R v Tibbetts

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 20 June 2006
• Court: Grand Court (Cayman Islands)
• Date: 20 June 2006

Grand Court

(Smellie, C.J.)

R.

and

TIBBETTS

Ms. C. Richards, Solicitor General, for the Crown;

S. Dickson for the defendant.

Cases cited:

(1) Andrews, In re, [1999] 1 W.L.R. 1236; [1999] 2 All E.R. 751; [1999] 2 BCLC 442, applied.

(2) Black-Clawson Intl. Ltd. v. Papierwerke Waldhof-Aschaffenburg A.G., [1975] A.C. 591; [1975] 1 All E.R. 810, dictum of Lord Simon of Glaisdale applied.

(3) Euro Bank Corp., In re, 2001 CILR 405, applied.

(4) Fraser (G.), In re, 2006 CILR 36, applied.

(5) Hughes v. Customs & Excise Commrs., [2003] 1 W.L.R. 177; [2002] 4 All E.R. 633; [2002] EWCA Civ. 734, applied.

(6) Maunsell v. Olins, [1975] A.C. 373; [1975] 1 All E.R. 16, observations of Lord Simon of Glaisdale applied.

(7) R. v. Glatt, [2006] EWCA Crim. 605, distinguished.

(8) R. v. May, [2005] 1 W.L.R. 2902; [2005] 3 All E.R. 523; [2005] 2 Cr. App. R. (S.) 67; [2005] EWCA Crim. 97, dictum of Keene, L.J. applied.

Legislation construed:

Proceeds of Criminal Conduct Law (2001 Revision), s.3: The relevant terms of this section are set out at para. 23.

s.5: The relevant terms of this section are set out at para. 24.

s.6(4): The relevant terms of this sub-section are set out at para. 28.

Criminal Procedure-proceeds of criminal conduct-confiscation order-minimum amount-in Proceeds of Criminal Conduct Law (2001 Revision), ‘minimum amount’ above which defendant to have benefited from offence for making of order under s.5(2) deemed to be US$10,000

Criminal Procedure-proceeds of criminal conduct-confiscation order-maximum amount of order is benefit obtained from offence, i.e. all property coming within control of defendant as result-by Proceeds of Criminal Conduct Law (2001 Revision), s.5(5) court may order confiscation of value of realisable assets if less-may reduce order further by confiscating only defendant”s actual net benefit but no allowance given for legal expenses for criminal and civil proceedings in connection with offence

The defendant was charged in the Grand Court with money laundering.

The defendant”s management company controlled several companies through which investors” money was channelled for the benefit of the principal offenders, who were operating a fraudulent investment scheme. He was convicted on two counts of money laundering and sentenced to three years” imprisonment. More than US$81m. had been obtained from investors and put through the company accounts, but it was accepted that only US$18.7m. of this had been during the two- to three-month period in which the defendant had knowledge of the scheme. The Crown applied for a confiscation order under the Proceeds of Criminal Conduct Law (‘PCCL’), s.5(2), which provided that an order could be made when an offender had benefited from an offence by more then the ‘minimum amount,’ though this was not defined in the statute. Section 3(3) provided that the amount was not to exceed the defendant”s realizable assets, less any prior obligations at the time of realization.

The Crown submitted that (a) the court should adopt a purposive construction of the PCCL to rectify the manifest error that the ‘minimum amount,’ above which a confiscation order could be made, was not defined; (b) the minimum amount, as expressed in an earlier decision of the Grand Court, was US$10,000 and the legislature must be deemed to have accepted this meaning, since it had failed to correct it when it amended the statute on subsequent occasions; (c) the appropriate sum for confiscation was US$727,898, i.e. the defendant”s total realizable assets, since, by s.5(5) of the PCCL, the sum to be confiscated was the lesser of

either this amount or the benefit obtained, which was £18.7m., being the total amount channelled through the companies that he controlled; and (d) the defendant”s benefit from the offences included two payments totalling US$78,866 made by him to his own company, as this was the source of his income, and to another company, since it had been accepted in the criminal trial that that payment had benefited him.

The defendant submitted that (a) the court could not order any confiscation because the minimum amount was not defined in the legislation; (b) as the legislature had failed to remedy this omission, it must be taken to have disregarded the earlier decision of the Grand Court, which was not, in any event, conclusive on the statutory meaning; alternatively, (c) the court should confiscate only the defendant”s actual profits retained as a result of the offences, calculated at US$143,372, not his benefit as widely defined; (d) this should be reduced by US$78,866 in respect of the amounts paid to his company and to the other company, with which he was not associated; and (e) in any event, no confiscation order should be made because as the defendant”s expenses, including receivership fees and the costs of defending the criminal charges, had exceeded his gains, he had received no net benefit and thus any order made would not have the desired deterrent effect but would simply enrich the Crown.

Held, making a confiscation order in the amount of US$143,372:

(1) The ‘minimum amount’ in the Proceeds of Criminal Conduct Law, s.5(2)(b)(i) was to be construed as US$10,000. Even though the statute provided no definition, the court had authority to remedy the omission, provided it was able to ascertain the legislative intention, as it had done on a previous occasion. It could certainly not conclude that the legislation had no meaning or could not be construed. The legislature must be taken to be aware of the current state of the law, including judicial pronouncements, and therefore it must have accepted the meaning given in the earlier decision, since it had subsequently amended the statute without departing from that construction when it had the opportunity to do so (para. 10; para. 15; para. 21).

(2) A confiscation order would be made because the defendant had realizable assets and had benefited by more than the minimum amount. His maximum benefit obtained from the offences included all property coming within his control as a result of them, and not just his actual profit or net benefit. His benefit was therefore US$18.7m., being the amount channelled through his company”s accounts for the purposes of the fraudulent scheme. However, although he had realizable assets of US$727,898, the court in the exercise of its discretion was entitled to give effect to the legislative purpose of confiscation by limiting the order to his actual criminal profit and the amount by which it had been shown he had genuinely benefited, which was US$143,372. No allowance would be made for his payment of US$78,866 to his own company since this was money from which he had benefited indirectly. Nor would his legal expenses and receivership fees be deducted as these were the result of his

having become involved in the criminal scheme and he was deemed to be personally responsible for the costs of the criminal and civil proceedings against him (para. 52; paras. 57–58).

1 SMELLIE, C.J.: The defendant, Mr. Tibbetts, was convicted in proceedings before this court by a jury on two counts of money laundering in respect of his involvement in a fraudulent scheme which became known as ‘Cash 4 Titles.’ He was sentenced on February 28th, 2005 to three years” imprisonment concurrent on each count.

2 This is the Crown”s application for a confiscation order, under the Proceeds of Criminal Conduct Law (‘PCCL’), against the known assets of Mr. Tibbetts in respect of his benefit derived from the offences.

3 A preliminary objection has been taken by Mr. Dickson on behalf of the defendant. It is that as the PCCL provides in s.5 that a confiscation order can only be made if the court is satisfied that the defendant has benefited more than the ‘minimum amount’ and, as that expression is not defined in the PCCL, the court may not proceed to order the confiscation of any amount. However startling a proposition this may seem, it is one which must be addressed.

4 In a case involving the enforcement of a foreign confiscation order, this problem would not now arise because the PCCL was amended in 2005 to define ‘minimum amount’ for those purposes. The problem is therefore one that arises only in respect of domestic cases such as the present.

5 The important objective of the statutory regime is now a matter of settled law: it is primarily to deprive the offender of the benefits of his crime as a deterrent to the further commission of crime by the offender...