I beg to move amendment No. 349, in page 148, line 7, leave out subsection (3).

With this it will be convenient to take amendment No. 385, in clause 260, page 151, line 27, leave out subsection (3).

This clause brings us to the functions of the interim receiver, and in particular, to such liability as he may attract for actions that he may carry out. It is noteworthy that subsection (3) states that if the interim receiver

''deals with any property which is not property to which the order applies, and . . . at the time he deals with the property he believes on reasonable grounds that he is entitled to do so in pursuance of the order'', he will not be personally liable

''in respect of any loss or damage resulting from his dealing with the property except so far as the loss or damage is caused by his negligence.''

That must be read in conjunction with clause 282 on compensation. It provides that someone may apply to the court for compensation if they have suffered loss as a result of the making of an interim order.

This is a probing amendment. I do not take great exception to subsection (3). It might be appropriate to provide protection for a receiver, but with regard to clauses 252 and 282, I need reassurance about the link-up and operation of the compensation mechanism.

If an interim receiver has been negligent, will the provisions of clause 282 not apply? To get compensation, instead of going to the court, will the interim receiver have to be sued? I have that in mind because when we discussed confiscation provisions, that appeared to be the case. I also need reassurance that when an interim receiver has made a mistake, anyone who has been affected will be able to claim compensation under clause 282. I think that that is the case, but I am not sure.

The two clauses are clearly linked, and it is important that there should be a compensation procedure. If someone is refused compensation under clause 282, can they still sue the receiver, if they think that he has been negligent, or is the one process mutually exclusive of the other?

Those are the key issues. I am unsure about them, and I do not find the clauses, particularly clause 282, easy to read. I seek clarification from the Minister, so that we can have a debate, if that is necessary.

I have one short question. Negligence is referred to in subsection (3), but there is no reference to any other kinds of misfeasance, such as dishonesty. What would happen if an interim receiver dealt with property that would otherwise fall within the category, but he did so dishonestly, and thereby caused loss?

Clause 251 provides for an interim receiving order for the detention, custody and preservation of property, and for the appointment of an interim receiver.

Clause 252 sets out the functions of the receiver. Subsection(3) provides legal protection for the interim receiver if he mistakenly, but without being negligent, deals with property that is not the property specified in the order, and causes loss or damage to that property. The term ''dealing with property'' includes disposing of it, taking possession of it, or removing it from the United Kingdom. Amendment No. 349 would remove the protection that is currently afforded to an interim receiver, and amendment No. 385 would do that in Scotland.

With regard to amendment No. 349, clause 251 provides that a director may apply for an interim receiving order to prevent property that is suspected of being recoverable property from being dissipated.

The court-appointed interim receiver has two functions: to look after and manage the disputed property pending a full court hearing, and to take an active role in ascertaining what is recoverable property.

The role of the interim receiver will be the key to the operation of civil recovery in most cases. When the interim receiver is appointed, he will endeavour to preserve the property. However, it is possible that in the course of discharging his duties, loss or damage may occur to property that is not the subject of the interim receiving order, as the interim receiver might mistakenly, but without being negligent, deal with such property. Clause 252(3) currently provides legal protection for the interim receiver if he causes damage in those circumstances. That protection is commonly provided to receivers and does not therefore represent a radical departure from existing practice.

Obvious models for the clause are found in the Insolvency Act 1986. In section 284(4) of that Act, the official receiver is provided with similar protection if he causes loss or damage in seizing or disposing of property that he has reasonable grounds for believing is part of the estate. The same provision is made in section 304(4) of the 1986 Act for the trustee of a bankrupt's estate. Such provisions also apply to receivers appointed in criminal confiscation cases under the Criminal Justice Act 1988 and the Drug Trafficking Act 1994. That provision is replicated in the Bill in clause 61, in part 2, for criminal confiscation cases.

If the protection provided in subsection (3) were removed as the amendment proposes, potential receivers might be deterred from taking on receivership in civil recovery cases. That would have a considerable impact on the director's ability to bring successful cases.

Under the clause, people who own an interest in property that suffers loss or damage when an interim receiver deals mistakenly with it will be able to bring civil action for damages against the interim receiver. Such action may well succeed if the receiver cannot satisfy the court that he had reasonable grounds for believing that the property was covered by the interim receiving order, and even if he shows that, he will still be liable for damages if he acted negligently. That seems a fair measure of protection for those adversely affected, and as I pointed out, the provisions are based

on precedents. If we went any further, we would risk paralysing receivers or deterring them from taking on cases.

Clause 282 deals with compensation for people whose property is subject to an interim receiving order. Clause 252 is about property that has nothing to do with the proceedings but is interfered with accidentally. There is therefore no link between the provisions in the two clauses. If the owner of the property referred to in clause 252(3) wants compensation he will have to bring proceedings against the receiver.

I can tell my hon. Friend the Member for Wellingborough (Mr. Stinchcombe) that in principle receivers are liable for loss caused by deceit or wilful neglect, and under the clause, negligence is added to those categories. As the hon. Member for Beaconsfield says, there are two separate provisions in the Bill for dealing with such issues, one in clause 282 and one in clause 252. The two are not interchangeable.

That leaves me slightly troubled, unless I have misunderstood what the Minister said. Let us suppose that a receiver deals with a property, accidentally and without being negligent, and that he believes—on reasonable grounds—that he is entitled to do that in pursuance of the order, and it then transpires that he should not have touched that particular property and it does not fall within the scope of the order. Under clause 282, the person concerned does not have a right of redress. In that case, where—if anywhere—does the right of redress lie for any damage that that individual may have suffered as a result of the receiver's actions? It is strange that no one is liable to pay compensation to an individual in those circumstances. There is a state-sponsored scheme under which an individual—who is apparently wholly unconnected with the proceedings—suffers damage, and unless that damage is due to negligence, he cannot recover it. That cannot be right.

Mr. Ainsworth rose—

On a point of order, Mr. O'Brien. I see on the Annunciator that the Minister who is winding up the debate in the Chamber has started to speak, so I expect that there will soon be a Division in the House. The next time there is a Division while we are in Committee, can we return to the normal convention of having a 15-minute break?

I will give that request serious consideration.

The position does not satisfy the hon. Member for Beaconsfield to the degree that he thought it would. In respect of properties that are involved in the case itself, obviously there are compensation procedures. They are provided for under clause 282 and are widely drawn. They give the court the discretion to allow compensation for any loss caused. The case to which the hon. Gentleman refers is

when neither the property nor the property owner should have been drawn in, but were drawn in by accident, through the activities of an interim receiver who behaved negligently. Under those circumstances, the case must be against the receiver himself, not for the sort of compensation provided under clause 282. That may appear a little harsh, but I am not sure that it is different from what happens to many people in similar circumstances.

It does appear very harsh. I can easily imagine circumstances in which a receiver could make a reasonable mistake. As a result, an individual's property, wholly outside the scope of the order—it is not associated nor recoverable property—is adversely affected. If I understand the Minister correctly, the receiver is immune from any proceedings against him, and there is nowhere else for the individual to look for compensation. I find that extraordinary. With such an extension of administrative power, I would have expected such a person to be covered by the compensation mechanism under clause 282. I invite the Minister to consider very carefully whether that should be included.

The hon. Gentleman has made a point that we need to go away and consider. He is talking not about a case in which the interim receiver is negligent and therefore liable to be pursued for that negligence, but about a case in which there is interference. The protection kicks in because there is no case for negligence, so there is no case against the receiver. The individual has been adversely affected yet he has nowhere to go. Let me reflect on the point that the hon. Gentleman has exposed, and I shall come back to him.

I am grateful to the Minister. He is right. When I opened the discussion, I said I wanted to understand the interrelationship between clauses 252 and 282. There were a number of possible grey areas. The hon. Gentleman has resolved nearly all of them, but at the end we were left with a serious omission. I find it most peculiar that in an issue of public policy—and this example involves the most innocent category of person—there is apparently no mechanism for redress.

I suppose that it would be possible to bring a claim against the director, but why subject individuals in these circumstances to that burden when it should be easy to include them within the provisions of clause 282 as an interested party who could come along and ask the court for compensation?

I would have thought that we would not reach clause 282 today. The opportunity to reflect on the point that the hon. Gentleman made should arise before we discuss compensation issues.

The Minister is right. Another amendment is gently formulating in my mind.

On the basis of the Minister's helpful remarks, his response to my point and the identification of a flaw in the legislation that could cause injustice and to which we will return, probably on Tuesday, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 252 ordered to stand part of the Bill.Schedule 3Powers of interim receiver or administrator