Clause 306 - General exceptions

Proceeds of Crime Bill – in a Public Bill Committee am 4:00 pm ar 10 Ionawr 2002.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Dominic Grieve Dominic Grieve Shadow Minister (Home Affairs) 4:00, 10 Ionawr 2002

I beg to move amendment No. 471, in page 175, line 19, at end insert

'or property obtained through unlawful conduct'.

This is the amendment to which I alluded earlier. It addresses the question of what happens to property that passes into the hands of a bona fide purchaser for value without notice. In a helpful intervention, the Minister made the point that when that happens,

''property obtained through unlawful conduct''

is still recoverable, because, as he put it, the roots go round the tree trunk. The recoverable property would then be the value paid by the bona fide purchaser to the person who was not a bona fide holder of the chattel or property concerned. That could still be recovered, so long as the limitation period had not been reached.

I find it difficult to understand why the amendment should not be accepted. It says that once property has passed to the bona fide purchaser for value without notice, it ceases to be property obtained through unlawful conduct. I accept that the amendment has no practical significance for recoverability. As the Minister knows from my interventions in previous sittings, which I do not want to go over ad nauseam, I feel anxiety about the opprobrium that attaches to those who are said to hold

''property obtained through unlawful conduct''.

That term is created by statute and by us. It is not a general term used in the world at large; it is our term, which we in Parliament have decided to put together. If the Bill works, that term may well be used in the press and people may comment on it.

I can easily foresee a situation in which someone gets the wrong end of the stick, perhaps deliberately, and is able to say that although the court made the decision that a person's property was not recoverable, he was still in possession of property obtained through unlawful conduct. If my amendment were accepted, that problem could no longer arise, because when the bona fide purchaser for value without notice obtained property in good faith, it would cease to be property obtained through unlawful conduct—and cease to be recoverable; that is the common ground between the Minister and me.

As the Minister rightly says, it is not as if the money or benefit has completely disappeared. As long as the limitation period has not expired, the roots around the item can be traced to those who have not been bona fide purchasers for value without notice. Property may still be recovered from them, and in certain circumstances, proper criticism may attach to them for the manner in which they have dealt with or handled that property.

I hope that the Minister will consider accepting the amendment. It seems innocuous, and in no way to detract from his desire to send a powerful signal about the demands of society—''society'' seems popular at the moment, although we might say the Government or the Administration instead—to be able to recover and trace property obtained through unlawful conduct. It would send a clear signal that that does not apply to the bona fide purchaser for value without notice, who is in every sense an innocent party. If he were not, no doubt in the course of studying the Bill we would have found circumstances in which recovery against him could be made. We have not, and the Minister has made the position crystal clear. Therefore, his property cannot and should not be defined as property obtained through unlawful conduct.

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

Society does seem to be in fashion again—through no action of the Government, but because the hon. Member for Surrey Heath, whose sidekick I have accused the hon. Gentleman of being, is going around the television studios saying that it does exist after all, in spite of the comments made by an earlier leader of the Conservative party. It is good to see the rediscovery of the existence of society on behalf of Her Majesty's Opposition, and a retraction from that appalling position.

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

I hesitate to say that I believe that a previous politician's words may have been misinterpreted. However, regardless of whether they were, I assure the Minister that I have always believed in the existence of society.

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

I believe that the hon. Gentleman always has—but that does not necessarily apply to all Conservative Members, either now or in the past. I wonder how deep the transformation in the Conservative party is, and how much support the hon. Member for Surrey Heath has for his change of tack.

The amendment would establish not only that property in the hands of a bona fide purchaser would not be recoverable, but that it could not be regarded as having been obtained through unlawful conduct. As we said previously, civil recovery is a proprietary remedy that relates to the characterisation of property, rather than the person holding it. If property is or represents property obtained through unlawful conduct, it is recoverable.

The Bill provides a limited number of defences and exceptions to that rule, to ensure that the enforcement authority cannot recover property when it would not be right to do so. They include, in clause 306(1), the

defence that one is a bona fide purchaser for value. Subsection (1) protects the bona fide purchaser for value by stating that when a person has obtained recoverable property in good faith, for full value and without notice, it cannot be followed into that person's hands, and therefore ceases to be recoverable. That cannot, however, change the fact that the property was at some stage obtained through unlawful conduct. No provision in the Bill can change the facts. Property retains its tainted history even if it is now indisputably the lawful property of the person who holds it.

Although under the Bill property in the hands of a bona fide purchaser for value remains property gained through unlawful conduct because of its history, there is no implication that the bona fide purchaser is blameworthy or acquired the property in dubious circumstances. That is the point of the bona fide purchaser provision.

As I said, we cannot wipe out the property's history through provisions in the Bill. At some point in its history it was gained unlawfully. That applies to all sorts of property, including parts of the Crown jewels. Nothing in the Bill will prevent people from exposing the history of particular items of property. The hon. Member for Beaconsfield is reaching for something that is unattainable. I accept that he is trying to do something in good faith, but I do not believe that it is possible. We must ensure that we provide full protection for the individual, while allowing the pursuit of recoverable property through its various transformations—and, we hope, recovering it at the end of the day. I cannot accept the amendment, and I ask the hon. Member for Beaconsfield to withdraw it.

Photo of David Wilshire David Wilshire Ceidwadwyr, Spelthorne 4:15, 10 Ionawr 2002

I am disappointed by that reply. I support my hon. Friend wholeheartedly because there is a valid point to be made about a person who acquires something in all innocence that he wishes to keep. There is no reason why a stigma should be attached to that. The Minister said that if property is tainted, it is tainted. Will he reflect that there are circumstances in which the property that is obtained is not necessarily of itself tainted?

There is a clear distinction in my mind—although the lawyers may tell me that it is not present in law—between property that is obtained by theft and property that is obtained by purchase. If any person—I do not know why we should consider only drug dealers and their cash—was convicted of a crime concerning which the measures are to be used, and had been involved in the theft of much valuable property, it might be necessary to go down this route. The Minister may tell me that that would not be appropriate. However, if it was appropriate, and items obtained by theft were subsequently sold, it is reasonable to argue that although the property was acquired in good faith, it was originally stolen.

Photo of David Wilshire David Wilshire Ceidwadwyr, Spelthorne

The Minister is correct. I can accept that such property would be tainted, and I accept his definition.

However, I may buy something from a drug dealer without knowing that he is a drug dealer. All the provisions would apply and, as the Minister said, I would be totally innocent—and therefore entitled to keep what I purchased with my hard-earned money. A drug dealer may buy an antique because he believes that to be the best way to get rid of the cash that he has slopping around. I do not accept that if I subsequently bought that antique from him, it would be tainted. The property would be perfectly innocent, because it was not acquired in the process of any crime. A crime would have been committed from which money was acquired and used to acquire through the proper channels a totally innocent and genuine antique, which was subsequently sold to me. I hope that the Minister will reflect and come to the conclusion that that item is not tainted.

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

Would it bolster my hon. Friend's argument to use a specific example? In yesterday's Evening Standard, I noticed an example of a person who could sell property in the precise circumstances that my hon. Friend mentioned. The media celebrity and television personality Johnny Vaughan disclosed in an interview that at the age of 23, he served a substantial custodial sentence for supplying cocaine. He also mentioned the huge amounts that he has earned for working on ''The Big Breakfast'' and television comedy shows. That gentleman would be selling lucrative items. Why should a bona fide purchaser for value without notice of those items who was not aware of the now celebrated person's conviction for supplying drugs be tainted?

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. This debate is deteriorating rapidly into one that goes wider than the amendment allows. The amendment is extremely narrow. The hon. Member for Beaconsfield made the intention behind it clear, and hon. Members are trying to widen the debate to areas that it does not cover.

Mr. Wilshire rose—

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

I have not finished. Furthermore, an intervention is meant to be just that. The previous intervention was a bit long.

Photo of David Wilshire David Wilshire Ceidwadwyr, Spelthorne

I am grateful for your guidance, Mr. McWilliam.

My hon. Friend raised a fair example. Having made the point that it is possible to hold such property that is not tainted, I shall not go further down that route.

However, I wholly support my hon. Friend's amendment. The wording may not be to the Minister's liking, but he cannot dismiss an amendment by saying, ''Look, the property is tainted, and there is nothing we can do to say that it isn't.'' The best way that the Minister can describe my example of something that is acquired after the crime rather than in the process of the crime is as property that was previously obtained using funds that were obtained unlawfully. The property itself was not obtained unlawfully by the person who has the money. If the Minister cannot accept my hon. Friend's wording, will he consider an alternative wording, whereby it is not the property that is tainted, but the money that was originally used to acquire it?

Photo of Mr John McWilliam Mr John McWilliam Llafur, Blaydon

Order. The hon. Gentleman has gone miles wide of the clause and the amendment, which are related not to money but to property.

Photo of David Wilshire David Wilshire Ceidwadwyr, Spelthorne

I understand that, Mr. McWilliam, which is why I sat down just before you stood up, as I had finished speaking.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

We have had a long debate on the amendment, and I endorse entirely the points made by my hon. Friends the Members for Spelthorne and for Beaconsfield. As far as the Minister is concerned, the property is tainted, and there is a clear, strong argument that it is tainted for ever. However, we have a real concern that a bona fide purchaser for value without notice is also likely to be tainted by attachment to property that has been obtained through unlawful conduct, and the individual's good name will inevitably be affected, however innocent he is. I wonder whether there is a form of words that could resolve that.

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

What can we do, other than name the individual as a bona fide purchaser for value? Surely that makes the situation as clear as possible: he was a bona fide purchaser for value without knowledge, and was totally and utterly innocent—and the property would no longer be recoverable. However, the fact that he is described in that way does not change the history of the property. I do not know how we can do that. We could try all kinds of contorted phrases—the hon. Member for Spelthorne tried one—but if we had to have wording such as ''obtained by funds that were obtained by funds that were obtained by funds that were originally the proceeds of crime'', that will be nonsense.

Photo of Mark Field Mark Field Ceidwadwyr, Cities of London and Westminster

That may well be nonsense, and it may not be the ideal way of drafting amendments to such clauses. None the less, I hope that the Minister will reflect further on how to remove the taint that would otherwise be transferred to a bona fide purchaser for value without notice.

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

I listened carefully to the Minister, and I am mindful of the points that he made. However, concepts are being misunderstood.

The Minister alluded to the fact that that which is unlawfully obtained remains, in history, unlawfully obtained. I can see the force of that if property is originally stolen property. At the beginning there was a victim—an individual who was deprived of it. One thinks of Earl Warenne—not the Earl Warren involved in the inquiry into President Kennedy's assassination but a 12th-century Earl Warenne—and the Act of quo warranto, whereby the King sent round justices to inquire how people held their land. Earl Warenne became a bit shirty, opened an old cupboard, and said, ''By this rusty sword!'' Clearly, there had been a victim of the original land depredation, at the time of the conquest. I have no doubt that hosts of properties held in this country were acquired by such unlawful acts.

The interesting point about the Bill, which we have discussed previously, is that it is not necessarily about property of which a person has originally been unlawfully deprived. Those individuals have remedies at law that are independent of this legislation, which

provides a complete statutory definition of a new thing called property obtained through unlawful conduct. There does not necessarily need to be a victim. It so happens that the origin of the money was through activities outside the law—that is the best definition that I can provide.

Analogies to the Crown jewels have little force, because we are discussing a statutory definition. Therefore, adding the phrase

''or property obtained through unlawful conduct.''

does not cause the chaos that the Minister envisages. When property is in the hands of a person who has paid good money for it and is innocent of any knowledge of its origins, the property obtained through unlawful conduct has the value of the money that was paid by the innocent person to the other person.

Although I regret taking up the Committee's time, an issue of principle is involved and I wish to press the matter to a Division. I dare say that it will not surface again in the passage of this legislation, unless it arises in another place, but I would not be doing justice to the issue if I did not ask the Committee to vote on it.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 13.

Rhif adran 24 Adults Abused in Childhood — Clause 306 - General exceptions

Ie: 5 MPs

Na: 13 MPs

Ie: A-Z fesul cyfenw

Na: A-Z fesul cyfenw

Question accordingly negatived.

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

I beg to move amendment No. 472, in page 176, line 36, leave out subsection (10).

If I recollect correctly, this is a simple matter. Clause 306 deals with exceptions. Each exception is explained and it says at the end of most of the subsections that the property ''ceases to be recoverable.'' However, subsection (10) is not an exception but a definition. My query is exactly the same as that in respect of clause 304 (3). Why is subsection (10) necessary? Does it fulfil any useful purpose? The Minister will probably give exactly the same explanation as he gave for clause 304 (3).

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

I will not, because this is not as clear as that.

Subsection (10) provides for how the provisions of clause 306(1) and (2) apply in cases where clause 303 is engaged—that is, where a person has entered into a transaction whereby he disposes of the original recoverable property and obtains other property in its place—in other words, where there is representative property.

Subsection (10) makes it clear that any representative property obtained in place of the recoverable property will still be recoverable. The amendment would remove that provision. Removing subsection (10) would not necessarily mean that the representative property would not be recoverable, but the position would be less clear than it is at the moment.

Clause 306 sets limitations on the enforcement authority's ability to follow and trace property, by setting out certain exceptions to civil recovery and cash forfeiture. Subsection (10) ensures that those exceptions cannot result in the avoidance of civil recovery or cash forfeiture proceedings.

An example of that might be helpful. Under clause 302, if someone is given a car in return for a contract killing and he subsequently sells the car, the enforcement authority may follow the car into the hands of the purchaser and recover it from him. Under clause 303, the money received in return for the car comes to represent the car, and is also recoverable property.

Clause 306(1) provides that property is not recoverable where it is obtained by a bona fide purchaser. If the purchaser pays full value for the car, and is unaware that it is the proceeds of unlawful conduct, the enforcement authority is not entitled to recover the car from him, or from anyone who may subsequently acquire it. The purpose of that is to defend an innocent purchaser who obtains property that would otherwise be a potential target for civil recovery.

However, the exception will apply only to the car; it will not apply to the proceeds of the sale. Subsection (10) makes it clear that the proceeds of the sale of the car, which themselves represent property obtained through unlawful conduct, will remain recoverable.

I accept that it is possible to argue that subsection (10) is not essential to achieve that result; it could be said that there is nothing in subsections (1) or (2) that suggests that representative property could become immune from prosecution in the circumstances that have been set out. However, as the provisions on recoverable property—including those on tracing property—are not straightforward, we think that it is preferable to retain subsection (10), to avoid any possible confusion.

The hon. Member for Beaconsfield was right after all: at heart, my argument is the same as the previous one. However, as it is also more complicated than that one, I wished to address it in greater detail. For the reasons that I have given, I ask the hon. Gentleman to withdraw his amendment.

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

The Minister has persuaded me. I take his point on board, and beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 306 ordered to stand part of the Bill.