Windsor & Ors v Crown Prosecution Service

Before charge, a restraint order under section 40(2) of the Proceeds of Crime Act 2002 requires evidence giving the judge reasonable cause to believe that the alleged offender has benefited from criminal conduct. Uncertainty is permissible at that stage, but it does not lower the statutory threshold. Suspicion and unsupported investigative assertions do not suffice.

When corporate assets are targeted, the court must identify assets that may properly be treated as the alleged offender’s and decide whether restraint or receivership is necessary. Labels such as piercing the corporate veil do not determine that inquiry. The court must also take account of legitimate business, innocent shareholders and the practical effect of the orders.

The appellants challenged restraint and receivership orders made without notice by HHJ Hawkins QC at the Central Criminal Court under Part 2 of the Proceeds of Crime Act 2002. The orders were made shortly before arrests and searches in an investigation into alleged alcohol-duty and VAT fraud.

Three alleged offenders appealed, as did companies in the Eastenders group and minority shareholders. The judge later refused to discharge or vary the orders. The principal issues were whether the material established reasonable cause to believe that the alleged offenders had benefited from criminal conduct, whether the companies’ assets were realisable property held by two alleged offenders, and whether the Court of Appeal could suspend its final order to permit a fresh Crown Court application.

1. The first and fourth grounds of appeal succeeded. The material before the judge on 6 December did not establish reasonable cause to believe that the three alleged offenders had benefited from the alleged criminal conduct. The statutory threshold in section 40(2) of the Proceeds of Crime Act 2002 remained applicable despite the pre-charge and ex parte context. Uncertainty may exist at that stage, but it cannot replace evidence from which the judge can reach the statutory conclusion.

2. The principal witness statement contained broad assertions, suspicion and hearsay without sufficient underlying material. It did not justify the inference that 925 consignments had been diverted. Suspicious financial transactions and a single potentially significant consignment could not cure that central evidential deficiency. The court explained the restraint-stage guidance in Jennings v CPS, [2005] EWCA Crim 619, as requiring focus on the statutory test, not an assumption that uncertainty favours restraint.

3. As to the Eastenders group, the court applied the practical approach described in In re D, [2006] EWHC 254 Admin. The issue was whether any corporate assets should be treated as assets of an alleged offender and, if so, whether an order of the scope sought was necessary. The judge had not identified such assets, separated alleged proceeds from legitimate trading, or addressed the interests of minority shareholders and creditors. The evidence indicated that about 95% of the companies’ business was legitimate. Their assets were not realisable property held by Windsor or Kulwant Hare, and the related receivership order was quashed immediately.

4. The court had power under section 43(3) and rule 73.7 to suspend the effect of quashing the first part of the orders. It did so to permit a prompt fresh Crown Court application on fuller evidence, subject to a time limit. Outstanding matters were to be addressed through an agreed order and, if necessary, written submissions.

• Court of Appeal (Criminal Division): Allowed the first and fourth grounds of appeal in [2011] EWCA Crim 143. It quashed the orders affecting the Eastenders group immediately and suspended the effect of its order on the first ground to permit a fresh Crown Court application.
• Central Criminal Court: HHJ Hawkins QC made restraint and receivership orders without notice on 6 December 2010 under Part 2 of the Proceeds of Crime Act 2002. On 23 December 2010 he refused to discharge or vary them, giving reasons on 4 January 2011.