United States Government v Montgomery (No 2)
| Jurisdiction | UK Non-devolved |
| Judge | LORD STEYN,LORD CARSWELL,LORD HOFFMANN,LORD CLYDE,LORD SLYNN OF HADLEY |
| Judgment Date | 22 July 2004 |
| Neutral Citation | [2004] UKHL 37 |
| Court | House of Lords |
| Date | 22 July 2004 |
[2004] UKHL 37
HOUSE OF LORDS
The Appellate Committee comprised:
Lord Steyn
Lord Slynn of Hadley
Lord Hoffmann
Lord Clyde
Lord Carswell
and another
My Lords,
I have had the privilege of reading the opinion of my noble and learned friend Lord Carswell. I agree with it. I would also dismiss the appeal.
My Lords,
I have had the advantage of reading in draft the speech prepared by my noble and learned friend Lord Carswell. For the reasons he gives I agree that the appeal should be dismissed.
My Lords,
I have had the advantage of reading in draft the speech of my noble and learned friend Lord Carswell. For the reasons he gives, with which I agree, I would dismiss this appeal.
My Lords,
I have had the opportunity of reading in draft the speech to be given by my noble and learned friend Lord Carswell and I agree that the appeal should be dismissed for the reasons set out in that speech. I expressly reserve my opinion on the question whether the operation of the fugitive disentitlement doctrine would if it had taken place in a Convention state have constituted a breach of Article 6.
My Lords,
The appellant's former husband Larry Barnette was charged with defrauding the United States Government of sums of money totalling some $15 million, and was convicted in 1984 on a number of counts of fraud and related offences, including offences under the Racketeer Influenced and Corrupt Organisations Act ("RICO"). He was sentenced to a term of imprisonment and also ordered to pay $7 million to the United States by way of restitution and to forfeit his 900 shares in Old Dominion SA ("ODSA"), a Panamanian company controlled by him through which he had passed proceeds of his fraudulent activity.
In August 1983, shortly before he was indicted for fraud, Mr Barnette transferred 800 of his 900 shares in ODSA to the appellant, who was at that time still married to him. The US court ruled that under RICO the US Government's title to the 800 shares antedated the transfer to the appellant, with the consequence that they were forfeited and had to be surrendered, or their value accounted for, notwithstanding the transfer to the appellant.
Mr Barnette and the appellant fought a vigorous rearguard action in an attempt to avoid confiscation of the shares or their value, details of which are set out in paragraphs 4 to 11 of the opinion of my noble and learned friend Lord Hoffmann in Government of the United States of America v Montgomery [2001] UKHL 3; [2001] 1 WLR 196, to which I would refer. After lengthy and complex litigation the US district court made an order on 18 August 1995, whereby it held both the appellant and Mr Barnette in contempt and ordered them to pay by way of forfeiture the sum of $4,217,833.01, representing the value of the ODSA shares as at 15 October 1984 (the date of the order for forfeiture of the shares) after setting off the $7 million already paid. Following this order Mr Barnette brought a motion on 24 August 1995 seeking credit for a sum seized from accounts in the name of ODSA in Liechtenstein. The US Government brought a motion on 28 August 1995 to revise the sum ordered to be paid by the addition of substantial interest and a sum for reimbursement of costs and expenses incurred. The order of 18 August 1995 was revised by a further order of 15 November 1995, which gave effect to the credit sought by Mr Barnette and ordered payment of interest at US Treasury rates from January 1985 to June 1995. The final effect of these orders was an increase in the total sum payable by the appellant and Mr Barnette to $11,767,754, plus a further sum for costs and expenses.
In August 1983 the appellant left Mr Barnette and subsequently remarried, being now Mrs Montgomery. She renounced her US citizenship in April 1992 and moved to London in May 1992, with the intention of taking up residence there. She became a citizen of St Kitts and Nevis in June 1994 and lost her US nationality in November 1994. On 15 December 1992, when she was out of the jurisdiction, the US court made an order for discovery against her, but she failed to comply with it. When the US Government brought a motion to increase the liability of the appellant and Mr Barnette as assessed on 18 August 1995, the appellant did not file any brief in opposition. The judge in the Administrative Court in the present confiscation proceedings found that the appellant had sufficient notice of the Government motion of 28 August 1995 to be able to oppose it if she chose. She did, however, take part in the proceedings to the extent that she supported an application by Mr Barnette claiming credit for certain sums and a motion by him seeking further time to respond to the US Government's motion. The order of 15 November 1995 was made by the district court after consideration of the documents without an oral hearing.
The appellant and Mr Barnette filed appeals to the US Court of Appeals against the order of the district court. The appellant filed a substantial brief and was represented by counsel. At the end of the hearing the court invited further submissions on the issue whether in view of the "fugitive status" of the appellant and Mr Barnette it should not entertain their appeal at all. The appellant submitted a brief on this issue, but the court on 20 November 1997 dismissed both appeals on the basis of the fugitive disentitlement doctrine. Under this doctrine the court had a discretion to refuse to hear or decide the appeal, on the ground that the appellant was a fugitive from justice.
The doctrinal basis for the discretion was described by the US Court of Appeals in the following passage from its judgment in para 7:
"The rationales [sic] for this doctrine include the difficulty of enforcement against one not willing to subject himself to the court's authority, the inequity of allowing that 'fugitive' to use the resources of the courts only if the outcome is an aid to him, the need to avoid prejudice to the nonfugitive party, and the discouragement of flights from justice….
That any judgment rendered by this court can be viewed by the Barnettes as merely advisory (and their compliance therewith optional) is our main concern in deciding the government's motion to dismiss this appeal. Impossibility of enforcement was the initial reason for the establishment of the fugitive disentitlement doctrine….
The Supreme Court has refused to allow application of disentitlement when enforcement is possible despite the appellant's absence …Here, however, possession of the forfeited property, Old Dominion stock, lies with Kathleen Barnette - outside the reach of the government…. In this appeal, we seriously doubt any decision rendered against the Barnettes could be enforced against them."
The court went on to say that the basis for the district court's decision to hold the appellant in contempt:
"was not the conviction of her husband, but instead her refusal to comply with clear orders from the court regarding property she claimed to own that was the subject of the forfeiture judgment. Nonparties that actively aid and abet a party in violating a court order may be held in contempt of court."
The court found on the facts that the appellant was not a clearly innocent party in the government's effort to collect the shares of stock owned by her. It stated that she acted in concert with him to hide assets and transfer funds, resulting in inaccessibility to these monies by the government. She admitted in a sworn statement that she moved the assets of ODSA to avoid the criminal forfeiture judgment. She had fought the forfeiture every step of the way and her continuing failure to furnish discovery was regarded by the district court as part of the Barnettes' overall scheme to evade the forfeiture judgment. It went on in para 15 of its judgment:
"Based upon her past conduct - including leaving the country - and continued noncompliance with court orders, Kathleen Barnette seems to intend not to submit herself to the authority of the United States courts, including this one. Therefore, we have no confidence that, should we decide this case on the merits and hold that the district court properly entered the contempt order against her, Kathleen Barnette would recognise that court's authority and forfeit the stock at issue or present herself for incarceration.
Kathleen Barnette is a fugitive from the contempt order and the ensuing bench warrants. Her status as a fugitive, like her husband's, flouts this court's authority by effecting the very stay that was prohibited by this court's denial of her motion to stay the contempt judgment pending appeal.
Applying the principle of disentitlement, Kathleen Barnette should not be entitled to an appeal in this court when she has repeatedly refused to abide by prior court orders, removed herself to the United Kingdom (beyond our reach), and renounced her United States citizenship."
The respondent government seeks in these proceedings to register the confiscation order under section 97 of the Criminal Justice Act 1988, with a view to enforcing it by process against assets of the appellant in the United Kingdom. In aid of the confiscation process it obtained a restraint order in September 1997, whose validity was finally upheld by your Lordships' House in the appeal of Government of the United States of America v Montgomery [2001] 1 WLR 196. Section 97 provides:
"(1) On an application made by or on behalf of the government of a designated country, the High Court may register an external confiscation order made there if -
(a) it is satisfied that at the time of registration the order is in force and not...
To continue reading
Request your trial
- Re Al Zayat
-
EM (Lebanon)(FC) (FC) v Secretary of State for the Home Department
...which in effect constitutes a complete denial of his rights" (emphasis added). I returned to the topic in Government of the United States of America v Montgomery (No 2) [2004] UKHL 37, [2004] 1 WLR 2241. In para 26 of my opinion, with which the other members of the House agreed, I stated:......
-
R (Al-Skeini) v Secretary of State for Defence
...Suresh v Canada (Minister of Citizenship and Immigration) [2002] 1 SCR 3 United States of America (Government of the) v Montgomery (No 2) [2004] UKHL 37; [2004] 1 WLR 2241; [2004] 4 All ER 289, Vearncombe v United Kingdom (1989) 59 DR 186 Wilson v First County Trust Ltd (No 2) [2003] UKHL 4......
-
Othman v Secretary of State for the Home Department
...that analysis when speaking for a unanimous House of Lords in Government of the United States of America v. Montgomery (No 2)WLR[2004] 1 WLR 2241, para. 26.17. We do not think it possible to say, as Mr Fitzgerald was minded to argue, that Lord Bingham and Lord Carswell intended the language......
-
Designing a civil forfeiture system: an issues list for policymakers and legislators
...6 rights or a fundamental breach of the requirements of that Article. Government ofthe United States of America v. Montgomery (No. 2), [2004] 4 All ER 289.214. Commonwealth model, ss 1(f) and 13.215. Victims Restitution and Compensation Payment Act 2001, s 12 (Alberta).216. Proceeds of Crim......