Divorce in England and Wales is common, but what is less common is when marital assets become part of criminal proceedings and are regarded as proceeds of crime. The courts have been troubled by this intersection of family law and criminal law for many years, having to ask which takes priority: the rights of the spouse to their assets in marriage, or the Proceeds of Crime Act. In this article, we look at how financial settlements in divorce could be affected by proceeds of crime.
What happens when the assets of the marriage are the subject of criminal proceedings as proceeds of crime?
Several judges have observed over the years that all marriages are subject to the rules included in the Matrimonial Causes Act 1973 (MCA). This means that even the marriages of those involved in selling drugs, money laundering, financial crime, or any other criminal activity, are not excluded.
As a result, the question of who should be able to benefit from assets that have been acquired as the result of criminal activity during a marriage is a challenging one. Should an innocent spouse be protected by the MCA? Or does the Proceeds of Crime Act 2002 take priority, meaning that the state can intervene and confiscate the assets under a confiscation order?
Of course, suppose a spouse is innocent and unaware of the criminal activity. In that case, they could be considered a ‘victim’, but so too are those who have been subjected to the criminality in the first place. The question arises as to whether the proceeds are better in the hands of those affected by the crimes rather than with the family of the person who committed the crime.
How the court decides
If the criminal conduct took place after March 2003, the provisions of the Proceeds of Crime Act 2002 (POCA) will be applicable. The court can make confiscations under part II of POCA and the court will look at how much the defendant’s spouse benefitted from their criminal activity and what is available for confiscation.
The amount ‘available’ will include any free property owned by the defendant, as well as the value of any ‘tainted’ gifts – such as transfers of property to their spouse. However, the court is not limited to assets that have been acquired as a result of offending, but may include all assets held by the defendant which could be included for confiscation.
Can a spouse intervene in any confiscation proceedings?
To enforce any confiscation order made, the court must appoint a receiver. The receiver must exercise their powers in a way which allows any person other than the defendant, or a person who has received a ‘tainted gift’, to recover their interest in the property available for confiscation.
Once a receiver has been appointed, third party property interests – such as those of an innocent spouse – are at risk. The court will decide which assets may be confiscated to enforce the order. It is vital that third parties establish their interest in the property subject to the confiscation order. A spouse at this stage may make an application under the MCA to obtain an interest through a property adjustment order. The case of Re Norris UKHL 34 established that a third party is entitled to be heard at this stage of the enforcement process, even if they have already given evidence in the Crown Court which was disbelieved.
How do divorce proceedings interact with criminal law proceedings if happening at the same time?
It is the role of the court to balance the MCA and the POCA which means that many matrimonial cases could be heard with the Crown as an intervener. In these cases, the Crown will generally try to negotiate claims in a practical way. If a spouse can clearly demonstrate their need for property and assets that are subject to confiscation proceedings, it is more likely that they will be able to establish a successful claim to property and assets which are the subject of a confiscation order.
Contact our Divorce and Criminal Lawyers in Central London today
Divorce and confiscation proceedings is a highly complicated area of the law. Our dedicated cross-discipline team is available to help you navigate this challenging process and assert your interest in marital property which may be the subject of confiscation proceedings. The sooner you get in contact with us, the more opportunity we have to build your case. Contact Lewis Nedas Law today by calling 020 7387 2032 or complete our online enquiry form.