Revenue and Customs Prosecution Office v Deprince & Ors Rev 1

This is the appeal of Mitzie Deprince; that is to say Mrs Deprince, the wife of John Javhad Deprince. She married her husband on 29 July 2004 and came from America, the place of her birth, to relocate in England following her wedding in January 2005. Mr Deprince was at that time in prison. He had been arrested on 17 December 1998 in respect of charges of two importations of cocaine in August and September of that year. On 5 June 1999 he was convicted in respect of two counts in relation to those drugs and on 23 June 1999 he was sentenced to 14 years’ imprisonment. Mr Deprince was released from prison from that sentence some 16 months after he married Mrs Deprince, that is to say on 23 December 2005. In the meantime Mrs Deprince, who had visiting rights to her husband in prison, had become pregnant. She was safely delivered of a baby girl in the middle of last year. Following Mr Deprince’s conviction a confiscation order was imposed on 8 November 2000. HHJ Pollock determined that Mr Deprince’s benefit from drug trafficking was some £149,000 and that his realisable assets were £125,369. He therefore made the confiscation order in that lower sum of £125,369 and fixed a term of 30 months’ imprisonment in default.

In December 2000 Mr Deprince applied for leave to appeal that confiscation order. For reasons which are not apparent, the course of that application and what became a subsequent appeal was long drawn out. The application was refused by the single judge on paper but that was not until 17 April 2002. On 17 March 2003 leave to appeal the confiscation order was granted by the full court and the appeal was heard on 20 February 2004 and dismissed on 9 March 2004. During all this time, whether before the court of his trial or before the Court of Appeal Criminal Division on his appeal from the confiscation order, Mr Deprince made no case that his home at The Orchid, at Borstal in Kent, was other than his own in full beneficial title. He did not raise the issue even if it would be one for subsequent adjudication in the High Court rather than in the Crown Court, or on appeal from the Crown Court, that someone other than he clearly had any interest in his home. Despite the absence of that assertion, it does appear from the judgment from which this appeal arises today, that of Holman J given on 19 May 2006, that the lady who became Mrs Deprince was involved in some sense with Mr Deprince, and indeed his home at The Orchid, for some considerable time. The relationship of Mr and Mrs Deprince, as they later became, in fact goes back to the summer of 1996 when they met in America and a relationship developed between them.

In May 1997 Mr Deprince’s company, called Galaxy Estates Limited, purchased The Orchid. It appears that at that time the house was in a semi-built condition, since its construction seems to have been overcome by motorway blight. It appears from the evidence given by Mr Akabah, an officer of HM Customs and Excise, upon the basis of which a restraint order was obtained on 9 February 1999 in advance of Mr Deprince’s trial, conviction and making of the confiscation order in the following year, that Galaxy Estates Limited had bought The Orchid for £80,000 and that Mr Deprince was a director and 50% shareholder of that company. It also appears from Mr Akabah’s statement that Mr Deprince bought The Orchid for himself from Galaxy Estates in September 1997, this time at a price of £135,000. He financed that purchase with a mortgage in the sum of £80,000 and the reduction of his loan account as a director to the company by the amount of £55,000. By that time, as I have said, the future Mrs Deprince was in a relationship with Mr Deprince. It appears from the witness statement of Mrs Deprince that on her first visit to this country in May 1997 she was taken to see the house then under construction by Mr Deprince. She says in her statement that he wanted her to see the property because it was important to him and because:

Mr Deprince told her that he had cashflow problems and she says that she gave him about $4,000 on that occasion, that is to say in May 1997, from her savings. She said that she gave him the money on the basis that it was invested specifically in the property to enable it to be completed. She said:

Her evidence then narrates further instalments of money paid to Mr Deprince or to his friend or into a bank account for the purposes of payments to the mortgage company. She says that by the time in late 1997 that the house had been finished she had given Mr Deprince about $6,000. She came over to the United Kingdom in December 1997. She was given her own set of keys. They discussed colours for painting the house, then an empty shell. She said that in 1998 she managed to send over to Mr Deprince about $8,000, being all her savings. She says that she gave a friend of Mr Deprince’s some $4,000-6,000 in 1998 to be paid to the mortgage. It is not clear whether that sum of $4,000-6,000 is in addition to the sum of $8,000 which she described as being all her savings in 1998. Be that as it may, at the end of 1998 Mr Deprince was arrested, which she described as a shock.

Nevertheless she said that she loved Mr Deprince and she continued to make contributions towards the mortgage. In 1999 she visited the United Kingdom and brought with her some $3,500. Mr Deprince’s friend took over further sums of $5,000-6,000 in that year. In 2000 she came to the United Kingdom twice and brought with her $6,000. She and Mr Deprince became engaged in 2001. She came over again. She said that she usually brought $6,000 each year. The monies that she brought over she said were paid towards the mortgage via the local HSBC branch in Rochester; that is to say, a branch local to The Orchid.

She says that when she relocated to this country in January 2005 she did not keep any of her banking records. In any event because she trusted Mr Deprince, she had made herself no record of the various advances that she had provided. When she came to this country she opened a bank account for herself at HSBC of Rochester. It is clear from the records of that bank account of hers that from March 2005 to January 2006 she has made monthly payments to the mortgage company of various sums which over that period fell from a monthly amount of just over £800 to just under £700. There also exist in the bundle statements from her American bank which indicate that she may have made equivalent dollar payments to the mortgage company in November 2004 and February 2005.

The judge, while not going into any particular detail about these payments, nevertheless accepted that she had made substantial payments, which in paragraph 30 of his judgment he refers to in these terms:

Later in his judgment at paragraph 38 he says:

Mrs Deprince says that at various times over the years on her visits to this country she had stayed at the property and that it had then been empty. The judge did not accept her evidence on that point because between June 1999 and June 2005 Mr Deprince had allowed his sister and all her family to stay in the property. He evicted his sister at the end of that period. The sister, like Mrs Deprince, in response to the Customs and Excise through its RCPO seeking to appoint a receiver over Mr Deprince’s property in an attempt to execute the confiscation order following the dismissal of Mr Deprince’s appeal against it, sought to intervene to claim an interest in the property. The sister’s evidence, which the judge accepted -- see paragraph 42 of his judgment -- was that she had paid the mortgage interest payments over the period that she had been residing there and indeed she exhibited, as part of her evidence, the mortgage company’s paying-in book through which she had made monthly payments. There had, she said, been three paying-in books of which she was able to find and exhibit one.

Mrs Deprince said that after her relocation to England in January 2005 she had cause, for some reason or other, to check the Land Register in respect of The Orchid and she then became aware of the inhibition on the Register in favour of the Customs and Excise. She raised that matter with Mr Deprince but he fobbed her off, saying that she had nothing to worry about. He was not open with her about the confiscation proceedings until the autumn of 2005 at the time when the RCPO reactivated, after what the judge described as an 18-month delay following the dismissal of Mr Deprince’s appeal against the confiscation order, its application for the appointment of a receiver. It was following those revelations in the autumn of 2005 that Mrs Deprince came forward in November 2005 to make an application to intervene in the confiscation proceedings and also to initiate her own claim in the Family Division.

On 16 November 2005 there was a hearing before Mr Andrew Nicol QC sitting as a deputy High Court judge in the receivership application, as a result of which both Mrs Deprince and Mr Deprince’s sister were joined to proceedings as interveners and other case management directions were given. Following that, Mrs Deprince brought a claim on 14 December 2005 in the Family Division in which she sought a declaration that she had a beneficial interest in The Orchid. She said:

In his judgment, Holman J pointed out that it was not until Mr Deprince’s third witness statement of 9 May 2006 that he spoke for the first time about any arrangement with his wife about an interest in The Orchid. He said this:

The judge heard both Mr and Mrs Deprince give oral evidence. Mr Deprince repeated the evidence he had given by way of witness statement that the agreement between them had been to the effect that if they married the house would be hers and hers alone, and if they did not would be jointly owned. Mrs Deprince, on the other hand, gave oral evidence which the judge described as going beyond anything that she had said in her written statement, albeit not as far as that for which Mr Deprince had contended in his evidence. She said that there had been a verbal agreement between them that once they were married the property would be half hers. She said that that agreement had been reached before his arrest. The judge pointed out that that was well over a year after the actual purchase of the house. The judge then went on to describe Mr Deprince as:

The judge then went on to describe Mrs Deprince’s evidence “[…] also to be vague and unreliable”. He rejected her evidence that when she visited England and stayed in the house she had found it empty and that there had been no-one else living in the property, which had an empty feel about it. He said that that could not be right if the evidence of the sister was to be believed, and the judge said that he had found the sister a convincing witness. Accordingly, he said that Mrs Deprince’s evidence about finding the property empty to be completely unreliable. He then continued in paragraph 38 of his judgment as follows:

Now on this appeal Mrs Deprince has been represented and, if I may say so, ably represented, pro bono by Mr Guy Opperman and Mr Mathew Gullick. Before the judge Mrs Deprince had not had any counsel personally representing her but she did have the advantage of submissions made in her interest by Mr Deprince’s counsel, Mr Bodnar. It may be observed that it is clear from what I have stated above that when it came to the trial before Holman J the interests of Mr and Mrs Deprince, albeit they put their respective cases in slightly different ways, were entirely at one. Indeed, Mr Deprince was saying that the house was entirely hers, whereas Mrs Deprince’s evidence was that it was only beneficially half hers. However, it was plainly in their joint interests as a happily married couple -- they were expecting their first child and living together in The Orchid -- that as much of the house could be preserved from the confiscation order by a finding that it was to the greatest possible extent beneficially owned by Mrs Deprince. In effect, therefore, while not having personal representation Mrs Deprince had the advantage of counsel at trial.

In their very helpful written submissions and in Mr Opperman’s oral submissions, the essential case upon which they have relied on Mrs Deprince’s behalf is to submit that there was here a classic, or almost classic, case of a common intention constructive trust or proprietary estoppel in Mrs Deprince’s favour. Reliance was placed in particular on Oxley v Hiscock [2004] EWCA Civ 546, [2005] Fam 211, and in particular on the summary of earlier jurisprudence contained in paragraphs 68 and following of the judgment of Chadwick LJ. The essential position supported by that jurisprudence and Chadwick LJ’s discussion of it and summary is that a constructive trust in favour of someone other than the legal owner may be found where a home is bought for a couple, whether married or not, and there is before or at the time of purchase either express discussions or arrangements of some kind to the effect of granting to the partner, without the legal interest, a beneficial share in the property. Or it may be that, even without such express language, such a common intention constructive trust can be found to be inferred from subsequent conduct such as contributions to payment of the mortgage instalments: see Lord Bridge’s summary in his speech in Lloyds Bank Plc v Rosset [1991] 1 AC 107 at pages 132D to 133A.

Reliance was also placed on the doctrine of proprietary estoppel which, it was submitted, could arise even after the acquisition of property: see for instance Gillett v Holt [2001] Ch 210 and see also Cobbe v Yeomans Row Management Limited [2005] EWHC 266 (Ch), [2005] 2 P&CR D2. In effect, it was submitted that the judge had found Mrs Deprince to have made substantial contributions totalling £31,000 over the years 1997 to 2004 to which it was submitted she had added the £11,000 or so evidenced by her bank statements from late 2004 to 2006, and that those payments had been made by Mrs Deprince because, as the judge had said in paragraph 38, she had been lulled by the manipulative Mr Deprince.

The question arises, however, as to whether this case can be fitted into either of the three categories essentially relied upon by Mr Opperman. The first category is Lord Bridge’s first category, that of express agreement or arrangement at or before the time of purchase. It seems to me, however, that it is quite impossible to read the judge in any way as making findings which would support, on this appeal, any such conclusion. Each of Mr and Mrs Deprince had given evidence to the judge of entirely different express arrangements. The judge had rejected both. His finding amounted to this: to revert to paragraph 38, which I have cited above, that Mrs Deprince thought that she was in a settled relationship with Mr Deprince and that the time might well come when they would live together and marry. She was lulled by her belief in that settled relationship and the possibility of future marriage that led her to make the various payments that she describes, not some express arrangement.

The second way in which Mr Opperman put it is to say that from the contributions made over the years, which the judge accepted that Mrs Deprince had made, it was nevertheless to be inferred that, going back to the time of the acquisition of the house albeit unspoken and unexpressed, there had been a common intention to give to Mrs Deprince a beneficial interest of some kind, even if it was not of 50%. If some such interest can then be found, it would be a matter for the court’s discretion, as explained by Chadwick LJ in Oxley v Hiscock, to say what the fair percentage of that beneficial interest should be. So Mr Opperman submitted that it was to be inferred from the subsequent payments that there had been a common intention constructive trust made at the time of acquisition.

It seems to me, however, that the judge’s judgment does not support this, even though it may fairly be said that in paragraph 38 the judge shifted uneasily between objective findings as to what the position was between the parties and (in particular) Mr Deprince’s internal and subjective intentions. I have no doubt that the relevant test is an objective one, as Lord Diplock had emphasised way back in Gissing v Gissing [1971] AC 886 at 906. To the extent, therefore, that the judge did at this point of his judgment pay attention to Mr Deprince’s subjective intentions, he was, I think, in error. The question is what, applying ordinary objective standards, was there in anything Mr Deprince said or in the overall relationship between the parties which could indicate, even if it was a matter of pure inference in the absence of any express language at all, that there was an intention to give to Mrs Deprince, already at that time, a beneficial interest in the property. Nevertheless, it seems to me that the judge was right overall in his judgment to state that he was unable to find and establish any beneficial interest in favour of Mrs Deprince.

For myself, I would put it in this way. The judge found that the evidence of both Mr Deprince and Mrs Deprince was unreliable and indeed self-serving. That is a very poor basis on which to find something as important as a common intention constructive trust. Not only was their evidence unreliable and self-serving but they each gave evidence of an express agreement, albeit in different terms. Once their respective cases of express agreement failed, it seems to me to be very difficult indeed to say that one can with the necessary confidence find implicit in their relationship, or in any general expression of concern for each other in their general relationship, a basis for the grant of a beneficial interest.

Thirdly, the claim to a beneficial interest on the part of Mrs Deprince only comes forward at a very late stage. On Mrs Deprince’s evidence she did not have full knowledge of the confiscation order until the autumn of 2005. However, something made her check the title in February 2005 and the register did in fact put her on notice, however much she may have been fobbed off by her husband concerning some important inhibition on the title in favour of the Customs and Excise. There is the further circumstance that no monies seem to have been paid at all to Mr Deprince or the property until after its first acquisition by Galaxy which, so far as Mrs Deprince would have known, would have been the relevant acquisition. Even then the sum involved at that stage was only $4,000. Mrs Deprince’s own witness statement describes that as being monies lent.

There is then the circumstance that for six years in the interim the house had been lived in by Mr Deprince’s sister and family and that it appears to have been the sister who for all, or for a goodly period of that time, had been paying the mortgage. Indeed, if one takes the whole of the evidence in this case there are three separate accounts of the way in which mortgage instalments were paid. There is the sister’s evidence, which the judge essentially accepted, that she paid the mortgage payments; there is Mr Deprince’s evidence that he made the mortgage payments through the shadowy figure of his unidentified friend, and there is Mrs Deprince’s evidence that she made at any rate a contribution to, and then at a late stage a full payment of, the mortgage instalments. All this is very unsatisfactory evidence upon which to base the constructive trust now sought.

There is also this consideration, that the true state of the mortgage account could have been easily identified from a mortgage statement provided by the mortgage company, which it would certainly have been open to Mr Deprince to obtain even if perchance it was also open to RCPO to acquire. I make those points to emphasise how uncertain the evidence is in this case, even accepting as I do the judge’s findings of substantial payments in the sums I have already cited being made over the years by Mrs Deprince. Nevertheless, in connection with this second way of categorising the basis of Mrs Deprince’s interest the position is: that there is a failure of the Deprinces’ evidence of express intentions; and there is the most unsatisfactory, unreliable and, as the judge said, self-serving evidence about the way in which to read the circumstances of the contributions being made over the years. So that I finally feel that on the judge’s findings the position goes no further than this: that Mrs Deprince trusted and loved Mr Deprince and on the basis of that confidence in their relationship, but not on the basis of any understanding that he was granting to her a beneficial interest in the property, she made the payments she did. I would emphasise that in her written evidence she does not go so far as to speak of either an express agreement that she would have a beneficial interest or indeed of an implicit understanding that she would have a beneficial interest. She speaks of her understanding that they would live together and the house would be their home. It is in that context that she was prepared to give or lend -- she used both words -- money to Mr Deprince and indeed, when he became imprisoned, to support him in his difficulties which it may be said that she had done with some nobility.

The third way in which Mr Opperman seeks to put the case is on the grounds of a straightforward proprietary estoppel such as is illustrated in Gillett v Holt. However, if there is no intention to share the beneficial interest at the time of acquisition, it seems to me that post-acquisition it becomes even harder to support the sort of representations which would found a proprietary estoppel such as is illustrated in the Gillett v Holt cases. It is clear from what I have already said that the evidence in this case goes nowhere close to the sort of representations illustrated by those cases. In my judgement, a case of proprietary estoppel arising out of reliance by Mrs Deprince on subsequent conduct or general statements of Mr Deprince is hopeless.

It therefore seems to me that on the limited grounds upon which Mrs Deprince has been given permission to appeal, this appeal must fail.

I should mention before finishing that Mr Opperman sought to get permission to argue a new ground of appeal for which he did not get permission on paper, and that was by reference to articles 6 and 8 of the European Convention on Human Rights. For these purposes Mr Opperman sought to rely on the 18-month delay in the confiscation proceedings which the judge described in highly uncomplimentary terms in his judgment. He did not however go so far as finding a breach of the article 6 requirement of a determination within a reasonable time in terms of that delay between the dismissal of Mr Deprince’s appeal against his confiscation order and the time when the RCPO took up the cudgels of seeking a receivership order. Mr Opperman also relied upon the more than three years which Mr Deprince’s application for permission to appeal against his conviction took to be resolved as it finally was by dismissal of the appeal which he was granted. In the context of these submissions about article 6 and its reasonable time requirements Mr Opperman also relied upon the guarantees in favour of a private life under article 8 of the Convention.

It seems to me, however, that this further ground is not arguable. There is no finding in favour of culpable delay by the RCPO other than in the last 18 months in 2004 and 2005. The victim whom that delay really concerned is Mr Deprince rather than Mrs Deprince. Certainly by February 2005, Mrs Deprince was on notice through the inhibition on the register that there was an order in respect of the property. Moreover, even giving to Mr Opperman’s submissions his most favourable case, which he submitted was a 25% or 30% beneficial interest in the property, the house would inevitably have to be sold to meet the confiscation order, even if that would leave some funds ultimately in Mrs Deprince’s hands. Therefore, the disturbance to the family’s private life in terms of the sale of the house would in any event have to take place. In truth, as between the public interests concerned and Mrs Deprince’s alleged interests, the enforcement of the confiscation order is a lawful and proportionate and thus justifiable response and, in any event, the case for a beneficial interest in the property having failed, it seems to me that there is really nothing sufficiently arguable to be said in favour of the Convention ground. We indicated in the course of argument that we would not give permission for that ground to be brought into the appeal before us.

Therefore, for the reasons which I have given, this appeal is dismissed.

I agree. Mr Opperman, assisted by Mr Gullick, put before the court a skeleton argument relying on a variety of points, not all of which were put at first instance, at which stage, as my Lord, Lord Justice Rix has mentioned, Mrs Deprince was not represented at all in any formal sense and was informally only represented by her husband’s counsel. Commendably, in his oral submissions he limited the case to the issues of proprietary estoppel and constructive trust which provide the real basis for the claim. I would pay tribute to the clear and well-focussed way in which he advanced Mrs Deprince’s case in this court. Disappointed as she will no doubt be at the outcome of the case, it may be no consolation to her, but it is the case that she has been very ably represented on the appeal.

The heart of the appeal is what the judge said at paragraph 38 of his judgment. Part of that paragraph concerns the subjective intentions of Mr Deprince. As Lord Diplock indicated in the passage from Gissing v Gissing which my Lord has mentioned, an uncommunicated subjective intention inconsistent with what appears from the words or conduct open to both parties is irrelevant to the issue. So it is argued the judge’s statement in the first sentence of paragraph 38 is tainted by reference to irrelevant matters.

Moreover, Mr Opperman points to the fact that, perhaps unusually, the start of the story of Mrs Deprince’s payments relevant to the property pre-dates the acquisition of the property by Mr Deprince. As my Lord has said, Galaxy Estates Limited, at that time owned as to half by Mr Deprince and as to half by someone else, bought the property in May 1997 with an uncompleted house upon it. Mrs Deprince’s first payment is said to have been of some $4,000 in about May 1997; that is to say, at or shortly after the acquisition by Galaxy but before its acquisition by Mr Deprince in September 1997, which arguably is the moment at which the question of a beneficial interest enforceable against him would arise. Thus, Mrs Deprince does not face the problem that some in her position do of seeking to show that an agreement or common intention can be inferred as at the date of acquisition, although all the acts relied on in respect of it start after the acquisition.

However, the question remains whether the judge did misdirect himself in the first sentence of paragraph 38. I do not think he did. He correctly formulated the question which he had to decide at paragraph 32. He said there “in considering whether there is a constructive trust, the court still has to consider whether there was an express agreement between the parties and whether they demonstrate some common intention between the parties which may be found or inferred from the circumstances”. He went on to say that the appellant’s difficulty was on the evidence. He described the course of the evidence and my Lord has referred to the critical passages in that evidence. At paragraph 37 the judge explained why he found Mr Deprince to be thoroughly unreliable and, for rather different reasons, found Mrs Deprince’s evidence to be vague and unreliable, and to be completely unreliable on one specific point where it conflicted with that of Beverley Powell, Mr Deprince’s sister, who also claimed a beneficial interest. The first sentence of paragraph 38 follows immediately upon that review of the evidence. That seems to me to be a rejection, on the grounds of the inadequacy of the evidence, of the basic ingredients of a constructive trust or proprietary estoppel claim to a beneficial interest.

As I read the judgment, Holman J then went on to discuss a separate topic. I do not regard the first sentence of paragraph 38 as dependent on or influenced by the following part of the paragraph. To the contrary, it is based on and represents the judge’s conclusion from his review of the evidence at paragraphs 30 through to 37.

In my judgment the judge was entitled, having seen Mr and Mrs Deprince give their oral evidence, to come to the conclusion that he expressed in the first sentence of paragraph 38, and he did not misdirect himself in reaching that view. I also agree with Lord Justice Rix and have nothing to add as to the case based on proprietary estoppel and otherwise.

Accordingly, I too, would dismiss Mrs Deprince’s appeal and refuse permission to appeal on the separate matter.

I have had some doubts in the course of the argument as to whether there was here, objectively viewed, a common intention to give the appellant a beneficial interest of some kind in The Orchid. It seems to me to be arguable that such an inference might be drawn on the basis of these two sentences in paragraph 8.7 of the judge’s judgment:

However, for the reasons given by both Lord Justice Rix and Lord Justice Lloyd, I have ultimately concluded that no such inference is to be drawn by whatever legal route, including the routes of constructive trust and proprietary estoppel. I therefore agree that the appeal should be dismissed. I also agree that the application for permission to appeal also fails, for the reasons given by Lord Justice Rix.