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“whether the available statutory charges adequately reflect the gravity of the offence.”—[ Official Report, Standing Committee B, 20 June 2006; c. 73.]
So the guidance to prosecutors is that they should use statute law wherever possible, and only when that possibility is exhausted proceed to conspiracy to defraud, with its slightly nebulous nature.
Some of us have concerns not only because of the nature of the common law offence, but because of its knock-on effects. I raised those concerns in Committee, and they have become even more pertinent, although I shall not dwell on issues of controversy in recent days. It is a matter of concern when, for example, the common law offence could form part of the criteria for dual criminality in more than one jurisdiction and therefore be a proper ground for extradition. We should at least be aware of that in deciding whether to allow the common law offence to continue.
However, I propose today not to disagree with the Government position, and to accept that there will be a review that will be concluded in three years and that the Government will then decide whether it is appropriate to abolish the common law offence. I simply say—I made this point in Committee, but I repeat it now—that it would be better to have the provision on the statute book in advance, by means of my new clause and the commencement amendment that accompanies it. They make it clear that the provision will not take effect until the review has been concluded, and even then not within a three-year period, so the period that the Government have in mind will be protected. That would provide the legislative support for the position that the Government wish to take.
The alternative is that the Government will have to come back with new law—with a new Bill—after the review. That might or might not find parliamentary time, and it might or might not be tacked on to some other measure that could be considerably less popular, and in any case that will take parliamentary time—unnecessarily.
My proposal offers a better way of doing our business, given that we have a clear joint intention. The control would lie with the Minister. He would not have to continue with commencement if the advice from the review was that he should not do so. The only argument against is what the Minister said in Committee, which is that this somehow puts the sword of Damocles over the offence, and that therefore there is a discouragement to prosecutors to use it, even when it is the most appropriate offence to use.
I cannot accept that: I cannot accept that there is a difference in kind between my new clause and its commencement amendment and the Government’s clear intention, stated in terms, that
“it remains our long-term aim to repeal this common law crime and we will review the position”.
There is no difference between the two positions, other than that one of them saves parliamentary time and
means that we have done the work already, while the other leaves it still to be done.
Therefore, it seems to me that what I am proposing is in the interests of the Government and in line with the views of all the parties represented in this House. It is certainly in line with the Law Commission’s proposals. It said on conspiracy to defraud:
“On any view, the present system is anomalous and has no place in a coherent criminal law.”
Therefore, we are doing the right thing in terms of improving the law.
Mr. Edward Garnier (Harborough) (Con): The hon. Member for Somerton and Frome (Mr. Heath) clearly set out his objections to the retention of the common law offence of conspiracy to defraud. His new clause addresses that in detail. As he said, there is no difference between us in respect of having this particular offence in common law for any longer than is strictly necessary; the difference between us is simply to do with approach, and how we get around to dealing with this matter.
The general thrust of the Second Reading debate in the other place on 22 June 2005 was that the common law offence of conspiracy to defraud needs to go. Such great legal minds as those of Lord Lloyd of Berwick and my noble Friend Lord Kingsland, the shadow Lord Chancellor, carefully explained why it needed to go, not least because it led to a lack of clarity in the criminal law. If there is one thing that the criminal law should provide, it is clarity, so that those who might come within its reach know precisely what it is that they are liable to be held responsible for before they decide whether or not to do something.
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I do not think that, in the end, there is much difference in approach. Either one abolishes the offence now, or one adds a sunset clause to the Bill saying that it will be abolished after a certain period of time, or one accepts the Government’s word that they will genuinely and actively review the law over the next three years and report back to us. I suspect that once it has been considered how the new law has bedded in, a decision will be made that reflects the spirit of the debates in this House and the other place.
I am prepared to accept the Government’s word, for present purposes, and I urge the hon. Member for Somerton and Frome to do so as well. He does not have to accept their word on all things, but on this matter perhaps he might. On that basis, I trust that we can put this issue, if not to bed, at least on the sidelines for three years, while the Government keep a close eye on what is going on.
The Solicitor-General (Mr. Mike O'Brien):
As the hon. Member for Somerton and Frome (Mr. Heath) rightly recognised, we had a very constructive and full discussion in Committee on 20 June. I have not changed my mind since then, but I hear the points that he makes. We hope in due course to be in a position where we can take the view that conspiracy to defraud can be removed from the statute book. Until then, there is guidance, which has been passed to Front Bench of other parties to look at. I would welcome hearing their views on that. We intend that the
conspiracy to defraud offence should be used sparingly, while, in the meantime, we would examine the impact that repeal would have.
However, let me just say that there is a difference in law, albeit not so much politically or in policy terms, between what the hon. Gentleman wants and what we want. The difference in law is about the prosecutor being able to use conspiracy to defraud if that is appropriate. If there is a guillotine—a sunset provision—in respect of that law, it risks to some extent discrediting it, and therefore I am opposed to the hon. Gentleman’s proposal.
Let me give seven good reasons for taking the view that we have, in the hope that the hon. Gentleman will feel able to withdraw his new clause. First, the Government plan to review conspiracy to defraud in the course of the next three years. Secondly, as Lord Rose’s Committee representing the views of judges stated, some issues are not covered by the Fraud Bill as it stands, and we need to look at how they would be covered—in particular, where it is intended that someone outside a conspiracy would commit the final offence, and also cases where the accused cannot be proved to have had the necessary degree of knowledge of the substantive offence to be perpetrated. We want to look at how we will deal with such issues, if we repeal the offence of conspiracy to defraud.
Thirdly, we want to look at the impact of the new laws under the Domestic Violence, Crime and Victims Act 2004, which we hope to implement soon, in respect of making changes on conspiracy to defraud. Fourthly, the Law Commission is studying the law covering forms of participation in crimes that do not amount to a statutory conspiracy. We want to see what its recommendations are, and the results of its inquiries. Fifthly, the Law Commission published in July a report on inchoate liability in crime, and we want more time to examine the impact that that might have. Sixthly, we also believe that it is useful to look further at the consultation paper on organised and financial crime, which was published in July. We want to examine the responses to that and see how these issues affect the whole ambit of conspiracy to defraud.
Finally, the fraud review itself only finishes its consultation period tomorrow, and we want to examine how that review will affect the overall way in which this country deals with fraud. Hopefully, that will also enable us to take a broader view of conspiracy to defraud.
So for all those reasons, I hope that the hon. Member for Somerton and Frome feels able to withdraw his new clause.
Mr. Heath: I am grateful to the Solicitor-General and I entirely accept all the reasons that he offered, which are all grounds for having the review period before proceeding. I am sorry, but I do not think that there is a difference between us on this issue. We accept that if this is the only offence that can be prosecuted successfully, it should be used, but that does not alter the fact that in our view, there should be better instruments in the hands of the prosecutors. That is the issue that needs to be examined.
I urge the Solicitor-General to arrange for the commencement of the multiple count provisions in the
Domestic Violence, Crime and Victims Act 2004 at the earliest opportunity. He said that that will happen soon, but it is already two years since Royal Assent. Those provisions will be a critical element of the prosecution palette. The power to repeal offences, or otherwise, should never be put in the hands of prosecutors, who will always relish having the widest possible range of offences available to prosecute. Such a power must be in the hands of those who look dispassionately at the utility of the offences in question.
I look forward to the fraud review, and if there are elements of our approach to white-collar crime that we need to improve and make more robust, the Solicitor-General will have my and my party’s full support. There are instances where such crime is not being successfully dealt with, and it should be, because it is a crime against us all. It is not a secondary order of criminality that should somehow be ignored.
I entirely understand the Solicitor-General’s argument; however, there is one missing component. In terms of legislative mechanics, it would still make sense to proceed with my suggestion because it would achieve all that he wants to achieve, but in better order. However, I see that I have not persuaded him and on that basis, I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
Mr. Heath: I beg to move amendment No. 1, page 2, line 22, leave out
‘occupies a position in which he’
and insert ‘by reason of position,’.
Madam Deputy Speaker: With this it will be convenient to discuss amendment No. 2, line 22, leave out ‘expected’ and insert ‘under a fiduciary duty’.
Mr. Heath: We can probably dispose of these amendments, which continue a useful discussion that we had in Committee, in an equally brief period.
Amendment No. 1 is new and picks up on a point made in Committee by the hon. Member for Beaconsfield (Mr. Grieve). We were considering the following phrase from clause 4:
“A person is in breach of this section if he...(a) occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person”.
The hon. Gentleman made the interesting point that it is possible for the person who might be accused of such an offence no longer to occupy the position in question, but to retain a fiduciary duty on the basis of the position that he had occupied. The clause uses the phrase “occupies a position”, rather than “occupies or has occupied”, which would be a very cumbersome way of putting it. My amendment would replace that phrase with “by reason of position”, which would enable the clause to apply not only to the holder of a position, but to a past holder, and thereby encompasses
both without any ambiguity. I simply table it for the Solicitor-General’s consideration.
Amendment No. 2 relates to a point that was debated in Committee and is not dissimilar to one tabled there by the hon. Member for Beaconsfield. I remain concerned about the interpretation of the phrase “is expected to”, which, in the light of the Solicitor-General’s explanation in Committee, extends beyond a fiduciary duty to some other expectation. However, we have not yet satisfactorily concluded in whose mind the expectation lies. Is it in that of the person who commits the putative offence, or in that of the person against whom the offence is committed? Is that expectation what a reasonable person might expect, or what a court might expect?
Although the Solicitor-General helpfully explained fiduciary duty in some detail in Committee, he did not convince me that he could offer examples that would not fall into the expanded definition of fiduciary duty as interpreted by the courts, but which would nevertheless constitute criminality that ought to be caught by this provision. In fact, a fiduciary duty is capable of a much wider interpretation than a strict contractual liability, for example. Indeed, it is already being interpreted by the courts in that way, so it would be a more precise term to use in this clause.
I tabled these amendments in an attempt to improve the Bill, rather than to in any way change its meaning. I think that my terms are more precise, but I look forward to the Solicitor-General’s response.
Mr. Garnier: The hon. Member for Somerton and Frome (Mr. Heath) is entirely right—there was a full discussion in Committee on this clause and these concepts, and I commend to him and to the Solicitor-General the remarks of not only my hon. Friend the Member for Beaconsfield (Mr. Grieve) but of my hon. and learned Friend the Member for Torridge and West Devon (Mr. Cox), who has extensive experience of dealing with fraud cases in the criminal courts.
It is neither necessary nor appropriate for me to offer a third explanation of the points that my hon. and learned Friend the Member for Torridge and West Devon made Upstairs. I fully understand the concerns of the hon. Member for Somerton and Frome about this clause, but I do not want to stand in the way of the Solicitor-General’s giving us the Government’s explanation.
The Solicitor-General: One of the criteria recommended by the Law Commission for the application of clause 4 was whether a person
“occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person.”
Amendment No. 1 would alter the wording of clause 4 to refer to a person who “by reason of position” is expected to safeguard, or not to act against, the financial interests of another person. In our view, such a change would introduce an undesirable lack of clarity into the clause. The phrase “by reason of position” is not only inelegant but is less clear than the criterion of whether a person “occupies a position”. I am not sure that there is a great deal of elegance in that phrase, either, but it is clearer.
I understand that the amendment’s intention is to catch cases where the defendant no longer occupies the position in question, but it does not clearly express that intention. There is no policy problem here. A defendant will not escape prosecution for fraud by abuse of position, committed while he occupied the position in question, just because he no longer occupies the position at the time of his arrest or trial. It is true that he will not be prosecutable under clause 4 if he manages to abuse the position after he ceases to occupy it, but in any event, there are limits to how he could do that.
I accept that information obtained during the course of employment could be valuable, but, as I made clear in Committee, we expect breaches of confidentiality to be a matter of civil law. That will certainly be the case once the employee ceases to occupy his position, which must be right.
Clause 4 is designed to tackle financial crime. If a person no longer occupies a position where he is expected to safeguard another person’s financial interests, how can he commit such fraud under the clause? He would probably need to commit another type of fraud—perhaps under clause 2—to access or exert influence over the person's financial interests. If he still has de facto access or influence, he surely “occupies” a position. That is one advantage of the way in which the clause is drafted in not being limited to those who have fiduciary duties.
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Amendment No. 2 brings us back to our interesting discussions in Committee. Again, the Law Commission expressed a view. It said that although a fiduciary relationship was important,
“We see no reason, however, why the existence of such duties should be essential. This does not of course mean that it would be entirely a matter for the fact-finders whether the necessary relationship exists. The question whether the particular facts alleged can properly be described as giving rise to that relationship will be an issue capable of being ruled upon by the judge and, if the case goes to the jury, of being the subject of directions.”
Amendment No. 2 would provide that clause 4 applies only if one person has a fiduciary duty to safeguard the interests of another. We are concerned that in some cases it might be difficult for prosecutors to prove the existence of that duty. While in most cases the clause will apply to circumstances where a duty clearly exists, there will be some cases where a formal fiduciary duty does not exist. These will arise particularly in personal and family relationships.
The great majority of those who responded to our consultations in 2004 supported clause 4, and some made comments that are pertinent to this debate. The Institute of Legacy Management, in welcoming clause 4, referred to the need to tackle the increasing financial abuse of the elderly. It told us that
“charities have noticed an alarming rise in estates where the testator’s funds had been misappropriated prior to death”.
It cited as a typical example the case of a tradesman—perhaps a milkman—who, having helped an old lady with odd jobs, gains increasing influence with her and misappropriates funds from her account.
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