Clause 246 - ''Unlawful conduct''

Proceeds of Crime Bill – in a Public Bill Committee am ar 13 Rhagfyr 2001.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Amendment proposed [11 December]: No. 366, in page 145, line 26, to leave out the words

'on a balance of probabilities',

and to insert the words

'to the standard applicable in civil proceedings.'.—[Mr. Grieve.]

Question again proposed, That the amendment be made.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs) 8:55, 13 Rhagfyr 2001

On a point of order, Mr. Gale. We still do not have the Hansard report of our proceedings on Tuesday afternoon. It was not available yesterday and I understand that it is still at the Stationery Office. I appreciate that such matters may be outside your powers, but such a situation is inconvenient, especially when we have a split debate. We are in the middle of discussing a substantial clause, so the ability to refer back to what was said previously is important.

Photo of Roger Gale Roger Gale Vice-Chair, Conservative Party

That point was well made, and I shall take it up with the authorities in the House.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

Good morning, Mr. Gale. Having laboured for so long on the Bill and knowing how much that hope is required at this time on a Thursday, I wish to point out two matters to the Committee: this is the last time this year that we shall meet at this hour on a Thursday; and my hon. Friend the Member for Stirling (Mrs. McGuire), the Whip, informs me that we are halfway through the Bill. I wanted to make sure that I named her in Committee in case her figures are wrong. Christmas is coming and some respite from our labours approaches.

As the hon. Member for Beaconsfield (Mr. Grieve) said, we are in the middle of a debate and some important issues have been raised. It is difficult to recall everything that was said during our previous sitting, but I am sure that members of the Committee will not be slow to remind me if I fail to address substantial issues that have been raised.

The amendment would mean that the court would have to decide on the civil standard of proof—not on the balance of probabilities—whether matters alleged to constitute unlawful conduct have occurred or whether a person intended to use cash in unlawful conduct. The balance of probabilities is the normal standard of proof applicable to civil proceedings. However, some limited civil proceedings attract the criminal standard. The amendment would therefore make the position less clear than under the current formulation of

''on a balance of probabilities''.

We discussed such matters when we debated part 2. Our opinion then on how matters should apply in the proceedings is no different now. The present wording gives a far clearer steer to the courts of what Parliament expects from the level of proof required under part 5.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

Although the Minister is saying that the clause sets out the conventional way in which the Government prefer to deal with such matters, he has not given sufficient weight to the powerful speech made on Tuesday by the hon. Member for Redcar (Vera Baird). She has enormous experience and far more legal seniority than other members of the Committee. Given her powerful speech in which she supported my argument and that of my hon. Friend the Member for Beaconsfield and other Opposition Members, I should have thought that the Minister would have given more credence to what she said.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

Well, the time is 8.59, a point of order has been made, I have just started speaking, and the hon. Gentleman has intervened. If he gives me the opportunity, I might do exactly as he suggested. I recall my hon. Friend's speech and I picked up on a couple of points that she made. I respect her capacity, ability and experience in dealing with such matters. She should be listened to seriously, as should other members of the Committee.

Clause 246 sets out the standard of proof that is to apply in civil recovery and cash forfeiture proceedings to determine whether unlawful conduct has occurred or, in the case of cash, is intended to occur. Subsection (3) deals only with the standard of proof that applies to proving unlawful conduct, not all other issues that must be proved in part 5 proceedings. That is because, since part 5 proceedings are civil proceedings, it is considered to be self-evident that the civil standard of proof applies.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

The Minister says that the proceedings are civil proceedings. I accept that that is the way in which part 5 is headed. However, does he agree that elements of that recovery process do not bear the normal hallmark or stamp of civil proceedings? For example, is there a limitation period in respect of the time in which property can be recovered? My understanding of part 5 is that there is not.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

The hon. Gentleman is not right. There is provision for a limitation period in the proceedings. Although he and other members of the Committee may be more familiar with the normal situation than I am, there is a 12-year limitation period, and I believe that that is not out of line with the normal situation. If it helps the hon. Gentleman, the provision can be found under clause 287.

The only area in which there could be any doubt is in relation to unlawful conduct, since that is defined by reference to the criminal law. Subsection (3) is designed to overcome that element of doubt. It provides that the test will be the balance of probabilities, which is the normal standard of proof applicable to civil proceedings. We discussed that issue in some detail in our consideration of part 2. The same arguments apply here. The phrasing used achieves what we intend in a way that a reference to the civil standard would not, because some civil standard proceedings attract the criminal standard of proof requirement.

The standard that normally applies in civil proceedings is, however, the balance of probabilities. It is the standard that applies in other proprietary proceedings under the civil law. It is therefore appropriate that it should apply to civil recovery and cash forfeiture. It is not appropriate for there to be any possibility that the criminal standard should apply, because both civil recovery and cash forfeiture are civil proceedings. They do not, and cannot, lead to a conviction.

During our consideration of part 2, I quoted the comments of Lord Nicholls in the case of Re H in 1996. He made it clear that, when assessing the probabilities, the court will have in mind that the more serious the allegation the less likely it is that the event occurred. With that in mind, the court should expect stronger evidence before concluding that a more serious allegation is established on the balance of probabilities. At the moment, my hon. Friend the Member for Redcar is not in the Committee. On Tuesday, she said that the standard that we were proposing was rigid. I bow to her expertise. None the less, I know of people with similar expertise who take a different line.

For example, I have heard the views of a senior judge and, if the Committee would like, I can quote chapter and verse on how he explained the workings and the wordings of the balance of probabilities. I see that the hon. Member for Orkney and Shetland (Mr. Carmichael) is protesting that I should not do that, but it is not my understanding that the standard is rigid. It is flexible, as the judge explained in the case to which I referred. It moves, in terms of the seriousness of the offences that people are facing. In civil recovery proceedings, the burden will be on the director to prove that, on the balance of probabilities, the property was obtained through unlawful conduct. If the court thinks that it is more probable than not that the claim against the respondent is true, the burden of proof is discharged.

On Tuesday, the serious point was made that we are not discussing cases that involve two equals, as is usual in civil recovery proceedings. In these civil recovery cases, the state is against the individual. That is undeniably true, but I remind the Committee, as it considers that inequality, that we are not talking about situations that may apply under part 2. We are not talking about the granny with the telly in the drawing room of her Scottish council flat. The director will not get involved in expensive civil legal proceedings unless, as the steward of the resources given to him, he can show that he is using those resources well. He will be sure to target substantial sums of money and serious criminals.

If we are to have a balanced view, we must remember that it is for the director to prove on the balance of probabilities that the property is the proceeds of crime. The defendant knows the origin of the property; it is for the director to find out and prove that the property is the proceeds of crime. That fact must be put on the scales when considering the potential imbalance that hon. Members said would arise because one of the parties is the state. The defendant is in an advantageous position in that respect.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

The Minister's argument would have considerable force if that were the position. He courteously wrote me a letter, which I hope that other members of the Committee have seen, in which he details the difference between the powers for civil recovery and confiscation. Civil recovery proceedings can extend to include property that was innocently acquired but has an origin that places it in the category of property acquired by unlawful conduct. The Minister is not right to say that the defendant will know the origin of the property. There may be circumstances—although I hope that they would be unusual if the director was bringing proceedings—in which the person whose property the state is trying to recover would have no idea of the property's unlawful origin.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

Yes, but that is not what I said. I am sure that this debate will continue throughout part 5. When we discuss the safeguards in clause 306, the hon. Gentleman will wish to explore whether those safeguards are adequate. The person will know where they gained the property, even if they do not know how the individual who passed that property on to them gained it. The person will know that if they gained the property innocently and paid its full value, it is not forfeit.

The hon. Gentleman may raise interesting issues that we need to explore, but they do not contradict my point. The defendant will be aware of how he gained the property. The director has only the information that comes to him in the course of his investigations to discover and prove the origins of the property. There is no reverse burden in part 5. The burden remains on the director, albeit to the level of the balance of probabilities.

There is nothing more that I can say, other than that I do not believe that it is appropriate to change the wording in the Bill as the amendment would do. Opposition Members cannot undo the fact that the Bill uses the words,

''on a balance of probabilities'',

so they are proposing something different. If their amendment were accepted, and we replaced the balance of probabilities with the civil standard, we would send the courts the clear message that we want a higher standard or the criminal standard to apply in certain circumstances. We should avoid that confusion. We need to stick with the wording in the Bill, which is clear. It is the normal civil standard of the balance of probabilities, and I would resist lifting the hurdle for the prosecution in proving its case.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

I am grateful to the Minister for his sensible approach to the issue and for appreciating that it is important. I am mindful of the fact that simplicity can help with the administration of justice. He wants to send out a simple message that the court should apply the civil standard of the balance of probabilities. He believes that the procedure of civil recovery will be fair and that the sort of cases to which I referred are unlikely to arise, because the director will not use his discretion to target such property. Nevertheless, I still take the view that a fundamental issue of importance is involved because of the nature of the power that we are giving the state.

It is perhaps unfortunate that this debate has had to take place so early in our consideration of part 5. I am the first to admit that the more I read part 5, the more it raised questions and anxieties in my mind. I shall make a point now in a nutshell and will amplify it when we debate subsequent amendments.

As the procedure is described as a civil recovery procedure, some might believe that the state is being placed in the same position as an individual pursuing a case against another individual for tortious interference with his goods and chattels, the only difference being that the victim would have priority and that the state is in reserve behind, arguing that, notwithstanding the fact that no identifiable victim will bring proceedings to recover the money, the state as a matter of public policy is placing itself in the victim category in order to bring civil proceedings to recover property.

In fact, however, on reading through the part, it becomes apparent that that is not what we are doing. It is true that many elements in the wording of the part are similar to those of the rules in tort in bringing an action to recover property against an individual. We shall discuss those later, so I shall not detain the Committee on the matter now. However, other elements are quite different.

When I asked about the limitation period, the Minister informed me that it is 12 years. However, unless I am mistaken, 12 years is the limitation period that I would expect for fraud and certain other actions, but a straight action for tortious interference with my goods and chattels would have a six-year limitation period. I highlight that as an area in which the state is taking more powers. There are further areas in which we consider receivers. The state is taking on powers within receivership that are wholly different from those that an individual would have when bringing an action. An individual may get injunctive relief to prevent the disposal of assets, such as a Moreva injunction, but his powers will be more circumscribed than those of the state.

Photo of Ian Lucas Ian Lucas Llafur, Wrecsam 9:15, 13 Rhagfyr 2001

Is not the Assets Recovery Agency's position in these proceedings similar to that of Customs and Excise and the Inland Revenue when they proceed to recover sums that are due under tax legislation?

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

The hon. Gentleman is almost certainly right. We have a hybrid that combines the powers that state enforcement agencies have had in limited areas to recovery money due by law with the principles of tort that allow an individual to sue another individual for the recovery of property that was unlawfully obtained. I have read the clauses of part 5, and I reread them last night. I thought that the two concepts were mixed.

Photo of Ian Lucas Ian Lucas Llafur, Wrecsam

Is not the procedure not entirely novel but close to that followed in connection with matters that are not, strictly speaking, unlawful conduct? The state already proceeds through the Inland Revenue and Customs and Excise in similar cases.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

I take the hon. Gentleman's point, but in the two cases that he cited—Customs and Excise for VAT and the Inland Revenue for tax—the law of the land says that there is a legal obligation on an individual to pay tax or VAT. Failure to do that may be a criminal offence, but both organisations may use civil recovery.

The unusual aspect of part 5 is that it would create a new category of civil wrong: possessing assets that were unlawfully obtained, or ''obtained through unlawful conduct'', as the Bill says. I make a point from the letter that the Minister wrote to me—it was helpful and made the point crystal clear—that such assets include those that have not necessarily been unlawfully obtained by the unlawful conduct of the person against whom the action is directed.

Philosophically, the concept is novel, because the state does not lose anything. That is unlike under tax or VAT law, because in those circumstances, the state has a legal right to certain assets that it has not obtained. In this case, the state has no contractual or existing legal right to the assets. The state has decided that it wants the Government to ask Parliament to pass legislation to provide that proceeds of unlawful conduct should be forfeited to the state as an issue of public policy. The state can bring a civil action to achieve that against not only the person who obtained the assets but, more pertinently, any person who possesses the assets, subject to reservations.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

I apologise for intervening before the hon. Gentleman moves his argument further—I am not trying to break his train of thought. He assumes that we based civil recovery on tortious interference rather than a victim's proprietary claim. His point that the time period should be six years rather than 12 is not necessarily the case.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

Perhaps I did not catch the last part of the Minister's contribution. He said that this was not based on tortious interference with goods but on—

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

But it is a feature of the legislation that, in many cases, the property is the proceeds of unlawful conduct when there is no victim. That must be right. In 1994, my house was burgled, and various chattels were taken from it. The following day, I went down the road and succeeded in finding out where they had gone. I told the police, and half of them were recovered. The other half were never recovered and I toyed with the idea of bringing civil proceedings against the individual concerned. That is a crime in which assets have been obtained and there is a victim—I have lost something. In many cases of unlawful conduct, however, there may be no identifiable victim in a position to bring an action.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

If the proceeds of unlawful conduct are a stash of £1 million as a result of the sale on the streets of heroin, no individual will have a private right of action to recover that money.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department

But the hon. Gentleman cannot claim that there is no victim of serious and organised crime. Society as a whole is a victim of such crime. The basis and justification for taking these actions is that they are proportionate to the problems that society faces, and society needs to be protected from such activity, which is extremely lucrative.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

The Minister must excuse me if I have expressed myself in such a way that he felt he had to make that intervention. Of course I appreciate that the basis of the legislation is precisely what he said. That is one of the reasons why we are prepared to support it. It is not a question of the state, the Government, or whatever word you want to use to describe it—

Photo of Roger Gale Roger Gale Vice-Chair, Conservative Party

Order. First, I do not want to describe it at all. Secondly, it is very difficult for Hansard reporters to produce an accurate record if hon. Members make sedentary interventions.

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs)

We shall talk about the Government. The Government are not placing themselves in the same position as an aggrieved party bringing a claim in tort for somebody having taken their assets. One of the reasons for that is that their claim extends more widely. It does not extend only to assets in relation to which there is an identifiable victim but assets that have been obtained by unlawful conduct, in relation to which the Government say that society has been the victim. That may help the Minister in terms of a community of approach between the two of us.

I do not accept—I do not want to drift too far from the point on which I started—that one should approach the matter on the basis of its being a civil procedure, in which case the balance of probabilities should apply, as that is the normal civil standard. As the Minister agreed during our debate, there are several areas in which the courts, in civil proceedings, have had to look at conduct that is different from ordinary civil disputes between individuals. It is precisely in those areas that the court has had a tendency, by discretion, over time, based on particular cases that it must consider, to introduce a more variable test, depending on the particular facts of each case.

In asking the Committee to alter the balance of probabilities to the civil standard of proof, I am asking it to give that measure of discretion and flexibility to the judiciary, in view of the unusual nature of the powers that will be conferred on the Government. It is as simple as that. It is unlikely that the amendment would substantially alter the recovery agency's ability to confiscate assets. However, the proceedings that we are creating are unusual, and the amendment would provide a protection that takes that into account.

I am not convinced that we are talking about civil recovery. It was commonly assumed that the Government were putting themselves in the position of an ordinary litigant, but that is not the case. The powers that are being given are administrative law powers. As the hon. Member for Wrexham (Ian Lucas) rightly said, they are similar to the powers of the Inland Revenue and Customs and Excise. However, those powers are being given in a context in which the origin of the targeted assets cannot always be as precisely traced to wrongdoing as can the assets that are dealt with by the Inland Revenue and Customs and Excise, because, as I have said to the Minister—and as he, tellingly, states in his letter—the provisions in part 5 can bite far beyond the individual who has obtained proceeds by unlawful conduct. They can bite on an innocent individual—albeit with reservations—and that is why it would be right to introduce the civil standard of proof.

If I do not ask for the matter be put to the vote now, I will not be able to do so later. My concern about the matter might lessen, as our examination of part 5 progresses. If that happens, I will inform the Minister—and we might not need to return to the matter on Report. However, at the moment, based on what I have seen of this part of the Bill, it is right that we should put it to the vote, and I invite the Committee to approve the amendment.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

I did not originally intend to add to my hon. Friend's cogent and powerful explanation of the reasons why we should vote on the matter, but I wish to make two points.

First, I am delighted that we have been joined by the hon. Member for Redcar, who made a powerful speech on Tuesday in support of Opposition Members' arguments.

Vera Baird (Redcar) rose—

Photo of Roger Gale Roger Gale Vice-Chair, Conservative Party

Order. I was under the impression that the hon. Member for Beaconsfield was giving way. If he had in fact finished speaking, the Committee should be aware that the Chair will not normally call a speaker after the winding-up speech.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

On a point of order, Mr. Gale. My second point is that, while my hon. Friend was speaking, I opened a detailed note from the Minister, which has been copied to all Committee members, and which has a bearing on the matter under discussion. I do not know whether my hon. Friend has seen it yet, but it contains new information, and it is dated 11 December.

Photo of Roger Gale Roger Gale Vice-Chair, Conservative Party

On this occasion, I am prepared to allow the hon. Gentleman to speak. However, the Committee must understand that, in future, once the winding-up speech is concluded, I will not allow another hon. Member to be called.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

I am very grateful, Mr. Gale. I have only one copy of the letter, but I will share it with my hon. Friend in a moment. The letter is addressed to Mr. David Williams, who is the vice-chairman of the technical committee of the Chartered Institute of Taxation.

I state at the outset that I do not wish to criticise the Minister, who has sent out every piece of relevant information to all Committee members as soon as possible. I first saw the letter in today's post—I do not know whether other Committee members have seen it yet. It foreshadows a meeting that—I understand from the covering letter—the Minister is due to have with the Chartered Institute of Taxation's technical committee on 17 December, and it addresses some of the institute's concerns about this part of Bill. Once my hon. Friend and I have had the opportunity to examine the letter fully, there will be time to return to the matter. The importance of the letter is that draft guidance is being supplied to the Chartered Institute of Taxation, which Committee members can look at, and, in particular, detailed proposed guidance by the Secretary of State to the director of the Assets Recovery Agency on the circumstances in which civil recovery will be used. Because we are concerned about the standard of proof that should be used—and, as my hon. Friend the Member for Beaconsfield rightly says, we may not get another chance to examine the issue—it is important to draw the Committee's attention to one particular aspect under the heading of civil recovery.

The draft guidance states:

''It is envisaged that the circumstances in which law enforcement agencies will refer cases to the Director for possible civil recovery action will include the following''—

the most relevant of which seems to be when—

''(c) a person has been acquitted of a specific offence charged in criminal proceedings, but there is compelling evidence that some of his assets were nonetheless derived from unlawful conduct by himself or others and there is no lawful explanation for their acquisition.''

We are therefore talking about circumstances in which there has been a criminal case, but, as a result of decisions, the state—I make no apology for calling it that, as that is what it is—decides that it wishes the director to move from the criminal proceedings and use the new civil recovery powers. In that context, I feel that our case that the balance of probabilities is not high enough is reinforced. It is question of the state saying ''We'll have a go on the criminal side, and if we fail, we'll use these new powers as a back-up.'' That is precisely the concern expressed by my hon. Friend the Member for Beaconsfield and I, and by other hon. Members. We do not oppose the arrangement in principle, but careful attention needs to be paid to how such a draconian power is used.

Photo of Bob Ainsworth Bob Ainsworth The Parliamentary Under-Secretary of State for the Home Department 9:30, 13 Rhagfyr 2001

I want to make a couple of points to the hon. Gentleman. First, the guidance has been shown to the Committee—there is no new and detailed guidance other than that which has been distributed to the Committee. We had this debate before the one that we are now having on the balance of probabilities. It is not a new issue that has just come to light. We had exactly this discussion in relation to the previous amendment, on which we have not yet voted.

Photo of Mr Nick Hawkins Mr Nick Hawkins Ceidwadwyr, Surrey Heath

I accept what the Minister says entirely. If the guidance is what we have seen before, I apologise. It was presented in the covering letter as something new that had been given to the Chartered Institute of Taxation, and I had taken it as a further development. As the Minister appreciates, I only opened the letter while my hon. Friend was speaking. It is therefore difficult for me to double check.

My point is that if, initially, there are criminal proceedings, and the state fails, and the new powers are used as a backstop, the concerns that we expressed, which are shared by the hon. Member for Redcar, would be reinforced.

Question put, That the amendment be made:—

The Committee divided: Ayes 7, Noes 12.

Rhif adran 15 Adults Abused in Childhood — Clause 246 - ''Unlawful conduct''

Ie: 7 MPs

Na: 12 MPs

Ie: A-Z fesul cyfenw

Na: A-Z fesul cyfenw

Question accordingly negatived.

The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendment proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause, as amended, stand part of the Bill.

Question agreed to.

Clause 246, as amended, ordered to stand part of the Bill.