The value of a family business or business interest is treated as an asset and therefore part of the matrimonial pot to be distributed when it comes to negotiating a financial settlement on divorce or...
(Court of Appeal; May, Arden and Wall LJJ; 12 June 2008)
The husband was convicted of drug trafficking. A confiscation order made against him attributed the entire equity in the jointly owned matrimonial home to the husband. In the enforcement proceedings the wife contested this, arguing that she had a 50% claim to the equity and to endowment policies and bank accounts also held in joint names. The judge held that the wife's acquisition of an interest in the assets had not been by way of gift, because she had provided consideration by bringing up the children and looking after the home. However, the judge decided that the wife's beneficial interest in all the jointly held assets was only 12.5%, on the basis that she had known that money used to pay the mortgage was not legitimately earned, and that this guilty knowledge should be taken into account. The judge relied on two Family Division cases concerning matrimonial assets tainted by guilty knowledge, Customs v Excise Commissioners v Ai  EWCA Civ 1039 and CPS v Richards  EWCA Civ 849  2 FLR 122.
The property in question had been joint names and there was nothing to displace the presumption of equal beneficial ownership; the wife had not had to rely on any illegality to establish her beneficial interest. The Drug Trafficking Act 1994 applied to gifts, but not to any interest for which consideration had been given. The Family Division cases relied on had concerned wives who were seeking to persuade the court to exercise its discretion to transfer assets that were the subject of confiscation proceedings to them, whereas this wife was not seeking any transfer in her favour, but to retain assets that she already held. The prosecution had failed to establish any public policy jurisdiction entitling the court to confiscate the wife's assets when she had not been convicted of any offence and there had been no confiscation order made against her.