News & Insights
Jonathan Lennon explores how the recent case of R v S provides more ammunition for pro-active defenders.
Criminal solicitors will be very familiar with the scenario where a client comes to see him or her pre-charge; the investigation is huge, a massive fraud, and a charging decision looks to be months, possibly years away. Nowadays the inevitable ‘released under investigation’ (‘RUI’) just means months of un-certainty and a feeling of powerlessness; not good news for the distressed client.
The client in that situation may very well have a Restraint Order imposed on him or her, obtained ex parte by the police/ NCA etc freezing up all of his or her assets. Our criminal solicitor in that situation can expect lots of correspondence over many months dealing with requests for variations to the Order by consent to release monies to pay for expenses as the investigation trundles along, but not much more. But in fact the Restraint Order, as troublesome as it may be, can also be the greatest defence pressure point. It is where the solicitor might just be able to give the client the beginnings of some good news; to force the pace of the investigation and lay down disclosure markers for later on.
The usual ground for securing a Restraint Order is under s40(2) of the Proceeds of Crime Act 2002 (POCA) – i.e. that a ‘criminal investigation has been started’ and that there are ‘reasonable grounds to suspect that the alleged offender has benefitted from his criminal conduct.’ In fact that has only been the test since 1st June 2015 when the Serious Crime Act 2015 amended POCA to change the test from belief to the lower suspicion test. But there was a quid pro quo – the new test came with new discipline. It has always been the case that anyone affected by a Restraint Order may apply for its discharge – one of the grounds for doing so is under s42(7)(a); the Court must discharge the order if proceedings have not been started within ‘a reasonable time.’ But now, by virtue of s41(7A) and (7B) (inserted by the 2015 Act) the Crown Court making the Order must now also include a ‘reporting requirement’ for the applicant to report on the progress of the investigation after the Order is made. There is a power for the Court not to make that order under s41(7C) –but the fact that the Judge must then give reasons for that ruling is an obvious steer against that happening. These update reports can be used as a foil against the tyranny of the RUI regime and, as will be seen, may act as a check on later disclosure issues. A recent case is a very good example of this.
On 17th October 2019 the Court of Appeal handed down judgment in a case called R v S  EWCA Crim 1728. In that case the West Yorkshire police had commenced their criminal investigation in May 2016 into suspected money laundering. A Restraint Order was obtained from an Old Bailey Judge in August 2018. This was an ‘all assets’ order against S, as well as certain companies. The case concerned an investigation into a precious metals business, vast sums of cash were apparently delivered to the office premises between 2015 – September 2016 (over £28m), which was then collected and taken to another firm based in West Yorkshire. Monies were paid into business accounts but then transferred to personal accounts, there was the usual lack of income tax declarations etc. S was interviewed under caution on a number of occasions and the suggestion was that the cash did not seem to be generated from any obvious commercial activity. Importantly for these purposes there was no suggestion that S was obstructive. He was RUI’d.
The application for the Restraint Order relied on a witness statement from the Financial Investigator (FI) which, in S’s case, outlined a lavish lifestyle including details of assets such as valuable properties in London. The Judge was told that a charging decision was “expected towards the end of 2018.” The Judge made the Order with a 6 monthly reporting condition.
The FI had to confess, in his first progress report in February 2019, that although the matter had been referred to the CPS the lawyers there were currently reviewing the case and the investigation continued. He outlined the work done since the Order was made, including further arrests, hours spent reviewing CCTV, the progress on the examination of electronic devices etc – a progress report really needs to set out the detail and, if done properly, will read something like an application to extend custody time limits. The FI then gave a new date – the CPS had indicated that they would have concluded their considerations by the end of May 2019.
In the meantime S was suffering some hardship and was made bankrupt in June 2019. His solicitors applied for a discharge of the Restraint Order. The police provided evidence about the delay in getting the file to the CPS. A CPS chronology was provided which emphasised the “complexity and size of the case” and detailed the instruction of leading counsel, conference dates, some details on the review of disclosure schedules and even some reference to counsel’s advice to show that further evidence was required. The evidence did not explain why the original target date for charging had been missed – and for the next date in a second progress report (in June 2019) was also missed. The prosecution relied upon the case of R v Al Zayat  EWHC 315 Crim, a case where a discharge application had been refused. However, the Old Bailey Judge distinguished that case on the basis that that case involved an obstructive suspect and investigations in eight different jurisdictions (in any event the issue in that case was principally about jurisdiction rather than delay). The Judge considered that what was reasonable depended on the circumstances of the individual case and expressly drew an analogy with CTL extension applications and the need there to act expeditiously. But she went further and said that where there is a draconian order in place, such as a Restraint Order, then there is a requirement on the Crown; “to act as rapidly as possible.” She discharged the Order – the Crown’s delay was not reasonable. However, she stayed the execution of that discharge until the Crown had a chance to appeal.
Lord Justice Davis gave the judgment of the Appeal Court. The Court was critical all the way through of the Crown’s delay but seized upon the Old Bailey’s Judge use of the phrase “to act as rapidly as possible” – this the Court said was not the statutory test and the Judge had thus went further that the statute. The discharge was quashed and the Restraint Order re-instated. On the facts the Order would have been quashed but the Appeal Court seized upon an apparent error of law by the Judge below.
A Pyrrhic Victory?
But in winning the appeal the Crown may have made a rod for their own back in future cases. The prosecution’s argument was to remind the Court of the duty of investigators to get disclosure right. It was argued that the renewed emphasis on getting disclosure right meant a ‘front-loading’ of the case – the work had to eb at the investigation stage and it took time. The Crown relied on the Code for Crown Prosecutors (October 2018) which makes clear the requirement to deal rigorously with disclosure. In particular the Crown relied upon the CPS Disclosure Manual (revised in December 2018) and the need for a Disclosure Management Document (DMD) which should be “started by allocated prosecutors at the very outset of the case” and where the disclosure issues are addressed pre-charge. The prosecution further relied on the recent (seemingly un-published) internal guidance to the Specialist Fraud Division of the CPS which states:
“.. a positive charging advice should only be issued once the prosecutor has satisfied themselves that they will be able to comply with their post-charge CPIA duties and the CPR.”
Those who defend regularly will see the inconsistency there. How many times have we come across complex fraud/laundering cases where the DMD is a very basic document drafted after charge, or even not at all, or where disclosure problems have come up that then take time for the prosecution to sort out, e.g. to properly complete MG6Cs, to secure expert unused material schedules after defence prompting, or ensuring that the Attorney General’s Guidelines on Disclosure are fully complied with in terms of analysis of seized digital material? These issues regularly dog fraud and money laundering trials.
The reporting requirement is there for a reason. Suspects (and affected third parties) can use it to their potential advantage, and not just for the immediate restrictions imposed by the Order. Once charged then there should, in theory, be no disclosure issues (according to the CPS’s own guidance). If there is then, arguably, the updating reports have either been misleading or incomplete or have missed their mark somehow – either disclosure becomes an issue or the Order, or both! In other words therein lies ammunition for submissions, even if the Restraint Order has not been discharged.
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