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Supreme Court of Ireland Decisions |
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You are here: BAILII >> Databases >> Supreme Court of Ireland Decisions >> Murphy v. M. (G.) [2001] IESC 82 (18 October 2001) URL: http://www.bailii.org/ie/cases/IESC/2001/82.html Cite as: [2001] 4 IR 113, [2001] IESC 82 |
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1. In
these cases the defendants/respondents and the plaintiff/appellant respectively
have sought declarations that some or all of the provisions of the Proceeds of
Crime Act, 1996 (hereafter the
“1996
Act”
)
are invalid having regard to the provisions of the Constitution. In the first
case, the defendants/respondents have also challenged the validity of certain
orders made by the High Court in purported exercise of certain powers conferred
by the 1996 Act on the court. The first part of this judgment is concerned
with the non-constitutional issue raised in the first case. The second part is
the judgment of the court on the constitutional issue raised in both cases.
2. The
plaintiff in the first proceedings is a Detective Chief Superintendent in An
Garda Síochána. He has instituted the proceedings as a member of
the gardaí within the meaning of the 1996 Act and in them he seeks:
3. In
an affidavit, sworn on the 28th July 1997, Det. Sgt. William P. O’Brien,
a bureau officer of the Criminal Assets Bureau appointed under s. 8(1) of the
Criminal Assets Bureau Act 1996, said that the first named defendant (hereafter
“GM”)
had been involved in facilitating armed robberies and hijackings since 1975.
He said that he was a known
“facilitator”
providing guns and transport (sometimes stolen) for such criminal activity and
was particularly well known as a receiver of large quantities of stolen property.
4. Mr.
O’Brien said that GM had one criminal conviction, involving stolen
property, having been convicted on 15th January 1988 by the Dublin Circuit
Court for receiving stolen goods valued £107,000 approximately, in respect
of which conviction he received a sentence of five years imprisonment.
5. Mr.
O’Brien said that, in common with a number of other prominent criminals
who had been active in armed robberies, GM became involved in the importation
of controlled drugs, mainly cannabis and ecstasy, on his release from prison
and, in association with known large scale drug dealers, organised the
transport by other persons of drugs so as to ensure that, if the shipments were
intercepted by gardaí or customs, he would not be liable to criminal
convictions.
6. Mr.
O’Brien said that he believed GM was the person behind, or at least
partly involved in, the financing of a shipment of 50 kilos of cannabis resin
which was seized by gardaí at the M50 motorway, Dublin, while in the
possession of one John Doran. He said that the latter had been a close
associate of GM since 1975 at least and had been sentenced to 12 years
imprisonment in November 1994 in respect of this offence.
7. Mr.
O’Brien said that GM was named in a trial in England in early 1997 by one
Michael Boyle, who has been tried for attempted murder, as the person who had
hired him (Boyle) to murder his intended victim. Mr. O’Brien said that
GM’s wife and one or more of his children reside at a stated address in
Palmerston, Dublin, but that GM himself had left Ireland and was staying at a
stated address in the Netherlands. The apartment in question was owned by one
Johannes Anthonius Bolung who had been charged in The Netherlands with a
violation of the Opium Act, handling and receiving stolen goods, and five cases
of theft, assault and battery and fraud.
8. Mr.
O’Brien said that PB had been a close associate of GM for some time. He
had stood trial in April 1995 in England with one Edward Phelan: both were
convicted on 12 counts of theft and forgery and sentenced to three years
imprisonment. PB absconded during the final week of his trial and was
convicted in his absence. Mr. O’Brien said that he had been informed by
the London Metropolitan Police that extradition proceedings in respect of PB
had failed in September 1996 but were likely to be recommenced. As part of the
sentence, PB was prohibited from being a director of a company for a period of
five years, but he (Mr. O’Brien) had been informed by PB and the
solicitor that it was intended to appeal the conviction.
9. Mr.
O’Brien said that the statements made by him in the affidavit as to the
activities of GM were based on garda information in his possession, the source
and precise contents of which he did not wish to reveal for operational reasons.
10. Mr.
O’Brien said that an extensive investigation had been carried out by
bureau officers of the Criminal Assets Bureau. During their investigations,
the solicitors’ offices were searched pursuant to a search warrant issued
under s. 14 of the Criminal Assets Bureau Act, 1996. Mr. O’Brien said
that in the course of that search a file was seized which was suspected to
contain evidence of the whereabouts of the proceeds of the criminal activities
of GM. On examination, the file was found to contain instructions in July 1996
from GM and one David Doran to the effect that funds would be deposited in the
client account of the solicitor to be at the disposal of PB in connection with
a property deal in the United Kingdom to the value of one million pounds. He
said that the file also indicated that the third named defendant (hereafter
“the
company”
)
was controlled by GM and PB.
11. Mr.
O’Brien said that on the 23rd July 1997 he called to the offices of the
solicitor, who informed him that he was holding approximately £300,000 in
his client account for PB. He said that the sum of £300,000 was shortly
to be paid out in pursuance of an agreement dated 30th May 1997 in a
transaction involving the purchase of United States railroad bonds.
12. Mr.
O’Brien said that he subsequently telephoned the solicitor and advised
him that he (Mr. O’Brien) suspected that the £300,000 was the
proceeds of crime and was being
“laundered”
using his client account. He requested him not to deal in any way with the
funds. The solicitor denied knowing any person by the name of GM or that he
was a client of the office. Mr. O’Brien said that he urged him to check
his client ledgers and any other client files he might have had. Mr.
O’Brien said that the solicitor in the course of the conversation told
him that he was under pressure from his client and asked him (Mr.
O’Brien) to fax a message to him advising that money laundering was
suspected. However, before he had time to send him a fax, he received two
faxes from the solicitor advising that
13. He
subsequently sent a fax to the solicitor requesting him not to remove any
monies referable to PB, GM or any associate companies.
14. Mr.
O’Brien said that he believed that GM and his associates were extremely
violent criminals and were likely to attempt to use violence or threats of
violence to force the solicitor to make the monies available.
15. The
plaintiff applied to the High Court (Smyth J.) on the 28th July 1997 ex-parte
for liberty to issue and serve a concurrent plenary summons against GM, for an
order pursuant to s. 2 of the 1996 Act restraining the defendants or any of
them or any person having notice of the making of the order from disposing or
otherwise dealing with the sum of £300,000 and appointing Barry Galvin,
solicitor, of the Criminal Assets Bureau as the receiver of that sum. Those
orders were granted by Smyth J. and the plaintiff thereupon brought a notice of
motion seeking similar restraining orders against each of the defendants, an
order pursuant to s. 7 of the 1996 Act appointing a receiver to take possession
of the sum of £300,000 and an order requiring GM, PB and the company to
swear and deliver an affidavit specifying all property etc. of which they were
in possession or control.
16. In
a preliminary report exhibited with an affidavit filed by him on the making of
that application, Mr. Galvin said that, immediately following the making of the
ex-parte order by Smyth J., he travelled to the offices of the solicitor in Dun
Laoghaire where he met the solicitor. The solicitor told him that he had paid
some of the £300,000 into his client account in the Ulster Bank, Dun
Laoghaire and that the balance had been lodged by him into a solicitor’s
reserve account in a branch of the National Westminster Bank in London. Having
telephoned the bank in London, he told Mr. Galvin that the amount to credit in
that account was £181,356.20 sterling and that the balance standing to
credit in the Dun Laoghaire bank was £118,643.80. At
17. Mr.
Galvin’s request, the solicitor signed an authority directing the London
bank to give to Det. Gda. Cliona Richardson a bank draft in the amount of
£181,365.20 sterling payable to Mr. Galvin. He also received from
18. Mr.
H. a cheque in the amount of £118,643.80 drawn on the Ulster Bank client
account. Det. Gda. Richardson travelled to London on the 28th July 1997 and
collected a bank draft in favour of Mr. Galvin in the amount of
£181,365.20 which she gave to Mr. Galvin. Those sums were paid to a
receivership account opened by Mr. Galvin at the Camden Street branch of the
Bank of Ireland.
19. In
a further affidavit dated the 7th October 1997, Mr. O’Brien said that in
the course of a search of premises which he did not wish to identify he had
seized copies of two bank drafts in the amount of £25,000 sterling and
£23,000 both payable to GM and purportedly endorsed by him which, he said,
together with other monies totalling £169,746.36 were lodged by credit
transfer to the client account of the solicitor in his Dun Laoghaire bank on
the 30th September 1996. He said that he also searched the dwelling house of
PB on the authority of a search warrant, during the course of which a document
was seized purporting to be a contract dated the 28th April 1996. He said
that, as a result of an examination of a computer also seized during the course
of the search, it was ascertained that this contract had been only recently
created and that it was proposed to present this document which he described as
fabricated before the High Court on affidavit as a false explanation of the
source of part of the £300,000. He referred to reports prepared by a
member of the staff of the Criminal Assets Bureau who was a qualified system
administrator in computer applications and a detective garda in the computer
crime investigation unit in support of this averment.
20. Affidavits
were filed by PB and the solicitor. For reasons which will appear shortly, it
is unnecessary to deal with their contents in any detail. It is sufficient to
say that PB denied that the sum of £300,000 came from GM or represented in
any way the proceeds of crime. The solicitor, although accepting that there
were references to GM indicating that monies from him had come into the
solicitor’s client account and that there were also references in his
correspondence with the London bank to
“our
client GM”
,
denied that GM was at any stage a client of his office.
21. No
appearance was entered in the proceedings by GM. The remaining defendants
entered appearances and made submissions on the hearing of the application for
the interlocutory order pursuant to s. 3(1) of the 1996 Act, which was heard by
O’Higgins J. over a period of 28 days. As already noted, in addition to
a number of non-constitutional issues being raised, the respondents were also
given leave to challenge the constitutionality of the 1996 Act. In a reserved
judgment delivered on the 4th June 1999, O’Higgins J. determined both the
non-constitutional and the constitutional issues in favour of the plaintiff and
granted an order pursuant to s. 3 of the 1996 Act prohibiting the defendants
and each of them from disposing or for otherwise dealing with the sum of
£300,000 and appointing Mr. Galvin receiver over the sum. From that
judgment and order, PB, the company and the solicitor have now appealed to this
court.
22. In
the course of his judgment, O’Higgins J. made a number of findings of
fact which can be summarised as follows. He did not accept the evidence of the
solicitor that he had never received any monies from GM or that the latter was
not his client. As to the source of the monies, having considered the evidence
in detail, the learned High Court judge rejected in emphatic language the
explanation for its genesis offered by PB and said that the latter had been
involved in what he described as
23. He
said that in the result he was satisfied that the respondents were in
possession and control of £300,000 and that this money constituted,
directly or indirectly, the proceeds of crime or was acquired in whole or in
part with, or in connection with, property that, directly or indirectly,
constituted the proceeds of crime.
24. The
specific findings of fact on which the learned High Court judge founded his
conclusion that the sum of £300,000 constituted the proceeds of crime and
that the plaintiff was entitled to the relief which he was seeking were not
contested on the appeal. The second and third named respondents had, however,
contested the jurisdiction of the High Court to make the orders in question on
a number of grounds, including the unconstitutionality of the 1996 Act, in the
High Court and those grounds were again advanced on the hearing of the appeal
in this court.
25. Before
the non-constitutional issues are considered, I should set out the relevant
provisions of the 1996 Act. It is described in its long title as
26. Subsection
(2) provides that an interim order may contain such provisions, conditions and
restrictions as the court considers necessary or expedient and 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.
27. Subsection
(3) provides that, where an interim order is in force, the court, on the
application of the respondent or any other person claiming ownership of any of
the property concerned may discharge or, as may be appropriate, vary the
interim order. That can be done where it is shown to the satisfaction of the
court that the property concerned or a part thereof is not, directly or
indirectly the proceeds of crime or that the value of the property is less than
£10,000. Subsection (4) provides that the court shall, on an application
at any time by the applicant, discharge an interim order.
28. Unless
an interim order is so discharged, it is to continue in force by virtue of
subsection (5) until the expiration of the period of 21 days from the date of
its making. It then lapses, unless an application for the making of an
interlocutory order is brought during that period: if such an application is
brought, the interim order is to lapse upon
30. The
first ground on which the order made in the High Court was challenged was that
the court had no jurisdiction to make the interim order appointing Mr. Galvin
as receiver or the interlocutory order to the same effect. It was submitted
that, under the terms of s. 7(1), such an order could be made only where an
interim order was
“in
force”
.
Since the receiver was appointed by the same order of Smyth J. dated the 28th
July 1997 as also made a restraining order under s. 2, the interim order was
not, it was said,
“in
force”
at the time the receiver was appointed.
31. I
am satisfied that this submission is wholly unsustainable. It was quite clear
from the terms of the order that the order restraining the defendants from
disposing of or otherwise dealing with the property was made first. At that
point, the order was, within the meaning of s. 7(1)
“in
force”
and the High Court had jurisdiction to make the further order, which it did,
appointing the receiver. There is nothing whatever in the section to indicate
that the legislature intended that an unspecified interval of time, whether
measured in minutes, hours or days, should elapse between the application for
an interim order and the appointment of a receiver. I have not the slightest
doubt that it was envisaged that the two applications could be made at the same
time, which is what happened here.
32. It
was also suggested that the interlocutory order which effectively continued the
appointment of Mr. Galvin as receiver was also made without jurisdiction since,
as the £300,000 had been lodged to the credit of these proceedings, there
was nothing further for him to do. At worst, however, the appointment of Mr.
Galvin under the interlocutory order was otiose; the learned High Court judge
was no doubt proceeding on the reasonable basis that, were a further order not
made appointing him as receiver, his appointment under the interim order might
be regarded as having come to an end when that order was spent.
33. The
second ground of objection was that, at the time the interlocutory order was
made, no person was
“in
possession or control”
of the sum of £300,000. Once the receiver had lodged the money in
question in the bank to the credit of these proceedings, it was said, the
monies were in the possession or control of the High Court, which is not a
juristic person.
34. If
this submission were correct, it would inevitably follow that, in every case
where a receiver was appointed following the making of an interim order but
before an interlocutory order was made, the interlocutory order could never be
made, since at that stage the property would be in the
“possession
or control”
of the court. A construction leading to so patently absurd and unintended a
result should not be adopted unless the language used leaves no alternative:
see
Nestor
.v. Murphy
(1979) IR 326. At the stage when the application for an interlocutory order is
made, the property can be said to be in the
“possession
or control”
of the receiver, but since the restraining order can be made prohibiting
“the
respondent or any other specified person”
from disposing of or dealing with the property account the fact that it is in
the receiver’s possession or control is of no consequence. I am
satisfied that this argument is without foundation.
35. The
third ground of objection was that, at the stage when the order was made under
s. 2 and s. 7, £180,000 approximately of the money was in a bank account
in London. It was submitted that there was no jurisdiction to make the order
in respect of that sum because
36. On
the facts as already summarised, no issue appears to have arisen for
determination in relation to this matter. The solicitor, at the request of the
receiver, transferred the money in the bank account in London to the latter.
If he had declined so to do, an issue might then have arisen as to whether the
receiver’s demand could have been enforced by the court. That did not
happen.
37. However,
even apart from that consideration, I am satisfied that the submissions made on
the topic have no foundation. It is settled law that courts, in the exercise
of their equitable jurisdiction, can appoint receivers over property which is
not within the jurisdiction. In
In
Re Maudslay, Sons & Field
(1900) 1 Ch. 602, Cozens-Hardy J. (as he then was) said at p. 611:-
38. There
is no reason to attribute to the legislature in the case of the 1996 Act an
intention that the powers of a receiver appointed under the Act were to be any
less extensive than those of a receiver appointed by the court in the exercise
of its general jurisdiction.
39. While
a number of authorities were cited in the course of argument in support of the
principle of international law that courts will not permit within their
jurisdiction the exercise of sovereign authority by another jurisdiction, I do
not find it necessary to refer to them in any detail since they do not arise
for consideration in this case. In the present case, the order of the High
Court was intended to secure compliance by a person within the jurisdiction of
the court with an order of the court directing the transfer of property in his
possession and control to a receiver appointed by the court. That order was in
no sense an attempt to exercise sovereign authority in another jurisdiction.
Similarly, the rules of private international law providing for the devolution
of certain property in accordance with the
lex
situs
have no application whatever to the facts of the present case and require no
further consideration.
40. The
fourth ground of objection related to the form of the proceedings. It was
submitted that the plenary summons claimed interim and interlocutory relief and
the appointment of a receiver only: it did not claim any substantive relief.
It was said that this was an impermissible mode of procedure, having regard to
the decision of this court in
Caudron
.v. Air Zaire
(1985) IR 716.
41. No
rules of court have been made prescribing the procedure to be followed in
applications under the 1996 Act and, specifically, indicating whether they are
to be initiated by way of plenary summons, special summons, notice of motion or
some other mode. There was therefore no reason in principle why the
proceedings should not have been initiated by way of plenary summons claiming
the only relief which was required at that stage, i.e. orders under s. 2, s. 3,
s. 7 and s. 9. It would seem at least debatable whether an application for a
disposal order under s. 4 should have been included at that stage, since, as
already noted, that relief could not be granted by the court until the
expiration of a period of seven years from the date of the making of the
interlocutory order. In the event, however, the learned High Court judge
indicated that, in his view, the plenary summons should be amended so as to
include a claim under s. 4 and such an application was made and granted
following the judgment on the interlocutory application.
42. I
can see no defect in any of these procedures and the decision of this court in
Caudron
is of no relevance. In that case, no substantive relief was claimed or could
have been claimed and this court held that, in such circumstances, a plaintiff
could not claim a
Mareva
injunction as a discrete remedy not depending on any specific cause of action
relied on in the plenary summons. That is wholly distinguishable from the
present case where the plaintiff is claiming express reliefs under specific
statutory provisions. I am satisfied that there is no substance in the
procedural points on which the respondents rely.
43. The
fifth submission was that the 1996 Act does not apply to the proceeds of
alleged crimes committed before it came into force and that, accordingly, if
the allegations made in the affidavits grounding the proceedings are correct,
they do not justify the making of orders, since they refer to crimes allegedly
committed before the 1996 Act came into force.
44. It
was submitted that an enactment of the Oireachtas should not be construed as
having retrospective effect in the absence of plain and unambiguous language
giving it such effect: see the judgment of this court in
Hamilton
.v. Hamilton
(1982) IR 466 at p. 484. It was further submitted that it could not have been
the intention of the Oireachtas to confiscate the proceeds of crimes committed
decades or even centuries ago.
45. I
can find no ambiguity whatever in the definition of
“proceeds
of crime”
in s. 1(1). It expressly extends to property obtained or received
before
the passing of the Act by or as a result of or in connection with the
commission of an offence. Property so obtained or received must, by
definition, have been obtained or received after the offence had been committed
and, accordingly, the Act in express terms applies to the proceeds of crimes
committed before it came into force. A remarkably strained argument was
advanced to the effect that the words
“in
connection with”
could extend to, for example, a ship bought in order to import drugs and that
it was only in that context that property obtained
before
the passing of the Act
was to be captured. There is, however, nothing whatever in the section to
support so fanciful and artificial a construction.
If
the legislature had intended the words
“before
or after the passing of this Act”
to have so limited an application, they would have so provided. I am satisfied
that the definition in plain and unambiguous language extends to property
obtained or received at any time before the passing of the 1996 Act by or as a
result of or in connection with the commission of an offence.
46. The
sixth submission was that the applicant in proceedings under the 1996 Act was
obliged to identify the crimes in question and when, where and by whom they
were alleged to have been committed. It is unnecessary in this case to
consider whether, and if so to what extent, the applicant in proceedings under
the 1996 Act must satisfy the court that the property whose disposition he
seeks to restrain is the proceeds of a specific crime. In this case, the
plaintiff gave detailed evidence as to the nature of the criminal activities
allegedly committed by GM which were the source of the property sought to be
frozen. (This evidence was undoubtedly hearsay, but, as already noted, such
evidence is admissible under s. 8.)
This
evidence was accepted by the learned High Court judge and his findings of fact
in this context have not been disputed on the hearing of this appeal.
Accordingly, no argument on this ground can succeed.
47. Finally,
it was submitted that the learned High Court judge should, at the outset, have
ruled on the question as to the onus of proof resting on the plaintiff, i.e.
whether he was obliged to satisfy the court on the balance of probabilities
that the sum of £300,000, constituted the proceeds of crime within the
meaning of the 1996 Act or simply that there was a fair question to be argued
as to whether they were. It was claimed that until such a ruling was made the
respondents (to quote their written submissions)
“could
not join issue with the applicant on the facts”
.
48. This
is clearly wrong. The respondents were not in any way precluded from joining
issue with the plaintiff on any of the facts. It was open to them to
cross-examine the deponents who had given evidence in support of the
application and to adduce evidence themselves. They could then have made
whatever submissions they thought appropriate in the light of the evidence on
the appropriate onus of proof. Their election not to cross examine and not to
adduce oral evidence was a matter for them and they cannot now be heard to
complain of the result.
49. I
am satisfied that the learned High Court judge was entirely correct in
rejecting, as he did, all the arguments advanced in this case in relation to
the non-constitutional issues and I would, accordingly, affirm the order of the
High Court.
50. This
is the judgment of the court as to the claim made in both proceedings
that
the 1996 Act was invalid having regard to the provisions of the Constitution.
That was the sole claim made on behalf of the plaintiff in the second of these
proceedings. In her judgment (reported in (1998) 3 IR 185), McGuinness J.
dismissed the plaintiff’s claim. In the first proceedings,
O’Higgins J. in the reserved judgment already referred to also dismissed
the plaintiff’s claim to the same effect.
51. The
second proceedings were a sequel to proceedings entitled
“The
High Court 1996 No. 10143P between Michael F. Murphy, Plaintiff and John
Gilligan, Geraldine Gilligan, Tracy Gilligan and Darren Gilligan,
Defendants”
in which an order was made by the High Court pursuant to s. 3 of the 1996 Act
preventing the plaintiff from disposing or otherwise dealing with the
properties specified therein. Those proceedings were grounded on an affidavit
by the applicant who is also the plaintiff in the first proceedings, in which
he deposed to his belief that the property forming the subject matter of the
application was directly or indirectly the proceeds of crime. He said that his
belief was supported by the fact that the plaintiff had been involved in crime
for a lengthy period and had accumulated very substantial assets in a short
period of time without his enjoying any apparent lawful source of income. The
applicant also averred that the Gardaí believed that the plaintiff had a
significant involvement in the importation of narcotics. The plaintiff did not
swear an affidavit in those proceedings.
52. In
those proceedings, evidence was given by senior Garda officers as to the
problems posed for the law enforcement agencies of the State by the significant
extension of the practice of
“money
laundering”
the proceeds of illegal activities, such as the import and sale of drugs on a
substantial scale.
53. The
relevant provisions of the 1996 Act are set out in the judgment of Keane C.J.
on the non-constitutional issues arising in the first proceedings.
54. The
principal argument advanced on behalf of the appellants in this court was that
the provisions of the 1996 Act essentially formed part of the criminal law and
not of the civil law and that the persons affected by those provisions were
deprived of some of the most important safeguards which were historically a
feature of the criminal law. Specifically, the presumption of innocence was
reversed, the standard of proof was on the balance of probabilities rather than
beyond reasonable doubt, there was no provision for a trial by jury in respect
of any of the issues and the rule against double jeopardy was ignored.
55. The
features of the Act which the appellants pointed to as being indicative of its
criminal nature can be summarised as follows:-
56. In
support of the submission that the procedures provided under the Act are
essentially criminal in nature rather than civil, the appellants relied on the
decision of this court in
Melling
.v. O Mathghamhna
(1962) IR 1. They submitted that the decision of the former Supreme Court in
Attorney
General .v. Southern Industrial Trust
(1960) 94 ILTR 161, relied on by the respondents, went no further than holding
that the penalties imposed in fiscal legislation for contravention of fiscal
laws are not necessarily criminal in nature. The 1996 Act was not of a fiscal
nature.
57. The
appellants also relied on a number of United States decisions, particularly
those of the Supreme Court, which, they said, supported their contention that
legislation such as the 1996 Act was criminal in nature. They referred in
particular to
Peisch
.v. Ware
,
4 Cranch 347;
United
States .v. Halper
,
490 US 435;
Austin
.v. United States
,
509 US 602;
Department
of Revenue .v. Kurth Ranch
,
511 US 767;
United
States .v. Ursery
,
518 US 267;
United
States .v. Bagakajiam
,
524 US 321. They accepted that the decision of the majority in
Ursery
was not in their favour, but submitted that this court should prefer the
dissenting judgment of Stevens J. in that case.
58. They
further submitted that the constitutional problems which flowed from the
absence of the traditional safeguards of the criminal law were not resolved by
treating the proceedings as essentially
in
rem
rather than proceedings which effectively punished persons for alleged
wrongdoing. They submitted that the decision of the House of Lords in
Republic
of India .v. Indian Steamship Company (No. 2)
(1998) AC 878, that characterising actions as
in
rem
was no longer an appropriate way of resolving questions of substance, should be
followed in this jurisdiction.
59. The
appellants further submitted that the decision of the High Court (Barrington
J.) in
Clancy
.v. Ireland
(1988) IR 326, which had been relied on by the respondents in the High Court,
was of no assistance to them, since the points relied on by the appellants in
the present case had not been raised or argued in that case. They submitted
that the decisions of this court in
McLoughlin
.v. Tuite
(1989) IR 82 and
O’Keeffe
.v. Ferris
(1993) 3 IR 165 relied on in the High Court were also distinguishable. The
first concerned a fiscal law and was a case in which there was no
mens
rea
requirement of any kind. The second concerned the statutory remedy available
to a liquidator or creditor of an insolvent company which was designed to
ensure reparation for losses caused to the company by the defendants’
wrongdoing, an entirely different situation from that addressed in the 1996 Act.
60. The
appellants also relied on a number of other features of the 1996 Act as
demonstrating that it was invalid having regard to the provisions of the
Constitution.
61. First,
it was submitted that the Act permitted of delays which were so oppressive in
their nature as to render the Act unconstitutional. Thus, in the present case,
a period of over 15 months had elapsed between the making of the order under s.
2 and the hearing of the interlocutory application under s. 3. They said that
this was compounded by the stipulation in s. 4(1) that what was effectively the
trial of the action (i.e. the application for a disposal order) could not take
place until at least seven years had elapsed from the making of the
interlocutory order.
62. Secondly,
it was submitted that the procedures permitted under the Act were so unfair as
to be unconstitutional. In the first place, it was said that the maxim
audi
alteram partem
was violated in that there was no provision to ensure that respondents to
applications under the Act were told of the case they had to meet. Thus, in
the present case the plaintiff was not ordered to deliver a statement of claim,
the appellants were not furnished with particulars of the crimes alleged to be
involved and no order for discovery had been made. Secondly, the provision for
the admission of hearsay evidence meant that the appellants were deprived of
the right to confront and cross examine the witnesses relied on by the
plaintiff. Thirdly, there was no
“equality
of arms”
between the parties to proceedings under the 1996 Act as required by Article
40.1 of the Constitution guaranteeing equality before the law. Thus, the
appellants were not entitled to proper pleadings, particulars and discovery and
evidence of opinion was permitted in the case of the plaintiff under s. 8(1)(b)
but not in the case of the respondents. Fourthly, the complete reversal of the
onus of proof in favour of the plaintiff was a manifestly unfair procedure,
even if the proceedings were properly characterised as civil.
63. Thirdly,
it was submitted that the entire scheme of the 1996 Act and in particular s. 9
- under which the respondent could be required to file an affidavit specifying
its property and income - contravened the privilege against self-incrimination.
A respondent wishing to challenge an order sought under
64. Fourthly,
it was submitted that the Act was so over-broad in its sweep that it
constituted an abdication of legislative responsibility. Thus, the expression
“proceeds
of
crime”
was extraordinarily vague and sweeping and the same could be said of the power
given to the court to make or refrain from making orders where there was
“a
serious risk of injustice”
.
Similarly, the vagueness of the Act was in contravention of the requirement
laid down in the European Court of Human Rights in the
Sunday
Times case
2 EHRR 245 where the term
“prescribed
by law”
was explained. It was also contrary to the law as laid down by this court in
King
.v. Attorney General
(1981) IR 233 and
Cox
.v. Ireland
(1992) 2 IR 503.
65. Fifthly,
it was submitted that the Act violated the guarantee of private property under
the Constitution, since there was no provision for compensation in the event of
any person other than the owner of the property seeking it or for
bona
fide
purchasers of the proceeds of crime.
66. Sixthly,
it was submitted that the Act impermissibly interfered with the judicial
function in a number of respects. The obligation on the court to discharge an
interim or interlocutory order on the request of the applicant was a fettering
of the court’s discretion which was not permitted by the Constitution.
67. The
seventh submission was that s. 3(5)(c) of the Act was unconstitutional because
it purports to authorise and/or recognise the possibility of an appeal from the
Supreme Court to a non-specified court or authority.
68. The
appellants finally submitted that, if contrary to the arguments advanced by
them on the non constitutional issues, the court found that the Act applied to
property abroad and/or was retrospective in its effect, it was invalid having
regard to the provisions of Article 29.3 and 8 of the Constitution and because
it violated the unenumerated right of a citizen not to have a penalty or other
penal burden imposed that was more severe than that applying at the time of the
commission of the wrong.
69. The
court begins its consideration of this issue by noting that the 1996 Act enjoys
a presumption of constitutionality and that the onus was on the appellants to
establish that it was invalid having regard to the provisions of the
Constitution. It also follows that, if in respect of any provision or
provisions of the Act two or more constructions are reasonably open, one of
which is constitutional and the other is unconstitutional, it must be presumed
that the Oireachtas intended only the constitutional construction: see
McDonald
.v. Bord na gCon (No. 2)
(1965) IR 217. It also follows that, in accordance with the decision of the
court in
East
Donegal Co-operative .v. Attorney General
(1970) IR 317, it is to be presumed that the Oireachtas intended that any
proceedings, procedures, discretions or adjudications permitted, provided for
or prescribed by the Act would be conducted in accordance with the principles
of constitutional justice and that any departure from those principles would be
restrained or corrected by the courts.
70. The
court addresses first the argument on behalf of the appellants that the
procedures permitted under the Act are essentially criminal in nature and that
the absence of some of the most important safeguards available under our system
of criminal justice to persons charged with criminal offences renders the
legislation unconstitutional.
72. It
is also clear that, if these procedures constitute the trial of a person on a
criminal charge, which, depending on the value of the property, might not
constitute a minor offence, the absence of any provision for a trial by jury of
such a charge in the Act would clearly be in violation of Article 38.5 of the
Constitution.
73. The
central issue, on this aspect of the case, is, accordingly, whether the
procedures prescribed by the Act are in substance criminal in nature.
74. The
statutory scheme established under the 1996 Act may be summarised as follows.
The applicant, who must be a senior Garda officer, may obtain on an
ex
parte
application to the High Court an order prohibiting a person who is in
possession or control of specified property (an expression which would
obviously include the owner of the property) from disposing or dealing with the
property if it is shown to the satisfaction of the court that it constitutes,
directly or indirectly, the proceeds of crime. That order remains in effect
for no longer than 21 days unless, before the expiration of that period, an
application for a further order is made. This application must be made on
notice to the person against whom the
ex
parte
order was made or anyone else claiming to be the owner of the property. Again,
the court, if satisfied that the property constitutes, directly or indirectly,
the proceeds of crime, may make an order to the same effect as the interim
order, unless it is satisfied that there would be
“a
serious risk of injustice”
.
That order then remains in force and, where it has been so in force for at
least seven years, the court may make, on the application of the Garda officer,
a
“disposal
order”
transferring the property to the Minister for Finance or such other person as
the court may determine. 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”
.
75. 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 have
developed sophisticated and elaborate forms of what has become known as
“money
laundering”
in order to conceal from the authorities the proceeds of their criminal
activities. In the two cases under appeal, the alleged activities were the
importation and sale in this country of substantial quantities of illegal
drugs, but the legislation is not, of course, restricted in its effect to that
particular form of criminal activity. The appellants urge that the resultant
legislation is a hasty, ill-considered and disproportionate reaction to that
particular phenomenon which unjustifiably and dangerously erodes their
constitutional rights.
76. 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 only provision for
compensation being where the ex parte or interlocutory order is discharged or
lapses or is varied, the compensation then being payable solely to the owner of
the property. The orders which the court is empowered to make, accordingly,
under the Act may equate to the forfeiture of the property in question and the
appellants contend that such a procedure cannot be deprived of its essentially
punitive and criminal nature by being given a statutory vesture appropriate to
civil proceedings.
77. The
general question as to whether proceedings authorised by statute which may
result in the forfeiture of property are civil or criminal in nature has been
considered in a number of authorities to which the court was referred.
78. The
constitutional validity of the relevant legislation was challenged by the first
defendant on two grounds, i.e. that it constituted a criminal procedure without
the safeguard of due process and a trial by jury required under
79. Article
38 and that it violated the private property rights of the first defendant
guaranteed under Articles 40 and 43 of the Constitution.
80. In
the High Court, Davitt P. rejected both these challenges to the
constitutionality of the relevant legislation and his conclusions were upheld
on appeal by the Supreme Court. The first defendants had relied, in support of
their first ground of challenge, on the earlier decision of the Supreme Court in
The
State (Gettins) .v. Judge Fawsitt
(1945) IR 183.
81. In
that case the prosecutor had exported a quantity of eggs in contravention of an
emergency powers order which brought into operation certain provisions of the
Scrap Iron (Control of Export) Act, 1938 and rendered him liable to the same
penalties, detention and proceedings to which a person was liable under s. 186
of the 1876 Act for illegally importing prohibited goods. That section
provided that, in the case of an offence under the Customs Acts, an offender
was, for each offence, to forfeit either treble the value of the goods or
£100 at the election of the commissioners and might either be detained or
proceeded against by summons. Section 11 of the amending Act of 1879 enabled
the relevant proceedings to be brought in the superior courts of common law in
the name of the Attorney General or by information in the name of an officer of
Customs and Excise before one or more justice or justices. The Revenue
Commissioners had elected to proceed for a penalty of £100 in the District
Court where the proceedings were dismissed. The complainant having appealed,
the Circuit Court reversed the dismissal and convicted Gettins, who was ordered
to pay a penalty of £100 or, in default, to be imprisoned for six months.
A conditional order of
certiorari
having been obtained to quash the conviction and order on the grounds that the
proceedings were criminal proceedings and that no appeal lay from the
acquittal, a divisional court of the High Court held that the proceedings were
not criminal proceedings and discharged the conditional order, following an
earlier decision of a divisional court in
O’Croinin
.v. Brennan
(1939) IR 274. On appeal, the Supreme Court by a majority (Sullivan C.J.,
Murnaghan and Geoghegan JJ., O’Byrne and Black JJ. dissenting) held that
the proceedings were criminal proceedings and allowed the appeal.
82. Delivering
the judgment of the majority in that case, Murnaghan J. distinguished the case
from that of the
Attorney
General .v. Casey
(1930) IR 163. That was also a case in which the Attorney General had
proceeded by way of information in the High Court to recover certain penalties
from the defendant under the provisions of s. 30(1) of the Income Tax Act, 1918
on the ground that he had fraudulently concealed part of his income for the
year in question. The defendant had sought an order that the action be tried
by a judge with a jury, but had been refused and, on the hearing of the appeal
in the Supreme Court, it was argued on his behalf
inter
alia
that the proceedings were criminal proceedings. That argument was rejected by
the court, all three members - Kennedy C.J., Fitzgibbon J. and Murnaghan J. -
being of the view that the proceedings were in the form of an action for debt
and were accordingly civil. The fact that the statute which imposed the
penalty also made the defaulter 1amenable to the criminal law by indictment or
otherwise in respect of the same facts did not, in the view of the court,
render the instant proceedings criminal in nature. While Murnaghan J.
dissented, he did so on the ground that, even accepting that the proceedings
were civil in nature, a charge of fraudulent intent under the then law
constituted an issue which required resolution by a jury.
83. Davitt
P. concluded that the case before him was governed by the decision in
Casey,
that it was essentially a civil proceeding which did not seek to make anyone
amenable for a criminal offence and that the fact that, in order to lay the
ground for an order of forfeiture, the Attorney General had to establish facts
which showed that the second named defendant had committed a criminal offence
did not render the instant proceedings criminal in nature. While he did not
seek expressly to distinguish the decision in
Gettins,
it is to be inferred from his judgment that the learned President would have
treated that case as also distinguishable on the ground that in that case the
Revenue Commissioners had elected to proceed by way of complaint in the
District Court and that this constituted the prosecution of a criminal offence
in contrast to proceedings initiated by the Attorney General in the High Court.
84. On
appeal, those conclusions were upheld in the judgment of the court, delivered
by Lavery J. Having expressed disquiet at the form of the proceedings, which,
in the light of the admissions and agreed statement of facts, indicated that
both parties were anxious to obtain something in the nature of an advisory
judgment from the court, the learned judge said
85. Lavery
J. then went on to say that the matter was in any event determined by authority
and to uphold the conclusions of Davitt P. in relation to three earlier
decisions already referred to. He cited the following passage from the
decision of Murnaghan J. in
Gettins:
87. The
court was not invited to hold that
Southern
Industrial Trust
was wrong in law and should not be followed. (It should be pointed out,
however, that, in the light of subsequent decisions, it cannot be regarded as
correctly stating the law on the second ground of challenge relating to the
private property guarantees.) It was, however, urged that the case was
distinguishable on the ground that it related to fiscal legislation: it was
said that, for somewhat anomalous historical reasons, revenue proceedings
against tax defaulters had usually been treated as civil matters. It was also
submitted that there could be a forfeiture under s. 5 of the 1945 Act, even
where the owner had a full defence to a prosecution under the Act, e.g. where
the vehicle had been stolen from him. In contrast, it was submitted that
forfeiture under the 1996 Act was invariably predicated on crimes having been
committed. It was also submitted that the procedure under the 1945 Act did not
provide for the establishment of
mens
rea
:
the provisions of the 1996 Act enabling the court to grant relief to the owner
of the property where there was a serious risk of injustice clearly indicated
that
mens
rea
was an essential ingredient of the forfeiture procedure under the 1996 Act.
88. It
was further submitted that the procedures permitted under the 1996 Act, even if
reconcilable with the Constitution when considered solely in the light of the
Southern
Industrial Trust
decision, were repugnant to the Constitution in the light of the later decision
of the Supreme Court in
Melling
.v. O Mathghamhna and Another
(1962) IR 1, which must next be considered.
89. In
that case, the plaintiff was charged in the District Court on fifteen charges
relating to smuggling of butter into the State in contravention of the Dairy
Produce (Price Stabilisation) Act, 1935 and s. 186 of the 1876 Act. The
Revenue Commissioners, under the provisions of s. 186, elected to proceed for a
penalty of £100 in respect of each of the charges. The prosecution was
resisted on the ground that the District Court had no jurisdiction to try the
charges because they were not minor in nature and hence could only be tried by
a judge and a jury. The matter was adjourned in order to enable proceedings to
be brought in the High Court claiming a declaration that the relevant
provisions of the 1876 Act and the amending Act of 1879 were inconsistent with
the provisions of the Constitution of Saorstát Éireann and the
Constitution of Ireland. The High Court having refused to grant that
declaration, an appeal was brought to the Supreme Court.
90. That
court (Maguire C.J., Lavery, Kingsmill Moore, Ó Dálaigh and
Maguire JJ.) were unanimously of the view that the offences were criminal
offences, but a majority, (Maguire C.J., Lavery and Maguire JJ.) were also of
the view that they were minor offences which could be tried in a summary manner.
91. Three
judgments were delivered. In the course of his judgment, Lavery J. said that
in his opinion the case was indistinguishable from
Gettins,
but went on to say
92. In
his judgment, Kingsmill Moore J., in a passage which is strongly relied on by
the appellants in the present case, referred to some definitions of a
“crime”
which had found favour with judges or text book writers. In
Proprietary
Articles Trade Association .v. Attorney General for Canada
(1931) AC 310 at p. 324, Lord Atkin had said that it could be discovered by
reference to one standard alone, i.e.
“Is
the act prohibited with penal consequences?”
The then current edition of Cross and Jones had suggested as a definition:
94. The
learned judge said that in his view an offence under s. 186 of the 1876 Act
would fall within these text book definitions and went on to say
95. The
learned judge went on to subject the decision in
Gettins
case to an exhaustive analysis (with which, it should be noted, Lavery J. in
his judgment expressly agreed) and concluded that the decision of the court in
that case had been to the effect that proceedings under s. 186 of the 1876 Act
were criminal and that this was supported by other authorities in both this
jurisdiction and in England. He summed up his view as follows:-
96. In
the course of his judgment, Ó Dálaigh J. (as he then was), having
noted that (a) one of the chief characteristics of civil liability, as
contrasted with criminal liability, was the obligation to make reparation and
not to have to suffer imprisonment if unable to make reparation, and
(b)
that certain acts, such as assaults, could be the subject of criminal as well
as civil proceedings, went on to point to those features of s. 186 of the 1876
Act which, in his view, rendered the proceedings permitted thereunder criminal
nature. He said
97. It
is a notable feature of this case that the court’s earlier decision in
Southern
Industrial Trust
,
although referred to in the course of the arguments, is not mentioned in any of
the judgments. The decisions taken together, however, made it clear beyond
doubt that, where proceedings were taken by the Attorney General for the
condemnation and forfeiture of illegally exported goods, they were civil in
nature, but where the Revenue Commissioners elected to proceed by way of
summons in the District Court seeking the imposition of a penalty, they were
criminal in nature. The court, at a later part of this judgment, considers how
the reasoning by which those conclusions were reached should be applied to the
present case. There are, however, three later decisions of the High Court and
this court which were also referred to in the course of argument and which must
next be considered.
98. The
first of these is
Clancy
.v. Ireland
.
That arose out of the enactment by the Oireachtas of s. 2 of the Offences
Against the State (Amendment) Act, 1985. Section 22 of the Offences Against
the State Act, 1939 provided that where the government had declared a
particular organisation to be an unlawful organisation which should be
suppressed, its property was to be forfeited to, and vested in, the Minister
for Justice. Section 2 of the amending legislation provided that, where in the
opinion of the Minister, monies held by a bank would, but for the operation of
s. 22 of the 1939 Act, be the property of an unlawful organisation, the
Minister could require the bank to pay the monies into the High Court on a
specified day and in the meantime to refrain from doing any act or making any
omission inconsistent with that requirement. The Act contained further
provisions entitling a person claiming to be the owner of the money to apply to
the High Court for an order directing the payment of the money to him, where he
showed to the satisfaction of the court that the monies were not monies to
which s. 22 of the 1939 Act applied and that he was the owner of the monies.
99. Such
an order having been made in respect of monies held upon a joint account in the
names of the plaintiffs in a bank, they issued proceedings claiming that the
monies were not held for the benefit of an unlawful organisation and
declarations that the relevant provisions of the 1985 Act were invalid having
regard to the provisions of the Constitution. The laconic and unsatisfactory
report of the case gives no indication as to the nature of the arguments
advanced at the hearing in the High Court. It appears from the judgment of
Barrington J. that the grounds on which the legislation was attacked were that
it violated the plaintiff’s rights of private property under the
Constitution and deprived him of the fair procedures to which he was entitled
under a number of decisions of this court, in particular
In
Re Haughey
(1971) IR 217.
100. Barrington
J. rejected both grounds of challenge. The learned judge said that he was
satisfied that the abridgement of property rights provided for under the Act
was a permissible delimitation of property rights for the purposes of Article
43 and was not a breach of fair procedures, citing with approval the decision
of the US Supreme Court in
Calero-Toledo
.v. Pearson Yacht Leasing Company
(1974) 416 US 663, an authority to which it will be necessary to refer at a
later stage.
101. Carroll
J., in the course of her judgment, considered the decisions in
Casey
and
Melling
.v. Ó Mathghamhna
and cited the extracts already quoted in this judgment from the judgments of
Lavery J., Kingsmill Moore J. and
102. Ó
Dálaigh J. in the latter case. Applying the
indicia
specified in the judgment of Kingsmill Moore J., she concluded that two of them
were present in the procedures under s. 500, i.e. if an offence was created, it
was one against the community at large and the sanction provided was penal in
its nature, although there was no provision for imprisonment in default of
payment of the penalty. She was, however, also satisfied that
mens
rea
was not an ingredient in a failure to make a return of income. She also
considered that the
indicia
mentioned in the judgment of Ó Dálaigh J. were all absent in the
provisions relating to penalties under s. 500. The learned judge concluded
that the imposition of a penalty where there was a default in making a return
was not indicative of a criminal offence and that, accordingly, the provision
was not repugnant to the Constitution.
103. That
judgment was upheld on appeal by this court. Having considered the decision of
the former court in
Melling
.v. Ó Mathghamhna
,
Finlay C.J., delivering the judgment of the court, said:
104. The
last case in the series of Irish decisions is
O’Keeffe
.v. Ferris
.
That case arose out of the provision in s. 297 of the Companies Act 1963
empowering the High Court, on the application of the liquidator or any creditor
or contributory of a company in winding up, to declare that persons who are
knowingly parties to the carrying on of the business in a fraudulent manner are
to be personally responsible, without any limitation of liability, for all or
any of the debts or other liabilities of the company. It also provided that
where the business is so carried on, the persons knowingly party to its being
carried on in that manner were to be liable on conviction to imprisonment or
fines or both. The liquidator of an insolvent company having instituted
proceedings against one of the directors claiming relief under s. 297, the
latter then instituted proceedings seeking a declaration that s. 297 was
unconstitutional or, alternatively, that the manner in which the liquidator
sought to invoke it against the plaintiff was invalid as it amounted to a trial
of criminal offence without due procedures for a criminal trial.
105. In
the High Court, Murphy J., having referred to the judgments in
Melling,
said that some of the
indicia
of a criminal offence identified in those judgments were not present at all in
the impugned subsection and those that were present were ambiguous. In a
passage which is of some relevance in the present proceedings, the learned
judge pointed out that it would not be correct to treat the procedure under s.
297(1) as conforming to the generally accepted concept of compensation or
reparation recovered in civil proceedings, since the applicant for the relief
did not have to be the particular creditor who had been defrauded by the manner
in which the business of a company was carried on. However, in his view, that
feature of itself did not mean that the proceedings were criminal in form. He
was satisfied that it was the clear intention of the Oireachtas that the remedy
afforded by the section was a civil remedy and not a criminal one. He
accordingly dismissed the plaintiff’s claim.
106. That
judgment was upheld in this court. Delivering the judgment of the court,
O’Flaherty J. referred to a submission on behalf of the plaintiff that
the procedure under the section was
“an
ersatz civil proceeding which was really criminal in nature”
,
an expression which was also adopted by counsel for the appellants in the
present case. In the course of his judgment, O’Flaherty J. says:
107. The
court is satisfied that the decision in
Melling
does not support the submissions advanced on behalf of the appellants in these
cases. Even if is assumed in their favour that the presence of
mens
rea
is an essential ingredient which must be established before an order can be
made under s. 3 or s. 4, that would not of itself deprive the proceedings of
their civil character. It is clear from the judgments of Lavery J. (with whom
Maguire C.J. and Maguire J. concurred) and from the judgment of Ó
Dálaigh J. that the ratio of that decision was that the presence of a
number of indicia, which are conspicuously absent in the present case, rendered
the proceedings criminal in character, viz. the provision for the detention of
the person concerned, the bringing of him in custody to a Garda station, the
searching of the person detained, his admission to bail, the imposition of a
pecuniary penalty with liability to imprisonment in default, the reference in
the statute to a party having been
“convicted
of an offence”
and the provision for the withdrawal of proceedings by the entry of a
nolle
prosequi
.
The court is satisfied that the emphasis placed by the appellants on the three
elements indicated by Kingsmill Moore J. as essential ingredients of a criminal
offence is misplaced: in another passage in his judgment, cited by Finlay C.J.
in
McLoughlin
.v. Tuite
,
he refers expressly to some of these indicia as pointing clearly to the
criminal nature of the proceedings. In contrast, in proceedings under s. 3 and
s. 4 of the 1996 Act, there is no provision for the arrest or detention of any
person, for the admission of persons to bail, for the imprisonment of a person
in default of payment of a penalty, for a form of criminal trial initiated by
summons or indictment, for the recording of a conviction in any form or for the
entering of a nolle prosequi at any stage.
108. The
court is in any event satisfied that the submission that the establishment of
mens
rea
by the applicant is essential if an order under s. 3 or s.4 is to be made is
fundamentally misconceived. Two conditions alone must be met before an order
is made under those sections: that a person is in possession or control of a
specified property which constitutes the proceeds of crime or was acquired in
connection with such property and that its value is not less than £10,000.
The orders can be made even though it has not been shown to the satisfaction of
the court that there was
mens
rea
on the part of the person in possession or control of the property. This is
so, whether
mens
rea
in this context is being used in the sense of
“a
general disposition to do something that was morally wrong in the old canonical
sense”
or in the sense adopted in the authorities at a later stage of
“an
intention to commit the particular wrong mentioned in the definition of the
relevant offence”
.
(The distinction between the two forms of
mens
rea
is helpfully discussed in
Criminal
Liability
by McCauley and McCutcheon.)
The
fact that the person in possession or control of the property against whom the
order is sought may not himself or herself have been in any way involved in any
criminal activity and, specifically, may not have been aware that the property
constituted the proceeds of crime would not prevent the court from making the
order freezing the property under s. 2 or s. 3, unless it was satisfied that
there would be
“a
serious risk of injustice”
.
If the legislature had intended that no such order should be made unless it
had first been established that the person in possession or control of the
property had acquired it with a criminal intent it would have said so. No
doubt the court might decline to make the order in a case where the person in
possession or control was in a position to establish that he or she had
purchased the particular property in good faith for valuable consideration: it
might, on the other hand, make the order in circumstances where an innocent
recipient of the property had made no payment for it.
109. It
also follows that one of the grounds on which it was sought to distinguish the
decision in
Southern
Industrial Trust
- that there was no requirement of
mens
rea
under the statutory provision in question - is not well founded. Moreover, the
court is satisfied that a further ground of distinction urged in respect of
that decision, that the order of forfeiture could be made even though the owner
of the property was innocent of any crime in respect of it, has not been
established. Although the making of the orders under ss. 3 and 4 is undoubtedly
predicated
on the commission of a crime by some person or persons, the same could be said
of the provisions under consideration in
Southern
Industrial Trust
:
although the first defendant was not guilty of any criminal offence, the
second defendant had undoubtedly committed the offence of exporting the car
without a licence. It is clear from the judgments both in the High Court and
the Supreme Court that the order could not have been made had the car not been
illegally exported.
110. The
appellants submit that the sequence of cases from
Casey
to
McLoughlin
.v. Tuite
do not support the findings in the High Court that the 1996 Act is
constitutional because they were all cases in which revenue offences were under
consideration. Black J., in his dissenting judgment in
Gettins,
said:
111. The
learned judge was there referring to a procedure by way of summons
in
the District Court which the majority of the court found to be criminal in its
nature. It is at this stage beyond argument that the procedures under
consideration in
Casey,
Southern
Industrial Trust
and
McLoughlin
.v. Tuite
were all found to be civil in character and - in the case of the two last
mentioned decisions - constitutionally valid. The evasion of tax and the
smuggling of goods are unquestionably serious criminal offences but it would,
in the view of the court, leave the law in a truly illogical and anomalous
condition if procedures for the recovery of penalties or the forfeiture of
goods in such cases were constitutionally valid while similar procedures in
respect of crimes of at least equal gravity, such as the sale of illegal drugs
on a substantial scale, were held to be repugnant to the Constitution.
112. That
conclusion receives significant support from the United States authorities to
which the court was referred. Since in that jurisdiction
trial
by jury is a constitutional requirement in a wide range of civil proceedings as
well as in indictable crimes, the cases in general dealt with a different
issue, i.e. as to whether the existence of parallel procedures for the
forfeiture of property and the prosecution of criminal offences was in
violation of the constitutional prohibition of
“double
jeopardy”
.
Since, however, in determining whether the double jeopardy principle had been
violated, it was necessary to consider whether the forfeiture proceedings were
civil or criminal in their nature, the decisions are of assistance in
considering the issue that has arisen in this case. They are conveniently
reviewed in the opinion of the United States Supreme Court delivered by
Rehnquist C.J. in
United
States .v. Ursery
(1996) 135 L Ed 2D549.
113. In
that case, the government had instituted forfeiture proceedings against the
respondent’s house, alleging that it had been used to facilitate illegal
drug transactions. Shortly before
Ursery
settled that claim, he was indicted and later convicted of manufacturing
marijuana. The government also filed an
in
rem
complaint against various properties seized from two other persons alleging
that each item was subject to forfeiture because it was involved in money
laundering.
114. In
his opinion, Rehnquist C.J. noted that, since the earliest years of the United
States, Congress had authorised the government to seek parallel
in
rem
civil forfeiture actions and criminal prosecutions based on the same underlying
events. He cited the following passage from an earlier case of
Various
Items of Personal Property .v. United States
,
282 US 577, in which the court said:
115. Rehnquist
C.J. also referred to the earlier decision of the Supreme Court in
Calero-Toledo
.v. Pearson Yacht Leasing Company
,
which was adopted with approval by Barrington J. in
Clancy
.v. Ireland
.
Calero-Toledo
was a case in which a statutory forfeiture scheme under which a yacht had been
seized and on which marijuana was discovered was challenged on the ground that,
since the owner, who was unaware of the wrongful use of the yacht by the
lessee, was not notified of the proposed seizure, it violated the due process
requirements of the Constitution. It was also contended that the statute was
in breach of the private property guarantees under the Constitution.
116. Delivering
the opinion of the court, Brennan J. pointed out that, at common law, the value
of an inanimate object directly or indirectly causing the accidental death of a
King’s subject was forfeited to the Crown as a deodand. This in turn, he
said, was traceable to biblical and pre-Judeo /Christian practices. He also
referred to the forfeiture which resulted at common law from conviction for
felonies and treason, the basis for them being that a breach of the criminal
law was an offence to the King’s peace which was felt to justify denial
of the right to own property. Having referred to the wide range of forfeiture
statutes which had been enacted in the United States, the learned judge
commented that contemporary federal and state forfeiture statutes reached
virtually any type of property that might be used in the conduct of a criminal
enterprise. In a passage clearly relevant to the present case, he added:
117. In
the result, the opinion of the court in
Calero-Toledo
was that the statute under consideration furthered the punitive and deterrent
purposes that had, in previous cases, been found sufficient to uphold, against
constitutional challenge, the application of forfeiture statutes to the
property of innocents.
118. While
the dissenting opinion of Stevens J. in
Ursery
was relied on by the appellants, the court is satisfied that, on examination,
even if it were to be regarded as more persuasive than the opinion of the
majority in that case, it does not support the submissions of the appellants.
The learned judge drew a distinction between the forfeiture of funds which he
described as
“the
proceeds of unlawful activity”
and the seizure of
Ursery’s
house, in respect of which, he said, there was no evidence that it had been
purchased with the proceeds of unlawful activity. His opinion undoubtedly
takes issue with the opinion of the majority in the same case that proceedings
in
rem
are in general civil rather than criminal in character as being too sweeping
and inconsistent with earlier decisions of the court, but the substance of his
opinion can be found in this passage:
119. That
passage reflects three categories of property identified by Justice Stevens as
being subject to forfeiture and his analysis as to why in some circumstances
the forfeiture would constitute
“punishment”
and in others not.
120. An
examination of the analysis made by Judge Stevens would properly commence with
the unusual (in this jurisdiction) title of the consolidated proceedings in
which judgment was delivered. The report is entitled
121. The
facts of the case should now be set out in more detail. The US government had
instituted civil forfeiture proceedings under specific legislation against Guy
Ursery’s house alleging that it had been used to facilitate illegal drug
transactions. That claim was settled by Ursery who was then charged and
convicted of manufacturing marijuana in violation of certain statutory
prohibitions. In the other proceedings (the Arnt and Wren proceedings) the US
government instituted proceedings
in
rem
against currency seized from the accused, Messrs Arnt and Wren, on the basis
that it was involved in money laundering or represented the proceeds of
felonious drug transactions. That litigation was deferred while Messrs Arnt
and Wren were successfully prosecuted for their illegal activities. The
government then sought to revive the forfeiture proceedings. Issues arose as
to whether the criminal proceedings in the Ursery case or the forfeiture
proceedings in the Arnt and Wren proceedings involved an infringement of the
double jeopardy rule. The ultimate decision of the majority of the Supreme
Court was that there was no double jeopardy as the forfeiture did not involve
the punishment of a wrongdoer.
122. It
was in that context that Justice Stevens disposed shortly and clearly of the
issue of punishment insofar as it arose in the case involving Messrs Arnt and
Wren. He said in the second paragraph of his judgment:-
123. Again,
Justice Stevens readily accepted that drugs seized by the police in pursuance
of the search warrant in Mr Ursery’s house were correctly forfeited as
the defendant had no right to retain contraband. It was on the third issue
namely, the right of the United States to forfeit the respondent’s
residence because it had been used
“to
facilitate the manufacture and distribution of marijuana”
that
Justice Stevens found himself in disagreement with his colleagues. Judge
Stevens was scathing in his comments on the argument that the forfeiture of a
valuable house, (which was the undoubted property of the defendant), because it
was used for a very limited purpose in conjunction with what appears to have
been a minor breach of the drug trafficking legislation, was not punitive.
Furthermore, he was dismissive in that case, as were the House of Lords
subsequently in
Republic
of India v. Indian Steamships Company Limited (No. 2)
of the suggestion that there was
“some
mystical difference between
in rem
and
in
personam
proceedings such that only the latter can give rise to double jeopardy
concerns”.
Whilst
his reasoning in that regard is impressive, his views did not gain the support
of any of his colleagues nor do they accord with the legal precedents
established in this jurisdiction. The
Attorney
General .v. Southern Industrial Trust
[1960] 90 ILTR 161 is clear authority for the proposition that a motor car used
in the course of an illegal activity could be subject to a forfeiture,
notwithstanding the fact that the owner did not participate in and had no
knowledge of that activity.
124. Even
if this Court were to review the decision in the
Southern
Industrial Trust Case
by reversing it or restricting its application, that would not assist the
appellants. The issue in the present case does not raise a challenge to a
valid constitutional right of property. It concerns the right of the State to
take, or the right of a citizen to resist the State in taking, property which
is proved on the balance of probabilities to represent the proceeds of crime.
In general such a forfeiture is not a punishment and its operation does not
require criminal procedures. Application of such legislation must be sensitive
to the actual property and other rights of citizens but in principle and
subject, no doubt, to special problems which may arise in particular cases, a
person in possession of the proceeds of crime can have no constitutional
grievance if deprived of their use.
125. The
court is satisfied that the United States authorities lend considerable weight
to the view that
in
rem
proceedings for the forfeiture of property, even where accompanied by parallel
procedures for the prosecution of criminal offences arising out of the same
events, are civil in character and that this principle is deeply rooted in the
Anglo-American legal system. The court notes that in
Republic
of India .v. Indian Steamship Company Ltd. (No. 2)
,
Lord Steyn in the course of his speech pointed to the fact that to treat the
ship as a defendant in admiralty proceedings because they were
in
rem
had always been a fiction. As already noted, there are observations to the
same effect in the dissenting opinion of Stevens J. in
Ursery.
It may be, as Holmes pointed out in
The
Common Law
,
that principles of this nature may outgrow their origins in a different
historical era and would now find their justification in considerations of
public policy or the common good. It is sufficient, however, to say that the
secure place of the principles as to civil forfeiture in our law and their
congruence with the Constitution is clearly reflected in the decisions in
Southern
Industrial Trust
and
McLoughlin
.v. Tuite
.
126. As
to the other modern Irish authorities to which the court was referred, the
decision in
Clancy
is not, in the view of the court, of any assistance in determining the issue as
to whether proceedings of this character are civil or criminal in nature as the
report does not indicate whether that issue was raised in the case: since it
is not referred to in the judgment of the learned High Court judge, it seems
safer to assume that it was not. The decision of this court in
O’Keeffe
.v. Ferris
usefully illustrates that the principle established in
Southern
Industrial Trust
and
McLoughlin
.v. Tuite
is by no means confined to revenue cases.
127. The
court is satisfied that the appellants failed to discharge the onus on them of
establishing that the sections referred to in the 1996 Act were invalid having
regard to the provisions of the Constitution on this ground.
128. The
next feature of the Act which the appellants relied on as rendering the Act
unconstitutional was that it permitted delays which were oppressive in their
nature.
129. The
court, in considering this submission, finds it unnecessary to express any view
as to whether the surprisingly lengthy period which elapsed between the making
of the order under s. 2 in the first case and the hearing of the interlocutory
application under s. 3 was wholly or in part the fault of the appellant in that
case, as contended by the respondents. It is sufficient to say that the
procedure under the Act is perfectly capable of being operated in such a manner
as to ensure that no unreasonable delay elapses between the making of the
interim order and the interlocutory order: that indeed is clearly what the Act
envisaged, since under s. 2(5), the order is to lapse after the expiration of
the period of 21 days from the date of its making, unless an application for
the making of an interlocutory order is brought during that period. As to the
claim that the period of seven years which must elapse before a disposal order
is made is unduly oppressive, that rests on the misconception that the
application for a disposal order can in some sense be equated to the trial of
an action in respect of which the legislation earlier provides for
interlocutory orders being made. That is clearly not the nature of the scheme
provided for in the Act. A person who is affected by the provisions of an
interlocutory order can apply at any time before the expiration of the seven
year period for an order discharging or modifying the interlocutory order. The
court is satisfied that the submission that the procedure is so oppressive as
to be unconstitutional because of this time limitation is not well founded.
130. As
to the submission that the procedures permitted under the Act are so unfair as
to be unconstitutional, it is necessary to recall again that it is to be
presumed that the Oireachtas intended that procedures provided for under the
Act would be conducted in accordance with the principles of constitutional
justice and that any departure from those principles will be restrained or
corrected by the courts. The appellants complain that the maxim
audi
alteram partem
was violated because, in the first case, the plaintiff was not ordered to
deliver a statement of claim, the appellant was not furnished with particulars
of the crimes alleged to be involved and no order for discovery was made.
These orders were either made in a proper exercise of the jurisdiction of the
High Court or they were not. If they were not, the appropriate course for the
appellant to have taken was to appeal to this court. It accordingly has to be
assumed that the orders were made in accordance with the principles of
constitutional justice by the High Court judges concerned. In any event, the
court is satisfied that in any case brought under the procedures laid down by
the Act, the affidavits grounding the interim and interlocutory application of
necessity will indicate to the respondents the nature of the case being made on
behalf of the applicant. Nor is the provision for the admission of hearsay
evidence of itself unconstitutional: it was a matter for the court hearing the
application to decide what weight should be given to such evidence. The court
is satisfied that there is no substance in these grounds of challenge to the
constitutionality of the legislation.
131. As
to the submission that there was no
“equality
of arms”
between the parties because evidence of opinion was permitted in the case of
the applicant but not in the case of the respondents, the court is satisfied
that no such inequality has been demonstrated: the respondents to an
application under s. 2 or s. 3 will normally be the persons in possession or
control of the property and should be in a position to give evidence to the
court as to its provenance without calling in aid opinion evidence. A similar
submission was advanced in respect of the extent to which the onus of proof was
reversed in applications under the Act, but the court is satisfied that, having
regard to its conclusion that these are civil proceedings this did not, of
itself, render the provisions unconstitutional.
132. In
this connection, the court was referred to the recent decision of the Privy
Council in
McIntosh
.v. Lord Advocate
(2001) 2 All ER 638. In that case, an issue arose as to whether certain
provisions of the Proceeds of Crime (Scotland) Act, 1994 were incompatible with
Article 6(2) of the European Convention for the Protection of Human Rights and
Fundamental Freedoms. Those provisions were in somewhat similar terms to those
contained in the Criminal Justice Act, 1994 which enable a court to make a
confiscation order requiring a person convicted of a drug trafficking offence
to pay a certain sum. Those procedures are in contrast to the procedures under
the 1996 Act, where the precondition for the conviction of the person against
whom the freezing order is to be directed does not exist. The court, however,
would adopt with approval the following passage from the speech of Lord Hope of
Craighead as to the approach a court should adopt in considering provisions of
this nature, whether in the context of the Constitution or of the European
Convention of Human Rights. He said (at p. 654):
133. A
further argument that the Act necessarily involves the contravention of the
privilege against self-incrimination rests on the assumption that a respondent
wishing to challenge an order sought under s. 3 might be obliged to disclose
information that could then be used to incriminate him. Parties to civil
proceedings, whatever their nature, may find themselves in a position where
they are reluctant to adduce evidence beneficial to them because it might also
expose them to the risk of a criminal prosecution. That factual position,
however, cannot be equated to a statutory provision obliging a person to give
evidence even in circumstances where his or her evidence might be
incriminating. Similarly, the fact that a person can be required to file an
affidavit specifying his or her property and income cannot, on any view, be
equated to a statutory provision requiring a person to adduce evidence which
may incriminate him or her. The court is satisfied that these grounds of
challenge are also without foundation.
134. It
was also argued that the Act was so over broad in its sweep that it constituted
an abdication of legislative responsibility. This was based in the first
instance on what was described as the vague and sweeping nature of the
expression
“proceeds
of crime”
.
The court notes, however, that in every case before an order can be made the
court must be satisfied on the balance of probabilities that on the evidence
adduced to it in that particular case the property in respect of which the
freezing order is sought was the proceeds of crime. Similarly, while the power
of the court to extend relief to persons claiming an interest in the property
where there is
“a
serious risk of injustice”
is undoubtedly wide in its scope, that can only be in ease of the individuals
whose rights may be affected and the court, in applying these provisions, will
be obliged to act in accordance with the requirements of constitutional and
natural justice. The court is satisfied that these submissions are also not
well founded.
135. It
was also submitted that the Act violated the guarantees of private property
rights under the Constitution. The court has already noted that in
Clancy,
Barrington J. adopted as a correct statement of the law in this jurisdiction
the opinion of the United States Supreme Court in
Calero-Toledo
and rejected a challenge to the constitutionality of analogous procedures under
136. It
was further submitted that the Act was invalid having regard to the provisions
of the Constitution in requiring the High Court to make orders of a specific
nature in certain circumstances defined in the Act on the ground that this is
an unwarranted interference with the exercise of the judicial function. The
court is satisfied that there is no substance in this contention: it is
perfectly permissible for the legislature to provide that, where certain
conditions are met, the making of an order of a particular nature by a court
may be mandatory rather than discretionary: see
The
State (O’Rourke) .v. Kelly
(1983) IR 58.
137. The
Act was also challenged on the grounds that, if, contrary to the arguments
advanced in the first case, it did permit the making of retrospective orders
and orders which were extraterritorial in their effect, this was in
contravention of the Constitution. The court is satisfied that there is no
substance in this submission. The Act does not offend in any way the
prohibition in Article 15.5 against declaring acts to be infringements of the
law which were not so at the date of their commission. The fact that it
enables the court to make orders in respect of property constituting the
proceeds of crimes committed before the coming into force of the legislation is
not in any sense a contravention of that prohibition. Nor is the fact that the
legislation may be operated so as to require the compliance of citizens within
the jurisdiction with orders of the court directing the transfer of property in
their possession or control to a receiver appointed by the court in
circumstances where the property is in another jurisdiction constitute in any
way a breach of the principles of international law which the State accepts
under Article 29 of the Constitution.
138. It
was also submitted that s. 3(5)(c) of the Act was unconstitutional as
authorising and/or recognising the possibility of an appeal from this court to
a non specified court or authority. The court is satisfied that the words
“or
if any further appeal”
in s. 2(5)(c) are, at worst, surplusage and, in accordance with well
established principles of statutory construction, can be disregarded where the
result would otherwise be unconstitutional or would, as in this case, produce
an absurd or anomalous result.
139. It
was finally submitted by the appellants that the provisions of the European
Convention on Human Rights ought to be considered as being part of the
‘generally recognised principles of international law’ and that the
Act was in breach of the convention. It was submitted that since Article
29.3 provides that ‘Ireland accepts the generally recognised principles
of international law as its rule of conduct in its relations with other
States’ and the convention confers rights on individuals, any legislative
measure which was in conflict with the provision of the convention must be
considered repugnant to the Constitution having regard in particular to Article
29.3.
140. This
case concerns the application of domestic legislation to persons within the
jurisdiction of the State. In these circumstances it is not relevant or
necessary to consider the application of the ‘principles of international
law’ in this case and in particular whether the provisions of the
European Convention on Human Rights ought to be treated as included in those
‘principles’, as Article 29.3 of the Constitution makes clear that
these general principles, whatever their content, govern relations with other
sovereign states at an international level. Furthermore, Article 29.6
expressly provides that no international agreement shall be part of the
domestic law of the State save as may be determined by the Oireachtas. The
European Convention has not yet been made part of the domestic law of the
State. As Maguire C.J. stated in the judgment of the Supreme Court in
In
re Ó Laighléis
[1960] I.R. At 93:
141. The
convention itself recognises that it does not of itself have direct effect in
the domestic law of the parties to it by providing remedies at international
level for breaches of the convention by any of the High Contracting Parties.
It is accordingly, unnecessary to express any opinion on whether the
legislation is, as alleged, in breach in any way of the convention.
142. The
court is, accordingly, satisfied that the appellants have failed to discharge
the onus on them of establishing that the sections referred to in the 1996 Act
were invalid having regard to the provisions of the Constitution on any of
these grounds.
143. Having
regard to the importance and novelty of the legislation it may be as well to
emphasise that the decision of this court is based upon the record of the
evidence adduced in the High Court and the arguments arising therefrom. Whilst
these arguments were extensive they were necessarily confined to matters in
which the appellants had an existing interest. Issues which were merely
hypothetical were not open for debate or subject to decision and, in the
result, the constitutionality of the Act was considered solely in the light of
those issues which were the subject of submissions in this court.
144. It
is indeed probable that the special character of the legislation and the broad
nature of the obligations imposed upon the Court to make certain orders which
“it
may regard as appropriate”
;
to refrain from others where it is satisfied
“that
there would be a serious risk of injustice”
and
to award and to determine compensation to be payable by the Minister in certain
circumstances in respect of loss incurred by the owner of property, are among
the aspects of the legislation which may be expected to give rise to
difficulties in practice if not in principle. However, the resolution of any
such problems must await another day.