Richards v Richards; Crown Prosecution Service v Richards

Ancillary relief – Drug trafficking – Restraint order – Wife’s application in divorce proceedings for ancillary relief for herself and child of family – Husband convicted drug dealer – Wife’s knowledge of husband’s criminal activities – Family assets comprising tainted money – Conflict between public policy imperative depriving offenders of fruits of crime and requirement that dependants provided for after divorce when only funds available the same – Judge ordering sale of all properties and granting a lump sum – Whether judge in error.

The parties’ relationship began in 1994 when both were in their early twenties. The husband became embroiled in dealing in heroin and in particular in its importation from Holland. He was arrested in Holland in connection with a consignment of heroin, was convicted in Holland and was sentenced to a term of imprisonment. Confiscation proceedings remained outstanding in Holland. Meanwhile, the wife had begun divorce proceedings, which were undefended and concluded in the making absolute of the decree of divorce. In two sets of concurrent proceedings in the Administrative Court and the Family Division the judge had to deal with an application for a restraint order in proceedings under the Drug Trafficking Act 1994 which covered the whole of the husband’s assets and the claims of the wife for ancillary relief under the Matrimonial Causes Act 1973 for herself and the child of the family. The judge held that the net value of the properties of which he found the husband to be the beneficial owner was £431,000; the wife (by reason of a gift) had a 13.3% beneficial interest in the former matrimonial home which he quantified as £35,750; all the family assets (other than the gift) were the proceeds of drug trafficking; the wife knew of the husband’s criminal activities. The judge ordered a sale of all the properties, declared that she was entitled to £37,750, ordered a lump sum of £39,250 out of the net proceeds of sale and then subjected the remaining assets to a restraint order so as to satisfy any confiscation order made by the Dutch court. The Crown Prosecution Service appealed. The issue arose as to how the court should resolve the conflict between a public policy imperative to deprive offenders of the fruits of their crime and the requirement that dependants were provided for after divorce when the only funds available for both were the same. In particular the issue arose whether the judge was wrong to order the lump sum of £39,250. The Crown Prosecution Service challenged the judge’s decision to engage in any discretionary balancing exercise. It contended that public policy required that

drugs dealers were deprived of the fruits of crime and that those fruits should not be distributed to others, least of all those with guilty knowledge of the origin of those assets.

Held – Where assets were tainted and subject to confiscation they should ordinarily, as a matter of justice and public policy, not be distributed. In most cases, the fact that the assets were tainted was the decisive factor in any balance. In the instant case in making the order he had, the judge had erred. Although he found all the assets were tainted as the proceeds of drug dealing he had failed to give sufficient weight to the inevitable consequences of that finding. The judge’s error lay in thinking that the requirement to conduct a balancing exercise meant that in every case, all factors were relevant. In cases such as the instant case the knowledge of the wife, throughout her married life, that the lifestyle and the assets she had enjoyed were derived from drug trafficking was dispositive. The order for a lump sum of £39,250 would be set aside and the restraint order would be varied by substituting for the figure of £75,000 the figure of £35,750.

A, Re [2001] EWHC Admin 773.

Harris v Harris (11 June 1997, unreported).

HM Customs and Excise Comrs v A[2002] EWCA Civ 1039, [2002] 3 FCR 481, [2003] 2 All ER 736, [2003] Fam 55, [2003] 2 WLR 210, [2003] 1 FLR 164.

Piglowska v Piglowski[1999] 2 FCR 481, [1999] 3 All ER 632, [1999] 1 WLR 1360, [1999] 2 FLR 763, HL.

The Crown Prosecution Service applied to appeal against orders made on 3 November 2005 by Bennett J sitting at Liverpool concurrently in the Administrative Court and the Family Division. The facts are set out in the judgment of the court.

Mr K Talbot (instructed by Crown Prosecution Service) for the appellant.

Mr M Sharpe (instructed by Morecrofts Solicitors) for the first respondent.

Grant Lazarus (instructed by Canter Levin & Berg) for the second respondent.

[1] This is the judgment of the court, largely drafted by Hedley J, on an application, by the CPS, to appeal against orders made on 3 November 2005 by Bennett J sitting at Liverpool concurrently in the Administrative Court and the Family Division. We granted permission to appeal at the outset of the hearing.

[2] The question raised in this appeal is short but important: how does the court resolve the conflict between a public policy imperative to deprive offenders of the fruits of their crime and the requirement that dependants are provided for after divorce when the only funds available for both are the same?

[3] In this case there were two sets of concurrent proceedings. In the Administrative Court, Bennett J was dealing with an application for a restraint order in proceedings under the Drug Trafficking Act 1994 which covered the

whole of...