Guernsey Law Reports 2007–08 GLR Note 14
FIDELITY MANAGEMENT LIMITED v. ROYAL BANK OF CANADA (CHANNEL ISLANDS) LIMITED
ROYAL COURT (Collas, Deputy Bailiff): September 20th, 2007
Criminal Procedure—proceeds of criminal conduct—freezing of assets
The share capital in Fidelity (which was a company incorporated in the Turks & Caicos Islands) was originally held in the form of bearer shares held by C, a US attorney and friend of the founder of the company. Following the founder’s death, meetings were held in the Turks & Caicos Islands at which the bearer shares were converted into registered shares in the names of the founder’s daughters who, as shareholders, elected C as the sole director of Fidelity.
Fidelity held a fiduciary deposit account at the defendant bank in Guernsey, which had been opened by the founder in a false name. C, as sole director, instructed the bank to transfer funds from that account to an account maintained by Fidelity at UBS in Zurich. In the light of further information it received, the bank declined to make the transfer, concerned that it might be committing an offence under the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law 1999. It requested the consent of the Financial Intelligence Service but this was neither given nor refused.
In the present proceedings, Fidelity sought a declaration that C was authorized to make the transfer request on its behalf and an order that the bank make the transfer in the terms requested. The bank took a neutral stance in the matter, the Financial Intelligence Service did not wish to become a party and, at the court’s request, a Crown Advocate appeared as partie publique.
Held: (1) It was not seriously disputed that the court had jurisdiction to hear the application as the forum conveniens. The bank was a registered Guernsey bank, the account was held in Guernsey, the fiduciary account agreement with the bank was governed by Guernsey law, the bank had a duty under the Criminal Justice (Proceeds of Crime) (Bailiwick of Guernsey) Law 1999 (a Guernsey Law) to obtain the Royal Court’s approval before acting on the transfer request, when the consent of the Financial Intelligence Service (a body based in Guernsey) was not forthcoming (Spiliada Maritime Corp. v. Cansulex Ltd., [1987] A.C. 460, applied). Moreover, no application had been made to refer the matter to the courts of another jurisdiction and, since the court could hear the matter with the assistance of expert evidence from the Turks & Caicos Islands, it did not need to consider whether it had the power itself to transfer the application to the courts of that jurisdiction.
(2) The making of a declaration was a discretionary matter which would be undertaken only when the court was satisfied it was appropriate to do so. It was not necessary to call upon Jurats to take part in making the decision, since there were no conflicts of primary evidence for them to resolve. The relevant foreign matters (the events in the Turks & Caicos Islands and the provisions of TCI company law) were not disputed and were detailed in affidavits sworn for the purposes of the present proceedings. The judge was satisfied that he could himself decide what conclusions to draw from the primary evidence.
(3) Having regard to the wishes of all the parties and since there was no arguable issue needing to be resolved at trial, it was appropriate to determine the application for the declaration as a preliminary issue. The court was satisfied that C had been duly appointed the sole director of Fidelity under the law of the Turks & Caicos Islands and the company’s articles of association. In this capacity, he had authority to issue instructions on behalf of the company in relation to the funds in its account with the bank. It was therefore appropriate to make a declaration that C’s request that the bank transfer funds from Fidelity’s account to another account in its name at UBS in Zurich was validly made on behalf of Fidelity and to order that it comply with the request.
2009
Law Report
None
Guernsey Law Reports 2007–08 GLR Note 14