The court has considered for the first time the operation of the Proceeds of Crime Act 2002 concerning a charging order over property where there was a dispute as to title in National Crime Agency v Tonino Carmino Persico and another [2021] EWHC 3476 (QB).
The claim arose following a police investigation into the Persico family for offences involving drugs, money laundering and fraud. While charges were not pursued against the respondent, the claimant, exercising the powers of HM Revenue and Customs, under section 317 of the 2002 Act, made a claim against him in respect of unpaid tax on income from the renting of warehouse units to businesses over many years. The claim was not challenged by the respondent and judgment in default was obtained in November 2017 for more than £1.1m.
The claimant sought a charging order over commercial land and property in Derby of which the interested party, Osmaston Business Park Ltd, (OBPL), was the legal owner. The claimant argued that the respondent was the true beneficial owner of the property and that OBPL held it on trust wholly for him. OBPL resisted the application, arguing that the property was company property and that the company was owned and managed by the respondent’s niece. An interim charging order was made over the property in February 2018. The question for the court was whether a final order should be made.
Since equity follows the law, OBPL was assumed to be both beneficial and legal owner of the property, and so the burden of proving that legal title was displaced fell on the claimant. The respondent urged caution on the basis that although the claimant had secured a judgment for tax, the sum was not assessed by HMRC but by the claimant, there was a dispute of fact involving a third party, the respondent’s niece, and it was a corollary of the case that the third party must be a willing co-conspirator in a sham arrangement to hide the respondent’s assets from the state.
The court decided that the claimant had proved its entitlement to a final charging order based on the plethora of strands that emerged from the evidence which supported the submission that OBPL may be looked behind in order to see the true picture.
Those strands included: that the respondent was the original joint purchaser of the property, which was then transferred through various companies for no value; that individuals and entities involved in the transactions were linked to the respondent; that OBPL acquired the property for no consideration and three days later the shareholding was transferred to the respondent’s niece, then 16 years of age, who was not aware of it; that accounts for OBPL showed acquisition of an asset as well as a creditor in a very similar sum suggesting that someone else was the true beneficial owner of the property and that there was no value in the company.
The court found the niece’s evidence entirely unconvincing and was satisfied that the case fell squarely within the concealment category. The respondent was the true beneficial owner of the property.
Louise Clark is a property law consultant and mediator
