Restraint Orders: Varying Restraint Orders for Civil Proceedings – a Welcome Clarification

Abstract

Luckhurst, a former professional sportsman, set himself up as an independent financial adviser in the 1990s. The company through which he most recently operated his work was dissolved on 5th October 2021. In June 2014, along with two others, he incorporated Aspirations Europe Ltd, which continues to operate. This was a vehicle through which investors were introduced to a separate investment scheme operated by two other individuals. In 2016, the investors commenced civil proceedings against Luckhurst and others, alleging that it was a fraudulent scheme. To prevent dissipation or removal of assets, a freezing order was obtained against Luckhurst which allowed a sum for ordinary living expenses together with reasonable sums for legal advice and representation. A settlement, to which Luckhurst was not party, was agreed in December 2017, and the freezing order was discharged. The civil proceedings continued against Luckhurst. By this point, the police were investigating whether a crime had been committed in the investment scheme, and shortly after the freezing order was discharged, the Crown Prosecution Service ('CPS') applied for a restraint order (section 41, Proceeds of Crime Act 2002 ('PoCA')). This was granted on 15th December 2017 allowing Luckhurst £250 a week for ordinary living expenses, but with scope for variation with written agreement of the CPS. This duly occurred on a number of occasions following the original restraint order being made. An offer of settlement in respect of the outstanding civil claims involving Luckhurst was made in April 2019 on what the Court of Appeal described as, 'potentially attractive terms' ([2020] EWCA Crim 1579, at [13]). The estimated cost of legal advice in relation to the settlement was £3000. Luckhurst sought a variation of the restraint order to release sums to pay for the advice.Under section 41(3), PoCA 2002, restraint order exemptions are permitted to make provision for 'reasonable legal expenses', but section 41(4), PoCA 2002 does not permit such provision for legal expenses which 'relate to an offence' for which the restraint order was obtained. In consequence, at first instance, the judge refused the variation on the basis that the civil proceedings on which the settlement was proposed had, 'its factual origins in the fraud which is the subject matter of the criminal prosecution'.