The Court of Appeal, helmed by Jonathan Crow CVO KC, David Perry KC and Sir Adrian Fulford PC, heard an appeal by the Guernsey Financial Services Commission against the Lieutenant Bailiff’s judgment and upheld every ground of appeal.
In 2022 the GFSC sanctioned Ian Charles Domaille, Ian Geoffrey Clarke and Margaret Helen Hannis – who all held senior positions at the fiduciary firm Artemis – on the grounds of acting without probity (without strong moral principles) and failing to meet certain aspects of the Minimum Criteria for Licensing. They were fined £280,000, £90,000, and £30,000 respectively and banned from holding certain money laundering positions. While all three accepted the judgment, they disputed the sanctions and appealed the decision of the Senior Decision Maker (SDM) for the GFSC, Mr John Russell Finch.
Their appeals were heard by the Lieutenant Bailiff, sitting alone in the Royal Court. She upheld their appeals and instructed that the bans be lifted and the fines be reduced.
The GFSC subsequently sought to appeal this judgment, arguing that: “…some of the reasoning and interpretation of the law contained in her judgment does not align with our understanding of our statutory duties and powers.”
It appealed the judgment on four grounds. One was that the Lieutenant Bailiff had exceeded her jurisdiction, that she had erred in law by failing to properly reflect the seriousness of anti-money laundering breaches, that she had erred in her approach to test for probity and that she had erred in concluding that financial penalties had to be assessed by reference to fining powers.
The second two grounds also had additional ‘arms’ including that the Lieutenant Bailiff was wrong in law in her application of the civil standard of proof, that she significantly and unlawfully limited the circumstances in which a prohibition order might be imposed, and that she erred in law having regard to the interrelationship between the penalties imposed on an individual and on an entity.
The Court of Appeal upheld every ground in a move that Artemis called disappointing. However, the Court of Appeal also found that the decision of the SDM had been “flawed”.
Artemis
“The individuals involved in this matter… are undeniably disappointed with the judgment of the Court of Appeal not least because the judgement highlights the fundamentally flawed procedure to which they have been subjected over the last four and a half years,” said a spokesperson for Artemis.
“On 19 January 2024, the GFSC issued an announcement that they welcomed the judgment even though it points to substantial flaws in the senior decision maker’s process… to the extent that a totally new senior decision maker now needs to be appointed.
“The Court of Appeal has considered it necessary to emphasise to the new senior decision maker… that ‘any future decision must be based on an entirely fair and individualised assessment of each person’s culpability, taking into account the exculpatory and mitigating factors on which they properly rely’. The fact that this has to be pointed out to the GFSC’s SDM is a sad reflection of their process.
“The criticism levied against the GFSC’s enforcement process by the Royal Court which has now been reiterated by the Court of Appeal is a poor reflection on both the GFSC and the States of Guernsey.
“The process followed in Guernsey is far less independent and fair than the equivalent process in the UK and it needs to be reviewed urgently so that other industry professionals are not put through the same harrowing experience.
“The referral by the Court of Appeal back through the process that they themselves have described as flawed is the most disappointing aspect of this judgment.”
GFSC response
The Guernsey Financial Services Commission has responded to the most recent judgment by reiterating that Guernsey has high standards in combatting money laundering offences.
“The Commission welcomes this judgment from the Guernsey Court of Appeal which affirms the Commission’s processes were applied properly in this matter and our important role in combatting financial crime in the jurisdiction. In determining that the decision of the Royal Court could not stand, we were obviously pleased that the Court of Appeal found in our favour in respect of all the grounds on which we appealed the Domaille et al judgment to it,” said the GFSC.
The Director General of the GFSC, William Mason, said: “We seek to be a risk-based and proportionate regulator. We don’t pretend we will never make mistakes and, when we do, we will seek to learn from them.
“We do not use enforcement tools lightly but if the Bailiwick is to continue to be a hospitable place for commerce, an attractive place in which to do business to well understood high standards for the benefit of the global commons, there must be respect for the Bailiwick’s law under which such business is transacted.”
What happens now
In summing up, the Court of Appeal said, “the decision of the Royal Court cannot stand”.
The matter is now being remitted back to the GFSC so it can appoint a Senior Decision Maker to remake its decision on sanctions in accordance with the new judgment. The Court also instructed that the SDM cannot be Mr Finch OBE.