LORDS AMENDMENT TO COMMONS AMENDMENT No. 220 (Hansard, 27 March 1980)

§ Lord LLOYD of KILGERRAN
My Lords, we are dealing with criminal penalties for breach of prohibition of loans, et cetera to directors and connected persons. I suggest to the Government that they should have regard to the fact (as they have indicated) that these clauses are very complex. There are likely to be a large number of loopholes. The attempt of this amendment is to close to some extent any of the loopholes. The Government have a duty to the public in ensuring as far as possible that contraventions of these prohibitions shall be punished in some way. The only way in this clause that punishment can take place is that on conviction on indictment there shall be a term of imprisonment not exceeding two years or a fine, or both. On summary conviction, the punishment would be a term of imprisonment of six months or a fine, or both, not exceeding the statutory maximum.
It is quite easy in these insider dealings for somebody to make £250,000, and he will happily go to prison for a period of two years—less remission—and he able then to pick up his spoils thereafter. This addition to this clause is that the court by or before which the person is convicted of an offence under this section shall on appli- 1064 cation or otherwise make an order requiring payment by way of compensation, restitution or otherwise in respect of any gain, loss or damage resulting from the offence.
I agree that it is often difficult to find out who it is that suffered the loss and who should pay. In many circumstances it will be clear who should pay, particularly when the fellow has been convicted. Again, there is a difficulty of deciding to whom restitution should be made. Perhaps the Government can say that once the person has been convicted on indictment, for example, before a court dealing with criminal matters, then the court has power under some of the criminal administration Acts to make such an order as I have indicated. If the Government can say that is the position, then I will withdraw the amendment. Not many people dealing or proposing to deal in insider dealings who contravene these sections on which there are criminal sanctions will be aware of the scope of the criminal administration. It would be helpful in discouraging these people from contravening the clause if a simple clause of this kind were introduced.

§ Lord LYELL
My Lords, may I thank the noble Lord, Lord Lloyd, for moving this amendment so clearly. The purpose of this amendment is to give the court power to award compensation or restitution in cases where persons are convicted of an offence under Commons Amendment No. 200. The noble Lord mentioned some criminal provision. The criminal courts do, in fact, already have powers to make compensation orders against convicted persons, described by the noble Lord, who have been in breach of the criminal law in matters which he has set before your Lordships. Under the powers of the Criminal Courts Act 1973, I understand that the courts do make compensation orders against convicted persons in such cases as the noble Lord explained. Under the provisions of the 1973 Act, the court has discretion to make an order, and in exercising its discretion it must take into account the means of the person against whom the order is proposed to be made.
1065 I think that really answers the noble Lord's question, in that if it can be shown quite clearly that someone has amassed a very large amount against which the criminal court can act, that is possible under the 1973 Act. But the criminal courts have made it quite clear that the power should be exercised only where the legal position is relatively straightforward. Obviously, it would be very unsatisfactory to use powers of this kind in complex situations involving more than one party. Situations of the kind that we are dealing with in Amendment No. 200 are likely to be very complex indeed. We would not wish to impose on the courts an obligation to grant compensation without giving them any guidelines, first, on how to decide compensation; secondly, who is to request them to do so and, thirdly, what sort of compensation is to be envisaged—is it to be in money or, as we heard earlier, in non-cash assets?
We believe the normal civil procedure is much more suitable for dealing with litigation arising out of situations such as have been described by the noble Lord, Lord Lloyd. In regard to Amendment No. 199 we did clarify civil remedies, and Amendment No. 200 expressly preserves any other remedies, including remedies for third parties, that may be available. I hope that my reply has been of some help to the noble Lord. We are not altogether in agreement that his amendment is likely to be helpful in compelling the criminal courts to award compensation where situations may be very complex. We believe that in these complex situations the civil procedures would be far more effective and more appropriate.

§ Lord LLOYD of KILGERRAN
My Lords, I am very much obliged to the noble Lord for his full explanation of the Government's position; but I should have thought that if the Government were undertaking seriously the task of discouraging this kind of contravention of sections, they would have accepted some clause which would have indicated that if a company or a person has contravened these sections, apart from fines or imprisonment, there was the clear right for compensation or restitution to be made. In the circumstances, I beg leave to withdraw my amendment.