Ashford & Ors v Southampton City Council

A restraint order under section 40(2) of the Proceeds of Crime Act 2002 requires evidence enabling the judge independently to find reasonable cause to believe that the alleged offender benefited from criminal conduct. A bare and unsupported assertion by investigators is insufficient. The unparticularised mixing of funds between personal and corporate accounts does not, without more, establish reasonable cause to believe that money laundering occurred.

The extent of a justified restraint order must realistically reflect the confiscation order that may follow. The possibility of a criminal lifestyle does not justify an unlimited order where the available evidence indicates a materially lower maximum benefit figure.

The Council investigated Joseph Ashford and companies associated with his plumbing business following numerous consumer complaints alleging dishonest trading. Ex parte restraint orders were made under the Proceeds of Crime Act 2002 against Mr Ashford and three companies.

At the Crown Court at Dorchester, Judge Jarvis refused to discharge the orders against two holding companies and refused to cap the orders against Mr Ashford and 1st Active Drainage Ltd. The applicants sought leave to appeal. The central issues were whether there was reasonable cause to believe that the holding companies had benefited from criminal conduct, and whether the remaining restraint orders should be limited in amount.

1. Appeals allowed. The court granted leave to appeal. It discharged the restraint orders against 1st Active Ltd and 1st Active Car Sales Ltd. It varied the orders against Mr Ashford and 1st Active Drainage Ltd by imposing a £720,000 cap.

2. The condition in section 40(2) of the Proceeds of Crime Act 2002 required evidence from which the judge could independently find reasonable cause to believe that each holding company had benefited from criminal conduct. Applying R v Windsor and others [2011] EWCA Crim 143, uncertainty at an early investigative stage did not itself justify restraint, and an investigator's unsupported conclusion could not substitute for evidential material. The evidence of unparticularised transfers and mixing of funds did not establish reasonable cause to believe that the two companies were laundering money, particularly given the substantial legitimate business activity. Their orders were therefore discharged, without preventing a further application on proper evidence.

3. The court accepted that restraint remained justified against Mr Ashford and 1st Active Drainage Ltd. However, the possible application of the criminal-lifestyle assumptions under sections 6(4)(a) and 10 did not support an unlimited order. On the present evidence, including the value of the offences under investigation, the number of complaints and the apparent availability of legitimate explanations for income, a confiscation order exceeding £720,000 was not realistically possible.

4. Under Rule 73.7 of the Criminal Procedure Rules, the appeal was a review rather than a rehearing. The court therefore declined to receive fresh evidence, while observing that either party could return to the Crown Court if new evidence or circumstances justified it. It indicated that section 43(3)(b) could permit a transitional order allowing a fresh restraint application.

5. Although unnecessary to the outcome, the court observed that alleged dishonesty will generally itself indicate a risk of dissipation: see Jennings v CPS [2005] 4 All ER 391. It also stressed the need for scrupulous statutory compliance, full and fair ex parte evidence, and effective judicial scrutiny, endorsing the procedural guidance in Barnes v The Eastenders Group and another [2014] UKSC 26.

• Court of Appeal (Criminal Division). In [2014] EWCA Crim 1244, the court allowed the appeals, discharged the orders against two companies, and capped the orders against Mr Ashford and 1st Active Drainage Ltd.
• Crown Court at Dorchester. On 28 February 2014, Judge Jarvis dismissed applications to discharge or vary restraint orders made ex parte on 24 September 2013.