Financial remedies in the Family Court and the impact of criminal proceedings

Circumstances can arise whereby there is something of an interaction between proceedings in the Crown Court and financial remedy proceedings being pursued in the family Courts. This can prove problematical if for example a restraint or confiscation order is imposed by the Crown Court, usually under the provisions of the Proceeds of Crime Act 2002 ("POCA"), against a person who is also a party to financial proceedings in the Family Court. Whilst the making of such an order by the Crown Court clearly presents difficulties, it need not be a bar to an Order being made in the Family Courts in favour of the other party.

Prosecuting bodies such as the CPS or HMRC frequently apply for a restraint Order under the provisions of POCA, pending the outcome of an investigation or trial. Such an order will effectively freeze person's assets, and they will not be able to sell or transfer them, and will usually only be permitted to withdraw from bank accounts sufficient sums to cover basic living expenses, which is also subject to the Court's consent. Frequently, jointly-owned assets are restrained under the terms of such orders, even if only one party is subject to the criminal investigation.

In proceedings under POCA, following a conviction for certain specified offences, such as drug trafficking, the Crown Court will firstly determine the benefit it considers that a Defendant has obtained from their criminal activity, and will hear arguments from both the Crown and on behalf of the Defendant. In the context of POCA, the term "benefit" goes somewhat further than its usual everyday meaning, as POCA proceedings are designed to be somewhat draconian in nature, so as to deprive those convicted of criminal offences of their ill-gotten gains. Once the benefit figure is determined, the Crown Court will then go on to determine what available assets and property the person has with which to satisfy such order , whether acquired through crime or otherwise, and will make an order for this sum to be paid by them. This sum is very often less than the benefit the court determines has been obtained, and there is also provision under POCA for the Crown to revisit this figure, should a person who is made the subject of an order for less than their deemed benefit come into money, such as by a lottery win.

One party, usually the wife, can intervene in the Crown Court POCA proceedings as an interested party, to assert that certain assets are rightfully hers, and hence should not be the subject of a confiscation order, such as her interest in the matrimonial home, as the Crown Court now has power to determine issues relating to the beneficial ownership of assets, subject to all relevant parties being afforded a chance to make representations on the issue. Such intervention can also be made in the case of restraint orders. The Court will also consider in its determinations as to whether assets should be deemed as "tainted", for example by virtue of a wife's knowledge of her husbands criminal offences . It is also possible for a wife to request that the Crown Court refers questions of beneficial entitlement to the Family Court to be determined in the proceedings relating to financial remedy.

In circumstances where a Confiscation order has actually been made, for example against a husband, it should also be noted that the Family Court can in certain circumstances use its discretionary power under the Matrimonial Causes Act ("MCA") in favour of the wife. If so, the Family Court is required to afford the prosecutor an opportunity to make representations before a decision is made. The Family Court is then tasked with weighing up the interests of the wife and children of a family, against that of the need and public interest for confiscation orders to be made.

In view of the occasional nexus between the operation of POCA and MCA, evidence needs to be adduced to show that a wife has a solid claim to having a beneficial entitlement to assets, which is not tainted by any knowledge or implication in her husband's criminal conduct. If she can do that, and if she can also demonstrate the need for an order to be made in her favour, then a strong case can be made for the Court to accede to her claim.