Investigating complex crime whilst restraining assets: ‘reasonable time’ v ‘practical realities’

Under section 42(7) of the Proceeds of Crime Act 2002, the court must discharge a restraint order (‘RO’) if, ‘within a reasonable time proceedings for the offence are not started’.

In R v S, the investigation started in May 2016 and by August 2018 an RO was imposed against all the suspect’s assets (although a ‘living expenses’ proviso was included). At that time, a charging decision was ‘expected towards the end of 2018’.  That timescale was not met and, in February 2019, in the financial investigator’s updating witness statement, it was suggested that a charging decision was ‘likely’ by the end of May 2019.  In June 2019, the suspect applied to discharge the RO under section 42(7) and, in July, the application succeeded.  By that time, the investigation was more than three years old and the RO had been in place for eleven months.

The judge at first instance determined that, despite the complexity of the investigation, and the ‘front-loading’ of the investigation with consideration of disclosure issues – to prevent potential delays after any charge – the passage of eleven months after an indication that a charging decision was imminent was unreasonable.

The Court of Appeal found that the judge’s evaluation of the prevailing circumstances was flawed and that her reasoning could not be upheld.

It should be noted that very significant sums were alleged to have been laundered.  Between 2013 and 2016, one suspected entity received c.£250 million into its bank accounts and another received c.£30 million in cash in a twelve-month period.  An additional important feature was the fact that the respondent was made bankrupt, on a creditor’s petition, the day after the RO was discharged.  There were competing interests in relation to the suspect’s assets and an RO has priority over an order in bankruptcy – the discharge of the order had been stayed pending the appeal.

In allowing the appeal, their Lordships held that:

1. no gloss was to be added to the words of s.42(7) – there was no requirement of ‘exceptionality’;
2. however, the more complex the case, the greater the need for time in which to prepare and the greater the likelihood of delay in preparation;
3. the courts needed to have regard to the ‘practical realities’ of litigation and the fact that there was no general obligation on a prosecutor of the kind applicable to custody time limits;
4. the following, non-exhaustive, circumstances are likely to be relevant to the court’s consideration on any application to discharge under section 42(7):

• the length of time that has elapsed since the restraint order had been made;
• the reasons and explanation advanced for such lapse of time;
• the length and depth of the investigation before the restraint order was made;
• the nature and extent of the restraint order;
• the nature and complexity of the investigation and the potential proceedings; and
• the degree of assistance given to, or obstruction of, the investigation by the suspect/s.

 On 17 September 2019, at Southwark Crown Court, Gavin successfully applied for the discharge of a restraint order in relation to the assets of his client, a UK film producer, under section 42(7).  In Gavin’s case, the investigation continues but the discharge of the order has not been appealed.

Gavin Irwin