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General, Trustees, Trusts

Trust no defence against Proceeds of Crime Act

The Proceeds of Crime Act 1991 (since replaced by the Criminal Proceeds (Recovery) Act 2009) provides for the forfeiture of property used in the commission of a crime.  In the case of Solicitor-General v Monk the property in question was a family home that had been used in the manufacture of methamphetamine.  The fact that the home was owned by a trust did not protect the home from forfeiture. 

However, as there were future beneficiaries who had not been party to the criminal proceedings, the question for consideration was whether any relief from forfeiture was available on account of those beneficiaries. 

The approach the court took was to assess the trust’s equity in the property as 25% (the market value of the property less the amount owing to Mr Monk), and to then hold that although the house was forfeited the Crown was required to pay back 25% of the net sale proceeds to the trustees on account of the trust’s final beneficiaries.  It was noted in the decision that this would mean that Mr Monk, who was also a beneficiary of the trust, could benefit in the future from the trust’s assets.

It is noted that it is unclear from the decision whether the debt owing to Mr Monk, which was capable of requiring a mortgage security, was repayable upon demand.

The question for consideration is what the approach might have been if Mr Monk had fully gifted the advance to the trust that provided the purchase price for the trust’s sole property such that, using the court’s reasoning, the trust had a 100% interest in the property.

Also see R v Brazendale, which considers an unsuccessful application for relief in respect of a forfeiture order made in respect of a trust owned property under the 2009 Act.

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