I beg to move amendment No. 395, page 156, line 6, at end insert

'and the time for making such payment may be postponed by agreement between the enforcement authority and the excepted joint owner.'.

The clause allows ''Agreements about associated and joint property'' to be reached by the enforcement authority and the person who holds the associated property or is the excepted joint owner. It is a sensible

provision designed to enable the parties to make agreements. I was a little puzzled by subsection (1)(b), which states:

''the recovery order may, instead of vesting the recoverable property in the trustee for civil recovery, require the person who holds the associated property or who is the excepted joint owner to make a payment to the trustee.''

That provides an opportunity for the person holding the associated property to buy out the trustee's share to pay that money back. However, there did not seem to be a provision whereby the deadline for making that payment could be postponed by agreement. I emphasise the words ''by agreement''—it would have to be with the enforcement authority's consent.

Clause 276 deals with consent orders. Those may allow for a recovery order to be made on terms by the parties, and allow for postponement to take place at that point, but I am not sure that that is the case. The Under-Secretary has made it clear that the enforcement authority wishes to recover the money. However, if it believed that somebody in possession of associated property was bona fide, one would expect it to be willing to come to arrangements to allow for payments by instalments, or for payment to be postponed. It seemed that the amendment might allow us to discuss that issue. The Inland Revenue sometimes allows postponement, even when dealing with someone who has not paid his tax, and as a matter of fairness and common sense, when dealing with a potentially innocent party, postponement should be possible. Should we not spell that out explicitly in the Bill? I am mindful that the Under-Secretary may tell me that that is provided for elsewhere in the Bill. However, given that we are dealing with agreements between the parties to resolve the issue, should that not be provided for in this clause?

Clause 271 provides for a recovery order to give effect to an agreement reached by the enforcement authority and the holder of associated property or an excepted joint owner. Such an agreement would allow the holder or the owner to agree to pay the trustee for civil recovery a sum in order to buy out the enforcement authority's interest in recoverable parts of the property. That would be subject to the approval of the court. In those circumstances, the clause provides that a recovery order may require the person who holds the property, or who is the excepted joint owner, to make the payment to the trustee.

The amendment would amplify the existing provision so that, in the case of an excepted joint owner, the recovery order could, if the enforcement and the excepted joint owner agreed, allow for the making of the payment to be postponed. The amendment seeks to make provision only in relation to the excepted joint owner and not to the holder of associated property. I appreciate that in some cases it may be difficult for an excepted joint owner immediately to lay his hands on sufficient money to buy out the enforcement authority's interest in the recoverable property. However, the amendment is not

needed to ensure that an equitable arrangement can be reached when the enforcement authority, and the holder of the non-recoverable property, agree.

The Bill does not specify when the payment to the trustee should be made. A recovery order could specify a delayed date for payment, if both parties agree on it— which is the point made by the hon. Member for Beaconsfield. Alternatively, if no such provision were made in the recovery order, the trustee who acts on behalf of the enforcement authority would be able to ensure that any agreement that was acceptable to both parties was given effect. That degree of flexibility will give the excepted joint owner sufficient time to arrange finance to buy the director's share of the property—for example, to arrange for a mortgage to purchase the remainder of the property that is deemed to be recoverable. I am saying not that that is provided elsewhere but that the amendment is unnecessary. Such agreements are perfectly possible, and it is unnecessary to spell that out in the Bill to ensure that they can be made when both parties agree. With that assurance, I ask the hon. Gentleman to withdraw the amendment.

Happily. So many provisions in the Bill have a mandatory flavour, tying down and trying to constrain every avenue through which exemptions may be given or exceptions made, that a short discussion on this matter seemed worth while. The Minister has reassured me, and I dare say that in the event of a future dispute on the subject someone could wave around the report of our proceedings as evidence of what he intended. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment No. 312, in page 156, line 16, after 'tenancy', insert 'and

(b) the enforcement authority agrees that the person has suffered loss as a result of the interim receiving order or interim administration order'.

With this it will be convenient to take Government amendments Nos. 313 and 314.

I had intended to say that these amendments were minor, but the hon. Member for Beaconsfield is so distrustful of my intentions that I had better not.

The amendments make minor changes to the compensation provisions in clauses 271 and 272 with a view to achieving fairness and consistency. Clauses 271 and 272 specify the arrangements that will apply when associated property or property held by an excepted joint owner is the subject of a recovery order. If an interim receiving or administration order has been applied at any time to the property, the arrangements allow for a payment to be made in respect of the property in order to compensate the person who holds the property for any losses suffered as a result of the order.

That is currently given effect in the Bill as follows. Under clause 271, when agreement is reached between

the enforcement authority and the associated property holder or excepted joint owner, the person may make a payment to the trustee in lieu of the recoverable property. That payment may be reduced by an agreed amount to reflect any losses suffered in respect of the associated property or joint tenancy.

Under clause 272, in the event of no agreement, the court may order the trustee to make a payment to the associated property holder or excepted joint owner. The order may require the enforcement authority to pay compensation for any losses suffered in respect of the associated property or joint tenancy.

Amendments Nos. 312 and 313 restructure subsection (4) of clause 271. Amendment No. 312 will make it explicit that a reduction in the amount to be paid by the trustee will be made only if the enforcement authority agrees that the person has suffered loss as a result of the interim receiving order or administration order. That is implicit in the current provision, but it is made explicit by the restructuring.

Amendment No. 313 represents the change of substance to the provision and brings it into line with the general compensation provisions in clause 282. Amendment No. 314 does the same for clause 272.

Clause 282(8) provides for the amount of compensation to be at the court's discretion and to have regard to the losses suffered and any other relevant circumstances. Clauses 271 and 272 do not currently include a provision allowing any relevant circumstances to be taken into account. Without that, only the loss suffered could be taken into account in calculating a reduction under clause 271 or the amount to be paid under clause 272. If the person involved has himself contributed to the losses through, for example, delays, that may be taken into account under clause 282, but not under clause 271 or clause 272.

We believe that it should be possible to take such circumstances into account in deciding what payment is to be made in respect of the property under clauses 271 and 272. Government amendments Nos. 313 and 314 will allow ''any ... relevant circumstances'' to be taken into account.

I reassure the Minister that I shall not oppose his amendments. It is noteworthy that, like virtually all his amendments, they tighten up the Bill. As he explained, these amendments boil down to enabling the court to look further than simple financial loss, and towards the conduct of the party concerned. That is reasonable. However, I shall rejoice when he introduces amendments that shift the balance away from the enforcement authority toward individuals' rights. I dare say that that will happen in the new year.

Amendment agreed to.

Amendment made: No. 313, in page 156, line 18, leave out from 'to' to end of line 19 and insert

'that loss and to any other relevant circumstances'.—[Mr. Bob Ainsworth.]

Clause 271, as amended, ordered to stand part of the Bill.

Clause 272

Associated and joint property: default of agreement

Mr. Grieve

: I beg to move amendment No. 402, in page 156, line 45, after 'regard', insert 'principally'.

With this it will be convenient to take amendment No. 403, in page 157, line 4, at end insert 'and thereafter to'.

Here I am again, rowing in the other direction, rather hopelessly, against the Minister's far greater power. With this amendment, I propose to shift the balance in favour of the person who holds the associated property when the issue must be decided in default of agreement.

The amendments , which would affect subsection (4), would provide that

''the court must have regard principally to...the rights of any person who holds the associated property or who is an excepted joint owner and the value to him of that property or, as the case may be, of his share (including any value which cannot be assessed in terms of money), and thereafter '' to consider

''the enforcement authority's interest in receiving the realised proceeds of the recoverable property.''

I emphasise to the Minister—because although we have discussed this before, it is worth repeating—that the basis for doing that is that the funds or money that the enforcement authority will try to recover are not necessarily attributable to a victim. They will not necessarily have been obtained from another person. They are likely to be the fruits of an illegal transaction, but the transaction may not have had a victim. If a person is willing and foolish enough to spend a lot of money buying cocaine in the marketplace, the transaction would be illegal and the individual who received the money would be unfairly and improperly enriched. However, there would be no monetary victim.

The clause deals with people who may, further down the road, have innocently acquired assets resulting from the unlawful transaction. In such circumstances, when considering the recovery, the balance should be in favour of the rights of the person who holds the associated property. His position should be considered before that of the state as the enforcement authority.

The clause should strike a balance. The question is where the court should look first. My view is that the position of the innocent individual who holds the associated property should be considered first. That is because we are not necessarily dealing with assets that are owed to or returnable to an individual.

I am beginning to think that I am misunderstanding the hon. Gentleman. Will he give me an example of how somebody innocently acquires assets derived from a cocaine deal?

Perhaps understandably, the hon. Gentleman has not been following the debate over the past few sittings. The whole issue of associated and

joint property is about circumstance. A sum of £2,000 may be the result of a cocaine transaction, so, as I have explained, there is no victim, because nobody has lost that £2,000. Although the transaction was unlawful, the individual who paid the money did so willingly, because he wanted the cocaine.

May I mention, as an aside, the fact that 80 per cent. of the acquisitive crime in my constituency is drug related? The person who pays for that cocaine is paying for it with the proceeds of other crimes.

That is a valid point, but it raises an issue of recovery separate from that which is raised with regard to the person who originally committed the crime.

It is socially desirable, and in the interests of justice and the maintenance of law and order, that the state should recover the proceeds of unlawful conduct; that is why my party has supported the principle of the Bill. However, it is also necessary to address the consequences for individuals who become involved in that process innocently; that is why associated and joint owner property are important. I hope that that answers the hon. Gentleman's point.

The Minister would not have included the clauses that we have been discussing unless he accepted the fact that it is likely that situations will arise involving individuals who hold associated property—exempted joint owners—who have the problems that we addressed earlier when we discussed who should be exempt. The provisions under discussion explain how the court should deal with the recovery of property in default of agreement. In those circumstances, a degree of primacy should be accorded to the innocent individual who has got mixed up in the matter, and who might be ruined by the process of having the relevant assets removed from him.

The court has a wide discretion, and I simply suggest that it should be exercised in a way that addresses the rights of the person who holds the associated property, before the rights of the enforcement authority are taken into consideration.

There appear to be parallels between key issues concerning tainted gifts, about which I sought clarification, and the subject under discussion—with regard, for instance, to someone who owns an asset and alleges that it has been acquired honestly and fairly. I was wondering whether the hon. Member for Beaconsfield agreed with me about that.

Let me spell out my party's concern. I understand why the Government, and other Labour Committee members, hold to their view about the matter: it is difficult to accept that an individual who has gained from the proceeds of crime might try to rely on this clause, or others, by saying, ''Actually, part of the money was from illegal proceeds, but some of it was legitimately acquired.'' It might be difficult, in such circumstances, to identify a defined pool, or it

might be straightforward to do that, but the onus must be on the criminal who has benefited from the proceeds of crime to show that a defined part of his assets is associated property—that a defined part of it was generated by legitimate means.

My party has particularly deep concerns about the consequences for innocent third parties. With regard to the confiscation of the proceeds of crime, the Assets Recovery Agency might tell such people that they are caught up in the issue of associated property, and it might then put a great burden of proof on them. They might have bought property in tandem with someone who was relying on the proceeds of crime, but they might not have known that any of the moneys that were going towards the purchase of the property—or land, or item—were the proceeds of crime. My hon. Friend the Member for Beaconsfield has got this absolutely right—when an innocent third party is involved, it would be wrong for that innocent third party to be lower down the pecking order. Surely, in that context, the innocent third party's interests should come first.

I entirely appreciate that when an individual who has relied on the proceeds of crime tries to argue that only a small proportion of the money that went into a purchase was the proceeds of crime, there must be a greater burden on that individual to prove his case. However, when an innocent third party is involved, I, too, share my hon. Friend's concerns that it would not be right for that individual to have as great a burden placed on him in proving his case as the villain.

I accept what the hon. Gentleman is saying. Supporting his hon. Friend, he says that he does not believe that the innocent third party—the person who owns associated property, or the joint owner of property that is potentially recoverable—should be lower down the pecking order, but they are not. In fact, his hon. Friend is seeking to put them higher up the pecking order. The Bill obliges the two interests to be dealt with together.

We have clashed on this issue before, and the hon. Member for Beaconsfield has accused me of trying to misrepresent his views, but I continue to be amused by his concept of victimless crimes. We would not be undergoing this process if such crimes were victimless. The victims are everywhere. They are in our constituencies, suffering massively from the consequences of the acquisitive crime that drives the gangs that organise cocaine deliveries to Glasgow, Pollok, to Coventry, North-East and elsewhere. We are trying to set up a system in which the various enforcement agencies provided for under the Bill act on behalf of society in general—but the hon. Gentleman has chucked into that the concept of the victimless crime, which does not represent the world as I see it.

That seems a little far-fetched, in the light of the amendments. The principle of recovery is established; we are trying to address the method of recovery. The rights of the individual should have primacy. The Under-Secretary said that I had suggested that such crimes are victimless. I never said

any such thing. However, we must narrow the issue to financial matters, which do not include the wider social victims. We are not necessarily dealing with property that has been unlawfully obtained in the sense of being stolen or obtained by fraud from another individual. We are dealing with the proceeds of unlawful conduct, which is different.

I understand that, but the hon. Gentleman says that he supports the principle of recovery. He knows how difficult recovery will be, and how adept people are at hiding the proceeds of crime. The enforcement authority must therefore have the ability to chase property through its various transformations, and along the routes that it travels. When it discovers the property that is the representation of the proceeds of crime, and that is inextricably tied up with other property, in unravelling and dealing with all that, consideration should be given to both sides. The hon. Gentleman wants to relegate the public interest below that of the joint owner or the associated owner. I fundamentally disagree with that, because of the origin of the problem and the need to be effective in recovering the proceeds of crime. I am not seeking—although the hon. Member for Cities of London and Westminster (Mr. Field) is under the impression that I am—to give lower priority to the person whose property has become tied up and, as a result, is associated property. We want the two matters to be dealt with equitably.

Yes, but again I bring the Minister back to what the clause is all about. It provides mechanisms by which the court, in default of agreement, can devise ways and orders to ensure that a recovery order is made and implemented to allow money to go back from the person who holds the associated property, or the excepted joint owner, to the enforcement agency. It is implicit in the clause that the recovery will take place. That governs the manner in which the recovery will take place, so may I say again to the Minister that the rights of the innocent individual who is affected should have primacy against those of the enforcement agency? The agency will still recover the money—or, at least, that is the principle behind the clause.

I think that we disagree, and I am not sure that it is worth continuing with the argument.

Under clause 272(4), in making such a provision the court must have regard to the rights of the people concerned and the value to them of the property, as well as to the rights of the enforcement authority. The court will look at all matters that have a bearing on the issue, not only at monetary value. It will consider the rights of the person and the interest of the enforcement authority at the same time. The overarching safeguard is that it can make an order in respect of non-recoverable property only if it thinks it just and equitable to do so.

The amendments would mean that the court would be required to have principal regard to the rights of the people concerned and the value to them of the property. We do not believe that the amendments are needed to ensure that the persons who hold associated or joint property are treated fairly. Subsection (4) is

essentially telling the court to act proportionately. The court must weigh up the public interest in ensuring that the enforcement authority receives the proceeds of the recoverable property as against the property rights of the individual associated property holder or excepted joint owner.

Perhaps I have misunderstood what clause 272 is trying to achieve. If I have, I should be grateful for the Minister's clarification. I assumed that it presupposed that the principle of recovery, including whether payment might be postponed, had been established. Subsections (2) and (3) refer to the provisions that a recovery order may make in terms of creating or extinguishing interest, vesting property in the trustee, extinguishing the joint owner's interest and the ''severance of his interest''. It is in those areas that I was asking for the rights of a person who holds the property to be regarded as paramount, not with regard to the principle that eventually, recovery should take place. If I have misunderstood the provision, and the Minister is saying that subsection (4) allows for the possibility that no recovery will take place, I should be grateful to be informed.

Clause 272 will not apply when there is to be no recovery. The hon. Gentleman is right; it is about associated joint property in default of agreement. The principle of recovery has not yet been established. The clause deals with associated property. The court may decide that there should be no recovery of that property. The issue is how to deal with the separation of those properties, and how to behave proportionally with regard to a separation when an agreement cannot be reached. Obviously, in the first instance there should be an attempt to reach an agreement so as to separate out the recoverable property.

When an order is made to recover the proceeds of crime, the recoverable property is clearly recoverable. It is not necessarily yet the case that the associated property is recoverable. An agreement is attempted in order to separate that out. If an agreement cannot be reached, subsection (4) will ensure that both the owner of the associated property and the interests of the enforcement authority are dealt with in a fair and proportionate way. I do not know whether that helps the hon. Gentleman.

It certainly does. The Minister began his comments by saying one thing, and switched to saying another half way through.

You noticed.

As I have occasionally done the same thing myself in the past four weeks, I shall not hold that against the Minister.

I read the explanatory notes, which suggested to me the idea that the provisions might be mechanisms by which payment might be postponed. For instance, including someone whose interest in the house is

extinguished would create the right for him to live in the house for the rest of his life. I assumed, perhaps wrongly, that ultimately the enforcement authority would get its cash, although I accept that an element of interest might not be present in that. I may be wrong; I simply went by what I read in the explanatory notes. I think that the Minister's argument has more force, so I shall be sensible and partly agree with him. That is not how I read the clause, but perhaps I misunderstood it.

I thank the hon. Gentleman for his kindness. I had hoped that he would not notice the seam running through my argument, but that was too much to ask. I have outlined the circumstances, and now that he has received my clarification, perhaps he is less unhappy.

The hon. Gentleman's amendment would instruct the court about what weight to give each of the factors. That would, arguably, conflict with the court's duty under the Human Rights Act 1998, since it is for the court to decide on its own proportionality, taking into account all the circumstances of the case. I hope that with his new understanding of the circumstances, he is prepared to withdraw his amendment.

As a Christmas present of good will to the Minister, I shall say that by changing his argument half way through his speech he has persuaded me that I should not press the amendment to a Division. I shall reconsider the matter and decide whether we should return to it on Report. I concede that if the provision means that property may never be recovered, the proposed balance makes more sense. I had thought that the proposal was a method of postponement in arriving at the best way of recovery, and I felt that in those circumstances the rights of the individual should take priority over the rights of the enforcement authority. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 314, in page 157, line 16, at end add

'and to any other relevant circumstances'.—[Mr. Bob Ainsworth.]

Clause 272, as amended, ordered to stand part of the Bill.