Criminal Assets Bureau v Whelan

• Jurisdiction: Ireland
• Judge: Ms. Justice Butler
• Judgment Date: 23 December 2022
• Neutral Citation: [2022] IECA 304
• Court: Court of Appeal (Ireland)
• Docket Number: Appeal Number: 2022/41

Between/

Criminal Assets Bureau

Applicant/Respondent

and

Graham Whelan

Respondent/Appellant

[2022] IECA 304

Donnelly J.

Binchy J.

Butler J.

Appeal Number: 2022/41

High Court Record No. 2021/02CAB

THE COURT OF APPEAL

Proceeds of crime – Risk of injustice – Proceeds of Crime Act 1996 – Appellant appealing from the decision on foot of which an order was made under s. 3 of the Proceeds of Crime Act 1996 in respect of four items of property – Whether the sum of €75,000 lodged in an AIB account in the appellant’s name was correctly characterised as the proceeds of crime

Facts: The appellant, Mr Whelan, appealed to the Court of Appeal from the decision of the High Court (Owens J, [2022] IEHC 26) on foot of which an order was made on 19th January, 2022 under s. 3 of the Proceeds of Crime Act 1996 in respect of four items of property listed in the schedule to the order. The appeal concerned only the first of the four items, namely the balance in an AIB bank account in the name of the appellant being a sum just in excess of €75,000. The appellant challenged the legal basis for the trial judge’s finding that this money constituted the proceeds of crime. The appellant asserted a risk of injustice to him which had not been considered by the trial judge.

Held by Butler J that the argument made by the appellant was based on a fundamental misapprehension because it conflated elements of the 1996 Act and of the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010. Butler J held that, contrary to the way in which the argument on behalf of the appellant was framed, the €75,000 was not itself being laundered; rather, it was being used as the vehicle through which other proceeds of crime, i.e. the proceeds of the appellant’s drugs trade, would be laundered. Butler J held that the proceeds of criminal conduct which are the subject of the money laundering offence under s. 7 of the 2010 Act are not the same proceeds of crime as those which are the subject of the order made at the High Court under s. 3 of the 1996 Act; nor do they have to be for the application to properly come within the scope of s. 3 of the 1996 Act. Even if the circumstances in which the appellant found himself were to be characterised as creating a risk of injustice (and Butler J was not satisfied that they did), Butler J held that there was absolutely no basis for suggesting that the risk thereby created should be characterised as serious. Butler J held that the requirement that the risk of injustice be serious suggested that the court was doing more than simply balancing the scales between the respondent, the Criminal Assets Bureau, and the appellant in an application of this nature, even taking into account the public policy considerations which provide the backdrop to any application taken by the respondent; rather, the court was looking for evidence of a particular risk of injustice that could be characterised as serious either by virtue of its immediacy, its effects and the likelihood of it materialising. It was difficult for Butler J to see how such a serious risk could be made out in the absence of evidence specifically addressed to that issue.

Butler J held that the appellant’s appeal should be dismissed.

Appeal dismissed.

JUDGMENT of Ms. Justice Butler delivered on the 23 ^rd day of December 2022

Introduction

1 . This is an appeal from the decision of the High Court (Owens J. [2022] IEHC 26) on foot of which an order was made on 19 ^th January, 2022 under s. 3 of the Proceeds of Crime Act, 1996 in respect of four items of property listed in the schedule to the order. This appeal concerns only the first of the four items, namely the balance in an AIB bank account in the name of the appellant being a sum just in excess of €75,000. The appellant challenges the legal basis for the trial judge's finding that this money constitutes the proceeds of crime.

2 . The appellant did not appeal the High Court's finding that the other three items, a smaller sum in cash, a watch and sums held in the appellant's name in a stockbroker's account constituted the proceeds of crime, and indeed did not contest this issue before the High Court either (see para. 32 of the High Court judgment).

3 . The dispute as to the status of the €75,000 held in the AIB account arises in circumstances where the evidence before the High Court established that this sum had been paid by a third party, Mr. John Wilson, to the appellant on 18 ^th January, 2019. Members of the Garda National Drugs and Organised Crime Bureau carried out a search at a hotel room on 31 ^st January, 2019. The appellant and another man were present in the hotel room at the time of the search. During the course of the search the three items listed at numbers 2 – 4 of the schedule to the court order were seized as were a number of other pieces of evidence linked to organised criminal activity and the drugs trade. On the day after the search, 1 ^st February, 2019, a formal loan agreement in respect of the sum of €75,000 was signed by Mr. Wilson and by the appellant at the appellant's solicitor's office. Subsequent garda investigations revealed the existence of the AIB bank account in the name of the appellant in which the sum of €75,000 was held.

4 . On 5 ^th February, 2019 shortly after the search and the discovery of the AIB bank account, an application was made by a member of An Garda Síochána to the District Court under s. 17(2) of the Criminal Justice (Money Laundering and Terrorist Financing) Act, 2010. The District Judge granted an order the effect of which was to prevent the AIB carrying out any service or transaction on that account for a period of 28 days. That order was renewed from time to time between February 2019 and February 2021. As he was entitled to, the appellant brought an application under s. 19 of the 2010 Act seeking to have the s. 17 order revoked. That application was adjourned from time to time until it was assigned a hearing date and was due to be heard on 16 ^th February, 2021.

5 . Because of the imminence of this hearing date and the possibility that the appellant's application might be successful, an ex parte application was made to the High Court by the Criminal Assets Bureau (“CAB”) under s. 2 of the Proceeds of Crime Act, 1996. On 16 ^th February, 2021 Owens J. granted an order under s. 2 of the 1996 Act prohibiting the appellant and any other person having notice of the order from disposing of or otherwise dealing with the assets listed in the schedule to the order. Owens J. directed, inter alia, that the AIB be served with, and the District Judge who made the orders under the 2010 Act be informed of, the making of his order. CAB then brought an application for an interlocutory order under s.3 of the 1996 Act which was heard by the High Court in December 2021. Judgment was issued on 19 ^th January 2022 and the High Court granted the orders sought.

6 . Although the notice of appeal raises grounds concerning the overlap between the District Court and the High Court proceedings, these grounds were not pursued in either the appellant's written submissions or at the hearing of the appeal. Thus, the only issue before this court on appeal concerns the correctness of the trial judge's conclusion that the sum of €75,000 in the AIB bank account constituted the proceeds of crime such that it could properly be the subject of an order made under s. 3 of the 1996 Act.

Background Facts

7 . In order to understand the central legal issue arising on this appeal it is necessary to look at the factual context in which the s. 3 application was made by CAB. This can be done briefly, in part because in his written submissions the appellant accepts the summary of facts set out at paras. 2 – 10 of the High Court judgment which has, in effect, been further summarised above. In addition, much of the broader factual background was simply not contested by the appellant before the High Court. Only one replying affidavit was filed on behalf of the appellant and in that affidavit he chose, for reasons connected with the then-ongoing criminal proceedings, not to engage with much of the substantive evidence which was adduced by CAB.

8 . It was undisputed that the €75,000 in question had been transferred by Mr. Wilson to the appellant's bank account on 18 ^th January, 2019. It was also undisputed that the €75,000 was a portion of a larger sum received by Mr. Wilson as compensation in respect of a personal injury claim arising out of an injury sustained by him at his place of work. Thus, there was no issue but that the receipt of the larger sum by Mr. Wilson from his employer's insurers was a perfectly legitimate transaction and the monies did not constitute the proceeds of crime at that time. The issue is whether the receipt of the €75,000 by the appellant from Mr. Wilson converted monies which had not been the proceeds of crime in the hands of Mr. Wilson into the proceeds of crime in the hands of the appellant. For reasons which are expanded on further below, the appellant argues that an intention imputed to him as regards his future conduct cannot change the status of the property before any action which might be characterised as criminal conduct has been taken by him.

9 . CAB argues that the €75,000 was received by the appellant as part of a money laundering scheme under which the appellant would repay Mr. Wilson using monies derived from his criminal activities. CAB relied on two strands of evidence in this regard. The first constitutes evidence of serious criminality on the part of the appellant. This included evidence of his past convictions including numerous and serious convictions for drug dealing; evidence of his involvement in the activities of an organised criminal gang; evidence of his association with persons known to be actively involved in the drugs trade; evidence of his suspected involvement in murder and...