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Standing Committee Debates
Proceeds of Crime Bill

Proceeds of Crime Bill

Column Number: 753

Standing Committee B

Tuesday 18 December 2001(Afternoon)

[Mr. Roger Gale in the Chair]

Proceeds of Crime Bill

Clause 255

Restrictions on dealing etc. with property

4.30 pm

The Chairman: Good afternoon, ladies and gentlemen. Your festivities can start at 7 o'clock. However, before then we have quite a few clauses to get through.

The Parliamentary Under-Secretary of State for the Home Department (Mr. Bob Ainsworth): I beg to move amendment No. 311, in page 149, line 16, leave out

    'in relation to recoverable property'.

The Chairman: With this it will be convenient to take Government amendment No. 406.

Mr. Ainsworth: The amendment introduces a slight change to subsection (6). Amendment No. 406 makes the same change to clause 263, which applies to Scotland. Clause 255 sets out provisions on exclusions that the court may make in an interim receiving order to allow dealing with property to which the interim receiving order applies. Clause 263 does the same in respect of Scotland. Property that may be subject to an interim receiving order or an administration order may be recoverable property or associated property. Exclusions may be made under clauses 255 and 263 in respect of both recoverable and associated property.

Subsection (6) currently sets out a proviso to the power to make exclusions, which is that the court must exercise the power with a view to ensuring that, as far as practicable, the rights of the director or Scottish Minister to recover property are not unduly prejudiced. As currently defined, however, the proviso applies in respect of recoverable property only, not associated property.

It is less likely that an exclusion in relation to associated property would prejudice the right to recover than an exclusion in relation to recoverable property, but it could be the case. It would therefore be reasonable to require the court to consider whether any exclusion applying to associated property would unduly prejudice the right of enforcement in the same way that, as the Bill is currently drafted, it would have to consider that in respect of recoverable property.

The amendment will mirror the provisions under clauses 257(2) and 264(2), which provide that associated property may be excluded from the terms of an interim receiving order or an administration order entirely, if the court thinks that the satisfaction of any

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right to recover the property will not be unduly prejudiced. It will not prevent the court from making exclusions in respect of associated property. It will ensure that, when taking decisions, the court considers all the relevant factors.

Mr. Dominic Grieve (Beaconsfield): The amendment, although itself minor and presented by the Minister as a minor matter, is of considerable importance. I am not sure why the draftsman and Minister were content with the existing wording of clause 255(6) but have now decided that it is no longer sufficient. The hon. Gentleman highlighted the difference between recoverable and associated property. Associated property is property into which recoverable property has become mixed or in some way associated. It will include property that belongs to another person and will not be subject to recovery. At the preliminary stage, the court must carry out an exercise to balance the need to ensure that the state may recover what it is seeking with the rights of the individual who will be adversely affected.

As we discussed this morning, there are areas in clause 255 in which we explored the balance that should exist regarding individuals' rights in the face of a receiving order. Clause 255(6), as amended, will substantially shift the balance on actions relating to exclusions toward the state and away from the rights of the individual—specifically, the innocent individual who has an interest in the associated property. I concede that it is just possible that such an individual may have recoverable property and be culpable. However, the chances are that he will be an innocent party.

The amendment is quite minor, but it would extend the statement, with which I cannot possibly take exception, that the satisfaction of any interest or right of the enforcement authority to recover recoverable property must be paramount, to a paramountcy on the balance when the state might be prejudiced if the rights of a person with an interest in the associated property were adversely affected.

Clause 255(6) states:

    ''The power to make exclusions in relation to recoverable property''—

we are taking that out—

    ''must be exercised with a view to ensuring, so far as practicable, that the satisfaction of any right of the enforcement authority to recover the property obtained through unlawful conduct is not unduly prejudiced.''

The exclusion of associated property clearly implied that it was accepted that it might be necessary to prejudice the rights of the enforcement authority if that was required to support the rights of the associated property owner.

The Minister has not explained why this change of heart has occurred. I shall be grateful if he does because, at present, I am minded to oppose the amendment.

Mr. Ainsworth: I did not think that I was insisting that the rights of the enforcement agency would be paramount in the case of associated property. As I said, I thought that the amendment would allow the

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court to take that into consideration. I hope that the hon. Gentleman will accept that that is sensible, and that he will not think that the rights of the enforcement authority can be ignored in every case of associated property.

Mr. Grieve: Perhaps the use of the word ''paramount'' is an exaggeration.

We discussed how undesirable it was to fetter judicial discretion. Clause 255(6) tells the courts how they should exercise their discretion when making exclusions. Previously, they were told that their discretion should be fettered in relation to recoverable property only, but now it must be fettered in relation to associated property, and the courts must act in a way that is in favour of the enforcement authority and against the individual who may be adversely affected if an exclusion order is not made.

Mr. Ainsworth: The hon. Gentleman is retreating from the word ''paramountcy'', but he is still insisting on a slant that is not justified by the wording of clause 255(6), which states:

    ''The power to make exclusions in relation to recoverable property''—

the amendment would extend the power to all property, whether recoverable or associated—

    ''must be exercised with a view to ensuring, so far as practicable, that the satisfaction of any right of the enforcement authority to recover the property obtained through unlawful conduct is not unduly prejudiced.''

Although the hon. Gentleman has come off the word ''paramountcy'', he appears to suggest that the use of the words ''not duly prejudiced'' means that that right is more important than that of the owner of the associated property.

The change in wording is not intended to achieve a shift in policy. We are trying to address an oversight, because the current wording would not allow the court to take into account the rights of the enforcement authority unless recoverable property was being dealt with. I hope that the hon. Gentleman accepts that even where associated property is involved, the court must at least consider whether the enforcement authority has rights. In separating out such property, something of no value should not be left.

Mr. Grieve: I am grateful to the Minister for giving way, as dialogue is helpful.

It is not the case that, without the Minister's amendment, the court would not have to exercise discretion with regard to the matter. The entire clause sets out a series of discretionary provisions that are designed to strike a balance when receivership is made. It is inherent in subsection (6), as it is currently worded, that it is open to the court to hold that an exclusion should be made in respect of associated property, if that is required to fulfil the necessary criteria under subsections (2) and (3) in favour of a person who holds associated property, even if, as a result of that, a considerable level of prejudice is caused to the ability of the enforcement authority to

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recover the recoverable amount within that associated property. That is a fair principle, and the Minister is going to get rid of it.

Mr. Ainsworth: We are discussing provisions where a bona fide purchaser for value is completely protected: we are dealing with property that has become mixed with recoverable property. The hon. Gentleman appears to be suggesting that we can completely ignore the enforcement authority's rights, when it is seeking to deal with such property, even to the point where it does not matter—according to my reading of subsection (6)—that the enforcement authority's rights are unduly prejudiced. That does not matter to him, and he is suggesting that that is fair.

Mr. Grieve: I accept that that is a possible result of leaving subsection (6) as it stands. However, that subsection is part of the total package of clause 255, which includes the specific provision, under subsection (3), of good reasons for making an exclusion. They are,

    ''(a) to meet his reasonable living expenses, or

    (b) to carry on any trade, business, profession or occupation''.

Circumstances will arise where the restraint order will bite on associated property, with the consequence that, prior to that property's being disentangled at the final hearing, the person who owns a large chunk of it may be unable to make his living. He will apply for an exclusion. Subsection (6) currently provides a considerable weight of balance in his favour when that matter comes to be considered. The Minister's change in wording moves the balance in favour of the enforcement authority. Is that fair?

Mr. Ainsworth: I do not accept that it moves the balance in favour of the enforcement authority. The hon. Gentleman keeps on creeping back towards paramountcy. He appears to be suggesting that an exclusion order should be granted to allow a person to continue his trade, business, profession or occupation—for example—even if allowing him to do so would unduly prejudice the rights of the enforcement authority. That seems, in effect, to be what he is insisting on, and if that is the case, I do not agree with him.

Question put, That the amendment be made:—

The Committee divided: Ayes 13, Noes 4.

Division No. 21]

Ainsworth, Mr. Bob
Clark, Mrs. Helen
David, Mr. Wayne
Davidson, Mr. Ian
Foulkes, Mr. George
Harris, Mr. Tom
Hesford, Stephen
Lazarowicz, Mr. Mark
McGuire, Mrs. Anne
Robertson, Jonn
Stinchcombe, Mr. Paul
Stoate, Dr. Howard
Watson, Mr. Tom

Baker, Norman
Field, Mr. Mark
Grieve, Mr. Dominic
Johnson, Mr. Boris

Question accordingly agreed to.

Column Number: 757

4.45 pm


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