Off-title beneficial interest in a property can be subject to a Confiscation Order
Prior to making a Confiscation Order, after having assessed ‘benefit’ the court has to go on to decide the ‘recoverable amount’ which is assessed on the basis of the assets available to the Defendant. The recoverable amount is an amount equal to or less than the Defendant’s benefit depending on what is ‘available’. In R v Reid  EWCA Crim 690, the Court of Appeal reminded us that the ‘recoverable amount’ is not limited to property in which a defendant has a legal interest.
Beneficial interest in property
A beneficial interest is an equitable interest in property. A legal interest is held by the legal owner of the property but is not necessarily determinative of ownership.
In Reid, the question before the court when considering the recoverable amount, was whether Reid had acquired a beneficial interest in his home since 2004 and if he had, how much the beneficial interest was now worth. Confiscation is a valuation-based exercise. In 2004, Reid was made subject to a different Confiscation Order arising out of different proceedings and then it was accepted that Reid had no beneficial interest in the property. The legal title to the property was vested in his girlfriend, an innocent third party. Reid argued that he had no interest in the property and that his girlfriend had sufficient income to pay the mortgage by herself.
The judge at first instance was unconvinced with the evidence of the girlfriend that (1) she paid the mortgage entirely herself and (2) that she could afford to do so. A finding was made that the defendant had paid all of the mortgage payments in addition to carrying out improvement and renovation works on the property. The Judge granted the Crowns application in a sum reflecting his assessment of the Defendant’s equitable interest in the property. Mr Reid appealed.
The Court of Appeal upheld the decision that where property is owned by a third party, such as a spouse or partner, and yet the defendant has financially contributed, this generated a resulting trust in favour of the defendant (thereby treated as an asset for the purpose of calculation of the recoverable amount). The existence of the resulting trust was demonstrated by the inability of the third party to have funded the mortgage payments or other household expenses alone. The defendant was therefore held to have acquired a beneficial interest in the property, his share of which was due under the recoverable amount.
Click here to see how Brett Wilson LLP can assist you if you are subject to confiscation proceedings.
Articles are intended as an introduction to the topic and do not constitute legal advice.