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Book Review

INTERNATIONAL TRACING OF ASSETS by MICHAEL ASHE QC and BARRY RIDER, Financial Times and Institute of Advanced Legal Studies

This is a new addition to the ever expanding library of legal works aimed at the practitioner who acts for clients whose business activities involve them in dealing with parties overseas.

The world is getting smaller all the time and the ability to move assets around the globe swiftly and effortlessly makes the disposal of those assets very easy for the fraudster who is determined to frustrate the claims of his creditors. Both in the criminal and civil sphere the law of all leading jurisdictions has changed over the last fifteen years or so in recognition of the desirability of enabling law enforcement agencies and defrauded litigants to meet the tactics employed by wrong-doers. This book (in two very substantial volumes) sets out to consolidate the remedies which are available to persons wishing to trace assets in both the criminal and civil contexts. It is a combination of legal text book and directory of services in a wide range of jurisdictions. It will, I am sure, provide practitioners with a useful starting point when considering what remedies may be available to a client in pursuit of assets overseas.

Volume I contains a series of chapters dealing principally with money laundering and the criminal law, and it is likely that these elements of the publication will be of greater interest to law enforcement agencies or prosecutors than to private practitioners. The early sections provide an introduction to the background to money laundering, with a jurisprudential discussion on the subject generally and the development of legislation in various jurisdictions.

There follow sections which deal with criminal law, financial services law, banking law, matrimonial law, civil law, insolvency law, tax law, corporate law, and administrative law.

Each of these sections is written by a different author who is no doubt a specialist in his field. The sections are user-friendly and take the reader succinctly to the practical elements of each issue. They do not set out to provide a detailed and academic analysis of each area covered (although some sections shine as being particularly learned) and they will undoubtedly provide a useful guide for the practitioner.

Most practitioners in the private sector will be drawn to the section dealing with civil law. There is for example a convenient summary of the principles of the law of tort, dealing in turn with restitution, quasi contract, unjust enrichment, money had and received, mistake, duress, and compulsion. Each of these elements is of course the subject of a plethora of case law and learned academic comment in other works, but this is a convenient means of introducing the subject and of guiding the reader in the right direction.

Although Jersey law on the question of contract has developed in a different manner from English law, I was really quite surprised to find barely a page and a quarter given over to this topic. Equally, when I came to the section on trusts, I was very surprised indeed to see that the entire subject merited barely half a page. In fairness however it is probably the topic of constructive trust which deserved greater attention in a work dealing with asset tracing and I was very impressed with the way in which this was addressed at section D under the heading "Handling Other People’s Money". I will deal with that section a little later.

Quite a large section was given over to insolvency, mainly dealing with the construction of English statutory provisions. The section on tax was much briefer and again dealt almost exclusively with statutory construction.

Corporate law is one of the better sections which is very clearly set out and will be accessible to all readers. A careful analysis of fiduciary duties is made in a logical and digestible format. Practitioners reading this part of the book who have no knowledge of this area of law will have no difficulty picking up the principles and applying them in practice. Many mysteries of this area of law are cogently unravelled and well presented.

There is a concise analysis of anti-money laundering law, with all relevant English statutes analysed and explained.

The most impressive section in my opinion was "D - Handling Other People’s Money". The reader is treated to an explanation of the principles underlying the doctrine of constructive trust. Knowing assistance, actual knowledge and dishonesty are all dealt with in a clear and concise way. There is a review of all of the relevant authorities, gathering together all of the strands of this fast-developing area of law. No stone is left unturned and there is a good analysis of the definition of "dishonesty" in the judgment of Lord Nichols in the Royal Brunei case.

"Knowing receipt" is discussed in the context of Polly Peck, re Montague, El Ajou and Lipkin Gorman, culminating in an interesting formulation of the common-law position on constructive trusts.

Other sections in volume I deal with financial services law, penetrating trusts (a section tantalizingly entitled "Busting Trusts" is referred to but will not be available until a subsequent publication), confiscation and forfeiture of assets, freezing and controlling assets, enforcement of orders, service of process out of jurisdiction, legal and evidentiary aspects of tracing assets and concurrent proceedings. There are two more sections which are worth mentioning.

Section E.2. provides advice about tracing in civil proceedings and is both practical and readily understandable, taking the reader through the full range of relief available from discovery orders to Norwich Pharmacal orders.

The other section worth mentioning is Section I which deals with defences to tracing and related claims. There is a temptation when dealing with tracing orders to assume that one will always be advising the person in pursuit of the alleged wrongdoer. For every plaintiff who wishes to trace assets there will be at least one defendant who will be the subject of the unwanted attentions of the tracing plaintiff. It is not safe to assume that every defendant who is made the subject of a tracing order is a fraudster bent on frustrating the claims of the plaintiff. There will be occasions when the plaintiff’s claims are ill conceived or brought for improper motives and it is absolutely essential that the practitioner is equally well equipped to defend competently on behalf of an innocent defendant, as he or she would be to act on behalf of a wronged plaintiff. Maybe the pendulum has swung too far in this area of law in favour of plaintiffs. Tracing orders should not lightly be deployed since they represent a really serious disruption to the rights of a defendant. If I have any criticism of this publication at all it is that the balance here is lacking and I wonder if more thought should have been devoted to defences to tracing actions. It is all too easy for this equitable jurisdiction of the court to be abused and defendants need to be able to challenge proceedings improperly brought.

Volume II of the publication provides a separate section for each jurisdiction. It is a ready reckoner or directory which will enable the reader to get a helpful snap shot of the state of the law and procedure in any jurisdiction which is being contemplated as a location for a tracing action. This will undoubtedly be of great assistance in the first instance in providing general advice to a client, prior to taking the plunge and instructing a foreign lawyer to give specific and more detailed advice.

The section on Jersey provides some very general information about this jurisdiction, the Court system and the remedies available. The section is adequate but there were a number of areas where I was left slightly confused. For example, I did not understand why the question of ordres provisoires was raised briefly (and then dropped) in a work on tracing of assets.

There is no mention of the important Court of Appeal decision in the Solvalub case which has clarified, and some would say significantly extended, the law of Jersey in relation to the jurisdiction of the Royal Court to deal with assets within Jersey which are being pursued by parties outside the Island. It may well be that at the time of going to press that case law was not available but it will be essential to include it in future editions.

Conclusion

I have used the term "directory" on more than one occasion during the course of this review. This book works because it combines an essential explanation of the relevant legal principles and then goes on to tell the reader how they apply. Law enforcement agencies and prosecutors will, I am sure, find this book tremendously helpful. Practitioners in the private sector will find it a helpful source book or starting point for subsequent more detailed enquiries. If the honorary librarian of the Jersey Law Society is reading this review, I would invite him to acquire a copy of this work for our library.

Michael O’Connell is an advocate of the Royal Court of Jersey and a partner in Messrs. Bailhache Labesse, 14-16 Hill Street, St. Helier, Jersey JE1 1BD