R v Hargreaves 2026
On 14 June 2016, MH was convicted at the Crown Court at Caernarfon of participating in a fraudulent business relating to unlawfully selling tooth whitening products. HH (the applicant in these proceedings) was originally a co-defendant but the prosecution offered no evidence against her and a not guilty verdict was entered. On 25 September 2014, the Crown Court granted two restraint orders pursuant to section 41 of the Proceeds of Crime Act 2002 against HH, prohibiting dealings with various assets including three investment properties registered in the joint names of HH and MH.
On 24 May 2018, a confiscation order was made against MH determining his general benefit to be £2.5 million and the available amount to be £1.0965 million. In making the order, the Judge included 100 per cent of the value of the three investment properties and found HH's third-party interests had been gifted from MH's criminal activities, though this was not a binding determination against HH. On 25 February 2022, HH applied to vary or discharge the restraint orders, arguing her interests did not constitute tainted gifts beyond a conceded £10,253.37. On 23 September 2024, the Judge refused the application, declining to determine the tainted gift issue and holding that such determination should be left to the enforcement stage.
HH sought leave to appeal, which was refused by a single judge on the papers, and renewed the application before the Court of Appeal.
HH's primary argument was that by making her application to vary or discharge the restraint orders, she was invoking a statutory process in which her property interests could be advanced and vindicated. She was entitled to a finding on the merits of her application and that meant she was entitled to a finding on the merits of the question of tainted gifts. The Crown Court was obliged to answer that question and make a determination. A restraint order should only be imposed and maintained if justified as necessary. The Crown Court cannot justify as necessary a restraint order if it constrains third party property interests beyond the value of tainted gifts, supported by common law and Convention rights. Section 69 requires powers to be exercised with a view to allowing a third party who is not the recipient of a tainted gift to retain or recover value, and realising no more than the value of any tainted gift. These duties can only be discharged if the Crown Court resolves the contested issue.
Unless the Crown Court determines the merits of the tainted gift question, this denies the opportunity to vindicate property rights and sterilises those interests, placing an innocent third party in indefinite limbo.
Held
Appeal dismissed.
The Court refused the renewed application for leave to appeal. The Court ordered that the applicant pay Powys County Council's costs, assessed at £22,000. The Court held that HH had pursued an application without legal merit, notwithstanding the clear reasons of the single judge on the papers, and in circumstances where voluminous materials were placed before the Court despite the central point being in essence a simple legal argument. The Court applied a broad brush reduction in Powys County Council's costs to arrive at a level which in all the circumstances was reasonable and proportionate.
The Court held that a restraint order is, by its nature, a holding order. Parliament did not by section 41(1) and section 83(b) require, as a precondition for a restraint order, the court making a determination on any contested question of the existence and extent of tainted gifts.
A restraint order could be initially imposed and maintained on the basis of a good arguable case. The so-called statutory steer in section 69 requires that powers be exercised "with a view to" achieving certain outcomes, including "realising" no more than the value of a tainted gift. The word "realising" reflects the ultimate enforcement stage. Powers can be exercised "with a view" to achieving outcomes without requiring substantive determination of all controversial points. The flaw at the heart of the appeal was that it equated an entitlement to have an application determined on its merits with an entitlement to have the tainted gift issue determined on its merits. The Judge did determine the application on its merits but held there was no entitlement to have the tainted gift issue determined ahead of the enforcement stage, which was the preferable time for determination. The Judge was entitled in exercising his discretion to find that resolution of the contested question was appropriately left to the enforcement stage, particularly given the undertaking providing a mechanism to trigger resolution, meaning no open-ended limbo without mechanism to trigger resolution of issues.
Reproduced with permission of Reed Elsevier (UK) Limited, trading as LexisNexis.
View the full case document here, with links to related legislation and similar cases.
