The Attorney General v Ian Joseph Ellis

JurisdictionJersey
CourtRoyal Court
JudgeJ. A. Clyde-Smith O.B. E.
Judgment Date31 October 2019
Neutral Citation[2019] JRC 219
Date31 October 2019

[2019] JRC 219

ROYAL COURT

(Samedi)

Before:

J. A. Clyde-Smith O.B. E., Commissioner sitting alone.

In the Matter of a Representation of her Majesty's Attorney General

and

In the Matter of the Forfeiture of Assets (Civil Proceedings) (Jersey) Law 2018

and

In the Matter of Ian Joseph Ellis

Between
The Attorney General
Representor
and
Ian Joseph Ellis
Respondent

Advocate M. T. Jowitt for the Representor.

Advocate P. G. Nicholls for the Respondent.

Authorities

AG v Ellis [2019] JRC 141.

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

Ahmed v HMRC [2013] EWHC 2241 (Admin).

R v Waya [2012] UKSC 51. Proceeds of Crime Act 2002. Human Rights Act 1998. Human Rights (Jersey) Law 2000

Forfeiture of assets

THE COMMISSIONER:
1

In handing down its judgment on 22 nd July 2019 ( AG v Ellis [2019] JRC 141), which we will refer to as “the First Judgment”, the Court asked to be addressed on whether it was proportionate to forfeit the whole of the bank account in the name of the respondent or just that part that represented the taxes evaded.

2

This judgment should be read as an extension of the First Judgment but by way of a brief recap:-

  • (i) The Attorney General applied under Article 11(4) of the Forfeiture of Assets (Civil Proceedings) (Jersey) Law 2018 (“the Forfeiture of Assets Law”) to forfeit a bank account in the name of the respondent (“the Account”) at Standard Chartered Bank, Jersey Branch, which has a balance of £33,804.52p.

  • (ii) Under Article 11(2), the burden was upon the respondent to satisfy the Court, on the balance of probabilities, that the Account was not tainted property, as defined under Article 2, namely property that the Attorney General has reasonable grounds to believe is or has been:-

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

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

  • (iii) The Court found that the Attorney General had reasonable grounds to believe that the Account was tainted property (paragraph 36 of the First Judgment). Of the grounds put forward, the Court was satisfied that the monies credited to the Account came from the respondent's legitimate taxi and car dealing businesses (paragraph 39 of the First Judgment) and not from any involvement on his part in the drugs trade, but was not satisfied that the Account was used for the purpose of legitimate tax avoidance, as opposed to illegitimate tax evasion (paragraph 40 of the First Judgment).

  • (iv) The key finding of the Court is contained at paragraph 42 of the First Judgment, which I set out again:-

    “42 We agree with Advocate Jowitt that the obvious inference from the respondent's affidavit is that the respondent paid monies into the Account as part of a dishonest scheme by which he under-declared the true amount of his income to the United Kingdom tax authorities, which would have involved him in filing tax returns which falsely under-stated his true income, and that would be an offence under our law if it had occurred here. The Account was used in, or intended to be used in, that unlawful conduct. In short, his conduct means that the Account falls fully within the definition of tainted property in Article 2 of the Forfeiture of Assets Law. This accords with English authority. The case of Ahmed v HMRC (2013) EWHC 2241 (Admin) concerned a respondent who hid cash in his home as part of a scheme to under-declare takings from his company to the revenue. Carr J said (at paragraph 37) ‘It is sufficient to prove that the sum or part of it was part and parcel of a dishonest scheme to cheat the Revenue’.”

  • (v) The case of Ahmed v HMRC [2013] EWHC 2241 (Admin), which, in turn, had quoted at length from the Supreme Court decision in R v Waya [2012] UKSC 51, raised the issue of proportionality, on which the Court had not been addressed. The skeleton argument filed by Advocate Jowitt, for the Attorney General, on the issue of proportionality maintained that it did not arise in this case and so I sat alone to consider that issue.

3

The facts in Ahmed v HMRC are analogous in many ways to the facts in this case. Over a period of some seven years, Ahmed had taken legitimate earnings totalling some £325,400 from the businesses of his wholly owned company and concealed it in his house, and this as part of a dishonest scheme to cheat the Revenue. There were two issues on appeal, namely whether these moneys comprised “ recoverable property” for the purposes of Part 5 of the Proceeds of Crime Act, 2002 (“ POCA”) and secondly, whether it was proportionate to forfeit the whole amount, or just the part that represented the amount of tax evaded. The High Court found that this was recoverable property, but that it was disproportionate to forfeit the whole amount. It remitted the matter back to the District Judge to assess the appropriate amount in the absence of agreement.

Attorney General's submissions
4

In summary, Crown Advocate Jowitt made the following submissions:-

  • (i) That the question of proportionality in the Ahmed v HMRC case was fact specific to that case, which focused on property ‘obtained through unlawful conduct’ and does not arise in the same way in this case, where the Royal Court found in terms that the property was tainted because it fully met the wide definition of tainted property in Article 2 of the Forfeiture of Assets Law as property “ used in or intended to be used in unlawful conduct” as well as property “ obtained in the course of … or in connection with” unlawful conduct.

  • (ii) In so far as proportionality may arise for consideration, it would be generally in respect of the Forfeiture of Assets Law's compliance with the European Convention on Human Rights (“ECHR”). No such argument was advanced at trial by the respondent. In any event, laws to confiscate not merely the proceeds of crime but also the instrumentalities of crime accord with obligations created by a number of international treaties. The Forfeiture of Assets Law seeks to fulfil an internationally recognised obligation and is ECHR compliant.

  • (iii) In any event the burden of proving what proportion of the property was due to tax fell on the respondent at trial, for example by the provision of business accounts and annual tax returns. He provided no such evidence and advanced no such argument. Accordingly the Court has no evidence before it now upon which it could arrive at any accurate finding.

Respondent's submissions
5

In summary, Advocate Nicholls, for the respondent, made the following submissions:-

  • (i) The approach to proportionality is clear:-

    • (a) The Forfeiture of Assets Law must be read and given effect to in a manner which avoids violation of Article 1 of the First Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms (“A1P1”).

    • (b) A forfeiture order which does not conform to the test of proportionality would constitute such a violation.

    • (c) The Court has a duty not to make an order which involves such a violation.

    • (d) The Forfeiture of Assets Law must be read down so as to be compatible with A1P1.

  • (ii) It would be disproportionate and a violation of A1P1 for the Court to seek to forfeit the cash in the Account which the Court has held to have been derived from a legitimate business source which was not owed in tax.

  • (iii) The only property which is liable to forfeiture is the amount in the Account which the representor is able to establish to represent the tax evaded.

  • (iv) The burden is on the representor (as the party seeking a forfeiture order) to establish the amount in the Account (if any) representing the tax evaded.

Decision
6

The starting point is the Supreme Court decision in R v Waya, which was concerned with confiscation following conviction under Part 2 of POCA which, as Advocate Jowitt rightly points out, is concerned with the recovery of the amount by which a convicted defendant has benefited from criminal conduct, namely the value of what he has obtained (section 76). I accept that this is a lower concept than the concept of being in possession of property “ used in, or intended to be used in, unlawful conduct”, namely the instrumentalities of crime.

7

In giving the judgment of the Supreme Court, Lord Walker and Lord Justice Hughes (at paragraph 11) set out A1P1:-

“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law .

The preceding provisions shall not, however, 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.”

8

Then at paragraph 12:-

“It is clear law, and was common ground between the parties, that this imports, via the rule of fair balance, the requirement that there must be a reasonable relationship of proportionality between the means employed by the state in, inter alia, the deprivation of property as a form of penalty, and the legitimate aim which is sought to be realised by the deprivation. That rule has consistently been stated by the European Court of Human Rights …”

9

Having pointed out that Section 3(1) of the Human Rights Act 1998 requires that in so far as it is possible to do so, legislation must be “ read and given...

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3 cases
  • The Attorney General v Ian Joseph Ellis
    • Jersey
    • Court of Appeal
    • 1 June 2020
    ...Forfeiture of Assets (Civil Proceedings) (Jersey) Law 2018. AG v Ellis [2019] JRC 141. Ahmed v HMRC [2013] EWHC 2241 (Admin) AG v Ellis [2019] JRC 219. Court of Appeal (Jersey) Law 1961 AG v Ellis [2019] JRC 220. Crociani v. Crociani [2014] (1) JLR 426. In the Matter of the Désastre of Blu......
  • HM Attorney General v Ian Joseph Ellis
    • Jersey
    • Royal Court
    • 24 November 2020
    ...not present or represented. Authorities Forfeiture of Assets (Civil Proceedings)(Jersey) Law 2018. AG v Ellis [2019] JRC 141. AG v Ellis [2019] JRC 219. Ahmed v HMRC [2013] EWHC 2241 (Admin) AG v Ellis [2020] JRC 098. Forfeiture of assets THE COMMISSIONER: 1 This is an application by the A......
  • The Attorney General v Ian Joseph Ellis
    • Jersey
    • Royal Court
    • 4 November 2019
    ...Ian Joseph Ellis Respondent Advocate M. T. Jowitt for the Representor. Advocate P. G. Nicholls for the Respondent. Authorities AG v Ellis [2019] JRC 219. Crociani v Crociani [2014] (1) JLR 426. Forfeiture of Assets (Civil Proceedings) (Jersey) Law 2018. In re Désastre Blue Horizon Holdings ......

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