Government of the United States of America v. Montgomery and Another

Proceedings in the High Court under Part VI of the Criminal Justice Act 1988 to restrain or realise property are civil proceedings. They retain that character when used to enforce a confiscation order made by a foreign criminal court. An appeal therefore lies to the Court of Appeal.

Legislation enabling enforcement of external confiscation orders may apply to foreign proceedings instituted, and orders made, before the relevant country was designated. Enforcing an existing foreign order is distinct from retrospectively imposing a penalty and engages the presumption against retrospectivity only to the extent required by fairness.

An external confiscation order may include interest representing the value or pecuniary advantage derived from retaining criminally obtained property.

Following an American fraud conviction, a federal court made forfeiture and related orders concerning shares whose assets represented proceeds of the fraud. Later orders required Kathleen Montgomery, the convicted person’s former wife, to pay an amount calculated by reference to the value of the shares and the benefit obtained from retaining them.

Collins J made restraint orders against Mrs Montgomery and her husband under section 77 of the Criminal Justice Act 1988. Latham J discharged them, holding that the statutory scheme did not apply to orders predating the designation of the United States and that the American orders were not external confiscation orders. The Court of Appeal, in Government of the United States of America v Montgomery [1999] 1 All ER 84, held that it had jurisdiction, reversed both conclusions and reinstated the restraint orders.

The issues before the House were whether the English proceedings were a criminal cause or matter from which no appeal lay, whether the scheme could apply to earlier foreign proceedings or orders, and whether the interest element fell within the statutory definition of an external confiscation order.

Disposition. The House unanimously dismissed the appeal and upheld the reinstatement of the restraint orders.

1. Appellate jurisdiction. Per Lord Hoffmann, whose speech Lords Cooke of Thorndon, Hutton and Scott of Foscote accepted, the civil-procedure distinction between a judgment and an order could not be transposed into criminal procedure. The expression “judgment of the High Court in any criminal cause or matter” extended to all orders made in such a cause or matter. The nature and character of the proceedings supplied the governing inquiry. The possibility of a trial and punishment was an illustration of criminal proceedings, not an exhaustive definition.
2. Civil character of enforcement. Per Lord Hoffmann, the criminal nature of the order being enforced did not necessarily determine the nature of the enforcement proceedings. Part VI of the Criminal Justice Act 1988 gave jurisdiction to the High Court rather than the criminal court. Its restraint, execution and receivership powers reflected ordinary civil procedures and could determine the proprietary rights of third parties. The jurisdiction was therefore civil, including when exercised in aid of an external confiscation order. Lord Hobhouse agreed, emphasising that the English proceedings concerned civil property rights and were only indirectly consequent upon the American criminal proceedings. The Court of Appeal accordingly had jurisdiction.
3. Earlier foreign proceedings and orders. Per Lord Hoffmann, the conditions in section 76, as modified, did not confine the scheme to foreign proceedings instituted or external confiscation orders made after designation. The omission of section 102(4) from the modified scheme was within the power conferred by section 96. The presumption against retrospectivity rests on fairness. Enforcement of rights created by a valid foreign confiscation order was materially different from retrospectively imposing a confiscation penalty, and permitting enforcement caused no unfairness. Lord Hobhouse reached the same conclusion after construing section 102(4) as confined to domestic proceedings, so that its omission for foreign orders was intra vires.
4. Interest and pecuniary advantage. Per Lord Hoffmann, the interest element formed part of an external confiscation order. The value of property to a wrongdoer included both its capital value and the benefit of retaining and using it. Alternatively, retaining a sum equal to the property’s value for ten years was itself a pecuniary advantage. Lord Hobhouse agreed that the American court used interest as a legitimate means of quantifying the advantage obtained from retaining the shares.

1. House of Lords: In Government of the United States of America v Montgomery and Another [2001] UKHL 3, the House unanimously dismissed the appeal and upheld the Court of Appeal’s reinstatement of the restraint orders.
2. Court of Appeal: In Government of the United States of America v Montgomery [1999] 1 All ER 84, the court rejected the jurisdictional objection, reversed Latham J on both substantive grounds and reinstated the restraint orders.
3. High Court, Latham J: The restraint orders were discharged because the statutory scheme was held not to apply to earlier American orders and because those orders were held not to qualify as external confiscation orders.
4. High Court, Collins J: Restraint orders were made under section 77 of the Criminal Justice Act 1988 against Mr and Mrs Montgomery.