Criminal Assets Bureau v B.G.S. Ltd and Others

• Jurisdiction: Ireland
• Judge: Mr. Justice Kevin Cross
• Judgment Date: 03 July 2013
• Neutral Citation: [2013] IEHC 302
• Court: High Court
• Date: 03 July 2013

[2013] IEHC 302

THE HIGH COURT

[No. 7 CAB/2013]

Criminal Assets Bureau v B G S Ltd & Ors

PROCEEDS OF CRIME

IN THE MATTER OF SECTION 3(1) OF THE PROCEEDS OF CRIME ACTS 1996 TO 2005

BETWEEN

CRIMINAL ASSETS BUREAU

APPLICANT

AND

B.G.S. LIMITED, P.M., R.M., M.C. LIMITED, A.B. LIMITED, TCF F. LIMITED, McL. F. LIMITED, B.M. LIMITED, H.F. LIMITED, NWS S.S. LIMITED, T.O.I. LIMITED, S.F. LIMITED, V.F. LIMITED, S.R. LIMITED, H.S. LIMITED, DNG E. LIMITED, S.B., J.B., ISS P.T. LIMITED, B.T. LIMITED AND H.F.I. LIMITED

RESPONDENTS

PROCEEDS OF CRIME ACT 1996 S2

BAMBRICK v COBLEY 2006 1 ILRM 81 2005/3/573 2005 IEHC 43

MCK (F) v DCST LTD UNREP CLARKE 26.5.2006 2006/36/7617 2006 IEHC 185

TATE ACCESS FLOOR INC v BOSWELL 1990 3 AER 303

PROCEEDS OF CRIME ACT 1996 S8

PROCEEDS OF CRIME ACT 1996 S8(1)

?

R (ON THE APPLICATION OF MERCURY TAX GROUP & ANOR) v HM REVENUE & CUSTOMS COMMISSIONERS & ORS 2008 AER (D) 129 2008 EWHC 2721 (ADMIN)

DIRECTOR OF THE SERIOUS FRAUD OFFICE v A 2007 EWCA CRIM 1927 2007 AER (D) 12

J v CROWN PROSECUTION SERVICE 2005 AER (D) 296

FINANCE ACT 1999 S101

Criminal law- Criminal procedure- Proceeds of crime- Order- Ex parte- Discharge- Onus of proof- Evidence- Money laundering- Fuel laundering- Proceeds of Crime Act 1996 as amended

Facts: The applicant sought ex parte to set aside an order made pursuant to s. 2 Proceeds of Crime Act 1996 as amended that the 21 ^st named respondent be prohibited from disposing of property. It was argued that a case of fuel laundering had essentially been made for which there was legitimating proofs thereof. It was argued that the Bureau had failed to disclose legitimate evidence and had thus withheld vital exculpatory evidence.

Held by Cross J. in granting the application to lift the s. 2 order in so far as it affected the 21 ^st named respondent. The application was made on the basis of fuel laundering not money laundering. The obligations of disclosure had not been met to the Court, particularly in respect of legitimate explanations.

1 1. By order of this court dated 26 ^th April, 2013, I ordered pursuant to s. 2 of the Proceeds of Crime Act 1996 and 2005, that the 21 ^st named respondent be prohibited from disposing or otherwise dealing with or diminishing the value of the property set out in the Schedule to the said order in relation to the 21 ^st named respondent being the sum standing to the credit in the account bearing the number 90336572051579 held in the Bank of Ireland, 78/81 Clanbrassil Street, Dundalk, County Louth, in the name of H.F. Limited, in the sum of €292,731 or thereabouts.

2 2. The said order was obtained by the applicant ex parte and by notice of motion, the 21 ^st named respondent now seeks an order discharging the said order of 26 ^th April, 2013, insofar as the same relates to the property set out at Item 30 of Schedule 2 thereof on the grounds that the applicant failed, in making application for the said order, to comply with the duty of utmost good faith.

3 3. The original order made by the court was pursuant to an affidavit of the Chief Bureau Officer of the Criminal Assets Bureau (the Bureau), Detective Chief Superintendent Eugene Corcoran, the affidavit of Detective Sergeant Michael V. Byrne and of the Bureau Forensic Accountant Number One. The 21 ^st named respondent, in support of the motion, relied upon the affidavit of Mr. A.H. and there were affidavits in response sworn by the said Chief Superintendent Corcoran and Detective Saundra Cullen.

The Law

4 4. The law in this matter is quite clear and is not essentially in conflict. In Michael Bambrick v. Johanne Corbley (Clarke J.) [2005] IEHC 43, and in FMCK and D.C.S.T. Ltd. v. B.H. Ltd. (Clarke J.) [2006] I IEHC p. 185, the issue of the obligations of candour were extensively addressed and I propose to adopt and apply the same.

5 5. A litigant applying ex parte for an onerous order in circumstances which amount to a basic breach of the principles of fair procedure is obliged to make full and frank disclosure of all material matters in his knowledge for the judge to know and which are relevant in the exercise of the judge's discretion.

6 6. If the duty of disclosure is not observed by the plaintiff, a court will discharge the ex parte order and may refuse the plaintiff any further inter partes reliefs even though the circumstances would justify the grant of such relief - see Tate Access Floors Inc v. Boswell [1990] 3 All E.R. 303.

7 7. In Bambrick (above), Clarke J. held that the plaintiff had failed in his obligation to disclose all matters relevant to the exercise of the court's discretion and held that the test by reference to which materiality of non-disclosure should be judged is one of whether objectively speaking, the facts could reasonably be regarded as material i.e. materially to be construed in a reasonable and non-excessive manner.

8 8. It is also accepted that the consequences of non-disclosure are not automatic and involve a discretion in the court and in Bambrick (above), Clarke J. identified a number of factors being likely to weigh heavily upon the court in the exercise of its discretion:-

2 "1. The materiality of the facts not disclosed.

2 The extent to which it may be said that the plaintiff is culpable in respect of a failure to disclose. A deliberate misleading of the court is likely to weigh more heavily in favour of the discretion being exercised against the continuance of an injunction than an innocent omission. There are obviously intermediate cases where the court may not be satisfied that there was a deliberate attempt to mislead but that the plaintiff was, nonetheless, significantly culpable in failing to disclose.

3 The overall circumstances of the case which lead to the application in the first place."

9 9. In Bambrick (above), Clarke J. held that the non-disclosure was of facts of significant materiality and while there was no attempt to deliberately mislead to the court, the plaintiff's solicitor ought to have been aware of his duty to disclose all material facts and was significantly culpable in failing to bring the attention of the court, the matters which may have had a potential to influence the courts determination.

10 10. In FMCK (above), Clarke J. stated that "the obligation of full disclosure is seen as a quid pro quo for the entitlement of the applicant to obtain what are, frequently, very onerous orders, without affording the person affected by those orders an opportunity "to be heard". Clarke J. rejected the submissions on behalf of the Bureau to the effect that as acting in the public interest pursuant to statute that different principles ought to obtain than apply to Mareva or Anton Pillar procedures but he did state that the statutory scheme has some relevance to the matters in which that the Bureau may be required to disclose but does not affect the principle concerned.

11 11. In FMCK, Clarke J. did not depart from the general principles he identified in Bambrick and held that the criminality relied upon by the Bureau was UK criminality and potential Irish criminality was merely an add on. Clarke J. pointed that in a s. 2 application the court is entitled to act upon on the opinion evidence tendered under s. 8 and does not have to satisfy itself that the opinion is correct. The court is only required to be satisfied that the opinion is reasonable.

"The obligation on the relevant CAB officer is to inform the court of the basis of his opinion so as to enable the court to satisfy itself as to whether that opinion is reasonable. If the tenderer of the opinion is aware of material which might suggest, on an objective basis, that his opinion was not reasonable then he may well be under an obligation to disclose that matter to the court while, at the same time, explaining why the factual matter concerned does not alter his opinion."

12 12. In that regard, Clarke J. held that the issue of whether a crime had occurred within the Irish jurisdiction was not reasonably to be regarded as material:-

"There is a very significant difference between the matters that require to be established to justify the court in making a Mareva order, on the one hand, and a freezing order under the Act, on the other hand. A key issue in a Mareva application is the obligation on the plaintiff to satisfy the court as to a risk of dissipation of assets. There is no equivalent requirement in applications under the Act. While such a risk may be a factor in the proper exercise of the courts discretion as to whether it is appropriate to make an ex-parte s. 2 order rather than requiring notice for a s. 3 application, the issue of risk of dissipation is not, in itself, a material factor under the Act."

13 13. Clarke J. also held that other matters were not material and stated that:-

"In an application under s. 2 it is necessary to have regard to the statutory framework to determine materiality… If the court is satisfied that there is evidence, sufficient to satisfy s. 2, that the assets the subject matter of the application are the proceeds of crime, then there may, of course, be other factors that might be relevant in considering whether it was appropriate to make an ex parte order. For example it is clear that the section can apply to the proceeds of crime even where those proceeds are in the hands of an innocent party. The fact that a party might not have knowledge of or be connected with the criminality which rendered the assets concerned proceeds of crime could be a material factor in the exercise of the courts discretion to make an order ex parte."

14 14. Clarke J. went on to hold that the only matter that could have relevance was the contention that D.C., the first named defendant had been arrested and was in custody in the UK and which might well have significantly reduced...