Bank of Ireland v Meenaghan

• Jurisdiction: Ireland
• Judge: Mr. Justice Costello
• Judgment Date: 01 January 1995
• Neutral Citation: 1994 WJSC-HC 2114
• Court: High Court
• Docket Number: No. 854 SP/1993,[1993 No. 854 Sp.]
• Date: 01 January 1995

1994 WJSC-HC 2114

THE HIGH COURT

No. 854 SP/1993

BANK OF IRELAND v. MEENEGHAN

BETWEEN

THE GOVERNOR AND COMPANY OF THE BANK OF IRELAND

PLAINTIFF

AND

MICHAEL JOHN MEENEGHAN AND THE COMMISSIONERS OF CUSTOMS AND EXCISE

DEFENDANT

1 Judgment of Mr. Justice Costello Delivered the 7th day of June 1994

INTRODUCTION

2 Mr. Michael Meeneghan (who I will call "the defendant") was a director of a company called Sedgley Construction Company Ltd which was registered in England where it carried on a construction business for a number of years. On the 7 September 1992 officers of Customs and Excise in England arrested him and charged him with an offence of being knowingly concerned in the fraudulent evasion of United Kingdom Value Added Tax contrary to section 39(3) of the Value Added Tax Act, 1983. On the 16 September 1992 the High Court in England made an order (a "restraint order") under Part VI of the UK Criminal Justice Act, 1988 which inter alia, restrained him from disposing or dealing with his assets in any way whatsoever save for a weekly allowance to cover legal and living expenses. He was admitted to bail but whilst his trial was pending he absconded. Warrants for his arrest were then issued.

3 For some years previously Mr. Meeneghan had been a customer of the Bank of Ireland, a bank which not only carries on business in this country but also has branches in England and is registered there under the provisions of the Companies Acts. Mr. Meeneghan opened accounts in a number of different branches of the Bank of Ireland and these proceedings are concerned with a Deposit Account (No. 7724826-1) in the Branch office of the Bank in Castlebar, Co. Mayo. There is now a substantial sum maintained in that account by Mr. Meeneghan. Paragraph (1) of the restraint order specifically referred to this account and restrained Mr. Meeneghan from dealing with it. Paragraph 5 of the order provided that in so far as the order purported to have extra territorial effect no person would be affected by it unless, inter alia, a person who is subject to the jurisdiction of the Court and who has been given notice of the order and is able to prevent acts outside the jurisdiction of the Court which would assist in the breach of the terms of the order. The defendant applied to the Bank for payment of the sums he holds in the Castlebar deposit. The Bank, concerned about the legal effect of the restraint order, has instituted these interpleader proceedings in which it claims to have determined the question whether the money on deposit is the property of Mr. Meeneghan or of the Commissioners of Customs and Excise.

4 Before explaining the issues which arise there are three further orders of the English High Court to which I should refer.

5 (a) By Order of the 18th March 1993 it was ordered pursuant to section 77(8) of the Criminal Justice Act, 1988 that one Raymond Hosling be appointed receiver over all defendant's "realisable property" and the defendant was specifically ordered to bring within the jurisdiction within 28 days all money held in Castlebar deposit account.

6 (b) By Order of the 18 August 1993 the Court found the defendant in contempt for failure to comply with the repatriation order of the 18th March.

7 (c) On the application of the Bank it was ordered that the restraint order of 16th September 1992 be amended to provide that a person would not be effected by the order unless that person was (a) subject to the Court's jurisdiction and (b) had notice of the order and (c) was according to the relevant domestic law lawfully able to prevent acts or omissions outside the jurisdiction of the court which would assist in the breach of the terms of this Order.

8 The Commissioner's do not make any proprietorial claim to the monies in the Castlebar deposit, in particular they accept that they have not been able to establish that it represents VAT to which they are by law beneficially entitled. Their claim is based on the restraint order of the 16th September 1992 - they assert that its effect is that the defendant cannot lawfully require the banks to pay him the money it owes him on this account.

The Criminal Justice Act, 1988.

9 To explain the issues that arise I must briefly refer to the relevant provisions of the 1988 Act.

10 Part VI of the 1988 Act is entitled "Confiscation of the Proceeds of an Offence" and begins by conferring powers on both the Crown Courts and Magistrates Courts to make "confiscation orders". The Crown Court has under section 71 power to make a confiscation order against an offender where -

11 (a) he is found guilty of any offence to which this Part of this Act applies, and

12 (b) it is satisfied -

13 (i) that he has benefited from that offence or from that offence taken together with some other offence of which he is convicted in the same proceedings ... and

14 (ii) that his benefit is at least the minimum amount.

15 The section defines the offences to which Part VI applies as well as the "minimum amount" referred to in section 71. No confiscation order has been made in this case (Mr. Meeneghan's trial has not yet taken place) but the prosecution has availed of another provision of the Act and applied for and obtained (on the 16 September 1992) a "restraint order" under section 77. Under that section the High Court may by order prohibit any person from dealing with any "realisable property", subject to such conditions and exceptions as may be specified in the Order. The power to make a restraining order can only be exercised in accordance with section 76, that is, where:-

16 a "(a) proceedings have been instituted in England and Wales against the defendant for an offence to which this Part of this Act applies;

17 (b) the proceedings have not been concluded, and

18 (c) either a confiscation order has been made or it appears to the court that there are reasonable grounds for thinking that a confiscation order may be made in them".

19 It is relevant to note that subsection (5) of section 77 provides that a restraint order can only be made on the application of the prosecutor, and subsection (6) that it shall be discharged when proceedings for the offence are concluded. After it has made a restraint order the court may appoint a receiver to take possession of any realisable property (section 77 (8)), and sums realised by a receiver on the sale of property may be applied towards the satisfaction of a confiscation order if one is subsequently made (section 81(1).

20 I draw particular attention to the following features of section 77 restraint orders:-

21 (a) a restraint order is made prior to a confiscation order and in order to make it efficacious

22 (b) it can only be made at the instance of the prosecutor

23 (c) it can only be made after criminal proceedings have been instituted and either a confiscation order has been made or there are reasonable grounds for thinking that a confiscation order will be made.

The submissions.

24 I can summarise the parties submissions as follows:-

25 The defendant firmly anchors his case on the well established principle of private international law to the effect that the Irish courts have no jurisdiction to enforce directly or indirectly the penal, revenue, or other public law of a foreign State, and submits:-

26 (1) That the power to make a section 77 restraint order is a penal power contained in a penal statute and the Irish courts cannot enforce this order by prohibiting the Bank from paying the money it owes the defendant.

27 (2) Alternatively, he argues that to prohibit the payment would amount to the enforcement of the revenue law of another State and likewise the Irish court has no jurisdiction so to order.

The Commissioners submit;

28 (1) The restraint order is not a penal order nor is the section which empowers the English High Court to make it a penal law so the principle of private international law relied on has no application.

29 (2) Alternatively, it is argued that a distinction is to be made between the "recognition" of a foreign penal law and its "enforcement". The Irish courts can and do "recognise" foreign penal laws and that is all the Commissioners ask the court to do in this case.

30 (3) In answer to the defendant's alternative claim that what is now sought is the enforcement of the Revenue law of a foreign State it is urged that the public policy considerations which justify the rule against non-enforcement of foreign revenue claims' have no application where claims for V.A.T. are made because V.A.T. is a tax subject to the Law of the European Union, that portion of the proceeds of the tax is payable by each member State to the Union, and this differentiates V.A.T. from other taxes levied in member States.

Is the law on which the Commissioner's rely a "penal law".

31 The statement that "the courts of no country execute the penal laws of another", was one used by Chief Justice Marshall in " The Antelope" ( 10 Wheaton, 123). It needs some amplification. This was done 100 years ago by the Privy Council in Huntington -v- Attrill (1893) A.C. 150 which has since been accepted as a classical exposition of the law. Huntington concerned the construction of a law of the State of New York which provided that if a certificate was given by the officer of a corporation which was false in any material respect all the officers of the corporation should be liable for all its debts contracted whilst they were officers of it. The defendant had signed such a certificate and the plaintiff sued him in New York claiming that he was personally liable for the corporate debts. He succeeded and obtained a substantial award. The plaintiff brought an action on the award against the defendant in the courts of the Province of Ontario which was defended on the basis that the action was one of a penal character and could not be entertained by the Canadian Courts. The plaintiff lost...