Who Bears The Burden: Applications Under The Forfeiture Law

KEY TAKEAWAYS

• The burden of proof rests on the party opposing a forfeiture application.
• The Law Officers are still required to establish a causal nexus between the monies (or a relevant part of them) sought to be forfeited and unlawful conduct.
• The requirement to established causal link is a necessary safeguard for a person seeking to defend their rights of property.

Under the Forfeiture of Money (etc) in Civil proceedings (Bailiwick of Guernsey) Law 2007 (the "Old Forfeiture Law") it was for His Majesty's Procureur or Comptroller (the "Law Officers") to show that funds to be forfeited represented the proceeds of unlawful conduct, or were intended by any person for use in unlawful conduct. The burden of proof in a forfeiture application therefore rested squarely on the Law Officers.

However, following amendments to the Old Forfeiture Law by the Forfeiture of Money (etc) in Civil Proceedings (Bailiwick of Guernsey) Ordinance 2022 (which has now been repealed) (the "2022 Ordinance") and the introduction on 26 April 2024 of the Forfeiture of Assets in Civil Proceedings (Bailiwick of Guernsey) Law, 2023 ("New Forfeiture Law"), the burden of proof has shifted such that:

"On determining an application...the Royal Court must make an order to forfeit the property concerned unless a person opposing the application satisfies the court that that property is not recoverable property¹" [emphasis added].

Importantly, the New Forfeiture Law provides various instances of unlawful conduct and which include (as was the case under the Old Forfeiture Law) "conduct which occurs in a country outside of the Bailiwick, is unlawful under the criminal law applying in that country, and had it occurred in a part of the Bailiwick, it would have been unlawful under the criminal law of that part at the time the conduct occurred".

Since the introduction of the New Forfeiture Law, there has been much debate surrounding the effect of the "reverse burden of proof" and whether the Law Officers are released of any evidential requirements in relation to "unlawful conduct".

Some helpful guidance was provided in relation to this in the recent decision of Lieutenant Bailiff Marshall KC in His Majesty's Comptroller v Fidelity Management and Royal Bank of Canada (Channel Islands) Limited [2025]GRC004 (17 January 2025) ("Fidelity Management") (available here). Although the application under consideration in Fidelity Management was made pursuant to the Old Forfeiture Law (as amended by the 2022 Ordinance), it nonetheless provides helpful guidance as the Court had to grapple with various concepts and/or issues which have followed through to the New Forfeiture Law, including the standard of "proof" of "unlawful conduct".

In summary, the Court stated that:

1. "Unlawful conduct" in the context of civil forfeiture has to be established to the court's satisfaction only on the balance of probabilities, and not to the criminally required standard of "beyond reasonable doubt", even though that would be the standard for any actual conviction.
2. It was common ground that the presence of any criminal conviction abroad or in the Bailiwick was not a pre-requisite to a finding of unlawful conduct. However, such presence or absence, or even evidence of charges, or allegations, from a reliable source must still form part of the overall relevant evidence to be assessed. It is not entirely irrelevant.
3. "Intended for use in unlawful conduct" does not encompass funds which may previously have been intended for use in unlawful conduct as "it is framed totally in the present tense, ie that the current owner/controller of the funds intends them to be used for criminal purposes".
4. Notwithstanding the reversed burden of proof:

(a) "in order to forfeit funds...HMC does have to specify relevant possible offence(s) and indicate the suggested causal link to the funds, for either one, or both, of the reasons she gives";

(b) "without such a requirement as a safeguard, the terms of the reversed burden of proof risk imposing such an excessive burden on a person seeking to defend their rights of property that it would be a disproportionate interference with those rights..."; and

(c) "it is necessary for HMC to specify what "unlawful conduct" within the meaning of that section it is relying on, either as an identified criminal offence or offences with an identified causal nexus to the target funds, or on the grounds that there is an irresistible inference that the target funds can only be the proceeds of some criminal activity, even if of an unidentified type, and in each case to demonstrate fulfilment of such offence(s) with the requirements" of the applicable law.

With the aforementioned findings in mind, the Lieutenant Bailiff Marshall KC concluded that:

"notwithstanding the reversal of the eventual burden of proof...there is an onus on HMC to establish a causal nexus between the Funds (or a relevant part of them) and unlawful (ie criminal) conduct [taking into accounts descriptive qualifications provided in the applicable law], either for being identifiable arguable criminal offences, or because the circumstances of the funds arguably show an irresistible inference that they are the proceeds of some kind of criminal conduct."

Interestingly however, Lieutenant Bailiff Marshall KC did note that, in practice, this may not be of great significance as (under the Old Forfeiture Law or New Forfeiture Law) there will almost inevitably have been some case already made out as to the relevant criminal conduct and the suggested link to the target funds. This because a "'reasonable suspicion' of this will have had to be disclosed in any preceding application for a Freezing Order".

Although the application under consideration in Fidelity Management was made pursuant to the Old Forfeiture Law, it nonetheless provides helpful guidance to parties faced with forfeiture applications under the New Forfeiture Law, including each parties' respective evidential obligations.

Footnote

1. Recoverable property is any property "that is or has been used in unlawful conduct", "that is or was obtained through unlawful conduct", or "is intended to be used in unlawful conduct" [emphasis added].

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.