R v Stewart (D)

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 19 June 2002
• Court: Grand Court (Cayman Islands)
• Date: 19 June 2002

Grand Court

(Smellie, C.J.)

R.

and

STEWART, CUNHA, BURGES and DONEGAN

A.R. Mitchell, Q.C., K. Talbot and Ms. C. Richards, Crown Counsel, for the Crown;

M. Hill, Q.C. and M. Thompson for the first defendant;

G. Cox, Q.C. and L.A. Freeman for the second defendant;

T.M. Burke, Q.C. and D.T. McGrath for the third defendant;

N.A. Sharkey, Q.C. and J.H. Furniss for the fourth defendant.

Cases cited:

(1) Att.-Gen. of Hong Kong v. Siu Yuk-Shing, [1989] 1 W.L.R. 236; (1989), 133 Sol. Jo. 152, followed.

(2) D.P.P. v. P, [1991] 2 A.C. 447; [1991] 3 All E.R. 337, referred to.

(3) McCorkle, In re, 1998 CILR 224, followed.

(4) Makin v. Att.-Gen. (New S. Wales), [1894] A.C. 57; [1891–4] All E.R. Rep. 24, followed.

(5) R. v. AsifUNK(1985), 82 Cr. App. R. 123; [1985] Crim. L.R. 679, referred to.

(6) R. v. Butler, [1999] Crim. L.R. 835, referred to.

(7) R. v. Cohen, The Independent, July 29th, 1992, unreported, applied.

(8) R. v. ColleUNK(1991), 95 Cr. App. R. 67; 156 J.P. 360, followed.

(9) R. v. El-Kurd, [2001] Crim. L.R. 506, considered.

(10) R. v. Greenfield, [1973] 1 W.L.R. 1151; [1973] 3 All E.R. 1050; (1973), 57 Cr. App. R. 849, referred to.

(11) R. v. Griffiths, [1966] 1 Q.B. 589; [1965] 2 All E.R. 448, dicta of Paull J. applied.

(12) R. v. HammersleyUNK(1958), 42 Cr. App. R. 207; [1958] Crim. L.R. 422, applied.

(13) R. v. JonesUNK(1974), 59 Cr. App. R. 120; [1974] I.C.R. 310, applied.

(14) R. v. Keen, English Court of Appeal, November 5th, 1999, Transcript No. 99/5711/12/13/S3, unreported, applied.

(15) R. v. Kellard, [1995] 2 Cr. App. R. 134; [1995] Crim. L.R. 251, applied.

(16) R. v. M., [2000] 1 W.L.R. 421; [2000] 1 All E.R. 148, referred to.

(17) R. v. Pettman, English Court of Appeal, May 2nd, 1985, unreported, applied.

(18) R. v. Powell, 1980–83 CILR 277, referred to.

(19) R. v. Sang, [1980] 2 A.C. 402; [1979] 2 All E.R. 1222, applied.

(20) R. v. Sawoniuk, [2000] 2 Cr. App. R. 220; [2000] Crim. L.R. 506, referred to.

(21) R. v. Simmonds, [1969] 1 Q.B. 685; [1967] 2 All E.R. 399, applied.

(22) Verrier v. D.P.P., [1967] 2 A.C. 195; [1966] 3 All E.R. 568, applied.

Legislation construed:

Proceeds of Criminal Conduct Law (2000 Revision) (Law 15 of 1996, revised 2000), s.2(4): The relevant terms of this sub-section are set out at para. 34.

s.22(1): The relevant terms of this sub-section are set out at para. 38.

s.25(6): ‘In this section-

“money laundering” means doing any act which constitutes an offence under section 22, 23 or 24 . . .’

Criminal Procedure-proceeds of criminal conduct-‘criminal conduct’-evidence-evidence of actual crime required to prove conspiracy to launder proceeds of crime-evidence of suspicious circumstances of receipt inadmissible to show necessary mens rea unless, objectively viewed, raises irresistible inference that crime committed

Criminal Procedure-proceeds of criminal conduct-‘criminal conduct’-evidence-evidence of questionable banking practices pre-dating Proceeds of Criminal Conduct Law, concerning specific accounts, inadmissible as background to bank”s conspiracy to launder money, unless more probative than prejudicial, or charge otherwise incomprehensible-general evidence of systems prone to abuse admissible as to mens rea if not adduced as proof that accounts contained proceeds of crime

Criminal Procedure-proceeds of criminal conduct-‘criminal conduct’-evidence-under Proceeds of Criminal Conduct Law, s.2(4), evidence of crime and bank”s dealings with proceeds occurring entirely before commencement of Law inadmissible to prove bank”s conspiracy to launder money or substantive offence-evidence of crime and dealings with proceeds beginning before and continuing after Law, or payment into and dealings with accounts opened afterwards to retain proceeds of pre-Law crime, admissible

Criminal Law-conspiracy-multiple charges-conspiracy not to be charged if substantive charge effective and sufficient or if may prejudice accused-exception if several substantive charges inadequate to convey overall criminality alleged-if conspiracy appropriately charged and facts support it, may bring substantive charge in case alleged conspirator acquitted-manageability of trial major factor in discretion to sever indictment

Evidence-improperly obtained evidence-discretion of court-relevant evidence not excluded merely because obtained outside scope of search warrant

The defendants were charged with money laundering and conspiring to facilitate the laundering of money.

The defendants were employees of a Cayman bank separately charged with money-laundering offences under the Proceeds of Criminal Conduct Law. It was alleged that contrary to s.22 of the Law the defendants had entered or been concerned in arrangements whereby the retention by others of the proceeds of their criminal conduct was facilitated, knowing or suspecting that those others had been engaged in criminal conduct or benefited from it. In addition it was alleged that between certain dates (beginning with the commencement date of the Law), they had conspired to enter into such arrangements. The conspiracy count was amended to include the element of knowledge or suspicion that others had engaged in or benefited from criminal conduct.

The court was requested to determine certain preliminary issues regarding the form in which the Crown”s case could be put to the jury and the necessary evidence to establish a case to answer.

The Crown submitted that (a) the defendants” agreement rather than the origin of the property was crucial to the conspiracy charge, and since the Crown did not have to prove that they agreed to an arrangement whereby the proceeds of crime were retained, but only that such proceeds would have been retained, had crime occurred, proof of actual money laundering was unnecessary to this charge and it could rely solely on the dealings with the accounts to infer the relevant mens rea; (b) it could adduce background evidence of events pre-dating the Law and before the alleged conspiracy, to show that the defendants had persistently conducted the bank”s business without regard for the possible criminal sources of incoming funds, despite codes of conduct and banking regulators” warnings, and had continued to do so after the commencement of the Law; (c) evidence of criminal activity beginning before and continuing after the commencement of the Law could be relied on in support of the money laundering offences; (d) it would seek to show, by evidence of the defendants” handling of a random selection of accounts, the institutionalized nature of the conspiracy to launder money; (e) it need not prove what type of crime had resulted in the depositing of funds handled by the defendants, provided it showed that the circumstances of their receipt indicated that they were the proceeds of crime; (f) it could rely on events involving different individuals and accounts, before and after the commencement of the Law, as forming part of the single conspiracy alleged; (g) it was the jury”s job to decide whether the fourth defendant had participated in the conspiracy with the controlling minds of the bank as alleged; and (h) the Crown was entitled to adduce evidence from the fourth defendant”s business diary and emails notwithstanding that their seizure might not have been authorized by the relevant warrant.

The defendants submitted that (a) since the conspiracy count indicated that knowledge or suspicion of actual crime was required, the offence was not made out by proof of suspicious circumstances without proof from outside the bank that criminal conduct had in fact occurred; (b) evidence of banking practices which at the relevant time were not criminal, but which the Crown wished to suggest were morally reprehensible, was inadmissible as proof of mens rea for subsequent

conspiracy offences, since it was unfairly prejudicial and contravened the prohibition on retrospective effect; (c) the Crown could not rely, as it might when obtaining an ancillary order, on evidence of criminal activity beginning before the commencement of the Law as proof of either the substantive money laundering offences or the conspiracy charge; (d) if the Crown sought to adduce evidence of the handling of selected accounts as representative of the defendants” general approach, those accounts must be selected in a genuinely random manner; (e) the Crown should not bring a charge of conspiracy to launder the proceeds of an unspecified crime unless it could show an irresistible inference that some indictable offence must have generated the funds in question, and should not combine such a charge with charges of substantive money laundering if that would place an unfair burden on the defence; (f) the Crown was attempting impermissibly to frame as a single conspiracy a series of agreements between different persons in relation to different accounts; (g) the fourth defendant should be severed from the conspiracy count on the ground that unlike the others she was, admittedly, not a ‘controlling mind’ of the bank; and (h) the Crown could not rely on evidence unlawfully seized from the fourth defendant.

Held, making the following rulings:

(1) Since the Crown alleged in the conspiracy count that the defendants had agreed to enter an arrangement which facilitated the retention of the proceeds of criminal conduct, knowing or suspecting that persons had engaged in or benefited from criminal conduct, the alleged offence was not made out unless there was evidence showing that actual criminal activity had occurred. The Crown would have to demonstrate an irresistible inference that indictable crime had occurred in order to prove the necessary mens rea on the part of the defendants. Accordingly, to the extent that the Crown wished to rely on evidence of suspicious circumstances in support of the conspiracy charge, it would be required to confine its case to those accounts in respect of which it could...