Forfeiture of assets

[2020]JRC245

Royal Court

(Samedi)

24 November 2020

IN THE MATTER OF THE REPRESENTATION BY HER MAJESTY’S ATTORNEY GENERAL

AND IN THE MATTER OF A NOTICE OF SUMMARY PROCEDURE PURSUANT TO ARTICLE 10(4) OF THE FORFEITURE OF ASSETS (CIVIL PROCEEDINGS) (JERSEY) LAW 2018.

M. T. Jowitt Q.C., Solicitor General appeared for the Attorney General.

The Respondent was not present or represented.

judgment

the COMMISSIONER:

1.        This is an application by the Attorney General for a forfeiture order under Article 11(4) of the Forfeiture of Assets (Civil Proceedings)(Jersey) Law 2018 (“the Law”), in relation to the entire content of a bank account in the Respondent’s name at the Jersey branch of Standard Chartered Bank. 

2.        Article 11(4) provides that where the Attorney General brings a representation under the summary procedure set out in Article 10 of the Law, the Court shall make a forfeiture order in relation to the specified property unless the Respondent satisfies the Court that the property is not tainted property.  Tainted property is defined in Article 2(1) of the Law in the following terms:

“(1)     For the purposes of this Law, “tainted property” means property (as further defined by paragraphs (2) to (7)) which is or, by the Attorney General or any officer on whom powers are conferred by this Law, is reasonably suspected to be or have been –

(a)     used in, or intended to be used in, unlawful conduct; or

(b)     obtained in the course of, from the proceeds of, or in connection with, unlawful conduct.”

3.        Unlawful conduct is in turn defined in Article 1(1) as conduct:

“(a)     constituting an offence against a law of Jersey; or

(b)     which, if it occurs or has occurred outside Jersey, would have constituted such an offence if occurring in Jersey;”

4.        As can be seen there are two categories of tainted property. 

(i)        Under sub-paragraph (a) there is property “used in, or intended to be used in, unlawful conduct”.  This is not therefore concerned with the proceeds of crime but with property used in connection with crime; what has been referred to as the ‘instrumentalities’ or ‘tools’ of the crime.

(ii)       Under sub-paragraph (b) there is property which constitutes the proceeds of crime.

5.        In this case the Attorney General brought his representation under Article 10 as long ago as December 2018, and the matter has since been before the Royal Court and the Court of Appeal.  In its judgment of 22^nd July, 2019, (AG v Ellis [2019] JRC 141) the Royal Court found, after a contested hearing with the Respondent and his advocate attending, that the account in question, which at the time had some £33,000 in it, was tainted property.  This was on the basis that the Respondent had opened the account in the 1980s and had paid into it money from his legitimate business activities with the intention of evading UK income tax on that income.  The whole account, the Court said, represented tainted property as it had been used in connection with tax evasion.  However, in a subsequent judgment (AG v Ellis [2019] JRC 219) the Royal Court held that it would be disproportionate and therefore contrary to Article 1 Protocol 1 of the ECHR to forfeit the whole account rather than just the proportion which represented the evaded tax.  It also held that the burden lay on the Attorney General to satisfy the Court that what he was seeking by way of forfeiture was proportionate.  In reaching its conclusion the Royal Court placed great weight on the English decision of Ahmed v HMRC [2013] EWHC 2241 (Admin). 

6.        On appeal by the Attorney General, the Court of Appeal (AG v Ellis [2020] JRC 098) reached a different conclusion.  In summary it held as follows:-

(i)        It upheld the Royal Court’s conclusion that the whole balance of the account represented tainted property.  It was not merely the unpaid tax that was tainted property, rather it was the whole balance of the account from time to time, because that account was an instrumentality of tax evasion as it was opened for the purpose of committing tax evasion and was used for that purpose. 

(ii)       The Royal Court had been wrong to place weight on the English decision of Ahmed because that case was concerned with English legislation which, unlike the Law, dealt only with the proceeds of crime and not with the instrumentalities of crime. 

(iii)      The evidential burden in relation to the issue of proportionality lay on the Respondent not the Attorney General.

(iv)      Whilst there may be a working assumption that a forfeiture order will be made in respect of all the tainted property in any particular case, that is not a legal presumption and can be rebutted in any particular case by a respondent adducing suitable evidence to show that it would be disproportionate to forfeit all of the tainted property and therefore a breach of Article 1 Protocol 1 ECHR.  Crow JA went on to say at paragraph 54

“54.    … No doubt, it will be difficult for a respondent to persuade the court not to forfeit the proceeds of crime; but, in cases involving instrumentalities, the question whether all or some of the tainted property should be forfeited (or potentially none of it, depending on the answer to the question identified in para. 47 above) will depend on the particular facts of the case, taking into account for example the degree of proximity between the property and the unlawful conduct in question.”

7.        The Court of Appeal therefore remitted the matter to the Royal Court for consideration, in the light of its judgment, of the issue of proportionality, the Royal Court having already found that the entire account constituted tainted property and this conclusion having been upheld by the Court of Appeal. 

8.        It is in those circumstances that the Solicitor General comes before us this morning seeking a forfeiture order in respect of the whole account.  Despite being notified of this hearing the Respondent has indicated through his advocate that he does not wish to attend or be heard on the application and he was not present or represented this morning. 

9.        As the Court of Appeal made clear, the evidential burden of showing that a forfeiture order would be disproportionate lies on the Respondent.  As he has produced no evidence and made no submissions to us, he has clearly not satisfied that evidential burden.  Nevertheless, we must still consider whether it would be disproportionate and therefore a breach of Article 1, Protocol 1 to make a forfeiture order in respect of the whole account rather than just the proportion representing the tax which has been evaded.

10.      We are satisfied that it would not be disproportionate to forfeit the whole account for the following reasons:-

(i)        As the Respondent has not produced any evidence, it is not in fact possible to know what proportion of the account represents evaded tax and what proportion represents legitimate earnings which would remain after all outstanding tax and penalties were settled.

(ii)       In any event the account was opened and used in its entirety as a tool or instrumentality to commit tax evasion and to retain the benefits of that tax evasion.  The account had no other purpose and none of the money in it was banked for a legitimate purpose. 

(iii)      There is a legitimate public interest in discouraging the use of bank accounts in Jersey for tax evasion as opposed to being used for legitimate tax planning.

11.      For these reasons we regard the forfeiture of the entire account as being proportionate.  It would not constitute a breach of Article 1, Protocol 1 and accordingly we so order. 

Authorities

Forfeiture of Assets (Civil Proceedings)(Jersey) Law 2018. 

AG v Ellis [2019] JRC 141. 

AG v Ellis [2019] JRC 219. 

Ahmed v HMRC [2013] EWHC 2241 (Admin)

AG v Ellis [2020] JRC 098.