Supreme Court of Ireland Decisions

 
THE SUPREME COURT

042/2003

Keane C.J.

Denham J.

Murray J.

Fennelly J.

McCracken J.

IN THE MATTER OF THE PROCEEDS OF CRIME ACT 1996

BETWEEN

McK

Plaintiff/Respondent

-v- D

Defendant/Appellant

[Judgments delivered by Fennelly J. & McCracken J.; Keane C.J., Denham J, Murray J. & McCracken J. agreed with Fennelly J. save for the subject matter of McCracken J.'s with which all agreed [sic]. Fennelly J. agreed with the principles to be applied under the judgment of McCracken J. but dissented with conclusion.]

JUDGMENT delivered on the 17^th day of May, 2004 by FENNELLY J.

On 31^st July 2002, the President of the High Court made an order pursuant to section 3 of The Proceeds of Crime Act, 1996 ("the 1996 Act") prohibiting the appellant and other persons on notice of the order from disposing of or otherwise dealing with a dwellinghouse, whose ownership is registered in the Register of Freeholders, County Wicklow (hereinafter "the premises").

The order was made on foot of a judgment of the same date and following a hearing over six days in the month of May 2001. It was based on a finding that the premises represented in whole or in part the proceeds of crime. The criminal activity in question had taken place in the United Kingdom. The learned President heard evidence, some of it on affidavit, from the plaintiff, an authorised officer of the Criminal Assets Bureau, an English detective constable and a member of An Garda Síochána, attached to the Bureau. He also heard evidence from the appellant.

The appeal raises four principal issues. In very brief terms they are:

1. That the claim is statute-barred;

2. That much of the evidence was inadmissible;

3. That the 1996 Act does not apply to the proceeds of crimes committed outside the jurisdiction;

4. That it was contrary to the interests of justice to make the order.

Section 3 of the 1996 Act provides as follows for the making of what it describes as "an interlocutory order":

"3.—(1) Where, on application to it in that behalf by the applicant, it appears to the Court, on evidence tendered by the applicant, consisting of or including evidence admissible by virtue of section 8—

(a) that a person is in possession or control of—

(i) specified property and that the property constitutes, directly or indirectly, proceeds of crime, or

(ii) 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

(b) that the value of the property or, as the case may be, the total value of the property referred to in both subparagraphs (i) and (ii) of paragraph (a) is not less than £10,000, the Court shall make an order ("an interlocutory order") prohibiting the respondent or any other specified person or any other person having notice of the order from disposing of or otherwise dealing with the whole or, if appropriate, a specified part of the property or diminishing its value, unless, it is shown to the satisfaction of the Court, on evidence tendered by the respondent or any other person—

(I) that that particular property does not constitute, directly or indirectly, proceeds of crime and was not acquired, in whole or in part, with or in connection with property that, directly or indirectly, constitutes proceeds of crime, or

(II) that the value of all the property to which the order would relate is less than £10,000:

Provided, however, that the Court shall not make the order if it is satisfied that there would be a serious risk of injustice.

(2) An interlocutory order—

(a) may contain such provisions, conditions and restrictions as the Court considers necessary or expedient, and

(b) shall provide for notice of it to be given to the respondent and any other person who appears to be or is affected by it unless the Court is satisfied that it is not reasonably possible to ascertain his, her or their whereabouts.

(3) Where an interlocutory order is in force, the Court, on application to it in that behalf at any time by the respondent or any other person claiming ownership of any of the property concerned, may, if it is shown to the satisfaction of the Court that the property or a specified part of it is property to which paragraph (I) of subsection (1) applies, or that the order causes any other injustice, discharge or, as may be appropriate, vary the order.

(4) The Court shall, on application to it in that behalf at any time by the applicant, discharge an interlocutory order.

(5) Subject to subsections (3) and (4), an interlocutory order shall continue in force until—

(a) the determination of an application for a disposal order in relation to the property concerned,

(b) the expiration of the ordinary time for bringing an appeal from that determination,

(c) if such an appeal is brought, it or any further appeal is determined or abandoned or the ordinary time for bringing any further appeal has expired,

whichever is the latest, and shall then lapse.

(6) Notice of an application under this section shall be given—

(a) in case the application is under subsection (1) or (4), by the applicant to the respondent, unless the Court is satisfied that it is not reasonably possible to ascertain his or her whereabouts,

(b) in case the application is under subsection (3), by the respondent or other person making the application to the applicant,

and, in either case, to any other person in relation to whom the Court directs that notice of the application he given to him or her.

(7) Where a forfeiture order, or a confiscation order, under the Criminal Justice Act, 1994, or a forfeiture, order under the Misuse of Drugs Act, 1977, relates to any property that is the subject of an interim order, or an interlocutory order, that is in force, ("the specified property"), the interim order or, as the case may be, the interlocutory order shall—

(a) if it relates only to the specified property, stand discharged, and

(b) if it relates also to other property, stand varied by the exclusion from it of the specified property.

Section 8 of the 1996 Act makes special provision for the receipt of evidence of belief as follows:

"8.—(1) Where a member or an authorised officer states—

(a) in proceedings under section 2, on affidavit or, if the Court so directs, in oral evidence, or

(b) in proceedings under section 3, in oral evidence,

that he or she believes either or both of the following, that is to say:

(i) that the respondent is in possession or control of specified property and that the property constitutes, directly or indirectly, proceeds of crime,

(ii) that the respondent is in possession of or control of specified property and that the property 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 of the property or, as the case may be, the total value of the property referred to in both paragraphs (i) and (ii) is not less than £10,000, then, if the Court is satisfied that there are reasonable grounds for the belief aforesaid, the statement shall be evidence of the matter referred to in paragraph (i) or in paragraph (ii) or in both, as may be appropriate, and of the value of the property.

The High Court proceedings

The appellant draws attention to three particular features of the proceedings in the High Court. Firstly, the action, having been commenced prior to the decision of this Court in McK v A.F. [2002] I.R. 242, proceeded primarily as if it were an ordinary interlocutory application, i.e., on affidavit and without pleadings other than the issue of a Plenary Summons. Secondly, the learned President stated in his judgment that he had been asked to leave over determination of the issue of the applicability of the Statute of Limitations until he had decided another action. In his judgment, he stated that he had decided this point on 12^th April 2002. Counsel says that the appellant is a stranger to this suggested deferment of that issue. Nonetheless, this issue was certainly argued in the High Court as it was argued on this appeal, so nothing seems to turn on the issue. Thirdly, the appellant says that it was anomalous that the learned President decided that the section was not unconstitutional, since, though he had served notice on the Attorney General pursuant to Order 60 of the Rules of the Superior Courts, he had not been allowed to join the Attorney General, but rather had been left to institute a separate action. In fact, the Order 60 Notice was served on the third day of the hearing in the High Court. Not surprisingly, the learned President considered it far too late to join the Attorney General. It would have been necessary to adjourn the entire proceedings. There does indeed seem to have been a misunderstanding or oversight which caused the learned President to rule that the Act was not unconstitutional. However, since the Attorney General was not, in fact joined, the matter was never properly in issue in the High Court and has not been pursued on this appeal.

Since one of the grounds of appeal concerns the quality of the evidence before the High Court, it is necessary to summarise the essential facts and the approach of the learned President to them.

It was not in dispute that the appellant has a long record of the commission of serious crime in the United Kingdom. He is a UK citizen and has no criminal record in this jurisdiction. The learned President summarised his history as follows:

"The Defendant was born in 1939. He has a criminal record extending from the 27^th February 1962 including convictions for road traffic offences, shop breaking, malicious wounding, assault, handling stolen goods, robbery, suborning members of a jury, possession of controlled drugs and possession of firearms all within the United Kingdom. He was first sentenced to imprisonment on 18^th July 1962 and thereafter in 1963 was sentenced to three years corrective training, in 1965 six months imprisonment, in 1966 to two years imprisonment, in 1969 to three years imprisonment, in 1974 to two years imprisonment, in 1976 to a total of nine years imprisonment, in 1983 four years imprisonment, in 1992 nine months and nine years imprisonment. He was sentenced to three years imprisonment consecutive to the last mentioned sentence for failure to comply with a Confiscation Order for £140,000 stg. made on the 18^th November 1992."

The Confiscation Order, there referred to, was made, on 18^th November 1992, under statutory provisions and based on an estimate of the value of property the appellant was believed to have as a result of his crime, including the premises. However, the appellant failed to discharge more than a part of the sum of £140,000. This made him liable to serve and he did serve a consecutive mandatory term of three years. At the relevant time, according to evidence of English law heard by the learned President, the appellant discharged his liability for the balance of the sum by serving this term. The law was changed in England in 1993 and again in 1994 with the effect that, in future, serving such a sentence does not expunge the debt under the Confiscation Order. The expert evidence was to the effect that these changes did not apply in the case of the appellant. The learned President appears to have accepted this evidence, when stating that the "Confiscation Order was satisfied in part by the realisation of the Defendant's assets and insofar as it was not so satisfied by the Defendant serving the term of imprisonment imposed in default of his satisfying the Confiscation Order within its terms."

The learned President then recited the following facts concerning the acquisition of the premises:

"The premises the subject matter of this application were purchased by the Defendant late in 1998- early 1999 [this should read: late 1988-early 1989] without the aid of a mortgage and for the consideration of £IR128 000. By transfer dated 26^th April 1993 he transferred the premises to his partner for the sum of £5. She contemporaneously executed an acknowledgement that she held the premises in trust for the Defendant and executed a transfer in his favour of the premises in consideration of £10 which transfer bears no date except the year 2000. The premises are at present occupied by his current partner. The following dates appear to me to be relevant as to the source of funds utilised by the Defendant to acquire the premises. He would appear to have been almost continuously in prison from 1963 to 1971 and from December 1974 to 14^th December 1984. He appears to have been at large from 14^th December 1984 to the 20^th October 1992. He was again in prison from the 20^th October 1992 to the 4^th April 2001. The only relevant period of significance during which he was at liberty and so capable of engaging in employment is that from 14^th December 1984 to the 20^th October 1992."

The plaintiff gave evidence that he was a Chief Superintendent of An Gárda Síochána and Chief Bureau Officer of the Criminal Assets Bureau. He was, therefore, an "authorised officer" for the purposes of the 1996 Act. He said that the Bureau became aware of the appellant, as a result of an anonymous letter received in 1999. The Bureau established contact with English police. Two officers came to Ireland. The plaintiff gave evidence that he was satisfied of the accuracy of the information supplied. He said that the appellant had been arrested in 1992 in possession of £300,000 sterling worth of drugs, as well as firearms and about £12,000 cash. He had also been convicted of interfering with a jury who were trying a serious organised criminal group. The plaintiff considered him to be a career criminal and that he was involved in major distribution of drugs in the United Kingdom. The premises were purchase with two bank drafts, valued £11,800 and £94,000, which the appellant had purchased for cash. The plaintiff gave evidence that, in his opinion, the premises constituted directly or indirectly wholly or partly the proceeds of crime and that its value exceeded £10,000. The plaintiff formed his opinion on the basis of the information supplied by English police officers.

The appellant gave evidence on affidavit and was cross-examined. The purpose of his evidence was to show that he had alternative sources of income from which he could have funded the purchase of the premises. Since he was released from prison in December 1984, having served various lengthy sentences in the preceding ten years, the relevant period was effectively limited to the years 1985 to 1988 inclusive. The appellant claimed that, in that period he earned money from two principal sources. Firstly, he said that he had a business dealing in men's clothing, primarily shirts and jumpers. He said that he bought from wholesalers and importers and sold on to others to retail to the public. As the learned President said, there was little to corroborate this. He admitted that he operated in the "black economy." He ceased this business in 1991 and his partner in the enterprise died in 1999. There are no records of the business. The second activity was buying, selling and racing greyhounds. There were also major problems with this evidence. Firstly, most of the greyhound activity took place after the beginning of 1999 and so was too late to explain the source of funds for the premises. For example, he had bought dogs for sums in the order of £1,000 each in 1999. Secondly, the evidence, such as it was, did not suggest significant profit. The only significant verified win was for third place in a valuable race. The prize was £4,000, but the seller of the dog received £1,500 and the balance had to be divided between the appellant and at least one other person. The appellant was left to allege that he had carried off some important betting coups.

The learned President concluded: "I accept the Defendant's evidence that he carried on the clothing enterprise and I accept the evidence that overall his gambling activities were profitable rather than as one might ordinarily expect conducted at a loss. However he has not satisfied me that the premises were not acquired at least in part by the proceeds of crime."

The Appeal

As already indicated, there are four principal grounds of appeal. The arguments need to be considered in a little more detail.

Statute of Limitations

The appellant says that the claim of the plaintiff is barred by the provisions of section 11(7)(b) of the Statute of Limitations, 1957, which provides:

"An action to recover any penalty or forfeiture, or sum by way of penalty or forfeiture, recoverable by virtue of any enactment shall not be brought after the expiration of two years from the date on which the cause of action accrued".

The application under section 3 of the 1996 Act is, it was submitted, an action for civil forfeiture of property. It is not merely a freezing order. The cause of action accrues when a person buys property with the proceeds of crime. The Act of 1957 was designed to provide a framework of limitation periods to deter stale claims. The learned President, in deciding this issue, referred to his own earlier decision in a case of McK v H. (unreported 12^th April 2002). In the event, his judgment, in the instant case, does not contain his reasons. The Court was informed that in that other case, the learned President approved a statement of a learned author to the effect that the section had been rendered redundant by the abolition of the common informer. This authority was not advanced by the Respondent on the appeal and does not appear relevant.

The Respondent submits that the application pursuant to section 3 does not come within any of the classes of cause of action mentioned in section 11(7)(b) of the Act of 1957. The section does not provide for forfeiture, but merely for a type of freezing order. The Respondent also submitted that even an application pursuant to section 4 would not be affected by the section. However, since that section is not before the Court, it does not appear material to consider it.

The Evidence adduced and the Determination made upon it.

The appellant points to the fact that, since the case was heard in the High Court prior to the decision of this Court in McK v A.F., cited above, it was treated as an interlocutory application in the ordinary sense. Consequently, inadmissible hearsay evidence was admitted. From the judgment of Geoghegan J, in that case, it is clear that such evidence may only be given in the circumstances provided in section 8 of the 1996 Act.

It is submitted that there was no direct evidence of the fact that the premises represented the proceeds of crime. The plaintiff's evidence of his belief was derived from inquiries conducted and information obtained from British and Irish police. The evidence of the English police constable was based on the appellant's criminal record and belief that he had no legitimate source of income. While his criminal record was admitted, these opinions flowed from certain statutory assumptions in English law. Thus the Court should consider the presence or absence of "reasonable grounds" for the belief of the plaintiff, in accordance with section 8 of the Act, on the basis that it consisted of (statutorily admissible) hearsay evidence based on hearsay based on a presumption of foreign law.

In respect of the premises themselves, the appellant refers to a number of facts which are not in dispute, namely:

That the appellant purchased the premises in 1988/89 for a consideration of I.R.£128,000 without the benefit of a mortgage;

That his then common-law partner became the nominal owner of the premises in 1993 on payment of a nominal sum;

That the same person executed a declaration of trust in favour of the appellant at that time;

That, by a signed transfer (neither stamped nor registered), and dated 2000, the same person purported to reconvey the property to the appellant for a nominal sum.

The appellant complains that Detective Sergeant O'L, on affidavit, expressed the belief that these arrangements represented a subterfuge to conceal the ownership of the property and to avoid the English Confiscation Order. Such evidence should not be accepted in contradiction of the contrary sworn evidence of the appellant.

When rejecting the claim that section 8(1) of the 1996 Act was unconstitutional, in Murphy v G.M. [2001] 4 IR 113, this Court emphasised that it was a matter for the Court, considering hearsay evidence, to "decide what weight should be given to the evidence." The appellant relied on the statement of McGuinness J in the High Court, in G. v CAB [1998] 3 IR 185, that the "evidence is not, of course, conclusive and is open to challenge by a respondent but in my opinion a court should be slow to make orders under s. 3 on the basis of such evidence without other corroborating evidence." The appellant also relied, in support, on similar statements in certain decisions concerning the weight to be given to the evidence of belief of a Chief Superintendent of An Gárda Síochána that a person is a member of an illegal organisation. (see The people (DPP) v Ferguson, Unreported Court of Criminal Appeal, 27^th October 1975; O'Leary v Attorney General [1993] 1 I.R. 102)

The learned President, in his decision in the present case, noted that the plaintiff had given evidence of belief pursuant to section 8 of the 1996 Act and that he had given, as his grounds for that belief the information provided by the police officers already referred to and continued:

"Accordingly, on this application I must make the order unless I am satisfied by the Respondent or other witnesses called by him that the property was not acquired in whole or in part with proceeds of crime ..."

It is submitted that, in this statement, the learned President fell into error. The presence of reasonable grounds for the expression of belief merely renders the evidence admissible and does not discharge the burden of proof. It does not oblige the court to make the order sought unless the evidence is rebutted.

The Respondent submits in reply that the object of the 1996 Act is to allow civil applications to freeze and ultimately to seize property which represents directly or indirectly the proceeds of crime. By definition the original criminal source of the property will often be impossible to prove by direct evidence. Surrounding circumstances such as previous criminal history, lack of evidence of legitimate income, known criminal associations, disguising of true ownership and the like may give rise, in the mind of an experienced police officer, to a belief that the property represents the proceeds of crime. It is sufficient that the belief be reasonably grounded.

It has been accepted, in Murphy v G.M., cited above, that the section has the effect of admitting hearsay evidence. Evidence of belief under section 8 does not have to be direct. The value of belief evidence is not diminished by being based on hearsay. Section 8 does, however, require that the evidence in a section 3 application be given orally. Thus the defendant has the right to test the belief in cross-examination and to give and to call his own evidence.

The proper construction of the term "crime" in the 1996 Act

The 1996 Act defines the expression "proceeds of crime." Under section 1(1), that term "means any property obtained or received at any time (whether before or after the passing of this Act) by or as a result of or in connection with the commission of an offence..." The term, "crime" is not defined. The appellant says that nothing in the definition of "proceeds of crime" or any other provision purports to extend its application outside the territorial jurisdiction of the State. Relying on a dictum of Kingsmill Moore J in Melling v O'Mathghamhna [1962] I.R. 1, he submits that "crime" is not inherently a transnational concept. It is an act punishable by the State. It is not referable to the laws of other states. The appellant has not been convicted of any offence contrary to the laws of the State. The Courts have repeatedly recognised the "draconian" character of the legislation (see McGuinness J in G V A.B. [1998] I.R. 185; Murphy v G.M., cited above, per Keane C. J. at page 136; McK v A.F., cited above, per Fennelly J at page 250; McK v C. [2001] 4 I.R., per Keane C.J. at page 524.) Legislation of such severity could be justified as a response to an extremely serious situation regarding crime in the State, but scarcely as a response to such a situation in another state.

The Act, like all penal statutes, should be given a strict interpretation. In the absence of a clear and unambiguous contrary indication, there is a presumption that acts of the Oireachtas do not have extra-territorial effect. Where statutes provide for such effect, this can be clearly seen. An example is the Criminal Law (Jurisdiction ) Act, 1976. Similarly, section 31 (11) of the Criminal Justice Act, 1994 clearly provides for application to foreign criminal activity. Such legislation will normally, as in the case of the Extradition Acts, contain provisions for correspondence between offences contrary to our law and those of other states. An absurd result of the contrary interpretation of the 1996 Act could be that property could be seised pursuant to the Act if it were the proceeds of activity which was criminal in another state, though perfectly lawful here. This would, in turn, mean that the Act was unconstitutional. The Act should be construed, so far as possible, so as make it consistent with the Constitution.

The appellant acknowledges that O'Higgins J, in the High Court, took a different view in the case of DPP v Hollman (unreported 29^th July 1999). He held that the Act "applie[d] to the proceeds of crime even if the crime is committed outside the State notwithstanding the failure of the legislation explicitly to say so." The learned President, in the present case, expressly approved and applied that statement. To the extent that O'Higgins J cited two English authorities, Bonalumi v Secretary of State [1985] 1 All E.R. 979 and Antonelli v Secretary of State [1998] 1 All ER 997, the appellant says they are distinguishable.

The Respondent submits that DPP v Hollman was correctly decided and correctly followed by the learned President. To permit persons who had amassed wealth in Ireland through the commission of crimes in other jurisdictions to escape the effects of the legislation would be contrary to its objective, the freezing and divestment of assets generated in connection with criminal activity. The Act does not purport to have extra-territorial effect. It suffices that the activity in question be a "crime" as ordinarily defined.

Insofar as it might occur that a particular activity was a crime in accordance with the laws of another State but not in this jurisdiction, section 3 is subject to the proviso that "the Court shall not make an order if it is satisfied that there would be a serious risk of injustice".

Delay, Abuse of process and the interests of justice

The appellant advanced a number of grounds under the general headings of delay and oppression. Since the premises were acquired in 1988/1989, the appellant was first asked to defend a claim based on its being allegedly the proceeds of crime in the year 2000. He was in prison in England until 4^th April 2001. The learned President accepted that two possibly relevant witnesses had died in the intervening years. The appellant argues that the learned President wrongly applied a test based on whether there had been culpable delay on the part of the plaintiff, rather on e based on prejudice to the appellant.

The appellant also relied on the effect of the English Confiscation order as already summarised. In effect, the appellant had been subjected to an order depriving him of £140,000 of his property. Because he had not discharged this, he became liable to serve and did serve an additional term of three years in prison. According to an expert in English law, the effect of this was to relieve him from further liability for this sum. Having originally put forward a case based on the principle of res judicata, the appellant limited the argument in this respect to one of oppression. It is said that the appellant elected to serve the additional three years on the basis that this would expunge the debt. Thus it is oppressive and wrong that he should now, nonetheless be called upon to pay it.

In response, the Respondent says that the learned President took full account of any possible prejudice to the appellant by reason of delay. Insofar as there was any prejudice in relation to the preparation of the case, this was fully considered. On the other hand, the appellant did not ask for any extra time. So far as the plaintiff was concerned there was no delay.

On the other hand, the courts here are in no way concerned with the enforcement of the English Confiscation Order. The fact that the appellant might have been able to claim that he had discharged his liability under a particular order, is irrelevant to the operation of the 1996 Act.

Conclusion

The grounds of appeal were presented in a different order in the written submissions and at the oral argument. There is, in truth, no compelling or logical order in which they should be considered, though any one of them, if successful, would suffice to enable the appellant to succeed. However, I think that the fourth ground, delay and oppression, should arise only if all other grounds have failed.

The first issue then is whether an application pursuant to section 3 of the 1996 Act is an action for forfeiture so as to benefit from the two-year limitation period provided by section 11(7)(b) of the Statute of Limitations, 1957. The appellant has not proposed any definition of forfeiture for the purposes of the section. He has relied on a statement of Keane C.J., delivering the judgment of the Court, in Murphy v G.M. [2001] 4 I.R., at page 137:

"The orders which the court is empowered to make accordingly, under the Act, may equate to the forfeiture of the property in question…"

This statement is referable to the Act as a whole and not specifically to section 3. In the passages leading up to that dictum, however, the Court explained the place of a section 3 order in the statutory scheme. It describes the making of the "interim order" (section 2) and the "interlocutory order" (section 3) and then points out:

"However, in the interval between the making of the interlocutory order and the expiration of that seven year period, the court may discharge the order on the application either of the garda officer or the person to whom it was directed or who claims an interest in the property. In the latter case, the order is to be made by the court where it is satisfied that the property was not, directly or indirectly, the proceeds of crime or that it would cause "any other injustice"."

It then says:

"The effect of the statutory scheme, accordingly, is to "freeze" property which senior members of the gardaí suspect of representing the proceeds of crime for an indefinite period, subject to the limitations indicated."

It further describes the status and effect of the interlocutory order as follows:

"Unless an order is made under s. 4 at the expiration of the seven year period for the disposal of the property, the owner of the property does not cease to be its owner by virtue of anything done in exercise of the powers conferred by the Act. He or she is however, in effect deprived of the beneficial enjoyment of the property even before such a disposal order is made…… "

The dictum cited by the appellant appears in the same paragraph and must be understood as referring to the potential effect of the order under section 4. It is unnecessary, in the present case, to decide whether an order under section 4 amounts to a forfeiture for the purposes of the Act of 1957. It is clear that the Court did not say, in Murphy, that a section 3 order effected a forfeiture. The Respondent has sought to trace the provenance of the section through the Common Law Procedures Acts and to explain their former relevance to claims by common informers. It is unnecessary to enter into that subject-matter. It is sufficient to say that the effect of section 3 is, as stated in Murphy, to freeze the interest of the property owner but not to deprive him of it. It allows the Court to make an order restraining the owner "from disposing of or otherwise dealing with the whole or, if appropriate, a specified part of the property or diminishing its value…" Such an order is not, in any normal sense, an order of forfeiture. It would do violence to the language of s.3 to hold that it effects a forfeiture. I would reject this ground of appeal.

The next complaint relates to the evidence before the High Court, but more particularly to the way in which the learned President evaluated the evidence heard by him. The objection is not to its admissibility. It is accepted that the Court may receive evidence of the belief of an "authorised officer" and that the plaintiff was such an officer. The complaint relates to the weight which the learned President attached to the admissible hearsay evidence he received and not to the fact that he received it. The complaint is that the learned President stated: "... I must make an order unless I am satisfied on evidence by the Respondent ……that the property was not acquired in whole or in part with proceeds of crime…."

This sentence must also be read in conjunction with what precedes it:

"On the application the Plaintiff an authorised officer of the Criminal Assets Bureau gave evidence pursuant to section 8 of the Proceeds of Crime Act 1996 satisfying me as to the requirements of section 3 of the Proceeds of Crime Act, 1996. As to the grounds for the belief of the Plaintiff the Plaintiff relied on information furnished to him by Detective Constable T. M. of New Scotland Yard and Detective Garda D. L. of the Criminal Assets Bureau both of whom gave evidence and I am satisfied on the evidence before me of these two witnesses that there are reasonable grounds for the Plaintiff's belief."

This passage recognises that section 8 envisages a two-stage process in the evaluation of the evidence. Firstly, the Court hears evidence of an authorised officer as to his belief of the relevant matters, but that is not sufficient to make it evidence. It is also necessary that the belief be reasonable. The plaintiff called, as witnesses, the persons on whose information he relied to support his belief. Though that is not stated to be necessary, it was a permissible means of establishing the reasonableness of the plaintiff's belief. Its purpose was limited to that and the learned President found that the plaintiff's belief was reasonable. The consequence is only that the belief of the authorised officer becomes evidence.

It was then incumbent on the learned president to evaluate the weight which he attached to the testimony of the plaintiff. Therefore, it became evidence.

A distinction must always be made between the existence of evidence and its value or persuasiveness, often called its weight. In O'Leary v Attorney General, cited above, Costello J considered the constitutionality of the provision of section 3 of the Offences against the State Act, 1972 making admissible evidence of the belief of a Chief Superintendent of An Gárda Síochána as a person's membership of an illegal organisation. He stated, at page 112:

"I fail to see how this section affects in any way the plaintiff's right to enjoy the presumption of innocence. What this section does is to make admissible in evidence in certain trials statements of belief which would otherwise be inadmissible. The statement of belief if proffered at the trial becomes "evidence" by virtue of this section in the prosecution case against the accused. Like other evidence, it has to be weighed and considered and a section cannot be construed as meaning that the Court of trial must convict. The accused need not give evidence, and he may ask the Court to hold that the evidence does not establish beyond a reasonable doubt that he is a member of an unlawful organisation."

It appears from the judgment of the learned president that, once the plaintiff had given evidence of belief, which is rendered admissible by section 8, and once he had also found that belief to be reasonable, the burden of proof was transferred ipso facto to the appellant. He did not advert to the opening words of section 3(1), "Where……it appears to the court…" The section does not abrogate the fact-finding function of the court. It is true that, at a certain point, the section shifts on to the defendant the burden of proving that the property does not represent the proceeds of crime. But that occurs only when the court has satisfied itself on the evidence produced of the matters specified section 3(1)(a) and (b). It appears to me that by stating that he "must make the order," unless satisfied by the appellant's evidence that the premises did not represent the proceeds of crime, he abstained from making any judgment on the quality of the plaintiff's evidence. He did, of course, decide that the plaintiff's belief was evidence. That was not enough. He could not proceed, as he did, for that reason alone, to transfer the burden of proof to the appellant.

I would, therefore, allow the appeal on this ground. However, that conclusion would merely result in a retrial. Therefore, it is necessary to consider the next ground of appeal. I would add, however, that I entirely agree with the judgment of McCracken J with regard to the proper approach to be adopted by a judge in applying the provisions of the Act to the evidence. I differ from the other members of the Court only to the extent that I am of opinion that the learned President erred in his approach in this case.

The question here is whether an interlocutory order can be made pursuant to section 3 of Act of 1996, where the crimes of which the property in question is alleged to represent the proceeds was committed against the laws of a foreign jurisdiction.

Plausible arguments can, of course, be advanced both in support of the view that a crime is a word of such general import that it should be limited to one jurisdiction and that it necessarily implies an offence against the laws of this State. I should state at once that I do not accept the appellant's argument that there is any question of extra-territorial effect. The Act of 1996 clearly has effect only within the boundaries of the State.

O'Higgins J, in a considered judgment in DPP v Hollman, stated:

"In my view the Act applies to the proceeds of crime even if that crime was committed outside of the State notwithstanding the failure of the legislation to explicitly say so. The object of the crime is the divestment of assets generated by or in connection with crime. I agree with the submission of Counsel that there is no reason why this objective should be limited to offences committed in this jurisdiction and there are many reasons why it should not. It would be strange indeed if the legislature to be deemed to have intended that persons committed criminal offences in another jurisdiction were free to obtain money from that crime and retain it in Ireland, while those engaging in the same conduct here would be liable to have the assets from similar offences forfeited. These are not criminal proceedings. They are based on the public policy consideration that people should not have in this State the enjoyment of the benefits of assets accumulated as a result of crime".

In reaching this conclusion, he relied on the cases of Bonalumi -v- Secretary of State [1985] 1 All E.R. 979 and Antonelli -v- Secretary of State [1998] All E.R. 997,

The case of Antonelli v Secretary of State, cited above, concerned an English statute which gave power to a named official to prohibit a person from doing estate agency work if satisfied that the person had "been convicted of an offence involving fraud, dishonesty or violence." The Court of Appeal held this to be applicable where the offences had been convicted outside the United Kingdom. Beldam LJ thought the purpose of the act to be the "persuasive consideration." It would be "anomalous if Parliament had not intended convictions for fraud, dishonesty or violence outside the United Kingdom as qualifying to enable the Director to make an order that a person so convicted was unfit to carry on estate agency work generally." The appellant distinguishes that ruling. He argues that it is easier to decide whether there has been a conviction for the range of crimes clearly defined in that legislation than to decide, for the purposes of the Act of 1996, whether a person has committed any crime of any sort against the laws of another state. Furthermore, the object of that legislation was the defined one of protecting members of the public in the United Kingdom from unsuitable estate agents.

The case of Bonalumi v Secretary of State concerned an application under the Bankers Book Evidence Acts. The Secretary of State had made an order under section 5 of the Extradition Act, 1873 giving directions to police magistrates to take evidence for the purpose of a criminal proceeding before a Swedish court. That section expressly referred to "any criminal matter pending in any court or tribunal in any foreign state…" The court of Appeal gave a broad interpretation to the expression "criminal cause or matter" in a statutory provision excluding its own appellate jurisdiction from orders in such a cause or matter. The case law reviewed in the judgment of Stephenson L.J. suggests that, depending on the circumstances, references to criminal matters might be interpreted to include activity in a foreign country at least in cases where some preparatory step was taken in the United Kingdom. (see Amand v Secretary of state for home Affairs [1943] AC 147). This line of case law concerns, essentially, the definition of "criminal cause or matter" for the purpose of defining the jurisdiction of the Court of Appeal. It does not appear to me to provide a definitive answer the more general question whether the word, "crime," when used in an Act of the Oireachtas should be held to include acts committed abroad.

These cases suggest that, in the view of the English courts, depending on the statutory context, the word "crime" is indeed capable of including crimes or offences committed under the law of a foreign state. It does not, therefore, seem appropriate to lay down any broad proposition of general application regarding the meaning of the word as it occurs in acts of the Oireachtas. The ordinary assumption would be, I think, that the connotation of the words "crime" or "offence" when they ordinarily occur in acts of the Oireachtas is that they refer to acts which are contrary to the law of the State. The term "offence" is used routinely when a law provides that an act is contrary to law, meaning, quite obviously, the law of the State. The English cases of Antonelli and Bonalumi cover special situations where there was good reason for applying a broader meaning. The answer is to be found by considering the particular statutory context.

It is instructive to consider some other statutory provisions designed to pursue and seize the proceeds of crime. They may expressly provide for the inclusion foreign criminal activity within their scope. The Criminal Justice Act, 1994 defines "drug trafficking" as extending to the named acts whether "within the State or elsewhere." Section 31 of the Act creates a number of offences under the broad description of "money laundering." They relate to a wide range of activities concerning any form of dealing with the "proceeds of drug trafficking or other criminal activity …" Section 31(11) provides:

"The provisions of this section shall, in so far as they relate to the proceeds of drug trafficking or other criminal activity, apply whether the drug trafficking or other criminal activity concerned took place in the State or elsewhere, and whether it occurred before or after the commencement of this section, provided that where the trafficking or other activity occurred outside the State it corresponded to an offence under the law of the State and amounted to an offence under the law of the country or territory in which it occurred."

Not only did the Oireachtas consider it necessary to enact an express provision where it wished to ensure that the new offences of money laundering would be committed by dealings with the financial fruits of foreign crime, it thought it appropriate to subject this extension to a test of double criminality. If the Court were to interpret the Act of 1996 as embracing the proceeds of foreign crime, there would be no requirement of correspondence. Unlike the Act of 1994, the Act of Act of 1996 contains no provision for correspondence. It would follow that the powers conferred by the Act could be invoked to seize assets in this jurisdiction representing the proceeds of acts committed against the law of a foreign state, although those acts were no offence under Irish law. It is, of course, common to states operating under the rule of law, that certain behaviour is recognised as being so fundamentally contrary to basic norms that it will always be treated as criminal. On the other hand, states vary in their approach to the regulation of many aspects of social and economic life. Some states criminalise behaviour which remains unregulated in others. To interpret the Act of Act of 1996, an Act of the Oireachtas, as applying without distinction to acts deemed unlawful under the laws of other states as well as our own would, in principle, permit the freezing and ultimately the confiscation of assets acquired perfectly legitimately, so far as Irish law is concerned. It seems most unlikely that the Oireachtas intended such an anomalous situation.

The Respondent, recognising the force of this argument, relied strongly on the proviso to section 3(1) to the effect that "the Court shall not make the order if it is satisfied that there would be a serious risk of injustice." That provision is, in my view, too ambiguous to answer the burden of the appellant's complaint in this respect. It simply does not address the question of whether the Act applies to foreign crime. If, as the respondent contends, it could be used by the court to ensure that assets acquired from the proceeds of acts criminal where they were they were committed, but not in Ireland, were not subjected to the remedies provided by the Act, it would fall to the court, in each case, to judge whether the application of the Act would "involve a serious risk of injustice." That would be an uncertain and unpredictable test. Again, the Oireachtas cannot have intended such a result.

To the extent that the Act of Act of 1996 is obscure on this important point, it should, therefore, be interpreted in the light of principles of fairness and justice. It should be possible for persons likely to be affected by its provisions to know where they stand. It also assists to consider the purposes for which the Act was enacted by the legislature.

This Court explained the purpose of the legislation in its judgment, delivered by Keane C.J. in Murphy v G.M. [2001] 4 IR 113 as follows, at page 136:

"The effect of the statutory scheme, accordingly, is to "freeze" property which senior members of the gardaí suspect of representing the proceeds of crime for an indefinite period, subject to the limitations indicated. It is not in dispute - and indeed is a circumstance strongly relied upon on behalf of the appellants - that this unquestionably draconian legislation was enacted by the Oireachtas because professional criminals had developed sophisticated and elaborate forms of what had become known as "money laundering" in order to conceal from the authorities the proceeds of their criminal activities."

It is clear that the purpose of the legislation was, as explained in the quoted passage and elsewhere, to freeze and, ultimately confiscate property acquired with or representing the proceeds of crime committed in the State. The Act of 1996, unlike the Act of 1994, contains no indication of any broader objective. In my view, it does not apply to the proceeds of foreign crime, such as is involved in his case.

I would, therefore, allow the appeal on this ground also, which means that the Act of 1996 never applied to the premises. It is, therefore, not necessary to decide the remaining points in the appeal. Therefore, the appeal should be allowed and the order of the High Court set aside.

THE SUPREME COURT

042/03

Keane CJ

Denham J

Murray J

Fennelly J

McCracken J

In the matter of proceeds of crime act 1996

Between:

McK

Plaintiff/ Respondent

AND D

Defendant/Appellant

Judgment of Mr Justice McCracken delivered on the 17^th day of May 2004

___________________________________________________________

I have had the opportunity of reading the judgment of Fennelly J delivered herein, and I am in complete agreement with his conclusion that the Proceeds of Crime Act 1996 has no application to the proceeds of crimes committed outside the State. Accordingly I also would allow the appeal and set aside the order of the High Court.

With regard to the findings made by the learned President on the evidence, there is no doubt that there is a certain ambiguity in his judgment, but I am not convinced that he was in fact in error. In any event I think it would be helpful to explain the different functions of section 3 and section 8 of the Act.

In his judgment the learned President said:-

"The Proceeds of Crime Act 1996 requires me to make an order pursuant to that section (section 3) if it appears to me on evidence tendered by the plaintiff including evidence admissible by virtue of section 8 of the Act that:-

(1) The defendant is in possession or control of specified property.

(2) In the circumstances of this case that the specified property was acquired in whole or in part with property that directly or indirectly constitutes the proceeds of crime and

(3) that the value of the property is not less than £10,000."

This is only a partial statement of the provisions of section 3. The section in fact provides that the Court shall make the order unless it is shown to the satisfaction of the Court on evidence tendered by the respondent that the property does not constitute directly or indirectly proceeds of crime and was not acquired, in whole or in part, with or in connection with property that, directly or indirectly, constitutes proceeds of crime. However, the learned President then continued in his judgment to set out the provisions of section 8 of the Act, and held, apparently in the context of section 8, that:-

"The order shall be made unless it is shown to the satisfaction of the Court on evidence tendered by the defendant or any other person that the property was not acquired in whole or in part with property directly or indirectly constituting the proceeds of crime or if it is satisfied that there would be a serious risk of injustice."

This provision, of course, is a provision of section 3 rather than of section 8. He then continued:-

"On the application the plaintiff an authorised officer of the Criminal Assets Bureau gave evidence pursuant to section 8 of the Proceeds of Crime Act 1996 satisfying me as to the requirements of section 3 of the Proceeds of Crime Act 1996."

He continued to find that on the evidence of two police officers there were reasonable grounds for the Plaintiff's belief. He then proceeded to consider the evidence given on behalf of the Defendant and held that the Defendant had not satisfied him that the premises were not acquired at least in part by the proceeds of crime. At the end of the day, I think the learned President applied the correct tests, and that his ultimate findings should stand. However, there was undoubted confusion between the two sections, and I believe a clarification of the position would be in order.

It seems to me that the correct procedure for a trial judge in circumstances such as those in the present case is:-

(1) He should firstly consider the position under section 8. He should consider the evidence given by the member or authorised officer of his belief, and at the same time consider any other evidence, such as that of the two police officers in the present case, which might point to reasonable grounds for that belief.

(2) If he is satisfied that there are reasonable grounds for the belief, he should then make a specific finding that the belief of the member or authorised officer is evidence.

(3) Only then should he go on to consider the position under section 3. He should consider the evidence tendered by the applicant, which in the present case would be both the evidence of the member or authorised officer under section 8 and indeed the evidence of the other police officers.

(4) He should make a finding whether this evidence constitutes a prima facie case under section 3, and if he does so find, the onus shifts to the respondent or other specified person.

(5) He should then consider the evidence furnished by the respondent or other specified person and determine whether he is satisfied that the onus undertaken by the respondent or other specified person has been fulfilled.

(6) If he is satisfied that the respondent or other specified person has satisfied his onus of proof then the proceedings should be dismissed.

(7) If he is not so satisfied he should then consider whether there would a serious risk of injustice. If the steps are followed in that order, there should be little risk of the type of confusion which arose in the present case.