Titan International Securities Inc. v The Attorney General and The Financial Intelligence Unit

• Jurisdiction: Caribbean States
• Judge: ‘Rajnauth-Lee, J.’,Mme. Justice Rajnauth-Lee,Justice Saunders,Hayton,Rajnauth-Lee,Anderson,Justices Wit
• Judgment Date: 17 October 2018
• Neutral Citation: [2018] CCJ 28 AJ
• Docket Number: Suit No.: CCJ Appeal No. BZCV2017/003, BZ Civil Appeal No. 6 of 2016,CCJ Appeal No. BZCV2017/003
• Court: Caribbean Court of Justice (Appellate Jurisdiction)
• Date: 17 October 2018

Titan International Securities Inc

and

The Attorney General and The Financial Intelligence Unit

Saunders, P.CCJ, Wit, J.CCJ, Hayton, J.CCJ, Anderson, J.CCJ, Rajnauth-Lee, J.CCJ

Suit No.: CCJ Appeal No. BZCV2017/003, BZ Civil Appeal No. 6 of 2016

Caribbean Court of Justice

Constitutional Law - Fundamental rights and freedoms — Right to protection against arbitrary search and seizure — Whether search and seizure was unconstitutional — Whether Mutual Legal Assistance and International Cooperation Act was unconstitutional.

Appearances:

Mr. Eamon H. Courtenay, SC Ms. Iliana N. Swift and Ms Leslie Mendez for the Appellant

Mr Nigel Hawke, Mrs. Samantha Matue-Tucker and Mr. Ravell Gonzalez for the Respondents

SUMMARY

1 The Appellant, Titan International Securities Inc. (‘Titan’) was at all material times an international business company licensed in Belize as a securities broker/dealer. Titan was incorporated on 28 February 2011. The Respondents were the Attorney General of Belize (‘Attorney General/AG’) representing the Government of Belize (‘GOB’); and the Financial Intelligence Unit (‘FIU’). The FIU was established by section 3 of the Financial Intelligence Unit Act to carry out statutory responsibilities which include the fight against international crime.

2 On 8 September 2014, an indictment was unsealed in the United States of America charging Titan, the President of Titan, Mr. Kelvin Leach, Mr Robert Banfield and nine others with securities fraud, evasion of taxes, money laundering and conspiracy to commit those offences. The following day, the US Department of Justice in Washington, Criminal Division, Office of International Affairs, urgently requested the assistance of the GOB pursuant to the Treaty on Mutual Legal Assistance in Criminal Matters (‘the Treaty’) in relation to an investigation by the US Attorney for the Eastern District of New York of several targets which included Titan as well as Leach and Banfield. The United States requested to have the targeted offices searched as quickly as possible to prevent the destruction of evidence. The Request detailed the documents which needed to be seized. The AG reviewed the Request and concluded that it was proper to provide the assistance requested. The AG informed the Belize Police Department to apply to a Magistrate for the warrant to execute the search and seizure pursuant to section 18 of the Mutual Legal Assistance and International Co-operation Act (‘the Act’). The AG also requested assistance from the FIU in order to carry out the search and seizure.

3 The application to obtain a search and seizure warrant was granted to Superintendent Hilberto Romero and to all Police Constables and Peace Officers of Belize and to the Officers of the Financial Intelligence Unit of Belize. The warrant entitled them to enter several premises, including the offices of Titan and to search for and seize documents which might be used as evidence in a prosecution for the offences listed. The search and seizure were conducted on the evening of 9 September. Though a copy of the search warrant was read to Mr. Leach, who was on the premises at the time, it was not given to or left with him; the authorities did not leave an inventory of items seized with Mr. Leach and, moreover, Titan's attorney was denied entry into its office during the search.

4 While the search was being conducted, Titan was informed via email by the International Financial Services Commission (‘the Commission’) that its licence had been suspended. On 15 September 2014, the Commission issued a warning notice to the public that the licence granted to Titan was suspended until further notice. On 17 September, the Commission confirmed Titan's suspension by letter. The suspension was never lifted, and the licence has since expired. On 20 January 2015, and 3 February 2015, approximately five months after the search was executed, almost all the items taken during the search and seizure were returned to Titan.

5 In December 2014, Titan commenced a claim in the Supreme Court in relation to the constitutionality of the search of its office and seizure of its documents, computers and other electronically stored devices. Titan claimed that section 18 of the Act breached sections 9 and 14 of the Constitution and that the search was executed in an unreasonable and oppressive manner which abused the authorization granted to search the premises. Section 9 protects against unreasonable search of a person or his property or the entry of others on his premises, while section 14 deals with the prohibition against arbitrary or unlawful interference with privacy.

6 Abel J. held that the provisions of section 18 subsections (1) and (2) were relevant and important in that they introduced key limitations and safeguards. The power to search was only to be used when it was reasonably required for the purpose of discovering certain evidence if and only where there were existing proceedings such as a filed Indictment, or an arrest, in the Foreign State. There must be an actual and specific criminal offence relating to a person in the requesting state and not merely an investigation. There must also be reasonable grounds for suspecting that there was, on premises in Belize occupied or controlled by a person the subject of such investigation, evidence relating to such an offence. In his view, as a result of these limitations and safeguards, any search and seizure carried out under a warrant issued pursuant to section 18, would be both reasonable and proportionate in a democratic society and provided adequate legal safeguards to protect the public interest from the risk of a breach of sections 9 and 14 of the Constitution. Drawing upon the provisions of sections 18 and 26 of the Act, he concluded that a reasonable interpretation of section 18 would require the imposition of eleven crucial matters and considerations which he set out in his judgment. The trial judge concluded his analysis by stating that the provisions of section 18(1) and (2) were proportionate as they satisfied the three-tiered test set out by the Privy Council in de Freitas v. Permanent Secretary of the Ministry of Agriculture, Fisheries, Lands and Housing and Others (1998) 53 W.I.R. 131.

7 Abel J. found, after careful consideration of all the facts and circumstances, that the search was executed, not to an insignificant extent, in an unreasonable and excessive, but not necessarily in an oppressive, manner. He concluded that Titan was entitled to redress for breach of its constitutional rights but struggled to ascertain the actual amount given the unreliability of the evidence presented. In the absence of an independent report, he found that the value of the business was overestimated by 80% and ordered damages in the amount of US$4,460,000.00, representing 20% of the original US$22 million claimed. He made no order for vindicatory damages.

8 The Court of Appeal disagreed with the trial judge that Titan should be awarded US$4,460,000.00 in compensatory damages. The Court of Appeal held that the trial judge adopted the wrong approach in awarding 20% of the damages claimed. In its view, pecuniary loss had to be specifically proven and not arbitrarily awarded. As the evidence of financial loss was rejected by the trial judge, there was no evidence to support the award of US$4,460,000.00. The Court of Appeal also held that Titan failed to establish the causal link between the harm for which it sought damages and the breach of its constitutional rights. The court held that the taking of the property was not the cause of the shutting down of Titan's business. In its view, there was an independent intervening factor – the suspension of the trade licence. Further, the licence was not renewed, and the suspension was never challenged. The court concluded that the trial judge erred in awarding “pecuniary damages” for the value of the business since the business could no longer lawfully continue its operation.

9 The Court of Appeal agreed with the trial judge's interpretation of section 18 and held that he correctly sought guidance from section 26 of the Act to aid his interpretation in the absence of statutorily required rules. The court held that section 18 ought to be read as consistent with sections 9 and 14 of the Constitution. As to costs, the court held that each party should bear its own costs in the appeal and the court below as the Respondents succeeded in relation to damages and Titan succeeded on the basis that the search of its premises was carried out in an indiscriminate, unreasonable and excessive manner.

10 There were four issues for the Court's consideration in this appeal: (i) whether section 18 of the Act was unconstitutional; (ii) whether Titan was entitled to monetary compensation for pecuniary damage; (iii) whether Titan was entitled to vindicatory damages; and (iv) costs.

11 Firstly, the Court found that the trial judge and the Court of Appeal were correct to find that section 18 of the Act was constitutional. The Court held that the three-tiered test set out in de Freitas was an appropriate test and agreed that in order to determine whether a limitation/restriction on a fundamental right was arbitrary or excessive, a court had to ask itself the following questions: “whether: (i) the legislative objective is sufficiently important to justify limiting a fundamental right; (ii) the measures designed to meet the legislative objective are rationally connected to it; and (iii) the means used to impair the right or freedom are no more than is necessary to accomplish the objective.” [The Privy Council adopted the three-tiered test set out in the Zimbabwean case of Nyambirai v. National Social Security Authority at p. 144] The Court found that on application of the test, the power to search in section 18 was a reasonable limitation/restriction on the rights enshrined in sections 9 and 14 of the...