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Bowman v Fels [2005] EWCA Civ 226

Appeal concerning s 328 of the Proceeds of Crime Act 2002

Bowman v Fels [2005] EWCA Civ 226

Court of Appeal: Brooke, Mance and Dyson LJJ (8 March 2005)

Summary

Section 328 of the Proceeds of Crime Act 2002 is not intended to cover or affect the ordinary conduct of litigation by legal professionals.

Background

This appeal raised important issues relating to the interpretation of the Proceeds of Crime Act 2002, especially section 328, and its application to the legal profession. The underlying facts were relatively straightforward: after the relationship between the claimant and the defendant ended, the claimant asserted a right to a beneficial interest in the property that they had occupied together, but which was registered in the defendant's sole name; in preparing for trial, the claimant's solicitors suspected that the defendant had included in his business accounts the cost of non-business related work carried out at the property, and notified the National Criminal Intelligence Service (NCIS) by virtue of their perceived obligation under s 328.

The key issue to be determined was whether s 328 means that, as soon as a lawyer acting for a client in legal proceedings discovers or suspects anything in the proceedings that may facilitate the acquisition, retention, use or control (usually by his own client or his client's opponent) of 'criminal property', he must immediately notify NCIS of his belief if he is to avoid being guilty of the criminal offence of being concerned in an arrangement which he knows or suspects facilitates such activity (by whatever means).

The court reviewed at length the Council Directives 91/308/EEC and 2001/97/EEC that gave rise to Part 7 of the 2002 Act, including s 328, and considered the various linguistic implications.

Judgment

The court concluded that the proper interpretation of s 328 was that it was not intended to cover or affect the ordinary conduct of litigation by legal professionals. That included any step taken by them in litigation, from the issue of proceedings and the securing of injunctive relief or a freezing order up to its final disposal by judgment. The court did not consider that either the European or the UK legislator could have envisaged that any of these ordinary activities would fall within the concept of 'becoming concerned in an arrangement which … facilitates the acquisition, retention, use or control of criminal property'.

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