Revenue & Customs Prosecutions Office v Stodgell

Under sections 77 and 82 of the Criminal Justice Act 1988, the court retains a discretion to permit restrained funds to meet third-party claims or legal costs, even after a confiscation order has crystallised. The statutory purpose of preserving funds for the confiscation order is a powerful consideration, but it does not eliminate the discretion. Exceptional circumstances may justify releasing funds, particularly where refusal would prevent related family proceedings from being determined fairly and promptly. The discretion must be exercised by balancing the legislative steer against the practical consequences, the history of funding, the interests of children, and the availability or timing of public funding. Costs paid to a spouse under an order for maintenance pending suit may subsequently be brought into account in the ancillary relief proceedings.

The claimant, the Revenue and Customs Prosecutions Office, opposed the defendant husband’s application for restrained funds to meet legal costs in proceedings concerning a disputed claim by a former client and connected matrimonial and children proceedings. The husband had been convicted of tax offences, a confiscation order had crystallised, and a receiver controlled the restrained assets.

The wife’s maintenance pending suit and legal-cost position was also reconsidered because payments from restrained funds had affected her eligibility for legal aid. The court considered the interaction between confiscation legislation, legal aid, matrimonial relief and the welfare of the parties’ child. The central issue was whether, after crystallisation of the confiscation order, the court retained a discretion to release restrained funds and, if so, how that discretion should be exercised.

1. Husband’s costs. The court preferred the approach of Davis J in Re X (Restraint Order) [2004] EWHC 861 (Admin). Section 77 of the Criminal Justice Act 1988 conferred a discretion to make provision for living and legal expenses. Sections 82(2), (4) and (6) supplied a powerful legislative steer towards preserving realisable property to satisfy the confiscation order, but did not remove the discretion or make its exercise for a third-party creditor impermissible in every case.
2. The relevant circumstances were exceptional. The husband’s lack of urgency counted against him, and public funding was the preferable ordinary route. However, the Revenue had previously accepted funding, the Legal Services Commission could not decide the application in time, and refusing funding would probably have adjourned the client claim. That would have delayed the ancillary relief and Children Act proceedings, including decisions concerning the child’s residence and welfare. The court therefore directed that reasonable costs of the client claim, capped at £15,000 plus VAT, be paid from the restrained funds.
3. Further funding for the husband’s ancillary relief and Children Act costs was not indicated. In the circumstances described, those costs would prima facie fall within legal aid rather than being released from restrained funds.
4. Wife’s position. The ordinary public-policy consideration that tainted assets should not be distributed, identified in CPS v Richards & Richards [2006] EWCA Civ 849, was important but not conclusive. The court could include a costs element in maintenance pending suit to secure a fair hearing, applying the approach in Moses-Taiga [2005] EWCA Civ 1013. The wife had an arguable case that not all assets would necessarily be treated as tainted, and the costs could ultimately be brought into account against her matrimonial award.
5. The court restored maintenance pending suit at £1,213 per month, together with rent and utilities, and included £44,000 plus VAT for costs and shortfall. The order was to be drafted to regulate the release and subsequent accounting of the funds.

The judgment records that the matter returned to the Administrative Court after an earlier hearing before Mr Justice Charles. No separate lower-court citation is stated. The court determined the outstanding funding and maintenance issues and made directions for payment from restrained funds.