Vehicle Tech Ltd v Allied Irish Banks Plc and Others
| Jurisdiction | Ireland |
| Judge | Miss Justice Laffoy |
| Judgment Date | 04 October 2010 |
| Neutral Citation | [2010] IEHC 525 |
| Court | High Court |
| Docket Number | [2008 No. 6170 P] |
| Date | 04 October 2010 |
[2010] IEHC 525
THE HIGH COURT
BETWEEN
AND
CONSTITUTIONAL LAW: Fair procedures
Judgment of Miss Justice Laffoy delivered on the 4th day of October, 2010.
2 1.1 The plaintiff is a limited company which prior to the events which gave rise to these proceedings was involved in the business of the repair and sale of commercial motor vehicles. It maintained two accounts in the Ashbourne branch of the first defendant (the Bank), which I understand were current accounts. At any rate, one of them, account No. 19108261, was a current account. The accounts had been opened in 2001 and the position of the Bank is that, up to the events of July 2008 which gave rise to these proceedings, they were operated in a satisfactory manner.
3 1.2 On 10 th July, 2008 a direction (the July 2008 Direction) was issued to the Bank by the Garda Bureau of Fraud Investigation (the Bureau) under s. 31(8) of the Criminal Justice Act 1994 (the Act of 1994), as substituted by s. 21 of the Criminal Justice (Theft and Fraud) Act 2001. It was signed by Detective Garda Seamus Padden and was addressed to the Bank's Anti-Money Laundering Unit. It was in letter form and the two accounts in the name of the plaintiff in the Ashbourne branch, account No. 19108261 and account No. 19108188, were referred to in it. It was stated that the purpose of the letter was to inform the Bank that the Bureau was "conducting an investigation into suspected criminal activities, including money laundering" by the plaintiff and to issue a direction in relation to the accounts in question. The letter then stated:
"It is my preliminary view that the accounts of [the plaintiff] mentioned above constitutes (sic) property captured by s. 31 .... I want to draw your attention to s. 31(8)...."
Section 31(8) was then transcribed. That was followed by the following statement:
"There is protection under this provision if the person in possession acts in accordance with directions from An Garda Síochána."
The directive part of the letter then followed. It stated as follows:
"For the purposes of s. 31(8), I hereby direct that you do not deal in any way with the accounts listed above without my specific consent until further notice. If this direction should result in your institution refusing to comply with instructions from [the plaintiff] or any other person who has power to give instructions in relation to the account, I confirm that in those circumstances I agree to you informing [the plaintiff] or such other person of the existence and content of this letter."
The final paragraph in the letter stated that it confirmed an oral direction which had been given on 10 th July, 2008 at 4.20pm to the Anti-Money Laundering Unit. The written form of the July 2008 Direction, apparently, was transmitted by fax at 17.15pm on the same day.
4 1.3 The investigation being carried out by the Bureau had been instigated as a result of a mutual assistance request which had been received in February 2008 from the Belgian authorities in relation to trucks which were stolen in Belgium, transported to this jurisdiction, sold here and, it was suspected, the proceeds of sale of which were laundered here. As a result of the investigation, the Bureau identified an account to which the proceeds of sale of some of the trucks had been lodged, which, in turn, led the Bureau to the accounts of the plaintiff to which the July 2008 Direction related. On the morning of 10 th July, 2008 searches had been carried out by the Bureau at the plaintiff's premises and the homes of its directors and certain items had been seized.
5 1.4 The Bank obeyed the July 2008 Direction. The plaintiff and its officers were not notified by the Bank that it had been received. The only officer of the plaintiff to give evidence, Mr. Louis Monaghan, testified that he first became aware that it had been made some days after the 10 th July, 2010 when a direct debit on one of the accounts was not processed by the Bank. As a result of a telephone call to the Bank, he was told that there was a problem with the account. He acknowledged that he understood that the account had been frozen.
6 1.5 In response to a letter from the plaintiff's solicitors, the Bureau, by letter dated 23 rd July, 2008 from Detective Superintendent Eugene Gallagher to the plaintiff's solicitors, stated that account No. 19108261 was under investigation and that rescinding the July 2008 Direction under s. 31(8) would not be considered until such time as the investigation, which was ongoing, was concluded. The Bureau refused to furnish a copy of the July 2008 Direction on the basis that there was "no statutory requirement to inform the customer orally or in writing of the making of such direction". The investigation was still ongoing when the action was heard.
7 1.6 Both accounts were in credit on 10 th July, 2008, one in the amount of €21,292.50 and the other in the amount of €130,990.83.
8 1.7 Before considering the case as pleaded, I propose outlining the provisions of s. 31.
2 2.1 The Act of 1994, as its long title states, is an Act to make provision for the recovery of the proceeds of drug trafficking and other offences, to create an offence of money laundering, to make provision for international co-operation in respect of certain criminal law enforcement procedures and for forfeiture of property used in the commission of crime and to provide for related matters. The offence of money laundering is dealt with in Part IV. Section 31 creates and sets out the ingredients of the offence of money laundering.
3 2.2 Sub-section (1) of s. 31 provides as follows:
"A person is guilty of money laundering if, knowing or believing that property is or represents the proceeds of criminal conduct or being reckless as to whether it is or represents such proceeds, the person without lawful authority or excuse (the proof of which shall lie on him or her) -"
(a) converts, transfers or handles the property, or removes it from the State, with intention of - ...
(b) conceals or disguises its true nature, source, location, disposition, movement or ownership or any rights with respect to it, or
(c) acquires, possesses or uses the property."
As regards the Bank, the activity which could have given rise to the offence of money laundering, assuming the monies in the two accounts in the Ashbourne branch constituted "the proceeds of criminal conduct", subject to the Bank having the necessary mens rea, was the activity stipulated in paragraph (c), that is to say, acquiring, possessing or using the monies.
4 2.3 Sub-section (7) of s. 31 is a definition provision and sub-paragraph (v) of paragraph (a) thereof, on which counsel for the second to fourth defendants (the State parties) laid emphasis, provides -
"references to any property representing the proceeds of criminal conduct include references to the property representing those proceeds in whole or in part directly or indirectly, and cognate references shall be construed accordingly."
That definition envisages tracing the proceeds of criminal conduct to property into which it has been converted.
5 2.4 Sub-section (8) provides:
"Where -"
(a) a report is made by a person or body to the Garda Síochána under s. 57 of this Act in relation to property referred to in this section, or
(b) a person or body (other than a person or body suspected of committing an offence under this section) is informed by the Garda Síochána that property in the possession of the person or body is property referred to in the section,
the person or body shall not commit an offence under this section or s. 58 of this Act if and for as long as the person or body complies with the directions of the Garda Síochána in relation to the property."
The July 2008 Direction given on 10 th July, 2010 was given in the circumstances outlined in paragraph (b). In other words, this is not a case in which a report had been received by An Garda Síochána from the Bank.
2 3.1 These proceedings were initiated by a plenary summons which issued on 28 th July, 2008. The statement of claim was delivered on 31 st July, 2008. The reliefs claimed in it are as follows:
(a) a declaration that s. 31(8) "should not enjoy the presumption of Constitutionality/of Convention compatibility and is repugnant to the Constitution and incompatible with the European Convention on Human Rights, in particular the guarantees of fair procedures, equality and property rights, and the separation of powers";
(b) a declaration that both the July 2008 Direction and the refusal of the Bank to comply with the plaintiff's demand for payment from its current account were unlawful; and
(c) damages, including, as against the State parties, "aggravated and/or exemplary damages".
3 3.2 The basis on which the plaintiff pleaded its entitlement to those reliefs was as follows:
(a) At no stage prior to the commencement of the proceedings did the defendants notify the plaintiff that the July 2008 Direction had been given, let alone the basis for doing so.
(b) After the direction was given, the plaintiff's accounts were effectively frozen. The Bank had -
(i) refused to honour demands for payment out of the accounts,
(ii) dishonoured at least one cheque made out to a valued customer of the plaintiff, and
(iii) refused to accept lodgments to the accounts.
Accordingly, the Bank was in breach of...
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