Att Gen v Cayman Natl Bank

• Jurisdiction: Cayman Islands
• Judge: (Zacca, P., Taylor and Forte, JJ.A.)
• Judgment Date: 11 March 2005
• Court: Court of Appeal (Cayman Islands)
• Date: 11 March 2005

Court of Appeal

(Zacca, P., Taylor and Forte, JJ.A.)

ATTORNEY GENERAL

and

CAYMAN NATIONAL BANK

P. Patterson, Crown Counsel, for the Crown;

A. Horsbrugh-Porter for the respondent;

D.T. McGrath for W.

Case cited:

(1) Re K (Restraint Order), [1990] 2 All E.R. 562, distinguished.

Legislation construed:

Criminal Procedure Code (1995 Revision) (Law 13 of 1975, revised 1995), s.190(1): The relevant terms of this sub-section are set out at para. 3.

Criminal Procedure-proceeds of criminal conduct-seizure order-ex parte order made under Criminal Procedure Code, s.190(1) to be regarded as interim preservation or restraining order-to ensure unqualified seizure, hearing to be inter partes-12-month period leading to forfeiture to Crown only starts to run when court gives direction under s.190(1)

Criminal Procedure-proceeds of criminal conduct-seizure order-inappropriate to invoke full jurisdiction under Criminal Procedure Code, s.190(1) ex parte on initial application if property to be seized is debt owed by one known party to another, where criminal charges expected to take some time

Civil Procedure-costs-appeal costs-point not taken below-if, in proceedings ancillary to enforcement of criminal law, Crown successful on uncontested ground it could have raised below, may be ordered to pay other party”s appeal costs

The applicant bank applied to vary a previous seizure order of the Grand Court to allow it to set off a debt owed to it by W against the credits in W”s accounts.

The bank held accounts in the name of W in which there were credit balances totalling approximately US$672,500 and CI$52,500. W also owed the bank approximately $213,500 which was secured by a lien over one of the accounts with a credit balance of US$568,425.20. On an ex parte application, the Grand Court (Henderson, J.) ordered, pursuant to s.190(1) of the Criminal Procedure Code (1995 Revision), that moneys standing to the credit of certain listed accounts of W be seized (believing them to be part of the proceeds of criminal conduct) and that the bank be restrained from paying out or disposing of them without leave of the court. It also purported to give itself the right to make a further order and to give W the right to apply for a review.

The Grand Court (Sanderson, J.) set aside the order on the grounds that (a) the order seized no actual funds as W had no property, only a right to claim against the bank; (b) had the order been effective it would only have seized the net amount remaining to W”s credit after the bank had

combined or set off W”s accounts; (c) the order had been made per incuriam and would be set aside as the Crown had not advised the court that the bank might lose its right to combine accounts or claim set-off, nor that there was a 12-month limitation period for establishing a right to seized property under s.190(1), nor that the bank was not to be deprived of any legal entitlement without being given the opportunity to be heard; (d) the language of the order, in giving the court the right to make a further order and W the right to apply for a review, was totally contrary to the concept of seizure and ultimate forfeiture to the Crown without further order; and (e) the Crown had indicated in writing to the bank that it recognized the common law right of combination and set-off, and had indicated to W that he could withdraw funds from his accounts to pay legal fees and had therefore waived reliance or was estopped from relying on the 12-month limitation period. The proceedings in the Grand Court are reported sub nom. In re Gambling Law, at 2004–05 CILR 92.

On appeal, the Crown repeated its main submissions before the Grand Court, namely that (a) the effect of the order under s.190 was to seize the assets immediately and (b) in any event, the lapse of 12 months, without challenge, had the effect under s.190(1) of forfeiting them permanently to the Crown. Alternatively, (c) it submitted that the order was valid as an interim preservation order and, although this meant that it could properly be varied so as to attach only the net proceeds due to W, assets in excess of $1m. could still be attached.

Held, reinstating the order below as amended:

(1) The ex parte order made under s.190(1) was to be regarded as an interim preservation or restraining order, attaching to the net balance after combination and set-off. It was not a seizure that commenced the running of the 12-month period leading to forfeiture, which would require an inter partes hearing-to ensure that those affected were not submitted to arbitrary confiscation, or denied due process of law-and the court to direct, under the second branch of the sub-section, that the property be held ‘until some person [established] a right thereto to the satisfaction of the court.’ The direction in the order that the frozen amounts not be paid out ‘without leave of the court,’ was inconsistent with treating the order as one that could result in the funds becoming payable to the Crown without further order (paras. 19–21; para. 23; para. 26).

(2) It would be inappropriate that the full jurisdiction under s.190(1) be invoked ex parte on an initial application if the property to be seized were a debt owed by one known party to another, where there were expected to be criminal charges against the latter that might not be disposed of for some time. Issues raised by the sub-section would have to be resolved before the criminal charges had been dealt with and-as here the Crown contended that it had-the...