S v Customs and Excise

Has the court jurisdiction to permit the release of assets that have been frozen by a restraint order made under the Proceeds of Crime Act 2002 (“the 2002 Act”), to be used for legal advice and representation in relation to the restraint order? To some it is surprising that such a question arises at all, but Mr Perry, who has appeared for the Customs and Excise, has advanced a strong argument that the court has no such jurisdiction. The issue is an important one and its outcome depends on the true construction of s.41(4) of the 2002 Act.

Mr S seeks leave to appeal against a decision of Judge Elwen on 5 December 2003 when he refused to vary a restraint order. We granted leave to appeal and proceeded to hear the appeal because of the importance of the point in issue.

The restraint order was originally made on 8 May 2003. It was made ex parte on the basis of evidence contained in a statement of Piers Phillips, an investigator employed by H.M. Customs and Excise, dated 2 May 2003.

The order is in a form commonly to be found in Mareva injunctions in civil proceedings. It is directed to Mr S, his wife and a company called Maple Link France SARL. It includes all assets in this country and worldwide, and directs that the assets of the French company are to be treated as those of Mr S. It requires Mr S to provide the Customs and Excise, within 72 hours, with written details of all his assets, and to return any moveable assets in which he has an interest that are outside the jurisdiction to England and Wales within 21 days. There are exceptions to the order that entitle Mr S and Mrs S each to expend £350 per week towards their ordinary living expenses, and for each of Mr S, Mrs S and the French Company to spend £750 on legal advice and representation in connection with the order, provided in each case they tell the Customs and Excise where the money is coming from. There is provision to agree in writing an increase of the amounts for living expenses.

It was submitted before us that the court has no power to make provision for any expenditure on legal advice and representation notwithstanding the judge was invited to make the order in the form of the draft submitted to him. This was said to have been an unfortunate error on the part of the person who drafted the order on behalf of the Customs and Excise.

The order contains the usual power to apply to vary or discharge on 2 clear days notice. The judge is said in Schedule A to have read the witness statement of Piers Phillips of an unspecified date in April 2003. In fact the only statement of Mr Phillips is dated 2 May 2003. It is important that those making ex parte orders of this kind complete accurate details of the evidence on which the order is made, lest the impression is given that such orders are made without the careful consideration of the judge making the order.

On 4 April 2003 the Customs and Excise started a money laundering investigation into the suspected transfer of criminal property. The Customs believed that a ‘missing trader’ fraud was being operated through a United Kingdom VAT registered company acquiring goods from other European Union member states without payment of VAT. The way the fraud works is that the goods are then sold on within the United Kingdom with VAT charged at 17½ %. The acquiring trader fails to account for the tax. In some cases the acquiring trader becomes impossible to trace (a missing trader); in others he claims the goods have been obtained, VAT paid, within the United Kingdom from a missing trader. If the trader did not go missing he would be selling the goods at a loss if he declared the VAT and this would not make commercial sense. The company obtaining the goods from the missing trader is known as the first line buffer. The goods then pass along a chain of other buffers before being exported out of the United Kingdom to the Continent, often back to the original supplier. The ring or carousel operates so the Customs are defrauded of the VAT owed by the missing trader.

The particular fraud under investigation concerns mobile phones. The Customs and Excise believed the French company was supplying missing traders in the United Kingdom. There was a bank account at Fortis Bank in London in the name of Maple Link France SARL. The signatories were Mr S and his wife. On 1 April 2003 Mr S instructed the bank to transfer £1m from this account to his Lloyds TSB personal account. There had only been three transfers to his personal account, totalling £120,000 over the previous 11 months. Exercising its powers under s.335 of the 2002 Act, the Customs refused to consent to the £1m transfer. Mr S then tried to transfer £1,819,000 from Fortis Bank in London to a Maple Link France account with the same bank in Bordeaux.

One of the innovations of the 2002 Act is it enables applications for restraint orders to be made from the moment an investigating authority such as the Customs and Excise starts an investigation, whereas previously the trigger point had been the start of criminal process.

Part 2 of the 2002 Act deals with the making of confiscation orders in England and Wales. S.40 provides that the Crown Court can make a restraint order if any one of 5 conditions is satisfied. The relevant one for present purposes is that a criminal investigation has been started in England and Wales with regard to an offence, provided there is reasonable cause to believe that the alleged offender has benefited from his criminal conduct.

The issue in the present appeal is as to the true construction of s.41. S.41(3) provides:

“A restraint order may be made subject to exceptions, and an exception may in particular –

(a)

make provision for reasonable living expenses and reasonable legal expenses;

(b)

make provision for the purpose of enabling any person to carry on any trade, business, profession or occupation;

(c)

be made subject to conditions.”

S.41(3)(a) provides therefore for a general power to make an exception for, inter alia, reasonable legal expenses. The word ‘reasonable’ indicates control by the court over the amount of legal expenses or living expenses that are to be allowed. If one stopped at s.41(3) and looked no further there would be no restriction on what legal expenses the court might, in its discretion, permit. The only qualification would be as to their reasonableness. That is the position with living expenses. One might have thought that Parliament could have left it to the courts to decide what in any case were reasonable legal expenses having regard to all the circumstances, including the fact of the restraint order, its scope and objective. However, it is common ground that under the previous legislation there had been a recurrent problem through repeated applications being made to vary restraint orders, with the result that the restrained funds were being eaten up in legal fees and the amount available to meet any eventual confiscation order diminished. Accordingly Parliament imposed the restriction in s.41(4) which provides:

“But an exception to a restraint order must not make provision for any legal expenses which –

(a)

relate to an offence which falls within subsection (5), and;

(b)

are incurred by the defendant or by a recipient of a tainted gift.

The subsection (5) offences are:

“(a)

the offence mentioned in s.40(2) or (3), if the first or second condition (as the case may be) is satisfied;

(b)

the offence (or any of the offences) concerned, if the third, fourth or fifth condition is satisfied.”

Thus the draftsman having, in a sense, given on the one hand in s.41(3) takes back with the other in s.41(4).

It is helpful for present purposes to envisage three different categories of legal expense’s (1) those relating to the offence under investigation, (2) those relating to some entirely separate matter, for example the purchase of a house already in progress or divorce proceedings, and (3) those relating to the restraint order. It is common ground between the parties that s.41(4) does not permit category (1) as an exception to the restraint order but it does permit category (2). The issue in this appeal is as to category (3). The Customs and Excise submit there is no distinction between (1) and (3); they both ‘relate to’ the offence under investigation. Mr Ramsden, who appeared on behalf of Mr S, submits that the restraint order is, as it were, free standing from the offence under investigation that led to it and that the words ‘relate to’ are not to be interpreted sufficiently widely to make the necessary link in s.41(4)(a).

Mr S’s argument seeks to classify the second and third categories together. Neither, he submits, ‘relates to’ the offence under investigation. As Holland J pointed out in argument, there is force in this submission. Why should Parliament, rightly anxious to preserve restrained funds, draw a distinction between allowing the order to be varied to pay for reasonable legal expenses arising out of the break up of Mr S’s marriage and yet giving no scope to pay for legal advice and representation to vary or perhaps clarify the restraint order? We do not find it easy to see a convincing answer to this question.

Judge Elwen accepted the Customs and Excise argument. He said at paragraph 17 of his judgment:

“The plain meaning of the words ‘relate to’, in the context in which they appear, is ‘connected with’ an offence the subject of an ongoing criminal investigation. But for that primary trigger, there would be no restraint order and, in my judgment, the intention of Parliament was that the court should have no power to make an exception to a restraint order to permit a defendant to draw from restrained funds monies in order to pay any legal expenses incurred or intended to be incurred in relation to the restraint order itself.”

It was submitted by Mr Ramsden that there is a difference in meaning between ‘relate to’ and ‘connected with’, and, that ‘connected with’ connotes a somewhat wider concept. We are unable to see such a distinction. It is to be noted that paragraph 11 of the restraint order refers to legal advice and representation ‘in connection with this order’.

The cornerstone of Mr Ramsden’s case is that a clear distinction is to be drawn between the underlying offence on the one hand and the restraint order on the other.

Some reliance was placed on the fact that the court made specific provision for the expenditure of £750 on legal advice and representation when it made the ex parte restraint order. In our judgment this is irrelevant to the issue of jurisdiction. If Mr Perry is correct, the court had no jurisdiction to make such an order; the order was made because of an error on the part of those applying for it and the judge’s attention was, in all probability, not drawn to the difficulty. There was also an issue about whether or not the £750 had in fact been released to Mr S’s lawyers. If it has not it will be, and again this seems to us to be a side issue that is irrelevant to the question of construction.

If Mr Ramsden’s construction is correct the £750 provision in the original order was lawfully made. It reflected a reasonable sum to obtain the legal services that both the court (and presumably the Customs and Excise) wished Mr S to have to take advice on the order and, if necessary, be represented at an inter partes hearing. Had more funds been sought it would have been for the court to rule on the reasonableness of the nature and amount of the proposed expenditure. It is difficult to see any vice or public detriment in this.

The main thrust of the argument of Mr Ramsden is this. First, the natural construction of the words of s.41 allows the expenditure of costs on legal advice and representation. Second, it is inconceivable that Parliament could have contemplated the possibility that someone whose assets had been restrained might not be able to obtain legal representation, particularly in the light of the increased ambit of restraint orders now that they can be made from the start of a criminal investigation. This argument is dependent on whether public funding is available generally within the appropriate timescale, or whether there is in reality a gap that could leave some, like Mr S, without legal representation.

On the first aspect the starting point is s.41(3)(a), which expressly provides that an exception may be made for reasonable legal expenses. This is in unrestricted terms, but the restriction comes in s.41(4). S.41(4)(a) prohibits legal expenses that relate to an offence falling within subsection (5). When one looks at subsection (5) one sees that this includes the underlying offence that is being investigated provided, as in the present case, there is reasonable cause to believe the alleged offender has benefited from his criminal conduct. Mr Ramsden submits that it is perfectly understandable that Parliament should wish to prohibit the expenditure of restrained funds on matters relating to the underlying offence. But, he says, the restraint order is quite separate from the offence that gave rise to it. It does not ‘relate to the offence’ in the sense envisaged in the legislation. There is no sufficient link for the purpose of depriving the alleged offender of legal representation. He submits that the words ‘relate to an offence’ in s.41(4)(a) should be construed narrowly and not so as to include the restraint order. Had the draftsman intended to exclude legal expenses in connection with the restraint order he could very easily have done so by adding to s.41(4)(a) words to the effect ‘or relating to any restraint order made in respect thereof’.

We pause to point out that if Mr Ramsden is correct there are likely to be considerable difficulties in drawing a line between those expenses that relate to the offence and those that relate to the restraint order.

The second aspect of Mr Ramsden’s argument requires some consideration of what happens when an ex parte order of the present kind is made. Such an order is without question one of a draconian nature. The power to make such an order is, as we have mentioned, now triggered by the start of the criminal investigation and not, as previously, by the commencement of criminal proceedings, or at the very least the settled intention to commence them. It follows that there will be cases in which after a perhaps lengthy investigation no proceedings are brought and the suspected offender will have been the subject of a restraint order for a considerable period of time. Why should such a person not have been entitled to pay for the services of a lawyer to challenge the order or aspects of it?

There has, in the present case, been considerable passage of time. The restraint order was made in May 2003 and the investigation remains ongoing. Mr S has still not been charged with any offence. It is not clear to what extent the delay is due to the fact that Mr S had not until recently been interviewed, and whether this was Mr S’s fault or the fault of the Customs and Excise. Throughout the whole period he has not had public funding, although he eventually applied for it, and he has not been able to pay for legal advice or representation.

Any person faced out of the blue with a restraint order will ordinarily wish to take advice about its implications. The order has a penal notice attached to it. The present order indeed advises Mr S to consult a solicitor as soon as possible. The irony is that on the Customs and Excise argument he cannot pay him and nor in the result was he able to obtain public funding. The right to ask the court to vary or discharge the order is also drawn to the recipient’s attention, and it may well be necessary to make such an application urgently. No return date was included in the order, which continues until a successful application is made to vary or discharge it. The order contained, among others, obligations to provide the Customs and Excise with a written list of all his assets within three days, verified by a statement of truth to be served within three weeks, and also to repatriate within 3 weeks any moveable asset in respect of which he had an interest which was outside the jurisdiction. Bearing in mind he and this family had lived in France for some years this was an impracticable obligation, as was recognised by the Customs and Excise after lengthy correspondence with Mr S’s solicitors. They eventually agreed for this provision to be varied. The point was made during argument that the order bites not only on assets belonging to Mr S but also on any property in which he has an interest. Difficult questions may arise for a layman whether or not a person has an interest in an asset.

All this illustrates the importance of the recipient of an ex parte restraint order having ready access to legal advice. That is why for many years, judges have routinely included provision in Mareva injunctions for the defendant to spend up to a specified sum on legal advice and representation.

If Mr Ramsden’s argument is right the court does have power when making an ex parte restraint order to include within it provision for expenditure up to a specified sum on legal expenses and legal representation. Further, the court has power to increase that sum, if needs be, on an application to vary the order. Stringent supervision by the court, he submits, is the way to achieve the legislative purpose of preventing the restrained assets being swallowed up in legal fees.

It is common ground that public funding is now available for applications and advice with regard to restraint orders. The judge did not deal with the argument that this was how Parliament intended to deal with the issue of legal representation on restraint orders, no doubt because it was not put to him. He did not have the evidence of Claire Kitchen’s statement of 17 May 2004 before him and consequently made no findings of fact about the circumstances in which Mr S failed to obtain a public funding certificate. The Court is therefore left in the position where it is unable to conclude whether there is a group of people (and if so the extent of it) who will be unable to obtain public funding for legal advice and representation with regard to a restraint order when justice dictates that they should.

What happened in the present case appears to be this. Mr S tried, but failed, to obtain a public funding certificate. He did not make his application until 23 September 2003. This may have been due to the fact that he had put his solicitors in funds to the extent of £5,000 shortly before the restraint order was made. Public funding was refused on 16 October 2003 on the ground that the funding was required in relation to matters arising out of carrying on a business. The decision was, it appears, reviewed and Mr S sought to appeal but was told by letter of 24 October 2003 that he was financially ineligible because his assessed aggregate disposable income exceeded the limit of £2288 per month. This was on the basis that the amount he and his wife were permitted to draw per week under the order was £350 i.e. £700 for the two of them. This would amount to £2800 for a four week period.

It may be that the funds available to Mr and Mrs S should not have been aggregated. There is evidence that the solicitors, who up until then had acted for both Mr and Mrs S, were told in late September 2003 that the marriage had broken down. Thereafter they acted for Mr S alone. Whether the S’s continued to live in the same house is unclear. There is no evidence that Mr S persisted in his attempt to obtain public funding. In any event, the remedy for a wrongful refusal of a public funding certificate would be an application for judicial review.

In summary Mr Ramsden’s submissions come to this. On the true construction of s.41, s.41(4) does not prohibit legal expenses in relation to the restraint order. There will be others in similar shoes to Mr S who are refused public funding. As a matter of principle it is important that those who are the subject of restraint orders should have ready access to legal advice and representation, and the vice that was previously apparent can be remedied by the strict control of the courts.

In Mr Perry’s helpful submissions on behalf of the Customs and Excise he began by inviting us to look at the development of the statutory regime. Prior to the 2002 Act the Criminal Justice Act 1988 (‘the 1988 Act’) gave the High Court power to make a restraint order on the application of a prosecutor. The relevant provisions are in sections 76 to 79. The procedure was governed by CPR part 50, Schedule 1, RSC order 115 and Practice Direction 115. There were almost identical provisions in the Drug Trafficking Act 1994 (‘the 1994 Act’) – see Sections 25 to 29. Both s.82 of the 1988 Act and s.31 of the 1994 Act require the court to exercise its power to make a restraint order with a view to maintaining the value of realisable property so as to satisfy any subsequent confiscation order. The legislative intention was emphasised by Lord Donaldson MR in Re Peters [1988] QB 871, 874D and by Simon Brown LJ in Re P (Restraint order: Sale of Assets) [2000] 1WLR 473, 479G.

Under the 1988 and 1994 Acts a defendant was permitted to draw sums from funds subject to a restraint order to pay for legal representation. This was, however, subject to the legislative steer towards preserving the assets to satisfy a confiscation order. However, the reality was that unnecessary expenditure on legal fees was seriously diminishing the restrained assets (see the Performance and Innovation Unit’s report of June 2000 entitled Recovering the Proceeds of Crime). Parliament’s response was to introduce the 2002 Act, an extremely complex and comprehensive piece of legislation in 12 parts running to 462 sections and 12 schedules.

Amongst many changes, the 2002 Act introduced three that are of particular significance to the present appeal. First, the ability to make a restraint order is moved back in time to the commencement of a criminal investigation. Previously the defendant had to be charged or at least there had to be a settled intention that he would be charged. Second, there is a restriction as regards expenditure on legal expenses, and third, public funding becomes available.

This steer, he points out, is stronger than under the previous legislation. He also referred us to the words of Lord Woolf C.J in R v Sekhon [2003] 1 WLR 1655, 1658:

“One of the most successful weapons which can be used to discourage offences that are committed in order to enrich the offenders is to ensure that if the offenders are brought to justice any profit which they have made from their offending is confiscated. It is therefore not surprising that Parliament has repeatedly enacted legislation designed to enable the courts to confiscate the proceeds of crime.”

On the question of the natural meaning of ‘relate to an offence’ in s.41(4), Mr Perry submits that these words are sufficiently wide to cover any restraint order. Why else, he submits, would the restraint order have been made but for the fact that an investigation was underway in relation to an offence. The judge’s ruling was therefore correct for the reason expressed in paragraph 17 of his judgment. A restraint order ‘relates to the offence’ in just the same way as production orders, applications for bail, and confiscation orders.

A strong point in favour of the Customs and Excise construction, and one which in our judgment was never satisfactorily answered by Mr Ramsden is the inclusion within s.41(4)(b) of the recipient of a tainted gift. A restraint order is an order prohibiting a specified person from dealing with any realisable property held by him. Realisable property is defined by s.83 as (a) “any free property held by the defendant” or (b) “any free property held by the recipient of a tainted gift.” Property is free property if it is not subject to any of the orders specified in s.82, e.g forfeiture orders etc. The effect of the Act is that a restraint order may be made against a defendant, a person under investigation, and any other person holding realisable property. As can be seen, the 2002 Act brings within its catchment the recipients of tainted gifts.

In summary, what amounts to a tainted gift depends on whether or not the court is proceeding on the basis that the defendant has a criminal lifestyle (as defined in s.75). If the court has decided that the defendant has a criminal lifestyle, or if no decision on the matter has yet been made, a gift is ‘tainted’ if it was made by the defendant within the period of 6 years ending on the day when the proceedings for the offence were started. However, s.40(9) treats the day on which proceedings were started as the day on which the investigation started in cases where, as in this case, the trigger for a restraint order is subsection 40(2).

Mr Perry’s point is this. Not only defendants but also recipients of tainted gifts are excluded from the provision of legal expenses by s.41(4)(b). This makes clear that the legislation is not directed simply at excluding legal expenses in connection with the defendant’s criminal proceedings – the underlying offence – but at the restraint proceedings themselves, otherwise the provision in relation to recipients of tainted gifts would be unnecessary. He gives the following illustration in his skeleton argument. Mr X receives £100,000 from the defendant in the 6 year period prior to when proceedings are started. S.77 classifies this as a tainted gift. A restraint order is made which also restrains Mr X from dealing with the £100,000. The now impecunious Mr X wishes to have his £100,000 released from restraint and wishes to argue that the £100,000 is legitimate. S.41(4) is intended to prevent him from drawing on that money to fund his legal expenses to argue the point in the same way as it prevents the defendant from doing so.

Mr Ramsden sought to answer this point by arguing that the tainted gift issue only arises after conviction. That is not so. S.77(1) applies equally where a court has not made a decision concerning criminal lifestyle.

In our judgment, therefore, the inclusion of the recipients of the tainted gifts in s.41(4)(b) gives strong support to Mr Perry’s construction.

The second main limb to Mr Perry’s argument is that it is no coincidence that Parliament made public funding available for restraint orders when it passed the 2002 Act. The explanatory notes to s.41 of the 2002 Act say this:

“Subsection (4) prevents funds under restraint from being released to the defendant or the recipient of a tainted gift for legal expenses incurred in relation to the offences in respect of which the restraint order is made. However, public funding for legal expenses on the standard conditions, will be available to both instead.”

It is central to his argument that paragraph 2 of schedule 2 to the Access to Justice Act 1999 was amended by schedule 11 to the 2002 Act. The reason was that Parliament was concerned about the dissipation of restrained assets on legal expenses incurred in repeated applications to vary restraint orders. Thus it was that the 2002 Act imposed a complete prohibition on such expenditure but in exchange made sure that public funding was readily available. Thus the restrained assets would be preserved and a measure of control achieved over legal expenses. No one who is a defendant in restraint proceedings and who merits it will be deprived of the opportunity of legal representation. Under paragraph 36 of Schedule 11 of the 2002 Act, Schedule 2 of the Access to Justice Act 1999 is amended so that applications under s.42(3) to vary or discharge a restraint order and applications under s.41(7) are included among those proceedings for which advocacy may be funded.

Mr Perry’s submission is, as we have said, that the introduction of public funding to vary or discharge a restraint order is very important. There is, he submits, a special procedure for public funding to be considered in these cases; there is a central unit with special expertise through which all applications should be channelled.

In the present case the application for public funding was not made until several months after the original restraint order. There is some doubt about the validity of the circumstances in which it was refused and why the matter was not further pursued with the Legal Services Commission. The situation is also clouded by the fact that Mr S paid his solicitors £5,000 on account shortly before the restraint order was made. The question the court is unable to answer, and as to which it is in some doubt, is whether there may be some deserving cases where a person is restrained from using all his assets on the one hand while on the other he is for some reason unable to obtain a public funding certificate. As we have said, the question was not raised before the judge and there are no findings of fact about it. In any event the answer to this question does not in our view inform the question of construction.

Mr Perry referred us to s.252 of the 2002 Act, which is in Part 5 dealing with the civil recovery of the proceeds etc of unlawful conduct. S.252 is concerned with interim receiving orders and restrictions on dealing with property. Subsection (2) provides that exclusions may be made when an interim recovery order is made or there is an application to vary it. Subsection (3) provides expressly for reasonable living expenses and carrying on a trade, business, profession or occupation. But subsection (4) expressly provides that, “an exclusion may not be made for the purpose of enabling any person to meet any legal expenses in respect of proceedings under this Part”.

It might be said, as Holland J observed in argument to Mr Perry, that the absence of a parallel provision in s.41 was against him. But Mr Perry submits that s.252 is all of a piece with his construction of s.41(4). Here too there is scope for ex parte orders and applications to vary or discharge, and here too public funding is available to challenge interim review orders. One is of course looking at a different provision in a different part of the Act, but s.252(4) is an illustration of Parliament’s intention that permeates the Act. It shows consistency of approach and helps to inform the true construction of s.41(4). We see the force of this submission.

Looking at the Act as a whole we are satisfied that Parliament intended to make public funding available to question restraint orders and that this supports Mr Perry’s argument on construction. We therefore agree with the judge that on its true construction s.41 prohibits the release of restrained funds for an application to vary or take advice upon a restraint order. Mr S therefore fails on his first ground of appeal, that the judge’s finding on construction was wrong in law.

We do, however, make the following observations about the terms of the restraint order. We think these orders should state clearly on their face that public funding is available. It is plainly desirable that defendants to restraint orders should in the ordinary course of events have legal representation. It would also be helpful if such orders direct defendants to the central unit at which their public funding application will be processed. Time will often be of the essence; it is crucial that public finding applications in these matters should be dealt with, with the greatest expedition.

It also seems to us, in the light of the statutory prohibition on the use of restrained funds for legal expenses, that these orders should ordinarily be made with a short return date rather then left open ended for the defendant to apply to vary or discharge. In that way the court can exercise close supervision over orders that are by their nature draconian.

The second ground of appeal is that the judge’s ruling was unfair because of the absence of any legal assistance afforded to Mr S following the refusal of legal assistance by the Legal Services Commission. This denied him a fair hearing and constitutes breaches of Article 6 and of the First Protocol to Article 1 of the European Convention on Human Rights (ECHR). In our judgment there is no merit in this argument whatsoever and the point can be dealt with quite shortly.

Articles 6(2) and (3) contains specific guarantees which apply to everyone charged with a criminal offence. Article 6(3)(c) provides that a person has the right:

“to defend himself in person or through legal assistance of his own choosing or, if he has not sufficient means to pay for legal assistance to be given it free when the interests of justice so require.”

Mr S in our view faces an overwhelming factual difficulty on this issue. He was represented throughout and it is not suggested that he did not have a fair hearing.

Secondly Article 6(3) applies only to criminal hearings where the individual has been charged with an offence. In our judgment it is impossible to conceptualise restraint proceedings as criminal see R (McCann and Others) v The Crown Court at Manchester [2003] 1 AC 787.

In X v Uhited Kingdom (1984) 6 EHRR 136 the European Commission distinguished civil proceedings from criminal proceedings:

“Only in exceptional circumstances, namely where the withholding of legal aid would make the assertion of a civil claim practically impossible, or where it would lead to an obvious unfairness of the proceedings, can such a right be invoked by virtue of Article 6 ‘(1)’”.

Recently in Perotti v Collyer-Bristow (a firm) [2004] 2 ALL ER 189 Chadwick L.J said the test is:

“Whether a court is put in a position that it really cannot do justice in the case because it has no confidence in its ability to grasp the facts and principles of the matter on which it has to decide.”

Turning to Article 1 of the First Protocol. This provides:

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The proceeding provision shall not, however in any way impair the right of a state to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other penalties.”

Raimondo v Italy (1994) 18 EHRR 237 makes it clear that there is a distinction between depriving a person of his possessions and temporary measures to prevent him from using them. A restraint order constitutes a control in the use of property which will be lawful if, as in the present case, it serves a legitimate aim, namely the preservation of property believed to be the proceeds of crime for confiscation, so as to deprive offenders of their benefit from crime.

The ECHR argument does not in our view advance Mr S’s appeal.

Contrary to our initial view that s.41 of the 2002 Act permits the release of restrained funds for legal expenses incurred in relation to a restraint order albeit not to the underlying offence that caused it to be made, we are in the end satisfied that on its true construction s.41 does not permit this. This is not a conclusion we have reached with any enthusiasm. We are driven to it by the underlying scheme and purpose of the Act and in particular (1) by reason of the inclusion of the recipients of tainted gifts in s.41(4) and (2) the amendment in Schedule 11 to the Justice Act 1999 making public funding available. Accordingly the appeal is dismissed.