Financial orders – handle with care

10 June 2019

Written by Sally French & Robert Shepherd Mourant

Guernsey law enforcers are making more and more use of financial orders, some of them issued against financial service businesses. It is not always easy for firms to deal with them, as the case of Heykers v HM Comptroller shows. Sally French (Senior Associate & Advocate) and Robert Shepherd (Partner & Advocate) of Mourant discuss this in a recent submission to Compliance Matters by experts in Guernsey's legal sector.

In this Guernsey judgment (ref: 41/2018) the court made a forfeiture order in September against which Mr Heykers appealed. Mr Heykers then applied to the court for the release of forfeited money to fund the appeal, but the bank had already released the money to the authorities.  

The judgment

The Forfeiture of Money etc. in the Civil Proceedings (Bailiwick of Guernsey) Law 2007 allows such applications to release money to fund legal costs in the following circumstances.

  • Money is detained or frozen. In this case the money had ceased to be detained as the Bank had transferred it.
  • The money belongs to the applicant or he is otherwise entitled to it. Mr Heykers' ownership/ entitlement ceased when the court made the forfeiture order.

On this reasoning, HM Comptroller argued that the court's competence to consider such an application had been extinguished. The court was not persuaded by this unduly legalistic approach which had no regard to the fact that the bank gave the authorities the money through no fault of Mr Heykers'. Mr Heykers, it ruled, was not to be deprived of legislative benefits because of someone else's mistake.

Section 13(3) Forfeiture Law dictates that forfeited money should be detained or frozen, and not released until proceedings, including any appeal, are over. There would have been no question as to whether the court's powers were engaged had the money remained held as required by s13(3). The court therefore stated that it had the jurisdiction to consider an application to release money for the payment of legal expenses, ordering the release of £8,000 from the forfeited sums for that purpose.

Implications

Financial service businesses must be careful with all financial orders. A typical order places obligations upon this-or-that business that may not be obvious to the reader.

* Robert Shepherd can be reached on +44 1481 731 418 or at [email protected]; Sally French can be reached on +44 1481 739 341 or at [email protected]

An original version of this article first appeared in Compliance Matters, 24 April 2019.

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