Crown Prosecution Service v The Eastenders Group & Anor

A receiver appointed under Proceeds of Crime Act 2002 will ordinarily have a lien for proper remuneration and expenses over property validly placed in the receivership. That ordinary rule does not make it lawful to take an innocent company’s assets where the statutory conditions for restraining the assets and appointing the receiver were not met.

Article 1 of Protocol 1 requires a lawful basis for that deprivation. Section 3 of the Human Rights Act 1998 cannot be used to create a power requiring the prosecutor to pay the receiver where that would contradict a fundamental feature of the statutory scheme.

The CPS obtained restraint and management receivership orders over assets of the Eastenders group under the Proceeds of Crime Act 2002. The receiver took control of assets and later asserted a lien for remuneration and expenses.

In earlier appeal proceedings, this court quashed the restraint and receivership orders after holding that the companies’ assets were not realisable property held by the alleged offenders: [2011] EWCA Crim 143. Underhill J declined to permit payment from the companies’ assets, but ordered the CPS to pay the receiver’s remuneration, expenses and related costs.

The CPS sought permission to appeal. The central questions were whether Article 1 of Protocol 1 barred recourse to the companies’ assets and whether the court could require the CPS to pay the receiver.

1. Permission was granted and the CPS appeal was allowed in part. The court dismissed the appeal against Underhill J’s refusal to allow the receiver to recover remuneration and expenses from the companies’ assets. It allowed the appeal against the orders requiring the CPS to make those payments.

2. The ordinary rule is that a court-appointed receiver is entitled to remuneration and proper expenses from assets under the court’s control. That rule applies to statutory receivers under the Proceeds of Crime Act 2002, and a receiver’s lien may survive discharge of a receivership. The majority accepted that analysis, subject to the terms of the appointment.

3. However, the ordinary rule could not lawfully justify depriving the companies of their assets in this case. The statutory preconditions for a restraint order and a receivership order had not been met: there was no reasonable cause to believe that the alleged offenders had benefited from criminal conduct, and no sufficient basis for treating the companies’ property as their realisable property. The receiver therefore could not be paid from the companies’ assets consistently with Article 1 of Protocol 1 to the Convention.

4. The court agreed with Lord Justice Laws that POCA contained no express power to order the CPS to pay the receiver. Reading such a power into the legislation under section 3 of the Human Rights Act 1998 would contradict the statutory scheme’s fundamental feature that a receiver’s remuneration is recovered from the receivership property, subject to any contractual arrangement.

5. Lord Justice Laws dissented on the Article 1 Protocol 1 issue. He considered that the Crown Court order remained effective until set aside and that the receiver’s lien for charges incurred while it was effective could be enforced against the specified assets. Mitting and Edwards-Stuart JJ held instead that the absence of a lawful statutory basis for the original appointment prevented that deprivation of the companies’ property.

• Court of Appeal (Criminal Division): Permission to appeal was granted. The CPS appeal was dismissed as to the refusal to permit recovery from the companies’ assets, but allowed as to the orders requiring the CPS to pay the receiver.
• Central Criminal Court: Underhill J declined to order payment of the receiver from the companies’ assets, but made orders requiring the CPS to pay the receiver’s remuneration, expenses and litigation costs.
• Earlier Court of Appeal proceedings: The restraint and management receivership orders were quashed after the companies’ assets were held not to be realisable property: [2011] EWCA Crim 143.