B, R. v

A restraint order requires a properly evidenced real risk that assets will be dissipated and unavailable to satisfy a future confiscation order. Suspicion of dishonesty may support that inference, but it does not remove the prosecution’s burden to establish the risk on the facts.

Where an alleged offender has known of the investigation, has had a clear opportunity to dissipate assets, and has not done so, the prosecution must explain why a real future risk nevertheless exists. Courts must scrutinise that issue carefully, including on an ex parte application, because restraint interferes with property rights protected by Article 1 of the First Protocol to the European Convention on Human Rights.

The appellant was the managing director and majority shareholder of an aircraft-parts company. A restraint order was made under section 41 of the Proceeds of Crime Act 2002 during an investigation into alleged concealment or disguise of criminal property. The allegation arose from his receipt and retention of a substantial cash payment connected with the sale of aircraft.

His Honour Judge Bursell refused to vary or discharge the order. The appellant appealed, accepting that there was reasonable cause to believe that he had benefited from criminal conduct but contending that the prosecution had not established a real risk of dissipation. The central issue was whether the evidence justified continued interference with his assets before charge.

1. Appeal allowed. Although the judge was entitled to find reasonable cause to believe that the appellant had benefited from criminal conduct, there was no proper basis for finding a real risk that he would dissipate assets. The restraint order, save for cash already protected by a magistrates’ court order, was discharged.

2. A restraint order interferes with property rights protected by Article 1 of the First Protocol to the European Convention on Human Rights. The prosecution must therefore establish a real, rather than fanciful, risk that assets which could satisfy a confiscation order will be dissipated. That requirement accords with section 69(2) of the Proceeds of Crime Act 2002, which directs that restraint powers be exercised to make realisable property available for a possible confiscation order.

3. Dishonesty alleged as the basis for suspected criminal benefit may also support an inference of dissipation. The court applied the guidance in Jennings v CPS [2005] EWCA Civ. 746: an allegation of dishonesty will usually give cause for concern, but where there has been a substantial period without dissipation, the prosecutor should explain why dissipation is feared.

4. Here, the appellant had known of the investigation for months and had not attempted to remove assets. He later disclosed a previously unknown company account with a substantial credit balance. He had also not used his position in the company to remove its assets after the company’s assets were excluded from the restraint order. The supposed lack of candour at interview was unsupported once the interview material was examined. The prosecution gave no adequate explanation for a future risk despite those opportunities.

5. Courts considering restraint orders, whether ex parte or on an application to vary or discharge, must carefully scrutinise both statutory benefit and dissipation. The procedural possibility of determining an application without a hearing does not reduce that duty. The appellant received his costs of the appeal and proceedings below, to be taxed if not agreed.

• Court of Appeal (Criminal Division): Allowed the appeal and discharged the remaining restraint order.
• Crown Court at Bristol: On 13 December 2007, His Honour Judge Bursell refused to vary or discharge the restraint order.
• Crown Court: On 20 November 2007, His Honour Judge Foley made the restraint order under section 41 of the Proceeds of Crime Act 2002.