HC Deb 12 July 1967 vol 750 cc888-907

Section 149(6) of the principal Act shall be amended—

  1. (a) by omitting the words 'to imprisonment for a term not exceeding six months or';
  2. (b) by omitting the words 'two hundred pounds' and substituting therefor the words 'one hundred pounds';
  3. (c) by inserting immediately after the last-mentioned Amendment the following new subsection—
  4. (d) by omitting paragraph (b).—[Mr. Corfield.]

Brought up, and read the First time.

Mr. Speaker

We come to new Clause No. 1, with which we shall take the following new Clauses: New Clause No. 6—(Increase in Penalties for Fraud.)—and new Clause No. 28—(Alteration of Penalties). At the same time, the House can also discuss the following Amendments: Nos. 24 to 27, 49 to 52, 65 to 70 and 109. I am prepared to allow a Division on New Clause No. 6 and on Amendment No. 109 if that is asked for.

6.45 p.m.

Sir J. Foster

I can initiate a debate on this subject shortly, drawing attention to the two principles involved. The principle involved in new Clause 1 is to take account of inflation and the seriousness of the offences covered by Section 149(6) of the Principal Act.

Mr. Speaker

Order. I am reminded that the name of the hon. and learned Member for Northwich (Sir J. Foster) is not appended to the new Clause. Will some other hon. Member move it formally?

Mr. Corfield

I beg to move, That the Clause be read a Second time.

I do not know whether that prevents me from speaking later in the debate.

Sir J. Foster

I thank you, Mr. Speaker, for getting me into the fold.

As I was saying when I was out of order, and not heard, the first principle is that we should amend those Sections of the principal Act in which the money amounts are not sufficient having regard to the erosion of inflation since 1948. The new Clause distinguishes between what may be purely negligent and what may be wilful. In new Clause No. 1 we seek to amend Section 149(6) of the principal Act. That Section deals with a director of a company who fails to take all reasonable steps to secure compliance as respects any accounts laid before the company in general meeting with the provisions of this Section and with the other requirements of this Act … He is liable on summary conviction to imprisonment for a term not exceeding six months or to a fine not exceeding £200.

There is a provision at the end that a person shall not be sentenced to imprisonment for any such offence unless, in the opinion of the court dealing with the case. the offence was committed wilfully". In the opinion of my right hon., hon. Friends and myself, it is a mistake in principle for the court to distinguish between what is negligent and what is wilful after the verdict of the jury on evidence which has been led. The director of the company is accused of not securing compliance with the Section of the Act. Evidence is given and he is found guilty. Then the court has to do another kind of inquiry, which is not according to evidence, and in which evidence is not necessarily led according to the rules of the trial as to whether an accused be negligent or wilful.

We consider this very undesirable from the point of view of protecting the liberty of the subject. If an offence is liable to lead to imprisonment, then the issue whether it has been wilful or negligent should be separated from the issue whether the accounts did or did not comply with the Section. In our submission the new Clause would be a very desirable improvement in the principal Act. It would avoid the court having to make a subsidiary inquiry after having heard the evidence whether the offence was committed.

Moreover, the Section includes the phrase in the opinion of the court dealing with the case". It is the opinion of the court and not a finding of the court as a result of evidence led, and that makes it difficult for the defence. Let us suppose that the defence wishes to argue that the offence was not committed. It leads evidence to show that, but at the same time it must have in the back of its mind, "Supposing we are wrong and supposing that the court finds that the offence has been committed: we must safeguard against the decision to show that it was negligent and not wilful." It makes it very difficult if the defence has to say, "I did not do it, but if I did it, it was negligent and not wilful." We sometimes get into the position in criminal cases of saying, "If I did it, my offence is less harmful than it seems". But it always puts the defence in great difficulty. It is different in civil cases. The judge in a civil case is used to alternatives. But great disadvantage arises in a criminal case, especially as the gradations from very slight negligence or even none at all to wilfulness are very great.

New Clause No. 6, which is another of the Clauses grouped with this one, is on a slightly different basis. It deals with the penalty for fraud by officers of a company under Section 330 of the Companies Act. The reason for introducing that is that representations have been made that the penalty is not severe enough for very grave frauds. Probably I shall have the support of the hon. Member for Westhoughton (Mr. J. T. Price), who has spoken on many occasions in Committee about the need for more adequate penalties for people who fraudulently take advantage of those not able to protect themselves and has said that the penalties should be adequate for the offence.

In Section 330 the penalty is only two years' imprisonment and it is thought that in a very serious case it should be up to five years. One principle involved is that because of the effect of inflation, what was a very serious amount of £100 or £200 in different parts of the Act should be at least doubled. In the case of new Clause 6 the penalty of two years should be raised to five years. We consider that this is an improvement in the criminal law as applied by the Companie Act, namely, that it is made perfectly clear whether the prosecution is alleging that the offence was not wilful or that it was wilful. It would be undesirable for the prosecution to embark on a fishing prosecution and to say, "Let us see how it comes out in the evidence and see whether it was wilful or not". That would be contrary to the standards laid down in criminal prosecutions in this country and, I think, undesirable.

Mr. R. Gresham Cooke (Twickenham)

I think that it would be a useful addition to put this Clause into the Bill and to make a differentiation between a wilful default and one which is not wilful. We are entering on a time when we will be putting on the Statute Book a huge new Act of Parliament. It consists of 120 Clauses, and seven Schedules. It is a Bill which we have taken nearly four months to consider in Committee in great detail. It will affect 400,000 companies, some of which are the smallest family companies in the land.

Secretaries and directors of companies will have to fill in an enormous number of forms, not only giving returns of directors but other information which is required. I am convinced that there will be hundreds, if not thousands, of offences committed in the first year that the Act is in operation because these people will not know what is to be done. We are also entering a time in which quite large public companies will not have qualified secretaries. Anyone who has grown up with a company may be a secretary and may have no qualifications. Therefore, mistakes will be made. For a mistake which is only a slip, the penalty should be fairly nominal. On the other hand, there are fraudulent companies which make wilful defaults and hold up the making of returns sometimes for years. They should be severely punished.

I think the suggested Amendment is a useful one which I hope the Minister of State will accept because it would greatly improve this difficult and complicated Bill.

Mr. Darling

The hon. Member for Twickenham (Mr. Gresham Cooke) has suggested—I suppose one can only guess because this is hypothetical—that there may be thousands of technical offences when this Bill goes on to the Statute Book because directors of small companies and their secretaries will have to find their way through the new legislation. Of course we shall send out explanatory memoranda of one kind and another which will help. I assure the hon. Member that there will not be thousands of technical prosecutions.

Mr. Frederic Harris (Croydon, North-West)

I do not suppose that there will be a large number of technical prosecutions, but the shortage of advice is becoming very great. The burden of work is tremendous and companies will not be able to get the advice they need.

Mr. Darling

This is one of the issues we discussed frequently in Committee. It is one which we shall do our best to meet when the Bill goes on to the Statute Book.

The hon. and learned Member for Northwich (Sir J. Foster) rightly said that these Amendments are concerned with two issues. One to get the penalties right for offences which are committed and where there are successful prosecutions, and in association with that to take note of the fact that the penalties which stand in the original 1948 Act and are carried forward into this Measure are, as a result of inflation, not such heavy penalties as they were in 1948. The second argument the hon. and learned Member put forward was on the question of whether there should be a distinction made between offences committed wilfully and those committed more or less by accident with no wilful intention.

In our discussions in Committee I gave are undertaking that we would look at the question of penalties, but I warned the Committee that if we were to have an adequate review of penalties throughout this legislation it would take some time and it might not be possible for us to put forward appropriate Amendments on Report. I can tell the House that the re view of penalties, in which of course the Horne Office and the Law Officers are involved, is now under way, but it is nowhere near ready enough for us to come forward with recommendations which could be incorporated in the Bill or Report. This will be a matter for the second Companies Bill which we intend to introduce during the life of this Parliament.

Therefore, although I gave an undertaking—which I have done my best to carry out—to have the penalties reviewed, we still think it would be desirable to stick to the penalties in the original Act an I which are carried forward to this Bill until the whole review is completed rather than to make ad hoc Amendments in regard to penalties in the Bill now before us.

On the question of whether an offence is committed wilfully or not, the hon. and learned Member rather let me down. When I saw that his name was not attached to the Amendments I thought that he was not in support of them and I conceived this to be something to my advantage. I hate to cross swords with the hon. and learned Member on points of law because I am no lawyer. I know very well why he has had to leave the Chamber, and I am not sorry in the circumstances. I am relying on my legal advice. I am told that it is desirable to keep the Bill as it is and not to accept this Amendment, for one or two good reasons. The most important was referred to by the hon. and learned Member. It is that cases can come forward in present circumstances in which the Board of Trade is compelled to prosecute because of the offence and only during the course of the prosecution it transpires that something which the Board of Trade thought was not wilfully done is found to have been wilful.

7.0 p.m.

It is up to the courts in these circumstances, I understand, to decide what penalties ought to be imposed. We prefer to leave it to the discretion of the courts rather than place an obligation on the Board of Trade to say that a prosecution, if it transpires that it is for something wilfully done, should be a prosecution arranged in that way. On the advice that I have had, it seems desirable to stick to the Bill as it stands for another reason.

The hon. and learned Gentleman said that defence lawyers are put in a difficult position if they do not know whether it is the intention of the prosecution to say that the offence was wilful or not and the prosecution leaves it open. The legal advice I have is that defence lawyers will ask the prosecution whether it is the intention to go ahead on the ground that, in the view of the prosecution, the offence was wilfully committed. If the prosecution refuses to answer that inquiry and subsequently, as the trial goes on, it becomes clear to the defence that the offence was committed wilfully and that this was what the prosecution is getting at, it will ask for an adjournment. I understand that this is so in all such cases.

Mr. F. P. Crowder (Ruislip-Northwood)

What is this proposition that the defence has to ask the prosecution how it intends to put its case before the court? If the prosecution comes with a case against a person in a court of law, it is for the prosecution to prove that case The defence does not have to go and ask how the prosecution intends to set about it. This is a ridiculous proposition of law.

Mr. Darling

All the legal advice we have in the Board of Trade, in that case, according to the hon. and learned Gentleman, is silly and stupid.

Mr. Crowder

The Board of Trade does not know about these things.

Mr. Darling

If the hon. and learned Gentleman is under the impression that we have no lawyers in the Board of Trade, he must think again. There may be something in this—I do not know. I have stated the advice I have been given.

Mr. Crowder

The right hon. Gentleman really cannot come here and say that he has been given information by Board of Trade lawyers and is passing it on to the House of Commons, asking it to listen to this sort of argument. It will not do.

Mr. Darling

The hon. and learned Gentleman is surprisingly ignorant of this matter. The Board of Trade has had a companies and insurance department under successive Governments with lawyers concerned only with matters affecting company and insurance law.

Mr. Crowder rose—

Mr. Darling

No. I will not give way again. I am sure that the Board of Trade lawyers are far more experienced in this matter than the hon. and learned Gentleman. The advice they have given to me is the advice I am now giving to the House. I am no lawyer and I accept their advice, which is that wherever the Board of Trade prosecutes in these matters arrangements are made by the defence to find out precisely what the prosecution is doing.

We think that the present system of a single offence with a higher penalty, to be decided by the court—a higher penalty for a wilful commission being usual—is in the interests of justice, because in cases where the prosecution says that there has been a wilful commissioning of an offence the defence may well prove to the court in cross-examination that the defendant did not offend wilfully.

I do not wish, I repeat, to cross swords with the hon. and learned Member for Northwich on a matter of this kind. As I have said, when I saw that his name was not on the Amendment, I assumed that he was not supporting it. For the reasons I have given, we would prefer to leave the Bill as it is at this point and I repeat my undertaking that we shall go ahead as quickly as we can with the review of penalties so that we can, not only in the ad hoc cases raised in these Amendments but throughout the companies and insurance legislation, make sure that penalties are uniform and in line with modern requirements.

Mr. Frederic Harris

I shall not detain the House long, but I want to make one or two comments on what was said by my hon. Friend the Member for Twickenham (Mr. Gresham Cooke). My concern about the Bill is the possibility of an innocent offence taking place. I support the idea behind new Clause 1 of trying to draw a distinction between wilful action and the appropriate penalties on the one hand and offences which are, in a way, innocent on the other hand.

I appreciate that the Minister of State has said that the Board of Trade would not embark on a witch-hunt of people making wrong returns, but from the business point of view I find that professional help available is getting less and less. They are becoming very overburdened, like taxation departments. Whilst all of us support the basic principles of the Bill, it is this type of worry which is very much in mind. Mention has been made that many firms are not able to use professional secretaries and have to call in professional firms to assist them in all these various returns. When one studies the detail of the Bill and all the returns which have been made, one must remind the Government that many offences will be innocently brought about and I am worried about this.

I am sorry that the Minister of State, who was trying to deal with the matter very fairly, did not seem to accept the principle lying behind what was said by my hon. and learned Friend the Member for Northwich (Sir J. Foster). I understood the case he was trying to put over but I hoped that the Government would accept the principle. He appeared to say that we should leave this over for the time being until we could deal with the revision of penalties in general. I agree, but not to the extent of lessening the distinction between wilful and non-wilful actions. Perhaps the President of the Board of Trade himself will be able to give us a little more comfort on this point.

From the business point of view, we are putting burdens on people which are most unfair. Much of the information required in the Bill could be omitted anyway, but that is beside the point now. If we ask people to do things, we must see that they have a chance to carry them out. I am worried that we are going in for legislation directing people to do things that they have not a chance to do a ad which they do not fully understand.

I appeal to the right hon. Gentleman to see whether more consideration could be given to this aspect so that errors which may occur quite unexpectedly over a period of some years after the passing of the Bill will not result in serious consequences for those who have unwittingly brought them about.

Mr. J. T. Price

I want to make a short comment which I do not think was made in Committee, for it is appropriate now. We are dealing, in new Clause 1, with the question of offences and penalties for certain offences which may be either committed out of negligence or carelessness or out of wilfulness or criminal intention. These Clauses deal with actions which may be criminal. It has often occurred to me, on another plane apart from the one which hon. Members have been discussing, that when we give to a magistrate or a judge who is sitting on a case of this kind the alternative either of inflicting a penalty which is prescribed in a particular piece legislation of £X as a maximum or, in a case of wilfulness, the right to send the person convicted by a jury to prison, we are dealing with a very strange bag of penalties. I do not speak as a lawyer in this House, so the hon. and learned Member for Ruislip, Northwood (Mr. Crowder) must not try to trip me up on a legal quibble. If he does, I shall try to deal with it.

Mr. Crowder

The hon. Member is doing very well, if I may say so.

Mr. Price

Here we are dealing with a situation which applies to corporate bodies. This is company legislation. One of the paradoxes in the development of our modern society, with all its complexities, is that we speak as though we are dealing with individuals under the criminal law, whereas we may be dealing with corporate bodies. The Clause acid the proposed Amendments to it suggest that there should be penalties of £200 as a maximum in certain cases or, on conviction, imprisonment not ex- ceeding a term of six months. We are dealing with something very difficult as it applies to a corporate body.

I put to the President of the Board of Trade that, as an undertaking has been given to look further at the whole question of penalties, the Government should address their minds to a different aspect from anything that has been mentioned up to now. When one inflicts a penalty of £200 or £500 upon a director or a general manager of some corporate body, under the principle of vicarious liability, once the fine has been inflicted and is paid out of the company's accounts it does not inflict any personal punishment on the person concerned.

Mr. Crowder

And is set against tax.

Mr. Price

I thank the hon. and learned Gentleman—and is set against tax. But if the person in the dock is convicted in such circumstances that the judge considers it proper to send him to prison, that is a very different form of punishment because it affects him personally. I have, I hope, smiled philosophically whenever I have read of cases affecting high officials, directors and general managers of large corporate bodies, not only in the realm of private finance in industry but in the realm of nationalised industries. What is the use of fining a high official of a nationalised industry £500, for example? If he has done something criminal, he ought to be dealt with in another way.

Every judge knows from his legal experience and his knowledge of what is happening that except in extreme circumstances he does not want to send anybody to prison because the gaols are bursting at the seams already. There is no more room to send people to prison. Very often in serious cases a humane judge will inflict the smallest penalty that is open to him because he is afraid of putting any more people in "jug" because there is nobody to look after them.

Some of our jurists and criminologists who consider these matters technically ought to look at the whole aspect of this matter. It is no use inflicting fines on people who act for corporate bodies. They might be very serious cases. I know, Mr. Speaker, that you are a great devotee of Gilbert and Sullivan operas, and I am reminded of some lines in, I believe, "H.M.S. Pinafore" to this effect: My object all sublime I shall achieve in time— To make the punishment fit the crime.

Hon. Members

It is "The Mikado".

Mr. Price

If it were not out of order, I would sing it.

Mr. Speaker

That would have given me great pleasure. What delights me is that everybody in the House corrected the hon. Gentleman and gave the right name of the opera.

Mr. Price

I am sorry. I made that illustrative point light-heartedly, although I am making a serious point that the whole question of penalties as affecting corporate bodies must be looked at in another light. I shall not pursue the point any further because we want to make progress with the Bill.

7.15 p.m.

Mr. Crowder

I am much concerned with this proposed new Clause because it seems to me to affect one of the basic principles of our criminal law. I am very surprised that when such a principle becomes involved we do not have the assistance of the Law Officers of the Crown. But, having regard to the work which the House of Commons has been doing in the last two days, I think this is quite understandable, so, although I express surprise, I do not advance criticism. However, when we are discussing matters which can affect the liberty of the subject, it seems singularly unfortunate that the business of the House should have been arranged in such a way that we have not got the benefit of the assistance and advice of those who should know best on this subject.

I confess that I was somewhat dismayed by the junior Minister, who has now left the Chamber, who, when I interrupted him on this point, merely said that he knew nothing about the law, let alone the criminal law, that they have got advisers in the Board of Trade who can tell them what to do. That, in terms, is what he said. He has now gone. He is not here to listen to me. I wish he were. It simply is not good enough if matters which affect the liberty of the subject are to be discussed in this House and all that the Minister of the Crown can say is that he knows nothing about it, that he has had some advice from some lawyers in the Board of Trade and that it is good enough for the House. It is not good enough for the Opposition. I feel most strongly on these points.

What is meant by "lawful intention", indeed? Is it any different from what at the moment is still in existence in our criminal law as the main principle—the question of a guilty mind, mens rea, a guilty state of mind? Before a private person or a Government Department can have the temerity to bring a prosecution against a company or a private individual in this country, first of all a magistrates' court has to be satisfied that there is a case to answer and, secondly, on many occasions a jury has to be satisfied so that they can feel sure and certain of the person's guilt. If there be hesitation in their minds, that hesitation is sometimes described as being a reasonable doubt—not a conjured-up or whimsical doubt, but the sort of doubt which would move any one of us in our everyday domestic and business affairs. If such doubt be present, it must be resolved in favour of the person or company on trial, and he is entitled as of right, according to the law of England, to be acquitted. That is the dominant principle which runs through our criminal law.

Now we have the Board of Trade coming to the House of Commons and saying, through a junior Minister, that they do not really understand the proposition, that they have been told it is all right by some people whom they employ and who are called lawyers in their Department, and that therefore they are not prepared to discuss the matter further. That sort of thing simply will not do.

The burden of proof must always rest upon the prosecution. In this instance, in regard to which we are told by the junior Minister to whom I have referred that the defence will have to go along and ask the prosecution exactly what it means, can one honestly say that the burden of proof still remains where it should in a criminal matter?

These are enormously important matters. So far as I recall, I have never heard the word "wilful" used in any criminal case. What is meant by "wilful"? Where does the dividing line lie between extreme negligence and wilfulness? If, for example, directors are criminally negligent or civilly negligent, haw near does that line come in relation to the word "wilful"? The last thing I wish to do is to detain the House on this matter, but these are questions of the greatest importance. I raise them with complete sincerity, and I ask the President o the Board of Trade to answer them.

Mr. Grant

I shall not follow my hon. and learned Friend the Member for Ruislip-Northwood (Mr. Crowder) in the delicate paths of the criminal law and the criminal mind. I wish to direct attention to new Clause No. 6, the simple effect of which is to increase the penalty o imprisonment for fraud under the principal Act from two years to five.

I want the House to understand that in this country, and in the City of London in particular, business people and others are deeply anxious about the outrageous frauds which are being perpetrated today, with enormous sums of money involved. Company fraud, particularly major company fraud, is now really big business in itself, and the loot obtained from big company frauds makes the loot obtained from a train robbery or bullion robbery look like peanuts.

The principal offence with which this penalty is concerned is covered by Section 3:30 of the principal Act, the most usual one being that with intent to defraud the creditors of the company", an officer of the company has concealed or removed any part of the property of the company since, or within two months before, the date of any unsatisfied judgment or older for the payment of money obtained against the company. That is one of the principal ways in which fraud is perpetrated, and, as I say, it is now very big business. A little time ago—perhaps my hon. and learned Friend the Member for Ruislip-Northwood will remember the case better than I do—there was a major company fraud for which the guilty parties were awarded fines running into six figures, but I am reliably informed that they accepted that punishment with glee because the proceeds of their fraud vastly exceeded the amount of the fines.

It is only right, when we are considering a Measure such as this, that we should express our determination to stamp out the frauds which are a blot on our national business life and which are the subject of condemnation by all responsible business men. This occasion affords us an opportunity to raise the maximum prison sentence of two years for these disgraceful crimes, crimes involving sums far in excess of those for which far heavier sentences are given in robbery and larceny cases, to a maximum of five years' imprisonment. I commend new Clause No. 6 to the House on that ground.

Mr. Corfield

There are one or two issues here which should be separated. First, on new Clause No. 1, we are considering an attempt to bring the Companies Act, 1948, into line with the provisions which we suggested should be incorporated in the present Bill. Clauses 11 and 23 of the Bill contain provisions in regard to offences which are precisely the same as those covered by Sections 196 and 157 of the 1948 Act. They simply make it an offence to fail to carry out certain duties and prescribe certain maximum penalties, with the proviso that, if the offence is not wilful, the offender shall not be sent to prison.

The object of the exercise on this issue is to ensure that a proper distinction is drawn between the wilful offence and the one which is not. I shall not cross swords with my hon. and learned Friend the Member for Ruislip-Northwood (Mr. Crowder) about what "wilful" means, but I take the word from the existing Act, assuming that someone knows. As the penalty is considerably greater for committing the offence wilfully, the person should be charged with having wilfully done it and not be charged with a general offence so that he does not really know whether he is being charged with negligence or doing it with, perhaps, fraudulent intent.

Clause 27 of the Bill contains substantially the same provisions. There may be a definite element of fraud here. Again, therefore, if fraud is alleged, or if a man is liable to be convicted and sentenced for fraud or anything with an element of fraud in it, he should be charged with fraud and not left, perhaps quite honestly, believing that he is charged with a comparatively trivial offence of negligence.

The reason why we have brought for-word the new Clauses regarding these matters is that, in Committee, the Minister of State said that his main difficulty in acceping our proposals then was that they would mean amending the principal Act. The new Clauses would do that. The only reason why new Clauses 1 and 28 are separate is that I had not immediately realised that there were several Sections in the 1948 Act with precisely the same provisions, so, for fear that the only new Clause when it came on the Notice Paper would be starred, I put down new Clause No. 1 and added No. 28 to it.

Emphasising what was said by my hon. Friend the Member for Harrow, Central (Mr. Grant), I point out that new Clause No. 6 is in an entirely different category. It deals with offences coming under Section 330 of the principal Act, almost exclusively matters involving fraud. It is essential to show that Parliament regards these matters as serious. Now that we have a string of penalties for relatively minor offences under the Bill all on much the same level as the penalty for downright fraud under the 1948 Act, this in itself is a reason for raising the penalties under that Act. I do not accept the proposition that we must wait for an overall review of penalties. We can get into an almost metaphysical argument if nothing can be done until a complete review of this branch of our law has been completed. We have before us now provisions creating new offences. There is every argument for dividing the negligent from the wilful and for making absolutely clear which type of offence is the subject of a charge. This is basic to the whole procedure of our criminal law. Moreover, there is every case for making clear that Parliament disapproves most strongly of fraud.

Amendment No. 109 raises a different' point. It is directed to Clause 46, under which the Board of Trade takes power to require a company with a misleading name to change the name. There is a right of appeal here, so I do not criticise it on other grounds, but, if the company does not take advantage of the right of appeal and refuses to change its name after being directed to do so, the penalty is £5 a day. If the misleading name was of great commercial value, as it might well be, that might be the main reason why it was adopted, and it could be cheap at the price of about £1,800 a year. That sum might be a relatively good investment if the name were sufficiently valuable. We therefore felt that it was wise to have a higher maximum penalty, bearing in mind that it is only a maximum and that the courts will judge the circumstances in awarding any particular sum.

The Minister of State said that there will not be any frivolous prosecutions, but there could be, and there is no guarantee that there will not. There is a distinction between Clauses 11 and 23 on the one hand and Clause 27 on the other, which contains the safeguards, such as they are, that there shall be no prosecution without permission of either the Board of Trade or the Director of Public Prosecutions. That gives a certain assurance that frivolity will not normally be an element in the prosecution, but there is no such subsection in Clauses 11 and 23. This makes it much more important that we should get it absolutely clear that a person charged with an offence for which he can go to prison knows what he is charged with and the case he must meet. That is the object of the new Clauses and Amendments, and I hope that the President of the Board of Trade will accept them.

Mr. Jay

I note what the hon. Members for Gloucestershire, South (Mr. Corfield) and Harrow, Central (Mr. Grant) have said about the magnitude of the penalties. I would not contest that there is force in their argument, nor would I attempt to argue that the whole structure of penalties under this system of law is correct in all its ratios as between one offence and penalty and another. What makes me hesitate to alter the penalty with which we are now concerned is that we should have to examine carefully the repercussions on the penalties for other offences and their relationship to one another throughout at least the whole area of company law, which we are not covering in the Bill.

I do not contest the excellent general principles of criminal-law to which the hon. and learned Member for Ruislip-Northwood (Mr. Crowder) nailed the flag. I do not think that they are at issue in the debate. But he completely—although I am sure not wilfully—misrepresented my right hon. Friend the Minister of State, and he did not seem to focus entirely clearly on the main issue between us on the new Clause and the Amendments.

The main new Clause, new Clause 1, would create two separate offences, one wilful and the other without the inclusion of the word "wilful". We are not trying to argue that no distinction should be made between an offence that is wilful and one that is not. We did not invent the use of the word "wilful". It is in the new Clause put down by the Opposition and is already in the company law. I would not attempt to invent a new interpretation of it now.

The only issue between us is whether the distinction should be made by the creation of two offences, which is what the hon. Member for Gloucestershire, South advocates, or whether, as we advocate, discretion should be left to the courts to consider how far the offence was wilful and then impose correspondingly greater or less penalties. For all

the reasons which my right hon. Friend gave, and which I shall not repeat, it seems to me that it is wiser to leave that discretion to the court. Even the hon. and learned Gentleman would agree, with his much greater knowledge of the criminal law than I would lay claim to, that this would not be the only case in English law where a distinction would be left within the court's discretion. That is the point at issue between us. In my view it is reasonable to leave a discretion to the courts.

Mr. Crowder

I am grateful to the right hon. Gentleman for his most courteous reply to my observations.

Question put, That the Clause be read a Second time:—

The House divided: Ayes 100, Noes 174.

Division No. 454.] AYES [7.35 p.m.
Alison, Michael (Barkston Ash) Harvie Anderson, Miss Pike, Miss Mervyn
Awdry, Daniel Hawkins, Paul Pink, R. Bonner
Baker, W. H. K. Hogg, Rt. Hn. Qulntin Powell, Rt. Hn. J. Enoch
Besscll, Peter Holland, Philip Pym, Francis
Biggs-Davison, John Hooson, Emlyn Ridley, Hn. Nicholas
Birch, Rt. Hn. Nigel Hornby, Richard Royle, Anthony
Braine, Bernard Hunt, John Russell, Sir Ronald
Brewis, John Iremonger, T. L. Scott, Nicholas
Brinton, Sir Tatton Jennings, J. c. (Burton) Shaw, Michael (Sc'b'gh & Whitby)
Bromley-Davenport, Lt. -Col. Sir Walter Jopling, Michael Stainton, Keith
Buck, Antony (Colchester) Joseph, Rt. Hn. Sir Keith Steel, David (Roxburgh)
Burden, F. A. Kershaw, Anthony Stodart, Anthony
Campbell, Gordon Legge-Bourke, Sir Harry Taylor, Sir Charles (Eastbourne)
Carlisle, Mark Loveys, W. H. Taylor, Frank (Moss Side)
Channon, H. P. G. Lubbock, Eric Temple, John M.
Cooper-Key, Sir Neill McAdden, Sir Stephen Thatcher, Mrs. Margaret
Curdle, John MacArthur, Ian Thorpe, Rt. Hn. Jeremy
Corfield, F. V. McMaster, Stanley van Straubenzee, W. R.
Craddock, Sir Beresford (Spelthorne) Maude, Angus Vaughan-Morgan, Rt. Hn. Sir John
Crowder, F. P. Mills, Peter (Torrington) Wainwright, Richard (Colne Valley)
Dance, James Mitchell, David (Basingstoke) Walker, Peter (Worcester)
Davidson, James (Aberdeenshire, W.) Monro, Hector Walters, Dennis
Dean, Paul (Somerset, N.) More, Jasper Ward, Dame Irene
Deedes, Rt. Hn. W. F. (Ashford) Morgan, Geraint (Denbigh) Webster, David
Doughty, Charles Mott-Radclyffe, Sir Charles Whitelaw, Rt. Hn. William
Elliott, R. W. (N'c'tle-upon-Tyne, N.) Munro-Lucas-Tooth, Sir Hugh Wills, Sir Gerald (Bridgwater)
Errington, Sir Eric Nabarro, Sir Gerald Wilson, Geoffrey (Truro)
Eyre, Reginald Neave, Airey Wolrige-Gordon, Patrick
Farr, John Nott, John Wylie, N. R.
Glover, Sir Douglas Osborn, John (Hallam) Younger, Hn. George
Gresham Cooke, R. Page, Graham (Crosby)
Grimond, Rt. Hn. J. Pardoe, John TELLERS FOR THE AYES:
Gurden, Harold Pearson, Sir Frank (Clitheroe) Mr. Anthony Grant and
Hall-Davis, A. G. F. Peel, John Mr. Bernard Weatherill.
Harris, Frederic (Croydon, N.W.) Percival, Ian
NOES
Abse, Leo Bishop, E. S. Buchanan, Richard (G'gow, Sp'burn)
Alliun, Frank (Salford, E.) Blackburn, F. Butler, Herbert (Hackney, C.)
Archer, Peter Blenkinsop, Arthur Cant, R. B.
Atkins, Ronald (Preston, N.) Boardman, H. Carmichael, Neil
Atkinson, Norman (Tottenham) Booth, Albert Carter-Jones, Lewis
Bagier, Gordon A. T. Bowden, Rt. Hn. Herbert Coleman, Donald
Barnett, Joel Boyden, James Concannon, J. D.
Beaney, Alan Braddock, Mrs. E. M. Craddock, George (Bradford, S.)
Benn, Rt. Hn. Anthony Wedgwood Broughton, Dr. A. D. D. Crosland, Rt. Hn. Anthony
Bennett, James (G'gow, Bridgeton) Brown, Hugh D. (G'gow, Provan) Crossman, Rt. Hn. Richard
Binns, John Brown, R. W. (Shoreditch & F'bury) Cullen, Mrs. Alice
Dalyell, Tam Hughes, Rt. Hn. Cledwyn (Anglesey) Padley, Walter
Darling, Rt. Hn. Ceorge Hughes, Emrys (Ayrshire, S.) Page, Derek (King's Lynn)
Davidson, Arthur (Accrington) Hughes, Roy (Newport) Palmer, Arthur
Davies, Dr. Ernest (Stretford) Hunter, Adam Pannell, Rt. Hn. Charies
Davies, G. Eifed (Rhondda, E.) Hynd, John Parker, John (Dagenham)
Davies, Ednyfed Hudson (Conway) Jackson, Colin (B'h'se & Spenb'gh) Pearson, Arthur (Pontypridd)
Davies, Harold (Leak) Jay, Rt. Hn. Douglas Pentland, Norman
Davies, S. O. (Merthyr) Jenkins, Hugh (Putney) Perry, George H. (Nottingham, S.)
Dempsey, James Jones, Dan (Burnley) Prentice, Rt. Hn. R. E.
Dewar, Donald Kelley, Richard Price, Thomas (Westhoughton)
Dickens, James Lawson, George Price, William (Rugby)
Dobson, Ray Lewis, Arthur (W. Ham, N.) Probert, Arthur
Doig, Peter Lewis, Ron (Carlisle) Rankin, John
Driberg, Tom Lipton, Marcus Rhodes, Geoffrey
Dunnett, Jack Lomas, Kenneth Robertson, John (Paisley)
Eadie, Alex Loughlin, Charles Robinson, W. 0. J. (Walth'stow, E.)
Edwards, Robert (Bilston) Lyons, Edward (Bradford, E.) Rogers, George (Kensington, N.)
Edwards, William (Merioneth) McCann, John Rowland, Christopher (Meriden)
Ellis, John MacColl, James Sheldon, Robert
Ennals, David MacDermot, Niall Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Evans, Albert (Islington, S.W.) Macdonald, A. H. Silkin, Rt. Hn. John (Deptford)
Evans, loan L. (Birm'h'm, Yardley) McGuire, Michael Silverman, Julius (Aston)
Faulds, Andrew Maclennan, Robert Slater, Joseph
Finch, Harold MacMillan, Malcolm (Western Isles) Small, William
Fitch, Alan (Wigan) McMillan, Tom (Glasgow, C.) Spriggs, Leslie
Fletcher, Raymond (Ilkeston) McNamara, J. Kevin Steele, Thomas (Dunbartonshire, W.)
Fletcher, Ted (Darlington) Mahon, Peter (Preston, S.) Swain, Thomas
Foot, Michael (Ebbw Vale) Mapp, Charles Swingler, Stephen
Forrester, John Marquand, David Symonda, J. B.
Fowler, Gerry Mellish, Robert Thomas, George (Cardiff, W)
Galpern, Sir Myer Mendelson, J. J. Thornton, Ernest
Garrett, W. E. Millan, Bruce Tomney, Frank
Gourlay, Harry Miller, Dr. M. S. Tuck, Raphael
Gregory, Arnold Milne, Edward (Blyth) Varley, Eric G.
Grey, Charles (Durham) Mitchell, R. C. (S'th'pton, Test) Walden, Brian (All Saints)
Hamilton, James (Bothwell) Moonman, Eric Whitlock, William
Hamilton, William (Fife, W.) Morgan, Elystan (Cardiganshire) Williams, Alan (Swansea, W.)
Hannan, William Morris, Alfred (Wythenshawe) Williams, Mrs. Shirley (Hitchin)
Harrison, Walter (Wakefield) Morris, Charles R. (Openshaw) Williams, W. T. (Warrington)
Hart, Mrs. Judith Neal, Harold Willis, George (Edinburgh, E.)
Hattersley, Roy Newens, Stan Wilson, Rt. Hn. Harold (Huyton)
Herbison, Rt. Hn. Margaret Noel-Baker, Francis (Swindon) Winterbottom, R. E.
Howarth, Harry (Wellingborough) Noel-Baker, Rt. Hn. Philip (Derby, S.) Woodburn, Rt. Hn. A.
Howarth, Robert (Bolton, E.) Ogden, Eric Woof, Robert
Howell, Denis (Small Heath) O'Malley, Brian Yates, Victor
Howie, W. Oram, Albert E.
Hoy, James Orme, Stanley TELLERS FOR THE NOES:
Huckfield, L. Owen, Dr. David (Plymouth, S'tn) Mr. Joseph Harper and
Mr. Ernest Armstrong.