OFFENCE BY BODY CORPORATE (Hansard, 17 May 2000)

§ Mr. Forth
I beg to move amendment No. 18, in page 1, line 16, after "the" insert "knowledge,".

§ Mr. Deputy Speaker
With this it will be convenient to discuss the following amendments: No. 3, in page 1, leave out lines 17 and 18.
No. 2, in page 1, line 23, leave out from beginning to end of line 3 on page 2 and insert— '(a) a director or company secretary described in the articles of incorporation, and (b) a person purporting to act in either of the capacities above.' No. 4, in page 1, line 25, leave out paragraph (c).
No. 20, in page 1, line 25, leave out "secretary" and insert— 'company secretary (in the terms defined in the Articles of Incorporation)'. No. 21, in page 2, line 2, leave out "purporting" and insert "authorised".
No. 31, in page 2, line 2, leave out "purporting to act" and insert "acting".

§ Mr. Forth
In the light the debate that we have just had, I am tempted to designate this part of the Bill the "Mafia clause". I can conclude only that the description of the clause, "Offence by body corporate", must refer to the Mafia. It has not been suggested yet by the Minister 377 that anything that would usually be known as a body corporate—a corporation or a company—is involved in that activity, but he has suggested, and seems to believe, that he has sufficient proof that the Mafia or some other organised crime organisation is behind it. I say that not in a spirit of levity, but to suggest that the thrust of the clause is either misdirected or directed for reasons that we have not yet been told by the Minister.
In restricting my remarks and in making them as succinct as possible, in order that we may make progress, I wish to explore whether the Minister is satisfied that the words in the clause are sufficient. That is the reason for our amendments. They are part probing and part designed—I hope that he will accept it—genuinely to strengthen the clause. However, it will be up to the Minister, as ever, to satisfy me and my right hon. and hon. Friends and to say whether that is the case. The amendment would add the word "knowledge". We want to be able to demonstrate within the clause that the offence has been committed not just with consent or connivance, but with the knowledge of an officer. That is important to make full sense of the provision.
There are references in the clause to the "director", the "manager" or the "secretary". Again, our concern was that the term "secretary" could be misconstrued and could draw into the net of the offence persons who perhaps should not be drawn in. We suggest the phrase "company secretary", which would provide the necessary elucidation or further expansion suggested by my right hon. Friend the Member for Penrith and The Border (Mr. Maclean).
6.30 pm
We are rather puzzled by paragraph (e), in which the word "purporting" appears. Unless the Minister tells us that the word has a specific meaning and will be specifically effective in terms of the Bill's aims, we propose the substitution of the word "authorised" for the word "purporting"—or, indeed, "acting". We want the legislation to be made more specific and therefore, as we would argue, more effective. I fear that the word "purporting" may not be strong enough or sufficiently focused to give the Bill the effect that I know everyone wants it to have.

§ Mr. Fabricant
I understand why, in his introductory remarks, my right hon. Friend described this as the Mafia clause, but does he now accept that it would not apply to organised crime unless it was committed by a body corporate? Surely it is highly unlikely that any crime organisation would incorporate itself in the United Kingdom. On that assumption, there would be no company secretary and, indeed, no officer of such a corporation.

§ Mr. Forth
That helpful intervention simply exposes the fact that my suggestion that the Mafia might be caught by the clause was somewhat wide of the mark, and I do not want to pursue it unduly. However, one issue lingers. We must know, by the time we have completed the Bill's Report stage and Third Reading, whether it will deal with the Mafia problem—as the Minister introduced it to the debate—and whether the confiscation of hamburger carts will be sufficient to deal with that problem. We will discuss confiscations later, but we are currently dealing with the body corporate.
378 I suspect that, like me, my right hon. Friend the Member for Penrith and The Border wants to be satisfied that the clause as it stands, or as amended if the Minister feels able to recommend any of the amendments, is drafted well enough not just to deal with a problem whose existence we all now acknowledge, but to ensure that there is no risk that an innocent employee might be caught up in a way that was not intended. I am thinking of, for example, the use of the word "secretary". I assume that the Bill means officers rather than employees. I have doubts about the use of the term "manager", but I think the Minister will be able to explain that.
The amendments are intended to be partly probing and partly helpful. I hope the Minister will accept them on those terms.

§ Mr. Maclean
I was very surprised by the drafting of this part of the Bill. I never say that drafting is sloppy, because that usually constitutes unfair criticism of parliamentary draftsmen, and sometimes constitutes unfair criticism of the civil servants who issue those draftsmen with instructions. On this occasion, I simply say that the drafting is slightly odd or obscure. I see what the Minister and the Government are getting at; I just wonder whether the terminology is right to catch the people whom they want to catch. I fear that it could lead to an unfair interpretation in court. I am thinking particularly of the use of the term "secretary" rather than "company secretary", which denotes a legally defined person. My right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) mentioned that.
Amendment No.2 proposes the omission of the examples cited in clause 3(2)—"director", "manager", "secretary", "another similar officer" and a person purporting to act in any of the capacities listed in the paragraphs… My amendment would substitute the words a director or company secretary described in the articles of incorporation, and…a person purporting to act in either of the capacities above. I think that, according to a proper interpretation of company law, my amendment uses the more appropriate terminology. In all company law, the people responsible are the directors of the company involved. When companies are incorporated, they must have directors, and I believe that they must have company secretaries. The company secretary is usually qualified: indeed, I think that a company secretary must be legally qualified under the law.

§ Mr. Fabricant
Will my right hon. Friend give way?

§ Mr. Maclean
I will give way to my hon. Friend, who is about to correct me.

§ Mr. Fabricant
My right hon. Friend is right in saying that a company secretary ought to be qualified, but most company secretaries are qualified in accountancy or are members of an institute. They tend to be accountants rather than lawyers.

§ Mr. Maclean
I am grateful for that correction, but it does not undermine the thrust of my argument that a company secretary is generally a recognised person with a professional qualification—in accountancy, I now 379 gather, and no doubt in company law, rather than that person being a lawyer. There is, however, a world of difference between a company secretary—according to the definition that I understood to be correct and what my hon. Friend informs me is correct—and a secretary. I think that, as drafted, the Bill could lead a court to convict a person who just happened to be a secretary—not a legally qualified company secretary or a company secretary qualified in accountancy; not a shareholder in the business; and not someone who has the authority of a director responsible for the management of a company and for ensuring that its accounts are filed and Companies Acts requirements are complied with; but a girl who just happens to be in a typing pool. I do not mean to be derogatory to ladies in the typing pool—

§ Mr. Forth
Or men.

§ Mr. Maclean
Indeed.
I am led to my conclusion by the fact that the word "manager" appears before the word "secretary". "Manager" is not a term used in Companies Acts either. I think that if the rules of interpretation of courts were applied, a court would conclude that clause 3(2) was trying to catch ordinary employees. It catches the director, then it catches managers of any description. They could be managing directors, but they could also be sales managers, store managers, floor managers, people in charge of hamburger barrows, or cold-store managers. If the Bill catches people who fall under the general description of manager, as opposed to director, the courts could easily assume that it catches people who just happen to be secretaries.

§ Mr. Fabricant
My right hon. Friend raises the spectre of a worrying situation, but I wonder whether he has overlooked the use of the word "officers" in subsection (2). Surely that would rule out the secretary in a typing pool. The reference in subsection (2)(c) to a secretary means an officer of a body corporate, who would be the company secretary under the terms of the Companies Acts.

§ Mr. Maclean
I beg to disagree with my hon. Friend. The Bill says: For the purposes for this section the following are officers of a body corporate. It then refers to a "director", a "manager", a "secretary" and "another similar officer". It says that, for the purposes of the Bill, those people are now to be regarded as officers of a body corporate, which is not the normal interpretation.
I understand some of the reasons behind the legislation. The Government have concluded that some of those involved in this trade are not just big limited companies but partnerships and other funny little businesses, one-man bands, or outfits in which one person is the boss and a few other staff are working for him or her. Some of those other staff might be secretary types or manager types, but they are equally involved in criminality or illegal activity. The Government intend subsection (2) to catch all who are taking part in, or encouraging, such activity. However, if that is the case, the Government should use different terminology.
It would have been acceptable if, in clause 3(1), the Government had used the terminology "with the consent or connivance of any other staff, managers or workers." 380 What is unacceptable to me is the mucking around with the usual interpretation of company law, suggesting that the officers of a body corporate can include those who are rather loosely described as managers, secretaries or other similar officers. What officer is similar to a director, manager or secretary? In the Companies Acts, one knows what "another similar officer" is in relation to a director or a company secretary. The rather vague terminology used in the Bill does not help us on the matter.
As I do not want to take too much time on this group of amendments, I shall move on to my first amendment, No. 3, which is more of a probing amendment than anything else. I can accept the first three lines of clause 3, although, in paragraph (a)—as my right hon. Friend the Member for Bromley and Chislehurst suggests—it might be appropriate to add the word "knowledge" to "consent or connivance". I perfectly well accept that, when an offence is committed as a deliberate act, with connivance or consent, the officers involved—as well as the body corporate, the limited company—should face the penalty.
I do not understand, however, how the offence can be attributable to neglect by an officer. I do not know in what other spheres of the criminal law someone could find themselves in a criminal court because of neglect to comply with an aspect of company law, although I know that, under company law provisions, someone who fails to file accounts or value added tax returns faces the penalty. In this case, however, we are talking about a criminal offence, and potentially an attaching criminal record, because someone in a company—the secretary, the manager or a director—was neglectful in some way in allowing the offence to be committed.
I can envisage circumstances in which someone's trading licence for a hamburger stall has come through for Green park, but not yet for St. James's park, and some manager or secretary says to their people with wheelbarrows or carts, "Off you go—you're off to St. James's park; it's all right, you have a licence there", but gets it wrong. I would say that that was not deliberate connivance—it might be a lack of knowledge—but a simple mistake. Yet, because of the neglect of that secretary in mistakenly directing a staff member to the wrong park, for which she thought that the company had a licence from the Department of the Environment, Transport and the Regions, she might suffer the full penalty of a criminal conviction and a fine of up to £1,000. She would face that penalty because the body corporate and she as a secretary have negligently committed that offence.
The Minister may rightly say that the court would take that into account, and that the police may not charge them but take a sensible view. I am always happy to ascribe to police, including park police, a view that they will always operate with common sense. The only exception to that—this is merely an aside, Mr. Deputy Speaker, or you would promptly rule me out of order—is when one sees pictures of park police on roller-skates, which is their latest device for catching Mafia in the park. I have a such a picture—from the Evening Standardof 13 April—which I may pass to you, Mr. Deputy Speaker, for inspection. Therefore, one sometimes has to question the wisdom of park police—although I am told that the roller-skates are very effective.

§ Mr. Forth
What if the Mafia put on skates?

§ Mr. Maclean
They will no doubt evade the police.
Nevertheless, although we shall give police all credence for having common sense on whether they prosecute a poor secretary because she makes a little mistake in sending the guy to the wrong park and commits an offence, it is our duty as legislators not to give police the opportunity to get it wrong initially. We should not build into the legislation a provision that will lead to police catching the wrong people—those who are not the real ringleaders, company directors or masterminds who may be making £1,200 a day. I may be tempted, in the summer recess, to ask the Minister how one can apply for a licence to sell goods in the park, as it sounds a rather lucrative profession.
6.45 pm
My final amendment, No. 31, deals with "purporting to act", which I think should be substituted by "acting". As my right hon. Friend the Member for Bromley and Chislehurst said, it would not be right to prosecute a company because someone falsely claims to be acting in any of the capacities listed earlier in the clause.
It is perfectly right to catch those who are not company directors, managers, secretaries or—if the Government wish—other similar officers, but who are acting in that capacity, actually doing it. Someone in the business may be called "the doorkeeper", "the doorman" or "the garage hand", although those titles are only a cover for his having a very powerful say in the company and the fact that he is the mastermind. In such cases, that person is acting in one of the listed capacities—he is the boss, although he may not have that title.
Someone who is acting in a listed capacity should be caught. What concerns me, however, is that there may be people who falsely claim to be acting in the capacity of boss. I cannot understand the wisdom of simply adding the word "purporting" when I think that the Government really want to catch people who are genuinely doing the acting and perhaps passing themselves off as someone else.
It is a small group of amendments, and we have not dealt with them at great length; there is much more that we could say. There are, however, a few serious points in them. I summarise those points by saying that I am still intrigued by the terminology that the Government have decided to use in the legislation, particularly in clause 3(2). I should like reassurances on the matter from the Minister, who was exceptionally kind and courteous in replying to the first group, thereby persuading my right hon. Friend the Member for Bromley and Chislehurst and I not to press them to a vote. We were persuaded by the strength of the Minister's arguments, which shows the importance of having exploratory amendments and a good ministerial reply.
I hope that the Minister will be able to convince us on this occasion also, so that we shall be able to make some progress—especially as there are some considerable things that I should like to say in speaking to the third group of amendments. There may be issues in that group that we wish to press further. Now, however, I should be happy to hear the Minister's reply.

§ Mr. Alan Howarth
I appreciate the spirit in which the amendments in this group have been dealt with by the right hon. Members for Bromley and Chislehurst (Mr. Forth) and for Penrith and The Border (Mr. Maclean). I think that, principally, once again, they are seeking clarification and reassurance that the terms in which the Bill is drafted are appropriate.
In amendment No. 18, the right hon. Member for Bromley and Chislehurst has actually sought to strengthen the Bill's provisions. I put it to him that his amendment would be excessively draconian—to use a term that we used in our first debate—in its effect, because it would make liable to prosecution an individual who had any knowledge of a certain state of affairs, regardless of the extent to which that individual could be held personally responsible. It could render officers of a company liable to conviction in cases in which it is unreasonable that they should be punished at all.
The type of cases that amendment No. 18 would add are ones in which a person had attempted, unsuccessfully, to prevent a misdeed—although they knew about it, they were ineffective in being able to deal with it—and various other cases in which someone who had some knowledge was powerless to be effective. I think that that would be unreasonable. I believe—as I hope to persuade Opposition Members—that, as drafted, clause 3(1) covers all the levels of action or inaction by an officer that are appropriate to prosecute.
The right hon. Member for Penrith and The Border has just spoken to amendment No. 3, which he explained was intended as a probing amendment. We need to make provision to deal with negligence. The amendment would restrict the circumstances in which an officer of a company may be convicted of a park trading offence to those in which he has consented to or connived at the commission of the offence by a body corporate. Clause 3(1) provides that if a body corporate has been convicted of a park trading offence and an officer is proved to have consented to or connived at it, or the offence is proved to be attributable to the neglect of the officer, that officer will be liable to prosecution. That additional provision is important.
The amendment would weaken the Bill by excluding from prosecution an officer or body corporate who was negligent. The negligence might be in failing to realise that the body corporate was committing an offence, albeit that the officer concerned was in a position of responsibility within that body corporate. The officer could equally not be prosecuted if he knew that the offence was being committed but did nothing to prevent it. I see no good reason why those who have been negligent should get away with it.
On amendment No. 2, the right hon. Gentlemen were concerned that the language that we have used may not be consistent with the ordinary terminology of company law. The amendment would create a loophole, allowing officers who do not hold the formal title of director or company secretary, but who carry out such responsibilities, to escape liability. It would preclude the possibility of prosecuting a manager or anyone purporting to act in such a capacity for the commission of a parks trading offence. Furthermore, it would remove the important flexibility that is currently written into clause 3(2) that provides for the possibility of prosecuting those who do not precisely fit the categories of director, 383 manager or secretary, but who hold similar positions that have effectively the same functions even if they are not formally so styled.
Amendment No. 20 would not add anything to the Bill, although I assume that it was intended to clarify matters. I am advised that the word "secretary" would be interpreted by the courts to mean company secretary in this context. The amendment would create a loophole by defining the term "company secretary" only by reference to the articles of incorporation, with the result that someone who was effectively company secretary but was not formally styled as such would fall outside the scope of the Bill and would escape criminal liability.

§ Mr. Fabricant
Will the Minister give way?

§ Mr. Howarth
No. I should like to carry on because we have a little business to transact before 7 pm and the hon. Gentleman has already spoken a certain amount.
Amendment No. 21 would restrict the class of person who may be considered to be an officer of a body corporate by excluding those who were purporting to act as a director, manager or secretary but did not have the authority to do so. The right hon. Member for Bromley and Chislehurst seeks to change the word "purporting" to "authorised". The amendment would achieve nothing positive. The persons authorised to act in the capacity of officer are already provided for in clause 3(2)(d). The amendment would preclude the possibility of prosecuting those who purport to act as an officer without the authority to do so. I cannot see why such individuals should escape liability.
Finally, amendment No. 31 would not improve or clarify the Bill. Persons acting in the capacity of officer are already provided for by clause 3(2)(d). Like amendment No. 21, it would preclude the possibility of prosecuting those who purport to act as an officer without the authority to do so. It is again unclear why such a category of individual should escape liability.
Having heard those explanations, I hope that the right hon. Gentlemen will not press their amendments.

§ Mr. Forth
When I looked at the clause and set about drafting my amendments, I suspected that I might get into difficulty because I was encroaching on a narrow, legalistic area. My right hon. Friend the Member for Penrith and The Border (Mr. Maclean) may have felt the same, although he has much more expertise in this area than I have, given his distinguished ministerial experience in a previous existence.
The Minister confirmed my suspicions in the most helpful and positive way. I tried to follow his arguments—he quite properly gave the House a carefully drafted reply of the kind with which some of us are very familiar. He reassured us that clause 3 has been carefully drafted; it is intended to cover all conceivable possibilities in this area. We may want to return subsequently to the Mafia point because I am not sure that the clause would cover it, but it was not intended to do so. The clause is intended to cover more organised operations, rather than sole practitioners or single-person enterprises. I accept the spirit in which that explanation was offered.
384 The Minister has gone a considerable way to reassure us that our unhappiness about the use of the term "secretary" was misplaced, because it is a term of art. My attempt to define it more accurately could have misfired and unduly narrowed the Bill or caused it to lose its focus. I did not quite follow the argument, but I gather that the same was true of the word "purporting", which appears also to be a term of art that I had not fully understood.
We can be reassured by what the Minister has said—that clause 3 strikes a reasonable balance, being broad enough to cover those who should properly be encompassed within the Bill and avoiding being too narrow to miss those whom we might wish to catch. I thank the Minister again for his care and courtesy in replying to the amendments. In the light of what he has said, I beg to ask leave to withdraw the amendment.

§ Mr. Maclean
I beg to move amendment No. 6, in page 2, line 4, leave out clauses 4 and 5.

§ Mr. Deputy Speaker (Mr. Michael Lord)
With this it will be convenient to discuss the following: Amendment No. 28, in clause 4, page 2, line 13, at end insert— '(4) Where a park constable exercises his powers under subsection (1) above he shall—

(a) ensure that he provides facilities for the safe removal from the park of any perishable material by the person having possession or control;

(b) give to the person having possession or control a document, in an appropriate language, setting out the reasons for the seizure, itemising the things seized and informing the person of his rights and liabilities under section 5; and

(c) not remove any article until he has performed an assessment under the Control of Substances Hazardous to Health Regulations that the removal of the thing or things would not create a hazard for his or others' health and safety.

(5) The document referred to in subsection (4)(b) above shall comply with the model in Schedule (Document relating to seizure of property).'. Amendment No. 22, in clause 5, page 2, line 20, after "at", insert "or before".
Amendment No. 23, in page 2, line 26, at end insert— '(3A) Proceedings arising from subsections (1) to (3) (including appeals) shall be concluded within a period of three months, after which the charges shall be withdrawn, or appeal deemed to have succeeded.'. Amendment No. 24, in page 2, line 30, leave out from first "of" to second "of" and insert— '60 days beginning with the date of the initiation'. Amendment No. 25, in page 2, line 35, at end insert— '(5A) If the Secretary of State has retained a thing under subsection (3)(b) for the period of 60 days from the initiation of proceedings relating to the offence (including any appeal), he shall return it to the person from whom it was seized.'. Amendment No. 7, in clause 6, page 3, line 2, leave out from "anything" to end of line 8 and insert— 'which the court believes to have been used in commission of the offence to be forfeited and dealt with in a manner specified in the order.'.