Woman who challenged confiscation order to keep property has appeal dismissed

The Inner House of the Court of Session refused an appeal by Farzana Ashraf, who claimed she had an “interest” in the flat and that the order made under the Proceeds of Crime Act 2002 should be varied to prevent the sale.

Confiscation order

The Lord Justice Clerk, Lady Dorrian, sitting with Lord Brodie and Lord Turnbull, heard that the reclaimer’s brother Mohammed Younas was convicted at the High Court in Glasgow in 2012 of being concerned in the supply of diamorphine, following which Lord Pentland made a confiscation order in the sum of £126,000, of which £121,000 was in respect of the flat he owned at 82 Polworth Gardens in Edinburgh.

At the confiscation proceedings Ms Ashraf and her sister Russian Ashraf opposed the order being made, arguing that when deciding on the available amount for the court should exclude from the benefit calculation the value of the property, but Lord Ordinary rejected that argument.

Thereafter, the reclaimer lodged an application under section 135(1) of the 2002 Act to recall or vary a subsequent interlocutor appointing an enforcement administrator to realise the property subject to the order made by Lord Pentland in 2014, to exclude the property so that it could not be disposed of by the administrator.

Ms Ashraf gave evidence in support of her application, explaining that her brother had purchased the property at Polwarth Gardens in 1990 but he had been sequestrated in 1993.

In 2002 the Accountant in Bankruptcy, which had been appointed as Mr Younas’s permanent trustee, concluded missives for the transfer of the property to Ms Ashraf and her sister for £25,000, to be payable in two instalments, which were paid in July 2002 and June 2003. 

‘Beneficial owner’

Ms Ashraf’s position was that she and her sister then made the mortgage payments and that she had accordingly become the beneficial owner of the property under the missives, with the result that the power to dispose of the property in satisfaction of the confiscation order should be exercised in such a way as to allow her to recover the value of that interest, in terms of section 132(3)(a) of the 2002 Act.

It was also argued that she had a “reasonable expectation” that she would acquire heritable ownership of the property and therefore to include the flat in the order would be a “breach of her rights” under Article 1 of Protocol 1 (A1P1) to the European Convention for the Protection of Human Rights (ECHR).

However, the arguments were dismissed by the Lord Ordinary, Lady Wide, who had considerable reservations about the reclaimer’s credibility and reliability, and rejected her evidence on all material points.

Ms Ashraf appealed, arguing that the Lord Ordinary erred in concluding that she did not have an interest in the property.

It was submitted that by virtue of the missives, and the payments of mortgages, she was the beneficial owner of the property.

She had a “letter of comfort” from the Accountant in Bankruptcy which confirmed that she had an interest in the property for the purposes of section 132(2)(a), having purchased the interest in the property prior to the date of the confiscation order.

For the Crown, it was submitted that the Lord Ordinary had been “correct” in the decision that she reached and that “no error of law” had been identified.

It was argued that the reclaimer’s interest was a “personal interest” under the missives, and she would neither retain nor recover the value of that interest by varying the confiscation order.

‘Personal interest’

Refusing the reclaiming motion, the appeal judges upheld the Ordinary’s decision.

Delivering the opinion of the court, the Lord Justice Clerk said: “In our view it is appropriate that whether a third party has any interest in terms of section 132 should be examined by reference to the meanings attributed to the word ‘interest’ in section 150, depending on whether the interest is said to be in heritable or moveable property.

“The reclaimer does not have any heritable right in the property having only a personal right under the missive. The Lord Ordinary was correct to state the he reclaimer had no more than a personal, contractual interest in the missives, that her rights were no greater than those of an unsecured creditor… and were not such as to come within the protection offered by section 132(3).”

The reclaimer also argued that her right under the missives created a “legitimate expectation” of obtaining title to the property, which constituted a “possession” for the purposes of A1P1, and that allowing the property to be sold and then applying the proceeds to the confiscation order amounted to an “unwarranted interference” with her possessory rights. 

“However,” Lady Dorrian added, “the factual situation is destructive of any claim which the reclaimer might advance. The reclaimer has never enjoyed a right of possession in the property, title to which remains with her brother. During many years when it was within her power to do so she took no steps to secure title to the property. 

“The Lord Ordinary was not persuaded that it had ever been the reclaimer’s intention to obtain title to the property, and moreover, that even if her intervention were to be successful, the title would thereafter remain with her brothers.

“The Lord Ordinary also rejected the reclaimer’s assertions that she had serviced the mortgages personally, from her own funds. On the facts found, the reclaimer’s claim under A1P1 could not succeed.”