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Civil asset recovery

Parallel proceedings

Is there any restriction on civil proceedings progressing in parallel with, or in advance of, criminal proceedings concerning the same subject matter?

The court has discretion to stay civil proceedings where there is an overlapping criminal complaint that is triable on indictment still pending and a clear case of prejudice can be made should the civil proceedings continue. In Capital G Bank v Eve Simmons [2008] Bda LR 60, the court found that there is no distinction between this modern approach and the rule in Smith v Selwyn (1914-1915) All ER 230, which suspends the claimant’s right to maintain a civil action against a defendant where the claim is based upon a felonious act, until such time as the defendant has been prosecuted. This rule was applied in Todd v Smith [1993] Bda LR 14.

Section 25(3) of the Criminal Code Act 1907 states that, except when expressly provided, the prosecution or conviction of a person for an offence does not affect any civil remedy that any person aggrieved by the offence may have against the offender. Section 26, however, provides that where civil proceedings have been taken for a summary offence against property, the defendant cannot later be prosecuted for the same cause.

Forum

In which court should proceedings be brought?

Claims are most likely to be brought in the Supreme Court.

Limitation

What are the time limits for starting civil court proceedings?

The Limitation Act 1984 prescribes the limitation periods for various types of action including the following:

  • tort: six years from the date on which the cause of action accrued;
  • contract: six years from the date on which the cause of action accrued;
  • enforcement of arbitration award: 20 years from the date on which the cause of action accrued;
  • recovery of land: 20 years from the date on which the right accrued;
  • breach of trust (other than fraudulent): six years from the date on which the cause of action accrued; and
  • fraudulent breach of trust: no limitation.

The commencement date of a limitation period can be extended in certain circumstances for certain causes of action. For example, the Limitation Act 1984 provides a discretion to the court to extend time limits in the case of personal injury. In Snowden v Emery, Dyer and Bermuda Hospitals Board [2014] Bda LR 92, the court confirmed that ‘in the exercise of the discretion, the basic question to be asked is whether it is fair and just in all the circumstances to expect the defendant to meet this claim on the merits, notwithstanding the delay in commencement’.

Jurisdiction

In what circumstances does the civil court have jurisdiction? How can a defendant challenge jurisdiction?

Where the rules of court have been satisfied in relation to the service of process within or outside the jurisdiction, the court shall have jurisdiction to entertain an action. Jurisdiction will also be invoked where a defendant has submitted to the court’s jurisdiction, or where the action relates to property situated within the jurisdiction. A defendant may challenge jurisdiction on grounds that he or she is not subject to the personal jurisdiction of the court, that there is another more appropriate forum or that there is a valid jurisdiction agreement between the parties, provided the defendant has not already submitted to the jurisdiction.

Time frame

What is the usual time frame for a claim to reach trial?

With respect to actions commenced by summons, the usual time frame for a claim to reach trial is approximately five months from commencement.

With respect to actions commenced by writ, the usual time frame for a claim to reach trial is approximately 18 months from commencement.

Admissibility of evidence

What rules apply to the admissibility of evidence in civil proceedings?

The Evidence Act 1905 governs admissibility of evidence in civil proceedings, together with Order 38 of the Rules of the Supreme Court (RSC). In particular, Part IIA of the Act addresses admissibility of hearsay evidence.

Witnesses

What powers are available to compel witnesses to give evidence?

The RSC provide that, if the Registrar of the Supreme Court so authorises, a writ of subpoena ad testificandum (summoning a witness to give oral evidence) or a writ of subpoena duces tecum (instructing the witness to produce documentary evidence) may be issued out of the Supreme Court Registry to compel the attendance of a witness for proceedings in chambers. An application must be made for any such writ and the Registrar may direct that the application be made to the judge before whom the proceedings are to be heard rather than to directly to the Registrar.

In terms of compelling a witness to give evidence for use in foreign proceedings, the issuance of letters rogatory is an available tool and involves the filing of an ex parte application with the Supreme Court.

The Court must be satisfied that the following three requirements have been met after receiving an application for the taking of evidence in Bermuda:

  • the application is made following a request issued by or on behalf of the foreign court that exercises jurisdiction similar to that of the Bermudian court;
  • the evidence to which the application relates is to be obtained for the purposes of foreign proceedings that have been instituted in the foreign court; and
  • there is an intention that the proceedings before the foreign court should proceed to trial.

Assuming the application is successful, the witness will be ordered to appear at a particular time and place before an examiner in order to be examined under oath. Such an order is typically accompanied by another order that compels the witness to produce certain documents, if such relief is required.

Publicly available information

What sources of information about assets are publicly available?

Companies

Public records available from the Registrar of Companies include the following:

  • company name;
  • registration number;
  • incorporation dates;
  • certificate of incorporation;
  • memorandum of association;
  • notice of registered office;
  • registered charges (registration is voluntary and there is no requirement for a company to maintain an internal register of charges);
  • winding-up notices;
  • share capital increase or reduction notice; and
  • prospectus registrations.

Information relating to shareholders and directors may be obtained by request made directly to the company’s registered office.

Registry General

In relation to real property, registered charges over land can be searched for a fee.

Shipping and aviation

A transcript of the register may be obtained for a fee and will include details of the registered owner and any registered mortgages.

Court records

With effect from 1 December 2015, the public may, on payment of the associated fee, obtain copies of the originating process for civil and commercial cases, save for winding-up proceedings, applications relating to trusts or arbitrations, cases relating to the administration of the deceased’s estates and divorce proceedings, or any proceeding involving children. Request for access to documents not otherwise automatically available can be made to the Registrar.

Cooperation with law enforcement agencies

Can information and evidence be obtained from law enforcement and regulatory agencies for use in civil proceedings?

The Bermuda Monetary Authority receives and processes requests for information from foreign regulatory authorities in relation to Bermudian financial institutions, companies or individuals.

The Proceeds of Crime Act 1997 allows an enforcement authority to disclose information obtained by it in the course of its functions for civil recovery investigations and proceedings, whether in Bermuda or elsewhere.

The Public Access to Information Act 2010 provides a right of access to information held by government bodies, subject to the exclusion of exempted records under Part 4 of the Act.

Third-party disclosure

How can information be obtained from third parties not suspected of wrongdoing?

Norwich Pharmacal orders

Under the principles of Norwich Pharmacal, an applicant may obtain information from third parties where there has been a wrong committed, where an order is needed (usually to identify the wrongdoer) and where the person or entity against whom the order is sought has been involved in the wrongdoing (innocently) so as to have facilitated it and is able to provide the necessary information for the wrongdoer to be sued. Orders will not be granted for fishing expeditions, and remain a matter of discretion for the court.

Bankers Trust orders

Banks may be ordered to provide discovery in order to enable funds to be traced where there are good grounds for believing the funds held by the bank are the claimant’s, in accordance with the principles in Bankers Trust v Shapira (1980) 1 WLR 1274. The court in Crowley Maritime Corporation v International Marine Assurance Group Ltd [1988] Bda LR 42 extended the reach of such orders beyond banks holding the proceeds of fraud, to a defendant against whom the fraud has been alleged.

Interim relief

What interim relief is available pre-judgment to prevent the dissipation of assets by, and to obtain information from, those suspected of involvement in the fraud?

Order 29 of the RSC provides a range of interim remedies such as an injunction, preservation of property, sale of perishable property and recovery of property subject to a lien.

Mareva (freezing) injunctions will be granted where there is a good arguable case, a real risk of dissipation of assets and where the court considers in all circumstances of the case that it is just and convenient.

Section 110 of the Companies Act 1981 provides for the Minister of Finance, either of his or her own accord or on the application of members of a company, to appoint an investigator of the affairs of the company and report thereon.

In insolvency proceedings a provisional liquidator may be appointed to preserve assets and prevent dissipation pending the hearing of a petition.

Non-compliance with court orders

How do courts punish failure to comply with court orders?

In the first instance, the court may make an ‘unless’ order providing, for example, that unless a party complies with the order it will not be permitted to further prosecute or defend an action. Failure to comply with an unless order may result in the action being dismissed, or if non-compliance persists, contempt of court proceedings and committal.

Obtaining evidence from other jurisdictions

How can information be obtained through courts in other jurisdictions to assist in the civil proceedings?

An application may be made to the court, under Rule 39 of the RSC, for the issue of a letter of request to the judicial authorities of the country in which a person is located, for the examination of that person on oath.

 

Assisting courts in other jurisdictions

What assistance will the civil court give in connection with civil asset recovery proceedings in other jurisdictions?

The Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters is extended to Bermuda via the United Kingdom. Accordingly, Bermuda will assist in the service of foreign process on local defendants.

Evidence may be taken in Bermuda for use in foreign proceedings pursuant to Part IIC of the Evidence Act 1905 and Rule 70 of the RSC.

The current common law position is that interim injunctive relief will be granted in support of foreign proceedings (stand-alone freezing orders) where the court has personal or territorial jurisdiction over the defendant and a good arguable case may be made for the relief under local law. In considering whether it is ‘just and convenient’ to grant an injunction, the court will consider whether the relief would properly assist the foreign court (ERG Resources LLC v Nabors Global Holdings II Limited [2012] Bda LR 30).

Bermuda has reciprocal enforcement regimes with a number of jurisdictions under the Judgments (Reciprocal Enforcement) Act 1958, pursuant to which foreign money judgments may be registered and enforced in Bermuda. Those jurisdictions falling outside the Act, or where the judgment is non-monetary, may still enforce foreign judgments under common law principles by commencing proceedings in Bermuda and applying for summary judgment.

Causes of action

What are the main causes of action in civil asset recovery cases, and do they include proprietary claims?

The most common civil causes of action include breach of contract, tort, fraud-based claims, tracing or other proprietary claims. A broad range of equitable, common law and statutory relief is available.

Remedies

What remedies are available in a civil recovery action?

The most common range of remedies to be ordered at trial are as follows:

  • damages - compensatory (and punitive in appropriate cases);
  • declaration as to rights;
  • interim or permanent injunctions;
  • specific performance;
  • account of profits; and
  • orders permitting tracing of assets and recovery.

Judgment without full trial

Can a victim obtain a judgment without the need for a full trial?

Yes. Default judgment is available where proceedings have been validly served but the defendant fails to respond within the time prescribed by the RSC.

Summary judgment is available where, although the defendant has responded to a service of proceedings, the claimant can establish that the defendant has no defence to the claim or any part of it.

Post-judgment relief

What post-judgment relief is available to successful claimants?

Freezing orders are available to preserve rights and assets and, in certain circumstances, stand-alone freezing orders will be ordered against a defendant in foreign proceedings where there are no local proceedings in progress.

Rule 48 of the RSC provides for the production of documents by, and the examination of, a judgment debtor as to the means of satisfying the judgment debt.

Rule 50 of the RSC provides for the appointment of a receiver by way of equitable execution.

Enforcement

What methods of enforcement are available?

Rule 45 of the RSC provides various methods of enforcement of a money judgment including:

  • seizure and sale of assets;
  • appointment of a receiver;
  • garnishee orders;
  • writ of sequestration; and
  • order for committal.

A money judgment will automatically create a lien over real property situated in Bermuda that is registered in the judgment debtor’s name.

Funding and costs

What funding arrangements are available to parties contemplating or involved in litigation and do the courts have any powers to manage the overall cost of that litigation?

The general rule in Bermuda is that ‘costs follow the event’; namely, the loser will pay the other party’s costs for the action, although costs awards fall within the discretion of the court. Although litigants are usually self-funded, third-party funding is permitted. Contingency fees are not permitted in Bermuda.

The RSC prescribe an overriding objective for the court to deal with cases justly, which includes saving expense, dealing with cases proportionately to the amount of money involved and the financial position of each party, and ensuring cases are dealt with expeditiously and fairly. However, the court has no specific statutory cost management powers.

Criminal asset recovery

Interim measures

Describe the legal framework in relation to interim measures in your jurisdiction.

The Proceeds of Crime Act 1997 (PCA) makes provision for powers of the court to order confiscation of assets of offenders that are derived from criminal conduct. The PCA grants enhanced powers to the court and the police in relation to issuing confiscation orders, investigations into the assets of offenders and the enforcement of such orders.

Proceeds of serious crime

Is an investigation to identify, trace and freeze proceeds automatically initiated when certain serious crimes are detected? If not, what triggers an investigation?

When a serious crime is recognised, investigations to identify and trace assets are initiated by enforcement authorities.

Powers of the court under the PCA for the production of information to assist in certain criminal and civil recovery investigations are not automatic, but may be initiated on application by the relevant investigating authority.

Confiscation – legal framework

Describe the legal framework in relation to confiscation of the proceeds of crime, including how the benefit figure is calculated.

Confiscation of the proceeds of crime is governed by the PCA. A confiscation order may be considered by the court on the application of the Director of Public Prosecutions (DPP) or of its own motion where it considers it appropriate to do so.

The court must first determine whether the defendant has benefited from criminal conduct. If benefit is found, the court shall, before sentencing or otherwise dealing with him or her in respect of the offence, issue a confiscation order and determine the amount to be recovered. The court shall then do the following, in respect of the offences concerned:

(i) order the defendant to pay the amount of the confiscation order within such period as it may specify; and

(ii) take into account the confiscation order prior to imposing any fine on the defendant or making any order involving payment by the defendant or under section 37 of the Misuse of Drugs Act 1972; or

(iii) subject to (ii) leave the confiscation order out of account when determining the appropriate sentence or other manner of dealing with the defendant.

The court can order confiscation of the aggregate value of the defendant’s proceeds of criminal conduct or a lesser value.

Confiscation procedure

Describe how confiscation works in practice.

Where a defendant appears before the court to be sentenced, the court may consider whether or not to make a confiscation order. The court may postpone determining whether the defendant has benefited from the wrongdoing or the amount to be recovered under a confiscation order if it considers that more information is required, for the purpose of enabling that information to be obtained. Except in exceptional circumstances, the postponement shall not exceed six months from the date of conviction or three months after an appeal is determined or otherwise disposed of.

The procedural stages are as follows:

  • Where the DPP applies to the court for a confiscation order, the DPP must give the court a prosecutor’s statement of matters that are considered relevant to the determination of whether the defendant has benefited from criminal conduct, or an assessment of the value of the proceeds of criminal conduct. The court may require the DPP to produce a prosecutor’s statement where the court considers a confiscation order on its own motion.
  • The defendant may then be ordered to indicate the extent to which he or she accepts the allegations in the prosecutor’s statement and, so far as any allegation is not accepted, give particulars of any matters on which it is proposed to rely.
  • The court decides on the balance of probabilities whether to make a confiscation order based upon the material in the parties’ respective statements and upon evidence it has heard.
  • Once a confiscation order is made, enforcement agencies such as the DPP, the police and customs officers may proceed to enforce the confiscation order by way of their respective statutory powers of enforcement.
  • Confiscation orders can be applied to third-party holders of the property (DPP v Roberts [2006] Bda LR 22 and Re Aldo Nelson Kirby Pace [2005] Bda LR 34) provided there is no mingling of the property of the defendant and the third party and that the defendant’s property can be clearly identified.
  • Enforcement agencies can also apply to a magistrate for the freezing of funds in the course of a confiscation investigation.

Agencies

What agencies are responsible for tracing and confiscating the proceeds of crime in your jurisdiction?

The following agencies are responsible for tracing and confiscating proceeds of crime:

  • the police and customs officers together with the DPP;
  • the Financial Intelligence Agency; and
  • the Bermuda Monetary Authority.

Secondary proceeds

Is confiscation of secondary proceeds possible?

According to section 4(1) of the PCA, ‘property’ includes money and all other property, movable or immovable, including things in action and other intangible or incorporeal property. ‘Realisable property’ is any property held by the defendant and any property held by a person to whom the defendant has made a gift caught by the PCA. There is no distinction between primary proceeds and secondary proceeds.

Third-party ownership

Is it possible to confiscate property acquired by a third party or close relatives?

Yes. Where property held by a person to whom the defendant has directly or indirectly given a gift falls within section 6 of the PCA, the property may be subject to confiscation.

Expenses

Can the costs of tracing and confiscating assets be recovered by a relevant state agency?

The court has the power to issue other orders involving payment by a defendant where a confiscation order has been made. However, it must take the confiscation order into account, before doing so.

Value-based confiscation

Is value-based confiscation allowed? If yes, how is the value assessment made?

Yes. Confiscation under the PCA is value-based. Any payments or rewards received at any time as a result of, or in connection with, criminal conduct carried out by the defendant or another person are the defendant’s proceeds of criminal conduct, and the value of these proceeds is the aggregate of the values of payments, or other rewards, property and pecuniary advantage. In determining whether the defendant has benefited from criminal conduct and, if so, the value of the proceeds of the criminal conduct, the court shall make certain assumptions pursuant to section 12(2)-(3) of the PCA. In R v Beach [2002] Bda LR 28, the court held that at the stage of assessing the value of the defendant’s proceeds from criminal conduct, the court should state, by reference to section 2(3) of the PCA, what assumptions if any have been made, the payments or other rewards that (after taking account of any such assumptions) the court finds have been received by the defendant and the aggregate of the values of those payments or other rewards.

Section 4(4) of the PCA states as follows:

For the purposes of this Act, the amount that might be realised at the time a confiscation order is made against the defendant shall be:

(a) the total of the values at that time of all the realisable property held by the defendant; less

(b) where there are obligations having priority at that time, the total amounts payable in pursuance of such obligations, together with the total of the values at that time of all gifts caught by this Act.

The value of property is determined in accordance with section 5 of the PCA. Gifts caught by the PCA are determined in accordance with section 6 of the same.

Burden of proof

On whom is the burden of proof in a procedure to confiscate the proceeds of crime? Can the burden be reversed?

Assumptions that the court must make under section 12 of the PCA have the effect that the burden is on the defendant to prove that the property he or she acquired in the six years prior to the commencement of proceedings was not obtained through criminal conduct, nor any expenditure in that period met out of payments received in connection with criminal conduct.

Using confiscated property to settle claims

May confiscated property be used in satisfaction of civil claims for damages or compensation from a claim arising from the conviction?

Under the PCA, there is a separate procedure for making compensation orders within criminal proceedings to compensate a victim. However, there is no express general power for the court to make a compensation order or to order that a civil claim be satisfied from moneys recovered via confiscation.

Confiscation of profits

Is it possible to recover the financial advantage or profit obtained through the commission of criminal offences?

There is no express reference in the PCA to confiscation of such types of benefit. However, financial advantage or profit would be caught within the statutory framework of the PCA as financial advantage and profit comprise a benefit received from criminal conduct.

Non-conviction based forfeiture

Can the proceeds of crime be confiscated without a conviction? Describe how the system works and any legal challenges to in rem confiscation.

The confiscation procedure under the PCA may be considered when a defendant appears before the court to be sentenced. Pending conclusion of confiscation proceedings, the DPP may make an application to restrain assets. Prior to the enactment of the PCA in R v Burchall [1991] Bda LR 71, with consideration of section 37 of the Misuse of Drugs Act, the court held that no such conviction is necessary for in rem confiscation.

Management of assets

After the seizure of the assets, how are they managed, and by whom? How does the managing authority deal with the hidden cost of management of the assets? Can the assets be utilised by the managing authority or a government agency as their own?

Where a restraint order has been made, the court may appoint a receiver to take possession of and manage property. Further, the DPP may apply for the appointment of a receiver in respect of any realisable property and in respect of any realisable property over which a charging order has been made. Remuneration and expenses of the receiver are generally paid from the confiscated assets fund. However, a receiver appointed in connection with property freezing orders shall be entitled to remuneration and expenses out of the proceeds of the property realised, even if the services are provided under arrangements made by the enforcement authority, but not if the receiver is a member of staff of the enforcement authority.

Once any payments as directed by the court have been made from proceeds of the realisation of property, the receiver shall apply the proceeds to the confiscation order. Where there are excess funds the receiver shall distribute them among those who held property that has been realised under the PCA, and in such proportions as the court may direct after giving a reasonable opportunity for those persons to make representations to the court.

There is no express provision in the PCA that grants the managing authority or a government authority the ability to utilise the assets as their own.

Making requests for foreign legal assistance

Describe your jurisdiction’s legal framework and procedure to request international legal assistance concerning provisional measures in relation to the recovery of assets.

Depending on which jurisdiction Bermuda is seeking assistance from, there are various procedural methods for requesting international assistance. Key procedures include registration of foreign judgments, freezing orders and letters rogatory for requests for evidence.

Complying with requests for foreign legal assistance

Describe your jurisdiction’s legal framework and procedure to meet foreign requests for legal assistance concerning provisional measures in relation to the recovery of assets.

The Criminal Justice (International Co-operation) (Bermuda) Act 1994 (CJICBA) provides for mutual legal assistance if requested by other countries in criminal proceedings and investigations in the context of all serious offences under Bermudian law and for implementing the Vienna Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. Pursuant to the CJCIBA, the central authority for all requests made is the Attorney General. Counsel in the Attorney General’s Chambers will be responsible for executing such requests.

The PCA and the Proceeds of Crime (Designated Countries and Territories) Order 1998 (PCO) govern the registration or enforcement of external confiscation orders or external recovery orders. Requests for the enforcement of such orders may only be made by countries listed in Schedule 1 to the PCO. Pursuant to the PCO, the central authority for all requests made by designated countries is the Attorney General.

The Evidence Act 1905 allows the court to provide assistance to foreign courts seeking evidence in criminal and civil cases. Any country may make requests through letters rogatory. The central authority for all requests is the Supreme Court. Letters rogatory are exclusively handled by the Registrar of the Court. In the event that the Registrar of the Court grants a request, then the evidence will be transmitted to the requesting court by the Clerk of the Court.

Treaties

To which international conventions with provisions on asset recovery is your state a signatory?

Bermuda is a signatory to the following conventions:

  • the Vienna Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances;
  • the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances; and
  • the United Nations Convention against Transnational Organized Crime.

The Attorney General has recently stated in the House of Assembly that the cabinet is committed to taking steps to seek the extension of the United Nations Convention against Corruption to Bermuda.

Private prosecutions

Can criminal asset recovery powers be used by private prosecutors?

No. Only the DPP is entitled to bring criminal asset recovery proceedings. However, a private prosecutor may seek the DPP’s consent to act on the private prosecutor’s behalf in such proceedings. In such circumstances, any recovered criminal assets will likely be treated by the DPP in accordance with the PCO, and the PCO makes no express provision for a private prosecutor to realise such property.