Property rights – Proceeds of Crime Act 2002 – Civil proceedings – First respondent holding registered title of property – Second respondent obtaining restraint order prohibiting disposal – Appellant claiming beneficial interest in property – Court striking out claim as abuse of process – Whether 2002 Act providing complete code for resolution of disputed property rights in context of restraint and confiscation orders in criminal proceedings – Appeal allowed
The first respondent was the registered proprietor of Brindles Farmhouse, Brindles Close, Hutton, Brentwood (the property). The appellant and the first respondent had a long-standing relationship and three children. In 2017, the property was purchased in their joint names. It was transferred into the first respondent’s sole name in 2019, but the appellant maintained that that was to facilitate the obtaining of a loan and that she continued to be beneficially interested in it.
In 2021, the first respondent was arrested and charged with offences relating to class A drugs and money laundering. He was subsequently convicted and sentenced to 15 years’ imprisonment.
On the application of the second respondent Crown Prosecution Service, the Crown Court made a restraint order under Proceeds of Crime Act 2002 which, among other things, prohibited disposal of the property.
In November 2022, the appellant sought an inquiry into the extent of the beneficial interests of the first respondent and herself in the property and a declaration as to those interests.
The second respondent applied to have the claim struck out on the basis that it had been brought for an improper or collateral purpose and/or was susceptible to determination under a procedure laid down in the 2002 Act for the resolution of such issues.
The court struck out the claim on the basis that it was an abuse of process: [2023] EWHC 1492 (Ch). The appellant appealed.
Held: The appeal was allowed.
(1) Section 10A of the 2002 Act applied where someone other than the defendant might have an interest in property that could be used to satisfy a confiscation order. It allowed the Crown Court to determine the extent of the defendant’s interest in the property and for anyone else who might have an interest in it to make representations.
Sections 58(5) and 59(5) of the 2002 Act expressly empowered the court to stay or allow to continue on any terms it thought fit pending proceedings relating to a property in respect of which a restraint order or one under section 50 of the 2002 Act had been made or applied for; the explanatory notes to the Serious Crimes Act 2015 referred to Crown Court judges exercising the power to determine the extent of a defendant’s interest in a property under section 10A only where their experience (including in respect of matters regarding property law), the nature of the property, and the likely number and/or complexity of any third party interests allowed them to do so: Re Stanford International Bank Ltd [2010] EWCA Civ 137, R v Forte [2021] 4 WLR 26 and Aquila Advisory Ltd v Faichney [2021] 1 WLR 5666 considered.
(2) Even where the real dispute as to the ownership of a property was with the prosecutor, there might be a persuasive case for allowing a third party to bring civil proceedings. Suppose that, as could happen, a restraint order was made in respect of a property when a criminal investigation was in its early stages; that there was no likelihood of any ensuing criminal proceedings, let alone confiscation issues, being determined for a number of years; and that a third party had an urgent need to establish ownership of the property or an interest in it.
The Crown Court might perhaps be able to render a civil claim unnecessary by arranging matters in such a way as itself to resolve the issue at an early stage. Alternatively, depending on the facts, it might not be reasonable to expect the prosecutor to be ready to address the issue yet. Even so, there could in such a case be a good reason for the third party to wish to resort to civil proceedings.
Further, the ability of a civil court to make a costs order in favour of the third party might be a relevant consideration. There was scope for argument as to the availability of such an order where the Crown Court made a determination under section 10A of the 2002 Act.
(3) There was no rule barring a third party from seeking to have the ownership of property relevant to confiscation proceedings determined by a civil court, even where the issue was between the third party and the prosecutor. The 2002 Act nowhere stated or necessarily implied that it was laying down an exhaustive code for the resolution of such disputes. To the contrary, it empowered a civil court to stay or to allow to continue on any terms it thought fit, a claim relating to a property in respect of which a restraint order or an order appointing an enforcement receiver had been applied for or made.
As a matter of statutory construction, it was not apparent that parliament intended the 2002 Act to provide the only ways in which any property questions relevant to confiscation proceedings could be decided. Further, while the court would not exclude the possibility of a civil claim asserting an interest in what was alleged to be “realisable property” within the meaning of the 2002 Act representing an abuse of process in particular circumstances, such claims were not generally to be regarded as abusive.
(4) Even where a civil court considered it desirable that a property issue raised by proceedings before it should be decided by the Crown Court, it should typically stay them under section 58(5) or section 59(5) rather than striking them out. Having regard to the potential advantages of having ownership matters relevant to confiscation proceedings determined in the Crown Court, the better course would commonly be to grant such a stay. In principle, however, a civil court should consider what was appropriate on the specific facts: Capper v Chaney [2010] EWHC 1704 (Ch); (2010) 174 JP 377 distinguished.
In the present case, the judge was mistaken in his approach to the matters on the footing that parliament had provided a complete and exhaustive code for the resolution of disputed property rights in the context of restraint and confiscation orders in criminal proceedings. The application to strike out the claim would be dismissed.
Mark Warwick KC and Eleanor Vickery (instructed by Rainer Hughes LLP) appeared for the appellant; The first respondent appeared in person; Martin Evans KC and Anna Keighley (instructed by the Crown Prosecution Service) appeared for the second respondent.
Eileen O’Grady, barrister
