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16 April 2014

Failure to Comply with a Restraint Order is not a Criminal Offence

In what the Serious Fraud Office has described as a "landmark victory" the Supreme Court has ruled in the case of Director of Serious Fraud Office v O’Brien [2014] UKSC 23.  This case highlighted an important matter for Courts dealing with Defendants who have failed to comply with Restraint Orders and also the problems of dealing with Defendants who have been arrested abroad and returned to the United Kingdom following extradition proceedings.

Background

In this case the Defendant was being investigated for an alleged “boiler room” fraud ( a large scale scheme to defraud investors) . During the course of the investigation he was made subject of a Restraint Order, pursuant to section 41 of the Proceeds of Crime Act 2002. That Order required him to provide details of his assets.

The Defendant failed to do this and he flew out of the United Kingdom. The Crown Court found that he was in contempt of court and also issued a warrant for his arrest.

Extradition

The Defendant was found to be in Chicago. The Serious Fraud Office wanted him extradited in order that he could be prosecuted. The authorities in the USA assisted and the Defendant was arrested. The Defendant consented to the UK’s extradition request but the Defendant did not waive his entitlement to the benefit of the specialty principle.

The “specialty” rule prohibits a person who has been extradited to the United Kingdom from then being charged with other offences committed before the date of extradition.

Ultimately, the Defendant was sentenced to 8 years imprisonment with a concurrent sentence of 15 months in respect of the contempt of court.

The Defendant argued that the Crown Court had no power to deal with him for his earlier contempt. This was argued on two grounds, the second of which was that his conduct was criminal in nature and therefore fell foul of the specialty rule.

Is non - compliance a criminal offence?

This argument failed. The Proceeds of Crime Act 2002 does not provide that it is an offence to disobey or obstruct a restraint order. However, the Crown Court does have an inherent power to treat such behaviour as contempt of court.

English Law has long recognised a distinction between civil and criminal contempt:

(a)  Civil Contempt is conduct which is not in itself a crime but which is punishable by the Court in order to ensure that its orders are complied with;

(b)  Criminal Contempt goes beyond mere non – compliance and involves a serious interference with the administration of justice. Examples include physically interfering with the course of a trial, threatening witnesses or publishing material likely to prejudice a fair trial.

The Supreme Court made clear that the fact that the Restraint Order had been made by the Crown Court (a criminal court) did not mean that disobedience with one of its orders amounted to a crime. What mattered was not the nature of the court but, rather, the nature of the conduct.

Criminal contempts could occur in civil courts and civil contempts could occur in criminal courts

Conclusion

The Court concluded that a contempt of court constituted by a breach of a restraint order is not itself a crime. Accordingly, the Defendant could be dealt with for that contempt when he had been extradited to the UK in respect of criminal offences.

Ian Unsworth QC

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