RESTRAINT ORDERS-IMPOSITION, VARIATION AND REMOVAL

General Principle

A Restraint Order freezes property that may be liable to confiscation following a trial and the making of a Confiscation Order. Not only can it be made against a defendant or person under investigation, it can be made against any other person holding realisable property. The intention is to strike a balance between keeping a defendant’s assets available to satisfy any potential Confiscation Order that may be made in the event of conviction and also meeting the defendant’s reasonable requirements in the meantime.

This is a delicate balancing act particularly when a Restraint Order can be imposed against a person who has not been charged and is simply under investigation.

A Management Receiver may be appointed on the application of a Prosecutor to manage assets pending the making of a Confiscation Order if the defendant’s assets are such that require active management and the defendant is either unable to manage assets or the Court is unable to trust the defendant to manage the assets properly.

Conditions to be satisfied before a Restraint Order can be met

There are five conditions that must be satisfied under Section 40 of POCA before a Restraint Order can be granted under Section 41 of POCA.

1. Criminal Investigation – if a criminal investigation has commenced with regard to an offence and there is reasonable course to believe that the alleged offender as benefited from his criminal conduct.

2. Proceedings – if there are proceedings for an offence that are not yet concluded and there is reasonable course to believe that a benefit has benefited from his criminal conduct.

3. Third, Fourth and Fifth conditions – these conditions relate to defendants already convicted and is not proposed to address them within the contents of this article.

The extent of a Restraint Order

The amount of realisable property likely to be restrained will depend upon the amount in which the Confiscation Order is likely to be made.

A defendant may be the subject of ‘general restraint’ if the prosecutor is likely to ask the Court to decide whether he has a criminal life style and has benefited from general criminal conduct.

If a criminal life style is not alleged and the Court is to be asked to consider whether the defendant has benefited from particular criminal conduct the defendant may be restrained from dealing with specific assets which together total the amount of benefit from particular conduct.

There is therefore a distinction between ‘general restraint’ and ‘specific restraint’.

In circumstances where benefit from particular criminal conduct exceeds the value of all assets then a defendant will be restrained from dealing with all assets.

Individuals holding assets jointly with the defendant may be specifically restrained from dealing with jointly held assets. Similarly the recipient of a tainted gift may be restrained from dealing with any free property they hold up to the value of the gift.

Management Receivers

Under Section 48 of POCA the Court has discretion to appoint a Management Receiver in respect of any realisable property to which a POCA Restraint Order applies. Being made the subject of a Restraint Order is extremely restrictive; to have a Management Receiver appointed is extremely expensive. The Management Receivers costs are paid from the assets that he is managing, even in circumstances where the defendant is ultimately acquitted. The case of Capewell [2005] 1 All ER900 in which the defendant was represented by Olliers Solicitors, led to the Capewell Guidelines which relate directly to the effective control and remuneration of Receivers.

Following the making of a Restraint Order it is served upon a defendant. It will contain a prohibition preventing the disposal of or dealing with assets and it is likely to identify specific assets. The Order will require the provision of information by a defendant i.e. the serving of a witness statement certified by a statement of truth on the prosecutor within a specified number of days. Such statement will require the fullest details of the defendant’s income and assets. The defendant will not be prohibited from spending ordinary living expenses usually £250 per week up to the date of any Confiscation Order.

The Order will also advise the defendant that they may apply to the Court at any time to vary or discharge the Order provided notice is given to the prosecutor and the application is accompanied by a witness statement in support.

Discharge or Variation of Restraint Order

Under Section 42 of POCA an application can be made to the Crown Court to discharge or vary the Restraint Order. The application must be in writing and supported by a witness statement. It must also be served upon the Crown with two days notice as well as being lodged with the Court.

Varying or having a Restraint Order discharged is not straightforward. A key issue is the justification for the Restraint Order and whether there is a real risk of dissipation of assets. However, Orders are varied and indeed discharged.

The key feature for anyone who is served with a Restraint Order is legal representation. Guidance will be required the moment the Order is served, firstly to assist with the provision of information but thereafter to assist with the issue of discharge and variation.

Matthew Claughton is the Managing Partner of Fraud Specialist Olliers Solicitors, Castlefield Chambers, 11 Duke Street, Manchester, M3 4NF, Tel: 0161 834 1515.