Criminal Assets Bureau v Craft

• Jurisdiction: Ireland
• Judge: O'Sullivan J.
• Judgment Date: 12 July 2000
• Neutral Citation: [2000] IEHC 134
• Court: High Court
• Docket Number: [1998 No. 174 R]
• Date: 12 July 2000

[2000] IEHC 134

THE HIGH COURT

No. 174 R/1998

CRIMINAL ASSETS BUREAU (CAB) v. CRAFT & MCWATT

REVENUE

BETWEEN

THE CRIMINAL ASSETS BUREAU

PLAINTIFF

AND

LINDSAY CRAFT AND CLAIRE McWATT

DEFENDANTS

Citations:

CRIMINAL JUSTICE (DRUG TRAFFICKING) ACT 1996 S2

CRIMINAL ASSETS BUREAU ACT 1996 S3

CRIMINAL ASSETS BUREAU ACT 1996 S10(4)

CRIMINAL ASSETS BUREAU ACT 1996 S10(7)

FRAUDULENT CONVEYANCES ACT 1634 S10

RSC O.60

TRIMBOLE, STATE V GOV OF MOUNTJOY PRISON 1985 IR 550

CRIMINAL ASSETS BUREAU ACT 1996 S8(1)(a)

TAXES CONSOLIDATION ACT 1997 S869(1)(b)

PROCEEDS OF CRIME ACT 1996 S8(1)

TAXES CONSOLIDATION ACT 1997 S966

TAXES CONSOLIDATION ACT 1997 S961

AG, PEOPLE V O'BRIEN 1965 IR 142

DPP, PEOPLE V QUILLIGAN 1987 ILRM 606

CRIMINAL ASSETS BUREAU ACT 1996 S8(1)(a)(ii)

CRIMINAL ASSETS BUREAU ACT 1996 S8(10)

MCCLEAN, IN RE 1950 IR 180

DEIGHAN V HEARNE 1990 1 IR 499

PROCEEDS OF CRIME ACT 1996 S8

GALLAGHER V REVENUE COMMISSIONERS 1995 1 IR 55

EMPLOYMENT EQUALITY BILL 1996, IN RE 1997 2 IR 321

RSC O.18

RSC O.19 r29

CRIMINAL ASSETS BUREAU (CAB) V MCSWEENEY UNREP O'SULLIVAN 11.4.2000

TAXES CONSOLIDATION ACT 1997 S961(1)

TAXES CONSOLIDATION ACT 1997 PART XXXXII CH 1

TAXES CONSOLIDATION ACT 1997 S965(1)(b)

TAXES CONSOLIDATION ACT 1997 S966(5)

TAXES CONSOLIDATION ACT 1997 S966(5)(a)(i)

VALUE ADDED TAX ACT 1972 S25(2)(dd)

VALUE ADDED TAX ACT 1972 S25(2)

VALUE ADDED TAX ACT 1972 S25(2)(j)

Synopsis:

Taxation

Revenue; proceeds of crime; first named defendant had been suspected of being drugs trafficker and had been arrested by Gardai; while in custody first named defendant's assets had been frozen under mareva injunction and proceedings initiated; plaintiff claims arrears of income and value added tax plus interest, a declaration that first named defendant is beneficial owner of monies lodged to two identified bank accounts and a dwelling house, and a further declaration that first named defendant had been obliged to discharge income tax and value added tax for appropriate years and had failed to do so; first named defendant had allegedly transferred various interests to second named defendant in order to defraud creditors; whether arrest of defendant on drugs offences had been purely to facilitate his interrogation in relation to arrears of tax; whether a prior demand for payment of income tax is required before the commencement of any proceedings;

Held: Defendant arrested lawfully; commencement of proceedings for income tax had been premature; declarations that first named defendant is beneficial owner of monies lodged to the two accounts identified granted; decree for value added tax and arrears thereof granted.

Criminal Assets Bureau v. Craft - High Court: O'Sullivan J. - 12/07/2000 - [2001] 1 IR 121

The defendant had been arrested pursuant to a drugs investigation and was subsequently served with tax assessments whilst in custody. In these proceedings the plaintiff sought to enforce the assessments in question and also sought declarations regarding the ownership of various monies and property. The first defendant claimed that the arrest in question was in violation of his constitutional rights. In addition the first defendant claimed that no opportunity had been afforded to appeal the tax assessments in question. O'Sullivan J held that it had not been shown that the arrest of the first defendant was spurious and thus the "fruits of the poisoned tree" doctrine did not apply. Applying the presumption of regularity Mr Justice O'Sullivan was satisfied that the plaintiff's officials were authorised to carry out the duties in question. However a prior demand should have been served in relation to the income tax assessment and in this regard the proceedings were premature. The proceedings with regard to the VAT demand were not premature and the declaration being sought would be granted. The presumption of advancement as between man and wife relating to the ownership of monies did not apply in such an illegal scheme. Therefore a declaration that the first defendant was the beneficial owner of the monies in question would issue.

1 JUDGMENT of O'Sullivan J.delivered the 12th July, 2000.

INTRODUCTION

2 At 7.30 in the morning of Thursday 7th May, 1998 a team of local Gardai, officers of the Criminal Assets Bureau and the National Drugs Unit under the supervision of Detective Inspector Patrick Byrne carried out a dawn raid at Cloonkeen, Westport Road, Castlebar, Co Mayo where the Defendants, who have since married, were living together as common law man and wife. The first Defendant was aggressive and could not be interviewed: the second Defendant was interviewed and I have been told about this in evidence.

3 Fifty minutes later at 8.20 a.m. the first Defendant was arrested and subsequently detained under Section 2 of the Criminal Justice (Drug Trafficking) Act, 1996.He was released at approximately 9.00 p.m. on the following day Friday the 8th. A thorough search was carried out at the house during the rest of the morning.

4 The background to this episode was that members of the Plaintiff were in possession of information that packages of cannabis had been delivered to the first Defendant at these premises and subsequently passed on by him. They suspected him of being engaged in drug trafficking and on one earlier occasion had arrested him at Shannon Airport without positive result. Evidence was given in this case by Detective Inspector Byrne in regard to the first Defendant's criminal record which includes a drug-related offence in Scotland.

5 While the first Defendant was in custody the second Defendant was questioned by Detective Inspector Byrne in the presence of Detective Garda Rice and I have been given evidence of what she said. On Friday the 8th May the instant proceedings were issued and a mareva injunction obtained from the late Shanley J. freezing the assets of the Defendants below £170,000. Furthermore, on the 7th May Revenue Officer members of the Criminal Assets Bureau completed tax assessments for some£138,000 for income tax for the year 1996/7 and three Value Added Tax assessments for the period March/April 1995 to November/December 1997 for some £158,000 and on the 8th May these assessments were served on the first Defendant while he was in custody.

6 Both these assessments were appealed on the 27th May, 1998 on behalf of the first Defendant by his accountant John Allen of O'Connell Street, Limerick but these appeals were rejected on the 29th May, 1998 on the basis that the appeal was not accompanied by the amount (£56,000plus) admitted due. It was stated in evidence on behalf of the Plaintiff that this rejection was communicated promptly whilst there was still time for a valid appeal at least in the case of the income tax.

7 On the 9th June, 1998 demand for the tax claim was served on the first Defendant by a member of An Garda Siochana who was not an officer of thePlaintiff.

The Parties

8 The first Defendant comes originally from Scotland and came to Ireland in January, 1994. The second Defendant came with him. He was last in this jurisdiction on the 15th July, 1998 for an appearance in Court in connection with assault charges. At that stage he informed the Gardai that he was leaving the country for the Isle of Man but not Scotland where he was being sought on criminal charges. The house at Cloonkeen was in the joint names of the Defendants as was a bank account with the TSB bank at Castlebar.

9 The second Defendant came to this country in January, 1994 with the first Defendant and lived with him in Castlebar as his common law wife. They were married in November, 1998. Whilst in Castlebar she drew social welfare and the authorities are claiming (not in these proceedings) that she has been overpaid by some £6,000 plus. When interviewed on the 7th May, 1998 she told the Gardai that the money in her account had been put there by the first Defendant "so that tax would not have to be paid on it" as it was the profits from his windscreen replacement business. At all times both Defendants denied that the first Defendant was involved in drug trafficking and both have sworn affidavits to that effect.

10 The Plaintiff is an individual officer of the body known as the "Criminal Assets Bureau" which is a body corporate established pursuant to Section 3 of the Criminal Assets Bureau Act, 1996. Section 10(4) of that Act provides that where a Bureau officer who is an officer of the Revenue Commissioners (as is the individual Plaintiff in these proceedings) exercises revenue functions he shall do so in the name of the Bureau and not in his own individual name. That is why the Plaintiff is styled "The Criminal Assets Bureau" notwithstanding that he is an individual who remains anonymous pursuant to an Order which I made under Section 10(7) of the Act of 1996 following evidence from Detective InspectorByrne that he would be concerned for the safety of and could not rule out threats to the Revenue Officers of the Bureau if their names were disclosed. Documents containing the name of the Plaintiff and another anonymous officer of the Bureau who gave evidence were handed to me with the names disclosed but to the Defendant's lawyers with the namesobscured.

The Claim

11 The Plaintiff claims in excess of £350,000 arrears of Income and Value Added Tax plus interest, a declaration that the first Defendant is beneficial owner of monies lodged to two identified accounts at the Trustee Savings Bank Castlebar and of the dwelling house at Cloonkeen, a further declaration that the first Defendant was obliged to discharge Income Tax and Value Added Tax for the appropriate years and that he failed so to do.

12 The declaration sought that the first Defendant is beneficial owner of the monies in the bank accounts and of the house is grounded on an allegation in the amended Statement of Claim to the effect that he transferred monies into those accounts and an interest in the...