Supreme Court dismisses appeals regarding the timing of bringing a Section 3 order application under the Proceeds of Crime Act.

THE SUPREME COURT

181/2003

Murray C.J.

Denham J.

Hardiman J.

Geoghegan J.

McCracken J.

BETWEEN/

F. McK.

Plaintiff/Respondent

and

A. F.

Defendant/Appellant

and

J.P.M.F.

Defendant

THE SUPREME COURT

No. 206/03

BETWEEN/

F.J. McK.

Plaintiff/Respondent

and

E.H.

Defendant/Appellant

JUDGMENT of Mr. Justice Geoghegan delivered the 23rd day of February 2005

1. These two appeals raise issues which overlap. They were originally listed for hearing and indeed opened before a court comprising

of three judges. When it emerged that attempts were being made to challenge at least one previous judgment of this court, it was

decided that the court should be reconstituted into a court of five judges and the appeals were re-entered for hearing before that

court. The appeals were then heard before the reconstituted court and I am now delivering a judgment which covers both appeals.

2. Having carefully read and considered the several sets of submissions filed by both appellant and respondent in each case, I have

come to the conclusion that I cannot meaningfully address the several grounds of appeal without first dealing with two underlying

matters running through all the written submissions and, indeed, the oral submissions of the respective appellants.

3 The first is that the decision of this court in the case (rather oddly cited in the Irish Reports as F. McK v. A.F (Statement of Claim)

[2002] 1 I.R. 242) was wrong. I delivered a reserved judgment in that case with which Denham J., Murray J. (as he then was) and

Hardiman J. agreed. In it I pointed out that despite the contextually unusual use of the expression “interlocutory order” it was

perfectly clear on any reading of the Proceeds of Crime Act, 1996 that a proceeding under section 3 of that Act was a quite separate

proceeding from a proceeding under section 4. It was wholly wrong to regard a section 4 hearing as in some way the trial of an action

originally commenced by a Section 3 Application. Fennelly J. delivered his own judgment but to the same effect.

4. Although, unfortunately for quite a period the Act was viewed differently in the High Court partly with the encouragement of the

parties and probably because the stage was never reached and, indeed, has not still been reached for considering all the ramifications

and the precise nature of a Section 4 Application, this need not have happened after the 18th October, 2001 when the former Chief

Justice, Keane C.J. delivering the judgment of this court in relation to the constitutionality of the Act of 1996 in Murphy v. G.M.

[2001] 4 I.R. 113 at p. 154 of the report said the following:

“As to the claim that the period of seven years which must elapse before a disposal order is made is unduly oppressive, that

rests on the misconception that the application for a disposal order can in some sense be equated to the trial of an action in

respect of which the legislation earlier provides for interlocutory orders being made. That is clearly not the nature of the

scheme provided for in the Act.”

5. That passage and another passage from a judgment of Keane C.J. in a different case are cited in my judgment referred to above.

In making these references, I am merely pointing out that before ever F. McK v. A.F (Statement of Claim) was decided the scheme of

the Act and in particular the concept that the Section 4 Application was not the trial of an action commenced by a Section 3

Application had been already signposted in earlier judgments.

6. Although as it has turned out and, indeed, could I think have been anticipated, the use of the expression “interlocutory order” in

the 1996 Act given the scheme of the Act was most unfortunate, I do not consider that its use by the Oireachtas or the draftsman

was in any way irrational or incorrect in terms of English. It is perfectly obvious that when a Section 3 Order is made it is

contemplated by everybody that there will be a further order in the future. Either an aggrieved party will bring an application to have

the Section 3 Order discharged and the property thereby unfrozen or, in the course of time, after the seven years have elapsed a

Section 4 Application will be brought. In theory, of course, neither event might happen. But that would not be the probability or the

anticipation. Only in that sense could the s. 3 Order be considered to have some elements which could be considered of an

“interlocutory” nature. However, it is only described as an interlocutory order because, as I have already indicated, of the

unfortunate use of that term in the drafting of the Act. Section 1 of the Act states “‘Interlocutory Order’ means an order under s.

3;” When the Act refers to an “interlocutory order” it means no more and no less than an order pursuant to s. 3, that being the

appellation attached by the Act to it. In any event it cannot be regarded as an interlocutory order in a particular action or

proceedings. Its use is unfortunate because the undiscerning may confuse that term and its specific statutory meaning under the Act

with its use elsewhere in a purely procedural sense as for example in the Rules of the Superior Courts. In short the nature or effect of

an order pursuant to s. 3 can only be discerned by reference to the substance of the provisions of s. 3 itself.

7. Accordingly, I will be approaching the grounds of appeal on the clear basis that F. McK v. A.F is correctly decided.

8. I now want to deal with the second underlying and overreaching point. In both sets of proceedings the general indorsements of

claim on the plenary summonses followed the old procedure now held to be wrong by this court and included as a relief an order under

section 4 as well as an order under section 3. Dr. Forde argues that whether that be right or wrong, once it has been done, then, for

the purposes of a ground of appeal which he makes relating to the Statute of Limitations and to which I will be referring, the

proceedings must be viewed as essentially seeking a Section 4 Order ultimately. I would wholly reject that argument. The reference

to Section 4 must be regarded simply as surplusage. I will, therefore, be approaching both of these appeals on the basis that the

nature of the proceeding before the court is a proceeding seeking a Section 3 Order only i.e. a freezing order.

9. Having disposed of those two matters, I propose now to deal with the relevant grounds of appeal. I will start with the F. case and

explain what exactly is involved in the appeal.

10. The proceedings were commenced by plenary summons issued on the 20th July, 2000. In accordance with the practice which

pertained at the time a notice of motion seeking relief under section 3 of the Proceeds of Crime Act, 1996 was issued at the same

time returnable before the High Court on the 28th July, 2000. That motion was grounded on various affidavits. An appearance was

entered by the appellant on the 26th July, 2000 and on the 28th July, she gave undertakings to the High Court not to dispose of the

property the subject matter of the application until the hearing of the Section 3 Application. The matter then became adjourned from

time to time during which period there was a history of further motions which it is not necessary to detail here. I should mention,

however, that that history included a motion which was appealed to this court which appeal was not in the event proceeded with.

Ultimately, a statement of claim was delivered in April, 2002 and that gave rise to a notice for particulars. Essentially, particulars were

being sought as to the particular crimes any alleged particular proceeds related to. The President of the High Court directed some

further and better particulars on the 19th July, 2002 which were furnished on the 26th July, 2002. However, the appellant then

brought another motion dated the 2nd December, 2002 seeking various reliefs but essentially seeking that the plaintiff’s claim be

struck out. That motion came before the President of the High Court and during the hearing the appellant’s undertaking not to dispose

of the property until the trial of the Section 3 Application was withdrawn. A Section 2 Order was then made. The President, in a

reserved judgment, ultimately refused the reliefs and the appeal which is before this court now is the appeal from that order.

11. The notice of motion of the 2nd December, 2002 had sought the following reliefs.

1. An order dismissing the proceedings.

(i) As no longer disclosing a cause of action because the plaintiff was not making the case that each item of property in

respect of which a Section 3 Order was sought was acquired or funded with the proceeds or the commission of a specific

offence;

(ii) as being statute barred;

(iii) in so far as the scheduled property represents the proceeds of alleged crime committed outside the State and not

contrary to Irish law.

2. An order under Order 19 rule 7 requiring the plaintiff to furnish further and better particulars in response to the appellant’s

notice for particulars of the 8th May, 2002.

3. An order permitting the appellant to withdraw her undertaking.

4. An order declaring “all or part” of the 1996 Act to be repugnant to the Constitution and invalid on a number of grounds

including one relating to the admission of hearsay evidence in proceedings under the Act.

12. As already mentioned, the appellant was released from the undertaking and an order under section 2 was made instead so that

issue was out of the case. The questions as to constitutionality of all or part of the 1996 Act were not dealt with by the President as

the Attorney General had not been brought in under the rules. Counsel for the respondents in the written submissions point out that

that being so no arguments relating to the admission of hearsay evidence were ever canvassed in the High Court. I do not think that

this is in dispute and therefore, I must agree with the view of the respondent that although references to the admissibility of hearsay

evidence are made in the notice of appeal and the appellant’s written submissions no issue on this can be properly regarded as being

before this court.

13. There would appear to be two main issues to be addressed in this appeal. These are:

1. Whether the proceedings disclose a cause of action given that the respondent does not seek to establish that each item of

the property was acquired or funded with the proceeds of the commission of a specific offence and linked with that submission

whether, even if a cause of action is disclosed, particulars have to be furnished on foot of a notice for particulars linking

specific proceeds to a specific offence.

2. Whether the proceedings are statute barred.

14. A third issue on the notice of appeal no longer now arises. In McK v. D [2004] 2 ILRM 419, this court has held that the Proceeds

of Crime Act, 1996 does not apply to proceeds of crimes committed against the laws of another jurisdiction.

15. Returning to the issue of whether in proceedings under the Act the respondent must be able to relate particular proceeds to a

particular crime or at the very least must be able to give particulars making such linkage, I am in complete agreement with the

submissions made on behalf of the respondent both in writing and before this court at the oral hearing to the effect that the Act

would be useless and unworkable if that were so and it cannot have been the intention of the Oireachtas. In one of their sets of

written submissions the respondent has cited a passage from the judgment of the High Court delivered by the learned President of

that court and I agree that that passage sums up the correct position. It is at p. 5 of the unreported judgment and it reads as

follows:

“I am satisfied that it is unnecessary for the plaintiff to rely upon specific crimes or to relate items of property sought to be

attached by an order under section 3 of the Proceeds of Crime Act, 1996 to the commission of specific crimes and the plaintiff

can make a sufficient case by relying on opinion evidence that the property in question constitutes directly or indirectly the

proceeds of crime or that the property was acquired in whole or in part with or in connection with the property that directly

or indirectly constitutes the proceeds of crime pursuant to section 8(1) of the Proceeds of Crime Act, 1996. The Act in

sections 2, 3 and 8 refers to ‘proceeds of crime’: the word ‘crime’ is not preceded by a definite or indefinite article and this

clearly indicates that it is the legislative intention that the Act should have application in circumstances where the plaintiff is

unable to show a relationship between the property alleged to be the proceeds of crime and a particular crime or crimes.”

16. I do not think that I can usefully add anything to what Finnegan P. has said in that passage. I am in complete agreement with it.

17. I now turn to the question of statute bar. Dr. Forde relies mainly though not exclusively on section 11(7) of the Statute of

Limitations, 1957. That subsection reads as follows:

(7) (a) In this subsection ‘penalty’ does not include a fine to which any person is liable on conviction of a criminal offence.

(b) An action to recover any penalty or forfeiture, or sum by way of penalty or forfeiture, recoverable by virtue of any

enactment shall not be brought after the expiration of two years from the date on which the cause of action accrued.”

18. This subsection is similar to a subsection in the English Limitation Act, 1939. Finnegan P. in the High Court following two earlier

decisions of his own rejected the argument of statute bar having regard to what he considered to be the historical antecedents of

the subsection. If it was necessary to interpret the subsection because of some ambiguity this would have been a perfectly legitimate

exercise. It would, however, appear to be unnecessary in this case because, for the reasons already given, the current proceeding is

one merely seeking a freezing order. By no stretch of the imagination could that be anything to do with a “penalty or forfeiture”.

Accordingly, the historic origins of the subsection are not relevant. I am expressing no view, therefore, as to whether the learned

President’s analysis is correct or not. I am simply taking the view that it does not arise. At any rate, this view has already been taken

by the court in McK v. D. cited above. At p. 432 of the report Fennelly J. is quoted as follows:

“It is clear that the court did not say, in Murphy, that a section 3 Order effected a forfeiture. The respondent has sought to

trace the provenance of the section through the Common Law Procedure Acts and to explain their former relevance to claims

by common informers. It is unnecessary to enter into that subject matter. It is sufficient to say that the effect of section 3

is, as stated in Murphy, to freeze the interest of the property owner but not to deprive him of it. It allows the court to make

an order restraining the owner ‘from disposing of or otherwise dealing with the whole or, if appropriate, a specified part of the

property or diminishing its value …’ Such an order is not, in any normal sense, an order of forfeiture. It would do violence to

the language of section 3 to hold that it effects a forfeiture. I would reject this ground of appeal.”

19. Like Fennelly J. in that case, I would reserve my view as to whether section 4 operates as a forfeiture for the purposes of the

Statute of Limitations or not unless and until the point arises for decision. It does not arise in this case as the proceeding now before

the court is an application under section 3.

20. There is, however, a wider argument being made by Dr. Forde on behalf of the appellant in relation to the Statute of Limitations

which I am quite satisfied is misconceived. He appears to take the view that unless a cause of action is expressly, as he puts it

“disapplied” by the Statute of Limitations there is then some provision in the Statute covering it. As counsel for the respondent point

out in their submissions this is a fallacy and there is no such principle in law. Where the statute does “disapply” particular types of

actions as in section 3 and section 7 both heavily relied on by Dr. Forde, it is doing so in circumstances where if it did not do so, the

particular form of proceeding either would be covered by other provisions in the statute or arguably would be so covered. Thus the

revenue claims referred to in section 3(2) might have been thought to be covered by the ordinary provisions for recovery of debt if

there was not this express provision otherwise. Likewise, section 7 makes it clear that the statute is not to apply to any action for

which a period of limitation is fixed by any other limitation enactment or to any action to which a state authority is a party and for

which, if that state authority were a private individual, a period of limitation would be fixed by any other limitation enactment. The

position as to statute bar in relation to section 3 applications is quite simple. There is no statute bar provision in the 1996 Act itself.

There is no section in the Statute of Limitations, 1957 that could conceivably cover them. Accordingly, section 3 applications are not

subject to any statute bar provisions.

21. I turn now to the H. appeal. In so far as the issues on that appeal are the same as the issues in the F. appeal then my opinion on

them is the same as that which I have expressed in the earlier part of this judgment. However, there appear to be one or two

additional issues. An issue as to excess of time elapsing between the making of the Section 2 Order and the ultimate decision to

uphold it has been raised. According to the respondent (and I have no reason not to accept it) this issue was not argued in the court

below and was not the subject of any determination by the learned President of the High Court in his judgment and order of the 12th

April, 2002. It is also stated that notwithstanding the terms of the notice of appeal no issue was raised before the President in

relation to the particularisation of the plaintiff’s claim and this does not seem to be a legitimate issue either to be aired before this

court. The same Statute of Limitations issue has been raised but an additional time issue has also been raised based on section 2(5)

of the 1996 Act. That subsection provides for a twenty-one day time limit for bringing the section 3 applications. The appellant

contends that the application has to be actually moved in open court within the twenty-one days and not merely filed in the office

with a view to a future hearing date. The learned trial judge rejected that argument and I agree. Section 2(5) of the 1996 Act reads

as follows:

“(5) Subject to subsections (3) and (4), an interim order shall continue in force until the expiration of the period of twenty-one

days from the date of its making and shall then lapse unless an application for the making of an interlocutory order in respect

of any of the property concerned is brought during that period and if such an application is brought the interim order shall

lapse upon-

(a) The determination of the application.

(b) The expiration of the ordinary time for bringing an appeal from the determination.

(c) If such an appeal is brought, the determination or abandonment of it or of any further appeal or the expiration of the

ordinary time for brining any further appeal whichever is the latest.”

22. The subsection is by its express terms dealing with the question of how long the interim order continues in force but it is not

necessary to consider the exact scope and effect of the subsection because in this case I am quite satisfied that the application for

the making of the Section 3 Order was “brought” during the statutory twenty-one day period. I do not think that there is any

significant difference between this case and the case of KSK Enterprises Limited v. An Bord Pleanála [1994] 2 I.R. 128 where Flood J.

rejected an argument that the word “made” involved the actual moving of a judicial review application. Dr. Forde tries to make a

relevant distinction between the word “made” and the word “brought” but I believe that no such distinction can be made. Given the

uncertainties of the availability of courts and judges at any given time and the systems of listing, a statute which creates a time limit

for the bringing or making of an application or uses any such cognate words should be interpreted as meaning the date of issuing if

the proceedings require a summons or filing or possibly in some cases filing and serving if what is involved is a motion but unless there

are express words in the statute that require it, it should not be interpreted as meaning the actual moving of the application in open

court. I would, therefore, reject this ground of appeal also.

23. There would seem to be only two other matters to which it is appropriate to refer. First of all, any issues relating to the

separation of proceeds from foreign crimes as distinct from proceeds from domestic crimes must be dealt with if they arise in the High

Court at the hearing of the Section 3 Application.

24. The second matter is one mentioned by Dr. Forde both in the written and in the oral submissions but which does not really arise in

the appeal before this court. He claims that all or some of the property involved in the F. case may be assets in the estate of the

appellant’s late husband and he alleges that no grant of representation has been taken out. The first point to be made about this

argument is that section 3 relates to a person who “is in possession or control”. It is not dealing with ownership as such. But at any

rate any case or argument that can be made in favour of the appellant based on there being no representation to the estate of her

late husband must be made before the High Court at the hearing of the Section 3 Application and this court cannot, at this stage, be

concerned with it.

25. For all the reasons given, I would dismiss both appeals.