Jersey Unreported Judgments

Determination of Criminal proceedings - re: applications by the Representor and the Respondent.

[2019]JRC225

Royal Court

(Samedi)

19 November 2019

Before     :

Advocate Matthew John Thompson, Master of the Royal Court.

 

Advocate S. A. Meiklejohn for the Respondent.

The Defendant in Person,

CONTENTS

		Paras
1.	Introduction	1
2.	Background	2-15
3.	The parties' submissions	16-20
4.	Decision	21-35

judgment

the master:

Introduction

1.        This judgment contains my decision in respect of an application by the representor to amend his representation and an application by the respondent to strike out certain parts of the representation and to object to certain amendments sought by the representor.  It also contains my decision in respect of the application of the maxim "Le criminal tient le civil en etat" in relation to these proceedings. 

Background

2.        The background to the present proceedings concerns certain search warrants executed on 21^st and 23^rd June, 2019 in respect of the representor's residential premises and commercial premises owned by Jersey Online Traders Limited ("the Company").  It was not in dispute that the representor was majority shareholder in the Company.  The representor was subsequently charged with offences under Article 30(3) of the Proceeds of Crime (Jersey) Law 1999.  As a result of the investigation the bank accounts of the representor and the Company with HSBC were frozen.  According to the respondent's written submissions, HSBC's refusal to operate any accounts occurred following the filing of suspicious activity reports under the Proceeds of Crime (Jersey) Law 1999 by HSBC as a result of which the Financial Intelligence Unit within the Joint Financial Crimes Unit ("JFCU") of the States of Jersey police refused to grant consent to HSBC to deal with monies held in bank accounts in the name of either the representor or the Company. 

3.        The representor presented his representation to the Royal Court on Friday, 2^nd August, 2019.  In summary his representation argued that the actions of the police in refusing to allow HSBC to deal with his bank accounts and those of the Company were ultra vires and unlawful. 

4.    The representor therefore sought the following orders:-

(i)        Replacement of a door when the personal premises the representor was searched in June 2019;

(ii)       That the Chief of Police was directed to consent that HSBC could operate the Company's account;

(iii)      The return of certain matters that had been seized unlawfully; and

(iv)      Compensation for additional costs incurred by the representor during the investigation and for financial losses incurred by the Company.

5.        When the representation was first presented, the representor convened both HSBC and the Chief Officer of the States of Jersey Police. 

6.        When the matter came back before the Royal Court on 9^th August, 2019, HSBC was released.  The respondent placed the matter on the pending list. 

7.        On 29^th August, 2019, the respondent filed his answer with the court and provided a copy to the representor. 

8.        The answer at paragraph 4 raised the following preliminary points:-

"(a)      The Representation is an attempt to bring judicial review using the wrong process and bypassing the requirement for leave and as such is an abuse of process;

(b)       The Representation is regarding events which form part of an ongoing criminal investigation and as such the matter should in any event be stayed pursuant to the principle of Le criminal tient le civil en état; and

(c)       The Representor has no locus to challenge the No Consent in his own name.  The account holder is Jersey Online Traders Limited (JOTL")."

9.        The answer also argued that judicial review was the correct mechanism for challenging the refusal of the police to consent to operation of bank accounts at HSBC.  The pleading therefore reserved the respondent's position to apply to strike out the representation on the grounds that it was an abuse of process.  The pleading also expanded on why in the alternative the principle of "Le criminal tient le civil en état" should apply and why the representor had no locus to challenge any refusal to consent in respect of the Company's back account. 

10.      On 2^nd September, 2019 the representor filed a reply.  At the same time he also sought to issue an application for summary judgment. 

11.      On 4^th September, 2019 I wrote to Mr Pearce as follows:-

"I write further to the summons for summary judgment provided to my secretary in relation to the representation presented by you on 2 August, 2019 which I have read.  I also refer to the answer filed on behalf of the Chief Officer of the States of Jersey Police.

It is clear from the representation and the answer filed that there are serious factual disputes between the parties.  It is well-known that on summary judgment applications if there are serious factual disputes matters are referred to the Royal Court for a trial.

It is also clear from the decision in Prospective Applicant v the Chief Officer of the States of Jersey Police [2019] JRC 161 that the correct way to challenge a decision by the States of Jersey Police is to seek an application for Judicial Review.

The procedure for seeking applications for Judicial Review is contained in Part 16 of the Royal Court Rules 2004, as amended, copies of which can be found on the Jersey Legal Information Board.

However, applications for Judicial Review must be in the form set out in Schedule 5 to the Royal Court Rules 2004, as amended.  I attach a PDF copy of Schedule 5 for your information and must be supported by an affidavit.

I also note from the answer filed that Advocate Meiklejohn on behalf of the respondent seeks to stay the civil proceedings on the basis of an ongoing criminal investigation as an alternative to your representation being struck out as an abuse of process.  I consider this alternative overlaps with whether or not leave for Judicial Review should be given and, if given, whether it should be granted.

I also note that no summons to strike out the representation has been issued within the time limit in Rule 6/14(2) of the Royal Court Rules 2004, as amended.

Accordingly, I am referring to the Bailiff the question of whether the representation should be treated as an application for leave for Judicial Review.  In that regard, it is in your interest to provide a completed Form 5 and a supporting affidavit as soon as possible.

In light of this referral a date fix appointment of your summons will be not arranged.  I am taking this approach because of the obligation in Rule 1/6(2) to actively manage cases, including the power requiring me to identify issues at an early date and to decide how such issues are to be resolved.

Finally, I am copying this letter to the Bailiff's Judicial Secretary to whom I will also provide a copy of the pleadings and acts of court issued to date."

12.      On 18^th September, 2019, on behalf of Deputy Bailiff Le Cocq (as he then was) Miss Debbie Le Mottée wrote to both parties stating as follows:-

"It appears to the Deputy Bailiff that the Master is correct in suggesting that, in general terms, any application challenging the decision of the police, either on the grounds of a lack of power or otherwise to refuse consent to operate a bank account should be dealt with by judicial review.  Of course it is a matter for you whether you bring such an application, but it may be that you could present the application for leave in early course were you to complete the appropriate form to which the Master has referred you and swear the necessary affidavit. 

It is a matter for you how you wish to proceed but as matters stand, there is no application before the Court that can be considered.  It seems to the Deputy Bailiff that the matter can be brought before Court either by an application for judicial review as suggested by the Master or, possibly, by a summons before the Court under the heading of the main proceedings for directions.  The Court can then hear argument as to whether or not your application for summary judgment can be heard at an appropriate time and what procedural steps need to take place in order to bring it on for hearing or indeed whether it must proceed by way of judicial review.  You should not, however, assume that the Deputy Bailiff is expressing any view that such a summons could be successful or that this is a matter in respect of which summary judgment can be obtained.  These points are merely made to emphasise that the Court can only act if there is a valid application before it."

13.      In response the representor renewed his application for summary judgment.  However, he also applied to amend his representation to remove that part of the relief sought requiring the respondent to consent to the operation of bank accounts.  The representor therefore stated that all he was seeking was damages based on a customary law tort. 

14.      However, the amended representation maintained the argument that the freezing of bank accounts at HSBC was ultra vires and wanted to continue to seek compensation, including for the Company, because of alleged unlawful acts by the respondent. 

15.      The Respondent replied by issuing a summons seeking certain parts of the representor's pleadings and reliefs to be struck out, and that the matter be stayed in any event subject to the maxim of le criminel tient le civil en état.  

The parties' submissions

16.      The representor argued that the purpose of his application to amend was that he was no longer seeking to compel the respondent to consent to HSBC operating bank accounts held for the representor and the Company.  Rather the representor made it clear that what he was seeking were damages based on the torts of false arrest, false imprisonment, malicious prosecution and misfeasance in public office.  Underpinning those claims was that the representor considered that there was no basis for a prosecution against him. 

17.      The representor accepted, as he had to, that any claims in tort had to await the outcome of the criminal process because the application of the maxim "Le criminal tient le civil en etat" even though he was concerned that a protracted, and in his view unnecessary, criminal investigation could affect him and the business of the Company significantly.  What the representor contended however was that in claiming damages based on one or more of the customary law torts, he was still entitled to challenge that the actions of the respondent in refusing consent were unlawful and that such unlawful acts amounts to a tort entitling him to claim damages. 

18.      The fact that he was not seeking to challenge the refusal of consent at this stage did not prevent him from claiming damages should either the prosecution be abandoned or following an acquittal. 

19.      The representor's present position was that the conduct of the respondent was unlawful because the only reason HSBC had filed suspicious activity reports was because it had been contacted by the police who informed HSBC that the representor was under investigation.  It was the representor's position that it was unlawful for the police to act in this manner to lead a financial institution to freeze an account when that financial institution was otherwise not suspicious about the activities of a customer. 

20.      Advocate Meiklejohn in response, argued that a claim for damages based on a claim in tort could not be brought by an individual whose accounts had been frozen following the filing of a suspicious activity report because of the lack of consent from the police.  Insofar as either the representation or the amended representation sought damages based on alleged misconduct, such a claim could not be brought where the representor had failed to challenge that conduct by judicial review.  The basis for this submission was Gichuru v Walbrook Trustees (Jersey) Limited et Ors [2008] JLR 131 at paragraph 29 which set out that where the States of Jersey Police had refused to consent to a financial institution operating a customer's funds, that customer had two choices namely, either to sue the institution to enforce contractual or other rights to compel payment by the institution or to challenge the decision of the police by way of judicial review.    There was no third limb available to bring a claim in tort to challenge the conduct of the police by ordinary civil proceedings. 

Decision

21.      There was no dispute on the applicable legal principles as to when a case or part of the case may be struck out.  As these are so well-known I have not set out in this judgment but I have applied them.

22.      The operation of the regime in Jersey in respect of suspicions of laundering was mostly recently summarised by the Royal Court in Prospective Applicant v The Chief Officer of the States of Jersey Police [2019] JRC 161.  The anti-money laundering regime withholding consent was dealt with at paragraphs 38 to 43.  The Royal Court at paragraph 43 in particular stated as follows:-

"43.    Thus, if a Jersey financial institution submits an SAR, and the JFCU grants consent to move funds, then the Jersey financial institution knows it will not be prosecuted for money laundering should the funds turn out to be the proceeds of crime, so it can be expected to carry out the transaction.    However if the JFCU refuses consent, then the financial institution would be taking a risk if it moved the funds, because if they turned out to be the proceeds of crime the institution would not have the defence under Article 32(3).  Invariably in such a position the institution will not move the funds on the basis that the risk of committing an offence entitles it not to act in accordance with the customer's instructions or requests for so long as the suspicion exists.  It is the Applicant's case that refusal of consent therefore causes a de facto indefinite freeze of the funds."

23.      Where the police have refused to consent to a financial institution operating a customer's funds, that customer has two choices, if a customer wishes to challenge the lack of consent to compel the financial institution to operate an account.  This was noted in Gichuru case at first instance at paragraph 29 as follows:-

"29     I hold, therefore, that a customer facing an informal freeze of his funds continues to have two alternative remedies which he may follow and it is a matter for him which he chooses. He may seek to bring a public law action for judicial review of the police refusal to consent to payment. In those circumstances, the focus of the court's attention will be on whether the police's decision can be successfully challenged on conventional judicial review grounds. Alternatively, the customer may bring a private law action against the financial institution seeking to enforce his contractual or other right to seek payment. In this event, the issue for the court is likely to be whether the funds are in fact the proceeds of criminal conduct. If the court finds that they are, then it will not enforce payment because to do so would cause the financial institution to commit a criminal offence and there is clear authority for the proposition that a court should not make such an order (see Bank of Scotland (Governor & Co.) v. A Ltd. (3) ([2001] 1 WLR 751, at para. 21), applying Rowell v. Pratt (7)). If, on the other hand, the court concludes that the funds are not the proceeds of criminal conduct, it will order the financial institution to act in accordance with its contractual or other duty towards the customer and, for the reasons already mentioned, the financial institution will thereby be protected from any criminal prosecution for making such payment."

24.      Gichuru was later upheld on an appeal (see Gichuru v States of Jersey Police [2008] JLR Note 39).

"In the present case, the applicant had a choice of remedies-i.e. a private law action against the financial institution, or a public law action for judicial review against the police-but they were not alternatives and he was entitled to pursue both (R. v. Civil Service Appeal Board, ex p. Bruce, [1988] 3 All E.R. 686, distinguished). The civil proceedings against the financial institution were concerned with whether the frozen funds were in fact the proceeds of criminal conduct. The police refusal to consent to the payments was not relevant in those proceedings. On the other hand, the judicial review proceedings would be focused exclusively on the propriety of the refusal. Although it could be said that, at one level, both sets of proceedings had the same objective, i.e. the release of the applicant's assets, at the next level their objectives were clearly different."

25.      In the Prospective Applicant decision the Royal Court also followed the decision of the Guernsey Court of Appeal of The Chief Officer Customs & Excise, Immigration Service v Garnett Investment Limited 19/2011 (File No. 432), where the Guernsey Court of Appeal observed in relation to the equivalent "no consent" regime in Guernsey that "any decision to grant or withhold consent is amenable to judicial review where the decision is irrational, unlawful or involves some procedural impropriety".

26.      However, the focus of the above decisions concerned the different remedies available to an individual to challenge the lack of consent by the police affecting the operation of that individual's bank account.  They did not consider whether an individual or other entity whose account had been frozen could bring proceedings in tort at a later date to argue that the lack of consent was unlawful so that a customer was able to plead the constituent elements of any of the types of torts referred to above by the representor in judgment of a claim for damages.  The point was not under consideration because what was being considered in both Gichuru and the Prospective Applicant decisions was a challenge to the police's refusal to consent to accounts being operated.  In Gichuru the issue was whether the relevant customer was entitled to apply for judicial review to challenge the lack of consent.  In the Prospective Applicant the claim brought was for judicial review.  Both customers were seeking relief designed to compel operation of a bank account subject to a de facto freeze.  In neither case did the question of a later claim for damages against the police arise. 

27.      In addition, judicial review is a high hurdle.  What has to be shown is a lack of power to refuse consent, a failure to take into account a relevant consideration, taking into account any irrelevant considerations, procedural fairness or whether the decision is irrational.  An individual with legal standing to bring such a claim may feel that the hurdle is too high to justify a challenge. 

28.      There may also be other complexities if a customer chooses to pursue a financial institution for failing to act on a mandate.  While the police do not have to be convened as a party to such a dispute, there may be occasions where the police choose to intervene to apply for a stay on the basis of the maxim "Le criminal tient le civil en etat" because they are concerned that findings of the Royal Court in a civil action may prejudice or affect criminal proceedings.  This situation is the respondent's alternative position in this case. 

29.      A subsequent civil proceeding also generally follows disclosure in the criminal proceedings having occurred.  The factual knowledge of a customer as to how an investigation has been conducted may therefore be very different from the knowledge of a customer at the time an account is frozen when an investigation is on-going.  In particular, evidence to justify pleading a claim in tort may come to light which evidence would not be available at the investigation stage. 

30.      In making these observations I am not saying at all in this case that there has been unlawful conduct on the part of the police, I make no observations on the representor's criticisms of the police and how HSBC came to file a suspicious activity report.  My observations are therefore general in nature and simply recognise the possibility that material evidence may become known to a customer at some later stage either during or after a criminal investigation which could form the basis of a claim in tort.  I am not therefore persuaded that an earlier failure to challenge the lack of consent on different legal grounds, i.e. judicial review rather than a claim in tort meets the high threshold to justify a strike out of such a claim.  A failure to claim judicial review therefore does not operate as a legal bar where the same conduct complained of is later challenged in civil proceedings on the basis of an applicable tort.  The two are different actions with different remedies.  Judicial review seeks an order setting aside a particular decision.  A claim in tort ultimately seeks damages as a remedy suffered as a result of an unlawful act taken. 

31.      I should make it clear that in order to plead a claim in tort, it is not enough simply to show that the actions of the police were unlawful because a prosecution has been abandoned or proved unsuccessful.  Any individual seeking to bring a claim against the police must plead the essential elements of the tort relied upon.  If the claim is for malicious prosecution it must be set out why the claim is malicious.  If a claim is for a misfeasance in public office, the misfeasance must be identified.  If the claims are for false imprisonment or false arrest, the claim must plead why there was no basis to arrest or imprison an individual. 

32.      I have referred to what is required to plead a claim in tort because while I am not persuaded by the respondent that the amended representation should be struck out, the maxim "Le criminal tient le civil en état" does apply because any civil claim the representor wishes to pursue in due course can only follow on after determination of the criminal proceedings (as conceded by the representor during the hearing).  Obviously, if the representor is convicted then any civil claim will fall away.  If the representor is acquitted or if the prosecution is not pursued, the representor will then need to consider at that stage, based on his knowledge, why he alleges a tort has occurred.    He will further need to revisit his representation to set out all material facts relied upon to justify any claim in tort he may wish to bring at that stage.  If the representor does not do so, there are appropriate powers vested in the Court to either strike out such claims or to grant summary judgment under Part 7 of the Royal Court Rules 2004, as amended.  The fact that I am not willing to strike out the representation because the representor is no longer seeking to lift the de facto freeze, should not therefore be taken as accepting than an arguable claim in tort exists.  That issue is for another day.

33.      I will deal with the costs thrown away by the amendments permitted by this decision when the matter comes back before me for further directions.  This is because, although I have not struck out the representation, the representor's approach is a change of position from initially having challenged the lack of consent to now being a claim seeking damages.  Where amendments occur, the usual order made is that the party seeking the amendment should pay any wasted costs of the other party arising as a result of the amendment.  In this case such an order may well be justified but the final consideration of this point should await a further directions hearing and any further amendments proposed by the representor in due course to justify why he says certain torts have been committed by the respondent. 

34.      The only other issue that arose during argument was whether the representor could claim damages due to the Company being unable to operate its bank account.  The respondent's argument was that such a claim could only be brought by the Company and not by the representor as director and ultimate beneficial owner of the Company.  Any loss was the Company's not any shareholder.  At this stage I leftover determination of this issue, should it arise, until any consideration of amendments of the representation following determination of the criminal proceedings.  I observed however that there are exceptions to the approach which were referred to in Holmes v Lingard & Anor [2018] JRC 071B at paragraphs 92 to 100.  The issue will be whether any of the exceptions to the general principle relied upon by Advocate Meiklejohn might apply in this case.  In the alternative, consideration may have to be given to joining the Company as a co-representor. 

35.      In conclusion for the above reasons, I permit the representation to be amended, refused to strike out any parts of the representation or the amended representation but the claim is then stayed until determination of the criminal proceedings.  The parties are therefore required within one month of the determination of the criminal proceedings to fix a further date for directions in this matter. 

Authorities

Proceeds of Crime (Jersey) Law 1999

Le criminal tient le civil en état

Prospective Applicant v the Chief Officer of the States of Jersey Police [2019] JRC 161

Royal Court Rules 2004, as amended

Gichuru v Walbrook Trustees (Jersey) Limited et Ors [2008] JLR 131

Gichuru v States of Jersey Police [2008] JLR Note 39

The Chief Officer Customs & Excise, Immigration Service v Garnett Investment Limited 19/2011 (File No. 432)

Holmes v Lingard & Others [2018] JRC 071B