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Attorney General v Jonathan Reid and others [2024] UKPC 30

Giorgio Saturno




Case Summary


Brief facts

In this case, the discharge of two applications for restraint orders, the discharge of these orders, and the duty of full and frank disclosure were at issue. The first restraint order was made on 20 May 2016 (the first restraint order) as a precursor to criminal proceedings being brought by The Bahamas against fraudsters who had allegedly defrauded Boeing of US$2,289,488.80 in the United States (“U.S.”).

 

The fraud was allegedly orchestrated in the U.S. by persons known as Jonathan Reid and David Valdez-Lopez through CWI International Investments Ltd (“CWI”), a company incorporated in The Bahamas. The fraudsters claimed that the money represented a deposit paid to Boeing regarding the purchase of a jet aircraft for which money had been a deposit. They further claimed that the contract had been canceled and, therefore, procured the return of the deposit to their account in the U.S. In truth, the fraudsters had not made any deposit, and as soon as the money was paid into the account, the fraudsters transferred the money, in separate amounts, out of the U.S. to accounts in The Bahamas. 

 

The respondents to that first restraint order included CWI and certain of its officers.

 

The Second Restraint Order

The second restraint order was granted on 20 June 2017, on an application by the Attorney General under an MLAT Request from the U.S. Department of Justice. The respondents to that order were Reid, Valdez-Lopez, and others. The application was based on the same facts as the May 2016 application.

 

Discharge of the June 2017 Restraint Order

On June 19, 2019, the High Court discharged the second restraint order. The judge held:

 

“(1) the application for that order was an abuse of process as it was based on the same facts and sought to relitigate the same issues as the domestic restraint order, and (2) no sufficient nexus had been shown between the fraud and the named respondents to the originating summons.”

 

The decision of the Court of Appeal

The Attorney General appealed the order to the Court of Appeal (COA).  On a preliminary objection by the respondents, the COA ruled, among other things, that CWI should be added to the appeal as the fourth respondent.  In his application, the Attorney General recited the fact contained in the affidavit from the U.S. that “all of the Sun Trust accounts were closed on 23 January  2015.”

 

The COA held that the appellants had breached the duty of full and frank disclosure in that it had failed to bring to the Court’s attention the fact that the MLAT Request had stated that CWI Investments' account with Sun Trust had been closed on 23 January 2015.  If this was true, it meant that the account had been closed almost one year before the cheque deposit was alleged to have been made to the RBC Accounts in the Bahamas.  On that basis, the COA held that the Attorney General had breached the duty of full and frank disclosure and the matter was struck out.

 

The Judicial Committee of the Privy Council (JCPC)

Based on the facts the JCPC held that there had been no material non-disclosure because there was ample evidence, on the facts before the COA, to show that the Bank had not closed on the date in the MLAT. That the date contained in the statement regarding the closer of the Bank had to be an error because it was inconsistent with the preponderance of the evidence before both the High Court and the COA. In that way, the JCPC held that there was no material non-disclosure.

 

On that basis alone, the court would have allowed the appeal it went on to examine the following issues:


1.        The public interest – the court held that public interest militated against discharge of the restrain order @par 39:

“It is undoubtedly the case that, in the context of an application for a restraint order in connection with proceeds of crime, it is necessary to take account of the public interest when determining what consequences should follow a material non-disclosure."


Again @par 41 the Court stated:

Consideration of the public interest will be no less essential where, as in the present case, the application for a restraint order is made pursuant to a request for mutual legal assistance. Here, the public interest of The Bahamas is clearly engaged because it appears that the fraud was carried out from The Bahamas, and the proceeds of the fraud were transferred to that jurisdiction. In addition, there are additional considerations of public interest relating to the commitments of the Bahamas under the MLA Treaty with the USA and to international cooperation to combat crime.


The JCPC emphasized the point that if there had been a material nondisclosure, the COA needed to deal with the public interest issue. In that regard, @ par. 45 the JCPC held that  

In the Board’s view, when considerations of the public interest are taken into account, there could be no justification for discharging the joinder order or the MLAT restraint order.


2.        The JCPC held that if there was a real issue regarding material non-disclosure, the Court of Appeal should go on to make necessary findings of fact.


The CWI Joinder

3.        After setting aside the application to join CWI as a respondent, the COA felt that if the CWI joinder order was set aside, the appellant’s appeal against the discharge of the MLAT restraint order was doomed to failure. The JCPC found that the proceedings were properly constituted because it was on an application by CWI that the High Court had discharged the order. Therefore, CWI was a respondent to the appeal, and there was no need for a joinder.


Moot point

4.        The respondents had argued the appeal was moot because the funds had been transferred to another law firm in The Bahamas. The Board disagreed that the transfer of the funds without more rendered the point moot. The Court held that the funds remain “realisable property” and may be restrained.


Commentary

This case illustrates the court’s obligation to consider the public interest in proceeds of crime matters where there is a material nondisclosure before deciding to discharge or vary an order under the proceeds of crime legislative regime.

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