FIU loses case before The Court of appeal

APPLICANT:

FINANCIAL INTELLIGENCE UNIT, Independence Avenue,Victoria

And

RESPONDENT:

MARES CORP, Electing its domicile at the chambers Of Mr. Frank Elizabeth, at suite 303 Premier Building, Victoria

SCA MA 1/2012

BEFOR: A. F. T. FERNANDO, J. A.

Mr. D. Esparon, for the Applicant
Mr. F. Elizabeth, for the Respondent

Date of Hearing: 15th June 2012
Date of Ruling: 21st June 2012-10-09

RULING

A. F. T. FERNADO, J.A.

• This is an application by the Applicant for an order from this court that execution of the Ruling of the Supreme Court dated 4th June 2012 in Miscellaneous Application No. 62 of 2012 arising from Civil Side No. 63 of 2012 by stayed and that BMI Bank Offshore (Seychelles) Limited be ordered not to part with any of the funds standing to the credit of Mares Corp in account number 300000005944; pending the determination of the appeal filed against the ruling of the Supreme Court in Miscellaneous Application No. 62 of 2012.
• The Respondent had by its Miscellaneous Application dated 22ndMarch 2012 sought an order of the Supreme Court against the Applicant in the instant case to release the Respondent’s funds in Bank account number: 300000005944 at BMI Bank Offshore (Seychelles) Limited, to itself forthwith, which account had been frozen by the Applicant on or around October 2010, apparently under the provisions of section 10 (1) (e) of the Anti Money Laundering Act 5 of 2006, as amended by Act 18 of 2008.
• According to the relevant provisions in section 10 (1) (a) of the said Anti Money Laundering Act, where a reporting entity has reasonable grounds to suspect that any transaction or attempted transaction may be related to the commission of criminal conduct including an offence of money laundering or of financing of terrorism, the reporting entity shall, as soon as practicable, after forming that suspicion or receiving the information, report the transaction or attempted transaction or the relevant information to the FIU. According to the relevant provisions in section 10 (1) (e): “If.....the circumstances relate to the proposed transaction or a transaction or any other transaction in respect of the funds shall not proceed without the consent in writing of the FIU, and if no such consent is received within a period of 10 days from the date of the receipt by the reporting entity of the acknowledgement from the FIU....., the proposed transaction or transaction may proceed and the provisions of section 3 (10) shall not apply unless within the said 10 day period the FIU issues a direction that the transaction or the proposed transaction or other transaction should not proceed.”
• The documents filed by the Applicant in this case are very unhelpful as it is silent about a written consent or direction of the FIU to BMI Bank Offshore (Seychelles) Limited. I also cannot find a section 3 (10) either in the Anti Money Laundering Act 5 of 2006, or in the Anti Money Laundering (Amendment) Act 18 of 2008 which repealed section 10 (4) of the Anti Money Laundering Act 5 of 2006 has not clearly provided for a time period as to when a freezing order issued by the FIU may be in force.
• The repealed section 10 (4) of the Anti Money Laundering Act 5 of 2006 stated as follows: “If the FIU, after consulting a reporting entity required to make a report under subsection (1), has reasonable grounds to suspect that a transaction or a proposed transaction may involve an offence of money laundering or of financing of terrorism, it may direct the reporting entity in writing or by telephone to be followed up in writing, not to proceed with the carrying out of that transaction or proposed transaction or any other transaction in respect of the funds affected by that transaction or proposed transaction for such period as may be determined by the FIU, which may not be more than five days, in order to allow the FIU
  
  a. To make necessary inquiries concerning the transaction; and
  b. If the FIU deems it appropriate, to inform and advise the Attorney General.
  
  For the purpose of calculating the period of five days referred to in this subsection. Saturdays, Sundays and public holidays shall not be taken into account.” (emphasis by me).
  
  It is unthinkable that a law could have given such draconian powers to the FIU to freeze moneys of persons for an indefinite period, which certainly affects the constitutionally protected rights of persons to property. When Counsel for the Applicant was questioned at the hearing in regard to this matter his answer was that one should have moved by way of judicial review to have such a seizure order by the FIU quashed. I must state that the Anti Money Laundering (Amendment) Act 18 of 2008 is a very poorly drafted piece of legislation. Realising this the Anti Money Laundering (Amendment) Act 24 of 2011, had remedied it, by providing in section 10 (4) that a seizure order by the FIU may be in force for a period not exceeding 180 days. In view of this amendment, which is on a matter of procedure, the freezing order made by the FIU in October 2010 to BMI Bank Offshore (Seychelles) Limited has lapsed.
• The Respondent had based his application referred to at paragraph 2 above on the ground “that the court had not issued an interlocutory, interim, or restraining order against Mares Corp or appointed a receiver to take over the bank account of the company as is required by law after an account is frozen” and that their “bank account was frozen in October 2010, more than 17 months ago and since FIU has not applied to the Court to extend the freezing directive and the Court has not made any order extending the directive” they believe “ that the directive has now expired” and that their “money is being frozen illegally by the bank and FIU.”
• The Applicant has opposed that application on the ground that Civil Side No 63 of 2011, to which the Miscellaneous Application is connected “is still before this Court for re-trial and the associated case of CS 354/10 which is before Judge Burhan has been set for hearing on the 11th and 12th November 2012” and that “It will not be just and proper to grant the motion for the release of the funds as doing so determine the merits of cases prematurely.” They had also said that these funds can be easily transferred outside the jurisdiction of these courts and would render the Applicant without a cause of action.
• The Supreme Court by its Ruling of 4th June 2012had allowed the application of the Respondent and directed “the FIU to release the applicant’s (Respondent in this case) funds forthwith.” In making his Ruling the Learned Chief Justice had set out the history of the matter thus: “The main proceeding is somewhat in legal limbo. This was initially a proceeding under the Proceeds of Crime (Civil Confiscation) Act commenced on the 21st March 2011. An application for an interlocutory order to freeze the assets in question was dismissed by the Supreme Court. There was an appeal by the respondent to the Court of Appeal. The Court of Appeal, on 9th December 2011, reversed the decision of the Supreme Court..... And directed parties to undertake further proceedings in the manner provided by the Seychelles Code of Civil Procedure starting with the filing of a plaint. Those directions have not been followed or implemented as yet, at least as at the hearing of this application, or writing of this ruling..... The respondent has failed to comply with the order of the Court of Appeal and has not instituted as directed a proceeding by way of plaint, more than six months since the decision of the Court of Appeal is announced. Much as no time limit was set by the Court of Appeal within which to comply with the order it must be assumed that it had to be complied with within a reasonable time. A month perhaps would be sufficient or perhaps even two months. The delay of six months is both inordinate and egregious. It cannot be condoned in my view..... No explanation is available as to why it has failed to comply with the Court of Appeal order. The affidavit of Mr. Hogan is quite on this aspect of the case.”
• The Supreme Court had allowed the application referred to at paragraph 2 above on the basis that at the time of the application “there appears to be no head proceeding before this court, that “there is no claim’ against the applicant (present Respondent) on this file as the case stands until the Court of Appeal decision is implemented” and because the Applicant to this case had “failed to comply with the order of the Court of Appeal and has not instituted as directed a proceeding by way of a plaint, more than six months since the decision of the Court of Appeal was announced.” The Learned Chief Justice had also stated: “With regard to proceeding before Judge Burhan in my view, it is up that court to make orders for interim relief, on application of the parties as the law allows, rather than for this court to anticipate or second guess what is going on in that proceeding. I am concerned only in the proceeding before me.
• In allowing the application referred to at paragraph 2 above the Learned Chief Justice had also stated: “It cannot be expected that the application in this matter has to wait for the respondent to wake up from the deep slumber that the FIU is enjoying in this matter. Or that the law can protect an indolent litigant who at the same time is restraining a party from its property. It is the duty of any Court to ensure that not only is the law applied but the court must not allow itself to be a conduit for unjust oppressive and abusive conduct by one litigant against another. The Supreme Court of Seychelles will use its inherent jurisdiction to protect its process from being abused. I find the conduct of FIU in relation to this proceeding to be unjust, oppressive and an abuse of the process of this court....”
• The Applicant by its application dated 6th June 2012 sought an order from the Supreme Court for stay of execution of Judgement (Ruling) of 4th June 2012 in the Miscellaneous Application No. 62 of 2012 arising from Civil Side No. 63 of 2012 pending the determination of its appeal to the Court of Appeal against the said Ruling on the grounds that they have “a good ground of appeal” that if no stay is granted “there is a real likelihood that the Respondent shall remove funds from the Bank Account at BMI Bank and transfer it out of the jurisdiction of Seychelles”.
• The Respondent had opposed the application for a stay on the grounds that this was an abuse of the process of Court, that there is no valid or substantial grounds of appeal and that the balance of convenience rests clearly with the Respondent in that the loss and hardship it would suffer is greater than that which the Applicant would suffer if the stay is not granted.
• The Learned Chief Justice by his Ruling of the 6th of June had refused to grant a Stay thus: “I shall decide this matter on one point alone. To me I take it as a continuation of the matter on the conduct of the Applicant in this matter which is an abuse of the process of this court. The Applicant did not attempt to comply with the order of the court of Appeal in the proceedings, not until the Respondent decided to come and seek assistance of this court to free their assets from the control of the Applicant now. On my part I cannot continue being a party to this. I dismiss this application with costs.”
• The Applicant having failed to obtain a Stay of Execution of the Judgement (Ruling) of 4th June 2012 has now made application to this Court as averred in paragraph 1 above. The grounds upon which the Applicant has based its application are: (a) “unless a stay is granted as a matter of urgency, BMI (Offshore) Bank Seychelles Limited will remit the said funds to the Respondent out of the jurisdiction of the Courts of Seychelles, and in those circumstances if the appeal is successful, the result would be rendered nugatory” and (b) that the Applicant has good grounds of appeal based on points of law which are of general and public importance since the matter in issue concerns the alleged proceeds of criminal conduct”.
• The Applicant in its Affidavit in support of the application for stay filed before this Court had tried to explain the delay in failing to comply with the Court of Appeal Order of the 9th of December 2011 referred to at paragraph 6 above by stating that after the delivery of the Ruling of the Court of Appeal, the Applicant and the Respondent had been in negotiations to settle the matters in CS 63 of 2011and related case CS 354 of 2010and referred to the affidavit of Svetlana Vasivela. The affidavit of Svetlana Vasivela dated 8th March 2012, annexed to the application for stay filed before this Court, states: “That I authorize Mr. Wilby Lucas, Attorney-At-Law to represent our Company and to negotiate an out of Court settlement with the FIU on the instruction of our Company and to accept any reasonable offer on our behalf.” (emphasis by me). The Applicant in its application for a stay of execution filed before the Supreme Court had not adverted to this and that is why the Learned Trial in refusing the stay had stated: “No explanation is available as to why it has failed to comply with the Court of Appeal order. The affidavit of Mr. Hogan is quite on this aspect of the case.” In my view the affidavit of Svetlana Vasivela dated 8th March 2012, made almost 3 months after the judgment of the Court of Appeal and when taking into consideration its contents, cannot certainly be held out as a valid excuse to explain the delay in complying with the Court of Appeal Judgment. There was nothing to prevent the Applicant to file a plaint before the Supreme Court in compliance of the Judgment of the Court of Appeal, even if it had an out of court settlement in mind.
• Rule 20 (1) of the Court of Appeal Rules 2005 states: “An appeal shall not operate as a stay of execution or of proceedings under the decision appealed from : Provided that the Supreme Court or the Court may on application supported by affidavits, and served on the respondent, stay execution on any judgment, order,..... pending appeal on such terms, including such security for the payment of any money or the due performance or non-performance of any act.... ordered by or in such judgment.....as the Supreme Court or the Court may deem reasonable.”
• Section 230 of the Seychelles Code of Civil Procedure is in similar terms, namely: “An appeal shall not operate as a stay of execution or of a proceeding under the decision appealed from unless the court or the appellate court so orders and subject to such terms as it may impose. No intermediate act or proceeding shall be invalidated except so far as the appellate court may direct.”
• It is clear that the granting of a stay f execution is entirely at the discretion of the Court and dependant on the circumstances of each case. This necessitates me to consider the way this case has proceeded since the making of the seizure order by the FIU in October 2010.
  1. The Respondent files a civil suit against the Applicant for unjust enrichment in the Supreme Court in Civil Side number 630/2011 on the 28th of December 2010, which case was called in January 2011.
  2. The Applicant, almost 5 months after the order issued by it to BMI Bank Offshore (Seychelles) Limited to freeze bank account number: 300000005944 at BMI Bank Offshore (Seychelles) Limited belonging to the Respondent and almost 3 months after the Respondent had filed the civil suit referred to above made application to the Supreme Court seeking interlocutory and receivership orders under section 4 and 8 of the Proceeds of Crime (Civil Confiscation) Act 19 of 2008 (POCCCA).
  3. When he application seeking interlocutory and receivership orders came up for hearing before the Supreme Court on the 27th of June 2011, Counsel for the Applicant sought an adjournment on the basis that the case was not suitable for hearing on affidavit as there were disputes of fact, without having made a prior application to Court, the adjournment however was not granted.
  4. The Supreme Court refused to grant interlocutory and receivership orders under section 4 and 8 of the POCCCA and the Applicant appealed to the Seychelles Court of Appeal against the Ruling of the Supreme Court.
  5. On the 9th of December 2011 the Court of Appeal by its majority judgment ordered that the matter be “remitted to the Supreme Court for the exchange of pleadings by the parties and subsequent trial of the issues.”
  6. On the 22nd of March 2012; almost 15 months after its money had been frozen on a directive of the FIU and more than 3 months after the judgment of the Court of Appeal remitting the case back to the Supreme Court for the exchange of pleadings by the parties and subsequent trial of the issues; the Respondent filed Miscellaneous Application No. 62 of 2012 seeking an order of the Supreme Court against the Applicant to release the Respondent’s funds in bank account number: 300000005944 at BMI Bank Offshore (Seychelles) Limited, to itself forthwith, which account had been frozen by the Applicant on or around October 2010.
  7. Subsequent to the Respondent filing Miscellaneous Application No. 62 of 2012 as referred to in the above sub-paragraph, the Applicant filed Miscellaneous Application No. 80 of 2012seeking directions of the Supreme Court in regard to the manner parties need proceed as ordered by the majority judgment of the Court of Appeal. The majority judgment of the Court of Appeal had stated: “Where an affidavit is filed by the Respondent comprehensively refuting the belief affidavit of the Applicant, parties are invited to file further pleadings (plaint, defence etc) in order to proceed to trial according to the Seychelles Code of Civil procedure.” Despite this clear direction from the Court of Appeal Mr. Barry Galvin in making his submissions before the Supreme Court on behalf of the Respondent, in Miscellaneous Application No. 80of 2012 on the 7th of May 2012, almost 5 months after the judgment of the Court of Appeal had said: “I’ve read the judgment and I’m not aware in the judgment does it say that a plaint should be issued perhaps I missed it....The most effective way for it is to follow exactly what would be the general recognised commercial court procedure that we would narrow down the issues by particulars that we come back before the Court if necessary for directions. That we would exchange sworn witness statements so that any unnecessary evidence” (verbatim from the Court Record). The Supreme Court by its Order dated the 7th of May 2012had rejected the method proposed by Mr. Galvin and ordered that he comply with the order of the majority judgment of the Court of Appeal. Mr. Galvin’s submission to Court on the 7th of May 2012, is not only in conflict with the directions of the majority judgment of the Court of Appeal but is contradictory of his own submission in this case made before the Learned Chief Justice on the 2th of June 2011 when he sought an adjournment of the hearing fixed for that day, on the basis that the case was not suitable for hearing on affidavit and that in order to do justice between the parties, further pleadings were necessary. Mr. Galvin’s behaviour I must state in the least shown total disrespect for the Court of Appeal and the Supreme Court and an attempt to drag on the proceedings in violation of the Respondent’s constitutional right under article 19 (7) to a fair hearing of the case filed by the FIU against it, within a reasonable time.
• The Applicant cannot make freezing orders and then drag its feet in obtaining the orders under section 3, 4 and 5 of POCCCA as happened in this case. This will seriously affect the credibility of the FIU and have drastic consequences on the offshore banking industry. Undoubtedly there is a duty cast on every individual and institution to ensure that Seychelles does not become a safe heaven for safe deposit and laundering of the proceeds of crime, but this should not be at the cost of counsel for the FIU showing disregard to court orders and the fundamental right of a person to a fair hearing within a reasonable time.
• I share the same views expressed by the Learned Chief Justice in dismissing the application for a stay of execution of the Ruling in Miscellaneous Application No. 62 of 2012 dated 4th June 2012, as set out fully at paragraphs 10 and 13 above. These matters outweigh the two grounds urged by the Applicant at paragraph 14 above, in making the application for a stay of execution of the Ruling of the Supreme Court, to this Court.
• I therefore refuse the application made to this Court for a stay of execution of Ruling of the Supreme Court in Miscellaneous Application No. 62 of 2012 dated 4th June 2012, with costs to the Respondent.