EM and JG v P

This ex tempore judgment from December 2024 which has only just been published involves an application by financial deputies for guidance from the court in circumstances where P, who had an acquired brain injury but was able to function at a high level, had become involved in drug dealing.  P had been arrested, and quantities of Class A and B drugs had been seized from his home and a friend’s home.  The drug dealer who had supplied some of those drugs to P was demanding a payment of £17,000 from P, which represented the value of the drugs.

The President held that if P lacked capacity to decide whether to pay the drug debt, then there could be no best interests decision or authorisation from the court to pay the debt, as that would involve the deputies in criminal activity. Specifically, the deputies would be potentially liable for a money laundering offence under s.328 Proceeds of Crime Act 2002 and conspiracy to commit that offence: “the short point is that…it is likely the deputies will have become drawn into engaging in payment of what will be seen under the 2002 Act as the proceeds of crime, although obviously at the moment, the money is not such: it sits in a bank account managed by the deputies on P’s behalf.” [6] Further, the deputies would be placing themselves in jeopardy under the Solicitors Regulations as the SRA Principles and Code of Conduct also applied to solicitors when acting as deputies, and solicitors cannot accept instructions that involve them in criminality.

If P had capacity, then he could ask for any sum he liked from the deputies and they would not be at risk of criminal proceedings, since they would be legally obliged to abide by his instructions.

On the facts of the case, P lacked capacity as he could neither hold in mind nor weigh up the salient information. There was no prospect of the court sanctioning the payment in P’s best interests: ‘the court would effectively itself be engaging, albeit at arm’s length, in serious criminality’, [19] and so the court refused to declare that the payment should be made.

Comment

It is very unfortunate that this judgment does not contain a reasoned explanation of why the payment of the £17,000 would constitute an offence under POCA 2002, and does not include any of the relevant caselaw on the provisions of that statute.

The purpose of this application as brought is fairly elusive. The judgment records that the application on the papers appeared to seek a best interests decision. However, where the deputies’ own position appeared to be that they would be committing an offence by paying this debt (and thus, it would be presumed, unwilling to do so), it is unclear what available option the court was being called on to consider. The deputies had obtained multiple opinions from criminal counsel which took this position, but the rationale of these opinions are not discussed at length. Where multiple opinions had already been obtained on this point, it does not appear that directions were sought or given for the Official Solicitor to obtain yet another advice on the same point of law, and the court does not appear to have heard any contested argument on the point. On the issue of P’s capacity (which eventually became the focus of the hearing), the deputies had an expert opinion on P’s capacity which the court described as ‘a thorough and very impressive account of his assessment establishes that P lacks capacity’ which did not appear to lend itself to any credible challenge. It is thus quite difficult to discern why the deputies brought this matter before the court at all, and what the benefit to P was where P will have born the full cost of two represented parties.

In the absence of a description of any contested hearing or endorsed statement of the relevant law, we are not clear on what if any conclusions were reached by the court in relation to its reasoning about the Proceeds of Crime Act; in the absence of such reasoning, this judgment does not appear to have any precedent value.

From what appears to be the logic of the judgment, the use of ‘clean’ money to pay for drugs is a money laundering offence.  If that is right, then it is unclear why P having capacity would remove the risk of the deputies committing a criminal offence.  S.328 POCA refers to a person becoming ‘concerned in an arrangement which he knows or suspects facilitates (by whatever means) the acquisition, retention, use or control of criminal property by or on behalf of another person’.  There is no defence of being required to give the money to the person by virtue of some other legal obligation, unless that obligation relates to the enforcement of POCA 2002 or some other enactment relating to criminal conduct.

If the judgment is correct, it would also appear to follow that any payment of ‘clean’ money to a drug dealer is a money laundering offence, whether through a deputy or otherwise. Anyone buying illegal drugs, or any other illegal substance or product, would be committing the s.328 offence, because their ‘clean’ funds would automatically become criminal property. That does not sit easily with POCA caselaw in the criminal context which makes clear that money laundering offences involve the acquisition of criminal property, not the criminal acquisition of property.  In R v Porter and Stanley [2023] EWCA Crim 1485 the court said ‘the property in question must already have the quality of being criminal property by reason of conduct distinct from the conduct alleged to constitute the actus reus of the money launder offence’.

It is to be hoped that there will be a future case in which the points are argued fully and a reasoned judgment given – which may or may not reach the same conclusion. The implications of the judgment for cases where deputies know that P is using an allowance to buy drugs from time to time will also need to be worked out in a future case.