The defendants/appellants (the Gilligans) appealed three 2011 High Court judgments and made certain due process and European Convention on Human Rights claims as regards the Proceeds of Crime Act 1996 and orders against their property. The legislation is a civil non-conviction based model for the confiscation of the proceeds of crime.
The court, when satisfied on application of the Criminal Assets Bureau that property represents the proceeds of crime (based on a balance of probabilities standard) the court may make an interim order ex-parte, followed by an interlocutory order on notice, freezing the property identified as proceeds of crime. If the respondent, who is the person in possession or control of the property, or any other person claiming ownership, is able to prove that the property does not represent proceeds of crime, then the interlocutory order may (at any time) be varied or discharged as appropriate. Property that can be forfeited includes money and all other property, real or personal, heritable or moveable, including choses in action and other intangible or incorporeal property and references to property shall be construed as including references to any interest in property. Section 2 of the Act provides however that an interim order can only be made in respect of property not less than £10,000 (Eur 12,700).
The period between the interlocutory order and the disposal order is seven years. If, at the end of the period of 7 years, the respondent has not been able to prove to the satisfaction of the court that the property does not represent proceeds of crime, then a disposal order under section 4 may be made and the title to the property then passes to the State (although it is possible to challenge the interlocutory order within that period also).
The defendants/appellants (the Gilligans) challenged the original orders of the court and the disposal orders in particular on procedural grounds regarding the so called interlocutory orders of the court.
爱尔兰Property (several vehicles; houses (including family residences) and an equestrian center) were the subject of freezing orders and subsequently orders for disposal-on the basis they represented the proceeds of crime.
The Proceeds of Crime Act 1996, Section 3 and Section 4 are particularly relevant. The court, when satisfied on application of the Criminal Assets Bureau that property represents the proceeds of crime (based on a balance of probabilities standard) the court may make an interim order ex-parte, followed by an interlocutory order on notice, freezing the property identified as proceeds of crime. If the respondent, who is the person in possession or control of the property, or any other person claiming ownership, is able to prove that the property does not represent proceeds of crime, then the interlocutory order may (at any time) be varied or discharged as appropriate. Property that can be forfeited includes money and all other property, real or personal, heritable or moveable, including choses in action and other intangible or incorporeal property and references to property shall be construed as including references to any interest in property. Section 2 of the Act provides however that an interim order can only be made in respect of property not less than £10,000. (Eur 12,700).
The period between the interlocutory order and the disposal order is seven years. In accordance with Section 4 if at the end of the period of 7 years, the respondent has not been able to prove to the satisfaction of the court that the property does not represent proceeds of crime, then a disposal order under section 4 may be made and the title to the property then passes to the State (although it is possible to challenge the interlocutory order within that period also).
The legislation is a civil non-conviction based model for the confiscation of proceeds of crime.
The proceedings (per Supreme Court Decision in Murphy & anor -v- Gilligan [2017] IESC 3) arise from a series of applications made by the Criminal Assets Bureau (CAB) for freezing orders and later, disposal orders. The defendants/appellants (the Gilligans) appealed three judgments of the High Court from 2011. Firstly as regards section 3 applications (freezing orders) of the Proceeds of Crime Act 1996. Secondly in respect of s. 4 applications (disposal orders) and thirdly as regards the defendants/appellants and the European Convention on Human Rights. In so doing they essentially they sought to set aside a decision of the Supreme Court in 2008 on the basis there was no trial of the issue as to whether or not the property of the defendants/appellants was acquired directly or indirectly with the proceeds of crime. As a result, it is contended that there was no valid order regarding the freezing and disposal of the property; thus, the later hearings in 2011 were without jurisdiction and could not stand and ultimately no disposal orders could be made in respect of the property.
The plaintiff (John Gilligan) claimed the legislation was de facto criminal in nature but lacked the usual due process safeguards afforded in criminal cases (regarding the presumption of innocence, the right to silence, the right against self-incrimination and the burden of proof). The High Court noted that the stated standard of proof in procedures was on the ‘balance of probabilities’ so that the protections usual afforded to criminal cases were not available.
As regards interference with property arguments (for the purposes of the Irish Constitution and the European Convention on Human Rights) the High Court concluded that the interference did not constitute an ‘unjust attack’ as the State must show the property in question is the proceeds of crime and that the respondent has no good title to it. The High Court also noted there are protections inherent in the act which allowed for legal challenges to be brought and which ensure due process.
The Supreme Court in 2001 on appeal of the 1997 High Court decision agreed with the legislation was not de facto criminal stating for example that the legislation did not contain the indicia of crime. It noted for example there are no provision for the arrest or detention of any person, for the admission of persons to bail, or for the imprisonment of a person in default of payment of a penalty. Regarding the interference of property arguments it agreed with the High Court adding moreover that even though the legislation was draconian and while wholly innocent parties may no longer have the benefit of certain property (e.g. a residence) this was outweighed by the broader public good considerations bearing in mind the detriment caused to society by organised crime and drugs in particular. It also noted in any event the legislation provided for certain due process standards in terms of opportunities to challenge the legislation.
This High Court decision concerned an application pursuant to section 3(3) of the Proceeds of Crime Act 1996 asking the court to vary or discharge the 2008 Supreme Court orders (case [2008] IESC 70) on the basis that it caused injustice and to protect constitutional justice. The High Court rejected that application at the time considering the orders made by the Supreme Court were proportionate (with one exception, finding that 20% of one house was not, on the balance of probabilities, from the proceeds of crime). While it agreed the court must be proportionate and sensitive in considering the competing property and other rights of litigants it must balance several issues. It concluded there was a failure to discharge the onus, for the purposes of a section 3(3) application that most of the property was not the proceeds of crime (i.e. but for the use of funds obtained from criminal activities, such property would not be owned). That judgment also recalled that there occurred a full hearing including oral evidence, cross-examination and legal argument and that for example each of the respondents was represented by counsel.
Also contested was the decision of the High Court in December 2011 in respect of section 4 (disposal) applications brought by CAB. Section 4(1) provides that a disposal order cannot be made unless there has been a section 3 order in force for not less than seven years. Sub-section (6) of section 4 provides that before deciding whether to make a disposal order the Court shall give an opportunity to show cause why the order should not be made. Each of the parties was provided with an opportunity to make both written and oral submissions. It was argued that the application was a penalty or a forfeiture and for the purposes of the Statute of Limitations was therefore statute-barred. However the High Court (quoting Supreme Court decisions regarding the same applicant Murphy v. G.M. and also Murphy v. Gilligan) ruled that taking of property under section 3 of the Act of 1996 is not forfeiture in the true sense as there is no element of punishment and the property is not “forfeited” as a result of any offence or penalty-rather under the act there is no loss as a penalty and a disposal order is in no way dependent upon or results from a finding that a respondent should forfeit or give up property as a result of a penalty or as a result of a particular offence. Rather the order freezes the interest of the property owner but does not deprive him of it. It restrains 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.
Accordingly and likewise the grant of a disposal order under section 4 and the taking thereby by the State of property which has been proved on the balance of probabilities to represent the proceeds of crime is not in the true or proper sense a penalty or forfeiture. The taking of property under the Act of 1996 is not and cannot be equated with a punishment and its operation does not require criminal procedures. A disposal order under the section 4 of the Act of 1996 is not an action for recovery of a penalty or forfeiture as provided for in the Statute of Limitations. But even if a section 4 order was interpreted as being a forfeiture for the purposes of the Statute of Limitations that the cause of action entitling the making of a section 4 application cannot have accrued until seven years after the section 3 order was made on the 16th July, 1996 –and on the facts that period had not yet run.
This High Court judgment of 2011 was a challenge by the defendants/appellants relating to the European Convention on Human Rights-specifically the first Article of the First Protocol (property); Article 6 of the Convention (Right to a fair trial); Article 7 (No punishment without law); and Article 8 (Right to respect for private and family life). Regarding Article 7 the High Court in 2011 considered Convention jurisprudence (Walsh v. United Kingdom [2006] ECHR 43384/05, and Engel v. The Netherlands [1976] 1 EHRR 706) and ultimately, following the analysis in the judgment of the Supreme Court in Murphy v. Gilligan held the Act is not penal (noting inter alia the national legislation intended the legislation to be civil not criminal based) and accordingly it did not engage either Article 6 or Article 7 of the Convention as civil-based proceedings.
Article 8 rights under the Convention provides that everyone has the right to respect for his private and family life, his home and correspondence. The court also noted paragraph 2 of article 1 Protocol 1 which provide “The preceding provisions shall, however, not in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.” The court followed the dicta of Murphy v G.M. which was informed by McIntosh .v. Lord Advocate (2001) 2 All ER 638 regarding proportionality issues. In that case, an issue arose as to whether certain provisions of the Proceeds of Crime (Scotland) Act, 1994 were incompatible with Article 6(2) of the European Convention for the Protection of Human Rights. It was held that Act served a legitimate aim in the public interest of combating criminal activity and the Act (which was noted was similar to the Irish Proceeds of Crime Act) operated in a way that is proportionate. They relate to matters that ought to be within the accused’s knowledge, and they are rebuttable by him at a hearing before a judge on the balance of probabilities. It was ruled the Act operated a fair between the legitimate aim (combating criminal activity) and the rights of the accused. In 2011 the High Court agreed the Act of 1996 had a similar the legitimate aim (combating criminal activity and organised crime) and highlighting constitutional safeguards identified by the Supreme Court in Murphy v. G.M. found the legislation proportionate given it provides safeguards and protections which enable a person such as John Gilligan to rebut in civil proceedings any evidence relied upon by the Criminal Assets Bureau concerning his source of funds and to do so from matters within his knowledge. John Gilligan had available to him the entitlement to challenge the section 3 order and he did so at a full hearing of his section 3(3) application.
Similarly it found there was no breach of his Article 6 rights in that he was afforded a fair hearing (or equality of arms) in the determination of the argument the interlocutory orders were “unclear and confusing” (in that the order was final for seven years). His defence was not compromised given the various opportunities, as recalled by the Supreme Court Murphy v. Gilligan, to challenge the legislation existed by way of defence of an application under section 3(1); an application under section 3(3); or under section 4.
Supreme Court
Outcome/verdict: The Supreme Court dismissed the appeal which sought to challenge certain court orders made pursuant to the Proceeds of Crime Act 1996 regarding the property of the defendants/appellants.
The Supreme Court did not agree that certain proceedings dating back 20 years (and subsequent court orders issued), failed to observe due process standards (including the right to a fair trial). It noted in that period, that several legal issues have already been considered and determined by the courts following a series of challenges by the defendants/appellants (and others) regarding the key features of the legislation.
As regards this specific case it considered that while the 1996 Act was a new act when it was first applied against the defendants/appellants (such that certain rules of procedure had yet to be fully determined), the orders made under the Act (including the nature of those orders and the manner in which they were made) did not infringe the rights of the defendants/appellants under the European Convention of Human Rights, or otherwise. The interlocutory orders so called were clearly final and in any event multiple opportunities in lengthy court proceedings stretching back over 20 years had been availed of by the defendants/appellants to dispute the CAB evidence that its property stemmed from the proceeds of crime. The Supreme Court deemed the Gilligans received a comprehensive hearing before the High Court in which they were given a full opportunity to deal with every possible conceivable issue (to demonstrate the contention that the properties concerned were not acquired with the proceeds of crime).
The Supreme Court in rejecting the claim that the defendant/appellants in the present case did not receive a fair trial as regards proceedings in 2008 and 2011 pointed to certain due process features existing under the law generally (i.e. as regards general rights of challenge); and specifically under the legislation (which features notice provisions, the opportunity for a respondent to seek to vary an order, the opportunity for any persons claiming ownership to be heard (i.e. these opportunities exists during the section 3 ‘freezing’ hearing itself; during any section 3(3) hearing (alleging ‘injustice’); and at the time of the section 4 hearing (regarding disposal)). The Court was satisfied that there was a full trial of the real issue in the case, namely whether the properties concerned were acquired directly or indirectly by the proceeds of crime. It was noted at the trial, the evidence initially produced by CAB remained in substance the same as it relied on in all subsequent court appearances,– thus there were multiple opportunities to engage with the evidence or to challenge its authenticity, reliability or value and the essence of what CAB asserted was never undermined. It must therefore be taken to have reached a status comparable to that required of any applicant in proceedings where the legal onus of proof rests upon it.
It noted on the facts that the appellants/defendants did issue a series of challenge as regards the legislation and procedures adopted, and in other cases could have, but failed to, bring certain challenges more promptly. Finally the court noted certain other balancing features specific to the legislation including the right to compensation and to legal aid.
It found there was no extraneous matter “going to the very root of the fair and constitutional administration of justice” (the standard required to overturn the decisive Supreme Court decision in 2008). Instead the court confirmed that the applications of the enforcement agency (the Criminal Assets Bureau) regarding freezing and disposal orders met the requirements of the Act and the standards of justice, and dismissed the appeal.
In doing so the Supreme Court cleared the way for the State to dispose of the defendants/appellants’ property.The proceedings arise from a series of applications made by the Criminal Assets Bureau (“CAB”) for freezing orders and disposal orders of property of the defendant/applicants. Many of these issues relating to the defendant/applicants had already been litigated before the courts in the last 20 years. In the present case the Supreme Court recalled several dicta from these previous cases as now set out here.
The proceedings arise from a series of applications made by the Criminal Assets Bureau (“CAB”) for freezing orders and disposal orders of property of the defendant/applicants. Many of these issues relating to the defendant/applicants had already been litigated before the courts in the last 20 years. In the present case the Supreme Court recalled several dicta from these previous cases.The proclaimed focus of the legislation is to divest those involved in criminal conduct of their illicit gains; to disrupt and dismantle criminal enterprises; and prevent the possible future reuse of illicit funds for criminal purposes. It has been claimed however that the legislation is draconian and penal in nature-that it imposes criminal level sanctions minus the safeguards usually associated with criminal cases (beyond reasonable doubt standard of proof, presumption of innocence, right to silence, right against self-incrimination): it is claimed, in other words that it is a penal confiscation model without due process. However the legislation and procedures adopted have survived constitutional challenge.
Supreme Court
Murphy & Anor -v- Gilligan [2017] IESC 3
The Proceeds of Crime Act 1996 and the establishment of the Criminal Assets Bureau were novel at the time in Ireland. Both have been since modelled in other jurisdictions although the model is not without controversy. While the traditional approach to organised crime is to bring the perpetrators of crime to justice and to impose criminal sanctions this is a non-conviction based model that focuses on the confiscation of the proceeds of crime i.e. the action is against the property (in rem not in personam) -no criminal charge against the owner (or indeed other affected persons) is necessary to trigger the Act..
The proclaimed focus of the legislation is to divest those involved in criminal conduct of their illicit gains; to disrupt and dismantle criminal enterprises; and prevent the possible future reuse of illicit funds for criminal purposes. It has been claimed however that the legislation is draconian and penal in nature-that it imposes criminal level sanctions minus the safeguards usually associated with criminal cases (beyond reasonable doubt standard of proof, presumption of innocence, right to silence, right against self-incrimination): it is claimed, in other words that it is a penal confiscation model without due process. The (long) title of the Act describes it as “An Act to enable the High Court, as respects the proceeds of crime, to make orders for the preservation and, where appropriate, the disposal of the property concerned and to provide for related matters”. The proposed title of the bill was the “Organised Crime (Restraint and Disposal of Illicit Assets) Bill.”
The legislation was tested almost immediately upon enactment, including as regards the European Convention of Human Rights. The present case summarises the main findings of those cases before delivering the final judgment in the present case. It ultimately upheld the legislation as constitutional and the case as handled by enforcement agencies as procedurally complaint with the proper standards of due process. The Supreme Court did not consider the rights of the Gilligans under the Convention were in any way greater than those guaranteed by the Irish Constitution –such that details regarding the constitutional arguments are informative for the purposes of same or similar arguments made as regards Convention rights.
Essentially the defendants/appellants claimed that there was no trial of the issue as to whether or not their property was acquired directly or indirectly with the proceeds of crime (in addition to certain due process issues going to ‘equality of arms’ largely based on the claim that the Act was de facto criminal and not civil). Accordingly, it was also claimed, that no 'disposal orders under the Act could be made. As related cases make clear the declared core feature of the legislation is that it is a civil non-conviction based model for the confiscation of proceeds of crime -the legislation at issue does not require a criminal conviction as a basis for proceeding and accordingly does not attract the usual criminal constitutional protections. This reasoning has been attacked as somewhat unsatisfactory on the basis that the effect (arguably) is penal (loss of control of property and ultimately loss of title to property). The counter argument is that no good title to the property exists, there are several opportunities to demonstrate that ownership of the property does not stem from the proceeds of crime; and the legislation is wholly proportionate response to organised crime proceeds and the damage organised crime inflicts on communities.