ER 302, [1939] Ch 738, CA.
Buckley v UK (1996) 23 EHRR 101, [1996] ECHR 20348/92, ECt HR.
Bull v Bull [1955] 1 QB 234, [1955] 1 All ER 253...
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