‘Falling into error’: when crime meets constructive trusts

WARNING: It’s mostly a LAND LAW sort of post. Legal historians can look away now. … Normal pootling around in the plea rolls will resume soon…

I am shortly going to be signing off from my Land Law duties for a year devoted to Legal History research, but Parker v. FCA [2021] EWCA Crim 956, to which the marvels of Twitter alerted me recently, deserves a quick note.

It is an appeal relating to very dodgy financial and property dealings, which ends up at the confluence between crime and property law, with enough references to different sorts of constructive and resulting trusts to satisfy the deepest devotion to doctrinal principles. If that floats your boat, read the case to get all of the details (spoiler – after some detours round the houses, the constructive trust point is actually straightforward).

I suppose we do need to locate this a little more clearly in its legal context: it concerns a convicted ‘fraudster’ who had run dubious financial schemes, persuading people, including Parker, to hand over money to him, which they lost. In such cases, there are processes to attempt to recover the ‘proceeds of crime’ (Proceeds of Crime Act 2002) so that, as well as facing prison time, the offender cannot profit from his crime. Often this recovery will be complicated in terms of finding assets, but not necessarily legally complex. It does get more difficult if the money has been used to purchase real property, however, as in this case. Essentially, the case turned on whether there was a chance that Parker, one of the fraudster’s victims, had a chance of establishing that he had an interest in a particular property, as a result of the dealings between himself and the fraudster. This was ruled out, but the Court of Appeal found that to have been wrong. Parker could have had a ‘common intention constructive trust’, as featured in every Land Law student’s favourite cases, Stack v Dowden and Jones v. Kernott. Clearly this principle was not restricted to domestic contexts.

There are two connected things which struck me as interesting here: the fact that there appears to have been a lack of familiarity with the rules of property law in certain quarters, in earlier stages, and the way in which the CA dealt with what certainly appears to have been a lack of full understanding  of principles of trusts. This business of grabbing assets of fraudsters is tacked on to criminal proceedings, but it can easily – as here – demand a detour into property law. Then there is the matter of how the CA ought to respond when there has been an apparent error in application of the law, by a judge in a lower court, as seems to be the case here. The judgment in this case is certainly at the mild end of correction.

Lady Justice Andrews, at 10,  was at pains to say a comment about the judge’s errors were ‘not intended as a criticism of the experienced judge who heard this matter’, because one could not expect ‘expertise in the law of trusts’ from criminal judges. The mild expression of ‘falling into error’ is chosen – suggesting a bit of a fault-minimising gravitational pull. Nevertheless, the impression given here is that the mistakes were pretty basic – including dealing with possible property interests in an order which was not logical [65], not providing proper reasons to dismiss Parker’s claim of an equitable interest, not giving the principles on which the decision was made [68], despite being referred to the relevant trusts cases. The CA judgment sums up the position succinctly – it is neither new nor particularly difficult:

‘83. The issue at the heart of this appeal can be identified as follows: if A gives B money for the express purpose of using it only to purchase an identified property as an investment, A and B agree that A will have an interest in the property pro rata to his financial contribution, and the money is then used to buy the property, does A have a beneficial interest in the property? The answer is yes. It would be surprising if it were otherwise.’

(In addition, an argument was run at one point which ignored one of the basic pieces of legislation on property law – the Law of Property Act s. 53(2).[72]. I would not be impressed by that sort of muddle in a Land Law paper …)

Ideally, one would have hoped that lawyers, and judges, would keep abreast of the core areas of law, even if they do specialise in one particular aspect. Certainly, the fact that they will all have passed exams in property subjects at some stage ought at least to make them aware of the broad outlines of informal acquisition of property interests, so that they would be able to consult someone with more expertise, or look up the relevant chapters in a textbook. A little humility in recognising the limits to one’s own expertise does not seem too much to ask. Land Law/Trusts refresher courses for criminal lawyers, anyone?




Image: a gent falling – whether or not ‘into error’ … Photo by Sammy Williams on Unsplash