Supreme Court of Ireland Decisions

1. I have had the benefit of reading the judgment prepared by Mr. Justice Fennelly and I am in agreement with his view that a statement of claim is required. I would also adopt his very clear treatment of the relevant statutory provisions and rules of court. But I would like to add some comments of my own with particular focus on the nature of the proceedings. I think this is of some importance because fundamentally the case being made by the plaintiff is that he does not have to deliver a statement of claim as the entire proceeding can be dealt with as though it were an application for an interlocutory injunction in the ordinary way including the rules of evidence in connection therewith. I believe that view to be fundamentally flawed.

2. The Proceeds of Crime Act, 1996 is described in its long title as " An Act to enable the High Court, as respects the proceeds of crime, to make orders for the preservation and, where appropriate, the disposal of the property concerned and to provide for related matters." The Act provides for some unique remedies and some unique procedures. No rules of court however have yet been made specifically covering applications under the Act. It is this lacuna which has given rise to the present dispute. The scheme of the Act is that under s. 2 a member of the Garda Síochána not below the rank of Chief Superintendent or a specially authorised officer of the Revenue Commissioners may apply to the court for a Mareva type order freezing a person's property for a period of twenty-one days, if it is shown to the satisfaction of the court on an ex parte application that the person is in possession or control of specified property and that the property constitutes directly or indirectly proceeds of crime or specified property that was acquired in whole or in part with or in connection with property that directly or indirectly constitutes proceeds of crime and that the value is not less than £10,000. S. 3 of the Act (which is the section with which this appeal is concerned) provides for more or less a similar order except that in this instance it is for an indefinite period of time subject to the court being able to discharge the order at any time on appropriate evidence.

3. S. 4 of the Act provides that where an order under s. 3 has been in force for not less than seven years in relation to specified property an application may be made to the court for an order directing that the whole or if appropriate a specified part of the property be transferred to the Minister or to such other person as the court might determine. It should be noted in passing that there is no right to bring an application under s. 4 until seven years have elapsed from the making of an order under s. 3.

4. Each of the respective orders under sections 2, 3 and 4 of the Act have been given names by the Act. An order under s. 2 is called " an interim order" . An order under s. 3 is called "an interlocutory order" and an order under s. 4 is called "a disposal order" . The first and the third of these names are genuinely descriptive and give rise to no great difficulty. It is the name given to the section 3 order which causes problems and which has directly led to this dispute. " Interim order" and " interlocutory order" are expressions well known to the courts. The interlocutory injunction is the commonest example of an interlocutory order. The jurisdiction to grant such an injunction derives from s. 28(8) of the Judicature Act (Ireland) 1877 which by its terms does not use the expression " interlocutory injunction" but rather " interlocutory order" which is the exact expression used in s. 3 of the 1996 Act. But it is well known to all lawyers that " an interlocutory order" within the meaning of the Judicature Act and of the Rules of the Superior Courts in their various forms over the years means an order which is not a final order. As Jessel M.R. said in In re Stockton Iron Furness Company (1879) 10 Ch.D. 334 at 349:

5. It must logically follow therefore that an order under s. 3 though called in the Act " an interlocutory order" cannot in fact be an interlocutory order in the normal sense of that term unless the hearing of the proceedings for a disposal order under s. 4 is to be regarded as the trial of the action. In Murphy v. Mitchell and Gilligan v. Criminal Assets Bureau (unreported judgment of the Supreme Court of the 18th of October 2001) Keane C.J. at p. 77 said the following:

6. It is abundantly clear therefore that orders under section 3 are final orders even though they can be discharged and not just temporary orders. No significance is to be attached to the name which the Act has given except possibly to the extent that it might be reasonable for the Rules-making Committee to provide for procedures whereby the plaintiff could actually get into court shortly after the initiating document issued a result which is achieved by the ordinary interlocutory injunction procedure. This would happen if the rules provided that the procedure was to be by originating notice of motion or indeed by special summons. But in the absence of any special rules or an order of the High Court permitting procedure by special summons, the plaintiff must proceed as he has done by plenary summons. Order 1, r. 6 of the Rules of the Superior Courts provides that in all proceedings (other than to take a minor into wardship) commenced by originating summons, procedure by plenary summons shall be obligatory except where procedure by summary summons or by special summons is required or authorised by the Rules. Order 3 of the Rules sets out a list of the categories of proceedings which may be commenced by special summons. The last of these i.e. No. (22) reads:-

7. It would appear, therefore, that the High Court judge regularly dealing with proceedings under the 1996 Act could make an order permitting proceedings of this kind to be brought by special summons. High Court judges have been allowing the special procedure of a notice of motion after the issuing of the plenary summons and again the lawfulness of that procedure is not in issue in this case. Presumably, it is done pursuant to practice directions and it may well be unobjectionable subject to the rules of evidence. It does, on the face of it however, appear to be inconsistent with procedure by plenary summons which by the express terms of Order 1, r. 2 of the Rules of the Superior Courts is intended as the appropriate commencement document for " plenary proceedings with pleadings and hearing on oral evidence". It certainly seems strange for two separate reasons that affidavits grounding the notice of motion can be allowed to contain hearsay evidence. In the ordinary way hearsay evidence can only be admitted in an interlocutory application within the traditional meaning of that expression and the name of the informant must be given. As this is a final proceeding and not an interlocutory proceeding within the traditional meaning of that expression despite the name given to the order, hearsay evidence cannot be justified unless it is especially permitted by the Act itself, but section 8 of the Proceeds of Crime Act, 1996 while providing for the possibility of some hearsay evidence expressly provided that in the case of proceedings under section 3, such evidence would have to be oral evidence.

8. Strictly speaking these issues are not before the court because the issue before the court is the question of whether a statement of claim has to be delivered. But the overall nature of the proceedings and the procedures used in them are relevant in considering the question of the obligation to deliver a statement of claim. I have no doubt at all that a statement of claim must be delivered. The position is quite simple. The proceedings have been correctly commenced by plenary summons. An appearance was entered to the plenary summons and in it the defendant, pursuant to O. 20, r. 3 of the Rules of the Superior Courts gave notice that he required a statement of claim to be delivered. That seems to me to be the end of the matter. I do not understand on what basis the plaintiff can escape from that obligation. Even if a s. 3 Order was a genuine interlocutory order in the ordinary sense of the term, there would still be a requirement to deliver a statement of claim though not necessarily before the application for the interlocutory injunction had been determined. But such an injunction would be merely a temporary injunction.

9. Counsel for the plaintiff relied almost exclusively on one particular decided case to get him out of his difficulties. That case is Inspector of Taxes v. Arida [1996] 1 ILRM 74. I turn now to consider that case.

10. The judge was, of course, referring to the Circuit Court Rules procedure. But in the Bell case Walsh J. had suggested that to oust the Rules it was necessary to identify some contrary indication to the effect that the Rules were to be disapplied. It is this slight qualification on the general principle which is relied upon by Mr. Nesbitt S.C. counsel for the plaintiff. He argues that because the expression " interlocutory order" is used and that the order may be discharged at any time on the application of the applicant and that it has a limited life in the sense that it becomes discharged once s. 4 proceedings are completed, there is displayed a contrary indication. I cannot accept that there is any validity in that argument. I have already pointed out that " interlocutory order" in the 1996 Act is simply a description of a particular order under that Act and bears no relationship to the interlocutory order as normally understood. Secondly, even if it did have some connection the plaintiff, who in ordinary proceedings, seeks an interlocutory injunction is not dispensed from delivering a statement of claim. He may not be compelled to do so before the application for the interlocutory injunction is determined but he still has to deliver it at some stage. The hearing of an application under s. 3 is the trial of the action and clearly the delivery of the statement of claim must precede that in the ordinary way if the proceedings have been commenced.

11. In fairness to the argument of Mr. Nesbitt it may well be true to say that the Oireachtas would have contemplated special rules of court being made which would not have involved applications under s. 3 having to be brought by plenary summons. I have already referred to the other options. Special rules could provide that the proceedings would be brought either by special summons or originating notice of motion or originating notice of application. Counsel for the plaintiff has not indicated to the court that delivery of a statement of claim presents any problem. But if that is so, it is difficult to know why the matter has been so heavily contested. One cannot but suspect that it is in some way to avoid searching notices for particulars. But no matter what procedures the Rules-making Committee might lay down, constitutional fair procedures would dictate that a defendant would be entitled to receive whatever particulars might be appropriate, and this would be all the more true in a case where at the trial the defendant would be in jeopardy by having to face oral evidence of a hearsay nature under s. 8.

12. Some of the remarks of O'Sullivan J. in his judgment give the impression that if the matter was free from authority he would have had concern about the obligation to deliver a statement of claim but he seemed to consider himself bound by earlier decisions and in particular a judgment of O'Higgins J. in Murphy v. GMPBPC Limited and GH. It is not clear to me from that judgment that the issues aired in this court were debated in precisely the same way in that case. But it is obvious that the views of O'Higgins J. were coloured by the interpretation which he gave to the Act. O'Higgins J. clearly considered that the hearing of proceedings under s. 4 for a disposal order was effectively the trial of the action and that proceedings under s. 3 were analogous to the ordinary interlocutory application. It is clear that that is not the view of this court having regard to the judgment of the court on the Reference and the judgment of the Chief Justice in the McKay case already cited.

13. I would allow the appeal to the extent of making a declaration that a statement of claim must be delivered but having regard to the fact that there was clearly room for doubt on the matter in the light of earlier High Court judgments I would not strike out the proceedings. I would be in favour of this court fixing an appropriate time limit within which the statement of claim must be delivered.

14. There are two important riders which I would like to add. First of all my view as to what the decision of this court should be is based on the fact that the proceedings are brought and are correctly brought by plenary summons. Nothing in the judgment is to be taken as expressing any view as to what might have to be done or not done procedurally beyond constitutional requirements if a different form of proceeding was prescribed by Rules of Court. Secondly, I am expressing no view as to whether in an appropriate case an interlocutory order in the traditional sense can be made which would remain in force pending the hearing of the section 3 application or until further order of the court or as to whether such application could be made before or after delivery of a statement of claim. Still less am I expressing any view as to the nature of the evidence which might be allowed in such interlocutory application.

15. This appeal raises an important about the procedures applicable to claims brought under the Proceeds of Crime Act, 1996 (“the act of 1996"). Is the Criminal Assets Bureau obliged to deliver a statement of claim, or may it proceed by notice of motion after the issue of the plenary summons?

16. The second named defendant entered an appearance on 21 ^st September 2000 requesting delivery of a statement of claim . This request was repeated in correspondence. The Chief State Solicitor, writing on behalf of the Plaintiff, replied as follows:

17. The appellant brought a motion to dismiss the proceedings on the ground of failure to deliver a statement of claim. On the hearing of that motion, Mr Justice O’Sullivan decided that he should follow a decision of Mr Justice O’Higgins in M v M (unreported 4 ^th June 1999). It is apparent that, as a general practice, the Plaintiff in Criminal Assets Bureau cases does not deliver a statement of claim and that that position has been accepted in the High Court. The learned trial judge noted that the point had arisen in many such cases and though it is desirable that the matter be decided by this Court.

18. The long title to the act of 1996 describes it as “an Act to enable the High Court, as respects the proceeds of crime, to make orders for the preservation and, where appropriate, the disposal of the property concerned and to provide for related matters.” In its judgment of 18 ^th October 2001, in M v G.M. an others, this Court entertained and rejected a wide-ranging challenge to the constitutionality of many of the provisions of the act of 1996. The Court described the legislation as “unquestionably draconian.” (Page 41 of the unreported judgment). The act of 1996 enacts three substantive procedures for the achievement of its objective.

19. The act of 1996 contains other important provisions including provisions for admitting hearsay evidence subject to specified conditions.

20. The interlocutory order under section 3 is central to the argument in the present appeal and I set out its relevant provisions:

21. No special rules have been made covering any of the proceedings under the act of 1996. The relevant rules relating to plenary proceedings are the following.

22. Order 1, r. 1 provides:

23. Order 1, r 6 provides:

24. Orders 2 and 3 provide respectively for proceedings by summary and Special Summons. It was not suggested that the present proceedings could have been commenced by either of those methods.

25. Order 12 provides for the entry of an appearance. Rule 2(1) requires an appearance to a plenary summons to be entered within eight days after service. Rule (5) states:

26. Order 19, rule 1 provides:

27. Order 20, rule 1 dispenses with the need for a statement of claim in cases commenced by summary or special summons.

28. Order 20, continues:

29. The appellant submits that, the procedure being by plenary summons, the rules provide for a statement of claim. He has asked for one and Order 20, rule 3 obliges the plaintiff to deliver one. He goes on to allege that he is disadvantaged by the absence of a statement of claim. He cannot seek particulars of the Plaintiff’s claim. He cannot put in a defence in the absence of a statement of claim. In this case, no criminality is alleged against him and he is all the more entitled to a clear statement of the case being made against him. The Plaintiff is in reality the Criminal Assets Bureau. There is no basis for according special treatment to that body, especially given all the special advantages procedural and otherwise conferred on the Criminal Assets Bureau by the legislation.

30. The relief sought by virtue of section 3 is not, in spite of the statutory name given to it in truth an interlocutory order. It is substantive relief provided for by statute. This Court had observed in its ex tempore judgment in McK v G, McK v C (unreported 23 ^rd July 2001) accepted that the interlocutory order could be regarded as the real issue.

31. Mr Richard Nesbitt, Senior Counsel for the Plaintiff, accepted that the application under section 3 was a proceeding for the purposes of Order 1, rule 6. He also accepted that the need to deliver a statement of claim would produce no particular difficulty for the plaintiff. In fact, hearsay and thus oral evidence is given and is the main evidence in these cases. He claimed, however, that it was an advantage rather than an inconvenience for the defendant to have all the material upon which the plaintiff intended to rely placed on affidavit. In justification of the procedure followed in this case, he made two principal submissions:

32. Firstly, the order provided for by section 3 of the act of 1996 is, as it is called in the act, an interlocutory order. Its provisional nature can be demonstrated by the terms of section 3 itself. The substantive relief is that provided for by section 4, the disposal order. Until the disposal order is made, the interlocutory order is provisional. The court has power to vary and discharge it. Not all interlocutory orders are made pending the hearing of an action. It is stated in Stroud’s Judicial Dictionary of Words and Phrases (Sixth ed. Vol 2 G-P London 2000) that it is “not confined to an order made between writ and final judgment, but meant an order other than final judgment; and, therefore, a receiver might be appointed under that section [referring to the Judicature Act]....”

33. Secondly, no rules have yet been made, as already stated by this Court in M v G.M (see above). The rules do not automatically apply. The decision of this Court in Inspector of Taxes v Arida Ltd. [1996] ILRM 74 shows that the application of the general scheme of the Rules was subject to the condition that one could not identify “some contrary indication to the effect that the rules are to be disapplied.”

34. The Plaintiff says, firstly, that the order sought under section 3, and there called an interlocutory order, is an interlocutory in the everyday sense in which that expression is used, an order of a procedural character made pending the hearing of an action. Hence, a statement of claim need not be delivered.

35. The true analogy for this purpose is, in my opinion, an application for an interlocutory injunction. Even if the plaintiff is correct in his submission, it does not follow that a statement of claim need not be delivered. Accepting the hypothesis that the order which can be sought under section 4 is to be equated with the substantive relief at the hearing of an action, the rules still appear to require a plaintiff to deliver a statement of claim when one is demanded by a defendant. But the ‘hearing of the action’ if that is what it is cannot take place for a least seven years, which illustrates the unreality of the analogy.

36. The solution must be found then by addressing directly the question of whether the section 3 order is truly an interlocutory order in the ordinary sense. Taking the interlocutory injunction as the closest equivalent type of interlocutory order, I find that the section 3 order lacks several of the essential attributes of such an order.

37. The purpose of an interlocutory injunction is to preserve the status quo between the parties, or putting it more cautiously, to maintain a just equilibrium between the parties until their respective rights can be substantively determined. Implicit in this is that the court must act urgently on the basis of limitations inherent in the impossibility of determining conclusively complex disputed issues of fact or law. Implicit also is the assumption that the substantive issues will be determined as soon as is reasonably possible. At that later stage, the entire substance of the material disputed at the interlocutory stage, may be reopened.

38. The interlocutory injunction is a provisional measure granted for a time long enough but no longer than is necessary to ensure that the rights of the parties are not prejudiced until they can be comprehensively determined.

39. It is true that second 3 of the act of 1996 confers power on the High Court to make an order of the type known as a Mareva injunction and that a Mareva order is interlocutory in the normal sense. It is designed to preserves a certain state of facts pending the hearing of an action. It does not dispose finally of the property affected. It restrains any dealing with it for as long as it remains in force.

40. Nonetheless, the interlocutory order under section 3 is, in my view a substantive remedy for several reasons.

41. Firstly, the restraint on dealing is itself a free-standing substantive remedy. It imposes a complete embargo on any dealing with property.

42. Secondly, it is not ancillary to an order to be made in the future under section 4, as an ordinary interlocutory injunction is. In a normal case, the plaintiff must at the trial of the action succeed in establishing his right to substantive relief. In the case of the act of 1996, section 4(1) permits a disposal order to be made on the sole ground that an interlocutory order has been in force for seven years. Nothing new needs to be proved.

43. Thirdly, in truth, the substantive allegation is that the subject property represents, directly or indirectly, the proceeds of crime. The court must, according to section 3, be satisfied of this essential fact at the time it makes the interlocutory order: the court may make the order if “it [so] appears to the court, on evidence tendered by the applicant..” This evidence may, by virtue of section 8 be hearsay. There would have been no need to introduce this provision, if the application were truly interlocutory. Order 40, rule 4 of the Rules permits hearsay evidence on such motions subject to the deponent giving his means of knowledge. In making this determination, the court does more than decide that there is a fair issue to be tried. It decides that the subject property in fact represents the proceeds of crime.

44. Fourthly, once this order is made, it continues in force indefinitely unless either the applicant applies for it to be discharged (section 4(4)), or unless the respondent can show to the satisfaction of the court that the property does not constitute the proceeds of crime (section 4(3)). There does not even appear to be any obligation on the applicant to apply for a disposal order at the end of seven years.

45. Fifthly, even if this last point is not high in the scale of importance, the fact that an interlocutory order must be in force for a minimum period of seven years before the disposal order can be sought makes it impossible to regard it ac interlocutory in the sense in which that word is used in the Rules of Court.

46. Geoghegan J., in his judgment, has examined the nature of an interlocutory. I agreed fully with his observations.

47. I turn now to Mr Nesbitt’s second argument, i.e. that there is sufficient contrary indication to show that the ordinary provisions of the Rules of Court should not apply. Clearly, the fact that, as already stated, the order under section 3 is not an interlocutory order in the sense of the rules removes one of the principal suggested indications.

48. The terms of the rules, as I have quoted them above are clear and explicit. Once it accepted, as obviously it had to be, that the application under section 3, then Order 1 rule 6 mandates the use of the plenary summons procedure. That procedure is peculiarly suited to the normal type of action where serious issues of fact are to be tried. The Summary Summons procedure is specially designed to prevent defendants’ from delaying clear claims (particularly everyday debt claims) and obliging them to swear an affidavit before being permitted to defend. It is notable, however, that, once that precondition is satisfied, the action is sent for plenary hearing, essentially because that procedure is the one chose for disposing of disputed issues of fact.

49. I can accept, in principle, that a statute, introducing, as does the act of 1996, a new legal remedy, may lay down a particular procedure so as to displace that provided for in the rules. That is, in effect what Egan J said in Inspector of Taxes v Arida Ltd. Nonetheless, it is notable that, in the particular case, which concerned the jurisdiction of the Circuit Court to hear tax appeals, he considered it “inconceivable, in the absence of any indication to the contrary, that the Oireachtas intended that the whole paraphernalia of procedural regulation provided for by the by the Circuit Court Rules should be disapplied merely because a particular jurisdiction is conferred upon the Circuit Court by legislation other than the Courts of Justice Acts.” (page 79 of the report). I think that is also true of the act of 1996. The act contains no reference to rules of procedure. Section 2, it is true, provides for an interim order to be made ex parte. By virtue of section 8, hearsay evidence may be given on affidavit under this section. Section 3 contains no corresponding provision. It does not, in particular, state that the application is to be by motion.

50. Accordingly, the plenary summons procedure applies. The appellant having entered an appearance seeking a statement of claim, the plaintiff is bound to deliver one.

51. While the above suffices to dispose of the case, it is right to add that this Court has described the legislation as draconian. It permits a person to be deprived of the use of his property based on allegations of the most serious character potentially supported by hearsay evidence. In important respects, it shifts the burden of proof. The plaintiff has not pointed to any procedural disadvantages for him in being required to deliver a statement of claim. It became apparent at the hearing of the appeal that applications under section 3 are almost invariably based on hearsay and, consequently, oral evidence. Thus the central part of the procedure approximates closely to what occurs in a plenary proceeding. In such circumstances, and in the absence of any indication of a legislative intent to the contrary, I think it is clear that the normal plenary procedure should be followed.

52. It does not follow from this that the Court should grant the relief sought in the notice of motion, namely that the proceedings be dismissed. The plaintiff has declined to deliver a statement of claim on a mistaken view of the law, but one which is in accordance with existing High Court practice. The Court should grant an appropriate extension of time.