Revenue & Customs Prosecution Office, R (on the application of) v Lloyds TSB Plc

A freezing order prohibiting a defendant from dealing with assets extends to changing the identifying characteristics or location of a specified bank account, even where the underlying debt owed by the bank remains unchanged. A bank which deliberately rearranges frozen funds without the consent of the court or the party obtaining the order risks breaching the order and committing contempt. The absence of actual loss, and the fact that the arrangement was intended to protect the funds, do not prevent contempt where the act might tend to interfere with the course of justice. The court retains discretion over costs and may make no order where the application has served a useful explanatory purpose but no financial harm has occurred.

The Revenue and Customs Prosecution Office applied for punishment for contempt against Mr R and Lloyds TSB Plc. The application arose from a restraint order made by Mr Justice Sullivan which prohibited Mr R from disposing of, dealing with or diminishing the value of his assets and specifically identified a bank account.

After approximately £2 million was transferred to that account, the bank moved the funds into two interest-bearing accounts without notifying the prosecutor or the court. The funds were later disclosed, and a confiscation order was made. By the time the contempt application was heard, the prosecutor accepted that no penalty should be imposed. The issues were whether the order had been breached, whether either respondent was in contempt, and how the costs should be dealt with.

1. Breach of the restraint order. The prohibition on dealing with assets was intended to catch activity not otherwise expressly specified. A bank account was identified in the order so that the restrained asset would remain identifiable and readily available for enforcement. Moving the funds from the specified account to other accounts removed that identifying characteristic and therefore constituted dealing with the asset. The bank and Mr R were both in breach.
2. Contempt. Contempt required a deliberate act which amounted to, or might tend to, interfere with the course of justice. Lloyds deliberately arranged the new accounts and assumed responsibility for deciding how the order should be policed. Although it acted with the intention of protecting the funds and caused no actual loss, the transaction might have interfered with the administration of justice. It was therefore contempt of court.
3. Mr R knowingly agreed to the arrangement and knew the terms of the order. His motives were proper and he lacked legal advice, but he nevertheless committed a breach and was technically in contempt.
4. Relief and costs. The court declined to impose a penalty. No order for costs was made against either respondent because the prosecutor had suffered no loss, the application had produced a useful explanation, and the circumstances were unusual. Lloyds was awarded the costs of its attendance on the final hearing because it had made a timely offer to settle on a no-order-as-to-costs basis and the matter did not need to continue beyond that point.