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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> B, Re [2008] EWHC 690 (Admin) (11 April 2008) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2008/690.html Cite as: [2008] EWHC 690 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		11/04/2008

Mr Justice Cranston :

1. This is an application by the Revenue and Customs Prosecution Office ("the Prosecutor") for the appointment of an enforcement receiver. The receiver's task would be to sell the defendant's matrimonial property in Birmingham ("the house") to satisfy an outstanding confiscation order. The Prosecutor contends that the defendant has a 50% share of the house. Mrs B, the defendant's wife, has intervened. She is a litigant in person. She has given evidence before me and has been cross-examined. She has argued that contrary to what was said on the defendant's behalf at the confiscation hearing she has the whole of the equity in the house.

Background

2. The background is that the defendant pleaded guilty at Birmingham Crown Court to 5 counts of excise fraud in December 2004. He accepted that he had bought undutied tobacco goods abroad and sold them in public houses in the United Kingdom. In January 2005 he was sentenced to 15 months imprisonment, although that was suspended for 18 months. The prosecutor then sought a confiscation order which was granted on 17^th June 2005. The value of the benefit from the excise fraud was agreed to be £213,933.73, although the recoverable amount was £31,000. That represented the defendant's half equity in the house. Mr. Weston, who appeared for the defendant on that occasion, said that the figure was not contested. Twelve months imprisonment was fixed in default of payment. Despite the defendant having only three months to pay, the amount paid has been £1102.50. With interest the amount now owing is £35,982.61 (statutory interest having accumulated at £6.55 per day).
3. The house was bought by the defendant and Mrs B in 1988. It is an ex-council property. It was originally purchased with the aid of a loan from Abbey National Building Society, although the house was re-mortgaged to Bristol and West plc in 1990 with an advance of £52,870. There was a second mortgage in favour of Endeavour Personal Finance on 9^th March 2004 for £5,000.
4. The defendant was arrested on 17^th May 2004. On 4^th August Mrs B applied in her own name to re-mortgage the house with Cheltenham and Gloucester for £73,000. Then on 2^nd October 2004 the defendant transferred his equity in the house into the sole name of Mrs B. The Land Registry transfer records that this was for no monetary value. The change was registered on 8^th November 2000, indicating the interest of Cheltenham and Gloucester. As said earlier the Defendant's transfer of the half equity in the house was just prior to his pleading guilty. At the confiscation hearing the defendant's counsel said: "Mr B will want me to say to your honour that the transfer of his interest in the property was not done to evade these proceedings…". The prosecution does not accept that and says, alternatively, that this was a gift caught by the legislation.

Mrs B's case

5. Mrs B's case is that the house is hers. She says that hers has been the only effective income in the family. She now works as a medical secretary but before that was a sales manager. She has two children, one in the first year at university, the other sitting for GCSEs. Her husband, the defendant, has been long-term unemployed through serious illness. Since 1994 he has been on incapacity benefit, which has gone to family expenses. His contribution has been limited to the children's dinner money, electricity meter payments and the like. He has spent money on smoking. She did not receive any of the "illicit cash" from the defendant's wrongdoing, as evidenced by her bank statements.
6. Over the years Mrs B explained that the family had incurred debts and there were arrears on the mortgage. There is correspondence supporting this. Mrs B's husband, the defendant, had County Court judgments registered against him. In 2003 there was a personal loan of £20,000 from the Harborne branch of Lloyds TSB to pay off the debts on that bank's credit cards. Repayments on loans and the mortgage were crippling. Mrs B says that Lloyds TSB recommended that she re-mortgage with Cheltenham and Gloucester in her name alone, after a previous joint application was refused because the defendant was unemployed and his County Court debts. (There is a joint application to Cheltenham and Gloucester in May 2003 in the papers.) When the mortgage with Cheltenham and Gloucester in her name went through in 2004 the moneys were used to pay off debts.
7. Mrs B's view is that the house is hers. The transfer in 2004 into her sole name represented the reality. It was she who had been financing the family for many years, including paying the mortgage. The transfer was tied up with the re-mortgaging of the house so that debts could be repaid and the family finances put on a more even keel. Her husband had contributed very little to the family finances over the years since he had become ill. His offending was inept, he did not get money from the wrongdoing and prison would be the end of him.

The Law

8. The relevant law is contained in Part VI of the Criminal Justice Act 1988. Its application can be harsh. Once a confiscation order has been made the court may appoint a receiver: s.80(2). The receiver's task is to realise property so as to satisfy the confiscation order. To protect third parties, who have an interest in the property to be realised, they are given an opportunity to make representations at the time a receiver is appointed: s.80(8). Mrs B is such a third party. Moreover, the receiver's powers must be exercised with a view to recover for them the property they own: S.82(4). The court has a discretion in appointing a receiver but the discretion must be exercised judicially, in accordance with the legislative policy.
9. Importantly, realisable property includes property which the defendant has transferred to someone else: s.74(1)(b). The Act catches gifts which were made after the commission of an offence and if the court considers that it is appropriate in all circumstances to take the gift into account: s.74(10). For the purposes of the Act a defendant is treated as making a gift if he transfers property to another person directly or indirectly for a consideration the value of which is significantly less than the value of the consideration provided by the defendant: s.74(12).

Findings

10. First, I reject the prosecution case that the defendant's transfer of his fifty percent equity in the house was for the purpose of avoiding the consequences of a confiscation order. That means I accept what his counsel told HH Judge Cavell at the confiscation hearing, and what Mrs B told me, that the reason for the transfer was part of an attempt to place the family finances in order. This is confirmed in part by a letter from a mortgage adviser at Lloyds TSB, Edgbaston branch, in May 2005.
11. However, the fact is that from 1988 until October 2004 the defendant had fifty percent of the equity in the property. What Mrs B told me, that she paid the mortgage, is confirmed by her bank statements back to 2001. But I cannot accept that the defendant contributed little or nothing to the mortgage payments. Prior to his becoming unemployed in the early 1990s the defendant worked and Mrs B accepted that he contributed then. Subsequently, he received incapacity benefit and there is no reason to think that what he received in that regard has not made some contribution, at least indirectly, to the mortgage payments. The report of Michael Cheek, who has prepared a financial analysis for the court, opines that a giro credit paid into Mrs B's bank account is probably the defendant's incapacity benefit. When Mrs B was asked about the destination of the moneys the defendant made from his offending there was no satisfactory answer. I can only assume that some went towards the family expenses, perhaps contributing in part to dealing with the debt and arrears which had been built up. Thus there is no reason to think that the land registry records for the house did not reflect the reality, that the defendant had an equity in the house, albeit that the fifty percent which the law regards him as having may not have reflected what he actually contributed from 1988 until the transfer in 2004.

Conclusion

12. This is a very sad case. I accept that Mrs B has acted throughout with the interests of her family at the forefront. She has demonstrated a care for her husband, who is clearly ill, which must be admired. I can understand her feelings of injustice: for years she has struggled to make ends meet, to obtain and keep the house for her family, and to bring up the children. The transfer of the property to her was to secure a place for her family and to recognise that since she had paid so much for it for so long it was hers.
13. As I said earlier, the law in this area can sometimes be harsh in its application. Here it treats the 2004 transfer as a gift of the defendant's equity to Mrs B. Thus it is available to be realised to pay the confiscation order. The matter has been going on too long. I propose to grant the prosecutor's application. However, exercising my discretion, I postpone the receiver's appointment for six months, until 1^st November. This will enable Mrs B to sell the property herself, so saving her the costs associated with a receivership. However, the house must be sold if the confiscation order cannot otherwise be paid.