Property litigation in the criminal courts: Parker v Financial Conduct Authority & Anor [2021] EWCA Crim 956

Many legal disputes fall neatly in one category such as civil, family or criminal law. After completing their training most modern-day lawyers, and this includes judges, tend to focus on one main area of law, even if they cover a wide range of types of cases within that area. Problems can occur when a case straddles two normally distinct areas of law.

A recent appeal in the Court of Appeal Criminal Division, Parker v  Financial Conduct Authority & Anor [2021] EWCA Crim 956, provides an example of a case where the criminal courts had to determine an issue which was really a matter of property litigation, a branch of civil law which specialist criminal lawyers might often have no experience of.

Background to Parker v FCA

The appeal was brought by Mr Parker, and it concerned a house which he claimed he was the majority owner of under a trust. Mr Parker had lost money in various fraudulent investments schemes at the hands of Mr Michael Moore. Mr Moore had been convicted of multiple offences under Financial Services and Markets Act 2000 and sentenced to seven years imprisonment. None of the offences for which Mr Moore was convicted related to Mr Parker’s investments, but the appeal court said that Mr Parker, a widower in his eighties, fit the typical profile of Mr Moore’s victims.

After Mr Parker had already lost hundreds of thousands of pounds in sham investment schemes, Mr Moore had invited Mr Parker to invest in a large house in Maidstone called Bockingford Court. Mr Parker was told that he and Mr Moore (and later Mr Moore’s stepfather) would own a percentage in the property corresponding to their financial contributions to the purchase, with the profits to be shared between them after it was refurbished and sold.

What Mr Parker did not know was that the property was bought in the sole name of Mr Moore’s stepfather, Reverend Higgs, and that Mr Moore intended to live in the house with his wife. Money had been transferred from Mr Moore’s company to his stepfather in order to convince a mortgage lender that Rev Higgs had the cash to pay the deposit. No paperwork was produced to record Mr Parker’s interest in the Property at this time.

When Mr Moore was convicted in relation to other fraudulent dealings, the Financial Conduct Authority asked the Crown Court to make a confiscation order under the Proceeds of Crime Act 2002. In those proceedings the Court assessed that Mr Moore’s total benefit from criminal conduct was just over £2 million. However, with only £255 in his bank account, Mr Moore’s only substantial asset was his share in Bockingford Court. That property was initially valued at £825,000 and it was later sold for slightly more than that.

Mr Parker’s interest in Bockingford Court

In the Crown Court, Mr Parker had intervened in the confiscation proceedings and argued that he had a 70% share in the property under a constructive trust. His lawyers argued that Mr Parker obtained this interest under a ‘common intention constructive trust’ because there was an express agreement made between himself and Mr Moore about the use of Mr Parker’s money to invest in the property. The Court of Appeal records that Mr Parker had “relied on the principle that a common intention constructive trust will arise where a party has acted to their detriment in reliance upon a common intention that he or she will acquire an interest in a property”.

The judge in the Crown Court found against Mr Parker, ruling that no trust interest for Mr Parker had been created, and that he was therefore just another one of Mr Moore’s victims. The Court of Appeal was critical of the judge’s reasoning here – finding it to be brief and unsatisfactory – but also sympathetic, noting near the start of the judgement that it was unfortunate that Judges in the Crown Court were required to make such determinations on “without having (or being expected to have) expertise in the law of trusts, and without necessarily having the assistance of specialist counsel” [paragraph 10].

The Court of Appeal reassessed the shares in the property as 70% for Mr Parker, and 15% each for Mr Moore and his wife. That might sound like an excellent result for Mr Parker, save for two harsh realities – firstly, Mr Parker was defrauded of almost £1,000,000 in total and there was no prospect of compensation for his other losses. Secondly, Bockingford Court had already been sold, and the proceeds of sale distributed among other victims of Mr Moore, the courts service, the FCA and Mr Moore’s wife. The Court of Appeal explained that it could not fully correct the consequences of the erroneous decision made in the Crown Court – the other victims could not be required to return the compensation they had received – and a claim in the civil courts against Mrs Moore would be required to pursue repayment from her.

Lessons to learn

Concluding her judgment, Lady Justice Andrews said that Mr Parker had been badly let down by the criminal justice system, and recommended that the Lord Chancellor treat with sympathy any request from Mr Parker for compensation.

Lady Justice Andrews also made interesting suggestions for how to avoid the messy outcome of that case happening again, saying that the case:

“raise[d] wider concerns about the fairness of the requirement that issues concerning the beneficial entitlement to property in the context of confiscation proceedings under POCA should always be determined in the Crown Court, instead of there being at least an option to transfer the more complex cases into the business and property courts.”

She suggested that if such matters could be transferred to another court “there would be a greater chance of the judge having relevant expertise, and of the judge having the benefit of the assistance of experienced specialist counsel”. She suggested as an alternative that specialist judges could sit in the Crown Court to hear such cases.

Co-ownership disputes

Disputes about co-ownership and trusts of land are already dealt with in the courts in a confusing range of ways. The County Court will hear cases under the Trusts of Land and Appointment of Trustees Act 1996 (known as TOLATA), but more complicated or valuable cases are heard in the Business and Property Courts, part of the High Court. A beneficiary may apply to the court for a declaration of their interest (or other more practical remedies) in those civil courts.

The First-tier Tribunal deals with referrals from the Land Registry where there is a dispute about the registration of a trust interest. There have also been calls for the Family Court to be given powers to deal with this area of law (which makes a lot of sense given that a property dispute between unmarried partners is really a form of family law dispute).

There certainly are some Crown Court judges whose professional background gives them sufficient expertise to rule on property ownership disputes, but Lady Justice Andrews’ proposals merit consideration, and there is a good argument for rationalising how ownership disputes are dealt with more generally.

The interaction of property and criminal law

Co-owned properties and confiscation of criminal proceeds presents just one example of how criminal law and property litigation can interact. Criminal offences relating to HMOs and social housing fraud are dealt with in the criminal courts, but often an understanding landlord and tenant law is required to properly prosecute or represent defendants in these cases. In prosecutions arising from breaches of planning enforcement notices there is a particular need to understand the property law context, especially where the prosecutor seeks a confiscation order to recover rent.

The traditional boundaries between criminal and civil law break down entirely in the First-tier Tribunal Property Chamber when it deals with rent repayment orders and appeals against financial penalties under the Housing and Planning Act 2016. These cases involve punishment for landlords who commit a criminal offence, and although the criminal procedure rules do not apply and the tribunal has not adopted the criminal rules of evidence, a criminal law ‘mindset’ is needed when applying the criminal standard of proof.

The erosion of traditional distinctions of civil and criminal legal practice creates a challenge not just for judges, but also for lawyers who aspire to be specialists. The solution in my opinion is to look beyond outdated ideas of what constitutes a legal specialism, and to develop the skills needed to advise clients whose legal problems fall between traditional sectors of the legal profession, while working collaboratively with other lawyers and experts with different professional experience to ensure that clients benefit from a range of perspectives when required.

The messy, and for Mr Parker very sad, outcome of Parker v FCA demonstrates that legal problems do not always fit neatly into categories. At Anthony Gold Solicitors we can draw on the expertise of colleagues from a range of legal disciplines and our experience of claims which involve a mix of property law and criminal law, such as regulatory criminal law relating to rented property, civil claims relating to property fraud, and co-ownership disputes of all types.