Clause 282 - Compensation

Proceeds of Crime Bill – in a Public Bill Committee am 6:45 pm ar 18 Rhagfyr 2001.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs) 6:45, 18 Rhagfyr 2001

I beg to move amendment No. 400, in page 163, line 16, at end insert—

''(1A)If any other person has suffered loss or damage as a result of an interim receiver or interim administrator dealing with his property in the reasonable but mistaken belief that he was entitled to do so in pursuance of an interim receiving order or interim administration order, such person may apply to the court for compensation.''

The amendment returns us to last week's debate on the position of a person who suffers loss and damage as a result of the interim receiver or administrator. If that person could not show that the receiver or administrator had been negligent, he would not have a right of recovery. The Minister may remember that debate, and I said during the proceedings that I felt gently in my mind that I had an amendment coming on. The amendment would enable such a person to be included in the compensation categories. I do not want to repeat the arguments that I deployed at length last week, which expressed my concern that such a person was not covered.

The state, and Parliament, can set up a system that may lead to an individual's being innocently caught up in the receivership process, and suffering loss. The receiver may have acted perfectly reasonably but accepts that he has made a mistake. He inadvertently interfered with the property of an innocent person, causing him loss. My view is that such a person should be included in the compensation framework and should be able to claim compensation like the other individuals who are able to under the clause. The amendment would allow that to happen, and I commend it to the Committee.

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

The protection provided to receivers under clause 252(3) is intended to prevent potential receivers from being deterred from receivership in several types of recovery cases. As I explained when we discussed the amendment tabled to clause 252, it is a protection commonly provided for receivers. Obvious models for clause 252(3) are found in the Insolvency Act 1986, in section 2, page 74. 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 to be part of the estate. The same provision is made in section 304(3) of the 1986 Act for the trustee of a bankrupt's estate. Such provision also currently applies under the Criminal Justice Act 1998 and the Drug Trafficking Act 1994 to receivers appointed in criminal confiscation cases. The provision is replicated for criminal confiscation cases in clause 61 of the Bill. That newfound injustice exists in other legislation. I am unaware that it causes difficulty or has caused difficulty in the past under the various pieces of legislation enacted by the party to which the hon. Gentleman belongs.

The amendment approaches the issue from another direction. If the receiver is not liable the amendment seeks to ensure that another party, in other words the enforcement authority, is liable. It does not seem appropriate that the director should be liable for the actions of an interim receiver or an administrator in those circumstances. The interim receiver is appointed by the court and is a creature of the court. He does not act on behalf of the director or Scottish Ministers. It would be odd if the enforcement authority could be required to pay compensation in relation to a property that had never been subject to an interim order, as a result of actions by a receiver over whose actions it had no control.

I fully understand the concern that people who are entirely uninvolved in the civil recovery procedures may suffer loss and not be eligible for redress. It may be that the property would normally be covered by their insurance and that there would not therefore be any loss. Even if that were not the case, I am not persuaded that the enforcement authority should be liable to pay the compensation. I have, however, noted the concerns expressed and I will look into the position to see whether an additional measure of protection should be afforded to those affected by the acts of the interim receiver. I am conscious that the law on receivers is well established and that it is important to take full account of existing precedents. I cannot, however, make a commitment to table a Government amendment on that point. Against that background, I hope that the hon. Gentleman will withdraw his amendment.

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

I am grateful to the Minister for considering the matter further. The issue will not go away. It is ultimately the state, through the enforcement authority, that decides to embark on the process. That differentiates it from receivership in ordinary civil litigation. The state decides to take a meddling role in ordinary civil relations for justified social and policy reasons. If as a result the property of a wholly innocent party is interfered with, it is extraordinary that he should not have the right to go to court to claim by a simple method reasonable compensation for his loss. It should not be left to the lawyers to go off into complex civil litigation. At the moment I cannot even see a valid target in view of the protection given to the receiver.

As an issue of principle it is quite wrong to allow the situation to persist. I will withdraw the amendment but I do so in the hope that the Government will table an amendment on Report; if they do not, we will return to the matter then. I accept that someone other than the

enforcement authority may have to pay, but ultimately the state will have to pay. It is the state's procedure that would lead to the situation in the first place.

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 282 ordered to stand part of the Bill.