July 7
The claimant companies and their administrators alleged that the five defendants, four of whom were said to have been directors or de facto directors in either of the companies, had misappropriated substantial company funds, or that the funds had been misappropriated for the benefit of the defendants or otherwise in circumstances giving rise to liability on the part of the defendants. On the application of the Serious Fraud Office (“SFO”), criminal restraint orders were made against the defendants under the Proceeds of Crime Act 2002 restraining them from disposing of any assets unless stipulated in the order. Those orders remained in force. The claimants, without notice to the defendants or the SFO, were subsequently granted worldwide freezing orders against the defendants until trial or further order with the deputy judge having been satisfied both that there was a good arguable case in respect of the claim based on misappropriation of funds and that there was a risk of dissipation of assets by the defendants. On the claimants’ application, the judge ordered the continuation of the freezing orders notwithstanding the criminal restraint orders. Two of the defendants appealed on the ground inter alia that the claimants were unable to establish a real risk of the defendants dissipating their assets so as to justify the continuation of the freezing orders, since the criminal restraint orders extended to all their assets.
On the appeal—
Held, appeal dismissed. There was no established binding principle requiring the court to refuse to make a civil or criminal restraint order where another restraint order was already in force. Although the existence of a prior restraint order was a material fact relevant to the risk of dissipation, and although the court had to be astute to the burden placed on a defendant by a freezing order, not so much because of the fact of duplicative restraint, but because of the time and monetary costs in complying with orders for disclosure and seeking consent to any disposal, that was very different from a principle that a prior restraint or freezing order would prima facie exclude the making of a second order. Rather, the court had to consider all the relevant and legitimate circumstances before deciding whether to make a freezing order where a prior criminal restraint order was in place. Neither was determinative of the other. In the present case, the judge acknowledged the criminal restraint order as a relevant factor in the exercise of his discretion but equally acknowledged its possible weaknesses in guarding against a risk of dissipation and weighed those factors in the particular circumstances of the case. Accordingly, there were no grounds for interfering with his decision (paras 27, 28, 36, 46, 48, 49).
Per curiam. The existence of two or more criminal restraint and freezing orders against a single party is liable to substantially increase, to some extent unavoidably, the burden of compliance, but joint management of the orders is a way in which it can be kept within proportionate bounds. Serious consideration should be given to arranging joint management in cases such as the present (para 47, 48, 49).
Charles Béar QC and Laura John QC (instructed by Stokoe Partnership Solicitors) for the first appellant.
Tim James-Matthews (instructed by Byrne and Partners LLP) for the second appellant.
Stephen Robins, Matthew Abraham and Andrew Shaw (instructed by Mishcon de Reya LLP) for the claimants.