R v Hayes

Factual and Procedural Background

This appeal concerns confiscation proceedings arising from provisions of the Proceeds of Crime Act 2002 ("the 2002 Act"), specifically the application and effect of sections 77 and 78 relating to tainted gifts. The central factual context involves the Appellant, who was convicted in August 2015 of conspiracy to defraud related to manipulating the Yen LIBOR rate during his employment with banks in Japan between 2006 and 2010. Following conviction, confiscation proceedings were initiated, resulting in a confiscation order for £852,560.94, with an available amount assessed at £1,757,919.68.

A significant asset included in the available amount was a property known as The Old Rectory, located in Surrey. The appellant and his wife (hereafter "Ms Tighe") purchased this property jointly in December 2011. The purchase price was paid entirely by the appellant, with Ms Tighe making no financial contribution. Ms Tighe was a qualified solicitor who had resigned from her employment and was a stay-at-home mother until May 2013. In July 2013, the appellant transferred his entire interest in The Old Rectory to Ms Tighe for £250,000, significantly less than its market value, and she took out a mortgage which partly reimbursed the appellant.

The judge at first instance found both the initial acquisition of the joint interest in The Old Rectory and the subsequent transfer to Ms Tighe at undervalue constituted tainted gifts under the 2002 Act. The appellant challenges only the finding regarding the initial acquisition in this appeal.

Legal Issues Presented

1. Whether the family services provided by an individual as wife and mother can constitute valuable consideration for the purposes of section 78(1) of the Proceeds of Crime Act 2002.
2. Whether the acquisition of a joint legal and beneficial interest in property by the appellant and Ms Tighe, where the appellant provided all financial means and Ms Tighe made no financial contribution, constitutes a tainted gift under sections 77 and 78 of the 2002 Act.

Arguments of the Parties

Appellant's Arguments

• First, the appellant argued that for the tainted gifts regime to apply, there must be a transfer of property. He submitted that at the time the property was transferred into joint names, he did not hold an interest to transfer, as the vendors did. Thus, no relevant gift occurred.
• Second, the appellant contended that the judge erred by focusing solely on direct financial contributions when assessing consideration under section 78(1). He argued that Ms Tighe's contributions as wife and mother should be valued as consideration, equating to half the property's value, thereby negating the finding of a tainted gift.

Respondent's Arguments

• The respondent submitted that the first argument was untenable and contrary to the statutory purpose, emphasizing that the transfer of a beneficial interest occurred when the appellant provided the funds and consented to the conveyance.
• Regarding the second argument, the respondent contended that the judge correctly applied the plain wording of section 78(1), requiring consideration of value capable of objective monetary assessment. Ms Tighe provided no such consideration, and thus the appellant made a gift of half the property.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by rejecting the appellant’s first ground of appeal, which argued that the appellant had no interest to transfer at the time of the joint acquisition. The court found this argument untenable as it would undermine the statutory purpose of the tainted gifts regime by enabling criminals to avoid confiscation simply by acquiring property jointly. The court endorsed the reasoning in Thompson, confirming that the appellant effectively transferred an interest by providing the purchase funds and consenting to the conveyance.

Turning to the second ground, the court emphasized that the statutory language of section 78(1) requires that consideration must be of value capable of objective monetary assessment at the time of transfer. The appellant’s argument that Ms Tighe’s family services as wife and mother constituted such consideration was rejected. The court noted that the statute does not contemplate non-financial contributions such as family services as sufficient consideration unless objectively valued and evidenced in monetary terms. The court distinguished this confiscation context from family law proceedings, where non-financial contributions may be relevant to asset division but do not equate to consideration under the 2002 Act.

The court considered precedents such as Gibson and Usoro but found them factually and legally distinguishable. It recognized that family services may be considered in some cases but only on a rigorous, fact-sensitive, and evidence-based monetary valuation. In the present case, Ms Tighe made no financial contributions to the purchase or household expenses, which were paid entirely by the appellant. The court concluded that the judge’s finding of a tainted gift was justified.

The court also provided a suggested general approach for courts assessing tainted gifts under section 78(1), emphasizing objective, evidence-based valuation of consideration, whether financial or otherwise, and rejecting arbitrary or self-assessed valuations.

Holding and Implications

The court DISMISSED the appeal.

The holding confirms that in confiscation proceedings under the Proceeds of Crime Act 2002, non-financial contributions such as family services provided by a spouse or partner do not, without objective and monetary valuation, constitute valuable consideration sufficient to negate the finding of a tainted gift when property is transferred at undervalue. This decision upholds the statutory purpose of the tainted gifts regime to prevent avoidance of confiscation through property transfers within families. The ruling clarifies the limited scope for considering familial contributions as consideration in this context and distinguishes confiscation proceedings from family law asset division. No new precedent beyond this clarification was established.