Jersey’s largest settlement [2020] under the Civil Forfeiture Law was $17 million.

In 2020 The Royal Court of Jersey approved the largest settlement ever under the new Civil Forfeiture Law regarding trust assets alleged to be connected to the Teamsters Union (AG v Allied Trust Company Limited [2020] JRC 020).

SUMMARY:

• In 2016,
• MONEYVAL recommended introducing a non-conviction-based confiscation regime that parallels its conviction-based system. In 2018, the State of Jersey implemented the Forfeiture of Assets (Civil Proceedings) (Jersey) Law 2018 (the Law).
• In 2019,
• The Attorney General asserted that he had reasonable grounds to believe that certain bank accounts held by the Respondent at STANDARD BANK JERSEY LIMITED with credit balances at the start of the proceedings in the sum of just under US$17 million were tainted property and that the other conditions in Article 10(2) of the Forfeiture of Assets (Civil Proceedings) (Jersey) Law 2018 (“the Law”) were satisfied. 
• The application was made under Article 11 of the Law for a forfeiture order regarding the allegedly tainted property. 
• The representation was brought on 3rd May 2019, and
• Duly served on the Respondent (“the Trustee”) in its capacity as trustee of the Truk Settlement (“the Trust”), a discretionary settlement established on 17th September 2014.
• On 19th December 2019,
• The Jersey royal court gave judgment approving a compromise of the proceedings commenced by the Attorney General against Allied Trust Company Limited [the Respondent] to which “B” [the Intervenor] had successfully applied to be joined.  Reasons were reserved, and the 2020 judgment contains those reasons.
• In 2020,
• In a landmark judgment, the Royal Court of Jersey approved the largest-ever settlement under the Forfeiture of Assets (Civil Proceedings) (Jersey) Law 2018.
• AG v Allied Trust Company Limited and B [2020] JRC 020 - https://www.jerseylaw.je/judgments/unreported/Pages/[2020]JRC020.aspx
• In this settlement, a Jersey trust fund (valued at just under US$17 million) was divided.
• The Jersey Criminal Offences Confiscation Fund and
• Three named Charities.

THE LAW

• The Law established a procedure for the summary forfeiture of cash and property in Jersey bank accounts, which had been subject to a “No Consent” regime for 12 months or more.
• The Law enables the Attorney General to commence proceedings to forfeit property where it has “reasonable grounds” to believe cash or property held at a bank in Jersey to be “tainted property” (being property “used in, or intended to be used in, unlawful conduct or obtained in the course of, from the proceeds of, or in connection with unlawful conduct”).
• The Law then reverses the usual civil burden of proof, requiring the account holder to satisfy the Court that the property is not tainted.
• Significantly, the Law also fetters the account holder's ability to recover any legal costs from the Attorney General if it is ultimately successful in defending the proceedings.

THE TRUST and THE DECISION

• Here, the account was held by the trustee of a Jersey discretionary trust established to benefit various named charities, initially including UNICEF and the Red Cross (a Jersey Charity; the Durrell Wildlife Conservation Trust was subsequently added as a beneficiary).
• The provenance of the funds was difficult to establish (the initial settled funds having been settled on a Liechtenstein foundation over 40 years beforehand by long-deceased individuals).
• The trustee had commissioned a report and then filed a suspicious activity report which sought to link the trust assets to a deceased US lawyer whose client list was alleged to have included high-profile individuals connected to organised crime, including a high-ranking member of the Teamsters Union who had been convicted of conspiracy to bribe in the US in the 1980s.
• The Attorney General then brought proceedings seeking the summary forfeiture of the account.
• The trust settlor successfully applied to intervene in the proceedings, denying that the accounts contained tainted property and contending that the property should be distributed to the trust’s charities.
• The parties ultimately agreed to settlement terms on the basis that 65% of the trust fund would be paid into Jersey’s Criminal Offences Confiscation Fund, with the remaining 35% being distributed to the three named charities.
• The parties then applied to the Court for an order approving settlement on those terms.

WHAT DID THE COURT DECIDE?

• Art 34 of the Law states, “On an application made by the Attorney General…..the Court may make an order….in terms agreed between the Attorney General and other parties to the proceedings, for the disposal of the proceedings”.
• The Court held that the explicit purpose of the Law was to provide a mechanism by which assets can be forfeited where those who claim to be the owner of them are unable to demonstrate that they are not the proceeds or instrumentalities of crime.
• It was common ground that Art 34 was permissive, giving the Court the discretion to approve a settlement but did not oblige it to do so.
• Furthermore, and although not required to determine the same, the Court was inclined to the view that Art 34 carried the necessary implication that the extent of the Court’s discretion was limited to an order which approved the terms agreed between the parties and that it ought not to prevent a settlement having effect unless it was either unlawful or contrary to public policy.
• The Court also accepted that the Court would better inform counsel as to the different factors which might need to be considered in considering a settlement and would be better placed to assess litigation risk, which was a material part of any negotiations which lead to a compromise.
• The Court agreed that as far as the Settlor was concerned, litigation risk assessed that the charities would not benefit if the proceedings were lost.
• The Court also accepted that the proposed settlement was not contrary to the public interest or public policy not only because the statute provided for a mechanism (under Art 34) by which such agreements can be put before the Court for approval but also because the agreement before it was consistent with the stated purpose of the legislation.
• In this case, the settlement agreement was explicitly subject to a condition precedent that required the Court to approve the compromise.
• The Court noted that this would comfort the charities so they could adequately receive their share of the monies.
• Significantly, the Court made clear that it was not approving the settlement terms insofar as the trustee of the trust was concerned in the capacity of a Beddoe Court but as what it described as a “Forfeiture Court”.
• It also made clear that it was not giving the trustee any confirmation (blessing) that it had acted appropriately in exercising its powers to make the compromise.

What are the practical implications of this case?

• Art 34 confers power on the court to consent to the settlement of forfeiture proceedings under the Law.
• In most instances, it is likely to be unnecessary to seek the court’s approval before entering compromises in relation to proceedings under the Law.
• However, where the proceedings concern assets held in a fiduciary capacity or where the settlement involves appropriations to third parties, this procedure affords a framework for relatively cost-effective and speedy resolution.
• Trustees should not construe any approval given in the context of Art 34 as analogous with approval given by a Beddoe Court to a trustee, and naturally, in appropriate circumstances, a trustee may still need to invoke the jurisdiction of that Court separately.

CASE DETAILS

• Court: Royal Court
• Judge: Sir William Bailhache
• Date of judgment: 30 January 2020

SOURCE –

• https://www.jerseylaw.je/judgments/unreported/Pages/[2020]JRC020.aspx
• https://steensonnicholls.com/news/first-major-court-approved-settlement-under-the-civil-forfeiture-law/
• https://www.gov.je/news/2019/pages/firstconfiscationunderforfeiture.aspx