In the matter of Stephen Edwards v In the matter of the Drug Trafficking Act 1994 [2011] EWHC 1688 (Admin)

[2011] EWHC 1688 (Admin)Case No DTA/69/2006
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 04/07/2011
Before
MR JUSTICE CRANSTON
Between
In the matter of Stephen EdwardsIn the matter of the Drug Trafficking Act 1994
Between
Mrs BessieApplicantThe Crown Prosecution ServiceRespondent
Nicholas Johnson QC (instructed by Tuckers Manchester) for ApplicantMark Sutherland Williams (instructed by Crown Prosecution Service) for RespondentHearing Hearing dates: 14 April 2011
Judgment

Introduction

[1]This is an application by Mrs Bessie Edwards for a declaration that she holds a 50 percent beneficial interest in property held jointly between herself and her husband, Mr Stephen Edwards. Mr Edwards is the defendant in proceedings under the Drug Trafficking Act 1994. The properties relevant to the application are as follows: “40 Turton Heights”, Bolton (“Turton Heights”); Urciudad Quesada Congunto, Gloria 10, Spain (“Gloria”); and Urciudad Quesada C-San Gabriel 22, Rojales, Alicante, Spain (“Gabriel”). Mrs Edwards’ application is opposed by the prosecution. The legal issue concerns the circumstances when the starting point of a 50/50 beneficial interest in jointly owned property should be displaced. Background facts[2]Mr and Mrs Edwards married in 1972. Prior to that, Mrs Edwards had 2 children, aged 6 and 9. Following their marriage they had a son, born in 1975. Mr Edwards had various jobs, but at one point operated his own road haulage business. He had an interest in cart racing. In 1992 he was sentenced to 18 months imprisonment for theft of a motor vehicle. Mrs Edwards brought up the children but until 1996 also had employment, at various times as a child minder and nursing auxiliary.[3]On 14 August 2006 Customs officers stopped Mr Edwards at the ferry terminal in Hull. A search was undertaken of the large motor-home vehicle he was driving. 91.9kg of cocaine was discovered packed within a compartment inside his vehicle. Mr Edwards was arrested and interviewed. During interviews, he stated that he had been an international haulier operating his own haulage business for approximately ten years up to 1997-98, but had sold this in 1997-98 for £225,000. He made admissions stating that much of his business activity was “off-record”, this ultimately coming to the attention of the tax-authorities, resulting in his being assessed for many thousands of pounds in tax arrears. He also made admissions as to money laundering over the previous decade: in 1997 or 1998 he had agreed to use his vehicle to smuggle holdalls of cash to the continent, in return for payment of between £2000 to £5000 a trip.[4]During the course of the interviews Mr Edwards admitted to having properties in Spain, as well as bank accounts abroad. He gave information about the properties relevant to this case in answer to questions from Mr Revell and Mr Wood. In relation to “Gabriel” he said: Revell:
“So then you send ten thousand pounds over to Spain.”
Edwards: “Yeah.” Revell: “Erm, so its not going to take very long for the mortgage, for that money to be used.” Edwards: “No, in fairness when we bought the property and we got the mortgage we didn’t anticipate being as less well off than what we were in actual fact because we expected to sell the house, coz it went on the market at eight hundred and we thought we’d get that but we didn’t realise, well I didn’t realise that I would incur so much debt waiting for it to be sold.” Revell: “Right.” Edwards: “So we were hoping that there’d be sufficient money from the sale of the house to buy the one in Bolton [“Turton Heights”] and buy the small one over there [“Gloria”] but because we couldn’t buy it at the time we took a mortgage out and the mortgage rate was low so …” … Revell: “So then you send ten thousand pounds over to Spain.” Edwards: “Yeah.” Revell: “Right.”[5]In relation to the property known as “Gloria”, Mr Edwards said this in interview: Edwards:
“Let’s say that I own it, I would rather say that than disclose anything else because it incriminates other people, but I own it.”
Wood:
“Why does it incriminate them?”
Edwards:
“I don’t want to. I’m in enough trouble as it is and I don’t want to. It’s got nothing to do with why I am here … and I’d just rather if … me and my wife who are on the deeds … so that in effect we own it.”
Later in the interview he said this: Revell:
“And you also own that other property in Spain?”
Edwards: “Yes.” Revell: “Combined with somebody else that you don’t want to talk about. Why didn’t you want to talk about them?” Edwards: “Because I would rather leave it at that at the moment, until such time as I have a chance to have someone to speak to them, just because I give their name forward because it’s … I don’t want to.” Revell: “Are they involved in drugs?” Edwards: “No, no, no. It’s they have lent me money alright. They, they, it’s a complete, it’s like a straightforward businessman, but I don’t think it is right and proper until I speak to him and tell him what is happening, or have someone to speak to him and tell him what’s happening on my behalf.” Wood: “Why does it incriminate them?” Revell: “And you also own that other property in Spain?” Edwards: “Yes.” Revell: “Are they involved in drugs?”[6]In November 2006, Mr Edwards pleaded guilty to the importation of 91.9kg of cocaine (Count 1 of the indictment). Subsequent to that plea, he also pleaded guilty to two money laundering charges, namely entering into or becoming concerned in an arrangement which he knew or suspected facilitated the acquisition, use or control of criminal property on 9 August 2006 (Count 2); and assisting another to retain the benefit of drug trafficking between the dates of 31 December 1996 and 9 August 2006 (Count 3). Essentially this covered Mr Edwards’ laundering cash to the continent. Mr Edwards was sentenced to 9 years’ imprisonment for the cocaine importation and a further three years for each of the two money laundering offences, to run concurrent with each other, but consecutive to the nine years, making a total of 12 years imprisonment.[7]On 13 September 2006, the late Hodge J issued an order which restrained Mr Edwards from dealing with his assets. Mrs Edwards was also restrained from dealing with her interests in certain assets listed in the restraint order. In August 2007 the order was varied to facilitate the sale of a Spanish property called “Gloria” and in September 2008 to facilitate the sale of an Iveco van.[8]In response to that restraint order Mr Edwards made a statement on 18 October 2006 in which he confirmed that he jointly owned the property known as “Turton Heights”. There was no mortgage on that property. He was also a joint owner of the property known as “Gloria”. There was no mortgage on this property as it was purchased with the proceeds of sale of “The Grange”, his previous Bolton property, owned jointly with his wife. This property was being marketed at the time of his arrest, but no dealing had occurred. Thirdly, he confirmed that he was the joint owner of a property known as “Gabriel”. There was a mortgage of £156,000 (approximately 200,000 Euros) on the property. The property was owned in equal shares with his wife and mortgage payments on the property amounted to 1,600 Euros. In the response Mr Edwards also said this in relation to “The Grange”, which he said was sold for £775,000 in May 2003. “During the course of 1997 (date unknown as at the date of the Response), I purchased the property known as The Grange. The property was purchased for £221,000 utilising a deposit drawn from the funds received from the sale of my business S Edwards Transport Limited and a mortgage of £150,000 from the National Westminster Bank.”[9]As a result of an order in June 2007 made by HH Judge Morrell under the Drug Trafficking Act 1994, Mr Edwards made a further statement on 9 August 2007. In it he referred to certain payments that had passed through the joint NatWest bank account at the Farnworth Branch in Bolton he held with Mrs Edwards. In relation to a credit on 4 May 2005, “Travelworld Cash”, he said:
“This was payment made through Travel World … The payment was from my business partners in Australasia and the Far East. This money was sent by way of a loan as I required capital fast to purchase San Gabriel, Spanish property.”
About a credit of £51,000 on 31 May 2005 he explained:
“This is from a loan account set up by the NatWest Bank. A transfer of the loan was made for £51,000 to pay back JSW loan which is a company owned by Regency Factors who are the holding company for the group. This essentially pays back the VAT loan to pay HM Revenue & Customs the money owed to them from the assessment.”
[10]In anticipation of confiscation proceedings, an officer of HM Revenue & Customs, Simon Cloke, prepared a Financial Statement dated 27 July 2007. That recorded that in the 6 years prior to Mr Edwards’ arrest over £1.2 million had passed through identified bank accounts, some held jointly with his wife. It calculated a benefit figure of nearly £22 million. Realisable assets were worth some £545,000. The Financial Statement recorded that “Turton Heights” was registered at the Land Registry in the names of Mr Edwards and Mrs Edwards. The Land Registry documents showed that the property was purchased on 16 May 2006 for the sum of £317,500.00. It was estimated to be worth £327,076.00. Secondly, there was “Gloria” said by Mr Edwards to have been purchased in 2004 for £100,000 with no mortgage. Two independent valuations said it was worth €180,832 and €194,954 respectively. The property known as “Gabriel” was said by Mr Edwards to have been purchased in 2004 for £200,000. There was a mortgage of €200,000 on the property, leaving equity of £50,000.[11]Mr Leigh Wright, a solicitor at Tuckers, prepared a response to the prosecution’s Financial Statement on Mr Edwards’ behalf. It was dated 20 December 2007. It said that Mrs Edwards had a 50 percent interest in all the real property. There was an unbroken linkage, it said, between their working lives and the purchase of all the properties since their marriage in 1972. The statement began with when Mr Edwards was working in Saudi Arabia while Mrs Edwards looked after the family. After Mr Edwards returned from the Middle East they had amassed sufficient money to purchase their first matrimonial home, 9 Farnborough Road, Bolton, in 1979. It was obtained with a mortgage, the purchase price being approximately £13,000. The couple lived there until 1997 when they bought “The Grange” in Grange Road, Bromley Cross, Bolton. They remained in that property until its sale in 2003. The net proceeds of sale of “The Grange” were utilised in their entirety to pay off Mr Edwards’ business debts and to purchase “Turton Heights”. Mrs Edwards purchased this property with her husband. Thus each property was sold to purchase the next. The response contended that “Turton Heights” was an untainted realisable asset and that the court should reach the conclusion that Mr and Mrs Edwards had a 50 percent share each in the equity of the property. As to the Spanish properties all that was said was this:
“The remainder of the monies received from “The Grange” was, as indicated, used to repay business debts and racing debts incurred by Stephen Edwards as well as to provide the capital to purchase properties in Spain. Due to a delay in the release of the sale proceeds by the National Westminster Bank interim finance was obtained from the sources already identified in order to allow completion of purchases of the Spanish property and “Turton Heights”.”
There was no witness statement from Mrs Edwards in relation to these matters.[12]In August 2007 “Gloria” was sold for €145,000 and the sale proceeds utilised to reduce the mortgage on “Gabriel”. That was contrary to the restraint order of Hodge J. A variation order of Ouseley J on 10 August 2007 required the proceeds to be held in a bank account.[13]On 7 February 2008 the prosecution received witness statements, to which Mr Edwards had referred in his December 2007 response) from Colin Vassiere, Dorothy Stones, Jeff Stones, Colin Rayner and Stephen Clague. In his statement, “dated in Australia 9 January 2007”, Mr Vassiere said that he was introduced to Mr Edwards by a mutual friend, Mr Stephen Clague who was the Chairman of Nields PLC, and who has been a personal friend since approximately 1984. Mr Edwards, James Tang and he (Mr Vassiere) had set up a joint venture trading operation in the late 1990s to buy goods in the Far East to sell to Africa. The initial set up cost was approximately £60,000 each. Mr Edwards’ share of generated profits was paid to an account in Luxemburg. “On this basis we did sometimes send loan funds to his [Mr Edwards’] UK accounts when requested. I confirm that an amount of £60,000 was sent to him at his request which he said he wanted to use for a deposit on a villa he was buying in Spain.”[14]Colin Rayner, the Edwards’ conveyancing solicitor for the sale of Farborough Road, and “The Grange”, and for the purchase of “Turton Heights”, said in his undated statement that the file for the sale of Farnborough Road had been destroyed. However, from his dealings with Mr and Mrs Edwards, he had understood them to have a joint and equal beneficial interest in those three properties. The statements of Mrs Dorothy and Mr Jeff Stones were in the same terms as each other. Both said that they had been shown a copy of a cheque for £50,000 paid to them by Mr Edwards, dated 14 June 2006. The cheque represented the final instalment of the purchase price for their property in Spain known as “Gloria”. “The final payment was delayed by agreement due to problems encountered by Mr and Mrs Edwards causing a delay to the sale of their home.”[15]There were two statements from Mr Stephen Clague. Mr Clague said that he had been the owner and director of Nield PLC, a company trading in wholesale toiletries, until May 2007. He had known Mr Edwards for 14 years and had introduced him to Mr Vassiere, known to him as an overseas agent in a deal concerning Nield PLC in the past. He was aware that the two went into business with each other and a third party. The partnership suffered losses as a result of deception by an accountant.[16]In his second statement Mr Clague confirmed that he was also the chairman of a company called Regency Finance Limited (“Regency”). He introduced Mr Edwards to Regency to assist him with the financial difficulties he was experiencing with his bank. For some reason he was unable to access the proceeds of sale of his house known as “The Grange”. Through his introduction he was aware that a short term loan was agreed. His general manager, Mr Maurice Kraft, dealt with the details. Mr Edwards was unable to repay the loan within the time agreed. Mr Edwards told him that these problems were caused by his bank, an account which was initially disputed by officers at Regency. The loan was eventually repaid using the proceeds of sale of Mr Edwards’ property.[17]The Revenue and Customs officer, Mr Cloke, made a further statement on 28 March 2008, commenting on Mr Edwards’ response. Of Mr Clague’s statement, the officer said that Mr Clague had loaned a total of £62,557.88 to Mr Edwards when he was short of money. Mr Clague stated that he was repaid £30,000 in the form of two cheques, the balance in cash. Mr Clague also paid off the balance of the hire purchase on the Edwards’ Lexus, totalling some £14,000. The estimate of the amount Mr Edwards laundered was £13,650,000, rewarding him some £105,000. As to Mr Edwards’ claim that he and Mrs Edwards had 50 percent shares in property, the officer said that Mr Edwards produced the reasoning behind that assertion but no claim from Mrs Edwards herself. “I respectfully suggest that any claim Mrs Edwards has to an interest in the matrimonial home is not a matter for these proceedings”.[18]A week long confiscation hearing was scheduled at the Crown Court in Hull before HH Judge Jack beginning the 11 June 2008. There were some proceedings in open court on the first day but the judge adjourned the hearing to see if the parties were able to reach an agreement. They were, and it was incorporated in a document entitled “Confiscation Summary”. The confiscation summary stated in its preamble:
“… And upon the agreement of the parties and a finding by HHJ Jack that the defendant’s interest in the property known as 40 “Turton Heights”, Bolton, BLD 3DU should not be less than 2/3rd of its present value; And that in relation to the matrimonial estate Mrs Bessie Edwards should be entitled to a ring fenced amount of “£108,818.66 (representing 1/3rd of 40 “Turton Heights”).”
The Confiscation Summary continued that the parties agreed that Mr Edwards’ realisable assets included “Turton Heights” (taking account of the settlement agreed in relation to Mrs Edwards), valued at £217,637.33, “Gabriel” and the proceeds of sale of “Gloria” (£50,000 equity and £80,158.73 respectively), a total value of £130,158.73.[19]Counsel for the prosecution, Mr Sutherland Williams, set out the terms of the confiscation agreement to the judge. He explained that he and Mr Edwards’ counsel, Mr James, had spent most of the previous afternoon and the morning trying to agree its terms. In relation to “Turton Heights” Mr Sutherland Williams said:
“One of the concerns that my learned friend expressed yesterday by way of introduction to this matter was the necessity to establish, in fact, the defendant’s interest in the marital home, 40 “Turton Heights”, but, of course, that has the effect of, by virtue of establishing that, recognising his wife’s interest in that property, the other side of the equation, and, again, having discussed this matter with my learned friend, it appears to us on the facts of this case that the defendant’s interests should not be less than two thirds of the present value of 40 “Turton Heights”, and in relation, therefore, to any claim Mrs Bessie Edwards may have against the matrimonial estate, we have agreed to ring-fence, following sale of that property, the equivalent to one third; that is to say £108,818.66. I think for the purposes of your Honour’s finding, it is simply that you, having considered 40 “Turton Heights” … and it was very helpful, if I may say, yesterday you were able to give an indication I think in open court to what you … at least one approach that your Honour was considering. We hope that this reflects your Honour’s reasoning in that regard and it appears to us that one third can be, ascribed to this defendant’s interest. Judge Jack: Again it seems to me that that is a sensible and just approach on the evidence.”
Later Mr Sutherland Williams took the judge to the part of the confiscation summary regarding the “Gabriel” and “Gloria” properties. Nothing was said of Mrs Edwards’ interests in those properties.[20]The judge then ordered Mr Edwards to pay a confiscation order in the sum of £713,548.23. The judge found that there was a benefit from drug trafficking in the sum of £7,500,000. The figure of £713,548.23 represented £477,548.23 of realisable assets less a credit of £14,000 (for the sale of a motor home). There were also hidden assets in the sum of £250,000. Mr Edwards was ordered to pay the sum of £713,548.23 within 12 months to allow for the realisation of the properties at “Turton Heights”; Adrian Road (a gift to his daughter) and “Gabriel”. He was given 28 days for the payment of all other assets, cash and property, with the exception of £6,600 held in a Bancaja account which was ring-fenced for mortgage payments by agreement of the parties.[21]After the confiscation order there was correspondence between the Revenue and Customs Prosecution Office and Mr Leigh Wright of Tuckers. On 2 September 2008 Mr Wright wrote that following the decision in Gibson v Revenue and Customs Prosecution Office [2008] EWCA Civ 645; [2009] QB 348, Mrs Edwards was refusing to execute a transfer from the Spanish bank account until she had received legal advice. On 17 June 2009 Calvert-Smith J appointed a receiver under the powers provided by section 29 of the Drug Trafficking Act 1994 to liquidate Mr Edwards’ assets. Mrs Edwards was given leave to intervene as an interested third party. The receiver sold “Turton Heights” on 12 March 2010 for £230,000, significantly less than its estimated value of £326,456 at the date of the confiscation hearing. The net proceeds of sale were £225,272.82. In terms of the confiscation summary a ring fenced £108,818.66, a one third share, was to be accorded to Mrs Edwards. This payment to Mrs Edwards, due to the decrease in value of the property, represented in fact a 48 percent share of the actual amount realised. The receiver is overseeing the sale of “Gabriel”. Mr Stephen Clague has expressed an interest in purchasing a share in the property, dependant on the outcome of these proceedings. Mrs Edwards’ evidence[22]Mrs Edwards gave evidence before me. Her name was on the deeds of the three properties because she and Mr Edwards were a couple. She said that if she had divorced Mr Edwards she would be entitled to 50 percent. She had been told she was entitled to 50 percent now. She would stand by Mr Edwards; she loved him. She did not know of any wrongdoing by her husband. She and the grandchildren had travelled to the continent with Mr Edwards and there was no possibility of anything unlawful occurring. It was only on the one occasion in 2006 that her husband had carried drugs and that was because of threats made to him. At various points over the years times had been really good. She had not asked her husband about the source of his income. He had his business and business associates. She had not asked where the money was coming from when her husband bought the Adrian Road property for their daughter.[23]At the time of the confiscation proceedings, Mrs Edwards said, she had had conversations with her husband from prison, although they had not discussed details. Mr Edwards had not informed her of the content of the confiscation summary. She did not know of the agreement that a one-third interest in “Turton Heights” would be ring-fenced for her. They had assumed a lot of their property would go. At some point Mr Edwards told her that Customs was proposing “Turton Heights” would be confiscated, but they could keep the Spanish properties.[24]As to the various properties, Mrs Edwards’ evidence was that Farnborough Road was purchased in July 1977. At the time Mr Edwards was the main breadwinner, although she had some income. Farnborough Road was remortgaged twice to assist Mr Edwards’ business. For a time the business was not going well. She did not know the extent to which the proceeds of sale of Farnborough Road were used for the purchase of the “The Grange”, but its sale had produced a substantial sum.[25]“The Grange” was bought with a NatWest mortgage in June 1998. When it was purchased Mrs Edwards said that it was a shell and needed a great deal of work. That was done in stages. Mr Stones was a master builder and undertook some of the work. The planning application for the “The Grange”, in the name of Mr Stones and her husband, dated 1997, a year before the property was purchased, may have been in anticipation of its purchase. (The application was to “build garage and pitch roof to bungalow”). As regards “The Grange”, Mrs Edwards accepted that the family did not move into the property until 1999. It was put to Mrs Edwards that Farnborough Road was not sold until 1999, so those proceeds could not have been used. Moreover, in his statement of October 2006 (in response to the Restraint Order) Mr Edwards had said that “The Grange” was purchased for £221,000 using a deposit drawn from the sale of his business and a mortgage from NatWest. Mrs Edwards confirmed that she had no interest in the business. Whatever the position with the deposit, she said, it was a joint mortgage. However, she had given up employment in 1996 and she conceded she made no contribution to its payment. She did not know how her husband paid the mortgage, but he had his business and friends. His business was doing well. She honestly had nothing to do with the mortgage. She did not look at the bank statements on the joint account. Mr Edwards paid everything. The purchase of Adrian Road for her daughter was funded, as far as she knew, through a man called “James” [Tang].[26]Once the children had left home Mrs Edwards said that they decided to sell “The Grange”. It was too big for them alone so they intended to buy a smaller property. “The Grange” was placed on the market in May 2004. It was put in the hands of various estate agents but not sold until 2 years later, in May 2006. Mrs Edwards was taken to the completion statement from the Edwards’ conveyancy solicitors, Colin Rayner & Co, dated 18 May 2006, which showed that “The Grange” was sold for £785,000, of which £317,500 went to purchase “Turton Heights” and £195,578 to repay of the NatWest mortgage. Taking into account a number of relatively small credits and debits, that left about £221,500. Mrs Edwards said that their solicitor, Mr Colin Rayner, was local and the Edwards knew him through his association with the Bolton Lads’ and Girls’ Club, where her son was at one point employed. She did not know about a letter her husband had written to Mr Rayner from prison in May 2008, suggesting that they could have a drink in Spain when he was released. She did not know whether Mr Rayner had property in Spain. As to the proceeds of the sale of “The Grange”, she did not know what remained after payment of her husband’s business debts.[27]The purchase of “Gloria” occurred when Mr and Mrs Edwards holidayed with Mr and Mrs Stones in Spain, who at that time owned “Gloria”. The Stones were friends, although Mr Stones was now dead. When Mr and Mrs Stones were intending to sell “Gloria”, for a bigger property, they gave first refusal to the Edwards. The Edwards bought it because they intended to retire to Spain. The conveyancing documents were explained to her. They had to obtain a loan of £50,000 from the Clagues through Regency Finance as bridging finance until “The Grange” was sold. She had no idea whether there was a loan agreement or whether interest was paid. She did not have a lot to do with money. “Gloria” was actually in the name of Mr Stones and his daughter, Julie, who was very poorly, and was going to live there. But Mrs Edwards had no idea of whether Julie was a party to the arrangements by which the Edwards were to pay. Because of the delay in selling “The Grange”, the Stones agreed to wait to be paid the full price.[28]Mrs Edwards was taken to a statement of 28 February 2011 by Mr Leigh Wright, her solicitor, and to the assertion there that funds to purchase “Gloria” were transferred to the purchasers after £60,000 was loaned by Mr Vassiere. Mrs Edwards said she knew Mr Vassiere, had met him at Nield plc functions, but had not seen him for several years. She did not know if he lent £60,000 as described in Mr Wright’s statement. It meant nothing to her. Mr Edwards had organised the funding.[29]Mrs Edwards said that they had been walking around one day and saw “Gabriel”. They asked to view it and decided to buy it, intending to sell “Gloria”. When “Gabriel” was purchased, that was with a mortgage. She did not know if money was still owed on “Gloria”. Mrs Edwards was not working at the time but she knew she had a responsibility to ensure repayment of the mortgage. Mrs Edwards was taken to a statement of Leigh Wright where he said that because of the delay in receiving money from the sale of “The Grange” – an unexplained bank problem – bridging finance in the sum of £50,000 was obtained through Regency Factors (sic) on 31 May 2005. That money was used as a deposit to secure “Gabriel”. Mrs Edwards recalled that when her husband had wanted money for Spain he had discussed it with Mr Clague, who referred him to Mr Maurice Kraft, the general manager of Regency Finance. The money for the deposit came from Maurice and Hilary Kraft. Earlier in her evidence she had said the money from Mr Kraft was for “Gloria”, but the £50,000 Mr Wright referred to must have been the money from Mr Kraft. She was not involved in dealing with Mr Kraft and signed no loan agreement. She really did not know the derivation of the “Gabriel” money and she could not explain the need to borrow funds for the “Gabriel” purchase when it appeared the mortgage almost covered the full purchase price. She did not know if the “Gloria” loans were still outstanding.[30]As indicated, in the course of her evidence, Mrs Edwards was taken at various points to the statements of Leigh Wright. He had been Mr Edwards’ solicitor at the confiscation hearing and was now Mrs Edwards’ solicitor. His statements were not prepared on instructions from Mrs Edwards but were an analysis of the various documents and an attempt to unravel matters, drawing in part on the reports of the forensic accountants instructed at the confiscation order. I draw on his statements below.[31]In cross-examination Mr Wright said, as would be expected from such an experienced practitioner, that he was aware of all the assumptions flowing from the case-law mentioned later in the judgment, although he opined that Gibson v Revenue and Customs Prosecution Officer [2008] EWCA Civ 645; [2007] QB 348, had clarified a difficult area. He explained the tension at a confiscation hearing between the interests of a defendant, in reaching a compromise best for him in terms of any finding on hidden assets and the length of a default sentence, and the interests of others such as the spouse. A spouse will be best advised not to give a statement at the time of a confiscation hearing because it can adversely affect any claim she may have under the case law. At the time of the confiscation proceedings in this case he represented Mr Edwards. Mr Wright said he could not prevent this later application by Mrs Edwards and it was not opportunistic. Moreover, he had no conflict of interest, since Mr Edwards’ instructions had always been clear, a point I accept. Legal framework[32]Section 31 of the Drug Trafficking Act 1994 provides for the powers conferred on a receiver appointed under section 29 of this Act. So far as relevant it provides:
“(2) Subject to the following provisions of this section, the powers shall be exercised with a view to making available for satisfying the confiscation order or, as the case may be, any confiscation order that may be made in the defendant’s case, the value for the time being of realisable property held by any person, by means of the realisation of such property. (4) The powers shall be exercised with a view to allowing any person other than the defendant … to retain or recover the value of any property held by him.”
Thus the rights of someone holding property over-ride the duty of the receiver to ensure that the confiscation order is paid.[33]Section 6(2) of the Drug Trafficking Act 1994 provides that the defendant’s realisable property will include any property which he has directly or indirectly gifted, if the property falls within section 8(1). A defendant transfers property if he transfers or grants to another any interest in it: s.62(5)(b). Under section 8(2)(a), a defendant is treated as having made a gift where he transfers property to another for a consideration significantly less than that he provided when he acquired it. A spouse can provide consideration by bringing up the children and looking after the home: Gibson v Revenue and Customs Prosecution Office [2008] EWCA Civ 645; [2007] QB 348, [10]. In Gibson the prosecution accepted that the gift provisions did not apply.[34]In a case in which property is held in joint names, the burden is on the prosecution to displace the inference that it is held in equal beneficial shares: In re Norris [2001] UKHL 34; [2001] 1 WLR 1388, [25], Stack v Dowden [2007] UKHL 17; [2007] 2 AC 432, [56] and Gibson v Revenue and Customs Prosecution Office [2008] EWCA Civ 645; [2007] QB 348, [6]. The fact that a compromise is reached between a defendant and the prosecution in confiscation proceedings cannot be determinative of the rights of the other joint owner. There needs to be evidence from which it is possible to infer that the presumption of equal beneficial ownership is displaced.[35]It is the common intention of the parties as to ownership that is determinative, not the result that the court itself considers fair. In Gibson, Arden LJ said this:
“25 … [W]hen the court is considering what interests a husband and wife intended that they should have in a property in their joint names, the court is not exercising discretion as to what is fair. This point is made clear by Baroness Hale in Stack v Dowden at [61], where she emphasised that the search is for the result which the parties must, in the light of their conduct, be taken to have intended and not for the result which the court itself considers fair. 26 It is noteworthy that the argument in the court below and in this court has proceeded entirely on the basis that the principles which govern the rights of Mr and Mrs Gibson with respect to the property are those of a common intention constructive trust as recently set out in Stack v Dowden ...”
Wall LJ agreed. There will be cases in which the joint legal owners are to be taken to have intended that their beneficial interests should be different from their legal interests, but these will be unusual. In making this point in Stack v Dowden, [69]-[70], Baroness Hale said that each case will turn on its own facts and that many more factors than financial contributions may be relevant to divining the parties' true intentions. Factors include any advice or discussions at the time of the transfer casting light upon their intentions; the reasons the home was acquired in joint names; the purpose for which the home was acquired; the nature of the parties' relationship; whether the parties had children for whom they both had responsibility to provide a home; how the purchase was financed, both initially and subsequently; how the parties arranged their finances, whether separately or together or both; and how they discharged the outgoings on the property and their other household expenses: [69]. Baroness Hale added that there may also be reason to conclude that, whatever the parties' intentions at the outset, these had now changed.

Beneficial ownership of the properties

[36]In each of the three properties – “Turton Heights”, “Gloria” and “Gabriel” – Mrs Edwards’ legal interest was 50 percent. Her case is that she also has a 50 percent beneficial interest in each of the three properties. During the period of a long marriage, she had employment from time to time. She had always been a devoted wife to Mr Edwards and provided consideration over and above any single financial contribution. She brought up the children of the family, and looked after the home while Mr Edwards was working. Because at the time of purchase it was intended by the Edwards that Mrs Edwards should have a 50 percent interest in the properties, irrespective of her financial contribution and the source of the money used to purchase them, she is entitled to the declaration sought.[37]So far as the real property in the United Kingdom is concerned Mrs Edwards’ case is that the trail goes back 33 years to July 1977. From that time onwards, until the sale of “Turton Heights” in March 2010, Mrs Edwards had a 50 percent legal interest in the matrimonial home. The burden is on the prosecution to establish that she is entitled to less than a 50 percent share in the net proceeds of sale of “The Grange” and the proceeds of sale of “Turton Heights”. Some of the proceeds of sale of “The Grange” were invested in “Gloria”, the proceeds of sale of which were in turn rolled over into “St. Gabriel”. Both “Gloria” and “St. Gabriel” were registered in joint names, to be held in “equal undivided halves” according to the deeds of the Spanish purchase. The burden on the prosecution to establish that Mrs Edwards is entitled to less than a 50 percent share in the three properties has not been discharged.[38]In my view the first background factor in considering where the beneficial interest of these properties lies is that from 1996, on the basis of his plea to a money laundering count, Mr Edwards accepted that his earnings included ill-gotten gains. Mr Johnson QC contends that while the start date in count 3 on the indictment is 31 December 1996, that is not evidence that that was the date when Mr Edwards’ offending began. He contends that when a spread of dates is used in an indictment the beginning and end are exclusive, not inclusive, and in any event the date is not a material averment. More substantially, the count was based solely on Mr Edwards’ admissions in interview that in 1997 or 1998 he agreed to smuggle holdalls of cash.[39]Once Mr Edwards pleaded to the counts, however, for legal purposes their detail became a matter of fact. It became the basis on which he would be sentenced and the basis of confiscation proceedings. If Mr Edwards wanted a different start date for his money laundering offending he should not have pleaded to the count in that form or he should have taken the courses well known in the criminal courts for establishing a different factual basis than that advanced by the prosecution. The flow of unlawful monies from 1996 has a bearing on the issues before me, since how a purchase is financed is one of the factors identified by Baroness Hale in Stack v Dowden [2007] 2 AC, [69] as relevant to the common intention of the parties as to beneficial ownership of property purchased.[40]A second background factor concerns Mrs Edwards’ own position. By 1996 her two older children were in their early thirties. (They had been aged 6 and 9 in 1972). The youngest child was born in 1975, so was 21 years old. So by this time Mrs Edwards was not earning income to make a contribution to the purchase of property, and all the children were old enough to be looking after themselves. Again these are factors identified by Baroness Hale as bearing on common intention and more directly on the consideration which Mrs Edwards provided, which in turn goes to whether property in her name was a gift.[41]Against this background, it is necessary to examine the details of the purchase of each of the properties at issue. As in this case, a difficulty in proceeds of crime cases is that those benefiting will often be less than forthcoming about the derivation and destination of any criminal proceeds. That is certainly the case here, as is evidenced above. Mr Edwards has given varying accounts in relation to loans and other matters relating to the purchase of the properties. Before me Mrs Edwards was unable to shed much light on the financial details of their purchase. The generous view, advanced by Mr Johnson QC, is that like may women of her generation, particularly in the north of England, she left matters relating to the administration of family finances to her husband, which explains her failings as an historian. The upshot is that the court is unable fully to explore the considerations which Baroness Hale referred to in Stack v Dowden, which would assist in determining the common intention of the parties.[42]In the Edwards’ case we begin with Farnborough Road, the matrimonial property, purchased before any admitted criminality. There is no verifiable evidence of the extent of the mortgage, the sale price, or what became of the equity in Farnborough Road. According to Mrs Edwards’ evidence it had to be remortgaged to support her husband’s business. For a time things were not going well with the business, by contrast with her evidence that at other times things were very good. What is clear is that, contrary to Mrs Edwards’ witness statement, Farnborough Road was not sold until after “The Grange” was purchased. In evidence before me Mrs Edwards accepted that her witness statement was incorrect when she asserted that she had moved out of Farnborough Road in May 1998 and its equity used to purchase “The Grange”. There is no clear evidential conveyancing chain connecting the purchase of “The Grange” with the sale of Farnborough Road.[43]The manner in which “The Grange” was purchased in June 1998 remains uncertain. At one point Mr Edwards maintained that he had funded the property from the sale of his business, plus a joint mortgage. There is no verifiable evidence of this. There is the curiosity of the joint planning application with Mr Stones in October 1997, a full 6 months before its purchase. That planning application, in Mr Johnson QC’s submission, showed that a considerable amount of work was done on the property to make it habitable. I fail to see that when the application was to build a garage and pitch roof to the bungalow. I cannot see how I can regard Mrs Edwards’ evidence, that the house was a shell when purchased, as any more accurate than other parts of her evidence.[44]For Mrs Edwards, Mr Johnson QC concedes that while it may be correct that the money to purchase “The Grange” did not derive from the sale of Farnborough Road, the sale proceeds eventually went to Mr Edwards, who produced the £71,000 deposit for its purchase. In his submission the prosecution have not been able to establish that the money put up by Mr. Edwards for the purchase of “The Grange” did not truly come from the business he ran, a business built up during the course of a long marriage, and to which he was able to devote his time and effort because of the corresponding domestic contribution of his wife. It was for the respondent to establish that they do not. Mrs. Edwards gave evidence to the effect that the proceeds of the Farnborough Road sale produced a substantial sum towards the mortgage of “The Grange”. To argue that there is no evidence of any contribution to “The Grange” by Mrs. Edwards is to ignore what happened to the equity in Farnborough Rd, which the respondent has failed to prove did not exist. It also fails to recognise Mrs Edwards’ contribution to the marriage by keeping the home while her husband was working, and that the couple must have had a substantial legitimate income from a business built up by joint efforts over many years in order to obtain a mortgage advance of £150,000 from the bank. Mrs. Edwards’ contribution need not have been contemporaneous with the purchase of the property. At the time “The Grange” was bought, the Edwards’ relationship had been ongoing for more than 25 years and Mrs Edwards had made her contribution.[45]In my view this simply will not do. Mr Edwards’ offending began from 31 December 1996, laundering cash to the continent. Mr Edward’s account of payment of £2000-£5000 a trip does not match the very significant sum, some £1.6 million, which passed through the Edwards’ identified accounts during that period. Even on the defence case there remains additionally a considerable amount unaccounted for. Mr Edwards did have his business but it was after he sold it that times were good, as Mrs Edwards put it, by contrast with the position at some points earlier. What is also evident in the purchase of “The Grange” and later “Turton Heights” is that there was an absence of any contribution provided by Mrs Edwards. She accepted in evidence she made no financial contribution at the time of their purchase and that she had not been working since 1996. As she told me, her husband looked after the money and she had very little to do with the purchase of the properties. Moreover, the children were older, into their twenties and thirties. There is no doubt that Mrs Edwards was entitled to a 50 percent beneficial interest in the Farnborough Road property and some of that carried through the later properties. With “The Grange”, however, Mr Edward paid the deposit and serviced the mortgage. The clearest inference is the money to pay for it was derived, at least in part, from criminal proceeds. To that extent, Mrs Edwards’ beneficial interest was reduced from 50 percent because on the principles outlined earlier that was the common intention and because there was an element of gift. The same applied with “Turton Heights” because the proceeds of the sale of the “Grange” went to purchase it, without any mortgage.[46]The difficulty is not in reaching that conclusion but, in the absence of adequate financial information, calculating the extent of Mrs Edwards’ true beneficial interest. At the confiscation hearing Mr Edwards accepted, under advice, that Mrs Edwards’ quantifiable interest was described as a ring fenced £108,818.66, representing a one third of the property’s value. It is difficult to see why Mr Edwards may have agreed, under advice from the same solicitors who now represent Mrs Edwards, if that did not reflect something like the true position. Mrs Edwards’ evidence to me was that she was aware of the confiscation hearing, but not the details. The judge at the confiscation hearing commented that it was a “sensible and just” approach on the evidence. Of course Mrs Edwards did not participate in the confiscation proceedings, just as Mr Edwards has not participated in these proceedings.[47]At one point Mr Johnson QC submitted that little weight should be attached to the division because it was simply agreed so Mr Edwards would have a shorter term in default. That I do not follow. It would have been in Mr Edwards’ interest to ascribe a larger share to his wife to drive down his sentence in default. Also in evidence to me Mr Wright, Mr and Mrs Edwards’ solicitor, accepted that he would have been aware of StackvDowden and the 50/50 presumption at the time of the confiscation agreement. Mr Colin Raynor, the Edwards’ conveyancing solicitor, makes reference in his undated witness statement to his understanding that the Edwards’ held “Turton Heights” as joint and equal beneficial owners, but there is nothing to suggest from whom that understanding is drawn.[48]My overall conclusion is that, notwithstanding Mr Johnson QC’s cogent and forceful arguments, the respondent has rebutted the ordinary 50/50 presumption in relation to “The Grange” and hence “Turton Heights”. While in the absence of assistance from those – the Edwards – with full and direct knowledge of the true precise financial position it is difficult to be certain as to the precise extent of Mrs Edwards’ beneficial interest, it seems to me that the best estimate is that reached in the confiscation proceedings.[49]As regards “Gloria”, it was purchased by Mr Edwards in July 2004. Mrs Edwards’ statement of 13 May 2009, that it was purchased in 2000, is simply wrong. To me she suggested that the intention was to use the sale proceeds from “The Grange”, once sold, to discharge a loan from Maurice and Hilary Kraft of £60,000. Further, there was the understanding with the vendor, Mr Stones, that the balance would not be paid until a later date.[50]All of this is deeply unsatisfactory. There is no statement from Maurice or Hilary Kraft, although there is a statement from Stephen Clague as chairman of Regency Factors. Mr Clague is said to have lent money to purchase Adrian Road for the Edwards’ daughter and to be prepared to purchase “Gabriel” now, if necessary. That statement suggests that a short term loan was agreed by the general manager, Maurice Kraft, but no information is given about its nature and terms. Mr Wright suggests that the £60,000 involved came from Mr Colin Vassiere, not the Krafts or Regency Factors. In a witness statement even more unsatisfactory than others in this case, Mr Vassiere states that he did sometimes send loan funds to Mr Edwards’ UK accounts, and that he sent £60,000 at his request for a deposit on a villa in Spain. Again no details whatsoever are given. Mr Vassiere’s statement is in distinct contrast to Mr Edwards’ evidence at the time of the confiscation hearing, that he had lent £60,000 to Mr Vassiere, not the other way round. There are the statements of the Stones, dealing with the payment to them of £50,000 by cheque from the Edwards’ joint account. Given the timing, the £50,000 could have come from the sale of “The Grange”. Friendship may have led them to agree to the postponement of the purchase price, although there is no explanation in their statements. Another problem is that at the hearing it became evident that “Gloria” was owned by Mr Stone and his daughter, not Mr and Mrs Stone.[51]Against this unsatisfactory evidence, what we do know is that while “Gloria” was purchased in July 2004, “The Grange” was not sold until nearly two years later, in May 2006. In 2005, despite what are said to be outstanding loans, and the problems of paying the Stones for “Gloria”, “Gabriel” was purchased. Mrs Edwards accepted that she was not involved in the purchase arrangements and could not assist. Mr Edwards did not assist either. There is nothing in his submission from the confiscation proceedings to explain his understanding of these arrangements. At the time he appeared to accept that his wife had no true interest in the Spanish properties and the sale proceeds in their entirety were his realisable assets. Mr Edwards did not declare the terms of these loan agreements in response to Hodge J’s order to disclose all transfers over £1000 in value.[52]I simply do not accept Mrs Edward’s evidence, evidence which is inconsistent and without foundation in what we do know. There is no account of where the money came from to purchase “Gloria” and of the common intention at the time. It was bought well into Mr Edwards’ course of criminal conduct, when considerable sums were being generated by money laundering. That being the case it seems to me that the respondent has established that the true position as regards “Gloria” is that contained in the agreement from the confiscation proceedings and that the presumption of equal beneficial ownership is rebutted. Because she made no contribution or gave no consideration, placing it in Mrs Edwards’ name can also be regarded as by way of gift.[53]The same conclusion applies with “Gabriel”. “Gabriel” was purchased in May 2005 for €230,000 and a mortgage of €227,000. As with “Gloria” the Spanish deeds speak of full ownership of the estates being in both Mr and Mrs Edwards’ name. Perhaps surprisingly in terms of the arithmetic, Mr Wright suggested that the deposit was £50,000, obtained from Regency Factors on 31 May, and that the balance of the monies used to purchase it were made up through funds transferred to Spain through Travel World. In anticipation of the confiscation proceedings Mr Edwards had stated that £40,000 Travel World cash had been forwarded on 4 May 2006 from his business partners in Australasia and the Far East, by way of a loan, to purchase Gabriel. If this were true, Mr Edwards was making a £90,000 deposit. There was a joint mortgage. Notwithstanding Mr Johnson QC’s submissions about the legal obligations this imposed on Mrs Edwards, the plain fact is that Mr Edwards paid the mortgage.[54]“Gloria” was sold for €145,000 in early August 2007. At some point the proceeds of sale were utilised to clear part of the mortgage on “Gabriel”, notwithstanding the assets had been restrained and a variation order had been agreed, which required the money to be paid into a bank account. Mr Wright confirmed in evidence that he was aware that this had happened, but that it was done without any reference to him. In any event the upshot is that a substantial amount of equity in “Gabriel” came from “Gloria”. The marketing of “Gabriel” is being overseen by the receiver. It was last valued in December 2009 at €228,800. In January 2010 it had a mortgage of approx €86,810. Conclusion[55]In my judgment the respondent has rebutted the presumption of equal beneficial ownership in relation to “The Grange”. However, Mrs Edwards was entitled to a beneficial interest, since she had had an equal beneficial interest in the previous matrimonial home, Farnborough Road. It seems to me that the figure agreed at the confiscation hearing is the best estimate of her beneficial interest. In the order, that is described as “a ring fenced amount of £108,818.66 (representing 1/3 of 40 “Turton Heights”), “Turton Heights” having been purchased outright on sale of “The Grange”. Given that “Turton Heights” sold for less that anticipated, £108,818.66 represents an amount greater than 1/3 of its realised value. Since the court order expressed Mrs Edwards’ entitlement as a “ring fenced amount of £108,818.66” it seems to me that she is entitled to that amount, even though it exceeds a one third interest. As I have explained, she has no claim on the proceeds of “Gabriel” when it is sold. Since Mrs Edwards has already been paid by the receiver the full amount of £108,818.66 ring-fenced by the confiscation agreement, no further payment is due to her and this application must be dismissed.

Cited in 1 later judgment