Proceeds of Crime Bill

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Mr. Hawkins: The Minister mentions pension rights. Has he taken any note of the danger that the Secretary of State for Transport, Local Government and the Regions might fall under the purview of the provision because of the loss of pension rights through the reduction to nil of the value of Railtrack shares, which affects all parliamentarians' pensions, and many other people's pensions, too?

The Chairman: Order. Pension rights will be discussed under clause 273. I hope that the Minister will stick to the amendment.

Mr. Foulkes: I certainly shall. I shall not go down that dangerous track, Mr. O'Brien.

The issues that may arise with other sorts of property will therefore not arise. Subsection (3) makes it clear that other, innocent pension scheme members cannot be affected. I hope that in the light of that clear and comprehensive explanation, the hon. Gentleman will withdraw his amendment.

Mr. Hawkins: I shall be mercifully brief. Not even the Prime Minister's spokesman could have accurately spun what the Minister said—both before and after the Division—as clear. Comprehensive it may have been, especially as on several occasions he stopped himself and said, ''I think I've read that bit out already.'' He may not have realised that the first part of his speech was word for word what is already in the explanatory notes, which I had already quoted, so no doubt Hansard will have that passage about four times in its report of this short debate.

When we decided to probe, little did my hon. Friend the Member for Beaconsfield and I know how much of a morass the Government would find themselves in. I do not blame the Minister personally for that, but I believe that he now recognises the accuracy of my comment when I moved the amendment that the drafting was worthy of Sir Humphrey in ''Yes, Minister''. Reading out the brief, the Minister was certainly as confused as Jim Hacker ever was.

Mr. Ainsworth: Does the hon. Gentleman not realise that it was not his probing amendment that caused the difficulty but the brief intervention by the hon. Member for Beaconsfield?

Mr. Hawkins: I am not at all surprised that my hon. Friend's incisive forensic skills should have led the

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Minister into difficulties, because his skills regularly cause difficulties for the Government.

I say to both the Minister and the Under-Secretary that we shall not press the amendment to a Division. It is a probing amendment, but after their difficulties in responding to it, they and their officials should reconsider this part of the Bill and introduce the necessary clarity. The provisions are far from clear at the moment. Because of their over-complexity and lack of clarity, we may return to them on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 250 ordered to stand part of the Bill.

Clause 251

Application for interim receiving order

Question proposed, That the clause stand part of the Bill.

4 pm

Mr. Grieve: This seems a well-drafted clause. I should like an assurance from the Minister that it is what I think it is, and that it follows the usual civil tests for the granting of injunctions. If he can confirm that it is the basis for the application for the interim receiving order, I shall be content. I have a slight anxiety, however, because the clause seems so clear and well-drafted that I may have missed something.

Mr. Hawkins: I agree. That is how the clause appeared to me, too. My question arises not only from the way in which it is drafted, but from the explanatory note. When I practised in the courts, I dealt with many of the Mareva injunctions to which the explanatory note refers. It says that they are still called Mareva injunctions in Northern Ireland, but not on the mainland. I am puzzled by that, because the arrangements that freeze people's assets have always been known as Mareva injunctions on the mainland. The change has happened since I practised in the courts, so perhaps the Minister could shed some light on why the injunctions have been renamed, and why that has not yet happened in Northern Ireland?

Mr. Bob Ainsworth: I can satisfy the hon. Member for Beaconsfield, because the clause provides that an application may be made before, or after, the start of the proceedings for a recovery order. That means that although the civil recovery cases—like all civil recovery cases—will start with the issue of a claim form as provided under the civil procedure rules, there may first be an application for an interim receiving order. The hon. Gentleman is absolutely right. The procedure falls within the normal procedures, and I can give him the clear assurance that he seeks.

The procedures have been renamed under the civil procedure rules. They are now called freezing orders in England and Wales, but the change did not apply to Northern Ireland, where they will continue to be called Mareva orders.

Question put and agreed to.

Clause 251 ordered to stand part of the Bill.

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Clause 252

Functions of interim receiver

Mr. Grieve: I beg to move amendment No. 349, in page 148, line 7, leave out subsection (3).

The Chairman: With this it will be convenient to take amendment No. 385, in clause 260, page 151, line 27, leave out subsection (3).

Mr. Grieve: This clause brings us to the functions of the interim receiver, and in particular, to such liability as he may attract for actions that he may carry out. It is noteworthy that subsection (3) states that if the interim receiver

    ''deals with any property which is not property to which the order applies, and . . . at the time he deals with the property he believes on reasonable grounds that he is entitled to do so in pursuance of the order'',

he will not be personally liable

    ''in respect of any loss or damage resulting from his dealing with the property except so far as the loss or damage is caused by his negligence.''

That must be read in conjunction with clause 282 on compensation. It provides that someone may apply to the court for compensation if they have suffered loss as a result of the making of an interim order.

This is a probing amendment. I do not take great exception to subsection (3). It might be appropriate to provide protection for a receiver, but with regard to clauses 252 and 282, I need reassurance about the link-up and operation of the compensation mechanism.

If an interim receiver has been negligent, will the provisions of clause 282 not apply? To get compensation, instead of going to the court, will the interim receiver have to be sued? I have that in mind because when we discussed confiscation provisions, that appeared to be the case. I also need reassurance that when an interim receiver has made a mistake, anyone who has been affected will be able to claim compensation under clause 282. I think that that is the case, but I am not sure.

The two clauses are clearly linked, and it is important that there should be a compensation procedure. If someone is refused compensation under clause 282, can they still sue the receiver, if they think that he has been negligent, or is the one process mutually exclusive of the other?

Those are the key issues. I am unsure about them, and I do not find the clauses, particularly clause 282, easy to read. I seek clarification from the Minister, so that we can have a debate, if that is necessary.

Mr. Paul Stinchcombe (Wellingborough): I have one short question. Negligence is referred to in subsection (3), but there is no reference to any other kinds of misfeasance, such as dishonesty. What would happen if an interim receiver dealt with property that would otherwise fall within the category, but he did so dishonestly, and thereby caused loss?

Mr. Ainsworth: Clause 251 provides for an interim receiving order for the detention, custody and preservation of property, and for the appointment of an interim receiver.

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Clause 252 sets out the functions of the receiver. Subsection(3) provides legal protection for the interim receiver if he mistakenly, but without being negligent, deals with property that is not the property specified in the order, and causes loss or damage to that property. The term ''dealing with property'' includes disposing of it, taking possession of it, or removing it from the United Kingdom. Amendment No. 349 would remove the protection that is currently afforded to an interim receiver, and amendment No. 385 would do that in Scotland.

With regard to amendment No. 349, clause 251 provides that a director may apply for an interim receiving order to prevent property that is suspected of being recoverable property from being dissipated.

The court-appointed interim receiver has two functions: to look after and manage the disputed property pending a full court hearing, and to take an active role in ascertaining what is recoverable property.

The role of the interim receiver will be the key to the operation of civil recovery in most cases. When the interim receiver is appointed, he will endeavour to preserve the property. However, it is possible that in the course of discharging his duties, loss or damage may occur to property that is not the subject of the interim receiving order, as the interim receiver might mistakenly, but without being negligent, deal with such property. Clause 252(3) currently provides legal protection for the interim receiver if he causes damage in those circumstances. That protection is commonly provided to receivers and does not therefore represent a radical departure from existing practice.

Obvious models for the clause are found in the Insolvency Act 1986. In section 284(4) of that Act, the official receiver is provided with similar protection if he causes loss or damage in seizing or disposing of property that he has reasonable grounds for believing is part of the estate. The same provision is made in section 304(4) of the 1986 Act for the trustee of a bankrupt's estate. Such provisions also apply to receivers appointed in criminal confiscation cases under the Criminal Justice Act 1988 and the Drug Trafficking Act 1994. That provision is replicated in the Bill in clause 61, in part 2, for criminal confiscation cases.

If the protection provided in subsection (3) were removed as the amendment proposes, potential receivers might be deterred from taking on receivership in civil recovery cases. That would have a considerable impact on the director's ability to bring successful cases.

Under the clause, people who own an interest in property that suffers loss or damage when an interim receiver deals mistakenly with it will be able to bring civil action for damages against the interim receiver. Such action may well succeed if the receiver cannot satisfy the court that he had reasonable grounds for believing that the property was covered by the interim receiving order, and even if he shows that, he will still be liable for damages if he acted negligently. That seems a fair measure of protection for those adversely affected, and as I pointed out, the provisions are based

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on precedents. If we went any further, we would risk paralysing receivers or deterring them from taking on cases.

Clause 282 deals with compensation for people whose property is subject to an interim receiving order. Clause 252 is about property that has nothing to do with the proceedings but is interfered with accidentally. There is therefore no link between the provisions in the two clauses. If the owner of the property referred to in clause 252(3) wants compensation he will have to bring proceedings against the receiver.

I can tell my hon. Friend the Member for Wellingborough (Mr. Stinchcombe) that in principle receivers are liable for loss caused by deceit or wilful neglect, and under the clause, negligence is added to those categories. As the hon. Member for Beaconsfield says, there are two separate provisions in the Bill for dealing with such issues, one in clause 282 and one in clause 252. The two are not interchangeable.

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