Confiscation of yacht by Customs

The Court of Appeal, composed of Chief Justice Silvio Camilleri, Mr Justice Joseph A. Filletti and Mr Justice Geoffrey Valenzia on October 29, 2010, in the case Helen Samantha Brett vs Comptroller of Customs, held, among other things, that Maltese law did not entitle the owner of an object which was confiscated by the Customs under Chapter 37, to recover it on the basis that he had no knowledge of the crime.

The facts in this case were as follows:

Helen Samantha Brett was the owner of the yacht Captain Nemo bearing registration number SSR105809. In September 2005 her husband used her yacht, with her consent, to go to Sicily in the company of a few friends.

She did not accompany him on this trip. In Sicily he purchased alcoholic beverages to stock up for a party he was going to throw in Malta. On his return to Malta, however he did not communicate with the Malta Authorities Turretta. Nor did he notify the Customs that he imported to Malta alcohol, in respect of which no tax had been paid.

The yacht was subject to a random inspection as it lay berthed in Qawra. The yacht as well as the alcohol were immediately confiscated by Customs officials on September 10, 2005, in terms of article 68 of Chapter 37 of the Laws of Malta.

Article 68 provides that “All vessels, vehicles or other conveyances, together with all horses and other animals and things knowingly made use of in the importation, landing, removal, keeping, concealing, or conveyance of any uncustomed or other goods liable to forfeiture under this Ordinance shall be forfeited: Provided that no vessel shall be liable to forfeiture under the provisions of this section, unless such vessel is under two hundred and fifty tons burden”.

Ms Brett, thereafter filed legal proceedings to recover her yacht on grounds that she, the owner of the yacht had not authorised third parties to use her yacht for any criminal purposes in terms of article 72 (2) of chapter 37.

This section provides that “all seizures made under this Ordinance shall be deemed to be forfeited as of right, and may be sold or otherwise disposed of as the minister responsible for customs may direct, unless the person from whom such seizure has been made, or the owner thereof, or any person authorised by him, within 30 days from the date of seizure, gives notice in writing to the Comptroller, that he claims the things so seized or intends to claim them, whereupon proceedings shall, within thirty days from the date upon which such notice was given, be instituted by the claimant in the competent civil court, according to the value of the things seized, in default of which the claim shall be taken to be abandoned.”.

She claimed that she should not suffer damages by having her yacht confiscated, once he was in good faith.

It was also stated that damage was being caused to her yacht.

She denied, knowing having any knowledge that her yacht was to be used for criminal purposes.

In reply, the Comptroller of Customs contested her legal action. He submitted that the yacht was used to import into Malta a considerable amount of alcohol in respect of which no tax had been paid. The unpaid tax amounted in excess of Lm8,000. For this reason, he said, the yacht was seized in terms of article 68 of Chapter 37. His argument was that it was not relevant to consider the relations of Ms Brett and the yacht in question or her knowledge of how the yacht was to be used. The Comptroller asked the court to dismiss her legal action.

The first court had to consider whether Ms Brett was justified to request the return of her yacht on the basis that she was not involved in the commission of the criminal offence. The court had no doubt that our law vested the Comptroller of Customs with sufficient discretion under Chapter 37 of the laws of Malta.

The first court considered rules of interpretation: re Dr Carlo Marche vs Hon Hiber nomine dated December 7, 1921: “If a legal provision was clear, it should be applied literally, and according to the usual principles.” Reference was made to the English writer McFarlane in his book Customs And Excise, Law And Practice. Mr McFarlane, commenting on the case Dr Keyser vs British Railway Traffic and Electric Co. Ltd states as follows: “A motor wagon which was seized by Customs on the ground that it was being used for the conveyance of goods liable to forfeiture. At the time the wagon was subject to a hire purchase agreement between the operators and British Railway Traffic. The officers of the respondent company were totally unaware of and free from complicity in the transaction which led to the seizure. However, it was held in the Divisional Court that the court was bound to condemn the vehicle, and that it had no discretion to decline to do so on the ground of hardship to an innocent owner. Lord Hewart observed ‘... this undoubtedly rigorous statute gives the claimant no opportunity of asking the court to take into consideration mitigating circumstances ...’ There is no opportunity for mercy with regard to a conveyance which has been forfeited. The only remedy available would be to institute an action against the persons who made use of such a vehicle in order to recover the damages of its loss.”

The principle underlying article 68 was dealt with in Xuereb vs Comptroller of Customs decided by the Court of Appeal on October 10, 2005. It was observed that her knowledge or lack of it, by the owner was not relevant. For purposes of article 68, what was essential was that the object was used to commit a crime, and on this basis it was liable to confiscation. The confiscation process was in rem. As soon as the merchandise entered Malta against the Customs Ordinance it was liable to confiscation. The fact that Helen Brett, the owner of the yacht, did not know of her husband’s criminal intention was not relevant for purposes of article 68 of chapter 37 of the laws of Malta. Once the third party used the yacht with her authorisation and knowledge, the yacht could be confiscated. The owner had the right to claim damages from the third party. The court noted that it was not established that her husband did not have the knowledge required under article 68. It was not proven that the Comptroller acted abusively, and contrary to the provisions of Chapter 37 of the laws of Malta. The first court dismissed Ms Brett’s case.

Aggrieved by the decision of the first court, Ms Brett entered an appeal, calling for its revocation. She pleaded that:-

(1) It was proven on a balance of probabilities that she did not know that her yacht was to be used for an illicit purpose. She said that the first court acted incorrectly by not taking this into account.

(2) The owner should not be held responsible for something, which she did not authorise and in respect of which, it was impossible for her to be aware.

(3) The first court gave an incorrect interpretation of article 72 (2) of Chapter 37.

(4) She did not have to establish that her husband did not have the knowledge mentioned in article 68. Allegedly all she had to show was whether she was aware of the commission of the crime and not whether her husband possessed such knowledge.

(5) The first court should have “stayed” this case until criminal proceedings against her husband were concluded.

The Comptroller of Customs, on the other hand, replied, defending the decision of the first court, which he said, should be confirmed in its entirety. It was submitted that the first court was correct. The good faith of the owner was irrelevant. Ms Brett should have produced proof to show that her husband did not know that no tax was paid on the alcohol on board the yacht.

On October 29, 2010 the Court of Appeal gave judgement by dismissing the appeal and by confirming the decision of the first court.

The following reasons were given for the Court’s decision: -

Our law allowed the Comptroller to confiscate the yacht under article 68. Our law did not state that if the owner had no knowledge of the crime, he had the right to recover the seized object; re: G. Vella vs Comptroller of Customs PA dated October 31, 2008.

In this case, it was held that the good faith (bona fede) of the owner did not affect the validity of the confiscation, insofar as the object seized constituted the corpus delicti. The owner had an alternative remedy against the user of the object.

Ms Brett was not entitled to recover the yacht on the basis that she was not involved and or was not aware of the crime.

It was not proven that her husband was not aware that alcohol was imported illegally to Malta. Article 68 of Chapter 37 provided for confiscation, if the yacht was used to smuggle alcohol. Article 72 (2) stated on what grounds a confiscation could be contested. As she knew that her husband was using her yacht, she could not claim that her yacht was used without her consent or clandestinely.

In addition the court said that as the first court had never been asked to stay proceedings whilst criminal action against her husband was still pending, this court, as a Court of Appeal, should not consider claims, that had not been raised before the first court.

Dr Grech Orr is a partner at Ganado & Associates.