HC Deb 26 February 2002 vol 380 cc647-72
Mr. Grieve

I beg to move amendment No. 57, in page 148, line 36, at end insert— '(3) No powers conferred by this Part are exercisable in relation to any property which is, or represents, property obtained through unlawful conduct prior to the coming into force of this Part.'.

Mr. Deputy Speaker

With this it will be convenient to discuss the following amendments: No. 201, in clause 250, page 149, line 10, leave out— 'decide on a balance of probabilities' and insert— 'give the benefit of the doubt to the person whose property is the subject of these proceedings in deciding'. No. 60, in page 149, line 10, leave out— 'on a balance of probabilities' and insert— 'to the standard of proof applicable in civil proceedings'. No. 59, in clause 252, page 149, line 30, leave out "thinks" and insert— 'has reasonable grounds to believe'. No. 61, in page 149, line 31, at end insert— '(1 A) No proceedings may be taken by the enforcement authority in relation to property where there has been a previous positive finding in relation to a defendant in confiscation proceedings pursuant to section 6 or 162 and the property that was the subject matter of the proceedings under section 6 or 162 includes the property sought to be recovered under this Part.'. No. 163, in clause 253, page 150, line 3, leave out "thinks" and insert— 'has reasonable grounds to believe'. No. 164, in page 150, line 4, at end insert— '(1A) No proceedings may be taken by the enforcement authority in relation to property where there has been a previous positive finding in relation to an accused in confiscation proceedings pursuant to section 94 and the property that was the subject matter of the proceedings under section 94 includes the property sought to be recovered under this Part.'. Government amendments Nos. 133, 114, 286, 287, 235, 115 and 116.

Amendment No. 202, in clause 282, page 164, line 19, at end insert— 'or if the property was acquired more than 6 years before the date on which the proceedings were commenced'. Government amendments Nos. 117 to 119.

Amendment No. 62, in clause 287, page 167, line 31, at end insert— '(1A) If any other person has suffered a loss or damage as a result of an interim receiver or interim administrator dealing with his property in the reasonable but mistaken belief that he was entitled to do so in pursuance of an interim receiving order or interim administration order, such person may apply to the court for compensation'. Government amendments Nos. 120 and 128 to 131.

Amendment No. 58, in clause 316, page 184, line 13, leave out subsection (3).

Mr. Grieve

This part of the Bill concerns civil recovery. As the House will be aware from our discussions on Second Reading, it is the intention that, in circumstances in which people have committed no offence whatever, a process can be initiated by the director that aims to seize their assets on the basis that it can be shown on the balance of probabilities that they have been gained as a result of criminal conduct.

The proceedings are not so much against the person as against the assets. The tainted nature of the assets is the key to whether they are liable to seizure and confiscation. It emerged in Committee as we considered part 5 that the process under civil recovery should not be considered akin to that which one might expect in normal civil litigation between citizens in England and Wales. In fact, it is wholly dissimilar. It is a process of administrative law by which the state sets out to recover assets that it believes to have a criminal origin. The scales are weighed in a way that is wholly different from what happens in ordinary civil proceedings. This is not a case of two people with competing rights going to court. It is a procedure initiated by the state against assets but, in reality, it affects the individuals holding those assets. It can have serious consequences for those individuals, who can suffer eventual bankruptcy. The procedure also attracts adverse publicity, but the Government have always treated the matter as a civil procedure.

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After the Standing Committee had concluded its consideration of part 5, the Joint Committee on Human Rights provided a helpful and illuminating report on the Bill's compatibility with human rights legislation. The Joint Committee contains a number of members who are well versed in human rights law. Its report expresses serious doubts about whether part 5 is a civil procedure. I share those doubts, and that view became firmer as we scrutinised the Bill in Committee.

If it is true that part 5 is not a civil procedure, a glaring difficulty is that it is retrospective in operation. It concerns not only assets that may be acquired after the legislation comes into force, but assets that may have been acquired, subject to the 12—year limitation period, prior to that date.

Amendments Nos. 57 and 58, the first and last amendments in this group, deal with that matter. Amendment No. 57 proposes that a new subsection (3) be added to clause 249 on page 148. That clause deals with the general purposes of part 5, and the proposed new subsection states: No powers conferred by this Part are exercisable in relation to any property which is, or represents, property obtained through unlawful conduct prior to the coming into force of this Part. Amendment No. 58 applies to clause 316, which is a definitions clause. The House will see that that clause allows for retrospective application, and the amendment would delete subsection (3), which states: For the purpose of deciding whether or not property was recoverable at any time (including times before commencement), it is to be assumed that this Part was in force at that and any other relevant time. I suppose that a pernickety person might argue that amendment No. 58 on its own would have the effect of removing the retrospective element from this part of the Bill, but it seemed wise to spell out, by means of amendment No. 57, what the House was trying to achieve.

If the Minister believes that the Joint Committee on Human Rights is mistaken, he must provide a detailed analysis this evening of his reasoning. I am mindful that time is pressing, so I do not want to read out the details of the Joint Committee's recommendations. However, the report specifically draws the matter to the House's attention. Paragraph 26 states: In accordance with its view on the classification of civil recovery proceedings, the Government consider that they are not proceedings for a criminal offence or a penalty, and so do not engage the right to be free of retrospective penalties under ECHR Article 7. For reasons which we have already developed, we disagree. The Government accepts that, if it is wrong on the classification issue, the civil recovery provisions would violate ECHR Article 7 because of their retrospective operation. We draw this matter to the attention of each House. That is a serious issue. The Minister has put his imprimatur on the Bill to say that it is ECHR compatible, but the Joint Committee set up—ultimately—under the aegis of the Government to provide scrutiny of human rights law, takes the opposite view. It would be much better for the reputation of this House if that conflict could be resolved here rather than subsequently in the courts.

One approach would be to say that, if in doubt, the House should err on the side of seeking to uphold the principles of the Human Rights Act 1998, which only so recently incorporated the ECHR into our law. The Government gave it a fanfare of publicity, and I am sure that the Minister would not want to go down in history as one of the early examples of non-compliance with the 1998 Act.

I have read the Joint Committee's report carefully, and I am bound to say that I favour its view. Everything that I have seen about the civil recovery provisions leads me to believe that they have nothing to do with ordinary civil litigation.

Three other amendments in the group tabled by the official Opposition merit consideration. They are part of a package, and allow the House to take a global view of the principles involved in part 5. Amendment No. 60 applies to clause 250, and addresses the question of what the tests in the proceedings should be to determine whether the assets arise from unlawful conduct. Unfortunately, we have not had an opportunity to look at the matter in detail in relation to confiscation, but the Government insist that the correct test in this case is the balance of probabilities.

My view, which was shared in Standing Committee by other hon. Members, is that the proper test should be the standard of proof applicable in civil proceedings. Generally speaking, that standard of proof is the balance of probabilities. That is how most issues are resolved. For example, if I am run over by a car and sue the driver, the question of whether he is responsible for my injuries through his negligence will be decided on the balance of probabilities.

However, because it is also well established that allegations are made in civil litigation that are tantamount to allegations of criminal conduct, the courts have developed principles for a higher test. That is because of the gravity of the allegations. Indeed, the test has been known to rise, effectively, to the criminal standard.

I take the view that when Parliament is initiating such a profound legislative change, it would be wise to allow a measure of discretion to the judiciary to develop, by practice, the appropriate standard within civil litigation to apply. Given the draconian nature of the consequences to the individual of the director establishing that assets have been unlawfully gained, it would be correct to allow the standard of proof applicable in civil litigation proceedings to apply.

We had a long discussion about this and I do not wish to go over it again. However, I have deep anxieties. I was concerned in Committee that, as these are not ordinary civil proceedings, the standard of proof should not simply be the same as that which applies in a county court if someone has been injured by a motor car through someone else's negligence.

It is not for us, as a Parliament, to set the way in which judges develop the standard of proof. If the judiciary wish to stick to the balance of probabilities, they can do so. If they wish to evolve a fresh or new test at an intermediate level, they should be allowed to do so. We are fettering them, and I am concerned that that may lead to injustice. I am also concerned that it may lead to the erosion of the Bill's compatibility with the Human Rights Act 1998. For that reason, I commend amendment No. 60 to the House.

Amendment No. 59 raises a fundamental issue that my hon. Friend the Member for West Dorset (Mr. Letwin) touched on when the matter was discussed on Second Reading. Clause 252 states: Proceedings for a recovery order may be taken by the enforcement authority in the High Court against any person who the authority thinks holds recoverable property. My hon. Friend expressed consternation at the presence of such a word in a Bill setting out the requirements on which a judicial process should be initiated. The word "think" does not imply much at all. There should be a higher standard and burden on the director before we start dragging people through the civil courts and, as I said on Second Reading, exposing their entire finances to public scrutiny in a way which may ultimately prove unjustified.

Mr. Mark Field

I would be interested if my hon. Friend could go into some detail about this. I am also concerned that a "think" test will be applied rather than any of the other tests that would apply to similar civil or, indeed, criminal proceedings. Can my hon. Friend go into detail about other legislation in which such a test is believed appropriate before draconian action is taken?

Mr. Grieve

I am grateful to my hon. Friend for his intervention. I do not claim great expertise in reading legislation, except possibly in relation to this Bill. I simply believe that it is rather an unusual term to use in relation to an administrative judicial process for the recovery of property against individuals.

Coming back to my analogy about being run over by a motor car, if I think that the driver was negligent, I may choose to initiate proceedings. I suppose that is where the Government's notion of the director "thinking" comes from. I certainly do not need to do more than that—whether I am justified in thinking that, only the judicial process may expose. There are a number of safeguards as the process unravels, so that if I have no case, it may become increasingly difficult to sustain it.

The thing about part 5 is that these are not ordinary civil proceedings—they are heavily weighted in favour of the state. The state has power: it can put in the receivers and it can confiscate and hold the assets, pending final determination. The state is given a range of weapons—for, I might add, perfectly valid public policy reasons—but it is important that they are not deployed without good and sufficient reason. That is why to change the test to one of "reasonable grounds to believe", thereby allowing for the possibility of review or criticism if proceedings are initiated when there could not have been said to have been a reasonable ground to believe, would be an appropriate safeguard to ensure that the assets that are pursued and the people who are roped along in the process are not unfairly or unjustly victimised. As the Minister acknowledged in Committee, the legislation will work if the public see the recovery of assets and the targeting of individuals who are palpably suspected of criminality, but who have never been nailed down through the ordinary criminal process. If people run to the courts and disappear off to Strasbourg, complaining that their rights to privacy, family life and property are being interfered with by an all-encompassing state agency with enormous powers—that is what we are creating—our process of law and the House that introduced such legislation will be brought into disrepute. It is precisely that outcome that I want to avoid.

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I am sure that the Minister's views and mine are absolutely identical when it comes to the legislation's desired outcome. However, I am anxious that, in their overwhelming desire to leave no loopholes by which devious criminals might suddenly escape, the Government have done rather more than close them. They have created a one-way system from which, potentially, there is no exit for the innocent until a lot of damage has been done. Amendment No. 59 goes a long way towards dealing with that issue and I commend it to the House.

Amendment No. 61 would amend clause 252, which, as I have said, states: Proceedings for a recovery order may be taken by the enforcement authority in the High Court against any person who the authority thinks holds recoverable property". The amendment, which would add a new subsection (1A), states: No proceedings may be taken by the enforcement authority in relation to property where there has been a previous positive finding in relation to a defendant in confiscation proceedings pursuant to section 6 or 162 and the property that was the subject matter of the proceedings under section 6 or 162 includes the property sought to be recovered under this Part. I apologise if that is a bit of a mouthful, but I was conscious in Committee that the amendment that I drafted then was deficient. I sought then, as I do now, to prevent double jeopardy, but I appreciate that the original amendment— shall return to this point in a moment—might have had the unforeseen and unintended consequence of creating a loophole.

The House must ask itself whether it thinks it right in principle that it should be even theoretically possible for the Assets Recovery Agency to tell a person pursued in confiscation proceedings in relation to a particular asset—where the burden of proof is reversed and the asset is excluded from confiscation at the end of that process because the tests were not followed or did not succeed—"Well, we didn't get you that way, but we think we might get you by the civil recovery route." It will be remembered that the civil recovery route will be aimed at the asset, not the individual. I find that highly questionable.

As I said, I am conscious that the amendment tabled in Committee was defective. It had the unintended consequence of preventing civil recovery in a failed confiscation, even though other assets might exist that were not the subject of the original confiscation proceedings. That is why I have worded amendment No. 61 in a slightly convoluted fashion

Mr. Garnier

I understand precisely what my hon. Friend is saying, but I wonder whether he can answer this question, so that I can appreciate the strength of his argument. Would not a court faced with a second claim of the type he has just described consider that there had been an abuse and strike it out on that ground, and of its own volition deal with the evil that he has identified through amendment No. 61? Perhaps he has considered that possibility and dismissed it, but I mention it now so that we can include it in our discussion

Mr. Grieve

My hon. and learned Friend makes a good point. I find it difficult to say whether that might or might not happen, although my opinion was that there were no grounds for believing that it would. We are creating a statutory framework that, in many respects, overrides ordinary principles of criminal and civil law. There is nothing to prevent anyone from embarking on such a double system of recovery. If Parliament thinks that that should not be allowed, it would be wise to spell that out. I am mindful, however, that the area under discussion is not free of pitfalls. I do not wish to create loopholes and will listen carefully to the Minister's response to an amendment that is a variation on a point already raised in Committee.

I do not think that we should rely on the court's ability to strike out proceedings. For example—this may be an argument in the Government's favour—prosecuting someone who is not convicted does not prevent one from bringing civil proceedings for interference with goods if one's house has been burgled. The principle of a civil criminal recovery system is not one with which I take issue.

The problem is that we do not have such a civil criminal recovery system in this case. We are instead creating two parallel administrative law recovery systems, which are hybrids between the civil and criminal. Rather different tests apply to each. One test is onerous because a person is pushed into it if he has certain previous convictions that mean that he can be defined as having a criminal lifestyle. The other is a slightly more difficult test by which the Assets Recovery Agency may have a go at a Mr. Clean who has no previous track record of criminality.

All sorts of choices are open to the director, and the House would be wise to be aware that applying the usual test of whether the system is criminal or civil has little relevance. We are creating an administrative law recovery system for the state against individuals and assets that have a taint attached to them. We must be extremely careful about that, and I shall be grateful to hear the Government's response to amendment No. 61. They may think that the matter can be approached in another way, and I believe that it might be approached through guidelines, so I have a slightly more open mind on amendment No. 61 than on some of the others that we have debated tonight.

I have been on my feet for rather longer than I had hoped, but I had many amendments to put to the House. I hope that we may have a sensible discussion on those and on the Government amendments. In conciliatory mode, I am mindful that the Government are tabling many amendments that address comments and issues raised in Committee. I shall respond further to those amendments in due course, but I am grateful to the Minister for the way in which he has addressed those matters.

Norman Baker

I shall focus on the human rights aspect with which the hon. Member for Beaconsfield (Mr. Grieve) began. I agree with much of what he has said. I hope I do not flatter him too much by saying that if the rest of the Conservative party conducted itself as he does, it might be doing better in the opinion polls and have more seats in the House. He is welcome to use that in his election literature if he wants.

Mr. Hawkins

He can use it against the Liberal Democrat candidate.

Norman Baker

We are probably too far behind to win Beaconsfield anyway.

The impact of the Human Rights Act 1998 is important. I was concerned by the Minister's response in Committee when I asked about the Bill's compatibility with the Act. The Minister referred to that tangentially earlier today. In Committee, he said that the proposal then under discussion was compatible with the Human Rights Act because the Act is to be read in conjunction with the Bill. However, I believe strongly that each piece of legislation should in itself be consistent with the human rights legislation, not least because a future Government—run not by the hon. Member for Beaconsfield, but perhaps by some of his colleagues—might repeal the Human Rights Act. Each piece of legislation must, therefore, of itself be consistent with the Act.

I raise that point because of comments made by the Joint Committee on Human Rights of which I am a member, as is the hon. Member for Redcar (Vera Baird), who is in the Chamber. The hon. Member for Beaconsfield quoted from the Committee's 11th report, which was agreed unanimously by all three parties and both Houses. There was no dispute in the Joint Committee as to the direct language used about the clauses that we are considering.

I shall not read out the whole report, but shall select some portions to which I hope the Minister will respond later. Paragraph 20 of the report states: If domestic law classifies a matter as criminal, it will be treated by the European Court of Human Rights as criminal under the ECHR, automatically attracting all the safeguards accorded to defendants in criminal proceedings. There is agreement on that point. However, the paragraph continues: If domestic law classifies the proceedings as civil, that carries relatively little weight under the ECHR. The reason is that giving domestic classification any real weight would make it too easy for a State to deprive people of the protection of appropriate standards of criminal procedure, merely by reclassifying matters as civil. We are therefore not swayed by the decision in the Bill to characterize the proposed new regime as civil. That was one of the key paragraphs in the report. Another was paragraph 24, in which the Committee concludes: Taking all these matters into account, we consider that the Government's confidence that the civil recovery process would be treated as civil, rather than criminal, for ECHR purposes is not justified. Furthermore, paragraph 26—to which the hon. Member for Beaconsfield referred—states: The Government accepts that, if it is wrong on the classification issue, the civil recovery provisions would violate ECHR Article 7 because of their retrospective operation. I do not criticise the Minister for not giving a detailed response to those conclusions as they were only recently published, but we need him to explain why the provisions would not fail the ECHR test under article 7. Is he confident that the word "civil" is not a misdescription of either a criminal or hybrid system as regards ECHR law?

I turn now to the arguments about the balance of probabilities although I do not want to repeat points made in Committee. The Bill's powers are far reaching. An appropriate balance must be struck. We must ensure that criminals and those who benefit from the proceeds of crime are properly apprehended and charged or have their assets seized, as appropriate; but it is equally important not to do injustice to innocent people by setting standards and thresholds that are so high that they cannot convince the relevant authorities of their innocence.

I am not sure that the Government have got that balance right, especially given my comments and those of the hon. Member for Beaconsfield about the human rights implications. That is why I draw the Minister's attention to our amendment No. 201, although I freely confess that it would introduce a novel form of safeguard. It would replace the words decide on a balance of probabilities with the phrase give the benefit of the doubt to the person whose property is the subject of these proceedings in deciding". We have chosen that form of words because we are confident that the Government would not wish to see a major increase in the threshold, which would defeat their purpose.

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We want to draw attention to the fact that we are uncomfortable with the phrase "balance of probabilities". We are seeking a way marginally to improve the protection for innocent parties without weakening the legislation in a way that would defeat the object of the Bill. That is why we suggest the phrase that we do, which I discussed with John Wadham of Liberty the other day; I hope that the Government will look on it kindly—we are always optimistic.

I fully support amendment No. 59, tabled by Conservative Members. The word "thinks" looks entirely out of place in clause 252. It is the sort of word that some of us might have included in an amendment after being a Member for a couple of months; it is not the sort of word that one expects Government draftsmen or Ministers to use, although I do not blame any individual for using it. I am sure that the Minister will take responsibility for any bad drafting in the Bill.

The suggested alternative phrase—"has reasonable grounds to believe"—appears regularly in legislation and is commonly understood by legislators and those in the courts. It is a reasonable phrase to include. After all, if a person, or an authority, does not have reasonable grounds to believe something, how can he or she proceed? The word "thinks" is a rather looser term, which defies tight description, so I hope that the Government will consider that amendment sympathetically.

I shall conclude my remarks because I want to give other hon. Members a chance to contribute and to ensure that we move on to later groups of amendments, but we are dealing with important issues, especially given the conjunction or interface—to use that dreadful word—with human rights legislation. It is simply not good enough for the Minister to say that the Human Rights Act exists so we should not worry as the courts will deal with such issues later. The Bill should reflect the fact that Parliament has passed the Human Rights Act, not simply as an adjunct but in the Bill itself.

Mr. Garnier

I, too, will be as brief as I can, given what has been said already. I turn first to amendment No. 57. I agree with the hon. Member for Lewes (Norman Baker) that European convention jurisprudence is not concerned so much with what Governments think—if I can use that word—but with the effect of any provision. Certainly on first blush, clause 249 involves a criminal penalty, and to dress it up as part of a civil proceeding does not rescue the Government from that problem. Given that, in effect, a criminal penalty will be exacted, the evil of retrospection ought to be carefully guarded against.

Powers of retrospection seem to be increasingly introduced into this country's criminal law, but as often as not they are confined to serious terrorist activities. I shall be corrected by the Minister who knows an awful lot about this, but I think that the terrorist statutes that the House has passed in the past two or three years are examples of laws where retrospection has been accepted to a greater or lesser extent.

Mr. Davidson

The hon. and learned Gentleman speaks about the evils of retrospection and is prepared to accept them for terrorist offences, but does he accept that more people have been killed in my constituency as a result of drug misuse than by terrorist activity and, therefore, that the significance of retrospection should be considered in that context as well as simply in that of terrorism?

Mr. Garnier

I am not an expert on the hon. Gentleman's constituency or on how people die in it. I dare say that what he says is perfectly true. However, we are not talking about criminal offences but about what the Government claim is civil recovery. If he is right, he should confine his remarks to the criminal law. We should not introduce retrospection into civil law, which this part of the Bill claims to be about.

On the points made by my hon. Friend the Member for Beaconsfield (Mr. Grieve) and the hon. Member for Lewes, the Government should inform us of their view of article 7 of the convention, of which I am sure the hon. Member for Glasgow, Pollok (Mr. Davidson) is aware. If they did, we would be able to understand what lies behind their thought processes in relation to part 5. I do not need to labour those points—they have been made already with considerable force by my hon. Friend the Member for Beaconsfield—but they are there to be answered. I take it that the report of the Joint Committee on Human Rights has recently been published, although I regret that I have not read it. The Government have therefore not yet had a chance to reply in full or had a chance to indicate whether they intend to reply at all. I dare say that somebody will assist me on that.

Amendment No. 60 deals with the question of the balance of probabilities and/or the standard of proof applicable in civil proceedings under clause 250(3). My hon. Friend was right to say at the outset that in all civil proceedings the general standard of proof is based on the balance of probabilities. However, in those proceedings, the judge or jury will be advised to consider a particular allegation in a slightly different way. In my field of defamation, a defendant publisher will often want to allege that it is true that the claimant is guilty of fraud or some other hugely antisocial activity. By and large, the more serious the allegation that is being made, the greater the degree of proof that the court will require to be satisfied that it has occurred.

In the context of a Bill that deals with serious criminal activity—whether it be drug trafficking, money laundering or another serious crime—we are dealing, as a sub-set of that, with civil recovery by the agency of unlawful proceeds, which is, in effect, a criminal penalty. It certainly seems to me that it would be just that the court should not accede to the claim issued by the authority unless the wording of amendment No. 60 were taken into account. To use the expression "balance of probabilities" is, in these circumstances, insufficient. I urge the Government to think carefully about what my hon. Friend has said.

Amendment No. 59 refers to clause 252. There has already been criticism of the use of the word "thinks". Although it is an English word that is easily understood, I am not sure that it is the right one to use in this context. Not all thoughts are necessarily rational or based on evidence or fact; they may be based on other factors. I dare say that the authority—or the director who runs the authority—would not wish to mount a claim on an irrational basis simply because it thought that somebody held recoverable property. None the less, it is an unwise word to use in this Bill even though an element of protection might be provided by the pleadings process that the authority will have to employ to mount its claim. We know that the enforcement authority must serve a claim form, which used to be called a writ, and a particulars of claim, which used to be called a statement of claim. No doubt those two documents—or one document, if one is endorsed on the other—will set out properly the basis on which the case is to be deployed. If that is so, there is no harm in the Bill reflecting the need for something more than thought to be the basis on which a claim is mounted.

My hon. Friend's arguments in support of amendment No. 59 are unanswerable. It would be sensible, wise and just to replace "thinks" with has reasonable grounds to believe". That does not damage the Bill. Indeed, it makes it more respectable. The same could be said of clause 253(1), which relates to Scotland.

My hon. Friend's amendments would not damage or wreck the Bill. Indeed, they would enhance its ability to do what the Government intend. I trust that the Minister, having listened to what my hon. Friend and the hon. Member for Lewes said—even if he ignores what I have said—will conclude that the amendments are good and give them serious consideration. I hope that he accepts them.

Vera Baird

Amendment No. 57 deals with retrospectivity, which is a theoretical issue at the moment and is part and parcel of whether the proceedings are criminal or civil. If what the Government call civil turns out to be criminal, the retrospectivity will make the proceedings incompatible with the European convention on human rights. On the other hand, it is good that we will have the power to seize the proceeds of a crime committed a long time ago or the day before the Bill comes into force. What were criminal goods before that date will retain the quality of criminal goods after it and should be seized. While the procedure remains civil, the problem with retrospectivity is relatively small.

Amendment No. 60 deals with the standard of proof. Current legislation uses the standard of proof that is applicable to civil proceedings. The draft Bill used the same standard of proof. The Government have changed that—if change it be—to the balance of probabilities. The issue is whether the change is cosmetic and whether it matters. Opposition Members said that common law authorities have noted that even if proceedings take place on the civil standard of proof, the fact that the complaint involves a criminal allegation requires that standard to slide upwards in relation to the criminality and the consequences that follow.

Interestingly, having accepted that that principle is right—indeed, I have experienced it and implemented it in court many times and seen the sense of it—we must consider a problem that was recently set out by Lord Bingham in a case in 2001. He said: It should, however, be clearly recognised…that the civil standard of proof does not invariably mean a bare balance of probability … The civil standard is a flexible standard to be applied with greater or lesser strictness according to the seriousness of what has to be proved and the implications of proving those matters. The difficulty is contained in what he went on to say: I have no doubt that, in deciding whether the"— question in respect of truth of criminality— is fulfilled, a magistrates' court should apply a civil standard of proof which will for all practical purposes be indistinguishable from the criminal standard. Granted, the Bill sets out, and the background documentation sets out as a policy, a hierarchy of proceedings so that the choice will be to prosecute on the criminal burden of proof when prosecution is possible and to resort to civil recovery only when it is not. It is not practical for the burden of proof in civil recovery ever to be as high as that in criminal proceedings, or one would not be able to succeed where one had already failed. Consequently, there are real conundrums in respect of the standard of proof.

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I looked, as a good lawyer would, to an evidence textbook to muddy the waters even further. I found in the latest edition of the textbook, that the civil standard of proof and the balance of probabilities were dealt with as though they were exactly the same thing. I comfort myself in this way: under clause 6(7), the court has to decide on the balance of probabilities the issues that arise under that clause, and under subsections (4) and (5) in particular. When it comes to the big decisions to be taken under clause 11, and to whether or not the assumptions should bite—that will be the penal bite of this aspect of the Bill—the court will not have to apply a standard of proof at all. It has to be satisfied that there is not a serious risk of injustice if the director's application is granted.

As I have understood it throughout my practising life, when a judge is considering the question of an injustice, he does not apply a burden or standard of proof on either side; he uses his experience and reason and makes a proper decision. Consequently, the backstop, which encourages me to think that the amendment is not as necessary as it might have first appeared, is that one can, I suspect, leave the balance of probabilities to be applied by the judiciary within the confines of what is acceptable.

Mr. Garnier

Is not the point that the hon. Lady is drawing to our attention that most decisions reached by the courts do not depend on the burden of proof but are much affected by the standard of proof? The burden of proof is who has the duty of proving a particular thing, and the courts are not always very worried about that. They are interested in the quality of the evidence in front of them and the standard to which it has to be proved.

Vera Baird

know what the hon. and learned Gentleman means, but I have argued time and again at the Court of Appeal, when it is eminently in my interest and that of my client to do so and when the issue is injustice, that the burden of proof falls on one side, and I have repeatedly been faced with the answer that it does not. I have been told that when the issue is one of injustice, what is important is the judge's properly reasoned view of what is just and what is not.

As a backstop provision, that comforts me into thinking that however doubtful one might be, there is that difficult conundrum that the civil burden of proof, is capable of rising up until its application becomes wholly impractical. The Government will already have tried to prosecute the person concerned and will be unable, on the same standard of proof, to take away his property under civil recovery proceedings.

I conclude my remarks on this difficult issue by saying that, as long as these are civil proceedings, it is acceptable to leave the question to the judiciary. If they become criminal proceedings, we will have to think again.

Mr. Mark Field

We have spoken at great length on this matter, so I shall keep my comments brief because I shall be interested to hear what the Minister has to say. I agreed almost entirely with the remarks of my hon. Friend the Member for Beaconsfield (Mr. Grieve).

Part 5 has been the crux of Opposition Members' concern, both in Committee and on Second Reading. I fully understand the inevitable frustrations of many Labour Members, which, as usual, were vocally expressed by the hon. Member for Glasgow, Pollok (Mr. Davidson), when individuals are seen to get away with blue murder, or at least with the proceeds of their crime. I hope that Members on both sides of the House accept our concern about many aspects of part 5. I probably go a wee bit further than my hon. Friend the Member for Beaconsfield, who, in his perennially consensual way, talked about our agreement with the main thrust of the proposals. I agree with the basic long-term aims of part 5, but I have deep concerns about the way in which the Government propose to introduce it. As has been said in relation to amendment No. 57 and the issue of retrospective recovery, we are trying to make a civil recovery test when we are dealing with criminal activity. There is therefore great concern that we are muddying the judicial waters.

On amendment No. 60, there is, as a number of Members have said, great concern about using the test of a balance of probabilities, rather than a test based on a decision beyond reasonable doubt. The hon. Member for Redcar (Vera Baird) made an extremely good point that is slightly unanswerable: that if we move towards a test based on a decision beyond reasonable doubt, many other amendments that we may wish to make would inevitably fall away. I entirely understand where the hon. Lady is coming from, but equally I would like the Minister to say something about the proposals in amendment No. 60, which, broadly speaking, rehearses arguments that we made in Committee.

On amendment No. 59, there is understandable concern about the power of the state, which, to many people with a libertarian cast of mind, is being unacceptably extended by the Bill. The state will have an almost overwhelming power; there is an assumption that if an individual is not prepared to tell all and sundry about the state of their bank account and assets they will quickly find themselves under full-frontal assault by a number of different state agencies, not least the all-powerful Assets Recovery Agency. I am interested to hear what the Minister has to say, but the use of the word "thinks" in clause 252 is symptomatic of the state's all-embracing power. At the very least, it should be substituted by words such as "reasonable grounds".

Norman Baker

The words "thinks" is a test that the ARA applies to an individual. It can say, "Well, we did think that", and that is all that has to be satisfied, whereas the criterion in the amendment based on "reasonable grounds to believe" is external and has to be justified and validated by someone else.

Mr. Field

I thank the hon. Gentleman and entirely agree that that is our core concern. I should be grateful if the Minister elucidated other cases in which such power rests with a state organ and in which there is simply a test on its director to think rather than believe or have reasonable grounds to believe.

I shall not harp on, as other Members have done, particularly the hon. Member for Lewes (Norman Baker), about human rights aspects of the Bill. That ground has been covered; Members will know that had I been in the House when it discussed our country becoming a signatory to a lot of European human rights legislation, I would not have supported that proposal. We all want to make sure that the Bill works. Nothing could be worse than finding ourselves in a position where a number of high-profile cases fell through simply because the European court of human rights could interfere, and the legislation became a jamboree for a lot of human rights lawyers. That is not a sensible way forward, particularly given the long-term goals of the Bill and the ideas that have understandably been put in place.

My hon. Friend the Member for Beaconsfield was right that there are no loopholes through which wrongdoers can possibly escape; the risk, however, is that a lot of innocent people will be put through the mill.

On amendment No. 61, concern has been expressed about what is almost a double-whammy in terms of the underlying intention of the Bill. I fear that the Assets Recovery Agency will be put under great pressure to produce results, with an increasing temptation for it or other organs of the state to go through the process of a second prosecution.

Clause 287 deals with compensation—I know that it arises elsewhere in the Bill, but it is obviously specific to part 5. Amendment No. 62 seeks to bring a certain level of justice into play by accepting that a receiver or interim administrator can initiate a course of action without culpability.

Mr. Grieve

In a desire to sit down and allow the debate to progress, I inadvertently failed to comment on amendment No. 62, whose importance my hon. Friend clearly appreciates. He may agree that the reason for that importance is that the Bill as it stands allows a defendant to obtain compensation in respect of a civil recovery, but not a third party that has been affected by the actions of the receiver. As the process is initiated by the state and may leave a third party at a grave disadvantage, that appears rather surprising, as he may agree.

Mr. Field

Something might be said about organ grinders and monkeys—but perhaps I am being a little too harsh on myself. My hon. Friend is absolutely right that the innocent person must be protected. The current provisions establish a convoluted route; in effect, as he says, a defendant can get compensation if his interests have been upset, but a third party will always have to be put into the shoes of a defendant in order to do so. That is why some amendment is necessary to protect the interests of other persons.

Mr. Davidson

I rise to speak with some trepidation, given that so many learned Members have spoken.

The implication in such debates is always that the rest of us are not so learned. Allow me to confirm that prejudice by speaking from a non-legal background, as this is one of those debates where the voice of non-lawyers ought to be heard.

Norman Baker

That includes me.

9.30 pm
Mr. Davidson

The hon. Gentleman is a Liberal, and I am never quite sure what category the Liberals fall into. They certainly have a natural tendency to bore.

I speak as someone who has been generally committed to the principles of civil liberty. For a long time, I was a member of the executive of the SCCL, the Scottish Council for Civil Liberties, so I do not approach these matters from an intolerant point of view. As the hon. Member for Lewes (Norman Baker) and some other hon. Members said, however, we are considering a question of balance. I have heard little to indicate that many hon. Members, especially Opposition Members, appreciate what is happening in the lives of constituents and understand how they are adversely affected by the actions of those whom we wish to pursue by introducing the Bill.

I appreciate that criminals have rights. I accept that they will want to hire the best lawyers whom they can afford to defend them, and that the job of those lawyers is to find loopholes and tricks to get their clients off, even though they might be as guilty as sin and the lawyers might know that. I recognise that that is all part of the game, but it must also be recognised that my constituents have rights. They have a right to expect criminals to be taken off the streets. There are families in my constituency who never go out together because they are afraid not to leave someone in the house, because they know that if they do so it will be broken into by people looking for something to steal and sell in order to feed their drug habit.

I know that some of those points are Second or Third Reading issues, but these matters must be seen in context. The Bill must be considered in the context of the perils and difficulties faced by people outside. I am struck constantly—

Norman Baker


Mr. Davidson

I am struck constantly by the hon. Gentleman, to whom I shall give way.

Norman Baker

There are three categories of people involved here. First, there are the criminals who want to hire the best lawyers, as the hon. Gentleman puts it; that is the category that the Government want to pursue. Secondly, there are the hon. Gentleman's constituents, who are entirely innocent and the victims of crime. Thirdly, there are those who may be innocent but who might be swept up by the provisions of the Bill and who may not be able, if the thresholds are set too high, to escape from the one-way street that the hon. Member for Beaconsfield described. That could include some of the hon. Gentleman's constituents. That is the category of people about whom we are concerned.

Mr. Davidson

I understand that, and I have some sympathy for that position. However, given what I have heard from Conservative Members in particular, I suspect that they are using that group that they wish to defend to try to weaken the legislation in a way that will benefit them and theirs. They are trying consistently today, as they did in Committee, to water down the Bill and to take out its teeth. On these matters, the Tories are soft on crime and soft on criminals, and that is an issue on which I feel strongly.

Looking at amendment No. 57 in terms of plain English, it seems to propose—perhaps I am misreading it—that a defence in these circumstances would be to say, "This money was stolen before the Act came into force, so you can't touch it." That might be a good game for lawyers, but people outside in the real world would regard it as ludicrous. Yet that is what the amendment seems to be all about. The Conservatives seem to want to water down the Bill, to weaken it and to try to draw the teeth from it.

I understand the point about retrospectivity; after all, we must remember that, by his own confession, the hon. Member for Beaconsfield is descended from cattle and sheep thieves and therefore has a vested interest in this matter.[Interruption.] Yes! The other Members on the Conservative Front Bench did not know that, but in his maiden speech he confessed to being descended from cattle and sheep thieves in the Borders. Indeed, as the shadow Home Secretary is here, perhaps I could just mention, Mr. Lord, as it is directly relevant—

Mr. Deputy Speaker

Order. First, the hon. Gentleman must address the Chair correctly. Secondly, I think that he is now in danger of wandering off down—dare I say?—sheep tracks.

Mr. Davidson

I take that point. Last week or the week before, when I was coming into the House, I passed the hon. Member for Cities of London and Westminster (Mr. Field). He gave me a cheery little wave and said, "I'm off to launder some money." I hope that that will also be taken into account when the future of the said Member is discussed. But it would be irrelevant for me to pursue that matter further, so I shall not do so.

Much of the discussion that we have heard from lawyers has smacked of how many angels can dance on the head of a pin. I recognise that the issues are important, but hon. Members ought also to bear in mind the wider circumstances outside. We have a responsibility to ensure that we are not overly self-indulgent, and that we remember the people whom we represent. I am quite clear as to what the people I represent want me to pursue: draconian measures against those who blight their lives.

I hope that the Under-Secretary, who, along with his colleague, the Minister of State, Scotland Office, has been extremely agreeable during this exercise today as well as in Committee, is not going to be too agreeable in conceding too much ground. The Under-Secretary has, of course, got form, having been a Whip in the past, and I know that he wants to demonstrate that he is not just a mindless thug. He wants to show that there is actually a heart there, but I hope that he will not do that by weakening the legislation.

It would be entirely out of order for me to observe that SNP Members are at last back in their places here, despite having played absolutely no part in the work of the Committee, because they chose not to apply to the Liberals for a place on it.

Annabelle Ewing


Mr. Weir


Mr. Davidson

I shall give way to the lady first.

Annabelle Ewing

We have been over that ground and such comments were ruled out of order by the Chair. The hon. Gentleman should respect the wishes of the Chair.

Mr. Davidson

Well, well, well: trying to get protection from the teacher—that is an old one. The hon. Lady has not answered the point and the fact is that the SNP did not ask for a place on the Committee. The hon. Member for Lewes, with whom I do not always agree, is shaking his head, so it must be true.

Mr. Weir


Mr. Davidson

I give way to the other nationalist.

Mr. Weir

As my hon. Friend the Member for Perth (Annabelle Ewing) pointed out, that matter has been discussed in great detail. I worry about the hon. Gentleman, who seems to have an unhealthy obsession with it. It has been well discussed in the debate and he would do better if he commented on the merits of this matter.

Mr. Davidson

I thank the hon. Gentleman for that point, but I, of course, have been able to discuss the merits of this and other matters at considerable length, because I was a member of the Committee. I volunteered to serve, as did many of my colleagues here, but, unless I am mistaken, there was no nationalist on the Committee. Indeed, not a single one of them asked to be on the Committee. If those remarks are out of order, the Speaker would point it out to me.

Mr. Speaker

Order. I have just arrived in the Chamber. The hon. Gentleman's remarks are out of order, because he is implying that the Committee of Selection got it wrong, and he would not want to do that. He is questioning the Committee of Selection procedure.

Mr. Davidson

I certainly would not wish to question the Committee of Selection in any way whatever. Its members are a fine body of men indeed, and women. I was once a member, but my understanding is that the Committee selects only from those who volunteer or are volunteered. As the nationalists were not volunteered—

Mr. Speaker

Order. The hon. Gentleman has got it wrong. Sometimes hon. Members are conscripted. We will now speak to the amendment, and if he does that there is no way he can go wrong.

Mr. Davidson

I shall conclude. I was tempted to say "finally", but, as the hon. Member for Surrey Heath (Mr. Hawkins) knows, when a Member uses that word he is often only 40 per cent. through his speech and wants to give the audience hope.

I hope that the Minister does not weaken on the legislation in any way. There are teeth in it and it is essential that they remain, because there are serious people out there who need to be bitten.

If people in my community and in the communities represented by many other Members who have considered the Bill are to be safer, action must be taken against the major criminals who curse our society and, indeed, against their collaborators. Those criminals could not survive without the collaboration of some lawyers, accountants, bankers and others in the financial community. The sooner the legislation goes through the House and starts to bite the criminals and their allies, the better.

Mr. Wilshire

I am delighted to follow the hon. Member for Glasgow, Pollok (Mr. Davidson) and pleased to see that he is back on form. I can only conclude that he has recovered from his beloved Scottish rugby team's defeat at the hands of the English. I am glad that he is better and over it. I am also pleased that he made his little speech about watering down provisions only once, because that means that I have to say only once that the amendment is simply an attempt to make the Bill fair and just and nothing to do with watering it down. I think he understands that, but he prefers to suggest that he does not.

Mr. Tom Harris (Glasgow, Cathcart)

Does the hon. Gentleman not accept that amendment No. 57 specifically aims to water down the legislation by ruling out retrospection? It would therefore give any criminals with an eye on the Chamber plenty of notice and allow them to hide their ill-gotten gains if they so wish.

Mr. Wilshire

I do not agree one little bit. The amendment would introduce fairness and justice, exactly as I suggest, when draconian measures, which are neither fair nor just, are being proposed by the Government. The hon. Member for Glasgow, Pollok made a remark with which I agree: there is a point when a layman's common sense may add to the erudition of the lawyers, who are being technical and wise.

It is blindingly obvious to me, as a layman, that although what we are discussing is entitled "Civil recovery", it is actually all about criminality. We are discussing confiscation and seizure, which are penalties for criminality. Seizing or confiscating in this context is not a civil matter. It is a penalty, arising in this instance from assets acquired criminally. If such assets are to be seized, sooner or later it must be demonstrated that they were the proceeds of crime. As a layman, I am struggling to understand what civil recovery and civil law have to do with criminality.

My hon. Friend the Member for Beaconsfield (Mr. Grieve) gave another reason for supporting the amendment when he pointed out that, under the Bill as it stands, it would be possible to go back 12 years to seize assets. Even if we accept that retrospection should be possible, that is surely excessive. Anyone seeking to defend himself against the seizure of business assets—the chances are that a business will be involved somewhere, rather than stashes of £5 notes all over the place—is unlikely to have records going back further than six years, because that is the point at which the Inland Revenue says that it is not necessary to keep them.

I hope the Minister will explain in detail why he and his advisers reached the opposite conclusion from the Joint Committee. We are aware that there is a difference of opinion between two groups who have studied the same facts, and I think it entirely proper that Parliament should resolve the issue rather than passing legislation that we know will require judicial sorting out. If we are to sort it out, however, the Minister must give us the facts.

Amendment No. 60 also strikes me as reasonable. I do not see it as a watering down; I see it as allowing the courts to do what they are good at—using their discretion on the basis of the facts before them in each case. The Government seem to be trying to make the courts into a rubber stamp. They want to say "We, the Government, wish this to happen; you, the court, will do what you are told rather than what you consider to be just and fair.

" As my hon. Friend the Member for Beaconsfield said, there might be grave circumstances in which it would be appropriate to increase the burden of proof. Some of the consequences of action taken under civil recovery provisions may involve the loss of irreplaceable assets. Under the Bill, seized assets can be sold ahead of a resolution of the issue. In that event, assets that could not be replaced because they were unique would disappear.

Grave consequences could also arise from the seizure of business assets. The owner of the business might lose trade—a part of his livelihood—that could not be recovered later. That would probably mean the closure of the business even if the attempt to confiscate the assets ultimately failed. In those circumstances, too, the burden of proof should be increased.

In an earlier debate this evening, we discussed the possibility of spouses and children being made homeless. If ever there was something that was grave and serious, it is that. I would argue that the burden of proof in such issues should be higher than is proposed in the Bill.

9.45 pm

My hon. and learned Friend the Member for Harborough (Mr. Garnier) made the fair point that not all thoughts are factually based. I would go one stage further and say that not all thoughts are of themselves guaranteed to be just and fair—the argument that I have used on the other two amendments. If the director "thinks" unjust or unfair thoughts, he still thinks them. Under the Bill, that gives him the power to act. That cannot be right.

In Committee, the hon. Member for Glasgow, Pollok asserted that the simple act of carrying £25,000 in cash was almost proof of criminal activity. He felt that that would be proceeds of crime because he could not conceive of anyone under any circumstances carrying such an amount unless they were criminals. In that example, the hon. Gentleman "thinks" that he has the evidence that he needs to take action. What appeal can there be against him, as he has simply asserted that that is what he thinks? There can be no appeal against that, which is why we should introduce some concept of "reasonable grounds".

I would not wish to test your patience, Mr. Speaker, by rehearsing the debate we had in Committee about why it is possible to carry £25,000 in cash and not be a criminal. It is important that we are allowed to ask whether the agency has reasonable grounds for believing, rather than thinking, something. That is why I believe that amendment No. 59 should be sorted—I mean supported. [Interruption.] Some might think that it also needs to be sorted; others may think that I should be sorted. The hon. Member for Glasgow, Pollok has said that more than once in Committee.

Amendment No. 61 concerns double jeopardy. The highlight of the day for me is to hear two of my expert legal friends offering two different views of what something means. I would not wish to choose between my hon. and learned Friend the Member for Harborough and my hon. Friend the Member for Beaconsfield. Afterwards, they can sort out how the court would act, because that is not as important as the principle that there should not be double jeopardy. For the avoidance of doubt, we should support the amendment to ensure that that cannot happen, whatever the court may or may not do.

My hon. Friend the Member for Cities of London and Westminster (Mr. Field) was right to say that amendment No. 62 is also important. The principle of paying compensation when things go wrong is established and accepted by the Government. It is important that that should be fair and just to all those people who are involved. It is perfectly possible to have a partnership of several people where all but one of them are totally innocent and ignorant of what one partner is doing. If action is taken against one of the partners and subsequently fails, that single partner, under the Bill, will have some redress by way of compensation. If the business has been disrupted by seizure and by the failure of that action, all the partners in the business will suffer equally, but the Bill will allow only one to receive compensation.

A great deal more could be said, and it might be useful to hear the Government's view of their amendments. We may well wish to debate those but, for now, I shall just say that I should like to return to the matter if the Government provoke me on their amendments.

Mr. Stinchcombe

I speak with some trepidation, standing in front of my hon. Friend the Member for Glasgow, Pollok (Mr. Davidson), because I am a lawyer who practised in part in human rights law, and many of my former colleagues are in Matrix chambers. We have to be careful to ensure that the Bill is fully compatible with the European convention and the Human Rights Act 1998, which I spoke in favour of, as did the hon. Member for Beaconsfield (Mr. Grieve), the only difference being that I voted for it and he refused to do so.

There is a tension between the Bill and some elements of the Human Rights Act, as can clearly be seen in some of the different definitions of unlawful and criminal conduct. Close examination of those provisions shows that the Government are striving to ensure that the hierarchy of procedures and processes that they are setting up is fully compatible with the Act, targeting different remedies at different behaviours in an appropriate way. There is clearly some tension, so we must be especially careful in our scrutiny.

We must give full credence to the three categories of persons talked about by the hon. Member for Lewes (Norman Baker): we want to confiscate unlawful proceeds from the guilty while protecting both the victims—the people who die of drug addiction and those whose property is stolen by drug addicts—and the other innocent people who could get swept up in the process. We must strike that balance.

Opposition Members say that the amendment does not water down the Bill, but it clearly does. It precisely targets people who are guilty and puts them outside the parameters of the legislation. In terms, it targets people who have property that is the proceeds of unlawful conduct and exonerates them from having that property recovered under the civil procedure. That simply cannot be right.

The hon. Member for Beaconsfield spoke about that part of the Bill being a close from which the innocent should be able to escape, but the amendment would make it a road that the guilty never enter.

Mr. Ainsworth

I will not be able to go into detail on all the amendments, not because they are not worthy of discussion but because we walked all over most of this ground in Committee at great length. However, I want to deal with the points made by the Human Rights Committee and to go into some detail about the word "thinks", which appears to be exercising Members so greatly.

On amendments Nos. 57, 58 and 202, both the new civil recovery scheme and the expanded cash forfeiture scheme use the concept of recoverable property. By virtue of clause 316(3), the unlawful conduct that generated the recoverable property is not confined to conduct that took place after the commencement of the Act. That will enable the two schemes to have complete and immediate effect, allowing recovery of property that has already been obtained through unlawful conduct when the Act comes into force. To that extent, it has a retroactive effect.

The retroactive effect is circumscribed by clause 291, which imposes a limitation of 12 years. When we introduced the Bill, we did so to tackle a problem that we have now. I believe that it is important—and our constituents would consider it important—for the legislation to begin to bite now, rather than biting slowly over the next six, 12 or however many years. The present legislation clearly does not work well. There is abundant evidence that people are enjoying wealth that they have obtained illegally. The Government at least do not want to create what in effect would be an amnesty, which would be the result of stopping the retroactive operation of the Bill. If the amendment were accepted, people would consider what they possessed to be safe. Lawyers would advise clients, in no uncertain terms, to hang on to what they acquired before the Proceeds of Crime Bill became law, as that could not be touched.

As my hon. Friend the Member for Wellingborough (Mr. Stinchcombe) very capably pointed out, that has nothing to do with protecting the innocent. I accept that Opposition Members have made much constructive comment on the Bill, but on this matter, as on some others, the Opposition leave themselves open to the allegation that they are soft on crime. If they continue to push the line that retrospection in any form should not be allowed, that allegation becomes increasingly justified.

Mr. Grieve

The Minister may be missing the point. I share his desire to seize criminal assets, and to see prosecuted those people who have committed actions that I consider to be reprehensible. However, that does not allow me to pass retrospective criminal legislation. That is a well-established principle, and the Joint Committee on Human Rights has said that it fears that the structure being established by the Bill would do precisely that.

Mr. Ainsworth

I shall therefore move on to the important point, which is not to do with amendment No 57. It was made by my hon. Friend the Member for Redcar (Vera Baird), who spoke about the definition that applies to this part of the Bill, and its consequences. The hon. Member for Beaconsfield (Mr. Grieve) talks about retrospective criminal legislation, and he knows far better than I do that applying that definition to the Bill would cause problems with retrospection.

We believe that the provisions in the Bill are justified. There is no question that retroactivity will be applied to the definitions of what counts as unlawful conduct. We accept that the retrospective nature of the civil recovery proceedings depends on the fact that civil recovery is not regarded as a criminal penalty, for the purposes of the ECHR. That was the central point made by my hon. Friend the Member for Redcar.

We note that the Joint Committee on Human Rights has expressed reservations about the view that the Government have taken—that civil recovery does not amount to a criminal penalty. However, we note also that the Committee accepted that the matter has not been decided conclusively, either way, in existing case law. Civil recovery is, of course, a brand new procedure for the United Kingdom. We continue to believe that civil recovery should properly be regarded as a civil procedure.

Civil recovery is operated successfully in other countries. For example, Ireland, which has accepted the ECHR, has signed up to the same procedures as the United Kingdom. We are not persuaded that the scheme that we have created should be characterised as anything other than civil. As my hon. Friends have said, we have struggled to ensure that we have stayed within that definition and made this part of the Bill appropriate to be classified as civil. We fully understand that these powers are extensive, but we believe that we are on the right side of the line. That is the advice that we have had, and we continue to take that view, notwithstanding the views expressed by the Joint Committee on Human Rights.

10 pm

Norman Baker

I have listened to the Minister carefully. The Human Rights Committee report was published only this month. What steps has the Minister taken to seek legal advice subsequent to the report's publication to check his initial conclusions, which were reached before the report was published?

Mr. Ainsworth

I am not a lawyer, as the hon. Gentleman knows, and neither is he. I have taken legal advice on the Bill, as appropriate, from when I assumed responsibility for it last summer. I continue to take legal advice on the Bill and anything that has an impact on it, and I assure the hon. Gentleman that I will continue to do so. He writes me off as a cavalier person who is not the least interested in human rights considerations but wants only to catch criminals, whatever the expense. That is a caricature. I accept that we have a very real problem and that we need to deal with it. The proportionality and need for the legislation are an important part of the argument about whether it is compliant with the European convention on human rights.

We considered some time ago whether to limit the retrospective nature of the scheme to a defined period of time. Our, preliminary view was that we should not. However, we made it clear in the Command Paper issued earlier this year that we wanted to think about it further.

We concluded that while we wanted to ensure that civil recovery proceedings will be as effective as possible, the introduction of a limitation period would nevertheless be appropriate. We have therefore specified that it should be 12 years.

Amendments Nos. 201 and 60 deal with issues that we tramped all over in Committee. We believe that the balance of probabilities is the appropriate test. Amendment No. 201 contains a formulation about giving the benefit of the doubt to the person whose property is subject to these proceedings. Amendment No. 60 calls for the application of the civil standard of proof.

As we said at length in Committee, the balance of probabilities is the normal standard of proof applicable to civil proceedings. However, some limited civil proceedings attract the criminal standard of proof. Amendment No. 60 would therefore make the position less clear in our view. The wording in the Bill achieves what we intend to do in a way that a reference to the standard applicable to civil proceedings would not. Some civil proceedings, notably the applications for contempt of court, attract the criminal standard of proof.

In Committee, I quoted from Lord Justice Nicholls' comments that the balance of probabilities is not a rigid but a flexible standard. The burden of proof will be on the director to prove his case on the balance of probabilities. In cash forfeiture proceedings, the burden will be on Customs and Excise or on the police to prove on the balance of probabilities.

The wording in amendment No. 201 does not, to our knowledge, appear in any other legislation. Therefore, when clarity is important, it would be highly undesirable to introduce anything into the Bill that would prejudice that clarity.

I want to talk about amendments Nos. 59 and 163 at some length, as there has been considerable discussion about them. Clause 252 gives the enforcement authority the basic power to bring civil recovery proceedings, and it explains what they are for and against whom proceedings may be brought. The person against whom proceedings may be brought is immediately the subject of the obligations imposed on the enforcement authority by clause 252(2)(a). The phrase any person who the authority thinks holds recoverable property therefore explains who the target respondent is, and that civil recovery proceedings are concerned with recovering property from the people holding it.

That phrase does not do what amendment No. 59 seems to want it to do: it does not introduce a free-standing test that the authority would have to satisfy even to start civil recovery proceedings, and which could be used by a respondent by way of an extra round of challenge to undermine the authority's position at the outset. That is not how civil litigation normally works. A claimant does not need to pass the test of having reasonable grounds before bringing a claim.

The director cannot begin civil recovery proceedings on a whim, as was suggested by Opposition Members. High Court proceedings are a serious undertaking. The director is under a statutory obligation to exercise his functions efficiently and effectively. He cannot use public money unreasonably, and in any event, as a public authority he is bound by public and human rights law. He is not allowed to go on escapades of his own. No purpose is to be served by making unnecessary and disruptive preliminary challenges before a case can be looked at properly.

There are two paths down which the authority can travel. If an interim receiving order is to be sought, a good arguable case will have to be made, and if the authority proceeds straight to issuing a claim form, the full basis for the claim must be set out. As soon as a civil recovery action begins to affect anyone, mechanisms are in place to allow a respondent to challenge it.

Amendments Nos. 61 and 164 are unnecessary, because the Bill already provides that a court may not make a recovery order in the circumstances set out in them. Clause 311(9) explicitly provides that property is not recoverable if it has been taken into account in deciding the amount of a person's benefit from criminal conduct for the purpose of making a confiscation order. Clause 282(8) provides that, if property has been taken into account for the purpose of making a confiscation order and the enforcement authority subsequently seeks a recovery order in respect of related property, the confiscation order will be treated as a recovery order for the purposes of the clause. Not only is the original property that was taken into account for confiscation purposes not recoverable; any property that represents the original property is not recoverable either.

In speaking to amendment No. 61, the hon. Member for Beaconsfield suggested that even property considered in confiscation should not be potentially liable to civil recovery. I do not want to discuss that issue now, but he will recall that I wrote to him and the rest of the Committee, setting out at length the argument that property that is considered part of the confiscation case might nevertheless be brought within the ambit of civil recovery. Those arguments have not been refuted.

Government amendment No. 133 deals with an issue raised in Committee. It limits the power of entry to premises to which an interim order applies. I agreed in Committee that the power was too widely drawn and the amendment limits it to entering such premises as may be specified by the court in an interim recovery order.

Government amendments Nos. 114 and 235 provide that any court in which other proceedings are pending in respect of property that is, or may be, subject to an interim receiving order may stay the proceedings or impose its own terms on how they should continue. Before exercising that power, the court must give the enforcement authority and the interim receiver the right to be heard. Amendment No. 114 also requires the court to give any other person who may be affected by the order an opportunity to be heard before it exercises the power, and amendment No. 235 makes equivalent provision for Scotland.

Government amendment No. 286 applies where an interim administrator is to be independent of both parties. It makes it clear that he must not be a member of staff of the Scottish Administration. Amendment No. 287 is purely a drafting change. Amendments Nos. 116 to 119 are technical.

Amendment No. 62 would provide an avenue for compensation to a person whose property is not included in an interim receiving or administration order, but who has suffered loss or damage because the receiver or administrator reasonably, but mistakenly, dealt with his property. We discussed that point at some length in Committee, and I indicated that I would give it further thought. I understand the concern that has been expressed, but I am not persuaded that there is a case for the sort of change that the amendment would make to compensation provisions.

I accept that that may leave a category of persons with no avenue for compensation, but I have difficulty in envisaging circumstances in which that might happen without anyone being liable. Exonerating the receiver from liability in circumstances in which his action was based on a reasonable belief and where he was not negligent in causing loss or damage is the normal position in civil law. Liability normally assumes fault, and strict liability is very much the exception. We do not see the point in putting liability on the receiver in the circumstances outlined.

The question arises of whether we should provide another avenue for compensation. That might happen on the basis that because someone applied for an interim receiving order or administration order, they would be liable if the receiver or administrator dealt with property not covered by the order. The normal position is that a person does not become liable as a result of actions taken in respect of property not subject to proceedings. We would therefore be providing an unusual form of Crown insurance to those affected by the actions of an interim receiver in civil recovery cases if we agreed to the amendment. Compensation provisions in clause 287 mean that civil recovery proceedings follow the normal pattern for civil recovery actions.

The other Government amendments are minor and allow us to update Scottish legislation by bringing it into line with that which applies in England and Wales. They have no effective policy implications.

I ask hon. Members to understand that although the Bill contains many powers, those under part 5 are key to it. If we succeed in keeping them within the realms of civil recovery, they will enable us to take effective action against a group of people who for a long period have managed to put their ill-gotten gains beyond the reach of the law. The powers are needed. They are justified and they will do a great deal in respect of our ability to deal with those matters. Hon. Members raise important issues, but I ask them to consider the other side of the argument.

10.15 pm
Mr. Grieve

The debate has been interesting and I am grateful to the Minister for taking the time to respond to the concerns that were expressed.

I share the hon. Gentleman's desire that assets that result from criminal conduct should be confiscated. He put a persuasive argument in relation to amendment No. 57: I would not want to put in jeopardy the possibility of recovering past assets. However, as he is aware, there is a link between all the amendments that we have considered: the hybridity of the system that we are establishing. That system will not be entirely criminal, administrative or civil. Overall, we retain serious reservations about it.

That is why, in a spirit of co-operation, we shall withdraw amendment No. 57. If the Minister is subject to a retrospective challenge under the Human Rights Act and the whole of part 5 is demolished as a result, we shall be able to tell him that we raised concerns about the matter. I hope that does not happen, however, and I understand the hon. Gentleman's arguments why it will not.

We shall thus ask to withdraw the amendment, but will put amendment No. 59 to the vote. I continue to believe that it is fundamental to the operation of part 5 that the procedure should be seen to be reasonable. Changing the clause by the use of the words "reasonable grounds to believe" is essential both to provide reassurance and to remind the director of the onerous duty placed on him. I ask that amendment No. 59 be put to the vote, but I beg to ask leave to withdraw the lead amendment.

Amendment, by leave, withdrawn.

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