The Court of Appeal last week clarified the duties of solicitors in reporting money laundering under the Proceeds of Crime Act 2002 (POCA).
Lord Justices Brooke, Mance and Dyson were ruling in the case of Bowman v Fels.
During the course of legal proceedings over the ownership of a house, Jennifer Bowman’s solicitors, Levine Mellins Klarfeld, became aware of possible money laundering by William Fels, the defendant.
The firm believed that the POCA required it to make an immediate disclosure to the National Criminal Intelligence Service (NCIS) without telling its client or the defendant’s solicitors, Male & Wagland, what it had done.
It also requested an order to adjourn the trial. Male & Wagland guessed why the order had been applied for and requested that the facts of the application be disclosed.
In March 2004, a county court judge concluded that the defendant’s solicitors and the courts should have been informed of the reasons for the adjournment being sought.
The case was referred to the Court of Appeal, despite the litigation being settled, because of the need for the clarification of disclosure rules. The Law Society, the Bar Council and the NCIS were all permitted to intervene.
The appeal panel ruled that Section 328 of the POCA did not require Levine Mellins to disclose to the NCIS any suspicions developed during legal proceedings, and that the firm was allowed to continue with proceedings in a normal manner.
Law Society chief executive Janet Paraskeva said: “We welcome the importance this judgment places on legal professional privilege. The Appeal Court believes that legal professional privilege can only be eroded by clear parliamentary legislation and not simply by interpretation of current legislation.”
Levine Mellins instructed Milan Dulovic of 2 Gray’s Inn Square; 4 Paper Buildings junior James Copley represented Fels; Fountain Court Chambers’ Anthony Boswood QC was instructed by the Bar Council’s pro bono unit; 3 Verulam Buildings’ Nicholas Elliott QC was chosen by the Law Society; and David Pannick QC of Blackstone Chambers was instructed by the NCIS.