Application for Summonses to be issued pursuant to Letters Rogatory [1984] VULawRp 9; [1980-1994] Van LR 90 (29 March 1984)

[1980-1994] Van LR 90

IN THE SUPREME COURT OF
THE REPUBLIC OF VANUATU

CRIMINAL JURISDICTION

Criminal Case No. 1 of 1984

APPLICATION: FOR SUMMONSES TO BE ISSUED
PURSUANT TO LETTERS ROGATORY

Coram: Chief Justice Cooke

Counsel: Mr Vasaris for applicant
Mr Cote for respondent

JUDGMENT

[BANKING - secrecy provisions - CONSTITUTIONAL LAW - "substantial justice"]

On the 9th January 1984 an ex parte application was made by the Public Prosecutor for an Order that the evidence of certain persons in Vanuatu be taken by the Senior Magistrate in Vanuatu for the purpose of a case under the Exchange Control Regulations in Australia.

The Court considering the request reasonable granted the Order.

On the 13th day of January 1984, Mr Vasaris, Counsel for one of the parties whose evidence was requested, by Notice of Motion, moved that the said Order be set aside and quashed since such Order was made in excess of the jurisdiction of the Court and not supported or authorised by:-

(a) any relevant Act or other law of and applicable to Vanuatu.
(b) any Convention or Treaty to which Vanuatu is a party.
(c) the Evidence (Proceedings in Other Jurisdictions) Act 1975 (UK).
(d) the Foreign Tribunals Evidence Act 1856 (UK).
(e) the Evidence by Commission Act 1859 (UK).

Mr Vasaris, in moving the motion, raised a query as to what extent a foreign law enforcement body should be allowed to have evidence taken in Vanuatu for its own purpose. Such question, he submitted, was most important in the particular case in view of the Bank's undertaking for secrecy. He contended that when certain information is required from a Bank, an application is made to the Court under the Bankers Book evidence Act 1879 but under that Act it must relate to legal proceedings within the country.

Mr Vasaris contended that section 10 of the Evidence (Proceedings in other Jurisdictions) Act 1975 (UK) provided for the extension of that act to any country, territory or colony but no order was made extending the Act to the former New Hebrides or Republic of Vanuatu. The same applies, Mr Vasaris submitted, in the case of the evidence by Commission Act 1859 (UK). He submitted there was no provision made in the Penal Code of Vanuatu or Criminal Procedure Code to permit such request to be granted and accordingly such grant should be refused. He ended his submission by stating that unless there was clear legislative authority applicable in Vanuatu that such a request be granted it is quite beside the point that the Court can deal with such matters under its inherent powers (Article 45 of the Constitution).

Mr Cote, in reply, submitted that Bank Secrecy is not relevant and further that Mr Vasaris' remark that such secrecy, if not protected, would be a fatal blow to the finance centre of this country is really taking the matter too far. He, Mr Cote, doubted if there was any country in the world which gives protection to secrecy dealing with serious crimes such as forgery or fraud. Mr Cote stated that the original application was couched in general terms because there is no law which applies in this country with respect to letters rogatory. It does not mean, he submitted, that because there is no law that the Court cannot deal with a bona fide request from a friendly country under its inherent power provided for in Article 45 (1) of the Constitution.

As there is no rule of law in this country governing the query before me and as I accept that the English Acts relating to the matter do not apply here I must resort to Article 45 (1) of the Constitution which states:-

"Article 45 (1). The administration of Justice is vested in the Judiciary, who are subject only to the Constitution and the law. The function of the Judiciary is to resolve proceedings according to law. If there is no rule of law applicable to the matter before it, a Court shall determine the matter according to substantial justice and whenever possible in conformity with custom."

Being the Constitution of this country, the meaning to be given to the words "substantial justice" must, in my opinion, be determined according to the position in Vanuatu. The query raised here is - whether a request by a Magistrate in Perth, Australia, for evidence to be taken by a Magistrate in Vanuatu on a matter which is not an offence in Vanuatu can be granted.

The offence for which evidence is sought in this country is a breach of the Australian Foreign exchange Control Regulations. There is no such regulation in this country as Vanuatu is a Tax Haven. That being so, I have to consider, would the principles of substantial justice be complied with if evidence were to be taken here on matters which Parliament has placed no restrictions. In my opinion, as Parliament, in its wisdom, has placed no restrictions on exchange control in this country, I would be acting contrary to the intention of Parliament and indeed contrary to substantial justice in its meaning relating to this country to allow the Order to remain. It is indeed the general procedure throughout the Commonwealth countries that the offence for which evidence is sought must be an offence in the country to which the request to take evidence is made. In Extradition proceedings it is called the double criminality rule i.e. "The return of a fugitive offender will either be precluded by law or be subject to refusal by the competent executive authority if the facts on which the request for his return is grounded do not constitute an offence under the law of the country or territory in which he is found."

In the case of Re Nassau and Trust Co. Ltd (1977) 1 Bahamas Law Reports, the Chief Justice of the Bahamas, Mr Justice Knowles rejected a somewhat similar application. In that case, the liquidator of the Nassau Bank and Trust Company applied for permission to disclose to the U.S. Department of Justice in the Central District of California certain information requested by that department to the banking affairs of one Robert J. Buchbinder with the Company. The evidence in support included an affidavit sworn by the Assistant U.S. District Attorney, stating that information was required in connection with a grand jury investigation regarding fraudulent conduct involving use of U.S. mails. This application was pursuant to section 10 of the Bahamas Banks and Trust Companies Regulation Act 1965. Section 10 (1) states - "Except for the performance of his duties or the exercise of his functions under this Act or when lawfully required to do so by any Court of competent jurisdiction within (the Bahamas), or under the provisions of any law of (the Bahamas), no person shall disclose any information relating to any application by any person under the provisions of this Act or to the affairs of a licence which he has acquired in the performance of his duties or the exercise of his functions under this Act." (This is the same as our section 10 (1) of the Trust Companies Regulation Cap. 10).

Knowles C.J. conceded the correctness of the submission that on the strict literal interpretation of the provision the liquidator was not bound by the prohibition it contained because technically the company is no longer a licensee under the Act, since its licence had been revoked by the Governor-General. Knowles C.J. admitted that the section failed to extend the protection of secrecy to the affairs of a company in liquidation. He rejected the application. Knowles C.J. seemingly considered that the 'mischief' which the legislature was concerned to avoid was disclosure, either by a liquidator or manager of a bank, would be the same. Knowles C.J. said "I feel that the language of the section must be modified to meet the intention. Admittedly this involves applying an exceptional rule of construction...." the mischief rule i.e. the wrongs intended to be redressed by a statute.

Knowles C.J. quoted extensively from a speech by D.M. Fleming, a former Minister of Finance in the Federal Government of Canada, now the leading financier in the Bahamas. Fleming said, and the Chief Justice quoted with approval :- "Call it what you will, the Bahamas is a 'tax haven' or an 'offshore financial centre'... What has brought the financial community to the Bahamas? What has attracted such a galaxy of banks and trust companies to Nassau? I would answer that there are five factors involved:

(a) The first is undoubtedly the tax structure of the country.

(b) The second is confidence.

(c) Third, the secrecy attached to relations and transactions between the financial institutions and their clients has been another essential factor in attracting financial business here. The statute law of this country, superimposed upon the wisdom of the English Common Law, has strengthened the inviolability of secrecy and confidentiality of this sphere.

"....Any weakening of this guarantee would be harmful to the interest of the Bahamas, any strengthening of it would be reassuring."

The Chief Justice described the Fleming statement as 'masterly' and in concurrence added:

"The secrecy provision is one of the pillars of this part of our economic structure, the destruction of which would lead to the collapse of the whole structure which it supports."

I entirely agree with the last remarks of the Chief Justice of the Bahamas. I therefore quash the Order made and in doing so, refuse the application of the Magistrate of Perth, Australia. As this matter is a test case, I make no order as to costs.

29 March 1984

FREDERICK G. COOKE
CHIEF JUSTICE