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The noble Baroness also argued that we should be referring to permission to appeal rather than leave to appeal. While we agree that "permission" is the more modern expression in relation to England and Wales, it is not correct usage in relation to the rest of the United Kingdom. As Part 5 applies throughout the United Kingdom we need to retain references to "leave" so that it can work in Scotland and Northern Ireland and, as there can be no possible doubt about what "leave" means, it is unnecessary to depart from the simple solution of using a single word.
Baroness Buscombe: My Lords, I wish to thank the noble and learned Lord the Attorney-General for responding to our concerns expressed in Committee and on Report regarding Clause 286. I entirely accept his point with regard to use of the word "permission" versus "leave". It is rather refreshing to hear that for once the Government are refraining from the need to modernise. Thank you very much for that report.
We believe that that is grossly unfair because it is punishing the innocent plaintiff, not the person against whom the recovery order is made. It also creates plain anomalies. If the claim, for example, is a claim for damages for negligence, the plaintiff can keep the money awarded to him or her under the judgment if the damage is caused by a negligent act which is also a criminal offence, for example, careless driving. But the plaintiff cannot keep the money if the damage is caused by a non-criminal form of negligence. If damages are paid by an insurance company, the plaintiff can keep the money because it is not paid for out of recoverable property. At least, that is the view of the Government. I am not certain that that is the case if the insurance premium was paid out of recoverable property. If, on the other hand, the damages are paid personally by an uninsured defendant, there may be a right to claw them back.
There will be plain inconsistencies between situations which have nothing to do with the plaintiff. When a similar amendment to this was moved by us on Report, the Government raised what seemed to me a fair point; that is, that a payment made out of recoverable property to, for example, a former spouse in the course of matrimonial proceedings, should remain recoverable. We have therefore tabled a revised amendment which prevents a claw back only in the case of claims for payment of a debt or for damages, and would not prevent the claw-back in the case of an order for payment of a settlement of matrimonial property.
That seems to me to be an amendment which is plainly just and fair. It will prevent what could be a serious injustice to a successful plaintiff. I also find it extraordinary, and, indeed, unprecedented, to be able to recover damages which have been not only ordered but paid under an order of the court in cases other than ones where there has been fraud or some other serious default on the part of the plaintiff. To that extent, it establishes thoroughly bad precedent. Therefore, I hope, though I fear I do not expect, that the Government will see the justice of the case and will accept the amendment. I beg to move.
Lord Goldsmith: My Lords, I shall explain the context in which the amendment arises. Clause 309 enables the proceeds of unlawful conduct to be traced. That principle is not assailed. Giving away dispositions, for example, or other dispositions, does not prevent the property from continuing to be recoverable and therefore recovered. But there must be exceptions.
However, another exception which the Government thought important is contained at present in Clause 312(3). That is in circumstances where the very nature of the proceedings is on the basis of the respondent's unlawful conduct. In those circumstances, it is likely that the claimant will realise that the property is recoverable because he is saying either, "The property has been taken from me by fraud", or if not that very property, "That is the sort of person who takes property dishonestly from other people". That is why the exception, as presently drafted, is necessary. Therefore, if I am defrauded, I sue for fraud and I receive back my money. The fact that I knew that the property which is coming to me was the proceeds of crime does not and should not prevent the recovery order from operating.
It would be wrong in those circumstances that the director should recover; the victim would take priority. However, the noble Lord, Lord Goodhart, wants to extend that to the proceeds of any judgment for debt or damages, subject only to the proviso that it is made in good faith, and therefore would not apply the two other elements in Clause 312 without notice that it is recoverable property or that it is for value. That would put the judgment creditor in a favourable position. Indeed, subject to other parts of the Bill, the person who had obtained a judgment for a debt would be in a better position than the person who had simply had the debt paid on this analysis without the need to go to court.
I emphasise that that does not undermine the judgment. The judgment will remain. If someone has a judgment, there is nothing wrong with him saying, "The respondent has chosen to meet that judgment by using my money or other property to which he is not entitled". The true ownerin this case the state, because that is the philosophy behind Part 5is entitled to say, "That is property which should be mine. This judgment has to be settled with some other property". There is nothing absurd or wrong about the principle.
My fundamental proposition is that Clause 312(1) adequately meets the cases which should be met. I understand that the noble Lord accepts that if a judgment is met there is a disposal, so that part is satisfied. He presumably sees no difficulty in the concept of good faith because that is the concept he wants to apply. Presumably, he has no difficulty with the concept that it was without notice that it is recoverable property. He continues to question whether or not a person who has obtained a judgment may be giving value. That is where he and I differ.
I invite the noble Lord first to consider a case in which a person has supplied goods, has a claim for a debt and that debt is paid before court proceedings. There can be no doubt that value has been given because value was given at the time that the money was lent, the goods were sold or whatever gives rise to the
Therefore, I do not have difficulty in seeing that in the right case the concept of Clause 312 can apply to proceeds after a judgment. It will be for the court to be satisfied that value have been given. That would always be the case. Researches have identified the Chancery Division case of Taylor v. Blakelock. That was a breach of trust. When the property was then passed from another trust to the person who had the claim in relation to the trust, it was held to be a disposition for value. One is not surprised by that because the real distinction is between a volunteer and someone who has given value. Someone who has a claim for damages, which is satisfied by the court, is not an innocent volunteer. That would be for the court to decide, but I suggest that there is not the problem that the noble Lord suggests.
The amendment is not necessary in order to meet the category of case with which he is concerned. However, there is a further problem, which goes beyond the considerations set out under Clause 312; that is, equitable considerations. That does not include the requirement of absence of notice or the requirement of value in some other sense. If the noble Lord accepts my argument, we have dealt with that point. It does not deal with the "without notice" issue. If someone has a judgmenteven if a bona fide judgmentand knows that it is being satisfied from the proceeds of a robbery, why should he be able to keep the property? He will say, "No, you must pay me out of money which is clean".
I refer to a second problem. In Part 5 we have been attempting to have a civil process, which follows the same kind of rules as a civil process. A concept such as bona fide purchaser for value without notice and in good faith is entirely what one would expect in a civil process. The courts would be used to dealing with that. To introduce a novel concept which simply depends upon good faith would be to introduce an unusual approach. That could give rise to serious difficulties as to how this is supposed to apply.
Lord Goodhart: My Lords, I am inclined to accept the argument of the noble and learned Lord the Attorney-General so far as it applies to actions in debt. To that extent, I agree that the wording of my amendment, which refers to debt, is probably superfluous. However, there remain serious problems as regards actions for damages.
Let us assume that there is an action for damages for personal injury. A plaintiff who is injured by the negligence of the respondent is not interested in the question of whether or not any claim for damages is likely to be satisfied out of recoverable property.
It is not like a contract where one knows that one is dealing with a particular person. One may or may not know that that person is involved in crime. If one does, it is reasonable that the property acquired from him should be treated as being recoverable. I turn back to the case of someone injured by the negligence of the respondent. Let us assume that at the time of the injury that the injured person does not know anything about the respondent whatsoever, except that his conduct has injured him. The noble and learned Lord tried to argue that one could get around that issue by saying that when the plaintiff is injured he acquires a chose in actiona right in action. When he gets the payment of damages he disposes of his right of action for value and in good faith. I regard that as an extremely narrow and technical argument.
On Report the noble and learned Lord raised against me the argument that the cause of action is extinguished by the judgment. On this occasion I would raise that against him because by the time one gets one's damages judgment has already been given, obviously. So one no longer has a cause of actionwhen one gets the damages one has nothing of which one can dispose. I do not wish to rely on that exceedingly technical argument.
If the noble and learned Lord is rightwhen one gets judgment in an action for damages, and when that judgment is satisfied one provides value to the person who paid the damagesthe whole of subsection (3) would be unnecessary. If the claimant's claim is based on the defendant's unlawful conduct, there must be a right of action for the unlawful conduct which is being given up, in exactly the same way as would be the case if it is simply an action for damages for negligence.
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