|Proceeds of Crime Bill
Mr. Grieve indicated dissent.
Mr. Ainsworth: The hon. Gentleman indicates that that is not so, and he is correct when considering people overall. However, when freezing orders are made in civil litigation, the only way in which they subsequently can be used to offset court costs is with the permission of the court. The situation is not always as he said, although I accept that factors must be considered in some circumstances that may occur.
Mr. Grieve: The Minister is absolutely right. He implied that discretion exists to allow that to occur. Under these provisions, there is no such discretion.
Mr. Ainsworth: That is right. There are other provisions, which we shall debate later.
As far as England, Wales and Northern Ireland are concerned, the amendments would require the court to make a provision to enable a person other than the respondent to meet the particular expenses described. A slightly different position applies to Scotland, but the hon. Gentleman did not intend to address that so we can leave it aside.
We do not believe, however, that it would be reasonable to make these exclusions mandatory, whether the expenses are those of the respondent or another person. The property that is subject to an order could, for example, be a painting or a piece of jewellery. In that case, it would not make sense to require the court to make an exclusion to enable a person to meet his reasonable living expenses. That would not be necessary in the likely event that he had another source of income. If a person's only assets were proscribed, the court has the discretion to allow for reasonable living requirements. However, if a person had a very good income and the means to represent himself, and if the goods being sought were a particular item, it would be unreasonable to allow the items to be released to defray living expenses. The amendment would make that mandatory. The court should be free to take decisions that pertain to the case before it.
If the order related to a person's bank account and he had no other source of income, the need to make an exclusion is—obviously—likely to be self-evident. It seems to me that courts are used to making assessments on such points. They will be able to take the most sensible and appropriate decisions. The requirement that the amendments would introduce is unnecessary and would be rather perverse in some circumstances.
Mr. Carmichael: I hesitate to intervene, because I may, again, be missing the point. Is the point that there is a discretion vested in clause 255(2) about whether an exclusion order is made? If a case is made for an exclusion order, the order must be as provided under subsection (3)(a) and (b). Does that answer the point about the individual with the painting and other means that are not frozen?
Mr. Ainsworth: There is discretion within the exclusion order other than in the case of court and legal costs, which I was about to move on to. Is that the point that confuses the hon. Gentleman?
Mr. Grieve: I think that the point that the hon. Member for Orkney and Shetland tried to make was that clause 255(2) provides discretion for making exclusions when the interim receiving order is made. If there were a circumstance—as described by the Minister—in which a person had substantial sources of funds other than those subject to the receiving order, the question under subsection (3) would not arise. The amendment would provide that in the absence of such other sources of funds, it would be mandatory for provision to be made from the sums that were subject to the receiving order.
Mr. Carmichael: That is what I would have said.
Mr. Ainsworth: If I did not have the clause in front of me, I would not have been able to answer the hon. Member for Beaconsfield. I cannot see the problem. The hon. Gentleman is suggesting that, while it is discretionary whether to make the exclusion, it should be mandatory in such circumstances to meet someone's reasonable living expenses. Clause 255(3) refers to the issues that courts should be willing—[Interruption.]
The Chairman: Order. I am trying to listen to the Minister. If members of the Committee want to have a conversation, will they do so outside the Room?
Mr. Ainsworth: Clause 255(2) is about the making of exclusions. If the provisions of clause 253 were made mandatory, there would not be such discretion. The court would have to decide whether to make the exclusion in the first place, not whether to allow for reasonable living expenses. Surely it should be able to consider the circumstances of the case when deciding whether reasonable living expenses need to be allowed for, not only whether to make the exclusion.
Although the Bill currently allows the courts to make exclusions, subsection (4) of clause 255—and clause 263—prohibits the making of an exclusion for the purpose of enabling a person to pay legal costs arising from proceedings under part 5. Amendments Nos. 252 and 388 would instead allow the court to release assets to pay legal fees. There is no doubt that respondents and third parties in civil recovery proceedings must have proper legal representation. The question raised by the amendments is whether they should be able to rely on the assets that are the subject of the proceedings to pay for that legal representation.
Having considered the options, our view is that respondents and third parties should meet legal costs from assets that are not subject to an interim receiving order or an administration order or, when they have insufficient further assets, their legal costs should be publicly funded. That is why clause 255(4) and clause 263(4) will prevent the court from excluding assets to meet legal expenses in civil recovery proceedings.
Assets that are frozen under an interim receiving order are the subject of dispute between the state and the holder of the assets. The order serves to preserve the assets so that, in the event that a recovery order is made, there should still be property remaining for the enforcing authority to recover. If the holder of the assets were allowed access to them to pay legal expenses, there is a risk that the expenditure may dissipate the property before the matter can be resolved. That would prejudice the state's right to recover the proceeds of crime in civil recovery proceedings.
When freezing orders are used in other civil proceedings, it is for the court to determine the uses to which the frozen assets can be put. We understand that the courts would look carefully at any application to unfreeze assets for legal expenditure. We believe, however, that in such instances it is preferable to make legal aid available when it is needed. I shall set out the arrangements for meeting legal costs. People who are not party to the proceedings may use assets that are not subject to an interim receiving order to pay for their legal expenses. If parties do not have sufficient means available to them to meet their legal expenses, they will be able to apply for public funding under the relevant scheme. Such funding will be made available to both respondents and third parties in civil recovery proceedings.
In order for an applicant to be granted public funding, they must satisfy both a means and a merits test. Parties to civil recovery proceedings will need to meet the standard means test. However, the standard merits test will be relaxed to the extent necessary to ensure that everyone has access to legal funding who needs it, and who qualifies financially.
If the director loses his case the court will, of course, be able to order him to pay the respondent's legal costs. Compensation will also be available under later provisions of the Bill.
We believe that these arrangements will ensure that people are properly represented in civil recovery proceedings, without unnecessarily risking the dissipation of any property pending the decision of the court on whether it is recoverable.
I was about to finish speaking but I give way.
Mr. Grieve: I should have intervened earlier. The Minister made an important point when he said that the merits test would be relaxed. I assume that he meant that the merits test would be disregarded, because I cannot see how the matter could be fairly dealt with unless one were to say that, if such proceedings were brought against someone, they must, as of right, have an entitlement to legal aid if they do not have sufficient means. If that were confirmed, it would help me to decide how to respond to the matter.
Mr. Ainsworth: As I have said, we would have to ensure that everyone was legally represented. The merits test will not be met by everyone. If they do not have other assets, they will have to be represented, and, therefore, they will need to be subjected to the means test—and the means test only.
Mr. Carmichael: I have a few observations to make.
With regard to the question of mandatory elements to an exclusion, there is a two-stage process. The court will consider whether an exclusion should be made, and if the court is satisfied about that, that would be done under subsection (2). If the court is persuaded that an exclusion should be made in relation to any person other than the respondent, it would be proper if the exclusion were mandatory.
With regard to that matter, the Minister said that he could not see a problem. I do not think of the issue that I am raising as a problem. However, what I am proposing would be an important safeguard for the rights of third parties, and it would send an important message to anyone who might become involved, as a third party, with litigation under the Bill.
I do not understand the thinking behind subsection (4). It seems to me to be part of the Government's current general fatwa against lawyers.
Hon. Members: Hear, hear.
Mr. Hawkins: In rising to intervene, I should declare that I have an interest in the matter under discussion; I am a member of the Bar, although I am not currently in practice.
Does the hon. Gentleman not find it extraordinary that there is such a divergence of views about lawyers within the Government? Whenever Ministers who are not lawyers want to attack lawyers, they do so, but the Government are packed full of lawyers—and the leading one is the Prime Minister. Therefore, there are Ministers who do not spend all their time attacking lawyers: only the Lord Chancellor enjoys the best of both worlds, by attacking lawyer fat cats although he is one of the fattest of all the fat cats.
|©Parliamentary copyright 2001||Prepared 18 December 2001|