Intermeddling - A toolkit for breaches of the Probate Law
Overview
Businesses are still being caught out by the intermeddling rules in the Probate (Jersey) Law despite recent prosecutions in Jersey. This is in part because the offence is a strict liability offence, and also because it is hard to know when someone has passed away. It may be that an international business has advisers outside Jersey who are working on a matter. They may be unaware of Jersey law requirements. This briefing note looks at the legal test for intermeddling and what businesses can put in place to avoid being caught out. It is relevant to all who carry out business in Jersey. Many in the finance industry manage other people’s assets and many have property – often stocks, shares, and cash in Jersey - even if they live outside Jersey.
The offence of intermeddling is created by Article 23(1) of the Probate (Jersey) Law 1998 (“the Probate Law”) states “ … if any person, other than a person acting in accordance with Article 19(3) or any other enactment, takes possession of or in any way administers any part of the movable estate of a deceased person without obtaining a grant, the person shall be guilty of an offence and liable to a fine or to imprisonment for a term not exceeding 12 months or to both.” An exemption is then created in Article 19(3) for estates which do not exceed £10,000.
Accordingly, any person who administers any part of the moveable estate of a deceased person without first obtaining a grant, will be guilty of a criminal offence. This applies to a bank which doesn’t freeze an account, an investment manager who continues to deal on the share account, the individuals and any parties who are tasked with administrating the will.
Article 23 creates an offence which does not depend on mens rea or criminal intent. “Administers” is not defined in the statute but is clearly linked to the concept of the grant of letters of administration under the statute. Therefore, a person who takes the place of an administrator of an estate who is granted letters of administration clearly commits the offence.
Also of relevance is the offence of aiding and abetting. Article 1 of the Criminal Offences (Jersey) Law 2009 states,
“(1) A person who –
(a) aids, abets, counsels or procures the commission of a statutory offence; or
(b) conspires, attempts or incites another to commit a statutory offence,
is guilty of an offence and is liable to the same penalty as a person would be for the statutory offence.”
Accordingly, a party who assists in the intermeddling is either liable as a principal depending on how broad the Court determines the interpretation of the word administers or liable for aiding and abetting in the principal breach. In the recent AG v Abu Dhabi Commercial Bank Unreported (18 October 2018) (the “Abu Dhabi case”) where bank employees authorised the payment away of assets following a court order in Abu Dhabi the bank itself was considered to be a principal. However, it is not necessary to consider the arguments either way at this stage. Aiding and
Regulatory Breaches
There should be separate considerations regarding regulatory breaches if there is a breach of the Probate Law. There is likely to also be a number of breaches of the Investment Business Code of Practice as well as breaches of the Financial Services (Jersey) Law 1998. The failure to comply with the Jersey law regarding probate may demonstrate that there has been a failure of corporate governance and a breach of the ongoing fit and proper licensing test. For example, Principle 3 states “A registered person must organise and control its affairs effectively for the proper performance of its business activities, and be able to demonstrate the existence of adequate risk management systems.”
It is important to note that the breach of a Code of Practice is a serious regulatory matter and could lead to regulatory sanction by the Jersey Financial Services Commission (the “Commission”). Regulatory sanction could be either a public statement, a direction to remediate the failings, a civil penalty or in extremis the revocation of a licence to carry out investment business. In particular the Commission is keen to use its relatively new civil penalties powers in appropriate cases.
Further a financial services business has an obligation under the Code of Practice to report breaches to the Commission in a timely fashion under Principle 6.1. That states, “A registered person must advise the Commission in writing as soon as it becomes aware of any matter that might reasonably be expected to affect its registration or be in the interests of its clients/investors to disclose. Wherever possible, this notification must include details of the steps the registered person has taken, or intends to take, to mitigate the matter.” This means that there is a potential overlap between the regulatory position and the criminal position.
Referral for Prosecution
There is an obligation to report the breach to the Commission. Once the Commission is aware of the breach it will refer the matter to the Attorney-General to investigate and to make a decision whether to prosecute. The wording of the notification to the Commission therefore is of considerable significance as this will be passed on to the Attorney-General. It is prudent to also make a self-referral to the Attorney-General. While the Attorney-General is deciding whether to prosecute, or bringing a prosecution, the Commission is unlikely to apply regulatory sanction in case the Commission’s published findings prejudices the prosecution. However, if the Attorney-General decides not to prosecute then the Commission may decide to apply a regulatory sanction.
If intermeddling has taken place then it is also possible that when letters of probate are applied for, the Registrar of Probate would refer the matter to the Attorney-General. The Attorney-General issued guidance in March 2014 updated in 2020 concerning when a matter should be referred by the Probate Registrar in the case of possible intermeddling in a deceased’s estate. That guidance included the following statement,
“1) The presence of any of the following factors should lead to a referral:
i) The amount concerned is in excess of £10,000.
ii) There are a number of persons entitled to a share of the estate and those individuals’ interests have been prejudiced by the intermeddling.
iii) The person who has intermeddled is a member of a profession, membership of which would suggest either awareness of the requirements under the Probate (Jersey) Law 1998 (as amended) or awareness that such requirements are likely to exist.
iv) It appears that the person who has intermeddled has acted in bad faith.
v) The intermeddling has come to light through a person other than the intermeddler.”
Helpfully the guidance stated that the presence of all the following factors will generally not need to be referred to the Attorney General:
“(i) The amount concerned is less than £10,000; and
(ii) The person who has intermeddled has acted in good faith and there is no indication that the intermeddling was a deliberate attempt to circumvent the Law; and
(iii) The person who has intermeddled is the sole heir or beneficiary or if there is more than one heir or beneficiary, the others have indicated their approval either in advance or retrospectively, of the actions of the person who as intermeddled; and
(iv) The person who has intermeddled is a person with no prior experience of legal matters. Those with no prior experience of legal matters cannot be expected to have the same level of knowledge about the probate process as those who have had prior experience; and
(v) There is no ground for supposing that the intermeddling was deliberately done to advance an ulterior motive, for example, to deliberately gain some advantage (financial or otherwise) or to damage the interests of a third party; and
(vi) The matter has only come to light because the person who has intermeddled has informed someone of what has happened, for example, where an executor has brought attention to their own intermeddling.
Guidance for Financial Services Businesses
In addition to those matters set out at paragraph 17 of the Attorney General’s Code on the decision to prosecute, the following public interest factors are stated as being considered in relation to financial services businesses, namely whether:
“The trigger event for the payment away of the deceased’s movable estate was a decision taken by a bank or financial institution in another jurisdiction over which the Jersey bank or financial institution had no control;
The estate which has been subject to an alleged act of intermeddling comprises complex asset structures held in multiple jurisdictions;
The alleged intermeddling took place as the direct result of an act by an automated system;
The alleged intermeddling took place as the direct result of an unavoidable manual error by a bank or financial institution in Jersey”
Following a referral, the Attorney-General will investigate and consider whether it is in the public interest to bring a prosecution.”
Abu Dhabi case
There have been several intermeddling cases in Jersey. The facts in the Abu Dhabi case were as follows. The deceased died on 1st June 2017, and at the time of his death he held a number of accounts with the Defendant bank. One account was held with the Jersey branch (“the Jersey Account”) with a balance of just over $400,000 at the date of death.
Following the death of the deceased, a court in the United Arab Emirates, which had jurisdiction over the estate of the deceased directed that all sums held by the Defendant in the name of the deceased were to be transferred to the Court’s “Treasury” so that the deceased’s estate could be managed in accordance with UAE probate law. This judgment was put into effect by an order served on the Defendant on 12th October.
When the Defendant was informed of the death of the deceased on 12th October 2017, a binding “no debit” instruction was attached to each of his accounts, including the Jersey account, to preserve the position. Four days later, a member of the remedial risk department of the Defendant, that department being based in the UAE, issued instructions to a relationship officer, also based in the UAE, to prepare a manager’s cheque representing all funds held by the Defendant for the deceased for the purposes of sending it to the Treasury of the UAE court pursuant to the order which had been made.
The relationship officer sent an email to two of the employees at the Jersey branch to inform them of this and it appears that those instructions were prepared either by those who did not know that the Jersey based funds would require a grant of probate or possibly did not notice that the transfer instruction which they had prepared affected the Jersey account – more likely the former, although that is not clear. The transfer was made from the Jersey account on 17th October, thus amounting to the offence of intermeddling in the estate.
In the Abu Dhabi case, the Court sentenced the Defendant to a fine of £25,000 and to pay a compensation order of the stamp duty owing to the Jersey revenue. The court rejected the civil penalty regimes quantum as a guide for the amount of fine to be paid. Instead the court found that an appropriate amount to pay considering that it had been a mistake with no loss to the estate and no fraudulent activity.
Standard Bank case
On 9th August 2019, the international bank was found guilty of the offence of intermeddling and fined £20,000. The deceased was domiciled in Jersey. The bank allowed the deceased’s partner, who held a third-party authority on the deceased’s account, to operate the account after the deceased’s death. The sums involves were small but it was accepted that the account should have been immediately suspended - and the Probate Law followed.
Conclusions
A business should regularly train its staff on the requirements of the Jersey Probate Law.The Attorney-General has shown a willingness to prosecute breaches.Training should not only focus on when an account should be frozen but also on what amounts to notification.If a breach has occurred then putting the breach right as much as possible will be likely to reduce the chances of a prosecution taking place.A self-referral should be made to the Attorney-General.Consider the regulatory impact as there is likely to be regulatory breaches which need correcting with the Commission.In appropriate cases where parties are ignoring the requirements of the law then it may be appropriate to make a SAR. Amati Law is always ready to assist guiding a business through these steps.
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