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

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Clause 197: Seizure

246.     Clause 197 allows a constable or a customs officer to seize any property subject to a restraint order to prevent its removal from Northern Ireland.

Clause 198: Supplementary

247.     Clause 198 contains ancillary provision relating to restraint orders. It re-enacts provision from existing confiscation legislation. In Northern Ireland there are two distinct procedures for the registration of title concerning land. This is as a result of historical differences concerning the purchase and sale of land in Ireland. Accordingly title is required to be registered either in the Land Registry or the Registry of Deeds. The existing provision on restraint orders has the effect that where the prosecutor obtains a restraint order affecting land, an "inhibition" may be placed on the property at the Land Registry preventing its disposal.

Management Receivers

Clauses 199 and 200: Appointment; Powers

248.     These clauses follow the current legislation in enabling a management receiver to be appointed where a restraint order has been made. The role of a management receiver is to manage property to maintain its value until a confiscation order is made. However, unlike England and Wales the appointment will continue to be made by the High Court. Clause 200 sets out the same powers for a management receiver appointed by the court in Northern Ireland as clause 49 provides for England and Wales.

Enforcement receivers

Clause 201: Appointment

249.     Where a confiscation order has been made, clause 201 empowers the Crown Court to appoint a person to act as enforcement receiver to help the prosecutor to enforce the confiscation order. This person may be the same as a management receiver appointed under clause 199 or not, as the case may be.

Clause 202: Powers

250.     Clause 202 sets out the powers that the court can confer on a receiver so appointed (for example, the power to seize and sell property). This is a function transferred from the High Court to the Crown Court, in accordance with current and future practice in Northern Ireland of the Crown Court as the sole venue for enforcement of confiscation orders.

Director's receivers

Clauses 203 & 204: Appointment; Powers

251.     These clauses provide that, as in England and Wales, where the Director is enforcing a confiscation order, the sole enforcement tool will be the appointment of a receiver. Clause 204 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 201, on the application of the prosecutor.

Application of sums

Clauses 205 & 206: Enforcement receivers; Sums received by chief clerk

252.     These clauses largely replicate for Northern Ireland the provisions made for England and Wales at clauses 54 and 55 of the Bill. There is no difference in substance but the text reflects the non-existence of justices' chief executives in Northern Ireland. Clause 205 specifies how any sums in the hands of receivers appointed by the Crown Court are to be disposed of after a confiscation order is made. Where a confiscation order is made, the sums are payable, subject to certain prior payments the Crown Court may order, to the chief clerk of the court where the confiscation order was made.

253.     Clause 206 also sets out how a chief clerk must dispose of any monies received in satisfaction of a confiscation order. The provision is the same to that proposed for England and Wales at clause 55.

Clauses 207 & 208: Sums received by Director's receivers or Director

254.     Clauses 207 & 208 make provision for Northern Ireland for the realisation of property where the Director is acting as an enforcement authority. Clause 207 like clause 56 details how sums received are to be dealt with by the Director's receiver. The provision is, with minor modification, the same as clause 205. Clause 208 requires the Director to broadly deal with monies received in the same way as the chief clerk under clause 206. However there are the same two significant differences as appear at clause 57.


Clauses 209 to 211: Restraint orders; Enforcement receivers; Director's receivers

255.     Clauses 209 to 211 essentially reflect the provisions made in this Bill at clauses 58 to 60 for England and Wales. The only significant differences between the changes proposed for England and Wales and those in Northern Ireland is that clause 209 reflects that in Northern Ireland restraint orders will remain within the jurisdiction of the High Court. Further there is no provision made regarding the remedy of distress as that remedy has effectively ceased to be available in Northern Ireland.

Receivers: further provisions

Clauses 212 to 215 Protection; Further applications; Discharge and variation

256.     Clauses 212 to 215 essentially reflect the provisions made in this Bill at clauses 61 to 64 for England and Wales. Again clauses 213 to 215 reflect the retained power for the High Court to appoint a receiver when exercising its jurisdiction to make a restraint order.

Clauses 216 & 217: Appeal to Court of Appeal; Appeal to House of Lords

257.     These clauses enable persons who apply for, or are affected by, an order either of the High Court to appoint a management receiver or of the Crown Court to appoint an enforcement receiver to appeal to the Court of Appeal in respect of the order. Clause 217 provides for the Court of Appeal's decision under clause 216 to be further appealed to the House of Lords. The provision is the same in substance as that provided for at clauses 65 and 66 for England and Wales.

Seized money

Clause 218: seized money

258.     Clause 218 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 chief clerk of the relevant Crown Court in satisfaction of a confiscation order. The power is only available where the prosecutor makes such application and a confiscation order has been made, time to pay has expired and the money is subject to a restraint order. The provision is made for the same purposes set out at clause 67.

Financial Investigators

Clause 219: Applications and Appeals

259.     Clause 219 sets out the same general rules for applications for restraint and receivership orders made by accredited financial investigators in Northern Ireland as appears at clause 68 for financial investigators operating in England and Wales.

Exercise of powers

Clause 220: Powers of court and receiver

259.     Clause 220 makes provision about how the High Court and the Crown Court or receivers appointed by them are to exercise their powers. It includes the same new provisions that are set out in clause 69 of this Bill for England and Wales and the detail of this clause is set out in the notes to that clause.


Clause 221: Committal by magistrates' court

260.     Clause 221 is to be read in conjunction with clause 158(2)(b). Its effect is that a person may be committed to the Crown Court for confiscation 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 for confiscation. The power to have a person committed for confiscation is granted only to the prosecutor, not to the Director. In practice, the prosecutor and the Director may consult in such cases, and the Director may assume responsibility for the subsequent confiscation proceedings in the Crown Court.

261.     There is one distinct difference between this clause and its equivalent clause for England and Wales, clause 70. It relates to the existing power of a magistrates' court in England and Wales to commit a defendant who is convicted of an either way offence to the Crown Court for sentence. There is no comparable power in Northern Ireland.

Clause 222: sentencing by Crown Court

262.     Clause 222 provides that, where a person is committed to the Crown Court for confiscation, the Crown Court will also assume responsibility for the sentencing process. The principle applied is the same as proposed for England and Wales. However, in light of the notes above for clause 221, the Crown Court is restricted to the sentencing powers available to the magistrates' court when dealing with a defendant committed for a confiscation hearing from that court.


Clause 223: serious default

263.     Clause 223 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 on the same grounds as those proposed at clause 72 for England and Wales. Clause 223 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. The clause also refers to the Director of Public Prosecutions for Northern Ireland whose office fulfils the same role as the Crown Prosecution Service in England and Wales.

Clauses 224 & 225: Order varied or discharged; Enforcement abroad

264.     Clauses 224 and 225 replicate the provisions for England and Wales contained in clauses 73 and 74.


Clause 226: Criminal lifestyle

265.     This provision is crucial to the operation of the Bill and ensures that offenders before the courts in Northern Ireland will be dealt with in exactly the same way in Northern Ireland as in England and Wales. The clause replicates the provisions made in clause 75 and the details of the clause are set out in the notes to that clause. The provision is similar to that which currently exists in Article 9 of the Proceeds of Crime (Northern Ireland) Order 1996.

Clause 227: Conduct and benefit

266.     Clause 227 defines criminal conduct as any conduct constituting an offence in Northern Ireland or (if it took place abroad) would constitute an offence there. The restriction of the scope of the legislation under existing legislation to drug trafficking, other indictable offences and specified summary offences is thus abolished. Under the Bill, the Crown Court, which makes a confiscation order, will need to consider conduct solely by reference to the law of Northern Ireland. Clause 227(2) and (3) also defines "general criminal conduct" and "particular criminal conduct" (for which, see the note on clause 76).

267.     Clause 227(4) also provides for Northern Ireland the same definition of "benefit from conduct" proposed at clause 76(4). This will replace the similar definition of benefit provided by Article 2(6) of the Proceeds of Crime (Northern Ireland) Order 1996.

Clauses 228 & 229: Tainted gifts; Gifts and their recipients

268.     The existing 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). Under the existing legislation in Northern Ireland, a tainted gift is described as a "gift caught by this Order". Clause 228 aligns the two different tainted gift schemes currently found to apply depending whether the offence was drug related or not. 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 at any time out of the proceeds of crime. This definition would apply both at the confiscation hearing and for the purposes of enforcement. However, if the court decides that the defendant does not have a criminal lifestyle, only gifts made since the earliest of the offences committed are caught. Again, this would apply at the confiscation hearing and for the purposes of enforcement. The provision is drafted so that it will apply in Northern Ireland as the similar provisions in Part 2 apply in England and Wales.

Clauses 230-232: Value: the basic rule; Value of property obtained from conduct; Value of tainted gifts

269.     Clauses 230-232 set out how the court is to work out the value of property held by a person, the value of property, and the value of a tainted gift. These clauses, apart from referring to Northern Ireland legislation where appropriate, replicate the provisions proposed at clauses 79 to 81.

Clauses 233-240: Free property; Realisable property; Property: general provisions; Proceedings; Applications; Confiscation orders; Drug trafficking offences; Money laundering offences

270.     These definitional clauses essentially reproduce for Northern Ireland the same definitions as those contained at clauses 82 to 89 of this Bill. The only differences in text are a result of references to the equivalent Northern Ireland legislation or comparable provisions of this Bill.

Clause 241: other interpretative provisions

271.     This clause essentially applies in Northern Ireland as it does in England and Wales. The only difference is that there is no reference to the Sentencing Act, as the Powers of Criminal Courts (Sentencing) Act 2000 does not extend to Northern Ireland. Any other difference in text relates to the numbering of clauses of this Part of the Bill.


Clauses 242 & 243: Procedure on appeal to the Court of Appeal; Procedure on appeal to the House of Lords

272.     These clauses, as in England and Wales, establish the general principle that the Court of Appeal's leave to appeal is required. Both clauses enable the Secretary of State to make an order in relation to appeals to either the Court of Appeal or the House of Lords under this part containing provision corresponding to any provisions of the Criminal Appeal (Northern Ireland) Act 1980. An order of this kind will cover routine matters such as the procedures for obtaining leave to appeal and transcripts.

Clause 244: Crown Court Rules

273.     Receivership is currently a High Court civil law function so the applicable Rules of Court are currently found in the Rules of the Supreme Court for Northern Ireland. Clause 244 puts it beyond doubt that proceedings concerning receivers appointed by the Crown Court under this part of the Bill may in future be dealt with in Crown Court Rules.

Part 5: Civil Recovery of the Proceeds etc. of Unlawful Conduct

Chapter 1: Introductory

Clause 245: General purpose of this Part

274.     Subsection (1) explains that this Part of the Bill has two purposes. One is to enable the enforcement authority to bring civil proceedings in the High Court or Court of Session to recover property that is or represents property obtained through unlawful conduct (civil recovery). This is an entirely new right of action, and is reserved to the enforcement authority. The civil recovery scheme is set out in clauses 248 to 287. Clause 310(1) explains that the enforcement authority means the Director of the ARA, except in Scotland where it means the Scottish Ministers. Except as specifically provided by the clauses, court proceedings in the High Court will be governed in the usual way in England and Wales by the Civil Procedure Rules or in Northern Ireland by similar rules of court referred to as Rules of the Supreme Court; and in the Court of Session in Scotland by Petition Rules.

275.     The second purpose of Part 5 is to enable cash which is or represents property obtained through unlawful conduct, or is intended to be used in such conduct, to be forfeited in civil proceedings before a magistrates' court or (in Scotland) the sheriff (cash forfeiture). This power replaces, with an extended scheme, the existing provision, in Part II of the 1994 Drug Trafficking Act, for the forfeiture of cash discovered on export or import which is suspected to be derived from or intended for use in drug trafficking. The cash forfeiture scheme is set out in clauses 288 to 301.

276.     The key components introduced in this clause are individually explained in later clauses. The meaning of 'property' is explained in clause 310(4); 'unlawful conduct' at clause 246; 'property obtained through unlawful conduct' in clause 247; and 'recoverable property' at clauses 302 to 307.

277.     Subsection (2) makes clear that civil recovery and cash forfeiture proceedings may be brought whether or not proceedings have been brought for an offence in connection with the property. Cases where criminal proceedings have not been brought would include cases where there are insufficient grounds for prosecution, or where the person suspected of the offence is outside the jurisdiction or has died. Cases where criminal proceedings have been brought may include cases where a defendant has been acquitted, or where a conviction did not result in a confiscation order. However, clause 306 makes clear that property is not recoverable if it has been taken into account in deciding the amount to be paid under a confiscation order.

Clause 246: "Unlawful conduct"

278.     Subsection (1) defines conduct occurring in the UK as unlawful if it is unlawful under the criminal law of the part of the UK in which it occurred.

279.     Subsection (2) extends the definition of 'unlawful conduct' to include conduct which occurs outside the United Kingdom and is unlawful under the criminal law of that country, and would be unlawful if it occurred in any part of the United Kingdom. The effect of this provision is to enable property which has been obtained through conduct abroad to be recovered, or cash which has been so obtained to be forfeited, if the conduct was unlawful where it took place and would be unlawful in at least one part of the United Kingdom; and to enable cash which is intended for use abroad to be forfeited if the conduct for which it is intended would be unlawful both in at least one part of the United Kingdom and in the country where it was intended to occur.

280.     Subsection (3) makes clear that the test the court must use in determining whether matters alleged to constitute unlawful conduct have occurred or whether any person intended to use cash for unlawful conduct is the balance of probabilities. That is the normal standard of proof applicable in civil proceedings. The criminal standard of proof, under which matters must be proved beyond reasonable doubt, does not therefore apply in civil recovery or cash forfeiture proceedings.

Clause 247: "Property obtained through unlawful conduct"

281.     Subsection (1) explains what it means to obtain property through unlawful conduct. A person will obtain property through unlawful conduct if he obtains it:

  • by the conduct - for example by stealing it, or by obtaining it by means of dealing in illicit drugs, or

  • in return for the conduct - for example by being paid to commit murder or arson, or taking a bribe to give false evidence or corruptly award a contract.

282.     The purpose of subsection (2)(a) is to ensure that property counts as having been obtained through unlawful conduct regardless of any investment in that conduct. So if a person buys illicit drugs with honestly come by money, and sells them at a profit, the whole of the proceeds of the sale will count as having been obtained through unlawful conduct, and not just the profit.

283.     Subsection (2)(b) provides that it is not necessary to show that property was obtained though a particular kind of unlawful conduct, so long as it can be shown to have been obtained through unlawful conduct of one kind or another. So it will not matter, for example, that it cannot be established whether certain funds are attributable to drug dealing, money laundering, brothel-keeping or other unlawful activities, provided it can be shown that they are attributable to one or other of these in the alternative, or perhaps some combination.

Chapter 2: Civil recovery in the High Court or Court of Session

Proceedings for recovery orders

Clause 248: Proceedings for recovery orders in England and Wales or Northern Ireland

284.     Clause 248 explains where court proceedings for civil recovery in England, Wales and Northern Ireland are to take place and how they are to be initiated.

285.     Under subsection (1) the enforcement authority (for England, Wales and Northern Ireland this means the Director of the ARA - see clause 310(1)) may take proceedings against any person who he thinks holds recoverable property. 'Recoverable property' is property that has been obtained through unlawful conduct or property that represents such property. Detailed provisions regarding recoverable property are set out at clauses 302 to 307 and clauses 303 to 305 define what is meant by representative property. Civil recovery proceedings are to take place in the High Court.

286.     As with normal civil procedure, the High Court will issue a claim form in respect of the property at the request of the enforcement authority. Under subsection (2), the enforcement authority must serve the claim form on the person who it thinks holds the recoverable property (the respondent) and on any person who holds associated property which the enforcement authority wishes to be subject to a recovery action. Holding property includes holding an interest in property - see clause 310(5) to (7). Associated property is defined in clause 250 and the circumstances in which it may be the subject of a recovery order are set out in clauses 270-272. Under subsection (3) the claim form must either specify the property to which it relates or describe it in general terms, and state whether it is alleged to be recoverable property or associated property.

Clause 249: Proceedings for recovery orders in Scotland

287.     Clause 249 provides that proceedings for civil recovery in Scotland will be taken by the Scottish Ministers (the enforcement authority) in the Court of Session. An application will be made by the Scottish Ministers to the Court of Session in respect of the property. The Scottish Ministers must serve the application on the respondent (the person who holds the property) and on any person who holds associated property which the Scottish Ministers wish to be subject to a recovery action. The application must either specify the property to which it relates or describe it in general terms, and state whether it is alleged to be recoverable property or associated property.

Clause 250: "Associated property"

288.     Sometimes only part of a property may be recoverable, or there may be several interests in a property, some of which are not recoverable. The non-recoverable part of or interest in the property is described as 'associated property.'

289.     Subsection (1) defines associated property. In paragraph (a) the associated property might be a tenancy in a recoverable freehold. In paragraph (b), where a lease in a freehold block of flats had been purchased with recoverable property, another lease in the same block bought with legitimate money would be associated property. In paragraphs (c) and (d) where two people buy a car together, one with recoverable cash and one with legitimate cash, the share of the person who bought with legitimate cash is the associated property. In paragraph (e), where a painting is recoverable property but it had been framed using legitimate money, the frame would be associated property.

290.     Associated property may be held by a third party or by the respondent, for example where the respondent mixes recoverable property with his own legitimate property (see clause 304).

291.     Where the recoverable property consists of rights under a pension scheme, however, no property is to be treated as associated with that recoverable property. This has the effect that the non-recoverable interests in a pension fund, i.e. the interests of all those other than the respondent who have interests in the pension fund, cannot be made the subject of an interim receiving order or a recovery order.

Interim receiving orders (England and Wales and Northern Ireland)

Clause 251: Application for interim receiving order

292.     Clauses 251 to 258 make provision for 'interim receiving orders' in England, Wales and Northern Ireland; equivalent provisions for Scotland are at clauses 259 to 266. Under subsection (1) interim receivership procedure may - but need not always - form the preliminary stage of civil recovery procedure.

293.     An 'interim receiving order' is, as subsection (2) explains, a court order for:

  • the detention, custody or preservation of property which is claimed to be recoverable property or associated property, and

  • the appointment of an interim receiver in respect of that property.

294.     Under subsection (1), the first step in the procedure is for the Director to make an application to the High Court for an interim receiving order. The Director may do this even though he has not yet issued the claim form. And he may do so without putting any interested party on notice that he is doing so, if giving notice would prejudice the Director's right to recover the property (subsection (3)). It may be necessary to act swiftly and without alerting potential parties, for example, to prevent property from being concealed or disposed of.

295.     The court may make an interim receiving order only if the conditions set out in subsections (5) and (6) are satisfied. The Director must satisfy the court that:

  • there is a 'good arguable case' that the property in question is either recoverable or associated property (the 'good arguable case' test is already used by the civil courts for applications for injunctions to freeze disputed property during litigation so that ultimate enforcement of judgment cannot be frustrated. Freezing injunctions were formerly known as 'Mareva' injunctions (and this is still the appropriate term for such orders in Northern Ireland), and

  • if the property in relation to which the order is sought includes associated property, he has either identified or has taken all reasonable steps to establish the identities of the person(s) holding that property (if the interim receiving order is made or the proceedings otherwise go ahead, the Director will have to put these persons immediately on notice under clause 248(2)).

296.     The Director must also, under subsection (7), nominate someone suitably qualified to act as interim receiver. But the Director may not nominate a member of his own staff. This is because the interim receiver on appointment becomes an officer of the court and has investigatory duties (see clause 252(1) and (2)) and it is thought appropriate that the interim receiver should be independent of the Director, who is a party to the litigation. The characteristics of an interim receiving order are spelled out more fully at clauses 252 to 258, but under subsection (8) these clauses do not limit the extent of the power to make the order. Subsection (8) has been included to make clear that the High Court retains the inherent discretion which it has in civil litigation to make appropriate orders when making interlocutory injunctions.

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Prepared: 18 October 2001