Jersey Unreported Judgments

Appeal against decision of the Royal Court 22 July 2016, dismissing the Appellant's application for a property restraint order to be discharged.

[2017]JCA029

Court of Appeal

22 February 2017

Before     :		James McNeill, Q.C., President; John Martin, Q.C., and Sir David Calvert-Smith.
Between	Doraville Properties Corporation		Appellant
And	Her Majesty's Attorney General		Respondent

Advocate P. G. Nicholls for the Appellant.

M. T. Jowitt, Esq., Crown Advocate for the Respondent.

judgment

calvert-smith ja:

1.        This appeal came before us following a decision of the Royal Court (Commissioner Clyde-Smith and Jurats Fisher and Grime - judgment 22nd July 2016 (Doraville Properties v AG [2016] JRC 128) following a three day hearing in May 2016) to dismiss an application by Doraville Properties Corporation ("Doraville") for a Property Restraint Order ("PRO") to be discharged.  The chain of events which led to the grant of the order are more fully set out in the judgment of the Royal Court. 

2.        In short, the litigation in this jurisdiction arises because Doraville has assets held in its name in Jersey in respect of which the United States of America (the "US") wishes there to be a PRO in order to support asset forfeiture proceedings in the US.  Those proceedings have resulted in judgment in rem against, among others, those Jersey assets. 

Preliminary Issue

3.        The first matter for our decision concerned a preliminary question as to whether the would-be appellant, Doraville, had been required to apply for leave to appeal within 28 days of the decision below, or, if to be permitted to do so later, whether there had to be a proper explanation for the delay in so applying. 

4.        Crown Advocate Jowitt submitted that the judgment the subject of the proposed appeal was an interlocutory judgment within the terms of Article 13 of the Court of Appeal (Jersey) Law 1961 which states:

"13     Limitation on appeals

(1)       No appeal shall lie under this Part -

 ......

(e)       without the leave of the court whose decision is sought to be appealed from, or of the Court of Appeal, from any interlocutory order or interlocutory judgment, except -

(i)        where the liberty of the subject or the custody of minors is concerned,

(ii)       in the case of a decree in a matrimonial cause or a judgment or order in an admiralty action determining liability,

(iii)     in such other cases of the nature of final decisions as may be prescribed.

(2)       An application to the Court of Appeal for leave pursuant to paragraph (1)(e) shall be made to a single judge of that Court.

(3)       Subject to paragraph (4), the single judge's decision on the application shall be final.

(4)       The single judge may at any stage refer the application to the full Court of Appeal for decision."

5.        He did so for the following reasons:

(i)        An application for a PRO is simply a necessary preliminary step to an application to register an External Civil Asset Recovery Order ("ECARO"). 

(ii)       It is at that second stage that a final decision is made which may be appealed without leave, there being no question in this case of the application of the three exceptions set out in Article 13(1)(e).  

6.        Advocate Nicholls on behalf of Doraville submitted that the decision to grant a PRO was a free-standing, and therefore final, decision which should be amenable to an appeal without leave.  If we were to reject that submission he argued that we should grant leave since if there had been a failure to do so in time that failure was not due to negligence but to a misunderstanding of the law, this being the first time that the court has had to construe the Civil Asset Recovery (International Co-operation)(Jersey) Law 2007 (the "2007 Law"), which introduced the concept of a PRO.  In addition he submitted that the grounds passed the test most recently considered by this court in Crociani and Ors v Crociani and Ors [2014] JCA 089, paragraphs 50-53, 151 and 156 namely that an Applicant must show that:

(i)        The appeal has a real prospect of success;

(ii)       A question of general principle falls to be decided for the first time; or

(iii)      There is an important question of law upon which further argument and a decision of the Court of Appeal would be to the public advantage. 

7.        We have no doubt that the submission for the Crown is correct.  The obtaining of a PRO is indeed a preliminary step taken to secure assets which might otherwise be dissipated in advance of a decision to register an ECARO.  At this latter stage, when the Royal Court has to consider the interests of justice, a final decision is taken which would attract an automatic right of appeal.  We accepted however that since this is the first time that certain provisions of the 2007 Law have fallen to be construed, since the failure to apply for permission was not due to culpable neglect, and since the applicant's grounds were on their face arguable, we should grant leave. 

The Appeal

8.        The factual background leading to the application for a PRO is carefully set out in the Royal Court judgment.  In summary, 

(i)        From 1993 to 1998 General Mohammed Abacha was President of Nigeria.  During that period it is alleged - and there has been no suggestion in these proceedings that the allegation is false - that he stole millions of dollars of Nigerian public money.  The monies were transferred to the US and, in this instance, to an account held with Deutsche Bank International in Jersey in name of Doraville (the "Bank Account").  General Abacha was assisted in the thefts by his second son, Mohammed Sani Abacha, and their associate Abubakar Atiku Bagudu. 

(ii)       In 2003 Bagudu was arrested in the US on warrants issued in Jersey.  He subsequently agreed to return more than US$163 million of Doraville's assets to the Nigerian government; an amount which he claimed represented his half share of Doraville's assets, the remaining money being that of Mohammed Sani Abacha. In return Jersey withdrew an extradition request and Bagudu was not returned to Nigeria for possible prosecution in that country.  Since then the balance in the Bank Account has increased to approximately $287 million. 

(iii)      In 2012 Nigeria requested mutual assistance from the US in recovering further stolen assets, including the Bank Account. 

(iv)      Pursuant to that request, on 18th November 2013 a Verified Complaint for Forfeiture in rem was submitted by the US Department of Justice in the District Court for the District of Columbia.  The US application was brought under 18 U.S.C.A. (United States Code Annotated) section 981(a)(1) which provides that "Any property, real or personal, involved in a transaction or attempted transaction in violation of section 1956, 1957 or 1960 of this title, or any property traceable to such property" is subject to forfeiture to the United States. 

(v)       On 6th December 2013 the Columbia District Court granted an arrest warrant in rem against the Bank Account. 

(vi)      On 2nd February 2014 the Royal Court granted the PRO with which we are concerned upon the application of the Attorney General.  

(vii)     On 6th August 2014 a Default Judgment (the "Default Judgment") was granted by District Judge Bates in the District Court of Columbia.  

(viii)    The Default Judgment formed the basis for the application under the 2007 Law.  This appeal is concerned with the application of the 2007 Law to the Default Judgment.  

The 2007 Law

9.        The 2007 Law, which apparently has no direct equivalent in any other jurisdiction, is described under its heading as a law "to enable Jersey to co-operate with other countries in external civil asset recovery proceedings and investigations and for related purposes."

10.      The concept of an External Civil Asset Recovery Order is defined in Article 1 of the Law:

"external civil asset recovery order" means an order or other judicial authority, that -

(a)       is made, other than in the course of criminal proceedings, by an external decision-making body in a country or territory outside Jersey; and

(b)       specifies that property specified in the order is tainted property, or specifies an amount of money to be money to be forfeited or recovered in lieu of tainted property."

11.      In that Interpretation Article, "tainted property" is defined in this way:-

"tainted property" means property that has been found by an external decision-making body to have been -

(a)       used in, or intended to be used in, unlawful conduct; or

(b)       obtained in the course of, from the proceeds of, or in connection with, unlawful conduct."

12.      The Interpretation Article defines "unlawful conduct" as "the commission of an offence against a law of a country or territory, including Jersey."

13.      Under Article 6(3) and (5), the Court may make a property restraint order on the application of the Attorney General in respect of any recoverable property specified in the application, where (for the purposes of this case) the following requirements are met:-

"(a)     external civil asset recovery proceedings that relate to property in Jersey have been instituted in a country or territory outside Jersey;

(b)       the proceedings have not been concluded; and

(c)       it appears to the Royal Court that there are reasonable grounds for believing that an external civil asset recovery order may be made in the proceedings."

14.      It is to be noted that Doraville accepts that these requirements were met when the PRO was made by the Royal Court. 

15.      Under Article 7, upon the making of a PRO, all of the recoverable property specified in the order shall vest in the Viscount; but under Article 7(5), any person affected may apply to discharge or vary that order. 

16.      Article 9 provides: -

"9. On an application made on behalf of the government of a country or territory outside Jersey, the Royal Court may register an external civil asset recovery order made in the country or territory if -

(a)       it is satisfied that at the time of registration the order is in force and not subject to appeal;

(b)       where the respondent in relation to the order did not appear in the proceedings in which the order was made, it is satisfied that he or she received notice of the proceedings in sufficient time to enable him or her to defend them; and

(c)       it is of the opinion that enforcing the order in Jersey would not be contrary to the interests of justice."

17.      No application has yet been made on behalf of the US to register the Default Judgment. 

18.      Doraville accepts that the Default Judgment was made other than in the course of criminal proceedings and that the US District Court is an external decision-making body (as defined) outside Jersey.  Doraville also accepts that the order of the US Court specifies the property to be forfeited but it does not accept that it is "tainted property". 

The appeal contentions

19.      For Doraville, Advocate Nicholls began by repeating two of the grounds argued before the Royal Court concerning the proper application of the definition of "tainted property" set out in paragraph 11 above:

"a.       Did the Default Judgment constitute a "finding" by an external decision-making body?

b.        If it did was the property concerned, or any of it, "tainted property"?

We shall deal with each of these in turn below.  A third ground concerning a possible breach of the appellant's rights under Article 1 of the 1st Protocol of the European Convention on Human Rights was not maintained before us.

20.      We should record that, in order to assist the Royal Court both sides had called an expert witness in order to deal with the relevant US law.  Their evidence was largely agreed and was allowed to stray some way beyond the narrow confines of their expertise in US law; but the Court was well aware of the boundaries and no complaint is made by either side to us as to the way in which the Court approached them.  There was in any event a large measure of agreement between them.  This appellate court is bound to accord the factual findings of the Jurats proper respect and will only interfere with such findings if they are shown to be "clearly wrong".  As it is, it seems to us that little turns on the expert evidence. 

21.      There are two important matters which were placed before the Royal Court and repeated before us.  They form the background against which the questions set out in paragraph 19 above regarding the definitions in the 2007 Law and their application to this case ought properly to be answered.  

22.      The first concerns the background to the enactment of the 2007 Law, a matter stressed as important by the Crown.  The second concerns the principle of "doubtful penalisation", a consideration upon which Doraville placed emphasis. 

The enactment of the 2007 Law

23.      Consideration of the Crown arguments was clearly set out in the Royal Court judgment in terms which seem to us to be correct.  In the analysis which we support below, it is not necessary for us to rely upon the background to the enactment of the 2007 Law. In view of the importance of the matter, however, we gratefully record what was said by the Royal Court.  Dealing with the background to the enactment of the 2007 Law, the Royal Court stated:

"78. The 2007 Law was enacted having regard to the recommendations of the Financial Action Task Force ("FATF") and in anticipation of an International Monetary Fund ("IMF") assessment of Jersey against the standards set out in those recommendations (see the Projet at paragraph 5 and Hansard at page 57). 

79. The sponsoring Minister envisaged that the legislation would apply to orders from a wide variety of States (including, expressly, the US).  The Projet says (paragraph 1):-

"Civil forfeiture schemes currently operate in a number of jurisdictions around the world including, at least, England and Wales, Scotland, Northern Ireland, Republic of Ireland, Switzerland, Italy, USA, Australia, South Africa and various Canadian provinces."

80. The most important current FATF recommendations for present purposes are recommendations 4, 36, 38 and 40. In setting out extracts from the FATF Recommendations and from some of the conventions, as we do below, the distinction (which we have underlined) between property which constitutes the proceeds of crime and property that is used or involved in crime - referred to as "instrumentalities" - becomes apparent. 

81. Recommendations 4, 36, 38 and 40 (of the current text) state:-

"B. MONEY LAUNDERING AND CONFISCATION

4. Confiscation and provisional measures

Countries should adopt measures similar to those set forth in the Vienna Convention, the Palermo Convention and the Terrorist Financing Convention, including legislative measures, to enable their competent authorities to freeze or seize and confiscate the following, without prejudicing the rights of bona fide third parties: (a) property laundered, (b) proceeds from, or instrumentalities used in or intended for use in money laundering....

Countries should consider adopting measures that allow such proceeds or instrumentalities to be confiscated without requiring a criminal conviction...to the extent that such a requirement is consistent with the principles of their domestic law.

G. INTERNATIONAL COOPERATION

36       International instruments

Countries should take immediate steps to become party to and implement fully the Vienna Convention, 1988; the Palermo Convention, 2000; the United Nations Convention against Corruption, 2003; and the Terrorist Financing Convention, 1999.  Where applicable, countries are also encouraged to ratify and implement other relevant international conventions, such as the Council of Europe Convention on Cybercrime, 2001; the inter-American Convention against Terrorism, 2002; and the Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism, 2005.

...

38       Mutual legal assistance: freezing and confiscation

Countries should ensure that they have the authority to take expeditious action in response to requests by foreign countries to identify, freeze, seize and confiscate property laundered; proceeds from money laundering, predicate offences and terrorist financing; instrumentalities used in, or intended for use in, the commission of these offences; or property of corresponding value.  This authority should include being able to respond to requests made on the basis of non-conviction-based confiscation proceedings and related provisional measures, unless this is inconsistent with fundamental principles of their domestic law ...

...

40       Other forms of international cooperation

Countries should ensure that their competent authorities can rapidly, constructively and effectively provide the widest range of international cooperation in relation to money laundering, associated predicate offences and terrorist financing ..."  

82. The international conventions referred to in recommendation 36 are relevant aids to the interpretation of legislation such as the 2007 Law (see, for example, SOCA v Perry [2013] AC 182 at paragraph 18) although ultimately, the Court is concerned with the interpretation of the domestic legislation and the actual words used by the legislature. 

83. The United Nations Convention Against Corruption (the "Anti-Corruption Convention") was extended to Jersey on 9th November, 2009.  It was expressly referred to by the Attorney General in the States Assembly in the course of the debate on the draft that became the 2007 Law.  The FATF recommendations expect States both to become a party to and 'implement fully' those conventions (see recommendation 36 above). 

84. The Anti-Corruption Convention contains the following Articles:-

"Article 1        Statement of purpose

The purposes of this Convention are:

(a)       To promote and strengthen measures to prevent and combat corruption more efficiently and effectively;

(b)       To promote facilitate and support international cooperation and technical assistance in the prevention of and fight against corruption, including in asset recovery;

...

Chapter V

Asset recovery

Article 51 General provision

The return of assets pursuant to this chapter is a fundamental principle of this Convention, and States Parties shall afford one another the widest measure of cooperation and assistance in this regard.

Article 54        Mechanisms for recovery of property through international cooperation in confiscation.

1.        Each State Party, in order to provide mutual legal assistance pursuant to article 55 of this Convention with respect to property acquired through or involved in the commission of an offence established in accordance with this Convention, shall, in accordance with its domestic law:

(a) Take such measures as may be necessary to permit its competent authorities to give effect to an order of confiscation issued by a court of another State Party;

..., and

(c) Consider taking such measures as may be necessary to allow confiscation of such property without a criminal conviction in cases in which the offender cannot be prosecuted by reason of death, flight or absence or in other appropriate cases.

Article 55  International cooperation for purposes of confiscation

1.        A State Party that has received a request from another State Party having jurisdiction over an offence established in accordance with this Convention for confiscation of proceeds of crime, property, equipment or other instrumentalities referred to in article 31, paragraph 1, of this Convention situated in its territory shall, to the greatest possible extent within its domestic legal system:

(a) ....: or

(b)       Submit to its competent authorities, with a view to giving effect to it to the extent requested, an order of confiscation issued by a court in the territory of the requesting State Party in accordance with article 31, paragraph 1, and 54, paragraph 1(a), of this Convention insofar as it relates to proceeds of crime, property, equipment or other instrumentalities referred to in article 31, paragraph 1, situated in the territory of the requested State Party.

Article 31, paragraph 1 provides:

Article 31. Freezing, seizure and confiscation

1.        Each State Party shall take, to the greatest extent possible within its domestic legal system, such measures as may be necessary to enable confiscation of:

(a) Proceeds of crime derived from offences established in accordance with this Convention or property the value of which corresponds to that of such proceeds;

(b) Property, equipment or other instrumentalities used in or destined for use in offences established in accordance with this Convention.

...

5.        If such proceeds of crime have been intermingled with property acquired from legitimate sources, such property shall, without prejudice to any powers relating to freezing or seizure, be liable to confiscation up to the assessed value of the intermingled proceeds."

85. Article 31 paragraph 5 above was the subject of some discussion to which we will come shortly. 

86. The Council of Europe Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and the Financing of Terrorism 2005 ("the Warsaw Convention") was extended to Jersey from 1st August, 2015. 

87. The Warsaw Convention includes the following Articles:-

"Chapter 1 - Use of terms

Article 1 -        Use of terms

For the purposes of this Convention:

a         "proceeds" means any economic advantage, derived from or obtained, directly or indirectly, from criminal offences.  It may consist of any property as defined in sub-paragraph b of this article;

...

c         "instrumentalities" means any property used or intended to be used, in any manner, wholly or in part, to commit a criminal offence or criminal offences;

d         "confiscation" means a penalty or a measure, ordered by a court following proceedings in relation to a criminal offence or criminal offences resulting in the final deprivation of property;

...

Chapter IV - International co-operation

Section 1 - Principles of international co-operation

Article 15 - General principles and measures for international co-operation

1.        The Parties shall mutually co-operate with each other to the widest extent possible for the purposes of investigations and proceedings aiming at the confiscation of instrumentalities and proceeds.

2.        Each Party shall adopt such legislative or other measures as may be necessary to enable it to comply, under the conditions provided for in this chapter, with requests:

a.        For confiscation of specific items of property representing proceeds or instrumentalities, as well as for confiscation of proceeds consisting in a requirement to pay a sum of money corresponding to the value of proceeds;

b.        For investigative assistance and provisional measures with a view to either form of confiscation referred to under a above.

Section 4 - Confiscation

Article 23 - Obligation to confiscate

1         A Party, which has received a request made by another Party for confiscation concerning instrumentalities or proceeds, situated in its territory, shall:

a         enforce a confiscation order made by a court of a requesting Party in relation to such instrumentalities or proceeds; or

b         submit the request to its competent authorities for the purpose of obtaining an order of confiscation and, if such order is granted, enforce it.

...

5         The Parties shall co-operate to the widest extent possible under their domestic law with those Parties which request the execution of measures equivalent to confiscation leading to the deprivation of property, which are not criminal sanctions, in so far as such measures are ordered by a judicial authority of the requesting Party in relation to a criminal offence, provided that it has been established that the property constitutes proceeds or other property in the meaning of Article 5 of this Convention.

Article 5 provides:

Article 5 - Freezing, seizure and confiscation

Each Party shall adopt such legislative and other measures as may be necessary to ensure that the measures to freeze, seize and confiscate also encompass:

a         the property into which the proceeds have been transformed or converted;

b         property acquired from legitimate sources, if proceeds have been intermingled, in whole or in part, with such property, up to the assessed value of the intermingled proceeds;

c         income or other benefits derived from proceeds, from property into which proceeds of crime have been transformed or converted or from property with which proceeds of crime have been intermingled, up to the assessed value of the intermingled proceeds, in the same manner and to the same extent as proceeds."  

88. The United Nations Convention Against Transnational Organised Crime 2000 ("the Palermo Convention") was extended to Jersey on 17th December, 2014.  It provides for mutual legal assistance in connection with the proceeds and instrumentalities of crime in similar terms to Articles 55 and 31 of the Anti Corruption Convention (see Articles 12 and 13 of the Palermo Convention).

89. The United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988 ("the Vienna Convention") was extended to Jersey on 7th July, 1997.  It also envisages measures relating to the proceeds of crimes and to "instrumentalities used in or intended for use in .. offences.." (see Article 5)." 

The principle of "doubtful penalisation"

24.      Turning to the background issue highlighted on behalf of Doraville, Advocate Nicholls correctly submitted that the 2007 Law is a forfeiture statute which, by its very nature, is confiscatory and therefore penal.  Courts are accordingly bound to apply the principle against doubtful penalisation when construing its terms.  Bennion on Statutory Interpretation (6th edition) puts it thus:

"Section 271     Principle against penalisation under a doubtful law

It is a principle of legal policy that a person should not be penalised except under clear law (in this Code called the principle against doubtful penalisation). The court, when considering, in relation to the facts of the instant case, which of the opposing constructions of the enactment would give effect to the legislative intention, should presume that the legislator intended to observe this principle. It should therefore strive to avoid adopting a construction which penalises a person where the legislator's intention to do so is doubtful, or penalises him or her in a way which was not made clear. In some cases however the court may find that the intention to impose the detriment was so strong as to require the doubt to be overridden.

Section 278     Statutory interference with economic interests

One aspect of the principle against doubtful penalisation is that by the exercise of state power the property or other economic interests of a person should not be taken away, impaired or endangered, except under clear authority of law."

25.      Advocate Nicholls submitted that that, in reaching its conclusions, the Royal Court had not applied the principle set out in Methuen-Campbell v Walters [1979] QB 525 at 542 (Buckley LJ):

"[I]f there is any doubt as to the way in which language should be construed, it should be construed in favour of the party who is to be dispropriated rather than otherwise."

26.      Advocate Nicholls listed specific criticisms of the judgment which, he suggested, showed that the Royal Court had failed to apply the principle.  

(a)       Instead of construing the term "found" in accordance with its natural meaning, the Royal Court effectively read it down thereby allowing foreign orders to be enforced in this jurisdiction even if the order contains no meaningful findings whatsoever.

(b)       The Royal Court expanded the scope of "tainted property" by holding that the term "used in" includes property that had only been "involved in" unlawful conduct. 

(c)       Although the 2007 Law requires that property be specified as "tainted property" on the face of the relevant order, the Royal Court went behind the terms of the Default Judgment and considered the allegations made in the Verified Complaint.  

(d)       Instead of construing the allegations in the Verified Complaint carefully and in accordance with their meaning, the Royal Court construed them broadly and in the Respondent's favour.   

(e)       The Royal Court effectively placed the burden on Doraville to prove that Doraville's assets were untainted (e.g. at para 143).  The Royal Court should have assumed that Doraville's assets were untainted unless the Respondent could prove that the US Court had found them to be tainted.  To the extent that he could not do so, it was incumbent upon the Royal Court to discontinue the restraint order at least to that extent.  

27.      We have borne the principle in mind in approaching the 2007 Law and its application to the circumstances of this case.  We deal with Advocate Nicholls criticisms as we discuss the two grounds of appeal, which we now proceed to do.  

Ground (a): Did the Default Judgment constitute a "finding" by an external decision-making body?

28.      There was no dispute that the answer to this question should be reached by applying the definition set out in Black's Law Dictionary at page 499 -  "a decision upon a question of fact reached as a result of a judicial examination or investigation by a court, jury, referee, coroner, etc."

29.      In the Default Judgment are the following words (asset (a) being the Bank Account):

"The verified complaint alleged that the defendant assets were involved in an international conspiracy to launder proceeds of corruption in Nigeria during the military regime of General Sani Abacha ... The United States now moves for entry of Default Judgment and an order of forfeiture to vest legal title and ownership to defendant assets (a)-(g) in the United States.  Based on the government's well-pleaded allegations in its verified complaint, the Court finds that defendant assets (a)-(g) were involved in transactions in violation of 18 U.S.C. sections 1956 and 1957, or are traceable to such property..."

30.      At first sight, the last sentence appears to be plain.  The District Court made a finding.  The finding referred to the whole of the Bank Account.  Although not strictly necessary in view of the terms of the 2007 Law we have studied the Verified Complaint.  The factual allegations within it amount to some 92 paragraphs which describe in detail the two methods used to steal the assets, the human agents involved in their removal and onward transfer, the entities they created and the bank accounts opened by those entities to receive the stolen funds.  In particular,

(i)        the history of the creation of Doraville in 1997 in the British Virgin Islands by Bagudu and the opening of the Doraville account in Jersey in 1998 by Bagudu and Mohammed Sani Abacha with false information as to the source of the deposits into it - paras 4(a) & (l), 11 and 16.  

(ii)       The methods used by General Abacha and his associates to steal funds from Nigeria via the "Security votes Fraud" and the "Debt Buy-Back Fraud" - paras 25-29, 36-44 & 48-50. 

(iii)      The payment of monies stolen in the Security Votes Fraud into the Bank Account - para 33. 

(iv)      The purchase with stolen monies of Nigerian Par Bonds and their deposit at ANZ Bank in London before onward transfer to the Bank Account - paras 53, 69-76.

(v)       The arrest in 2003 of Bagudu and his return of $163,719,820 from Doraville to Nigeria - para 77. 

(vi)      The then current value of the assets in the Bank Account of approximately $287 million - para 78. 

31.      As is clear from the Default Judgment, Judge Bates had read the Verified Complaint and indicated that he found that the assets "were involved in transactions contravention of 18 U.S.C. sections 1956 and 1957, or are traceable to such property..."

32.      The Royal Court judgment dealt with the issue as to whether there had been a finding at paragraphs 100-121.  In particular the court stated:

"108.   The 2007 Law expressly contemplates the registration of an external civil assets recovery order made in default.  Article 9(b) is in these terms:-

"Where the respondent in relation to the order did not appear in the proceedings in which the order was made, it is satisfied that he or she received notice of the proceedings in sufficient time to enable him or her to defend them."

109.    Not to permit the registration of default judgments would, as Advocate Jowitt points out, severely emasculate the scheme for the recognition and enforcement of such overseas orders.  It would be an easy way to avoid the confiscation or forfeiture of Jersey assets; one would only have to ignore the overseas domestic proceedings and allow the overseas domestic court to enter judgment by default.  It would lead to the strange result that judgments based on stronger, uncontested cases would be more difficult to enforce in practice than judgments based on weaker, contested cases.  Furthermore, it would make this legislation unique among all these schemes for the recognition and enforcement of overseas civil judgments, which would require some kind of explanation or justification and, he said, none exists. 

110.    Advocate Nicholls accepts, as we believe he must, that in the light of Article 9(b), default judgments can be registered, but he maintains that in order to comply with the definition of "tainted property", that default judgment must still make factual findings.  He said that this was particularly important because the 2007 Law applies potentially to judgements from every legal system in the world, for example from Iraq or Afghanistan.  If such orders were made in the absence of the interested party, it cannot be right that this Court should give effect to the same without that foreign court making any findings. 

111.    We accept that under a default judgement there must be a finding, as that is what the 2007 Law stipulates, but given the structure of the 2007 Law and the requirement for any assets recovered to be paid into the Civil Asset Recovery Fund, then it seems to us that in practice applications are only going to be made by those countries which have civil forfeiture schemes and asset sharing agreements with Jersey (currently limited in number--see paragraph 79 above) which provides some safeguard, but the real safeguard against injustice lies with the provisions of Article 9(c), which provides that the Court will not enforce an order where it would be contrary to the interests of justice to do so. 

112.    In evidence, Mr Alberts informed us that the US District Court had the power to hold a further hearing in order to inquire into the facts, if so requested, but as a matter of US procedure, it would not be customary and it would not be necessary to do so. 

113.    We question what such a further hearing would achieve in the absence of a contesting party and when the US court must still accept as true all of the factual allegations before it.  Mr Alberts in his report pointed to the case of Aschroft v Iqbal (supra) a decision of the US Supreme Court which was concerned neither with a Default Judgment nor asset forfeiture, and in which it was made clear that in a motion to dismiss, the court must take the allegations as true, no matter how sceptical the court may be, unless the allegations are sufficiently fantastic to defy reality.  We are not in the territory here of the facts being alleged in the Verified Complaint being regarded as implausible let alone sufficiently fantastic to defy reality. 

114.    Because such a further hearing did not take place, Advocate Nicholls reaches the conclusion that at most the Default Judgment is an expression of the view of District Judge Bates that the reasonable belief standard under Rule G had been met, namely that in due course, the US government would be able to meet its burden of proof at trial. 

115.    It is helpful to break down the central part of the judgement of District Judge Bates, set out in paragraph 13 above, into its constituent parts:-

i.         Firstly, he made a finding based on the Verified Complaint, that the Doraville Assets had been "involved in" transactions in violation of US money laundering legislation;

ii.        Secondly, based upon that finding, he held that the Doraville Assets were subject to forfeiture pursuant to section 981(a)(1)(A) and Rule G;

iii.       Thirdly, he held that due process had been complied with and that the motion for entry of default judgement was unopposed; and

iv.       Fourthly, he then concluded that the US was entitled to default judgement and an order for forfeiture. 

116.    We are advised by the experts that as a matter of US law the default judgement does not constitute a judicial determination of the facts of the case-being a default judgement it necessarily does not involve the litigation or resolution of any factual issues.  That, it seems to us, is inherent in any default situation.  As a matter of general principle foreign civil default judgements will be enforced in this jurisdiction without the foreign court having investigated the merits of the case.  As Dicey, Morris and Collins on Conflict of Laws, 15th edition, says at paragraph 14-021:-

"Nor was it necessary that the judgement should be given as the result of investigation of the merits of the case; if the court were one which in the view of English law had jurisdiction over the defendant, and he failed to defend, the court's judgement might be enforced in England as fully as if he had defended the case on the merits".

117.    What is clear is that District Judge Bates made a finding on evidence that had been verified and in our view that suffices for the purposes of the 2007 Law.  It complies with the definition of the word "found" in Black's Law Dictionary (see paragraph 47 above) in that it is a decision upon a question of fact (the involvement of the Doraville Assets in money laundering) as a result of a judicial examination of the evidence (the Verified Complaint-which constitutes evidence notwithstanding the qualifications referred to in paragraph 51(i) above).  It is not a mere expression of the view of District Judge Bates or a mere decision that the threshold under Rule G had been met, as would be the case in a motion to dismiss.  Rule G was a threshold that had to be passed in order to make an order for forfeiture, but it is wrong to equate the finding to the threshold. 

118.    In relation to the threshold, we accept and prefer the view of Mr Cassella that District Judge Bates applied the more rigorous standard as contained in Rule G-indeed he makes express reference to it in his judgment. 

119.    We cannot infer from District Judge Bates apparently deleting wording from the draft order (see paragraph 52 above), that he did not consider himself to be making a finding of fact or law, as he clearly made such a finding.  Nor can we infer that he did not think the Verified Complaint stated a sufficient factual and legal basis for forfeiture, because he based his order for forfeiture upon it. 

120.    We conclude that District Judge Bates did make a finding based on the evidence and law before him that the Doraville Assets had been "involved in" transactions in violation of US Money laundering legislation.  That part of the definition of "tainted property" that requires a finding is therefore met."

33.      We have considered that discussion and conclusion in the light of the contentions advanced before us by Advocate Nicholls which, essentially, repeated the submissions he had made to the Royal Court.  Nothing in our own consideration has caused us to doubt the correctness of the Royal Court's conclusion that the Default Judgment embraced something "found" within the meaning of the Article 1 definition of "tainted property" quoted in paragraph 11 above.  Further, and as indicated at paragraph 30 above, we have looked at the content of the Verified Complaint and have found ample material within it to justify such a finding.  As the Royal Court held, the fact that the finding was made by way of a default judgment is immaterial.  Orders under the 2007 Law will almost always be made in advance of substantive proceedings whether civil or criminal in nature so as to rule out the possibility that the subject assets may be dissipated before such proceedings.  In this case the conclusion is strengthened by the fact that the appellant was given notice of the application and chose not to contest it, or to appeal it. 

34.      An additional submission was made to the Royal Court and repeated before us to the effect that even if the Default Judgment represented a "finding" within the meaning of Article 1 that finding was limited to the amount of US$11m as opposed to the total balance of funds in the account of some US$287 million.  This submission was based on matters derived from the evidence of the expert witness called by Doraville before the Royal Court.  

35.      The Royal Court dealt with this submission at paragraphs 142-150.  In summary the Court found that:

(i)        The Verified Complaint made it plain that the allegation:

(a)       involved all Doraville's assets none of which were derived from legitimate sources, and the interest which accrued during the life of the account;

(b)       Included an allegation that lies were told to Deutsche Bank about the purpose of the account;

(ii)       The Default Judgment was unequivocal.  It concerned all the assets of the appellant.  

(iii)      Neither at the stage when the matter was before the US Court or since has there been any suggestion of a legitimate purpose for the establishment of the account or of the monies which have been deposited in it.  As the Royal Court stated, and we agree:

"148. The final, but simple, point relates again to what the US District Court actually found.  Under the Default Judgment, Doraville's Assets, which were the subject of forfeiture, are defined as "(a) All assets held in account number...", so that when District Judge Bates states that "...defendant assets (a)-(g) were involved in transactions in violation..." he means all of the assets in the Bank Account, not some part of them.  To suggest that there was insufficient evidence contained within the Verified Complaint to justify such a conclusion is to go behind the judgment (impermissibly), but in any event in our view there was sufficient evidence. 

149.    Taking up the approach suggested by Advocate Nicholls at paragraph 55 above, we have considered the allegations in the Verified Complaint, assumed they are true and have determined that the allegations are that all of the Doraville Assets constitute the proceeds of crime; and that is what in substance District Judge Bates found. 

150.    We therefore find that under the Default Judgement, the US District Court found that all of the Doraville Assets constitute the proceeds of crime and the case therefore falls squarely within the second part of the definition of "tainted property" under the 2007 Law.  That finding is sufficient to dispose of Doraville's application."

36.      We agree with that analysis and the conclusion.  According to the Verified Complaint the account was opened to be used to receive the proceeds of theft.  There has been no contention advanced either in the Verified Complaint or on behalf of Doraville that the funds whether by way of the deposit of fresh funds or the accumulation of interest on deposited funds were derived from legitimate sources, merely a suggestion that the contrary had not been proved.  Indeed a careful analysis of the Verified Complaint - in particular of paragraphs 52-71 - shows that the US investigation has been able to trace all of the Doraville assets back to the thefts committed by General Abacha by way of the "Security Votes Fraud" or the "Debt Buy-Back Fraud".  This was not a case therefore which depended on an assessment of the accuracy of witnesses' recollection or of their honesty, it relied solely on identifiable transactions within financial institutions.  There is, therefore, no basis upon which to restrict the ambit of the "finding". 

Ground (b). If there was a finding, was the property concerned, or any of it, "tainted property"?

37.      The argument for Doraville focused on the different elements of the definition of this phrase in Article 1 of the 2007 Law and an alleged conflict between those elements and the terms used in the Default Judgment.  The definition, said Advocate Nicholls, encompasses property:

"used in, or

-intended to be used in, or

-obtained in the course of, or

-from the proceeds of,

or in connection with,

unlawful conduct."

38.      These elements can be characterised as categories; but before turning to the facts of this particular case it is perhaps worth stressing that the same property may at the same time fit one or more of these categories.  Monies obtained in the course of a theft, or from the proceeds of theft or in connexion with it, may also be used in the commission of a money laundering offence.  Even if there was evidence that some of the funds in an account were legitimate, provided there was sufficient evidence to indicate that the account had been set up to receive stolen money, the use of legitimate money in the account to conceal its principal purpose would mean that that legitimate money was being used in unlawful conduct.  The disguise of criminally acquired assets with legitimate assets is precisely what money laundering is intended to achieve.  In fact, in this case, as both the Default Judgment and Royal Court found, there is no suggestion let alone any evidence of that latter type of money laundering. The "laundering" alleged in this case simply involves the movement of stolen assets into different foreign jurisdictions and their subsequent disguise as Nigerian Par Bonds etc. 

39.      In his written submissions Advocate Nicholls put forward a number of bases for his contentions that there had not been a "tainted money" finding. 

40.      First, there was no allegation in the Verified Complaint that the Doraville Assets were the proceeds of crime.  This submission was based upon evidence given by the expert called on behalf of Doraville. 

41.      It is doubtful, to say the least, whether this evidence was admissible as expert evidence.  The interpretation of the words of the Verified Complaint and the Default Judgment is a matter for the courts of Jersey to determine.  The Royal Court determined that the words of the Verified Complaint meant, and that Judge Bates "found", that the assets were indeed the proceeds of crime, that being the only logical interpretation of the Verified Complaint and, accordingly, the consequent finding in the Default Judgment.  The whole thrust of the Verified Complaint is to the effect that Doraville's assets represent the monies stolen from Nigeria and interest etc., derived from them. 

42.      Second, Advocate Nicholls founded upon the Department of Justice's decision to apply for judgment under Title 18 USCA, Section 981 (a)(1)(B) which focuses on property "involved in" transactions in violation of the federal money laundering provision rather than Section 981(a)(1)(C) which focuses specifically on the proceeds, or assets traceable to the proceeds, of such crimes. 

43.      We derived little assistance from the cases cited to us on this issue.  Milne v the Queen [2014] HCA and Director of Public Prosecutions v King (2000) 49 NSWLR do no more than point out the ordinary meaning of the relevant phrases. 

44.      While of course there is a clear difference in many cases between things used to commit crimes and things which are or can be traced to the proceeds of a crime, there are many other occasions in which the same property falls into both categories.  This is just such a case according to the Verified Complaint.  The stolen assets in a bank account such as that of Doraville, which are then used to generate further assets, do not stop being "proceeds" because they have been "used" to generate further assets.  To repeat the relevant part of the Default Judgment:

"...the Court finds that defendant assets (a)-(g) were involved in transactions in violation of 18 U.S.C. sections 1956 and 1957, or are traceable to such property..."

45.      At paragraphs 149-150 the Royal Court said:

"149. Taking up the approach suggested by Advocate Nicholls ......... we have considered the allegations in the Verified Complaint, assumed they are true and have determined that the allegations are that all of the Doraville Assets constitute the proceeds of crime; and that is what in substance District Judge Bates found....

We therefore find that under the Default Judgment, the US District Court found that all of the Doraville Assets constitute the proceeds of crime and the case therefore falls squarely within the second part of the definition of "tainted property" under the 2007 Law.  That finding is sufficient to dispose of Doraville's application."

46.      We agree.  The Default Judgment is clear.  It is based upon the allegations in the Verified Complaint which allege that the assets are all the proceeds of crime. 

47.      Third was a criticism which repeated the submission with which we have already dealt above at paragraph 34, namely the contention that only $11m or so of the Bank Account could be held to be the proceeds of crime.  

48.      The fourth criticism was that the Royal Court was wrong to derive any support for its conclusion from the claim in the Verified Complaint that Bagudu had returned $163m to Nigeria as his "half" of the stolen assets.  We reject that criticism.  The Royal Court was being asked by Doraville, supported by the expert called on its behalf, to construe the Default Judgment.  Most of the submissions of the appellant involved looking at those passages of the Verified Complaint which gave rise to the Default Judgment.  The claim concerning Bagudu's action was one of those passages.  In the event, as we have said there was ample material without this point to justify the conclusions reached by the Royal Court. 

49.      The fifth and sixth criticisms concerned the Royal Court's findings concerning the "specificity" requirement contained in Article 1, namely that the ECARO:

"specifies that property specified in the order is tainted property"

50.      Advocate Nicholls submitted that the Royal Court's reference in paragraph 142 of its judgment to "the (admittedly in part unquantified) interest payments on the Nigerian Par Bonds" meant that the Court was accepting that there was a lack of specificity.  He further submitted that the Royal Court, having examined the Verified Complaint to ascertain whether the allegations in it fulfilled the requirements of the 2007 law, should not have returned to the Default Judgment to use it for the conclusion that the property had been suitably specified. 

51.      We reject these criticisms.  The Verified Complaint and the Default Judgment are quite specific.  They both refer to the whole of the assets of Doraville.  The Royal Court dealt with these points, correctly in our judgment, at paragraph 143:

"143. There is no hint in the Verified Complaint of Doraville having any purpose other than that of laundering these large sums of money misappropriated from the Nigerian government.  No evidence of any legitimate activity on the part of Doraville was advanced by Doraville before the US Court, because it elected not to contest the US proceedings, and no evidence was filed by Doraville in these proceedings.  We note that Advocate Nicholls was very careful in his submissions not to suggest that there might have been any such legitimate activity.  Doraville's argument is based upon its (in our view unrealistically restrictive) interpretation of the Verified Complaint."

52.      The Royal Court was entitled to conclude that the Default Judgment referred to the whole of the assets of Doraville.  The fact that the balance between the original proceeds of crime and interest payments etc., was not "specified" made no difference to the finding or its "specificity".  The suggestion, as we understand it, that a proper consideration of the Verified Complaint should have remained "off limits" to the Royal Court stands in stark contrast to Doraville's repeated references to it both in submissions and through the evidence of its expert. 

53.      The next submission amounted to a restatement of a ground presented below and which we have already covered.  It returned in essence to the proposition that without a full hearing on the merits, whether in civil or criminal proceedings, it would be impossible to trigger the operation of the 2007 Law.  As indicated above, we concur with the conclusions of the Royal Court.  Their consideration of this issue at paragraph 116 of the judgment needs no greater exploration.  

54.      Finally under this head it was submitted that the Royal Court was wrong to conclude at paragraph 164 of the judgment that "in the field of money laundering there is no meaningful distinction between 'used in' and 'involved in'".  As a matter of plain English anything "used in a crime" is obviously "involved" in it, whereas not everything "involved in crime" will have been "used" in it.  However the clear finding to which we have already referred more than once was that the assets in the Account were the "proceeds of crime" so that the distinction is truly one without a difference.  The Australian cases cited in the judgment, namely Studman v Commonwealth Director of Public Prosecutions [2007] NSWCA 285, Re Commissioner of the Australian Federal Police [2012] NSWSC 1533, and Commissioner of the Australian Federal Police v Mulder [2013] NSWSC 993 simply illustrate the point already made.  The asset created, in the first two of those cases, when an account is opened in a false name and monies deposited in it can be said to "used in crime".  If, as in this case, the asset also represents the proceeds of crime it has clearly been "involved in crime" as well.  

55.      As we noted in paragraph 26 above, Advocate Nicholls complained that the Royal Court had been in error in, effectively, placing on Doraville the burden of proving that Doraville's assets were untainted (e.g. at para 143).  We disagree.  As Crown Advocate Jowitt pointed out, this litigation in Jersey proceeds from an application by Doraville to have the PRO discharged.  The burden is therefore on Doraville to persuade the court that such an order should be granted in its favour.  At one level, this argument is merely a different formulation of the argument that a full hearing in the US on the merits is required; and we have dealt with that at paragraph 53 above.  Once that latter point has been rejected, it is clear that the general burden is upon Doraville.  Whilst there are many instances when a court will be astute to appreciate that an evidential burden might shift from one party to another, the point perceptively made here by the Royal Court as paragraph 143 is that nothing has been put before the Royal Court or this court to suggest that there may be doubt as to the colourable circumstances of Doraville's acquisition of its assets. 

Conclusion

56.      This appeal is therefore dismissed. 

Postscript

57.      The Royal Court was informed that in separate proceedings issued by Nigeria in Jersey against Doraville on 11th May 2016, shortly before the hearing of Doraville's application to discharge the PRO, it is asserted by Nigeria that on 14th July 2014, Mohammed Sani Abacha entered into an agreement with it in full and final settlement of all claims between them and under which all assets held in the Bank Account would be transferred to Nigeria.  It is alleged in those proceedings that all of the assets within the Bank Account were misappropriated or otherwise unlawfully obtained from Nigeria by Mohammed Sani Abacha, Abubakar Bagudu and others and Nigeria seeks a declaration that the monies held in the Bank Account are held as constructive trustee for Nigeria, or alternatively that it is beneficially entitled to the same.  The US has applied to intervene in these proceedings and procedural directions have been given.  Advocate Nicholls told us at the outset of his submissions that Doraville had entered into a binding contract to return all the funds in the account to Nigeria.  He suggested further that were the PRO to remain in force and to be followed in due course by registration under Article 9 of the 2007 Law, the funds would be shared between the governments of the US and Jersey rather than returned to the Republic of Nigeria from which they originated.  We were also made aware of a recent (23rd January 2017 Federal Republic of Nigeria-v-Doraville Properties Corporation [2017] JRC 019) Judgment of the Royal Court in those proceedings in which the same submission was made and a submission made in reply to it on behalf of the Attorney General.  Neither the submission nor the Judgment had any relevance to the points at issue in this appeal and have therefore not formed any part of the reasoning in this judgment.  

Authorities

Doraville Properties v AG [2016] JRC 128.

Court of Appeal (Jersey) Law 1961.

Civil Asset Recovery (International Co-operation)(Jersey) Law 2007.

Crociani and Ors v Crociani and Ors [2014] JCA 089.

18 U.S.C.A. (United States Code Annotated) section 981(a)(1).

European Convention on Human Rights.

Bennion on Statutory Interpretation (6th edition).

Methuen-Campbell v Walters [1979] QB 525 at 542.

Black's Law Dictionary.

Milne v the Queen [2014] HCA.

Director of Public Prosecutions v King (2000) 49 NSWLR.

Studman v Commonwealth Director of Public Prosecutions [2007] NSWCA 285.

Re Commissioner of the Australian Federal Police [2012] NSWSC 1533.

Commissioner of the Australian Federal Police v Mulder [2013] NSWSC 993.

Federal Republic of Nigeria-v-Doraville Properties Corporation [2017] JRC 019.