Supreme Court dismisses appeal requiring State to give damages undertaking for interim asset freezing orders in international criminal proceedings.

Appeal No. 147/07

THE SUPREME COURT

Hardiman J.

Fennelly J.

Finnegan J.

O’Donnell J.

McKechnie J.

IN THE MATTER OF THE CRIMINAL JUSTICE ACT, 1994 SECTION 46(6)

IN THE MATTER OF THE CRIMINAL JUSTICE ACT, 1994 (SECTION 46(6))REGULATIONS 1996

IN THE MATTER OF CRIMINAL PROCEDINGS PENDING BEFORE THE COURTS OF THE UNITED KINGDOM AGAINST BERNADETTE

MARGARET ROSE DEVINE

IN THE MATTER OF A REQUEST SENT BY THE HOME OFFICE ON BEHALF OF THE SOLICITORS OFFICE OF HM CUSTOMS AND

EXCISE.

BETWEEN:

THE MINISTER FOR JUSTICE EQUALITY AND LAW REFORM

Appellant/Applicant

-and-

BERNADETTE MARGARET ROSE DEVINE

Respondent

JUDGMENT of Mr. Justice Fennelly delivered the 26th day of January 2012.

1. An applicant for an interim injunction is, so far as I am aware, invariably required, as a condition of the grant of the relief, to give

to the court an undertaking as to damages. In the present appeal, the appellant invites this Court to hold that the State should not

be required to give an undertaking, when it asks the court to restrain dealing with assets claimed to be the fruits of crime. It is an

example of international mutual assistance. The appellant relies on developments of the law in England, in particular, some decisions

of the House of Lords. The High Court judge described the issue as “a small point of practice but a large point of principle.”

2. In the instant case, the appellant, whom I will describe as the Minister, is performing his part of an international system for mutual

assistance in the enforcement of criminal sanctions. The respondent has been investigated in England for involvement in large-scale

VAT fraud. She has been convicted and has served sentences of imprisonment in England. The English courts have made orders for

the seizure of her properties, including properties in Ireland. The High Court has made consequential orders restraining dealing with the

properties.

3. The question raised relates exclusively to the provisional or interim stage of the proceedings: should the High Court have required

the Minister to give an undertaking as to damages at the ex parte stage, i.e., when granting an interim restraining order?

4. First, it is necessary to describe the legislative regime.

The Legislation

5. The legislation in force at the relevant time was Part VII of the Criminal Justice Act, 1994 and, in particular, the Criminal Justice

Act 1994 (s.46)(6) Regulations, 1996 (S.I. No. 343/1996) (“the Regulations”), made thereunder. The Regulations were made pursuant

to section 46(6) of the Act of 1994, which was contained in Part VII of the Act.

6. The Act of 1994 was repealed by section 10 of the Criminal Justice (Mutual Assistance) Act, 1994, which had the effect of

revoking the Regulations. However, the Act of 1994 and the Regulations were in force when the High Court (Quirke J) granted the

interim restraining order which is under consideration on this appeal.

7. The long title to the Act of 1994 describes it as “an act to make provision for the recovery of the proceeds of drug trafficking and

other offences, to create an offence of money laundering, to make provision for international co-operation in respect of certain

criminal law enforcement procedures and for forfeiture of property used in the commission of crime and to provide for related

matters.” The first part of that title refers to domestic enforcement. This case is concerned with the latter part dealing with

international co-operation in criminal law enforcement.

8. The Act of 1994 provides for the making of orders confiscating property, (called “confiscation orders”) firstly, where a person has

benefited from domestic drug trafficking or other offences (Parts II and III) and, secondly, by way of international co-operation,

where orders of confiscation have been made in countries designated under the legislation and an application is made to the High

Court by or on behalf of the government of such a designated country by way of request for international mutual assistance. The

application is for what the Act calls “a confiscation co-operation order.” (Part VII). Insofar as confiscation co-operation orders are

concerned, the State, by this legislation, was giving effect to the European Convention on Mutual Assistance in Criminal Matters done

at Strasbourg on 20 April 1959 and amending international conventions. The Act contains, for each type of order, provision for the

making by the High Court of provisional restraint orders prohibiting any person from dealing with property shown to be liable to be

made the subject of a confiscation order. Part VII and the Regulations use the model provided for domestic restraint orders and apply

it with necessary modification to the case of external confiscation orders.

9. Section 46(1) of the Act of 1994 provides that the Government may by order designate countries as countries in whose case

orders described as “confiscation co-operation orders” may be made for the confiscation, in accordance with the law of the State, of

property which is liable to confiscation in accordance with “external confiscation orders,” made by a court in the designated country

for the purpose of recovering from a person the benefits of drug trafficking or property or its value obtained as a result of other crime.

10. Section 46(2) provides:

“If an application is made to the High Court by or on behalf of the government of a country designated under subsection (1) of this

section (referred to in this section as a “designated country”) and with the consent of the Minister for the making of a confiscation

co-operation order pursuant to an external confiscation order made by a court in that country, and the High Court is satisfied that

the conditions specified in subsection (3) of this section are satisfied, the court may make a confiscation co-operation order.”

11. The specified conditions are that the “external confiscation order” be in force in the designated country and not subject to

appeal, that the person had received due notice of the proceedings and that the making of a “confiscation co-operation order

corresponding to the external confiscation order would not be contrary to the interests of justice.”

12. By virtue of section 46(5) a confiscation co-operation order is to have effect corresponding to a domestic confiscation order

which is made pursuant to section 4 (drug trafficking offences) or section 9 (other offences). That then is the substantive and, in

effect, the final order confiscating property from a person shown to have property in the State which is shown to be the proceeds

directly or indirectly of criminal activity in a designated country. This proposition is qualified only insofar as section 46(7) provides

that the “High Court shall revoke the confiscation co-operation order if it appears to the court that the external confiscation order

has been satisfied in accordance with the law of the country in which it was made.” That does not affect the definitive character of

the confiscation co-operation order, when made. That is the substantive “confiscation co-operation order.” The present case

concerns the provisional stage.

13. The important provision for the purpose of the present case is section 46(6), which provides, inter alia, for the making of

provisional restraint orders. Part VII, unlike Parts II and III, contains no provision for the grant of provisional measures. It achieves

that result by the unusual mechanism of the making of regulations adapting those provisions of Part III of the Act relating to domestic

enforcement (particularly sections 23 and 24) to the case of confiscation co-operation orders made under section 46(2). To that end,

section 46(6) provides as follows:

“The Government may by regulations make such modifications of this Act as appear to it to be necessary or expedient for the purpose

of adapting to confiscation co-operation orders any of the provisions of this Act relating to confiscation orders, in particular in relation

to enforcement and the taking of provisional measures to prevent any dealing in, or transfer or disposal of, property that may be liable

to confiscation in accordance with any confiscation co-operation order that may be made.”

14. Sections 23 and 24 of the Act of 1994 deal with domestic restraint orders. Under section 24(4)(b), a restraint order “may be

made only on an application by the Director of Public Prosecutions, which may be made ex parte and otherwise than in public”. These

sections then reappear but in a modified format in the Regulations with the object of rendering the system of restraint applicable to

the case of international mutual assistance.

15. Regulation 3 of the Regulations provided:

“In so far as it relates to confiscation co-operation orders, the Act of 1994 is hereby modified, for the purpose of adapting it to such

orders, to the extent that sections 2 and 3 and Part III of that Act shall be read as set out in the Schedule to these Regulations.”

16. Pursuant to the provisions of the adapted versions of sections 23 and 24, set out in the schedule, the High Court had power,

exercisable at the time relevant to the present proceedings, to issue a restraint order in support of an external confiscation order. So

adapted by the Regulations, section 24 read as follows:-

(1) “The High Court may by order (in this Act referred to as a “restraint order”) prohibit any person from dealing with any

realisable property, subject to such conditions and exceptions as may be specified in that order.

(2) Without prejudice to the generality of subsection (1) of this section, a restraint order may make such provision as the

court thinks fit for living expenses and legal expenses.

(3)A restraint order may apply:-

(a)where an application under subsection (4) of this section relates to a confiscation cooperation order made in

respect of specified property, to property which is specified in that order, and

(b) in any other case-

(i) to all realisable property held by a specified person, whether the property is described in the order or not, and

(ii) to realisable property held by a specified person, being property transferred to him after the making of the order.

(4)A restraint order –

(a) may be made on an application by or on behalf of the Government of a designated country, with the consent off

the Minister which may be made ex parte and otherwise than in public, and

(b) may provide for service on, or the provision of notice to, persons affected by, the order in such manner as the

court may direct.

(5) A restraint order-

(a) may be discharged or varied in relation to any property and

(b) shall be discharged on the conclusion of the proceedings or of the application in question

(6) An application for the discharge or variation of a restraint order may be made by any person affected by it.”

17. The conditions which were required to be established before the High Court could exercise the powers conferred by section 24

were set out in section 23(1), which provided:

“(1) The powers conferred on the High Court by section 24 of this Act shall be exercisable where-

(a) (i) proceedings have been instituted against the defendant in a designated country,

(ii) the proceedings have not been concluded, and

(iii) either a confiscation co-operation order has been made in connection with the proceedings or it appears to the

court that there are reasonable grounds for thinking that such an order may be made in connection with the

proceedings,

or

(b) (i) the court is satisfied that proceedings are to be instituted against a person in a designated country, and

(ii) it appears to the court that there are reasonable grounds for thinking that an application may be made for a

confiscation co-operation order in connection with the proceedings.”

18. O’Donnell J, in the judgment he is about to deliver, raises an important question regarding compensation provisions. He draws

attention to section 16 of the Proceeds of Crime Act 1996, which provides a limited scheme of compensation in the event of the

discharge or lapse of interim or interlocutory orders made under that legislation. More materially to the present appeal, he refers to

section 65 of the Act of 1994. That section provided:

65.—(1) If proceedings are instituted against a person for a drug trafficking offence or offences or for an offence or offences in

respect of which a confiscation order might be made under section 9 of this Act and either—

(a) the proceedings do not result in his conviction for any such offence, or

(b) where he is convicted of one or more such offences—

(i) the conviction or convictions concerned are quashed, or

(ii) he is pardoned by the President in respect of the conviction or convictions concerned,

the High Court may, on an application by a person who held property which was realisable property, order

compensation to be paid to the applicant if, having regard to all the circumstances, it considers it appropriate to

make such an order.

(2) The court shall not order compensation to be paid in any case under this section unless the court is satisfied—

(a) that there has been some serious default on the part of a person concerned in the investigation or prosecution

of the offence concerned, and

(b) that the applicant has suffered loss in consequence of anything done in relation to the property by or in

pursuance of an order under this Act.

(3) The court shall not order compensation to be paid under this section in any case where it appears to the court that

the proceedings would have been instituted or continued even if the serious default had not occurred.

(4) The court may order compensation to be paid under this section to a person with an interest in property affected by a

confiscation order or a restraint order notwithstanding that he is not the person who was the subject of the relevant

investigation or prosecution.

(5) The compensation to be paid under this section shall be such amount as the court thinks just in all the circumstances

of the case.

19. As O’Donnell J points out, this scheme of compensation “is significantly more limited than an undertaking to pay compensation for

any and all loss suffered as a result of an order which is subsequently set aside or lapses.” It does not seem, on the face of it, that

section 65 applies in the case of a restraint order made under Part VII. The essential pre-condition to the section’s application is that

there shall have been a failure of a prosecution for drug trafficking or other offences mentioned in Part II of the Act. That can only

refer to domestic prosecutions. Even if that obstacle can be overcome, sub-section 4 refers to persons affected by a “confiscation

order or a restraint order…” At first sight, at any rate, that can mean only orders made under Part II. Part VII refers, not to

“confiscation orders” but to “confiscation co-operation orders.” It contains no reference to “restraint orders.” Perhaps, the meaning

of the latter term could be extended to that term as it is used in the Regulations. However, all that seems far-fetched and difficult

and we have had no sufficient argument on the point to enable us to reach a useful conclusion. I will return later to the possible

significance of section 65.

20. By an order made on 26th November 1996, the United Kingdom of Great Britain and Northern Ireland was named as a designated

country for the purposes of the Act of 1994. On 1st October 2004, an officer of the Home Office transmitted to the Minister as

Central Authority for Mutual Assistance a request on behalf of the Commissioners of Customs and Excise of the United Kingdom (“the

Commissioners”) for assistance in relation to restraining and confiscating the assets of the Respondent as a result of her conviction

by the Crown Court sitting at Middlesex Guildhall on 5th and 6th July 2001 of offences of fraudulent evasion of value added tax.

21. Commencing in 1997 the Commissioners conducted an investigation into the business and trading activities of the Respondent and

others, based on suspected involvement in a scheme to defraud them of large sums for value-added tax.

22. Pending her criminal trial the Respondent was the subject of a restraint order under United Kingdom legislation. The order, inter

alia, prohibited her from in any way disposing of or dealing with or diminishing the value of any of her assets or assets of companies

with which she was associated whether within or outside England. These included specified assets in this jurisdiction, which, with

other assets discovered later, in due course formed the subject of the application made to the High Court in the present proceedings.

23. The Respondent was charged with five offences of fraudulent evasion of value added tax, contrary to provisions of the United

Kingdom Value Added Tax Act. She was tried before the Middlesex Crown Court between May and July 2001. She was convicted by

the jury on all five counts and sentenced to six years imprisonment. She was released from prison in April 2003.

24. In August 2001 confiscation proceedings were commenced in order to determine whether the respondent had benefited from her

criminal conduct and, if so, the amount of any such benefit. On 5th August 2003 the Middlesex Crown Court made a determination

that the Respondent had benefited from the fraudulent scheme to the value of STG£18,759,430.00. A Confiscation Order was made

against the Respondent in the sum of STG£1,446,368.68, the amount which represented what, in the view of the court, might be

realised even though less than the value of the respondent’s benefit. In default of payment of that amount by 31st August 2004, the

court ordered that the respondent serve a five year term of imprisonment.

25. The Respondent lodged an appeal against her conviction and the Confiscation Order which was refused by the single judge on 9th

July 2004. Thereafter she lodged an appeal against that refusal. She was refused leave to appeal her conviction on 27th January

2005. Her application for leave to appeal the Confiscation order was adjourned pending the outcome of an appeal then pending before

the House of Lords. On 21st December 2005 leave to appeal the Confiscation order was refused by the Court of Appeal and the

Respondent notified the U.K. authorities of her intention to abandon her appeal. Consequently, as of December 2005, the confiscation

order had become final and beyond being the subject of any further appeal.

26. The United Kingdom authorities proceeded to execute the confiscation order insofar as it related to assets within that jurisdiction

and on 26th July 2007 an Enforcement Receiver who had been appointed for that purpose paid the sum of STG£317,000 into Court.

The Respondent failed to attend a number of subsequent enforcement hearings as a result of which, on the 2nd October 2007, the

default sentence of the confiscation order was activated and the Respondent served some two and a half years of a five year

sentence.

Proceedings in the High Court

27. In these circumstances, the United Kingdom sought the assistance of the authorities in this jurisdiction in accordance with the

provisions Part VII of the Act of 1994. The Minister, acting on behalf of the government of the United Kingdom, applied for a restraint

order, in support of the confiscation order made in the United Kingdom Order referred to above, in relation to the properties in Ireland

which were covered by that order. In the affidavit grounding the application, it was stated that: (a) there were reasonable grounds

for the court to be of the opinion that a confiscation co-operation would be made and that (b) it was anticipated that, subsequent to

a restraint order being made, a request would be made by the Government of the United Kingdom for such an order in this State.

28. The application was made ex-parte on 7th March 2005 in accordance with the provisions of section 24(4) of the regulations

before Quirke J. No undertaking as to damages was offered. Quirke J granted an interim restraint order restraining any person having

notice of the order until after 18th April 2005 or until further order from disposing or dealing with or diminishing the value of the

Respondent’s property as detailed in a list of specified properties paragraph (a) to (l). The listed properties included a number of bank

accounts, land holdings and assets of companies. The Minister was given liberty to serve notice of motion for an interlocutory

injunction returnable for 18th April 2005. No undertaking as to damages was sought from the Minister.

29. On 15th December 2005 the Respondent issued a notice of motion seeking an order setting aside what the notice of motion

described as “the Interlocutory Restraint Order granted by Mr Justice Quirke on 7th Day of March 2005.” It was in fact an interim

order. The affidavit grounding the application was brief, not to say laconic. It said merely that the order of Quirke J had been made

without jurisdiction “in that it did so without first requiring or receiving from the [Minister] any undertaking as to damages……”

30. That was the single and very narrow issue considered by O’Sullivan J. In his judgment, he took as his starting point the fact that

the parties had accepted the propositions laid down in a passage from Bean on Injunctions (8th ed, 2004) as follows:

“The court has a discretion to grant an interim injunction without requiring an undertaking in damages. There are a number of types of

case in which an undertaking is generally dispensed with. They include:

(a) Matrimonial and domestic proceedings…

(b) Where the Crown applies for an injunction to enforce what is prima facie the law of the land (Hoffman-La Roche

and Co. A.G. v. Secretary of State for Trade and Industry [1975] A.C. 295; Director General of Fair Trading v. Toby

Ward Limited [1989] Q.B. 1: if the Crown is seeking to enforce its proprietary rights this rule does not apply…

(c) Where a local authority or other public authority seeks to enforce what is prima facie the law of the land

(Kirklees Metropolitan Borough Council v. Wickes Building Supplies Ltd [1993] A.C. 227;

(d) where the financial services authority seeks an injunction…”

31. O'Sullivan J emphasised that his conclusions concerned only the question of an undertaking at the ex parte stage. He said:

“In the present context I think a court should lend particular weight to the obligations of this State under an international convention

and equally should be particularly conscious of the pressing and increasing need for prompt, comprehensive and effective international

cooperation in respect of criminal activities such as may underlie the respondent’s prosecution in the United Kingdom or prosecutions

similar to it. Very great weight should, I think, be given to these considerations.

“But does the need for urgent if not instantaneous comprehensive and definitive response on occasion mean that the balanced

guarantees of a seventy year old Constitution must yield in toto to these perfectly legitimate and pressing concerns? I do not think

so: the very need for swift and assertive response (in some cases it may even be in secret,) reinforces rather than the reverse the

countervailing need that the courts have due regard to the unrepresented interests of the parties affected by such orders. The

court, in my view, should be free where appropriate to make orders with such draconian effect without the burden of conducting even

a preliminary enquiry into the current and possibly changing circumstances of the party or parties to be affected with a view to

identifying the scope of potential damage to them. The tried and trusted method of achieving the appropriate balance has been an

insistence that an undertaking as to damages should be given to the courts and not, be it noted, to the affected party. It is the

court that insists on the undertaking to ensure as best it can that its own procedures be marked with the characteristics of fairness

and balance.”

32. The learned judge balanced his earlier reference to the weight that should be accorded to the performance by the State of its

international obligations by saying that “great weight should also be given to the constitutional and conventional guarantee in relation

to property rights and more so in my opinion, to the principle of equality before the court." He concluded that the court, when

granting ex parte relief, “ought at the very least to have its attention drawn to the issue of an undertaking as to damages” and

added that “it ought to require such an undertaking in the absence of an adequate explanation as to why it should not be given.” He

decided that the court had had statutory jurisdiction to make the order and that the failure to furnish an undertaking as to damages

did not invalidate it. Having heard counsel, he made an order extending the order which had been made ex parte by Quirke J. At his

insistence, the Minister, having expressed an intention to serve a Notice of Appeal, gave what has been described as a “limited

undertaking as to damages to the Respondent pending the determination of the Appeal…”

Arguments on the appeal

33. The Minister submitted that the practice of requiring an undertaking as to damages in general litigation had no relevance to an

application such as was provided for under the statutory scheme concerning international cooperation involved in this case.

Alternatively, the requirement could be dispensed with. The submission was founded on two bases: - (a) the nature of the

proceedings and (b) the fact that the applicant is the State enforcing what is essentially the law of the land. Counsel for the Minister

referred to evolving case-law from the United Kingdom, to which I will refer. Counsel accepted that the State would normally be

required to provide an undertaking if it was seeking an injunction aimed at enforcing or vindicating proprietary rights of the State (jus

privatum). The central point of the submission was the repeated one that, in a case such as the present, the State is seeking to

ensure compliance with the law of the land. That principle, it was contended, extended by analogy to the performance by the Minister

of his functions under the Act of 1994. In that case, the Minister is ensuring that Ireland complies with the international and

Convention obligations to which it has signed up, a public-law function.

34. The Minister also submitted that the rationale underpinning the restraint order granted by the courts of the United Kingdom was

that the Respondent had benefited from participation in extensive organised criminal conduct, the proceeds of which are to be found

in this jurisdiction. Thus, it was submitted that it was embraced by the terms of Irish legislation related to money laundering, in

particular section 31(1) of the Act of 1994, as substituted by section 21 of the Criminal Justice (Theft and Fraud Offences) Act,

2001). As so amended, the provision reads:

“(1) A person is guilty of money laundering if, knowing or believing that property is or represents the proceeds of criminal

conduct or being reckless as to whether it is or represents such proceeds, the person, without lawful authority or excuse

(the proof of which shall lie on him or her)-

(a) converts, transfers or handles the property, or removes it from the State, with the intention of –

(i) concealing or disguising its true nature, source, location, disposition, movement or ownership or any rights with

respect to it, or

(ii) assisting another person to avoid prosecution for the criminal conduct concerned, or

(iii) avoiding the making of a confiscation order or a confiscation co-operation order (within the meaning of section

46 of this Act) or frustrating its enforcement against that person or another person

(b) conceals or disguises its true nature, source, location, disposition, movement or ownership or any rights with

respect to it, or

(c) acquires, possesses or uses the property.”

35. With particular reference to paragraph (iii) of section 21(1), the Minister submitted that the prohibition on handling property in any

way which would have the effect of removing it from the scope of a confiscation cooperation order meant that, in the absence of the

restraint order, it would amount to a breach of the criminal law of this jurisdiction, for the Respondent to attempt to deal in her

property.

36. Counsel for the respondent submitted that in virtually all cases where an interlocutory injunction is given, or an undertaking to the

court is accepted in lieu, the person obtaining the benefit is required to give an undertaking as to damages. Such undertaking is, in

effect, the price of obtaining the injunction.

37. Counsel submitted that the exception for the Crown was developed in the context of Crown immunity from suit, even in matters of

contract and that, over the past century, there has been a continuous cutting back of the enormous litigation advantages and

immunities enjoyed by States and public authorities. The State claim, in this case, is that it should enjoy virtual impunity to secure

interim and interlocutory statutory injunctions that can cause individuals enormous loss and damage to their property, professional

lives and businesses.

38. That would amount, it was said, to a disproportionate interference with an individual’s constitutional right to private property.

Counsel claims that the Minister does not even address the question of balance or proportionality with regard to undertakings

generally in the broad context of respect for human rights.

39. Counsel submitted, as had been submitted in the High Court, that to dispense with the provision by the State of an undertaking

as to damages would amount to an unfair and unequal treatment. It would treat the State differently from an equivalent private

litigant.

40. It is contended that the requirement of an undertaking as to damages would in no way seriously inhibit the State from performing

such obligations as it may have undertaken in international law. It is suggested that the Minister could seek an indemnity against any

liability imposed as a result of the giving of an undertaking.

Conclusion

41. There cannot, I think, be any room for doubt about the general rule. It is that a party who seeks the aid of the court by way of

injunction restraining another person from acting in any particular specified way is required, as a condition of the grant of any

injunction, to undertake to the court that he or she would be liable for any damage or loss sustained by the person so restrained, if it

should transpire that the injunction should not have been granted. The undertaking is an integral part of the process of seeking to

maintain the status quo, of maintaining a just balance. In this appeal, we are speaking of the interim or ex parte stage. The applicant

is, of course, bound by an obligation to act with the utmost good faith and to inform the court of any material fact and in particular

of any element which is or may be considered disadvantageous to his case. However, the context remains one of uncertainty. The

court hears only one side of the story. The application is made on affidavit, often as a matter of great urgency.

42. It is pointed out in the English cases that, as a matter of history, the requirement of an undertaking emerged only during the

nineteenth century. Lord Diplock, in his speech in the case of Hoffmann-La Roche, discussed later, said that it originated in the Vice

Chancellorship of Sir James Knight Bruce between 1841 and 1851. That may be true, but it is merely of historic interest. Lord Diplock

explained the function of the undertaking in this context of uncertainty in his speech in American Cyanamid v Ethicon Ltd [1975] 396

at 407:

“It is no part of the court's function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on

which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and

mature considerations. These are matters to be dealt with at the trial. One of the reasons for the introduction of the practice of

requiring an undertaking as to damages upon the grant of an interlocutory injunction was that "it aided the court in doing that which

was its great object, viz. abstaining from expressing any opinion upon the merits of the case until the hearing": Wakefield v. Duke of

Buccleugh (1865) 12 L.T. 628, 629.”

43. The proposition that there is an established exception for certain types of State action is based on certain English cases, three in

particular, referred to in the High Court. These are put forward by the Minister as establishing the distinction between State action in

enforcement of the general law, or in the hallowed expression, “the law of the land,” on the one hand, and applications, even by the

State to enforce its own property or contractual rights.

44. It is said that the principle that the Crown did not have to provide an undertaking in damages was pronounced, though not for the

first time, in the case of Attorney General .v. Albany Hotel Company [1896] 2 Ch. 696. That action involved the Attorney General

suing on behalf of the Crown for an order restraining the defendant company from using or permitting certain premises for the retail

sale of intoxicating liquor contrary to the terms of the lease of premises which had been granted by the Crown. It was stated, in the

course of the argument, that the practice of requiring an undertaking was a comparatively recent one and that, at first, it was

required only on ex parte applications. Lindley L.J., in the Court of Appeal, addressed the issue as follows at page 703:

“The question then raised before us is this; is it in accordance with the practice to compel the Attorney General, on obtaining an

interlocutory injunction, to submit to the condition of giving an undertaking as to damages? The practice is, in my opinion, settled in

the negative. Of course, if the case presented to the Court on the motion for injunction were doubtful, the Court might say, even to

the Attorney General, “We shall not grant you an injunction”: and if the case were very near the line, the Court might say, “If you like

to give an undertaking, or find somebody to do so, we will then grant an injunction”. That is possible. But if the case for an injunction

is sufficiently plain as, in my opinion, this is, the practice is entirely against imposing any such condition. This condition was imposed

in ex parte cases long before my time: but I never heard of such a condition being imposed upon the Attorney General in the case of

an ex parte injunction……if the Crown’s case is too doubtful, the Attorney General is not entitled to an injunction at all; that is the

answer to the defendants’ contention.”

45. Lopes L.J. at page 704 was of a similar view. If the plaintiff had been “an ordinary lessor,” the injunction would have been granted

“with the usual undertaking in damages.” He thought that “it was the inveterate practice” not to require an undertaking when “the

Queen sues by her Attorney General.”

46. I cannot regard this case is being of any assistance. The decision not to require an undertaking was based exclusively on what

was described as the "inveterate practice." No other principle or reason is identified. Although the judges do not refer to Crown

immunity, it is inescapable that it was the status of the monarch which decided the case. Lord Diplock, in the Hoffmann-La Roche

case discussed below, at page 362, inferred that the court had accepted an argument of counsel that the practice was based on

Crown immunity from damages, which seems to me to be more than plausible. Furthermore, if there be a principled distinction of the

type for which the Minister contends, this case is not consistent with it. It was not a case of enforcing the "law of the land." It

concerned the terms of a Crown lease. The analysis by Lindley L.J. shows that the question of whether an injunction would be given

or not dependant essentially on the strength of the case, a proposition inconsistent with the more modern test propounded in

American Cyanamid v Ethicon Ltd of a fair case to be tried.

47. In reality, the sheet anchor of the Minister’s case is Hoffman-La Roche & Ors v. Secretary of State for Trade and Industry [1975]

AC 295, a case not previously considered in our courts. The appellants were a famous pharmaceutical group of companies. Following

an enquiry and report by the Monopolies Commission relating to their profits on the tranquillising drugs, Valium and Librium, the

respondent, in his capacity as government Minister laid a number of statutory orders before Parliament, one of which fixed maximum

prices at which the drugs might be sold. Upon the approval by parliament of the order, the appellants announced that they would not

obey it and brought proceedings claiming declarations of invalidity. It was in this context that the respondent, as Secretary of State

for Trade and Industry, brought proceedings, pursuant to an express statutory provision enabling him to do so, for an injunction

restraining the appellants from charging prices in excess of those fixed by the order. In the course of those proceedings the Secretary

Of State applied to the court for an interlocutory injunction. He declined to give an undertaking as to damages.

48. The House Of Lords held that the former rule or practice, described in Attorney General .v. Albany Hotel Company, whereby the

Crown was not required to give an undertaking as to damages as a condition of being granted an interim injunction was no longer

justified following the Crown Proceedings Act 1947. The House proceeded to establish the distinction between an injunction to

enforce what was prima facie the law of the land, on the one hand, and one aimed at enforcing proprietary rights, on the other.

49. Lord Reid justified dispensing the Secretary of State from giving an undertaking very much by reference to the principle of the

“law of the land.” At page 341, he said:

“Dealing with alleged breaches of the law is a function of the Crown (or of a department of the executive) entirely different in

character from its function in protecting its proprietary right. It has more resemblance to the function of prosecuting those who are

alleged to have committed an offence. A person who is prosecuted and found not guilty may have suffered serious loss by reason of

the prosecution but in general he has no legal claim against the prosecutor. In the absence of special circumstances I see no reason

why the Crown in seeking to enforce orders of this kind should have to incur legal liability to the person alleged to be in breach of the

order.”

50. Lord Reid could not countenance an ingenious arrangement offered by the plaintiffs for the deposit of monies representing the

difference between the prices they would charge pending the hearing of the action and the maximum prices permitted, “because the

serious objection would remain that the law laid down in the order is to be disregarded until the case is decided.”(page 342)

51. Lord Diplock, having said that the Crown should have to give an undertaking where it applied for an interim injunction “in an action

brought against a subject to enforce or to protect its proprietary or contractual rights (jus privatum),” proceeded to consider the

position of the Secretary of State in seeking to enforce the prices orders. He believed that the action could conveniently be called “a

law enforcement action.”

52. Although it had been recognised historically that the Attorney General, acting on behalf of the Crown might apply as parens

patriae to a court for an injunction to restrain the commission of illegal acts, this rarely happened. An order for costs could not be

made against the Crown prior to 1933. The alternative was the relator action, where the relator could be made liable to costs.

53. Lord Diplock addressed the case of the Crown seeking to enforce a statute in the following terms:

“When, however, a statute provides that compliance with its provisions shall be enforceable by civil proceedings by the Crown for an

injunction, and particularly if this is the only method of enforcement for which it provides, the Crown does owe a duty to the public at

large to initiate proceedings to secure that the law is not flouted, and not simply to leave it to the chance that some relator may be

willing to incur the expense and trouble of doing so.

“…… the practice of exacting an undertaking in damages from the Crown as a condition of the grant of an interlocutory injunction in

this type of law enforcement action ought not to be applied as a matter of course, as it should be in actions between subject and

subject, in relator actions, and in actions by the Crown to enforce its proprietary or contractual rights. On the contrary the propriety

of requiring such an undertaking from the Crown should be considered in the light of the particular circumstances of the case.”

54. Lord Cross, at page 371, said that “the court in considering whether or not to make the grant of an interim injunction conditional

of the giving of an undertaking in damages has to bear in mind the interest which the public -- and in particular any section of it

which will benefit thereby -- has in seeing that the law in question is enforced.” he expressed concern that the Crown might be

“deterred from applying for an interim injunction by the necessity of giving an undertaking in damages…”

55. In Kirklees Metropolitan Borough Council v Wickes Building Supplies ltd. [1993] 1 A.C. 227, the House of Lords followed Hoffman-La

Roche. In that case two local authorities had brought proceedings to restrain a number of retailers from opening their shop premises

for trade on Sundays in breach of what were then the Sunday-trading laws. They applied for interlocutory injunctions. The only real

significance of the decision is that the House of Lords extended to local authorities, when seeking to enforce the law, the same

principles as applied to the Crown.

56. There has been no equivalent development of the law in this jurisdiction. The Hoffman- La Roche principles might conceivably

have been applied in the case of Campus Oil v Minister for Industry (No. 2) [1983] I.R. 88, where the defendant Minister applied to

the High Court for a mandatory injunction requiring the plaintiffs, which were oil importing companies, from ceasing, in breach of their

statutory obligation, to purchase oil from a State-owned oil refinery. The report of the case is entirely silent on the question of

whether the Minister gave an undertaking as to damages. Having been counsel in the case, I should recall but I do not. The absence

of discussion leads me to believe that the undertaking was granted, as a matter of routine, which seems to be the view of the

authors of Civil Proceedings and the State (Second ed. Anthony M. Collins and James O’Reilly Thomson Round Hall 2004). Those

authors state that “If an injunction is granted on the application of the Attorney General or a Minister of Government in such

circumstances, an undertaking as to damages will be required by the court. This supposition gains some support from the fact that, at

page 111 of the report, Griffin J quoted the passage from Lord Diplock's speech in American Cyanamid v Ethicon Ltd, referring to the

function of the undertaking, which I have myself cited above.

57. On the other hand, it is clear that the question of the obligation of the State or a State organ to give an undertaking as to

damages as a condition of obtaining an injunction as to damages has not been considered at the level of principle. It is true that, in

Attorney General at the relation of Francis X. Martin v Dublin Corporation and another [1983] I.L.R.M. 254, the Supreme Court held

that the relator and not the Attorney General should provide an undertaking, when seeking an interlocutory injunction. However, the

reason was that the Attorney General did not, by giving his consent, indicate any approval of the proceedings. I can certainly

envisage circumstances in which the Attorney General seeks an injunction to enforce compliance with the general law, where he

should not have to provide an undertaking. It is preferable not to try to delineate those circumstances more precisely until they arise.

58. The Hoffman-La Roche case proceeds upon an assumed distinction between two types of case: in one, the State seeks to

enforce its proprietary rights; in the other, it is concerned to enforce observance of the general law. Insofar as the State might, in a

particular case, presumably in the person of the Attorney General, apply for an order enforcing the general law, most notably, to

prevent the commission of criminal offences, there may, as I have suggested, be no particular difficulty in accepting the principles laid

down in Hoffman-La Roche. The present case does not fit into either the category of enforcing the law of the land or enforcing a

proprietary right. I do not agree with the submissions made on behalf of the Minister to the effect that, in making the application to

the High Court for the interim restraint order, the Minister was seeking to enforce the general "law of the land." Insofar as the law of

the land was concerned, the respondent was prima facie entitled to deal with, handle, remove, sell or otherwise exercise rights of

ownership over the specified property, assuming it to have been in her ownership. I do not intend, in the slightest, to question the

strength of the case to the effect that the property in question represented directly or indirectly the proceeds of crime. I merely

state that, as a matter of Irish law, and prior to the making of the order, it was not unlawful for her to deal with the property. For

those reasons, the case is distinguishable from Hoffman-La Roche, where the pharmaceutical company openly declared that it would

not obey the prices order. For the same reason, it is distinguishable from Campus Oil, where the oil importers refused to observe the

mandatory obligation to purchase oil from the State refinery. Equally obviously, it is distinguishable from the Sunday-trading case. At

that time, the opening of the shops on Sundays was unlawful.

59. Nor do I accept that the Minister can, by invoking section 21 of the Act of 1994, which criminalises money laundering as there

broadly defined, bring this case under the rubric of enforcing the law of the land. The application was not made to the High Court on

that basis. The grounding affidavit sworn on the behalf of the Minister made no reference to that section or to money laundering. I

would reserve further consideration of this point for a case where it truly arose.

60. At this point, I would say that I do not accept the argument of the respondent that the State benefits from any discriminatory

difference of treatment such as to constitute a breach of the principle of equal treatment, from a private litigant insofar as it is

dispensed from offering an undertaking as to damages in an appropriate case. The State is clearly not to be equated with a private

citizen or corporate litigant pursuing the protection of private interests.

61. The Minister argues for the extension of the principles derived from Hoffman- La Roche to his function under the Act of 1994,

where, in pursuance of international obligations and of a statutory procedure, he applies to the court for a restraint order. As is clear

from the legislation, that order is of a provisional kind. Section 46(6) authorised the making of “provisional measures.” These took the

form provided for by the Regulations. It is intended to preserve the property so as to enable a confiscation co-operation order to be

made. The ultimate object of the United Kingdom authorities is to have the property confiscated.

62. Meanwhile, section 24 of the Act of 1994, as adapted by the Regulations provides for the making of orders ex parte and that an

order may provide for service on or provision of notice to persons affected. Sub-section (5) provides that an order “may be

discharged or varied in relation to any property...” The order of Quirke J was made for a limited period only, to 18th April 2005, and

provided for notice of motion for an interlocutory injunction for that day. All of this is characteristic of an interim injunction. It is

temporary in nature: the affected party is provided an opportunity to oppose the making of an interlocutory order. It is implicit in the

scheme that the affected person may dispute the making of the order. It is true that the respondent has not, in this case, made any

attempt to dispute the correctness of the material presented to the Court by the Minister. That would, of course, have been highly

relevant at the stage of application for an interlocutory injunction.

63. This appeal is concerned exclusively with the interim injunction and with whether an undertaking as to damages should then have

been sought at the stage when the application was made ex parte before Quirke J.

64. As I stated at the beginning of this judgment, it is the invariable practice of our courts to require that a party seeking an interim

injunction, provide the court with an undertaking as to damages. I do not exclude the possibility of exceptional cases. In Boyle v An

Post [1992] 2 I.R. 437, Lardner J granted an interlocutory injunction to employees of the postal service because they had an

unanswerable case and dispensed with the undertaking. I have seen discussion of the possible injustice to a totally impecunious

applicant, who might be deprived of a remedy if he could not provide an undertaking. O’Donnell J discusses this possibility in his

judgment. These are special situations on I would not which to comment.

65. There are very powerful reasons for requiring an applicant for an interim (as distinct from an interlocutory) injunction, as a matter

of more or less invariable practice, to provide an undertaking. It is an essential part of the system of balancing rights and of

attempting to maintain the status quo or of compensating for disturbance of it, if that be the case. I can see force in the argument

for dispensing with it in a true case of the State applying to enforce the law of the land. If a person is openly and flagrantly violating

the criminal law, he should not be compensated for being restrained from continuing to do so, but that is not this case. In that

context, I have little doubt that the Hoffman-La Roche approach is compatible with Irish law.

66. I do not, therefore, exclude the possibility of exceptional cases. But, in my view, it would require a clearly established ground of

exception to dispense the State, as applicant, at the interim and ex parte stage from providing an undertaking as to damages. I wish

to emphasise the distinction between the interim and interlocutory stages. The Regulations do not, as O’Donnell J points out, provide

for distinct interim and interlocutory stages. In the case of the latter, a court can hear both sides and decide whether there are truly

grounds for departure from the normal requirement of an undertaking. In the present case, for example, it would be open to a court to

weigh in the balance the fact that the respondent has disputed none of the material put forward by the Minister in his application.

67. The application made under the adapted version of section 24 of the Act of 1994 depended on proof of the existence of the pre-

conditions, some of them alternative, mentioned in section 23 (as adapted), which are set out in paragraph 16 above. They require,

at least, that it be established that:

(a) the other country has been duly and properly designated:

(b) that, in the case where paragraph (a) is invoked, proceedings have been instituted against the defendant in

that country, and;

(c) that a confiscation order either has been made in those proceedings or it appears to the court that there are

reasonable grounds for believing that one will be made;

(d) that, in the case where paragraph (b) is being relied on that the court is satisfied that proceedings are to be

instituted “against a person” in a designated country;

(e) there are reasonable grounds for believing that an application will be made (i.e., made in this jurisdiction) for a

confiscation co-operation order.

68. These are all matters of fact, which the applicant must prove. The respondent is, in principle, entitled to dispute any or all of

them. The purpose of the rule of audi alteram partem is to permit an affected person to contest allegations made against him and the

courts do not countenance a response that the case was so clear that a hearing would be pointless because no defence could

possibly be made out. Similarly, the purpose of an interlocutory hearing is to enable the affected person to contest the making of the

order and, where an interim injunction has been granted, to argue that it should not have been. The respondent, in cases such as the

present, would be entitled to call into question any of the elements of the Minister’s case. It is not absurd to suggest even, for

example, that an order validly designating the other country had not been made, or had been revoked or that there had been a

mistake in identifying the country. (In Abimbola v Governor of Cloverhill and others [2008] 2 I.R. 302, the making of a statutory order

revoking the application of the Part II of the Extradition Act 1965 to the Federal Republic of Germany had the effect, not anticipated

by the authorities, of rendering ineffective an existing request for extradition.) Mistakes occur. There can be cases of mistaken

identity or misdecsription of property.

69. I do not exclude the possibility that a judge, at an ex parte hearing, would have discretion to dispense the applicant from the

giving of an undertaking. I have already stated that I accept that, in certain cases, the State may be in a special position, notably if

it claims that it is seeking an order restraining the commission of illegal acts, i.e., performing the public function of ensuring

observance of the law of the land. I do not disagree with O’Donnell J in his description of the flexibility of the discretion. On the other

hand, I believe the O’Sullivan J, on the material before him, struck the balance correctly when he said that the court “ought to require

such an undertaking in the absence of an adequate explanation as to why it should not be given.” The presumption should be that an

undertaking is required. If the judge is to dispense with it, the applicant would have to point to an exceptional reason. He or she

would then address his or her mind to the question. Ideally, the order would recite that there was no undertaking.

70. O’Donnell J makes a number of relevant suggestions in his judgment. It may be appropriate for the court to take account of

statutory provisions which, though not applicable, are relevant in analogous circumstances, in particular section 16 of the Proceeds of

Crime Act, 1996 and section 65 of the Act of 1994. An appropriate undertaking might be fashioned to meet the circumstances of the

case. Account might be taken of compensation provisions potentially applicable in the country seeking the assistance of the court.

However, the applicant, whether that be the Minister or other Central Authority or the other state will necessarily be privy to all that

material. It is incumbent on the applicant to place any such information before the court and to make submissions as to whether an

undertaking be dispensed with or a modified undertaking be given. None of that took place in the present case.

71. In the present case, I believe that O’Sullivan J correctly assessed and balanced the several elements of the case. He accorded

particular weight to the international obligations of the State. He said that the court should be “particularly conscious of the pressing

and increasing need for prompt and comprehensive and effective international co-operation in respect of criminal activities.” He also

saw the “countervailing need that the courts have due regard to the unrepresented interests of the party affected by such orders.”

He was concerned at the making of orders with “draconian effect without the burden of conducting even a preliminary inquiry into the

current and possibly changing circumstances of the party or parties to be affected with a view to identifying the scope of the

potential damage to them.” He added that the “tried and trusted method of achieving the appropriate balance [had] been an

insistence that an undertaking as to damages should be given to the courts and not, be it noted, to the affected party.”

72. I approve of the approach adopted by the learned judge, based on the material before him. I am satisfied that he was right to

require that there be an undertaking. I would dismiss the appeal.