IN THE SUPREME COURT

OF TURKS AND CAICOS ISLANDS

Action No: CL 80/08

IN THE MATTER OF DAVID SMITH, TRACEY SMITH, TCI FX TRADERS LIMITED, OLINT TCI CORPORATION LIMITED, OLINT CORPORATION LIMITED

AND IN THE MATTER OF APPLICATIONS UNDER SECTIONS 43 AND 127 OF THE PROCEEDS OF CRIME ORDINANCE

D Ramdhani for the original applicant

C Barnett for the respondents

Hearing: 28 and 29 July 2008

Ruling: 31 July 2008

Ruling

1.             On 10 July 2008 application was made ex parte for a restraint order and a production order under sections 43 and 127 respectively of the Proceeds of Crime Ordinance, 2007. Both were granted. The restraint order was returnable on 28 July 2008 on which date the Attorney General advised he would be seeking its continuation. This hearing is in relation to the restraint order only.

2.             In that order, the Court ordered that Mr and Mrs Smith (the respondents) were prohibited from removing or in any way disposing of, dealing with or diminishing the value of their assets in Turks and Caicos Islands. The order specifically included a residential property in Chalk Sound, Providenciales, the property and assets of a business known as Olint TCI Ltd, the assets of a company known as TCI FX Traders Ltd, all bank accounts and other funds held in the name of or connected to Mr or Mrs Smith at the TCI Bank Ltd and Hallmark Bank and Trust Ltd and all vehicles owned by them.

3.             The order allowed, in paragraph 7, the respondents to spend up to $1,000.00 per week from the restrained property towards their ordinary living expenses up to the date of any confiscation order which may be made. It required that "before spending any money the respondents must tell the Attorney General where the money is to come from”.

4.             On 22 July 2008 the respondents filed an application to vary or discharge the restraint order principally to obtain an increase in the living expenses and to allow payment of reasonable legal expenses under section 43 (2) (a) of the Proceeds of Crime Ordinance.

5.             It was listed for hearing on the return date and, on that date, the Attorney General filed an application for a disclosure order on the basis that it was necessary before any variation could be allowed because the respondents had failed to comply in any way with the requirements of paragraph 7 set out above.

6.             The purpose of restraint orders under the Proceeds of Crime Ordinance is to preserve any realisable property which may be available to satisfy any confiscation order which may be made subsequently. Although the court is given the power by section 43 (2) (a) to make provision from the restrained funds for "reasonable living expenses and reasonable legal expenses” and equally has the power to vary an order already made, the power must be exercised in such a way that it does not unreasonably diminish the value of the realisable property which may be applied in satisfaction of any confiscation order.

7.             In considering whether to exercise any such power, the court must know the source of the funds and any other sources of income to which the respondents may have access. If they have access to other funds, the need to allow dissipation of some of the funds subject to the restraint order may not be made out and the court would not in those circumstances allow such a variation. Without such information, there is a risk that the claim for reasonable expenses may be no more than a means to obtain release of some of the funds which the court has restrained.

8.             Mr Ramdhani points out that there has been no information supplied under paragraph 7. The affidavit submitted in support of the initial application for the orders showed that Mr Smith had asserted that he had very large sums of money abroad which could be, and some of which were to be, brought to Turks and Caicos Islands. In a more recent affidavit, Mr Belliard of the police Financial Crimes Unit on Providenciales, deposes to information that the account in the TCI Bank in the names of the respondents receives the majority of its funds from a Panamanian bank account in the name of Overseas Locket International Ltd which is believed to be the “alter ego”, as he puts it, of Mr Smith.

9.             Mr Barnett has addressed the court eloquently on the need for the variation and the unreliability, he suggests, of the affidavit evidence. However, he gives no explanation for the failure to provide the details required in paragraph 7 of the original restraint order. Had he done so, he would have been on stronger ground for, if there is indeed no other source of funds, the case for some increase in the funds allowed for living expenses appears compelling. Similarly, there can be no doubt that he should be able to obtain the release of a reasonable sum for his legal expenses. He tells the Court that the TCI Bank account is the personal account of the respondents but the evidence of Mr Belliard is that Mr Smith does not distinguish between funds in the various accounts under his control.

10.          However, I require compliance with the terms of paragraph 7 of the order before I can consider the application for variation and any release of funds for expenses of either type.

11.          The clear reluctance of the respondents to give such information lends support to the Attorney General's application for a disclosure order. Mr Barnett submits that the criminal nature of these proceedings preclude such an order. I disagree. These proceedings are civil are civil in nature and similar to an application for a Mareva order and I am satisfied that this Court has the power to make a disclosure order on consideration of the same matters as are relevant for a Mareva application which I have done.

12.          In the light of the respondents’ failure to give the information in paragraph 7 of the order, I consider the disclosure order now sought is necessary and expedient in order that the Court may determine any application to vary the terms of the restraint order and, therefore, that compliance with that is now necessary before I can consider any such variation.

13.          I, therefore, grant the application for a disclosure order in the terms sought and I refuse the application for variation until such time as there is compliance with the disclosure order.

14.          Today’s order includes a direction to change the title to this action and I shall use that form on this Ruling.

31 July 2008

Gordon Ward

Chief Justice