Practice and Procedure

P v P (Ancillary Relief: Proceeds of crime) (2003)

PUBLISHED October 9, 2003

The court gave guidance to the legal profession on its obligations under Parts 7 and 8 Proceeds of Crime Act 2002.Application on behalf of the wife ('W') seeking the ruling of the court as to the effect of the Proceeds of Crime Act 2002 on her application for ancillary relief in divorce proceedings. Based on the financial information provided by the husband ('H'), W and her legal team became suspicious that part of the matrimonial assets might be criminal property within the meaning of the Act. W's legal team were worried that, in acting for W in the litigation and a settlement of the financial dispute, they might offend the s.328 prohibition and might become involved in an arrangement which might facilitate the acquisition, retention, use or control of criminal property by W. They sought to protect themselves and W by invoking the protection of s.328(2)(a) and, on 18 June 2003, wrote to the National Criminal Intelligence Service ('NCIS') making disclosure that H's assets might comprise criminal property. NCIS did not respond. Telephone calls were made to NCIS and an NCIS officer advised that the decision to continue to act was a business decision for the solicitors and that W's solicitors were not permitted to tell the other side or their client that the disclosure report had been made as it would contravene the tipping off provisions and the prohibition against prejudicing an investigation. On 16 July 2003, W's solicitors received a letter from NCIS consenting to them proceeding with the transaction. W's legal team made an urgent application to the court for clarification. Two issues arose for consideration: (i) whether and in what circumstances it was permitted to act in relation to an arrangement; and (ii) whether and in what circumstances a legal adviser, having made an authorised disclosure, was permitted to tell others of the fact they had done so. NCIS admitted that the advice given by their officer over the telephone was incorrect.HELD: (1) The act of informing the client or any other person that a disclosure was to be or had been made to NCIS would itself appear to be a "disclosure" within the meaning of s.333(1) and s.342(2) of the Act. (2) There was nothing in s.328 of the Act to prevent a solicitor or barrister from taking instructions from a client. However, if, having taken instructions, the solicitor or barrister knew or suspected that they or their client would become involved in an arrangement that might involve the acquisition, retention, use or control of criminal property, then an authorised disclosure should be made and the appropriate consent sought under s.335. (3) Section 333 and s.342, which prevented a person from tipping off or prejudicing an investigation, specifically recognised a legal adviser's duty to make the relevant disclosures. A central element of advising and representing a client was the duty to keep the client informed and not to withhold information from the client. The legal professional exemption was lost if a disclosure to a client was made "with the intention of furthering a criminal purpose". Unless the requisite improper intention was there, the solicitor should be free to communicate such information to the client as was necessary and appropriate in connection with the giving of legal advice or acting in actual or contemplated legal proceedings. (4) Having complied with the obligations under s.328, there was nothing in the statute to require a solicitor to delay in informing the client. (5) Where guidance from the court was sought, it would be appropriate for legal advisers to make the application without notice to the other side, making NCIS the respondent to the application. The application would be heard in private and the court should direct that no mechanical recording of the proceedings should be disclosed or transcribed without the leave of the judge. (6) In the circumstances of the instant case, W's legal advisers had been right to make an authorised disclosure to NCIS. It had also been entirely proper for them to approach the court for guidance. As there had been no reply from NCIS by the end of the requisite seven-day period, W's legal advisers had been free to continue to deal freely with the other side and to inform the other side that a disclosure had been made to NCIS. They would not have been exposed to the risk of prosecution for tipping off or prejudicing an investigation.Declarations granted.

[2003] EWHC 2260 (Fam)