Att Gen v Euro Bank Corporation

• Jurisdiction: Cayman Islands
• Judge: (Zacca, P., Collett and Rowe, JJ.A.)
• Judgment Date: 15 July 2002
• Court: Court of Appeal (Cayman Islands)
• Date: 15 July 2002

Court of Appeal

(Zacca, P., Collett and Rowe, JJ.A.)

ATTORNEY GENERAL

and

EURO BANK CORPORATION, EVANS and ROBB EVANS AND ASSOCIATES

D.F. Ballantyne, Attorney General, A.R. Mitchell, Q.C., and K. Talbot for the appellant;

A. Malek, Q.C. and C.D. McKie for the liquidators;

R.D. Alberga, Q.C., G.F. Ritchie and Mrs. R.C. Whittaker-Myles for the receiver.

Cases cited:

(1) Aro Co. Ltd., In re, [1980] Ch. 196; [1980] 1 All E.R. 1067, referred to.

(2) Briton Medical & Gen. Life Assur. Assn., In reELR(1886), 32 Ch. D. 503; 55 L.J. Ch. 416, considered.

(3) Brooks v. D.P.P., [1994] 1 A.C. 568; [1994] 2 All E.R. 231; (1994), 44 W.I.R. 332, explained.

(4) Burrows (J.) (Leeds) Ltd., In re, [1982] 1 W.L.R. 1177; [1982] 2 All E.R. 882, followed.

(5) Connelly v. D.P.P., [1964] A.C. 1254; [1964] 2 All E.R. 401, referred to.

(6) K., In re, [1990] T.L.R. 629, followed.

(7) Metcalfe, In re, English Court of Appeal, Crim. App. No. 199905420/24, May 18th, 2001, unreported, followed.

(8) R. v. Dickson, [1991] BCC 719; (1991), 94 Cr. App. R. 7, followed.

(9) Rhondda Waste Disposal Ltd., In reELR, [2001] Ch. 57; sub nom. Environment Agency v. Clark (Admor. of Rhondda Waste Disposal Ltd.), [2000] BCC 653, followed.

Legislation construed:

Companies Law (2000 Revision) (Laws of the Cayman Islands, 1963, cap. 22, revised 2000), s.101: The relevant terms of this section are set out at para. 10.

s.151: The relevant terms of this section are set out at para. 7.

s.154: The relevant terms of this section are set out at para. 7.

Grand Court Law (1995 Revision) (Law 8 of 1975, revised 1995), s.11: The relevant terms of this section are set out at para. 25.

Proceeds of Criminal Conduct Law (2000 Revision) (Law 15 of 1996, revised 2000), s.5(3): The relevant terms of this sub-section are set out at para. 40.

s.17(1)(a): The relevant terms of this paragraph are set out at para. 41.

(2): The relevant terms of this sub-section are set out at para. 41.

Cayman Islands (Constitution) Order 1972 (S.I. 1972/1101), Schedule 2, s.16A(1)(a), as added by the Cayman Islands (Constitution) (Amendment) Order 1993 (S.I. 1993/3143), s.5: The relevant terms of this paragraph are set out at para. 21.

s.16A(2): The relevant terms of this sub-section are set out at para. 21.

(5): The relevant terms of this sub-section are set out at para. 21.

s.49H(1), as added by the Cayman Islands (Constitution) (Amendment) Order 1993 (S.I. 1993/3143), s.22: The relevant terms of this sub-section are set out at para. 25.

s.57(2): The relevant terms of this sub-section are set out at para. 20.

(4): ‘In this section the expression “existing laws” means laws and instruments (other than Acts of Parliament of the United Kingdom and instruments made thereunder) having effect as part of the law of the Islands before the appointed day.’

Colonial Laws Validity Act 1865 (28 & 29 Vict., c.63), s.2:

‘Any colonial law which is or shall be in any respect repugnant to the provisions of any Act of Parliament extending to the colony to which such law may relate, or repugnant to any order or regulation made under authority of such Act of Parliament . . . shall be read subject to such Act, order, or regulation, and shall, to the extent of such repugnancy, but not otherwise, be and remain absolutely void and inoperative.’

Companies-winding up under court”s supervision-proceedings against company-court”s leave under Companies Law (2000 Revision), s.101 required to bring civil proceedings against company in compulsory or supervised voluntary winding up

Companies-winding up under court”s supervision-proceedings against company-no leave required to prosecute company in compulsory or supervised voluntary winding up-Companies Law (2000 Revision), s.101 invalid in respect of criminal proceedings, since conflicts with Attorney General”s right to prosecute without restriction under Constitution, s.16A(1)(a) and (5)-court”s inherent power to control own process unaffected

Criminal Procedure-proceeds of criminal conduct-confiscation order-for purposes of Proceeds of Criminal Conduct Law (2000 Revision), s.5(3), bank charged with money laundering benefits from deposited funds as owner of property-benefit (liable to confiscation as realisable property) is value of all funds remaining, not merely profit made

Criminal Procedure-proceeds of criminal conduct-restraint order-discharge-no discharge under Proceeds of Criminal Conduct Law (2000 Revision), s.17(2) if liquidators” distribution of property to legitimate creditors not inhibited-if no known creditor with direct claim against holder of property (besides perpetrators of offences by which property obtained), no conflict between restraint order and liquidators” functions

The liquidators of a bank applied for the court”s approval of a deed of release and assignment, to allow for the discharge of a restraint order against the bank. In separate proceedings, they sought a ruling on whether the Attorney General was required to obtain leave under s.101 of the Companies Law (2000 Revision) to bring criminal charges against the bank, which was being wound up under the supervision of the court.

In November 2000, under the Proceeds of Criminal Conduct Law, s.10, a restraint order was made against the bank”s liquidators, relating to

various accounts held with the bank, including one in the names of T and his wife, the alleged perpetrators of a large-scale US credit card fraud. The bank was subsequently charged with money-laundering offences. T was convicted of fraud-related offences in the United States and a receiver was appointed over his assets and those of companies in his control.

The liquidators applied to the court for a ruling on whether the Attorney General required leave to institute the criminal proceedings against the bank, whether such leave should be granted and what, if any, conditions should be attached.

T”s receiver later applied for the variation or discharge of the restraint order as a corollary to the liquidators” application for approval of a proposed deed of release and assignment, requiring them to admit to proof his claims on behalf of victims of the fraud. Payments could then be made to him by the liquidators to compensate those victims pursuant to an order of the US court. The Crown also asserted a claim to the funds in the account on the basis that they would be subject to confiscation, as the proceeds of crime from which the bank had benefited, if it were convicted in future.

The Grand Court held that the Attorney General required the court”s leave to institute proceedings against the bank. Under s.154 of the Companies Law the need to obtain leave applied equally to a company in voluntary liquidation under the court”s supervision as to one in compulsory liquidation. Section 101, by analogy with similar legislation construed in English case law, applied to criminal as well as civil proceedings. It was not incompatible with the Attorney General”s power under s.16A(1)(a) and (5) of the Constitution to institute and undertake criminal proceedings free of the direction or control of others. That section of the Constitution (introduced in 1993) preserved his independence from political or other extraneous interference, but did not preclude the court”s intervention under its inherent or statutory jurisdiction (preserved by s.49H) to control its own process. For the same reason, s.101 was not invalidated under s.2 of the Colonial Laws Validity Act 1865 as being repugnant to the Constitution. The proceedings in the Grand Court are reported at 2001 CILR 156.

In separate proceedings, the court held, as a preliminary point, that for the purposes of s.5(3), the bank had ‘benefited’ from its own money-laundering offences to the value of all the funds remaining in the account, and not just the profit it had made from handling the account. However, the restraint order should not have been made, since s.17(2) of the Proceeds of Criminal Conduct Law prevented the court from making such an order in relation to realisable property held by a company already in liquidation. The funds in the account formed part of the liquidation estate in respect of which the liquidator exercised its functions. The order was discharged. The proceedings are reported at 2001 CILR 405. The proceedings were consolidated on appeal.

On appeal, the Attorney General submitted that (a) s.101 did not apply to the bank, since companies in voluntary liquidation were dealt with by

separate sections of the Law; (b) the court”s power to grant or refuse leave to institute proceedings did not apply to criminal proceedings, since the words ‘suit’ and ‘action’ in s.101 referred to civil proceedings, and ‘other proceedings’ should be construed ejusdem generis with them; (c) under s.57(2) of the Constitution, s.101 should be construed as subject to the Attorney General”s exclusive constitutional powers to institute criminal proceedings free of the direction or control of others; (d) alternatively, the section was void and inoperative under s.2 of the Colonial Laws Validity Act, as being repugnant to the Constitution; (e) for the purposes of s.5(3), the bank had benefited from all the funds in the restrained account as realisable property obtained from its alleged money-laundering offences, which was therefore liable to confiscation; and (f) s.17(2) of the Law should be construed purposively, so as to avoid creating a loophole by which the liquidators could apply the funds for the benefit of the bank”s creditors (including, in theory, the perpetrators of the fraud), rather than compensating the victims of the offences charged.

The liquidators submitted in reply that (a) under s.154 of the Companies Law, the order that the bank”s winding up should continue under supervision conferred on the court power under s.101 to grant or refuse leave to institute proceedings, since that was the construction placed by English...