Luckhurst, R. v

Under Proceeds of Crime Act 2002, reasonable living expenses permitted by a restraint order are subject to an objective and fact-sensitive assessment. A defendant has no entitlement simply to maintain a previous lifestyle. Relevant factors include preservation of restrained assets, affordability, the likely duration of restraint, and whether the lifestyle appears to derive from criminal activity.

Reasonable living expenditure is not barred merely because it is incurred on unsecured credit. However, a restraint order should not ordinarily be varied to repay unsecured third-party loans for unidentified earlier expenditure. Legal costs of independent civil proceedings are not excluded merely because those proceedings overlap factually with the alleged offence. They remain subject to discretion and the statutory objective of preserving assets for confiscation.

The appellant was charged with fraud and theft arising from an alleged investment scheme. A restraint order made against all his assets under the Proceeds of Crime Act 2002 allowed specified living expenses.

HHJ Carr refused the appellant's application to vary the order. The application sought payments for a second car, repayment of Spanish-property kitchen costs, repayment of alleged family and friends' loans, and £3,000 for advice about settlement of related civil proceedings. The judge held that the first three categories involved repayment of unsecured creditors and that the legal costs were barred by section 41(4).

The Court of Appeal considered the proper meaning of reasonable living expenses, the effect of unsecured credit and other available assets, and whether civil legal expenses with factual overlap with the criminal case were expenses related to the offence.

1. Appeal dismissed save for a limited variation. The restraint order was varied to permit £3,000 for advice on settlement of the civil proceedings. The remaining requested variations were refused.

2. Reasonableness under section 41(3)(a) requires an objective, fact-sensitive assessment. Previous living standards are relevant but not determinative. The court identified non-exhaustive factors: preservation or enhancement of restrained assets; the relationship between assets and the likely confiscation order; prior lifestyle; affordability; the restraint's duration; any prima facie criminal source of the lifestyle; and the absolute amount sought. The civil freezing-order approach of preserving a defendant's accustomed lifestyle does not govern restraint orders, because confiscation has statutory priority and expenditure can reduce the available amount.

3. Reasonable living expenses may be incurred on unsecured credit. Director of the Serious Fraud Office v Lexi Holdings Plc [2009] QB 376 does not prohibit that. It prevents a restraint order being varied to pay unsecured creditors generally. It therefore applied to alleged loans from family and friends, which were sought as repayments of unidentified past expenditure rather than as proposed, assessable living expenditure.

4. The other-available-assets principle applies to restraint orders. A defendant cannot draw on restrained assets where funds are in practice available from a spouse or others, even without a legal entitlement to those funds. On the evidence, the appellant's wife had repeatedly met the motoring, legal and household expenditure and had resources available to do so.

5. Section 41(4) does not automatically bar reasonable legal expenditure in independent civil proceedings merely because they involve some of the same facts as the alleged offence. The court retains a discretion, exercised consistently with the preservation objective in section 69(2). The proposed advice costs were reasonable, conceded to be permissible if section 41(4) did not apply, and were allowed.

6. Anonymity was refused. A wish to withhold financial information from co-defendants did not outweigh open justice.

• Court of Appeal (Criminal Division): Allowed a limited variation of the restraint order to permit £3,000 legal expenditure, but otherwise dismissed the appeal.
• Crown Court at Birmingham: HHJ Carr refused the application to vary the restraint order on 30 September 2019.
• Crown Court at Leeds: HHJ Clark made the restraint order on 15 December 2017.