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You are here: BAILII >> Databases >> Jersey Unreported Judgments >> In the matter of the Berthiaume Confiscation [2016] JRC 215 (22 November 2016) URL: http://www.bailii.org/je/cases/UR/2016/2016_215.html Cite as: [2016] JRC 215 |
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Before : |
J. A. Clyde-Smith, Esq., Commissioner, and Jurats Fisher and Blampied |
Her Majesty's Attorney General as Applicant
IN THE MATTER OF AN APPLICATION SEEKING TO CANCEL REGISTRATION OF AN EXTERNAL CONFISCATION ORDER GRANTED OURSUANT TO THE DRUG TRAFFICKING OFFENCES (JERSEY) LAW 1988, AS MODIFIED AND INCLUDED IN THE THIRD SCHEDULE TO THE DRUG TRAFFICKING OFFENCES (DESIGNATED COUNTRIES AND TERRITORIES) (JERSEY) REGULATIONS, 1997.
Crown Advocate A. J. Belhomme for the Applicant.
JUDGMENT
THE commissioner:
1. The Attorney General applies to set aside the registration by this Court of an external confiscation order made by the Court of Québec, (Criminal Division) ("the Québec Court") and this invoking the inherent jurisdiction of the Court.
2. Following an investigation by the Royal Canadian Mounted Police, Sarto Berthiaume ("the defendant") pleaded guilty on 1ST May, 2007, before the Québec Court, to being a party to a conspiracy to import cocaine into Canada. On that date, a confiscation order ("the external confiscation order") was made over the sum of US$125,699.70 held by the defendant in an account in his name with the Royal Bank of Canada (Channel Islands) Limited, in St Helier ("the bank account").
3. By letter of request, the Attorney General of Canada requested that the external confiscation order be registered in the Court so that the bank account could be forfeited and confiscated as proceeds of crime in satisfaction of the external confiscation order. It was certified that the time for the defendant to appeal the external confiscation order had expired.
4. On 4TH April, 2008, on the application of the Attorney General, the Court ordered the registration of the external confiscation order under Article 39(4) of the Drug Trafficking Offences (Jersey) Law 1988, as modified and included in the Third Schedule to the Drug Trafficking Offences (Designated Countries and Territories) (Jersey) Regulations 1997. The Viscount was ordered to realise the bank account and to pay the funds, after deduction of the Viscount's reasonable fees and expenses, into the Drug Trafficking Confiscations Fund, pursuant to Article 24(2) of that law.
5. On 15TH January, 2014, some five years later, the Québec Court of Appeal confirmed a decision by the Québec Court granting a stay of proceedings in relation to twelve accused (other than the defendant) because of an abuse of process by the Royal Canadian Mounted Police in relation to a number of investigations including that involving the defendant.
6. On 9TH April, 2015, in reliance on the same complaint about the conduct of the Royal Canadian Mounted Police, the Québec Court of Appeal allowed an appeal by the defendant and authorised him to withdraw his guilty plea. It set aside his conviction and sentence, stayed the proceedings against him and held that the external confiscation order was invalidated and no longer in effect.
7. By letter of request dated 8TH July, 2015, the Attorney General of Canada now seeks the assistance of the authorities in this jurisdiction in:-
"Vacating the registration by the Royal Court of Jersey, dated April 4, 2008 pertaining to the Confiscation Order, dated October 23, 2007 of the Court of Quebec, District of Montreal, Criminal Division with respect to the 'realisable property' of Sarto Berthiaume of $125,699.70 US in account number 402 088-9 in the name of Sarto Berthiaume, at the Royal Bank of Canada (Channel Islands) Limited, 19-21 Broad Street, St Helier, Jersey; and to discontinue the enforcement of the said Order.
If necessary, take the required steps to refund the money in the above mentioned bank account to the benefit of Sarto Berthiaume. Alternatively, take the required steps to refund the money directly to Sarto Berthiaume.
The Attorney General further requests that the authorities of the Bailiwick of Jersey notify in writing Canada's Central Authority once the money has been returned to Mr Berthiaume."
8. On 28th July, 2016, the Attorney General brought a representation seeking the cancellation of the registration of the external confiscation order, pursuant to the Court's inherent jurisdiction and/or by way of comity with the Québec Court and an order directing the Treasurer of the States to pay the sum (with accrued interest) still held, directly to the account of the defendant in Québec.
9. Crown Advocate Belhomme steered the Court skilfully through the relevant legislation. As stated above, the external confiscation order in this case was registered by the Royal Court pursuant to Article 39(4) of the Drug Trafficking Offences (Jersey) Law, 1988 as modified and included in the Third Schedule to the Drug Trafficking Offences (Designated Countries and Territories) (Jersey) Regulations, 1997 ("the 1997 Regulations").
10. On 23rd July, 2008, the 1997 Regulations were repealed and replaced by the Drug Trafficking Offences (Enforcement of Confiscation Orders) (Jersey) Regulations 2008 ("the 2008 Drug Trafficking Regulations").
11. On 4th August, 2014, both the Drug Trafficking Offences (Jersey) Law 1988 and the 2008 Drug Trafficking Regulations were repealed by the Proceeds of Crime and Terrorism (Miscellaneous Provisions) (Jersey) Law, 2014 ("the 2014 Law").
12. Article 1 of the 2014 Law contains transitional and saving provisions. Article 1(5) provides that any monies remaining in the Drug Trafficking Confiscations Fund following entry into force of the 2014 Law should thereafter be transferred to the Criminal Offences Confiscation Fund ("the COCF") established pursuant to Article 24 of the Proceeds of Crime (Jersey) Law, 1999 ("the 1999 Law"). The confiscated monies in this case are therefore currently held in the COCF.
13. Article 1(3) of the 2014 Law provides as follows:-
14. The Proceeds of Crime (Enforcement of Confiscation Orders) (Jersey) Regulations 2008 ("the 2008 Regulations") were made pursuant to Articles 28A and 38 of the 1999 Law.
15. The 2008 Regulations came into force on 23rd July, 2008.
16. The Schedule to the 2008 Regulations sets out the 1999 Law in its modified form ("the Modified 1999 Law"). The Modified 1999 Law applies generally to registration and enforcement of external confiscation orders. It follows that the Modified 1999 Law is the statute which applies for the purposes of this application.
17. Part 4 of the Modified 1999 Law is entitled "REGISTRATION OF EXTERNAL CONFISCATION ORDERS". Within part 4, Article 39 of the Modified 1999 Law provides as follows;-
18. Apart from Article 39(3) above, the Modified 1999 Law is otherwise silent on the question of cancelling the registration of an external confiscation order in circumstances where the external confiscation order has subsequently been invalidated by order of the overseas court.
19. There is no Jersey authority to guide the Court as to the approach it should adopt when considering whether to cancel the registration of an external confiscation order in these circumstances.
20. Guernsey legislation essentially mirrors the provisions of the Modified 1999 Law. There is no Guernsey authority in point.
21. In the United Kingdom, the current legislation which governs registration and enforcement of external confiscation orders is the Proceeds of Crime Act, 2002 (External Requests and Orders) (Order) 2005 ("the 2005 Order") - made pursuant to section 444 of the Proceeds of Crime Act, 2002 ("the 2002 Act"). Jersey has not enacted legislation equivalent to either the 2002 Act or the 2005 Order and it is therefore of greater assistance to look for guidance to the English legislation which preceded the 2002 Act and the 2005 Order (such legislation, under the transitional provisions of the 2002 Act, may still apply in England and Wales in certain circumstances and mirrors more closely the legislation in force in this jurisdiction).
22. Although it is a case decided under the 2002 Act, Crown Advocate Belhomme had found one English authority which considered the approach to be adopted in relation to the potential return of confiscated funds when a confiscation order is later cancelled following a successful appeal, namely R (on the application of Seago) v Her Majesty's Courts and Tribunal Service [2012] FWHC 3490 (Admin).
23. The claimant, Seago, had been convicted of being concerned in the management of a company whilst disqualified. A confiscation order had been made (effectively by consent) on the basis that the benefit obtained by Seago was the entire turnover for the company during his period of disqualification. In accordance with the order, Seago paid to the Court Service the amount assessed to be his available assets. After the time for appealing had expired, part of the money was paid to the liquidator of the company for distribution to the creditors and the balance was paid to the Treasury. Following the judgment delivered in an unrelated case two years later, to the effect that "benefit" in disqualification cases was the director's personal benefit, Seago sought leave to appeal out of time, which was uncontested by the prosecution. It was subsequently agreed that the confiscation order would be quashed if Seago agreed to an order being made in the lesser amount of his personal benefit. The money paid to the Treasury was returned to Seago. The money paid to the liquidator, some £224,198, was not. He brought proceedings by way of judicial review, arguing that the Court Service was under a public law duty to return the whole of the amount he had paid to it, less the amount of the new reduced confiscation or, alternatively, following the quashing of the confiscation order, it was void ab initio, or retrospectively unlawful.
24. Openshaw J reached this conclusion at paragraph 31:-
25. In the case before us, the confiscated funds remain identifiable within the COCF, and in the event of the registration of the external confiscation order being set aside, Seago would suggest, and the Attorney General accepts, that the Treasurer of the States would be obliged to repay the same to the defendant, save for the issue of whether the confiscated funds still constitute the proceeds of crime which we deal with below. That obligation would not extend to any part of the confiscated funds that had been lawfully paid away by the Treasurer of the States. The registration of the external confiscation order must, of course, be set aside before that obligation can arise.
26. Current Isle of Man legislation mirrors the 2002 Act. No relevant case in the Isle of Man decided under those provisions has been found.
27. The Privy Council case of Isaacs v Robertson [1985] AC 97 involved contentious litigation in which an interlocutory injunction had been made and which it was later held should not have been made. In rejecting an argument that the interlocutory injunction was void ab initio and that the appellants therefore could not have been in contempt of it, Lord Diplock said this at p. 102:-
28. The starting point in the case before us is that the order of the Court of 4th April, 2008, registering the external confiscation order was regularly made; it is not contended that it should not have been made at that time. No question arises of it being obtained in breach of natural justice.
29. Should the Attorney General be required to apply to the Court of Appeal for leave to appeal against the order that he sought some eight years out of time, or can this Court set it aside in the exercise of its inherent jurisdiction, notwithstanding that it was regularly made at the time? The defendant was not a party to the Attorney General's application to register the external confiscation order and it is questionable therefore whether he would have the locus to seek leave to appeal out of time himself.
30. As the Court of Appeal said in C Le Masurier Limited and Clarke v Alker and Northern Inn Limited [1992] JLR 123 at p. 129, the locus classicus on the subject of inherent jurisdiction is to be found in the speech of Lord Morris of Borth-y-Gest in Connelly v DPP (4) [1964] AC at 1301:-
31. The leading Jersey authority on inherent jurisdiction is the Court of Appeal decision in Mayo Associates, Troy Associates and TTS International Limited v Cantrade Private Bank Switzerland (CI) Limited and Touche Ross & Company [1998] JLR 173, which was concerned with whether the Royal Court had an inherent jurisdiction to appoint the Viscount to put a settlement offer made by the first defendant who had allegedly defrauded investors. At page 187, Smith JA said this:-
And at page 188 he continued:
Finally, at page 191 he concluded:
32. In Eves and Eves née Buchel v Hambros Bank (Jersey) Limited [2000] JLR 221, it was held that the absence of precedent does not mean there is no inherent jurisdiction to grant the relief sought (in that case, to make orders preventing vexatious litigation), or that such jurisdiction should not be asserted. The Court's inherent jurisdiction can co-exist with a statutory jurisdiction.
33. In the matter of the Representation of T N Moustras and K Moustras née Gavriel [2006] JLR 491, the Court held that it had the power to cancel a hypothèque conventionnelle simple when there was no power under the Loi (1880) sur la Propriété Foncière (the 1880 Law) to do so. Although there was express power to cancel legal or judicial hypothecs, the 1880 Law was silent when it came to the cancellation of a hypothèque conventionnelle simple. Having quoted the above passage from the judgment of the Court of Appeal in Mayo v Cantrade, Bailhache, Bailiff found that the Court had an inherent power to do so, citing this passage from the judgment of the Court of Appeal in Jones (SM) v Attorney General [2000] JLR at 110:-
34. This decision is of particular relevance to the case before us, because Article 39(3) of the Modified 1999 Law provides a mandatory requirement for the cancellation of an external confiscation order in limited situations but is entirely silent on whether there are other circumstances in which the Court may cancel such a registration.
35. In Syvret v AG [2012] (1) JLR 132, the Court held that in the exercise of its inherent jurisdiction it could reopen a concluded appeal from the Magistrate's Court and admit fresh evidence when there was no statutory jurisdiction to do so and no other statutory remedy available. In his judgment at paragraph 9, Sir Christopher Pitchers, Commissioner, set out the competing principles at play:-
At pages 141 and 142 of the judgment he continued:-
36. We draw from these authorities the proposition that the court's inherent jurisdiction is a virile and viable doctrine that forms part of procedural law and is derived from the need of the Court to have and to exercise powers to make it effective as a Court; the vital clue being necessity. The Court has a procedural power because it has to have it to be a Court in any meaningful sense (Mayo v Cantrade). The absence of precedent is no bar to its exercise and it can exist in respect of matters about which a statute is silent and co-exist with or supplement a statutory jurisdiction (Eves v Hambros and Jones v AG).
37. It is necessary to consider the function of the Court when it registered the external confiscation order, in what are civil proceedings conducted on behalf of the Government of Canada, exercising its rights over Jersey assets - see United States v Montgomery and another [2001] 1 WLR 196, (at paragraph 30), Representation of Her Majesty's Attorney General in the matter of Rosenlund and another [2015] JRC 186 (at paragraphs 39 and 41) and Representation of Doraville Property Corporation [2016] JRC 128 (at paragraph 95).
38. As this Court said in Rosenlund, in the context of the Modified 1999 law:-
39. In this case, the Court was assisting the Canadian authorities to recover assets located in Jersey that had been confiscated from the defendant in the criminal proceedings before the Québec Court. The substantive order was therefore made by the Québec Court. The role of this Court was to cooperate in the recovery of those assets by registering the external confiscation order in this jurisdiction. This Court was not called upon to consider the merits of the external confiscation order, but whether the requirements for registration under Article 39 of the 1997 Regulations had been met.
40. Quoting from Doraville, which was concerned with the registration of external civil asset recovery orders pursuant to the Civil Asset Recovery (International Cooperation) (Jersey) Law 2007, at paragraph 95:-
41. Thus, the Court was not making its own substantive confiscation order; it was assisting the Canadian authorities by the registration of the confiscation order made by the Court. The Jersey Court therefore had a subsidiary and essentially procedural role in the matter. If the external confiscation order is subsequently set aside by the Québec Court of Appeal, then there is no confiscation of Jersey based assets and as a matter of logic and necessity, the registration here must fall away with it.
42. It is not for this Court to consider the merits of the defendant's appeal to the Québec Court of Appeal or the grounds upon which his conviction and the confiscation order were set aside. The fact is that they have been set aside. There is no conviction and no confiscation order. The proceedings against him have been stayed for abuse of process. It would be anachronistic (as well as grossly unjust) in those circumstances for the registration of the now non-existent external confiscation order here, to be maintained over assets which have not been confiscated and which the Canadian authorities say should now be returned to the defendant.
43. Furthermore the request for the registration of the external confiscation order to be set aside has come from the Attorney General of Canada, following the decision of the Québec Court of Appeal, and it is in the interests of comity, described as a duty by the Court of Appeal in Solvalub Limited v Match Investment Limited [1996] JLR 361, that effect be given to that request. This is particularly the case in the context of this legislation, the purpose of which is to facilitate international cooperation in the recovery of assets from criminals. That cooperation must extend to the freeing of assets of defendants whose conviction and confiscation order have been set aside.
44. We are not concerned here, in our view, with the competing interest of finality in litigation, where one unsuccessful party is seeking to reopen litigation long since finalised. This is a request from the Canadian authorities, the very authority that requested the registration in the first place, for it to be set aside because the order upon which it was based has itself now been set aside.
45. As noted above the fact that the Modified 1999 Law is silent as to the power of the Court to set aside the registration in these circumstances is no bar to the exercise of the Court's inherent jurisdiction. Article 39(3) mandates limited circumstances in which the Court must set aside such a registration, essentially where the external confiscation order has been satisfied by whatever means, but that pre-supposes the validity of the external confiscation order itself. The Modified 1999 law is silent about the power of the Court in circumstances where an external confiscation order, that has been registered here, is set aside by the courts of the jurisdiction that made it, but it cannot have been the intention of the legislature to maintain, in this jurisdiction, the registration of an external confiscation order that no longer exists and this in the face of a request from the relevant foreign authority that the registration should be set aside.
46. The question we have to ask ourselves is whether, following the setting aside of the external confiscation order by the Québec Court of Appeal, it is necessary for this Court to regularise the position in this jurisdiction by setting aside its registration here?
47. We conclude that it is necessary. Taking into account the Court's subsidiary and essentially procedural role in the registration of an external confiscation order, it has the inherent jurisdiction to set that registration aside in circumstances where the external confiscation order has itself been set aside by the courts of the jurisdiction that made it and where the authorities of that jurisdiction have requested it to do so.
48. We accept that this matter could be dealt with by way of an application by the Attorney General to the Court of Appeal for leave to appeal, some eight years out of time, against the decision of this Court registering the external confiscation order and that the Court of Appeal would have the power under Rule 12(1) of the Court of Appeal (Civil) Rules 1964 to admit fresh evidence of a question of fact, namely the decision of the Quebec Court of Appeal setting aside the external confiscation order. Such an appeal would not, in our view, place the Attorney General into the category of an unsuccessful litigant seeking to re-open litigation long since finalised and where the principle of finality of judgments might apply. However we think the matter is more appropriately dealt with by way of an application to this Court for it to regularise what is essentially a procedural matter pursuant to its inherent jurisdiction without invoking the jurisdiction of the superior court.
49. We should add, although it is not necessary to do so, that there may be another route by which the Court could set aside the registration, namely, its power to set aside default judgments under Rule 11/2 of the Royal Court Rules 2004.
50. The order registering the external confiscation order was entered in default of defence. In accordance with the practice prevailing at the time the Attorney General's application was simply presented to the Court during public business on a Friday morning. No order was made that the defendant be notified of the application or otherwise convened on a return date. The order was obtained on the day it was presented.
51. The test for setting aside a default judgment was stated by the Court of Appeal in Strata Surveys Limited v Flaherty and Company Limited [1994] JLR 69 (at page 71 and following), the essential requirement in the exercise of the Court's discretion being the requirement to do justice. Randalls Properties Limited and Anor v Rozel Bay Hotel Limited [2005] JLR Note 33 confirms that the Court will not, in any event, wish to be hidebound by a list of factors to come to a conclusion that it does not consider to be in the interests of justice.
52. This would be an unusual use of that power, but there is some authority for it. Merchant International Co Ltd v Natsionalna Aktsionerna Kompaniia Naftogaz Ukrainy [2012] 1 WLR 3036 (CA), was a decision of the English Court of Appeal. It concerned a Ukrainian judgment which was sought to be enforced in England and Wales. Judgment was given for the claimant in England in default of defence. Sometime after the English judgment, a Ukrainian Appeal Court overturned the original Ukrainian judgment. An application was made by the defendant to the English proceedings to set aside the default judgment under CPR r 13.3. The Court of Appeal refused to set aside the English default judgment. The Court began by commenting (at paragraph 63) that:-
53. The Court then said that the claimant had a properly entered English judgment. It considered the circumstances in which the Ukrainian appeal judgment had been obtained and concluded that those appeal proceedings 'involved a fundamental denial of legal certainty and fair process' and therefore the English Courts would not base the exercise of their discretion to set aside an English judgment on it. It was not suggested in that case that CPR r 13.3 was not an appropriate basis on which to challenge a default judgment where the ground for challenge was that the underlying foreign judgment had been set aside on appeal.
54. The request from the Canadian authorities extends to ordering the Treasurer of the States to refund the monies held in the COCF, which remain identifiable, to the defendant.
55. Initially, the prospect of making such an order gave the Court some concern because the defendant had himself acknowledged to the Québec Court on 23rd October, 2007, that these monies were the proceeds of crime. By ordering their return to the defendant, was the Court being instrumental in the return to him of the proceeds of his crime? In effect, would the Court be facilitating money laundering?
56. It seems clear that the Court itself cannot commit the crime of money laundering by making orders in applications brought before it in relation to what may be the proceeds of crime and a person does not commit money laundering offences by conducting or genuinely settling litigation, even where the subject matter of the litigation is the proceeds of crime - see the decision of the English Court of Appeal in Bowman v Fels [2005] 1 WLR 3083 (at paragraphs 24, 62-66, 83-84 and 99 -102) (as applied in Jersey in WTHK Limited and Anor v UBS Trustees (Jersey) Limited [2016] JRC 99 at paragraph 89).
57. However, the Court should not order others, such as the Treasurer of the States and his bankers, to commit what may be money laundering offences - see Gichuru v Walbrook Trustees (Jersey) Limited and Ors [2008] JLR 131 (at paragraphs 29, 33(iii) and 34(v)).
58. Crown Advocate Belhomme suggested that in the light of the Court's concern, it could set aside the registration of the external confiscation order only, leaving the defendant to make demand against the Treasurer of the States and, if necessary, to seek an order against the Treasurer of the States from this Court.
59. However, it seems to us that this would be to pass the problem on to the Treasurer of the States and his bankers, inevitably giving rise to further litigation before this Court, and to fail to grapple with the central issue of whether, on the balance of probabilities, these are the proceeds of crime. Four points arise here:-
(i) The defendant's acknowledgement that these monies were the proceeds of crime was made in the context of his plea of guilty to the drugs charges against him and it is implicit that his acknowledgement related to those crimes, and not to other unrelated criminal activity.
(ii) The Canadian authorities have given this advice:-
"According to Canadian Law, for the Crown to be able to establish that an amount of money is in fact and in law a 'proceeds of crime' or 'property obtained by crime', there must be a nexus between 'possession of property obtained by crime', 'trafficking in property obtained by crime' or 'possession for the purpose of trafficking property obtained by crime'. If there is no underlying crime committed, there cannot be an offence related neither to 'proceeds of crime' nor to 'property obtained by crime'.
In the present case, there was a stay of proceedings declared by the Court of Appeal of Quebec against the State and for the benefit of Mr Sarto Berthiaume. Consequently, there was no crime whatsoever committed by M. Berthiaume according to Canadian Law. Hence, if there was no underlying crime committed, there cannot be 'proceeds of crime' nor 'property obtained by crime'.
In conclusion, the Canadian competent authority would not be able neither in fact nor in law to prosecute anyone that would remit the monies to the benefit of Sarto Berthiaume, since the latter is now considered as not having committed any crime." (Their emphasis).
(iii) The request to make the payment to the defendant has come from the Attorney General of Canada and such a request could only be made on the basis that, consistent with the position under Canadian Law, these are not the proceeds of crime.
(iv) We were informed that the Attorney General of this jurisdiction had decided not to conduct his own investigation into whether these monies constitute the proceeds of crime and indeed has made this application seeking an order that they be paid to the defendant direct.
60. We therefore conclude that, following the setting aside of the defendant's conviction, the monies held in the COCF are not the proceeds of crime and that, out of comity, we should accede to the request of the Attorney General of Canada and order the Treasurer of the States to refund the same to the defendant.
61. In conclusion:-
(i) Pursuant to our inherent jurisdiction and by way of comity, we cancel the registration of the external confiscation order; and
(ii) We direct the Treasurer of the States to pay the net sum realised by the Viscount, together with accrued interest, to the defendant by way of bank transfer, the precise terms to be set out in the order we will make when this judgment is handed down.