High Court: House and watch seized under proceeds of crime legislation

About this case:

• Citation:
  [2020] IEHC 92
• Judgment:
  External link
• Court:
  High Court
• Judge:
  Mr Justice Alexander Owens

Mr Justice Alexander Owens found that the property at 18 Mallin Avenue, Rialto and the watch found in the search of the property are items of property acquired using the proceeds of crime and that, at the time of seizure of the watch, Paul Gray was in possession or control of it within the meaning of that term in s.3 (1) of the Proceeds of Crime Act 1996.

The court held that the Criminal Assets Bureau (CAB) proved that the property was in the possession or control of Kevin Gray but that this possession or control was more ostensible than real. CAB was also found to have proved Paul Gray is in the real control and possession of the assets.

Assets

The court considered the affidavit of the Chief Bureau Officer and found that there was “ample material” in the affidavits to support his belief that the watch was acquired with the proceeds of crime and that the house was acquired in connection with a “bogus” Credit Union loan arrangement for the purpose of creating a lawful source for the €20,000 payment for the house under a scheme which involved repayment from funds supplied by Paul Gray which were generated from drug-dealing. Mr Justice Owens found that there was also ample material to support his belief that the house was then extended and extensively refurbished using the proceeds of crime.

The court was minded to believe that a “false” claim by another related party grounded by what “was previously an unsupported contention by the Bureau that the house was given to settle a drug debt”. He stated that this other party was “an obvious liar and I cannot rely on anything he says”.

The judge said that when Kevin Gray was asked to explain who built the extension and how it was funded, he gave “nonsense explanations which I do not accept” about a cash amount of €18,000 “from under the bed and €18,000 from other sources does not go anywhere near explaining the expenditures in fact incurred”.

The details provided on costings provided were “way too low”, and no vouchers were produced for expenditures in the refurbishment which “clearly involved skilled tradespeople such as plumbers and carpenters, the certificates of commissioning and inspection of the new gas unit to demonstrate when these units were in fact made operational or the purchases of the kitchen appliances”.

Definition of property and acquisition

In considering whether an improvement of a property which has been already acquired an “acquisition” within s.3(1)(a) of the 1996 Act, Mr Justice Owens found that the Act gives a wide definition of the concept of property and held that an acquisition of property includes anything which might give value to property or a claim on property, including accretions to property such as extensions and refurbishments, even if they are to the property of another.

“For instance, a gift of an extension funded by the proceeds of crime adds a value to an existing property. The resulting property interest or claim of whatever nature, and whether or not the item improved by such works was acquired with the proceeds of crime, partly represents the proceeds of crime. The same goes for property paid for with a loan under an arrangement that the loan be paid off by use of proceeds of crime.”

Conclusion

In finding that the respondents’ arguments did not displace his prima facie view of what the evidence tendered by CAB established, the judge held that Kevin Gray had not engaged with important elements of the case made by CAB. He did not explain why Paul Gray would be involved in installing a kitchen in the property which he owns in late 2016 and how this fits with the completion of works in 2014.

The judge further noted that he was “not impressed” with the evidence on the removal of the kitchen by Paul Gray, and noted that this was not a kind of action which a tenant would engage in. Rather, it was the act of an owner who was aware that CAB was examining how this house came to be bought and extended, and who made the choice to clear it out when he left.

The court made an order under s.3(1) of the 1996 Act in respect of both the watch and the house including all fixtures and fittings. In doing so, the judge emphasised that there is no suggestion that Kevin Gray is himself involved in the illegal drugs trade, and that the finding of the court was that he has assisted his brother in laundering profits of the illegal drugs trade by fronting as ostensible owner of the house. In the event that the court should appoint a receiver, Mr Justice Owens said that he will appoint the Chief Legal Officer of CAB as receiver under section 7.