OB v The Director of the Serious Fraud Office [2012] EWCA Crim 67

Case No 201102730

[2012] EWCA Crim 67

IN THE COURT OF APPEAL (CRIMINAL DIVISION)

ON APPEAL FROM

THE COMMON SERJEANT HHJ BARKER QC

U2009/1027 AND U2011/0173

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 1 st February 2012

Before

LORD JUSTICE GROSS

MR JUSTICE OPENSHAW

HHJ MILFORD QC

Between

OBAppellant

The Director of the Serious Fraud OfficeRespondent

Alun Jones QC and Colin Wells (instructed by Morgan Rose) for Appellant

Edward Jenkins QC and Ben Douglas-Jones (instructed by the Serious Fraud Office) for Respondent

Hearing Hearing dates : 2 nd November 2011

Judgment

[1]Two principal questions arise on this appeal. The first is whether a contempt of court flowing from a breach of a restraint order made pursuant to s.41 of the Proceeds of Crime Act 2002 (“POCA”), constitutes a civil or criminal contempt. The second goes to the interpretation of Art. 18 of the United Kingdom – United States Extradition Treaty 2003 (“the Treaty”).

[2]The reason these questions matter relates to the principle of “specialty” (or “speciality”) in the context of extradition. The Appellant was extradited from the USA to this country to face various charges of fraud. He was not extradited in respect of contempt. Subsequent to his return to this country, he was committed to prison for contempt (as set out below). He challenges the decision to proceed against him in respect of contempt and, hence, his committal to prison, alleging a breach of the specialty principle and an infringement of Art. 18 of the Treaty. The Respondent (“the SFO”) retorts that neither the specialty principle nor the Treaty is engaged in that the contempt in question was a civil not a criminal contempt.

[3]On the 1st April, 2011, the Common Serjeant of London (“the Common Serjeant”) ruled that the (English) Court had jurisdiction to deal with the contempt issue and that the principle of specialty did not offer protection from “these civil proceedings”. Subsequently, on the 20th May, 2011, the Common Serjeant committed the Appellant to prison for 15 months in respect for contempt of court. Pursuant to s.13 of the Administration of Justice Act 1960, the Appellant appeals as of right against both these decisions (“the 1st April ruling” and the “20th May decision”).

THE FACTS

[4]For present purposes, the facts may be shortly summarised. The Appellant came under investigation in respect of what is alleged to have been a substantial scheme to defraud investors - a “boiler room” fraud. On the 24th September, 2009, a restraint order (“the restraint order”) was granted by the Common Serjeant, pursuant to s.41 of POCA, against the Appellant and others (with whom this judgment is not concerned). The restraint order, inter alia, required the Appellant within 21 days both to make disclosure (broadly) of all his assets and to repatriate all his moveable assets held outside England and Wales, in particular, the sum of £457,312.40 held in a bank account in Cyprus. As is indisputable, the Appellant failed to comply either with the disclosure or the repatriation obligations imposed by the restraint order.

[5]On or about the 22nd October, 2009, it would appear that the Appellant left the jurisdiction. On the 19th November, 2009, the SFO issued an application to commit the Appellant to prison for failing to comply with the restraint order. On the 18th December, 2009, in the Appellant’s absence, the Common Serjeant found the Appellant to be in contempt, adjourned the imposition of a penalty and issued a bench warrant.

[6]In or about June 2010 the Appellant was located in Chicago. By now, the SFO was interested in obtaining the Appellant’s extradition in connection with the underlying charges relating to the boiler room fraud. Assistance was sought from the relevant US authorities and, on the 6th October, 2010, a federal arrest warrant was issued for the Appellant in the US District Court in respect of the (underlying) fraud matters. On the 8th October, 2010, the Appellant was arrested at his home address in Chicago and remanded in custody. On the same day, he appeared before the US District Court Northern District of Illinois Eastern Division. The Appellant, then or subsequently (it matters not), consented to extradition in accordance with the United Kingdom’s request; for the avoidance of any doubt, the Appellant did not waive the application of the specialty principle.

[7]So far as concerns the question of contempt of court, the position as of October 2010 appears to have been as follows. The question of the Appellant’s contempt of court plainly had been raised by the SFO with the US authorities. To begin with, both the SFO and the US authorities appear to have assumed that the contempt was criminal in nature. On that footing, contempt of court was not an extraditable offence; in the US, contempt of court, insofar as criminal in nature was punishable, as a misdemeanour, by up to 6 months imprisonment; however, the Treaty (see below) provided that offences were not extraditable unless punishable by sentences of imprisonment of 1 year or more. If, per contra, the contempt was a civil matter – a point which occurred to one of the leading US officials involved - then the SFO would of course be unable to secure extradition in respect of the contempt.

[8]Against this background it appears that the SFO, by way of a letter to the Central Criminal Court, dated 17th November, 2010, asked for the matter to be listed so that representations could be made as to the withdrawal of the bench warrant. The 17th November letter concluded as follows:

“ The purpose of our request is attributable to the fact that a contempt of court pursuant to breach of a Restraint Order is not an extraditable offence in the USA. Consequently, the rule of speciality applies and OB can not be brought before the Court in relation to this Bench Warrant under the terms of the rule of speciality in the United Kingdom….. ”

On the 30th November, 2010, following an ex parte mention, the Common Serjeant acceded to this application.

[9]In a witness statement dated 28th October, 2011 (“the 28th October witness statement”), Mr. Leong, a barrister employed by the SFO, stated that the bench warrant was withdrawn to ensure expeditious extradition. A decision to put the contempt matter to one side on this ground is perhaps unsurprising, given the exchanges with the US authorities recounted above. Para. 32 of the 28th October witness statement is more puzzling. Mr. Leong said this:

“ In view of the fact that A was now [i.e., late October 2010] to be extradited, my view was that the outstanding bench warrant created a risk that A might, on his return, be taken to the CCC before being processed at Heathrow Airport, charged with the predicate offences for which he was to be extradited and taken to the City of Westminster Magistrates’ Court which had issued the extradition warrant. The fear was that if the bench warrant were executed before charge that would lead to unnecessary delay in the extradition procedure. It would also prove unnecessarily disruptive and inconvenient to A by causing him not to be processed expeditiously for the matters for which he was extradited: it might have led to A being prejudiced……. At all times, R was conscious of the Overriding Objective of the Criminal Procedure Rules and the duty to assist the court in actively managing cases. ”

At first blush, the meaning of this paragraph was not apparent. No explanation was forthcoming at the hearing of the appeal which clarified its meaning. It remains, to us, put most charitably, wholly unclear and does the SFO no credit.

[10]Overall, it is clear that the US authorities (in the shape of the Department of Justice) were undoubtedly made aware of the contempt matter and of the bench warrant – at a time when it was still extant. It is not clear that the US Court was likewise made aware, though whether anything turns on that is another matter. On any view, the US Court was well aware of the principle of specialty and its practical meaning was explained to the Appellant in the course of the hearing on 8th October, 2010.

[11]On the 2nd December, 2010, the Appellant was returned to the United Kingdom. He was then arrested, charged with the underlying fraud offences, produced at the Magistrates’ Court and remanded in custody.

[12]Subsequently, as it would appear, the SFO reconsidered the matter and formed the view that contempt in this context was civil and accordingly not caught by the specialty principle. The SFO decided to proceed and the contempt proceedings returned to the Central Criminal Court. At hearings on the 18th March, 2011 and the 1st April, 2011, the specialty issue was argued. Thereafter, the Common Serjeant gave the 1st April ruling in the SFO’s favour; the gravamen of the ruling was that this was “a civil contempt in origin and nature”. The 1st April ruling was followed by the 20th May decision, committing the Appellant to prison.

THE RIVAL CASES

[13]We turn to a brief outline of the rival cases on the appeal. For the Appellant, Mr. Alun Jones QC’s powerful submissions proceeded as follows. English law was to be applied in characterising the contempt as civil or criminal. The better view was that the contempt here was criminal; the best test was furnished by reference to the Courts in which the proceedings had taken place: the Central Criminal Court followed by an appeal to the Court of Appeal. By contrast, the SFO’s case had far-reaching consequences: contempt for breach of a restraint order made under s.41 of POCA would not give rise to an extraditable offence. On the basis that this was a criminal contempt, the Appellant enjoyed the protection of the specialty principle and the Court had no jurisdiction or was wrong to commit him to prison. In any event, even if the contempt was civil, it had been wrong to commit the Appellant to prison, given the terms of Art. 18 of the Treaty. It was of the first importance that the Courts should give effect to the United Kingdom’s international obligations. The “evidence” that the US authorities were not concerned by these proceedings was unsatisfactory and could not be relied upon. A simple and pragmatic alternative course was in any event available to the SFO; it should have sought a fresh restraint order, rather than relying on the contempt which preceded the Appellant’s extradition. Such a course would have practical benefits for the Appellant in terms of remand status and time on remand counting. For completeness, Mr. Jones accepted, rightly in our judgment, that an abuse argument canvassed in his skeleton argument did not add anything to his case; accordingly, no more need be said of it.

[14]For the SFO, Mr. Jenkins QC’s submissions were straightforward. Both the SFO and the US authorities had initially made the erroneous assumption that the contempt was criminal. They had therefore and wrongly asked whether the contempt was an extraditable offence – rather than whether it was an offence at all. When minds came to be focussed, the better view was that the contempt was civil; regardless of the Court/s concerned, restraint proceedings were civil (akin to proceedings concerning freezing orders) and the contempt constituted disobedience to an existing order of the Court. It was, however, to be underlined that there had been no misrepresentation whether to the US Court, the US authorities or the Common Serjeant. While, as was clear from s.148 of the Extradition Act 2003 (“the Act”), conduct was always the foundation for extradition, the context of both the Act and the Treaty concerned criminal offences. It followed both that the specialty principle was inapplicable and that the committal to prison had not been contrary to Art. 18 of the Treaty.

[15]Against this background, the principal issues which arise for determination on this appeal may be formulated as follows: i) Whether the Appellant’s contempt was a civil or criminal contempt? (“Issue I”) ii) Whether, if the Appellant’s contempt was a civil contempt, it was nonetheless wrong to commit him to prison given the terms of Art. 18 of the Treaty? (“Issue II”) We turn directly to these Issues.

ISSUE (I): WHETHER THE APPELLANT’S CONTEMPT WAS A CIVIL OR CRIMINAL CONTEMPT?

[16](1) Extradition and specialty: In R v Seddon

[2009] EWCA Crim 483

;

[2009] 2 Cr App R 9

, a case concerned with European Arrest Warrants, observations of Hughes LJ (Vice President, Court of Appeal Criminal Division) helpfully serve to put the matter in context:

“4. Extradition is a process involving agreement between Sovereign States. The requesting State has no power to send its policemen into the requested State to arrest a prisoner who has run away there. That would be a direct infringement of the sovereignty of the requested State. So the requesting State depends upon the voluntary co-operation of the State where the fugitive is now to be found. Unsurprisingly States found that they generally had a common interest in A surrendering prisoners to B if B asked, providing that B entered into a reciprocal agreement to surrender those whom A wanted when the boot was on the other foot. On the other hand, States generally wished to retain the power to refuse to surrender in some circumstances. To take simple but non-exhaustive examples, they might wish to refuse if the conduct complained of was not a crime in the requested State, or if it was, for example, a crime of a political character where the interests of the two States diverged. 5. Historically, extradition was generally achieved through separate bilateral treaties between States. Commonly the power of the requested State to refuse extradition in some circumstances was preserved by the terms of such treaties. To give effect to that practice, the principle evolved that if A requested a prisoner from B, A would identify the offence for which the prisoner was wanted, so that B could decide whether there was a sufficient reason to refuse to surrender him. With that went the practice that if surrendered the prisoner could only be dealt with for the offence for which he had been sought, otherwise plainly the surrendering State’s power to refuse would be circumvented. That principle is called specialty. ….The rationale for it may owe something to the protection of the individual, but it plainly lies principally in the international obligation between States. ”

[17]Manifestly, the principle of specialty applies only to criminal offences and has nothing to do with civil matters.

[18](2) Statutory provisions:If the contempt here is criminal, the Act makes it clear that the principle of specialty applies; insofar as material, the Act provides as follows:

“ 148. Extradition offences (1) Conduct constitutes an extradition offence in relation to the United Kingdom if these conditions are satisfied – (a) the conduct occurs in the United Kingdom; (b) the conduct is punishable under the law of the relevant part of the United Kingdom with imprisonment or another form of detention for a term of 12 months or a greater punishment. 151A Dealing with a person for other offences (2) The person may be dealt with in the United Kingdom for an offence committed before the person’s extradition only if – (a) the offence is one falling within subsection (3), or (b) the condition in subsection (4) is satisfied. (3) The offences are – (a) the offence in respect of which the person is extradited; (b) an offence disclosed by the information provided to the territory in respect of that offence; (c) an offence in respect of which consent to the person being dealt with is given on behalf of the territory. (4) The condition is that – (a) the person has returned to the territory from which the person was extradited, or (b) the person has been given an opportunity to leave the United Kingdom. ”

[19]S.14(1) of the Contempt of Court Act 1981 (“the CCA”) is in these terms:

“ In any case where a court has power to commit a person to prison for contempt of court and (apart from this provision) no limitation applies to the period of committal, the committal shall (without prejudice to the power of the court to order his earlier discharge) be for a fixed term, and that term shall not on any occasion exceed two years in the case of committal by a superior court….”

As some reference was made to it in argument, we record the wording in s.14(2A), which speaks of the “…exercise of jurisdiction to commit for contempt of court or any kindred offence….” [italics added] and that a “….fine imposed under subsection (2) above shall be deemed, for the purpose of any enactment, to be a sum adjudged to be paid by a conviction”.

[20]S.76 of the Powers of Criminal Courts (Sentencing) Act 2000 (“the PCC(S)A”) deals with the meaning of “custodial sentence”; the section provides as follows:

“ (1) In this Act ‘custodial sentence’ means – (a) a sentence of imprisonment….. (2) In subsection (1) above ‘sentence of imprisonment’ does not include a committal for contempt of court or any kindred offence.”

[21]Pausing here, it is plain that the CCA makes provision for imprisonment (or fines) in the case of contempt of court. It can fairly be said that the language is redolent of a criminal statute. But too much cannot be made of this feature. First, s.14(1) undoubtedly applies to contempt of court which is indisputably civil in nature: for example, flouting the provisions of a freezing order in a commercial case. Accordingly, committal to prison is a “sentencing” option in the case of both civil and criminal contempt. Moreover, as is settled law, the burden and standard of proof are the same regardless of whether the contempt alleged is civil or criminal – and Art. 6.2 and 6.3, ECHR are likewise equally applicable. Secondly, s.76(2) of the PCC(S)A distinguishes, in terms, between committal to prison for contempt and sentences of imprisonment.

[22](3) The distinction between civil and criminal contempt: The ordinarily somewhat arid distinction between “civil” and “criminal” contempt was explained, in general terms, by Lord Scarman in Home Office v Harman

[1983] 1 AC 280

, at p.310, as follows:

“ ….The distinction between ‘civil’ and ‘criminal’ contempt is no longer of much importance, but it does draw attention to the differences between on the one hand contempts such as ‘scandalising the court’, physically interfering with the course of justice, or publishing matter likely to prejudice fair trial, and on the other those contempts which arise from non-compliance with an order made, or undertaking required , in legal proceedings. The former are usually the business of the Attorney-General to prosecute by committal proceedings (or otherwise): the latter, constituting as they do an injury to the private rights of a litigant, are usually left to him to bring to the notice of the court. And he may decide not to act: he may waive, or consent to, the non-compliance. ”

[23]In essentially similar vein, Lord Oliver, in Attorney-General v Times Newspapers Ltd

[1992] 1 AC 191

, at pp. 217-218, said this as to the distinction:

“ ….A distinction (which has been variously described as ‘unhelpful’ or ‘largely meaningless’) is sometimes drawn between what is described as ‘civil contempt’, that is to say, contempt by a party to proceedings in a matter of procedure, and ‘criminal contempt’. One particular form of contempt by a party to proceedings is that constituted by an intentional act which is in breach of the order of a competent court. Where this occurs as a result of the act of a party who is bound by the order or of others acting at his direction or on his instigation, it constitutes a civil contempt by him which is punishable by the court at the instance of the party for whose benefit the order was made and which can be waived by him. The intention with which the act was done will, of course, be of the highest relevance in the determination of the penalty (if any) to be imposed by the court, but the liability here is a strict one in the sense that all that requires to be proved is service of the order and the subsequent doing by the party bound of that which is prohibited. When, however, the prohibited act is done not by the party bound himself but by a third party, a stranger to the litigation, that person may also be liable for contempt. There is, however, this essential distinction that his liability is for criminal contempt and arises not because the contemnor is himself affected by the prohibition contained in the order but because his act constitutes a wilful interference with the administration of justice by the court in the proceedings in which the order was made. Here the liability is not strict in the sense referred to, for there has to be shown not only knowledge of the order but an intention to interfere with or impede the administration of justice – an intention which can of course be inferred from the circumstances. ”

[24]Although, as already indicated, we are not concerned with the classification of contempt in US law, the graphic passage in the majority judgment of Justice Breyer, in the US Supreme Court, in Turner v Rogers 564 US 10-10 2011, at p.8, helpfully illuminates the nature of the distinction:

“ But the Sixth Amendment does not govern civil cases. Civil contempt differs from criminal contempt in that it seeks only to ‘coerce the defendant to do’ what a court had previously ordered him to do. Gompers v Bucks Stove & Range Co., 221 US 418, 442 (1911). A court may not impose punishment ‘in a civil contempt proceeding when it is clearly established that the alleged contemnor is unable to comply with the terms of the order’. Hicks v Feiock, 485 US 624, 638, n.9 (1988). And once a civil contemnor complies with the underlying order, he is purged of the contempt and is free. Id., at 633 (he ‘carries the keys of [his] prison in [his] own pockets’….”

[25]The earlier US Supreme Court decision in Gompers v Bucks Stove, referred to in this passage, itself contains a valuable analysis of the distinction between civil and criminal contempt. Giving the opinion of the Court, Mr.

Justice Lamar said this (at pp. 441 – 443):

“ Contempts are neither wholly civil nor altogether criminal……But in either event, and whether the proceedings be civil or criminal, there must be an allegation that in contempt of court the defendant has disobeyed the order, and a prayer that he be attached and punished therefor. It is not the fact of punishment but rather its character and purpose, that often serve to distinguish between the two classes of cases. If it is for civil contempt the punishment is remedial, and for the benefit of the complainant. But if it is for criminal contempt the sentence is punitive, to vindicate the authority of the court. It is true that punishment by imprisonment may be remedial as well as punitive, and many civil contempt proceedings have resulted not only in the imposition of a fine, payable to the complainant, but also…in committing the defendant to prison. But imprisonment for civil contempt is ordered where the defendant ahs refused to do an affirmative act required by the provisions of an order which, either in form or substance, was mandatory in character. Imprisonment in such cases is not inflicted as a punishment, but is intended to be remedial by coercing the defendant to do what he had refused to do. The decree in such cases is that the defendant stand committed unless and until he performs the affirmative act required by the court’s order…… It is true that either form of imprisonment has also an incidental effect. For if the case is civil and the punishment is purely remedial, there is also a vindication of the court’s authority. On the other hand, if the proceeding is for the criminal contempt and the imprisonment is solely punitive, to vindicate the authority of the law, the complainant may also derive some incidental benefit from the fact that such punishment tends to prevent a repetition of the disobedience. But such indirect consequences will not change imprisonment which is merely coercive and remedial, into that which is solely punitive in character, or vice versa. ”

[26]This general discussion as to classification, from both sides of the Atlantic, is not and could not be dispositive of the particular issue/s arising on this appeal. Moreover, the parallel between the SFO and a private litigant is hardly exact. The discussion does, however, tend to support the SFO case, for these reasons. First, the contempt here involved the breach of an existing order of the Court, rather than a wilful interference by a non-party with the administration of justice. Secondly, the purpose of the committal, in our judgment, is both punitive and, importantly, coercive; a major purpose – if not necessarily the sole purpose - is to induce compliance with the disclosure and repatriation requirements of the restraint order. There is no doubt that the Appellant could have purged his contempt by compliance with those requirements; in that sense, it can be said (in the memorable phrase from the US authorities) that he ‘carries the keys of [his] prison in [his] own pockets’. Thirdly, the discussion underlines that the fact of punishment is essentially neutral for present purposes and so reinforces the observations already made that too much cannot be made of the language of the CCA.

[27](4) Civil proceedings, freezing injunctions (Marevas) and search orders (Anton Pillers): Much reliance was placed by the SFO on Pooley v Whetham (1880) LR 15 Ch D 435. The head note readily explains why:

“ An attachment issued by the High Court of Justice for disobedience of an order of the Court in a civil action is not an offence within the meaning of the 19th section of the Extradition Act, 1870. Therefore, where a party to an action in the Chancery Division was arrested in Paris for a crime under the Extradition Act, and while in prison in England under the warrant was served with an attachment for disobedience to an order in the action:- Held, (affirming the decision of Bacon, VC), that the attachment was valid, and that the prisoner was not entitled to his discharge until he had cleared his contempt, although he had been acquitted of the criminal charge.”

[28]The contempt had been committed before the surrender and s.19 of the 1870 Act, so far as material, provided that the person surrendered was not “….triable or [to be] tried for any offence committed prior to the surrender…”.

[29]The appellant’s contentions were robustly rejected. James LJ said this (at p.440):

“ Although it assumes the form of punishment for contempt of Court, it is a mere civil process to enforce obedience to an order of a civil Court to do something on behalf of or for the benefit of a private person, which has no reference whatever to any offence committed against the State or against the Sovereign of the State, which are the offences mentioned there. It appears to me that it is impossible to extend the words to an attachment for a contempt which is really only a process of coercion to compel the performance of the order of the Court in what….is a civil matter.”

Brett LJ (at p.443) put the matter this way:

“ …..The real truth is that the word ‘offence’ in the 19th section means a criminal act, whether a felony or a misdemeanour is immaterial, but an offence which would be triable in a criminal Court. Therefore it does not apply to civil processes, so that the objections which were founded on that reading of the statute all fail.”

[30]For our part, we do not think that Pooley v Whetham goes nearly as far as the SFO would wish it to. That disobedience to an order in (wholly) civil proceedings should give rise to a civil contempt is unremarkable – but does not resolve the question here, namely, whether flouting a restraint order made under POCA gave rise to a civil or criminal contempt. Nonetheless, in our view, this authority does furnish some assistance. First, it is a decision in the extradition context. Secondly, the passage cited from Brett LJ’s judgment serves, with respect, as a succinct pointer as to the context in which ss.148 et seq of the Act are to be read – and, it may be said, the relevant provisions of the Treaty (see below): an offence means a criminal act. Thirdly, it raises for consideration the question of why breach of a restraint order should give rise to a criminal contempt whereas flouting an order such as that made in this decision should so emphatically not do so.

[31]Similar considerations apply to authorities in the Anton Piller and Mareva context: a breach of such orders or injunctions gives rise to a civil not a criminal contempt: see, Cobra Golf Inc v Rata

[1998] Ch 109

; Daltel Europe Ltd v Makki

[2006] EWCA Civ 94

;

[2006] 1 WLR 2704

, esp., at [51]. As not infrequently remarked, there are distinct parallels between freezing injunctions (in particular) and restraint orders. Although the former are utilised in civil proceedings and the latter (most likely) in support of criminal confiscation proceedings, the suggestion that contempt for breach of one should be criminal but for the other civil, requires justification – given the similarities between the orders and the nature of the contempt in question arising from their breach.

[32](5) Predecessor regimes: The statutory regimes prior to POCA contained provisions for confiscation and restraint orders. Authority relating to these predecessor regimes suggests that contempt for breach of a restraint order constitutes civil rather than criminal contempt.

[33]The Court of Appeal in In re O

[1991] 2 QB 520

held that the relevant provisions in the Criminal Justice Act 1988 established a regime for restraint and charging orders, which was both civil in character and collateral to the criminal regime furnished by other provisions in the same act covering confiscation orders and their enforcement: see, esp., at pp. 527-528. That, as Lord Donaldson MR observed (at p.528), restraint orders are designed to preserve assets upon which the orders of the criminal courts may bite at a later stage, did not, it would appear, lead the Court to doubt their civil character. While the Court in In re O expressed concerns as to the jurisdictional consequences (at the time) for appeals were it to have concluded otherwise, we do not think that the decision can properly be explained or discounted simply on that basis. In passing, the analogy between a restraint order and a freezing injunction is plain; Lord Donaldson MR had himself previously said that a restraint order might not inaccurately be referred to as a “drugs Act Mareva”, in the context of the Drug Trafficking Offences Act 1986: see, In re Peters

[1988] QB 871

, at 879.

[34]In DPP v Scarlett

[2000] 1 WLR 515

, the Court of Appeal dismissed an appeal from an order attaching a repatriation requirement to a restraint order made under the Drug Trafficking Act 1994. The Court had an inherent power (as, we interpose, it does in the case of Mareva injunctions) to make ancillary orders to ensure that the exercise of its jurisdiction was effective to achieve its purpose. Accordingly, the Judge had jurisdiction to commit the appellant for breach of the order. Beldam LJ, giving the single substantive judgment of the Court, observed (at p.523) it to be “well settled” that the civil jurisdiction of the High Court in contempt proceedings was separate and distinct from its criminal jurisdiction.

[35]In In re Grant

[2011] EWHC 1007

, Ouseley J held (at [23]) that contempt proceedings for breach of a restraint order made pursuant to the Drug Trafficking Act 1994 were civil proceedings. For completeness, there was a successful appeal from the decision of Ouselely J - but on compassionate grounds and hence immaterial to the present discussion: see,

[2011] EWCA Civ 643

[36]To the extent, therefore, that guidance with respect to the POCA regime can properly be obtained from these authorities, they lend powerful support to the SFO case.

[37](6) The POCA regime: The relationship between the POCA regime and its predecessors was, with respect, neatly summarised by Laws LJ in Jennings v CPS

[2005] EWCA Civ 746

;

[2006] 1 WLR 182

, at [16], as follows:

“ The statutory regime for the making of confiscation orders in connection with the proceeds of crime, and for the preservation of assets of a suspect or defendant so that any later confiscation order might be made good, is now provided for by Part II of …[POCA]… Confiscation orders are dealt with at sections 6-39, and restraint orders at sections 40-47 and 69. These provisions reflect, though they do not precisely replicate, those contained in Part VI of the 1988 Act. A major change consists in the fact that whereas under the 1988 Act the jurisdiction to make restraint orders was vested in the High Court, under the 2002 Act it is in the hands of the Crown Court. Confiscation orders are dealt with in the Crown Court (as they have always been) and so now the whole regime is administered in that court. Appropriate rights of appeal lie to the ….[CACD]…”

[38]POCA, s.41 governs the making of restraint orders:

“ (1) If any condition set out in section 40 is satisfied the Crown Court may make an order (a restraint order) prohibiting any specified person from dealing with any realisable property held by him.”

[39]POCA, s.46 provides as follows:

“ Hearsay evidence (1) Evidence must not be excluded in restraint proceedings on the ground that it is hearsay (of whatever degree). (2) Sections 2 to 4 of the Civil Evidence Act 1995….apply in relation to restraint proceedings as those sections apply in relation to civil proceedings. …..”

Two features of s.46 merit attention. First, hearsay evidence is not to be excluded in “restraint proceedings” and ss. 2 – 4 of the Civil Evidence Act apply to such proceedings. Secondly, those sections of the Civil Evidence Act apply to restraint proceedings “as those sections apply in relation to civil proceedings”. We return, presently, to consider the ramifications of the terms of s.46.

[40]R v M

[2008] EWCA Crim 1901

;

[2009] 1 WLR 1179

involved an alleged breach of a POCA restraint order. The prosecution applied to the Crown Court to commit the defendant for contempt of court. The defendant resisted the application on the ground that the Crown Court had no jurisdiction to try an allegation of civil contempt; such applications should be made to the Divisional Court. The Judge ruled that he had jurisdiction to proceed; the defendant’s appeal to the CACD was dismissed. As a restraint order was the equivalent in criminal proceedings of a freezing injunction in civil proceedings and since allegations of contempt of court consisting of breaches of freezing injunctions were regularly heard and determined by High Court Judges sitting alone, so too single Judges of the Crown Court had jurisdiction to deal with allegations of contempt consisting of breaches of a restraint order made under s.41 of POCA. Thus far, it could be said that this decision does not significantly impact on the argument here, other than (again) drawing attention to the analogy between restraint orders and freezing injunctions.

[41]However, the judgment in R v M is noteworthy because of this Court’s acceptance that the contempt in question was a civil contempt; although the contrary does not appear to have been argued, there is no hint in the careful judgment of the Court (given by Bean J) that the contempt in question might have been a criminal contempt. To the contrary, the Court discussed two cases of alleged criminal contempt, Balogh v St Albans Crown Court

[1975] QB 73

and Rooney v Snaresbrook Crown Court

(1978) 68 Cr App R 78

– and clearly distinguished between criminal contempt and the contempt which the Court was considering. The alleged contempt in Balogh concerned the planned disruption of a Crown Court sitting by releasing a cylinder of laughing gas into the ventilation system. In Rooney, the alleged contempt consisted of a company director dismissing an employee for having been on jury service. At [18], Bean J said this:

“ Both the Rooney case and the Balogh case were cases of alleged criminal contempt, that is to say either contempt in the face of the court or conduct tending to interfere with a trial which is under way or just about to begin. There are two possible ways of dealing with criminal contempt: one by the the exercise of the summary jurisdiction, the other by an application to a Divisional Court. Neither case has anything to say about civil contempt, that is to say breach of a court order carrying the contempt sanction.…. ”

[42]In our view, R v M falls short of constituting binding authority, effectively determining the present Issue in favour of the SFO. In particular, this is so because there was no argument before the Court in R v M that the contempt in question was a criminal contempt. We do, however, think that this Court’s approach in R v M furnishes strong persuasive authority for the contention that the contempt here is a civil contempt.

[43](7) Pulling the threads together: We are persuaded that the contempt constituted by breach of a restraint order made under POCA is a civil not a criminal contempt. While no single factor is decisive, we are satisfied that this is the better view in the light of all the various matters to which we have had regard. In the paragraphs which follow, we pull the threads together.

[44]First, this conclusion is supported by and consistent with the general discussion on the classification of contempt in English law. To reiterate, the fact of a custodial punishment is neutral; what matters is the nature of the contempt (breach of an existing order of the Court) and the purpose of the punishment (coercive as well as punitive).

[45]Secondly, the restraint order in the context of confiscation proceedings is closely analogous to the freezing injunction in civil proceedings. We can see no proper justification for concluding that a contempt constituted by breach of such orders is a criminal contempt in the case of restraint orders but a civil contempt in the case of freezing injunctions (and search orders).

[46]Thirdly, nothing in the predecessor regimes to POCA supports the contention that contempt constituted by a breach of a restraint order is a criminal rather than a civil contempt. To the contrary, authorities decided under those regimes speak with one voice, namely, that such contempt is to be characterised as civil contempt.

[47]Fourthly, as to the POCA regime itself: i) The conclusion that restraint proceedings are to be treated as civil proceedings and that the contempt constituted by breach of a restraint order is a civil contempt flows from a consideration of the predecessor regimes - unless POCA produced a radical departure from the position prevailing under those regimes. While it is true that under POCA, jurisdiction to make restraint orders has been transferred from the High Court to the Crown Court, we view the basis of this change as administrative – rather than in any way reflecting a radical change in the classification of restraint proceedings from civil to criminal. Overall, we see POCA as reflecting if not precisely replicating the predecessor regimes: Jennings v CPS (supra), at [16]. We are unable to accept the test proposed by Mr. Jones; despite its taut formulation, we cannot agree that the Courts in which the proceedings have taken place determine whether the contempt was civil or criminal. That would be to place an undue premium on the listing and administrative arrangements current at any particular time; such arrangements do not outweigh the other considerations to which we have had regard. ii) The conclusion to which we are attracted is fortified by the terms of POCA, s.46; for our part, its real significance lies in the specific provision for the application of sections 2 - 4 of the Civil Evidence Act to restraint proceedings. It is noteworthy that those sections of the 1995 Act are made applicable to restraint proceedings under POCA, whereas they do not apply to confiscation proceedings which are to be regarded as criminal in nature: see R v Vincent Clipston

[2011] EWCA Crim 446

;

[2011] 2 Cr App R(S) 101

, esp. at [50]. While we acknowledge the somewhat ambiguous nature of the wording in s.46(2) (“as those sections apply in relation to civil proceedings”), we do not think that this wording suggests that restraint proceedings are not civil proceedings; instead, we view this wording as confirmatory of the characterisation of restraint proceedings as civil proceedings. Had the legislature’s intention been to produce a radical change in the nature and characterisation of restraint proceedings from that which had hitherto prevailed, we are confident that very different wording would have been used. iii) Furthermore, this conclusion is consistent with and supported by R v M (supra), where this Court plainly proceeded on the basis that a contempt constituted by breach of a restraint order made under POCA, s.41, was a civil not criminal contempt.

[48]It follows that we answer Issue (I) by holding that the contempt here in question was a civil not criminal contempt. We turn to Issue (II). ISSUE (II): WHETHER, IF THE APPELLANT’S CONTEMPT WAS A CIVIL CONTEMPT, IT WAS NONETHELESS WRONG TO COMMIT HIM TO PRISON GIVEN THE TERMS OF ART. 18 OF THE TREATY?

[49]Insofar as material, the Treaty provides as follows:

“ [Preamble] ….Desiring to provide for more effective cooperation between the two States in the suppression of crime, and, for that purpose, to conclude a new treaty for the extradition of offenders; Have agreed as follows: Article 1 Obligation to Extradite The Parties agree to extradite to each other, pursuant to the provisions of this Treaty, persons sought by the authorities in the Requesting State for trial or punishment for extraditable offences. Article 2 Extraditable Offences 1. An offence shall be an extraditable offence if the conduct on which the offence is based is punishable under the laws in both States by deprivation of liberty for a period of one year or more or by a more severe penalty. Article 18 Rule of Specialty 1. A person extradited under this Treaty may not be detained, tried or punished in the Requesting State except for: (a) any offence for which extradition was granted, or a differently denominated offence based on the same facts as the offence on which extradition was granted, provided such offence is extraditable, or is a lesser included offence; (b) any offence committed after the extradition of the person; or (c) any offence for which the executive authority of the Requested State waives the rule of specialty and thereby consents to the person’s detention, trial, or punishment….”

Have agreed as follows: Article 1 Obligation to Extradite Article 2 Extraditable Offences Article 18

Rule of Specialty

[50]We can deal summarily with this Issue. If our conclusion had been that the contempt here in question was a criminal contempt, then Art. 18 of the Treaty would have precluded the committal proceedings – reflecting the initial thoughts of both the SFO and (so far as we can tell) the US authorities.

[51]However, we have already concluded that the contempt was a civil not a criminal contempt. As it seems to us, this conclusion is effectively determinative of Issue (II) as well. As is clear from the Preamble and Art. 1, the scope of the Treaty is confined to criminal offences; in this regard, the Treaty and ss. 148 and 151A of the Act are to the same effect. A civil contempt is not a criminal offence; the observations of Brett LJ in Pooley v Whetham (set out above) continue to have resonance. Despite the width of its opening words, Art. 18 has no application; read in context, those words bite and bite only on detention, trial and punishment for criminal offences. Consistently with principle, the rule of specialty embodied in Art. 18 has nothing to do with civil matters: see, the observations from R v Seddon, cited above. That civil contempt may in fact result in punishment by way of committal to prison does not make it any the less a civil matter. It of course follows, as indeed Mr. Jones submitted, that in other cases the SFO would not be entitled to seek extradition in respect of contempt of this nature; so be it. The point is a short one, not benefiting from further elaboration.

[52]We accordingly answer Issue (II), “no”.

CONCLUDING OBSERVATIONS

[53]As already observed, Mr. Jones, rightly in our judgment, did not press an “abuse” argument in the event that he failed on Issues (I) and (II). We are anxious, however, to dispel lingering concerns, if any, arising from certain matters canvassed in argument.

[54]First, we treat compliance with this country’s international obligations as a matter of the first importance. We would indeed have been very troubled, had we thought that committal proceedings against the Appellant in respect of civil contempt gave rise to potential embarrassment between this country and the US. But we do not think that the SFO’s pursuit of these proceedings has done so. While we acknowledge the force of Mr. Jones’ criticisms of the state of the evidence as to the views of the US authorities – and the SFO has, in our judgment, no excuse for the evidence being in the form it was – there is no or insufficient material for any realistic suggestion of dissatisfaction on the part of the US authorities, still less that the US authorities considered there to have been a breach of specialty in this case. It is to be underlined that the matter was clearly anxiously considered here (across Government departments) by an experienced Home Office official, with (we were told) a particular interest in such matters; the position ultimately reached does not support any submission of concern in this regard.

[55]Secondly, we have ourselves anxiously considered the SFO’s various changes of position with regard to the contempt in this case and its classification as civil or criminal. We have done so to satisfy ourselves that there was no question of either the Common Serjeant (in this country) or the US Court or authorities having been misled, however inadvertently. On the material before us, including the most recent (and regrettably late) disclosure, we are satisfied that, as our recitation of the history shows, the answer to this question is “no”. We have already highlighted the obscure and disquieting paragraph in Mr. Leung’s 28th October witness statement; that paragraph does not, however, seem to go anywhere. We do not for a moment think (for instance) that the Common Serjeant was induced by that paragraph to make any ruling he would not otherwise have made. That paragraph apart, while, with respect, there was a degree of vacillation, we do not think that anything in the SFO’s conduct gave rise to unfairness.

[56]Thirdly, we remind ourselves of the purpose of the restraint order and the need for Courts to do what they properly can to render such orders efficacious. The Appellant was extradited without any subterfuge; it was not and could not have been suggested that he was extradited for the disguised purpose of dealing with the matter of his contempt. He has failed, as set out above, on his substantive arguments. In the circumstances, we see no unfairness in the SFO continuing the committal proceedings against him. That the SFO might instead have sought a fresh restraint order is ultimately neither here nor there. At all events, it remains open to the Appellant to purge his contempt; to that extent, the remedy continues to lie in his own hands.

[57]For the reasons given, the Appellant’s committal to prison did not infringe either the principle of specialty or the Treaty. This appeal is dismissed.