Criminal Assets Bureau v Base Garage Supplies Ltd

• Jurisdiction: Ireland
• Judge: Hon. Ms. Justice Stewart
• Judgment Date: 16 April 2018
• Neutral Citation: [2018] IEHC 192
• Docket Number: [2013 No. 7 CAB]
• Court: High Court
• Date: 16 April 2018

[2018] IEHC 192

THE HIGH COURT

PROCEEDS OF CRIME

Stewart

[2013 No. 7 CAB]

IN THE MATTER OF THE PROCEEDS OF CRIME ACTS 1996 – 2005

BETWEEN

CRIMINAL ASSETS BUREAU

APPLICANT

- AND -

BASE GARAGE SUPPLIES LIMITED, PATRICK MURPHY, ROSEMARY MURPHY, MIDLAND COAL LIMITED, ATHBOY BIOFUELS LIMITED, TCF FUELS LIMITED, MCLIDDY FUELS LIMITED, BENALI MARKETING LIMITED, HIBERNIA FUELS LIMITED, NWF SERVICE STATIONS LIMITED, THE ELEVENTH RESPONDENT, SAVE FUELS LIMITED, VIENNA FUELS LIMITED, SHIN RAM LIMITED, HOODA STORES LIMITED, DMG ENERGY LIMITED, THE SEVENTEENTH RESPONDENT, THE EIGHTEENTH RESPONDENT, ISS PROPERTY TRADING LIMITED, BARRISTERS TRADING LIMITED

and

THE TWENTY-FIRST RESPONDENT

RESPONDENTS

- AND -

THE MINISTER FOR PUBLIC EXPENDITURE AND REFORM

NOTICE PARTY

Proceeds of crime – Evidential threshold – Property – Applicant seeking orders pursuant to ss. 3 and 7 of the Proceeds of Crime Act 1996 – Whether the appropriate evidential threshold had been met

Facts: The applicant, the Criminal Assets Bureau, commenced proceedings by way of an originating notice of motion seeking ex parte relief pursuant to s. 2 of the Proceeds of Crime Act 1996. The notice of motion was issued on 26th April, 2013. On foot of that application, orders were made by Cross J pursuant to s. 2 in respect of the property set out in the schedule attaching to the originating notice of motion. In the intervening period, consent orders were made in respect of some of the respondents. At a hearing on 18th and 19th January, 2018, the applicant opened extensive documentation and sought to satisfy the High Court that the appropriate evidential threshold had been met in order to warrant the making of orders pursuant to ss. 3 and 7 of the 1996 Act.

Held by Stewart J that the Court proposed to make the following orders: (1) an order pursuant to ss. 3 and 7 in respect of the first respondent, Base Garage Supplies Ltd, and Item 1 in the schedule attached to the notice of motion; (2) an order pursuant to s. 3 in respect of the fourth respondent, Midland Coal Ltd, and Items 3, 4 and 5, together with an order pursuant to s. 7 in respect of Items 3 and 5; (3) an order pursuant to ss. 3 and 7 in respect of the fifth respondent, Athboy Fuels Ltd, and Items 6 and 7; (4) an order pursuant to ss. 3 and 7 in respect of the sixth respondent, TCF Fuels Ltd, and Items 8 and 9; (5) an order pursuant to ss. 3 and 7 in respect of the seventh respondent, McLiddy Fuels Ltd, and Items 10 and 11; (6) an order pursuant to ss. 3 and 7 in respect of the eighth respondent, Benali Marketing Ltd, and Item 12; (7) an order pursuant to s. 3 in respect of the ninth respondent, Hibernia Fuels Ltd, and Items 13 and 14, together with an order pursuant to s. 7 in respect of Item 13; (8) an order pursuant to ss. 3 and 7 in respect of the tenth respondent, NWF Service Stations Ltd, and Items 15 and 16; (9) an order pursuant to ss. 3 and 7 in respect of the twelfth respondent, Save Fuels Ltd, and Items 18, 19 and 20; (10) an order pursuant to ss. 3 and 7 in respect of the thirteenth respondent, Vienna Fuels Ltd, and Item 21; (11) an order pursuant to ss. 3 and 7 in respect of the fourteenth respondent, Shin Ram Ltd, and Items 22 and 23; (12) an order pursuant to ss. 3 and 7 in respect of the fifteenth respondent, Hooda Stores Ltd, and Items 24 and 25; (13) an order vacating the s. 2 order in respect of the sum of €6251.48, which formed part of Item 2, it being the property of the second and third respondents, Mr and Ms Murphy; and (14) an order vacating the s. 2 order in respect of the property listed as Item 28, it being the property of the nineteenth respondent, ISS Property Trading Ltd.

Orders granted.

JUDGMENT of the Hon. Ms. Justice Stewart delivered on the 16th day of April, 2018.

1 The within proceedings commenced by way of an originating notice of motion seeking ex parte relief pursuant to s. 2 of the Proceeds of Crime Act 1996, as amended. The notice of motion was issued on 26 ^th April, 2013. On foot of that application, orders were made by Cross J. pursuant to s. 2 in respect of the property set out in the schedule attaching to the originating notice of motion. In the intervening period, consent orders were made in respect of some of the respondents and matters arising from their involvement do not form part of this ruling.

Background

2 The applicant in these proceedings is the Criminal Assets Bureau (CAB), a statutory body responsible for identifying assets which derive or are suspected to derive directly or indirectly from the proceeds of crime. They are also tasked with the responsibility of taking the appropriate steps to deprive persons of such assets or the benefit of such assets.

3 In or about mid-2012, the applicant commenced an investigation into connections between the respondents and suspected fuel laundering, money laundering and related activities occurring in this jurisdiction. That investigation culminated in simultaneous searches being carried out at nineteen locations on or about 13 ^th March, 2013, on foot of applications made to the District Court to authorise same.

4 Following the search and seizure of the relevant properties the subject matter of these proceedings, as stated above, an application was made to Cross J. on 26 ^th April, 2013, for orders pursuant to s. 2 of the 1996 Act, as amended. The application was grounded upon the belief evidence required by s. 8 of the 1996 Act, as amended, which was that of the then Chief Bureau Officer (CBO) of CAB, Eugene Corcoran. He outlined the grounds for his belief, relying upon affidavit evidence filed in support of the application, and requested anonymity in respect of certain relevant Bureau officers.

5 The substantive basis for the belief evidence of CBO Corcoran was set out at length in the affidavit of Detective Sergeant Michael V. Byrne and in other supporting affidavits. DS Byrne outlined the factual background to the investigation and stated that, since 1998, he had been involved in Bureau investigations concerning cross-border crimes, particularly those related to oil fraud and money laundering.

6 The background to the illegal fuel trade and related money laundering activities was described in detail by DS Byrne in his affidavit sworn on 26 ^th April, 2013. The following is a synopsis of the background which he outlined to the Court. The figures cited reflected the relevant amounts as they stood in and around that time. In 2013, the annual return to the exchequer from the sale of auto-fuel was approximately €1,800,000,000 excise tax and VAT, accounting for approximately 5% of total revenue receipts.

7 Marked mineral oil, more commonly known as diesel, is a legitimate product used by the farming community and some sectors of industry, as permitted by legislation. A dye or marker is added to the fuel to distinguish it from other mineral oils. This marker is added before the product is imported into the country. Although the marked fuel is capable of being used in all types of vehicles, it is liable to mineral oil taxes at a lower rate than the standard rate levied on unmarked diesel. The excise rate for marked mineral oil is €102.28 per thousand litres, whereas the excise rate for unmarked diesel is €479.02 per thousand litres. Furthermore, the VAT rate on marked mineral oil is 13.5%, compared to 23% on unmarked fuel. On 19 ^th December, 2012, the average retail price of unmarked diesel, commonly referred to as white diesel, road diesel or DERV, was approximately 153.09c per litre, while the average price of marked diesel was 92c per litre.

8 The cost differential between these various types of fuel has been exploited by organised criminal elements over many years by engaging in diesel laundering. Fuel laundering fraud involves the laundering, i.e. washing, of large quantities of Marked Mineral Oil (MMO) i.e. green diesel, commonly referred to agricultural diesel, to produce what is ostensibly white diesel (DERV). The laundering process removes the dye from marked diesel through the use of bleaching agents, thereby allowing that fuel to be passed off as unmarked fuel. It is an offence to launder fuel. Such criminal activity causes distortion within the industry and results in a large loss of revenue to the State. The cost of laundering fuel varies depending on the type of laundering material used but, based on intelligence available to the applicant in these proceedings, it is believed to be in the region of 10-15c per litre. Using these figures, the profit to a fuel launderer who misappropriates 20,000 litres of fuel (i.e. the capacity of the type of rigid tanker used to carry such fuel) is calculated to be approximately €9,200.

9 In addition to laundering based on the marking of diesel, petrol can be “stretched”. This is a process whereby methanol is illegally added to petrol to increase the volume that can ultimately be sold on to the consumer. Stretched fuel gives a lower mileage to the litre and can also cause significant damage to vehicles if used over long periods.

10 The price differential between this jurisdiction and the jurisdiction of Northern Ireland determines what product is smuggled, how it is smuggled and at what particular time the smuggling occurs. In the past, investigations carried out by custom agents in both jurisdictions had run into difficulties due to the ongoing security situation caused by local paramilitary activity. However, following the declaration of a ceasefire, such investigations have had greater success.

11 Over the past number of years, it appears that the laundering and sale of marked diesel has become more prevalent. The process has evolved over time and a variety of methods are used, all of which are very hazardous and result in the production of large amounts of toxic sludge. The most common process uncovered in recent years is the filtration method, which involves the pumping of diesel from one...