House of Commons - Explanatory Note
Proceeds Of Crime Bill - continued          House of Commons

back to previous text

Management receivers

Clause 48: Appointment

94.     The current legislation enables "a receiver" to be appointed on the application of the prosecutor. In fact, receivers perform two quite different functions. They manage property pending conviction (and sometimes afterwards) and they dispose of it to satisfy the confiscation order. These receivers are known in practice as "management" and "enforcement" receivers respectively but the current legislation does not distinguish between them explicitly. The Bill now deals separately with the two sorts of receivers' functions.

95.     Clause 48 enables a management receiver to be appointed where a restraint order has been made. In accordance with the principle of the Crown Court as the main venue for confiscation, the appointment is made by the Crown Court, not the High Court. The Bill makes it clear that a receiver may only be appointed on application to the Crown Court by the person who applied for the restraint order. This is, in fact, what happens at present (albeit in the High Court) but the current legislation is silent on the need for an application.

Clause 49: Powers

96.     Clause 49 sets out the powers that the court can confer on a management receiver. They are based on the powers that receivers use in practice to manage property pending conviction and confiscation. Subsection (7) prevents the powers from being exercised in relation to property subject to a charging order under earlier confiscation legislation in England and Wales or Northern Ireland (there was no provision for charging orders in the Scottish legislation).

Enforcement receivers

Clause 50: Appointment

97.     Where a confiscation order has been made and the magistrates' court will be responsible for enforcing it, clause 50 empowers the Crown Court to appoint a person to act as enforcement receiver to help enforce the confiscation order. This is another function transferred from the High Court to the Crown Court, in accordance with the general principle of the Crown Court as the main venue for confiscation. As in the current legislation, the application for the appointment of an enforcement receiver, where the magistrates' court is enforcing the confiscation order, has to be made by the prosecutor. Thus, prosecutors will continue to be involved in confiscation order enforcement. The enforcement receiver may (but need not) be the same as the management receiver appointed under clause 48.

Clause 51: Powers

98.     Clause 51 sets out the powers that the court can confer on an enforcement receiver. Again, these are based on the powers that enforcement receivers use in practice. The main difference between their powers and those of management receivers is the inclusion (for enforcement receivers) of a power to realise property. Enforcement receivers may need to manage property before disposing of it.

Director's receivers

Clause 52: Appointment

99.     Where the Director is enforcing a confiscation order, the main enforcement tool will be the appointment of a receiver (the Director will also be able to make requests for assistance outside the jurisdiction and have a term of imprisonment in default imposed).

100.     Subsection (3) requires the Crown Court, in all cases where clause 52 applies, to make an order authorising the Director to appoint any person as receiver to enforce the confiscation order. Thus, the court will authorise the appointment of a receiver but it will be for the Director to decide on who is appointed.

Clause 53: Powers

101.     Clause 53 enables the Crown Court to confer certain powers on the Director's receiver. The powers are the same as those that the Crown Court may confer on a person appointed as enforcement receiver under clause 50, on the application of the prosecutor.

Application of sums

Clause 54: Enforcement receivers

102.     Clause 54 applies to an enforcement receiver appointed under clause 50 on the application of the prosecutor (i.e. to cases in which the Director is not the enforcement authority). It specifies how any sums in the hands of the receiver are to be disposed of, after a confiscation order has been made. The sums are payable, subject to certain prior payments the Crown Court may order, to the enforcing justices' chief executive. Under subsection (3), once a confiscation order has been satisfied, the receiver is to pay any remaining sums in his hands to those with an interest in the property concerned, as directed by the Crown Court. The Crown Court must give those with interests in the property concerned a reasonable opportunity to make representations before making any directions under subsection (3).

Clause 55: Sums received by justices' chief executive

103.     Clause 55 sets out how an enforcing justices' chief executive must dispose of any monies received in satisfaction of a confiscation order, whether from a receiver appointed under clause 50 or otherwise (for example, voluntary payments by a defendant or the proceeds of the chief executive's own enforcement activities). The provision is similar to the current legislation, except that an existing power for the justices' chief executive to reimburse the prosecutor out of confiscated monies for sums the prosecutor has paid to a receiver in advance has been abolished. The money will to go to the Consolidated Fund rather than to reimburse the prosecutor. In practice, this is what happens under the current legislation.

Clause 56: Director's receivers

104.     Clause 56 is the equivalent, where enforcement by the Director is concerned, of clause 54 in relation to receivers appointed on the application of the prosecutor. The provision is, with minor modifications, the same as clause 54, except that in this case the sums must be paid to the Director instead of to the justices' chief executive.

Clause 57: Sums received by Director

105.     Clause 57 is the equivalent, where enforcement by the Director is concerned, of clause 55 in relation to sums received by justices' chief executives. The provision is broadly similar to clause 55, but there are two significant differences. Firstly, subsection (4) requires the Director to reimburse the expenses of any enforcement receiver appointed in the case, but subsection (7) makes it clear that this does not apply where the receiver is a member of the Director's own staff or providing services under arrangements made by the Director. These costs will be met out of the Director's budget.

106.     Secondly, the Director must pay the residue of any monies received to the Secretary of State (see paragraph 6(3) of Schedule 1) rather than to the Lord Chancellor, as occurs under fine enforcement mechanisms and as applied to confiscation order enforcement. In both cases, however, the eventual destination of the monies will be the Consolidated Fund.

Restrictions

Clause 58: Restraint orders

107.     Clause 58 prevents certain actions from being taken against property subject to a restraint order without the leave of the Crown Court. It also gives any court dealing with property proceedings the power to stay them if it learns that a restraint order has been applied for or made. The current confiscation legislation is silent on this issue, but the High Court does in practice stay other property proceedings occasionally where a restraint order has been made.

Clauses 59 & 60: Enforcement receivers; Director's receivers

108.     Clauses 59 and 60 make similar provision to clause 58 for property in respect of which an enforcement or Director's receiver has been appointed after a confiscation order has been made.

Receivers: further provisions

Clause 61: Protection

109.     Clause 61 protects receivers from liability for anything done by them to property which is not realisable property (as defined in clause 83), unless they are negligent. It replicates existing legislation and protects the receiver if he inadvertently deals with the property of third parties.

Clause 62: Further applications

110.     Clause 62 relates to receivers appointed under clause 48, 50 or 52. The clause enables any person affected by any action taken or to be taken by such a receiver to challenge the action in the Crown Court. The person affected may be the defendant, the recipient of a tainted gift from the defendant or some other person.

Clause 63: Discharge and variation

111.     Clause 63 explains who may apply for the variation or discharge of a receivership order. It also provides for the circumstances in which the court is required to discharge an order appointing a management receiver.

Clause 64: Management receivers: discharge

112.     Clause 64 results from the new formal distinction in the Bill between management and enforcement receivers. Its purpose is to ensure that any property in the hands of a management receiver is handed over to an enforcement receiver when appointed.

Clause 65: Appeal to Court of Appeal

113.     This clause provides rights of appeal to the Court of Appeal against decisions of the Crown Court relating to receivership matters. Like clause 44, it is required because the general right of appeal which currently exists against a decision of the High Court in a confiscation receivership matter does not apply to receivership decisions of the Crown Court under the Bill.

Clause 66: Appeal to House of Lords

114.     This clause provides a right of appeal to the House of Lords against a decision of the Court of Appeal under clause 65. As with clause 45, it is not possible for new parties to come forward at this stage. Only people who were already party to the proceedings at the Court of Appeal stage may appeal to the House of Lords.

Seized money

Clause 67: Seized money

115.     Clause 67 provides the magistrates' court with a new power to order any realisable property in the form of money in a bank account to be paid to the justices' chief executive in satisfaction of a confiscation order. The power is only available where a confiscation order has been made, time to pay has expired, the confiscation order is being enforced by a justices' chief executive (i.e. not by the Director) and the money is subject to a restraint order.

116.     The new power provides an alternative to garnishee proceedings to enable justices' chief executives to seize money held by the defendant in a bank account. A garnishee order is an order to a person who owes a debt to one person (the defendant) to pay it to another (the justices' chief executive). It is usually used to seize money of the defendant's in a bank account. A garnishee order can only be made by the civil courts (the High Court or a county court). Unlike garnishee orders, the new order will be made by the magistrates' court.

117.     Clause 67 also enables justices' chief executives to obtain access to money in the form of cash which has been seized from defendants as evidence and subsequently paid into a bank account. Under existing law, the only legal means of getting at the money without the defendant's consent is by having a receiver appointed. Subsection (6) enables the magistrates' court to order a bank or building society which fails to comply with one of the new orders to pay a sum of up to £5,000. It also provides that this sum is to be treated as if it were adjudged to be paid by a conviction of the court. The effect of this is that the fine enforcement powers in Part 3 of the Magistrates' Courts Act 1980 are available to enforce payment of this sum.

Financial investigators

Clause 68: Applications and appeals

118.     Clause 68 sets out general rules for applications for restraint and receivership orders made by accredited financial investigators. It provides in particular that steps in a case after the initial application need not be taken by the same investigator who made the initial application. This is intended to ensure that no problems are caused by, for example, the subsequent ill health of the investigator who makes the initial application for a restraint order.

Exercise of powers

Clause 69: Powers of court and receiver

119.     Clause 69 makes provision about how the Crown Court and receivers appointed under the Bill are to exercise their powers. It largely re-enacts the current legislation in that it emphasises, for example, that the satisfaction of a confiscation order takes precedence over any other obligations of the defendant or the recipient of a tainted gift from the defendant.

120.     Subsections (2)(b), (3)(c), (4) and (5) are new. Where a confiscation order has not yet been made, they require the powers to be exercised with a view to maintaining the value of the amount available for confiscation. This will enable management receivers to dispose of depreciating assets. Subsection (4), however, enables the defendant or the recipient of a tainted gift to challenge the management receiver's decision to dispose of a particular asset on the grounds that the asset is irreplaceable. The provision has regard to the fact that the defendant has not been convicted at this stage and should not, therefore, be obliged to lose irreplaceable assets. It does not apply to enforcement receivers because at the enforcement stage, any realisable property can be used to satisfy a confiscation order.

Committal

Clause 70: Committal by magistrates' court

121.     Clause 70 needs to be read in conjunction with clause 6(2)(c). Its effect is that a person may be committed to the Crown Court for confiscation proceedings following a conviction of any offence, indictable or summary, in the magistrates' court. Where the prosecutor asks the magistrates' court to do so, the court must commit the defendant to the Crown Court under this clause. The power to have a person committed is granted only to the prosecutor, not to the Director of the Agency. However the Director can assume responsibility for the subsequent confiscation proceedings in the Crown Court.

122.     Where the defendant is convicted of an either way offence, subsection (5) requires the magistrates' court to state whether it would have committed the defendant to the Crown Court for sentence anyway. This subsection is required because, under clause 71, the Crown Court's sentencing powers following a committal for confiscation are normally limited to the sentencing powers the magistrates' court would have had in the same case.

Clause 71: Sentencing by Crown Court

123.     Clause 71 provides that, where a person is committed to the Crown Court for confiscation proceedings, the Crown Court will also assume responsibility for the sentencing process.

Compensation

Clause 72: Serious default

124.     Clause 72 provides for compensation to be paid to a person whose property has been affected by the enforcement of the confiscation legislation. Compensation is only payable where an investigation is started but proceedings are never brought, or the defendant is not convicted of an offence, or his conviction is quashed, or he is pardoned. In all cases, there must have been a serious default on behalf of one or more of the enforcement authorities specified in subsection (9). The restriction to serious default cases is based on the principle that the restraint and realisation of property is ancillary to a criminal trial in the same way as the detention of a person pending trial. In neither case is compensation paid on acquittal as a matter of course.

125.     Clause 72 is largely based on existing legislation except that it has been extended to cover the situation where an investigation is started but proceedings are never brought. Under the Bill, it will be possible for a restraint order to be made as soon as a criminal investigation has been started (at present, this is only possible where proceedings have been started or are about to be). Therefore, compensation will in future be payable, subject to the current criteria including the serious default test, from the beginning of an investigation, not only where proceedings have been started.

Clause 73: Order varied or discharged

126.     Clause 73 allows compensation to be payable where a person who absconded before trial and against whom a confiscation order was subsequently made secures a variation or discharge of the order by the Crown Court. The provision is not limited to serious default (as in clause 72) because it is considered that the court should be able to exercise a more flexible approach in circumstances where a confiscation order has been made without the defendant having been tried.

Enforcement abroad

Clause 74: Enforcement abroad

127.     Clause 74 sets out the conditions under which requests for assistance in the freezing and realisation of property may be made by authorities in England and Wales to other jurisdictions outside the United Kingdom. Although requests of this nature have been made for many years, the current primary legislation is largely silent as to the respective roles and powers of the various authorities involved. The Bill places outgoing requests on a fully statutory footing. Clause 74 applies only to requests relating to Part 2 of the Bill.

128.     All outgoing requests must be made either by the prosecutor or by the Director, and may only be made with the authority of the Secretary of State. In practice, this means that all outgoing requests must pass through the United Kingdom Central Authority for mutual assistance in criminal matters in the Home Office. Requests may be made for a prohibition on dealing with property or additionally, where a confiscation order has been made, the realisation of property. It will be noted that under subsection (1)(a), a request may be made where any of the conditions in clause 41 is satisfied. This will enable the prosecutor or the Director to request an asset freeze abroad before any restraint order has yet been made in England and Wales, as long as the conditions for making one are satisfied.

Interpretation

Clause 75: Criminal lifestyle

129.     Clause 75 is to be read in conjunction with clause 6. As explained in the note on clause 6, the question of whether a person has a criminal lifestyle is central to the operation of Part 2 of the Bill, because it determines whether the defendant is subject to the confiscation of benefit from his particular criminal conduct or his general criminal conduct. Clause 75 sets out the criteria that govern whether or not a person has a criminal lifestyle.

130.     Under the current legislation, drug trafficking is always regarded as a criminal lifestyle offence. A conviction for any drug trafficking offence triggers an examination of all the defendant's past drug trafficking and the mandatory application of the assumptions. All drug trafficking offences and money laundering offences are treated by the Bill as conclusive of a criminal lifestyle. The Bill thus adds money laundering to the offences which are always to be regarded as conclusive of a criminal lifestyle. Subsection (2)(c) enables the Secretary of State to specify by regulations other offences that are always criminal lifestyle offences. Such offences might include, for example, trafficking in arms or human beings.

131.     The effect of subsections (2)(d) and (3) is that a defendant has a criminal lifestyle if the defendant has been convicted in the current proceedings of four or more offences from which he has received a benefit, or has been convicted in the current proceedings of one such offence and has other convictions for such offences on at least two separate occasions in the last six years.

132.     The provision is similar to that in the current non-drug legislation, where an enquiry may be launched into benefit from a person's entire past criminal conduct (other than drug trafficking) where the person is convicted of two or more offences from which he has received a benefit in the current proceedings or of one in the current proceedings and one in the last six years. However, the number of triggering offences is greater in the Bill because, under clause 11, the application of the assumptions is mandatory where a criminal lifestyle is identified.

133.     Subsection (2)(e) provides that a defendant has a criminal lifestyle if the defendant is convicted of any offence committed over a period of six months or more for example, a conspiracy. It will thus be possible under the Bill to confiscate the benefit from a defendant's entire past criminal conduct where he is convicted of one offence of any nature. But, unless the offence falls within subsection (2)(a) to (d), it must have been carried out over a period of six months or more.

Clause 76: Conduct and benefit

134.     Clause 76 defines criminal conduct as any conduct constituting an offence in England and Wales or which (if it took place abroad) would constitute an offence there. The restriction of the scope of confiscation under existing legislation to drug trafficking, other indictable offences and specified summary offences is thus abolished. Under the Bill, the Crown Court that makes a confiscation order will only need to consider whether the defendant has benefited from any conduct contrary to the criminal law of England and Wales. Clause 76 also defines "general criminal conduct" and "particular criminal conduct". For the significance of these terms see the note on clause 6.

135.     Clause 76 also provides that a person benefits from criminal conduct if he obtains property as a result of or in connection with the conduct. This unites in one new provision two similar but not identical definitions in the existing legislation relating to drug trafficking and that relating to other offences. Under the drug trafficking legislation a person benefits from drug trafficking if he receives any payment or reward in connection with drug trafficking carried on by him or another person. Under the legislation relating to other offences, a person benefits from an offence if he obtains any property as a result of or in connection with its commission.

Clauses 77 & 78: Tainted gifts; Gifts and their recipients

136.     The existing confiscation legislation enables gifts by the defendant to other persons to be recovered in satisfaction of the confiscation order, and makes ancillary provision (for example, to enable assets of the recipient of a gift to be placed under restraint). Clause 77 aligns the different tainted gift schemes currently found in the drug and non-drug legislation (where a tainted gift is referred to as a "gift caught by this Act").

137.     The new scheme provides that, where the court has decided that the defendant has a criminal lifestyle, any gift from the defendant to any person in the six years before the commencement of proceedings is caught, together with any gift made at any time out of the proceeds of crime. This is relevant both at the confiscation hearing and for the purposes of enforcement. If the court decides that the defendant does not have a criminal lifestyle, only gifts made since the beginning of the earliest of the offences committed are caught. Again, this is relevant at the confiscation hearing and for the purposes of enforcement.

138.     However, in relation to a time before the court has decided whether the defendant has a criminal lifestyle, for example, at a restraint hearing, the wider definition of tainted gifts applies. When making a restraint order, the court must exercise its discretion as to how much property to restrain by reference to the size of the confiscation order that may eventually be made. So, although a court can technically apply the wider definition of tainted gifts at the restraint stage, if it is clear at that time that the defendant does not have a criminal lifestyle and that therefore the narrower definition will apply at the confiscation hearing, the court will have to take this into account when making the restraint order.

Clauses 79-81: Value: the basic rule; Value of property obtained from conduct; Value of tainted gifts

139.     Clauses 79-81 set out how the court is to work out the value of property held by a person, the value of property obtained from criminal conduct and the value of a tainted gift. These clauses broadly reproduce the property valuation principles set out in the existing legislation.

Clauses 82-84: Free property; Realisable property; Property: general provisions

140.     Clause 82 introduces the new concept of free property as any property that is not subject to certain kinds of forfeiture and deprivation orders. The underlying principle is that property already subject to one of these orders made in earlier proceedings should not be included in the calculation of the amount available for confiscation because it is already accounted for. In addition, property is not free if it is subject to certain orders under Part 5 of the Bill on civil recovery. Clause 83 defines realisable property by reference to the free property of the defendant and the recipient of a tainted gift. Clause 84(1) defines property in very wide terms.

Clauses 85-87: Proceedings; Applications; Confiscation orders

141.     Clauses 85-87 define when proceedings are started, when proceedings and applications are concluded, and when confiscation orders are satisfied and are subject to appeal. The definitions are particularly important in that they determine the earliest and latest points at which a restraint order may be made. The provisions in clause 85 have been extensively reworked when compared with those in existing legislation to take account of the new right of appeal (in clauses 32-34) for the prosecutor and the Director. The purpose of the new provision is to ensure that proceedings are not concluded where the prosecutor or Director appeals against the Crown Court's decision, and thus to ensure that a restraint order may be made where such an appeal is lodged, and that any restraint order already made in the case does not have to be discharged.

Clause 88: Drug trafficking offences

142.     The definition of a drug trafficking offence in this clause is required because any conviction of a drug trafficking offence is conclusive, under the Bill, of the fact that the defendant has a criminal lifestyle. As explained above, where the defendant has a criminal lifestyle, the case is one in which all the defendant's criminal conduct can be taken into account in calculating the amount due under the confiscation order.

143.     The definition in clause 88 replaces that currently found in section 1 of the Drug Trafficking Act 1994, but there are two important differences between the two. Firstly, the offence of allowing premises to be used for drug related activities (section 8 of the Misuse of Drugs Act 1971) is regarded as having the characteristics of a drug trafficking offence and so has been added to the list. Secondly, drug money laundering offences have been removed from the list, because, under the money laundering provisions in Part 7 of the Bill, the current separate drug and other crime money laundering offences found in current legislation are abolished and replaced with a single set of money laundering offences applicable to the proceeds of all criminal conduct. The handling of money laundering offences for confiscation purposes is discussed further in the note on clause 89 below.

 
previous Section contents continue
 
House of Commons home page Houses of Parliament home page House of Lords home page search Page enquiries index

© Parliamentary copyright 2001
Prepared: 18 October 2001