In The Petition Scottish Ministers For A Disclosure Order In Respect Of Am
| Jurisdiction | Scotland |
| Judge | Lord Jones |
| Neutral Citation | [2014] CSOH 131 |
| Docket Number | P584/13 |
| Court | Court of Session |
| Date | 03 April 2014 |
| Published date | 19 August 2014 |
OUTER HOUSE, COURT OF SESSION
[2014] CSOH 131
P584/13
OPINION OF LORD JONES
In the Petition
SCOTTISH MINISTERS
for a disclosure order in respect of AM
Petitioner;
Petitioner: Carmichael; Civil Recovery Unit
Respondent: Moir; Drummond Miller LLP
3 April 2014
(i) The petitioners are the enforcement authority for Scotland for the purposes of part 5 of the Proceeds of Crime Act 2002. They sought, and were granted, a disclosure order in terms of section 391 of that Act, averring that certain property of which the respondent has knowledge was the subject of a civil recovery investigation. The effect of the disclosure order was to require the respondent to answer questions, among other things. The respondent enrolled a motion in which he invited the court to vary the disclosure order.
(ii) The respondent’s argument in support of his motion was that section 391 provides, in terms, that no application for a disclosure order may be made in relation to a money laundering investigation. In their petition, the petitioners accuse the respondent, in effect, of having committed money laundering offences in connection with the property which is the subject of the disclosure order. If the respondent is required to answer questions about that property, so ran the argument, he will be the subject of a money laundering investigation.
(iii) The motion was refused. The petitioners, through the agency of the civil recovery unit, are responsible for recovering property which is or represents property obtained through unlawful conduct. If the court finds any property to be recoverable, it must order its recovery. The property then vests in the trustee for civil recovery. That is a civil remedy, directed against the property. A money laundering investigation is directed to determining whether an offence has been committed and, if so, the identity of the perpetrator. It is not a function of the Scottish Ministers to investigate crime. The application for the disclosure order was not made in relation to a money laundering investigation. It was made in relation to a civil recovery investigation.
Introduction
[1] The petitioners are the enforcement authority for Scotland for the purposes of part 5 of the Proceeds of Crime Act 2002 (“the Act”). The long title of the Act narrates that it makes provision, among other things, to allow recovery of property which is or represents property obtained through unlawful conduct.
[2] The petitioners aver that a number of heritable properties and the proceeds of the sale of certain other heritable properties (“the specified property”) are the subject of a civil recovery investigation. It is also averred that, as part of their civil recovery investigation, the petitioners are seeking to ascertain the full circumstances in which the specified property was obtained.
[3] The definition of “civil recovery investigation” is to be found in section 341 of the Act, which provides that it is an investigation into (a) whether property is recoverable property or associated property, (b) who holds the property, or (c) its extent or whereabouts. (Subsection 2) Two other types of investigation are also mentioned. A “confiscation investigation” is an investigation into (a) whether a person has benefited from his criminal conduct, or (b) the extent or whereabouts of his benefit from his criminal conduct. (Subsection 1) Subsection 4 concerns a “money laundering investigation”, which is an investigation into whether a person has committed a “money laundering offence”.
[4] Section 316 of the Act provides that “recoverable property” is to be read in accordance with sections 304 to 310. Section 304(1) provides that property obtained through unlawful conduct is recoverable property. “Associated property” is defined as property of any of a number of specified descriptions which is not itself the recoverable property. For example, if the recoverable property is part of a larger property, but not a separate part, the remainder of that property is associated property for the purposes of the Act. (Section 245(1))
[5] Shortly after raising these proceedings, the petitioners sought a disclosure order in terms of section 391 of the Act. Section 391 provides as follows:
“(1) The High Court of Justiciary, on an application made to it by the Lord Advocate in relation to confiscation investigations, or the Court of Session, on an application made to it by the Scottish Ministers in relation to civil recovery investigations, may make a disclosure order if it is satisfied that each of the requirements for the making of the order is fulfilled.
(2) No application for a disclosure order may be made in relation to a money laundering investigation.
(3) The application for a disclosure order must state that —
(a) a person specified in the application is subject to a confiscation investigation and the order is sought for the purposes of the investigation, or
(b) property specified in the application is subject to a civil recovery investigation and the order is sought for the purposes of the investigation.
(4) A disclosure order is an order authorising the Lord Advocate or the Scottish Ministers to give to any person the Lord Advocate considers or the Scottish Ministers consider has relevant information, notice in writing requiring him to do, with respect to any matter relevant to the investigation for the purposes of which the order is sought, any or all of the following —
(a) answer questions, either at a time specified in the notice or at once, at a place so specified;
(b) provide information specified in the notice, by a time and in a manner so specified;
(c) produce documents, or documents of a description, specified in the notice, either at or by a time so specified or at once, and in a manner so specified.
(5) Relevant information is information (whether or not contained in a document) which the Lord Advocate considers or the Scottish Ministers consider to be relevant to the investigation.
… "
[6] By interlocutor, dated 19 June 2013, the Lord Ordinary made a disclosure order as sought by the petitioners. Under cover of letter, dated 7 March 2014, the petitioners served on the respondent a certified true copy of the disclosure order, together with a disclosure notice requiring him to attend at the Crown Office on a date and at a time specified, and to answer questions, provide information and produce documents in relation to the civil recovery investigation.
[7] The case came before the court on 3 April 2014 on the respondent’s motion to vary the disclosure order in terms of section 396(4)(b) of the Act, which provides that such an application may be made to a judge of the court which made the order by any person affected by it. According to the terms of the motion, the variation was sought “to prevent the Scottish Ministers from ordering [the respondent] to attend for interview.” The reasons given, which are accurately quoted, were as follows:
“Section 391(2) of the Act states, ‘no application for a disclosure order may be made in relation to a money laundering investigation.’ Section 415 of the Act defines money laundering offence as an offence under Section 327, 328 or 329 of the Act. Section 327(1)(a), (b), (c), and (d) of the Act makes it an offence for a person to conceal criminal property, disguise criminal property, convert criminal property or transfer criminal property. Section 329(1)(a), (b) and (c) of the Act makes it an offence for a person to acquire criminal property, use criminal property or possess criminal property.
On the 19th June 2013 the Scottish Ministers petitioned the Court for and were granted a prohibitory property order under section 255A of the Act. At paragraph 2 of the Petitioner’s stated that, ’The respondent … in an individual who the petitioners think hold, or has interest in the property mentioned in Part II of the schedule to this petition. There is a good arguable case that the property is recoverable property within the meaning of the Act. Reference is made to paragraphs 7 to 34 below.’ The petitioner also referred within the petition to the property at schedule 2 as being property unlawfully obtained. The property referred to at Part II is the same property as referred to in the disclosure order. The disclosure order also referred to the proceeds of the sale of [other properties]. Within the petition the Petitioner avers that [the respondent] has been involved in the supply of controlled drugs, shoplifting, fraud and illegal money lending. At paragraph 32 the petitioner specifically averred that, ‘said property forming items [1] to [4] of the schedule is recoverable property, being property either wholly or partly obtained by the respondent through unlawful conduct. Namely the supply of controlled drugs and mortgage fraud.
The petitioners are investigating offences defined as money laundering and have no lawful authority to order [the respondent] to attend for interview under the terms of the order granted under section 391 of the Act…”
[The assertion that a prohibitory property order was granted under section 255A of the Act on 19 June 2013 is incorrect.]
[8] Having regard to the terms of the motion, the issues for determination are these: (i) whether or not the petitioners are investigating money laundering offences, and, if so, (ii) whether or not the disclosure order was made in relation to a money laundering investigation.
Submissions for the respondent
[9] Mr Moir, who appeared for the respondent, drew attention to sections 327, 328 and 329 of the Act which create what are described in section 415(1) as money laundering offences. They provide that a person commits a money laundering offence in certain circumstances involving criminal property. In terms of section 340(3), property is criminal property if it constitutes a person’s benefit from criminal conduct and the alleged offender knows or suspects that it constitutes such a benefit. Section...
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