R v Stewart (D)

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 06 October 2003
• Court: Grand Court (Cayman Islands)
• Date: 06 October 2003

Grand Court

(Smellie, C.J.)

R.

and

STEWART, CUNHA, BURGES and DONEGAN

IN THE MATTER OF SHAPIRO

A.R. Mitchell, Q.C. and K. Talbot 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) Euro Bank Corp., In re, 2002 CILR 497, dicta of Henderson, Ag. J. applied.

(2) R.v. Dimsey, [2000] 2 All E.R. 142; [2000] 1 Cr. App. R. (S.) 497; [2000] Crim. L.R. 199, referred to.

(3) R.v. Firetto, [1991] Crim. L.R. 208, referred to.

(4) R. v. Murray, [1982] 1 W.L.R. 475; [1982] 2 All E.R. 225; (1982), 75 Cr. App. R. 58, referred to.

(5) R.v. Selvage, [1982] 1 All E.R. 96; (1981), 73 Cr. App. R. 333, referred to.

(6) R.v. Simpson, [1998] 2 Cr. App. R. (S.) 111; [1998] Crim. L.R. 292, dicta of Dyson J. distinguished.

Legislation construed:

Proceeds of Criminal Conduct Law (2001 Revision) (Law 15 of 1996, revised 2001), s.2(5):

‘References in this Law to property obtained, or to a pecuniary advantage derived, in connection with the commission of an offence include a reference to property obtained or to a pecuniary advantage derived both in that connection and in some other connection.’

s.5(3): ‘For the purposes of this Law, a person benefits from an offence if he obtains property as a result of or in connection with its commission and his benefit is the value of the property so obtained.’

s.22(1): The relevant terms of this sub-section are set out at para. 18.

s.22(2): The relevant terms of this sub-section are set out at para. 20.

s.22(10): The relevant terms of this sub-section are set out at para. 20.

s.24(2): ‘Whoever, knowing or having reasonable grounds to suspect that any property is, or in whole or in part directly or indirectly represents, another person”s proceeds of criminal conduct-

(a) conceals or disguises that property; or

(b) converts or transfers that property or removes it from the jurisdiction,

with intent to assist any person to avoid prosecution for an offence or to avoid the making or enforcement of a confiscation order is guilty of an offence.’

Criminal Procedure-proceeds of criminal conduct-‘proceeds’-money which might in future constitute proceeds of crime not ‘proceeds’-evidence of account containing lawfully-earned money inadmissible to substantiate money-laundering charge even if depositor has intention to defraud and pervert course of justice

Criminal Law-perverting course of justice-conspiracy-no offence of conspiracy to pervert course of justice if no proceedings in being or imminent, nor investigations in progress which might bring about proceedings

Criminal Law-perverting course of justice-attempt-attempt requires intention to pervert course of justice and act which, without more, has that tendency, e.g. swearing false affidavit-relocation of lawful assets to Cayman Islands to avoid future judgment insufficient to constitute attempt

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

The defendants were employees of a bank who were charged under the Proceeds of Criminal Conduct Law (2001 Revision), inter alia, with assisting S to launder the proceeds of his criminal conduct through an account held at the bank and also of a general conspiracy to launder the proceeds of crime allegedly committed by many of the bank”s customers, including S. The Crown sought to adduce evidence of S”s bank account in support of these charges.

The account contained lawful earnings from S”s medical practice in Florida, of which the defendants were aware. S had made a lump sum payment to his ex-wife in recent divorce proceedings in Florida, but acting on his belief that she would continue to have recourse to the courts after the settlement, he had relocated assets to the Cayman Islands, assisted by his parents, to evade any future claims. It had not been ascertained, however, whether S intended to comply with any disclosure order to be made in Florida in relation to those assets, but no further claim had yet been made and there was no evidence that his ex-wife intended to make one.

An earlier ruling in these proceedings established that the threshold test for the admissibility of evidence to substantiate the charges against the defendants was that the accounts contained the proceeds of predicate criminal conduct (reported at 2002 CILR 420). The Crown submitted that although the money in S”s account had been lawfully earned, evidence of it was nevertheless admissible since (a) the money was tainted by the conspiracy to defraud the ex-wife if she brought a further claim and to pervert the course of justice in so doing, which constituted criminal conduct for the purposes of the money-laundering charges; (b) the relocation of the assets to the Cayman Islands, combined with S”s intention to pervert the course of justice in future proceedings, constituted an attempt to pervert the course of justice, of which the defendants must have been aware, and was thus predicate criminal conduct rendering the account admissible; and (c) alternatively, the money held in the account represented a pecuniary advantage obtained by S in connection with the fraudulent conspiracies, and ‘proceeds’ of criminal conduct, in the context of the criminal charges under the PCCL, encompassed the benefit obtained in connection with S”s offence, as well as the actual proceeds.

Held, ruling the evidence inadmissible:

(1) The Crown was not permitted to adduce evidence of S”s account, as it had failed to show that the money in it constituted the proceeds of criminal conduct. The lawful earnings from S”s medical practice could not be so described, as there was no causal link between the money and the alleged conspiracies. Even if it were assumed that S”s lawful earnings could become the proceeds of criminal conduct-if S intended to defraud his ex-wife and to pervert the course of justice in the event that a further claim were brought-evidence of the account was nevertheless inadmissible, as the defendants could not be convicted of money-laundering offences based on the possibility that the money in the account might in the future become the proceeds of criminal conduct (paras. 23–24; paras. 32–34).

(2) Nor did the account contain the proceeds of a conspiracy to pervert the course of justice, as further proceedings had not yet been instituted by the ex-wife in Florida, and there was no evidence that she intended to do so. A finding of conspiracy to pervert the course of justice depended upon such proceedings being in progress or imminent, or that investigations which could or might bring about proceedings were in being and that S”s conduct was in anticipation of and preparatory to misleading the court in those proceedings. There was simply no evidence to support this allegation (para. 27).

(3) Similarly, the Crown had failed to show how the money in the account constituted the proceeds of criminal conduct arising from an attempt by S, in moving his assets out of Florida, to pervert the course of justice. Even if it were established that S had the requisite intention, the mere relocation of the money to the Cayman Islands-with the intention

of perverting the course of justice-did not constitute an attempt to pervert the course of justice unless it also, without more, had a tendency to that effect. The relocation of assets did not, in itself, have such a tendency, which would only have occurred had S sworn a false affidavit or undertaken some analogous unlawful conduct intended to defeat a legitimate claim of his ex-wife in future proceedings (paras. 28–29).

(4) Even if the money in the account was properly to be described as the ‘benefit’ obtained in connection with the conspiracy to defraud the ex-wife and pervert the course of justice, rather than the ‘proceeds’ of such conduct, evidence of the account would nevertheless be inadmissible in the criminal trial. Unlike English law, for the purposes of...