Mr.
Grieve: That is true, although I should have thought that
a judge would be capable of explaining to a jury what a fiduciary duty
is. In the course of a criminal trial, if a fiduciary duty appears in
the relevant statute, the judge ought to be in a position to explain
that to the jury. Furthermore, a judge would also be in a position to
rule, on a submission of no case to answer, whether the prosecution had
laid the basis of whether a fiduciary duty
existed. The
difficulty of the present wording of the clause is that, other than
leaving the matter to a judge on a ruling of no case to answer, the
case is pretty much open to the jury. The old saying, when I was first
at the Bar, was that perhaps we should get rid of all forms of criminal
code and simply present facts to a jury, which would be allowed to say
on its verdict in order, out of order
or totally out of order. There is a sense that that is
what we are doing with the clause: a set of facts is put to a jury and
it is asked, Is it in order, out of order or totally out of
order, and on that depends guilt or innocence. That worries
me. As
I said earlier to the Solicitor-General, hopefully the criminal code is
in accordance with moral principles. However, many people are allowed
to behave in an immoral fashion and still not face criminal sanction.
The wording of the clause leaves a grey area. Let me give an example,
which has just come into my head, of the sorts of problems that might
arise. Earlier, I
mentioned buying and selling. A person is helping his aged aunt with
her affairs, in the course of which she gives him access to all her
private papers. From those, he discovers that a bust sold out of the
family 20 years before in a house sale was made by Bernini. Nobody knew
about that at the time, but it is clear in the family papers to which
he has been given a degree of access by his aunt. That bust is now for
sale in the antique shop down the road, so he zooms down there; nobody
knows that it is a Bernini bust and he buys it at a vastly discounted
rateit is the bargain of a lifetime. He does not tell his aunt;
he just takes it home and puts it in his house.
Did that
person abuse his position? After all, his aunt allowed him access to
her papers. He took advantage of the information that he gleaned from
those papers and made use of it for his own benefit. Hon. Members must
understand that the aunt was not ga-ga; she just asked him to help her.
To what extent would he be caught by clause 4? One might consider what
he did to be morally reprehensible, but was it a crime?
I have picked
one example; we could pick dozens of others. Mine illustrates my slight
anxiety that we might be casting our net too wide on the waters, the
consequence of which is to create uncertainty. Of course, Parliament
might wish to modify the behaviour of human beings, which is not
necessarily an undesirable objective, but we must be careful about
making sure that the scope of the criminal law in such an area is
properly restricted. Otherwise, as always happens, we encounter the law
of unintended consequences.
I have given an illustration,
and I hope that the Solicitor-General will discuss the issues that it
raises so that the matter can be explored further. It is one thing for
somebody to be entrusted formally with something, but are we really
going to say that taking advantage of information gleaned in the course
of a relationship of friendship, without any formalised trust being
involved, is a criminal act and that we wish it to fall within the
scope of clause 4? That is the difficult dividing line about which we
must think. I
emphasise to the Solicitor-General that I have not reached a conclusion
on the subject; I am feeling my way. I suspect that the Bill, having
gone through the other place, will probably go on to the statute book
in its present form. However, I hope that we can reflect on the serious
and difficult issues that I have raised through my amendment before we
simply rubber-stamp clause
4.
Mr.
Heath: I support amendment No. 2, but I shall speak to
amendment No. 7, which is on similar
lines. I concur with
the hon. Member for Beaconsfield (Mr. Grieve). I do not think that, in
its present form, the clause is likely to cause a massive injustice,
but I have a nagging feeling that it is sufficiently loosely worded to
allow for ambiguity. I draw attention again to the fact that the
wording in clause 3 is precise. It mentions
a legal duty to
disclose, whereas
clause 4 uses less precise language, referring
to a position in which
he is expected to
safeguard anothers
interests. That opens up questions, which I expressed on Second
Reading, about who is doing the expecting. Is it to be the judge, the
jury or the person who has a form of relationship with the person
indicted? Is the view of the man on the Clapham omnibus to be taken on
what constitutes a reasonable expectation?
When we intervened on the
Solicitor-General on Second Reading, he was anxious to put our minds at
rest, but he came close to saying that the phrase is expected
to safeguard comes close to what he is under a
fiduciary duty to do. I do not think I am putting words in the
Solicitor-Generals mouth by saying that, in his view, there was
little difference between an expectation and what formed a duty. He was
also at pains to say that, at the end of the day, the courts must
decide the matter and that the prosecution has the responsibility of
establishing that relationship and that expectationor, as I
prefer it, that duty.
I still do not understand what
advantage there is in framing the offence as the Solicitor-General has
in the Bill. What circumstances that do not fall within
duty, but do fall within expectation
does he expect to catch? I have read carefully at what the
Solicitor-General said, which is why I framed my amendment in a perhaps
more lax way than it would have been framed had I used the precise term
fiduciary duty. On Second Reading, the
Solicitor-General
said Of
course, the duty may well go beyond a mere fiduciary one; other duties
could be encompassed. We can deal with such detail in
Committee.[Official Report, 12 June 2006; Vol.
447, c. 537.] Well, here we are
and we are now expecting to deal with that
detail.
11.15
am What I really
need from the Solicitor-General is some illustrations what duties might
be encompassed. Because I have an expectation and he has a duty to
provide such illustrations to the Committee, that is why I have used
the phrase has a duty in my amendment, so that it could
encompass other duties that the Solicitor-General brings forward for
our consideration.
Mr.
Grieve: I understood that that was what the hon. Gentleman
was trying to achieve in proposing the mere word duty.
Of course, the problem with the mere word duty is that,
unless the sort of duties one is talking about are defined, it is
capable of being as loose as an expectation, because
what one person regards as a duty another person might not. We shall
still have the same problem unless we produce a comprehensive list of
expectations or duties.
Mr.
Heath: That is probably true. My expectation is that the
Solicitor-General will perform his duty in giving us that list in
Committee so that the courts have something to work on. That is a firm
expectation and one that I expect to see met in a few
moments. I support
the purpose of the clause. I do not want it not to work. There must be
a reason behind using that loose and ambiguous term without stating a
clear view on in whose mind the expectation has formed that there is
some requirement for one individual to safeguard anothers
financial interests. If it cannot reasonably be argued that the person
who is accused of fraud under the clause should be aware of that
expectation, it seems that we have a slightly dangerous instrument
before us. If there is a legal duty, a fiduciary duty, it is reasonable
to assume that the person should know that they are in that
relationship and they should be aware of that in legal terms. However,
the present wording of the clause falls short of that. There are
circumstances in which a jury, judge or court might form the view that
there was an expectation but there is no reason to suppose that the
person who committed the act was, or could be, aware of that
expectation because they had not entered into any form of contractual
or professional relationship that implied that expectation. That is my
concern and that is what I hope that the Minister will be able to
satisfy us on when he replies to the
debate.
Mr.
Geoffrey Cox (Torridge and West Devon) (Con): I should
declare an interest in that I have been a practising lawyer,
particularly in the field of fraud, for well over 20 years. I appeared
in the case of Regina v. Preddy, to which I believe the Minister
referred, in which some of the shortcomings of the Theft Act were
illuminated by the House of Lords in 1996. I also appeared recently in
a case of some notoriety that collapsed after two years called the
Jubilee line extension fraud. I therefore have some considerable
experience in the field of the practice of fraud in the criminal
courts. I have to say
that although I usually appear on the defence side I often wonder,
sometimes aloud and sometimes silently, at the difficultiesthe
mireinto which prosecutions appear to get themselves when they
are confronted with prosecuting major frauds. I have no doubt that the
offence in the clause will make it
easier for the prosecution to bring their case and to explain it to a
jury, which is why I broadly support it. However, I believe that
particularity and precision are vital components of the criminal law
and that when the ambit of the criminal offence is broadened and
relaxed, one runs into a fundamental problem whereby, as my hon. Friend
the Member for Beaconsfield said, forms of conduct are criminalised
which, on reflection, no responsible legislature would wish to
criminalise. Clause 4 crystallises that
concern. I
invite Government Members to consider the position of employees, which
may be of substantial concern to them. There is no doubt that, whatever
the nature of the employment, an employee is bound by implied, if not
expressed, terms of the contract, to a duty of confidentiality. There
are certain necessary responsibilities that go with any contract of
employment, whether one works in the humblest capacity in the mailroom
or at directorial level. On closer examination, it becomes apparent
that the clause may become a stick with which to beat employees whom
the employers regard as having breached their terms of confidentiality
or otherwise breached their expectations.
I will give one example. The
employee who, in the hope of a job with a rival firm or company,
decides in the pub to let a rival window cleaning firm know that his
firm is seeking to extend its business in another part of the
geographical area in which they live. On the face of it, that situation
would be covered by the offence in the clauseit would be fraud.
There would be an expectation on the part of the employer that the
employee would not disclose even relatively dilute and unimportant
detail of the future plans of his employer.
The employee would
have acted in the hope that perhaps one dayparticularly if he
anticipated that in the shake-up of the companys organisation,
he might be made redundanthe might gain a job with the rival
employer at some future date. However, I respectfully submit that it
would be hard to contend that that employee ought to be found guilty of
the crime of fraud set out in clauses 1 and 4, even though he occupied
a position in which he was expected by his employer not to act against
the financial interests of another personhis
employer.
If an
employee disclosed details, even fairly minor and minimal details such
as, I know that a window-cleaning firm is going to expand in
Bideford, that disclosure could be interpreted by a jury as
being contrary to the financial interests of the employer. However, the
provision would expose thousands of employees the length and breadth of
this country to the risk of a complaint of fraud being made to the
police by their employers, and given that the offence is so broadly
defined, the employees would potentially face conviction.
Mr.
Greg Hands (Hammersmith and Fulham) (Con): Does my hon.
Friend agree that that may become a particular problem in the City of
London where such discussions happen all the time between employees,
current employers and future employers? Might not the measure imperil
Londons position as the No. 1 financial centre in
Europe?
Mr.
Cox: I did not want to draw in such vulgar realms as the
City of London. I wanted to bring it
down to the level of the ordinary persons experience. I am
genuinely concerned about this clause. There is a real problem with it.
What on earth does occupies a position mean? The
Minister says that the clause and the Bill in general are designed to
remove from defence advocates the rich harvest of opportunity to argue
over the terms and definitions of criminal offences, but I have to tell
him that I can see a very broad realm for my colleagues at the Bar to
explore. They may ask questions such as: what is a
position? It seems to have some kind of formal connotation.
Does it mean a position of employment, a position of trust, or simply a
type of position in some informal relationship, as my hon. Friend the
Member for Beaconsfield
said? The clause
refers to a person being expected to safeguard, but
expected by whom? By the employer, in the case that I just suggested?
The clause continues:
or not to act against, the
financial interests.
Does that mean the
immediate financial interests, or would it be a defence to say,
Well, it may not have been in his short-term financial
interests, but in the long term, what I did was definitely in the
interests of my employer, for the following reasons? We will
have endless debates in the courts of law on whether something was in
the financial interests of the person who is said to be the victim,
because, as my hon. Friend the Member for Hammersmith and Fulham (Mr.
Hands) pointed out, we are not always looking at auntie and nephew; we
are often looking at vast multinational organisations, where it is not
easy to judge whether a particular act by a director or employee may
have jeopardised those financial interests. The argument may well be
advanced: I did it in the best interests of the firm.
Thus the court will become bogged down in examining the economic status
of the entire company or economic enterprise concerned when trying to
decide whether an action was in its financial interests.
The Committee
may regard my argument with a degree of scepticism, but let me assure
hon. Members that that is precisely what will happen. It is precisely
what happened in the Jubilee line case to which I referred. The charge
in that case was conspiracy to defraud, but it was at the ultimate
frontier of what had in the past been considered conspiracy to defraud.
The passing of very low-level commercial intelligencesimilar to
the information that I mentioned on whether a window cleaning firm
should extend its activities into the town of Bidefordwas
regarded as a conspiracy to defraud. The question was bound to arise
whether it could be proven that passing that intelligence had a
damaging effect on London Undergrounds financial
interests. I submit
that that is a question that the Committee ought to consider with
extreme care. Any precision that we can bring to the clause,
particularly along the lines suggested in the amendment proposed by my
hon. Friends, would have something to commend it. The amendment would
insert a fiduciary duty, rather than leaving the
offence to rely on an expectation. We would like more precision. Let me
explain the reasons why. To go back to my employment law example, not
every employee is in a fiduciary relationship with his employer. A
fiduciary relationship is a precise legal term; the law defines it
well, and it applies in a range of relationships. The law understands
it, and it is not difficult to interpret to a jury. Inserting that
phrase
would remove the great mass of employees from the
risk of prosecution for what the employer regards as an abuse of the
employees
position. I urge the
Committee to consider extremely carefully whether the amendment should
be made. It would further define the offence and make it more precise.
It would assist, because there would be no question of the ordinary
employee being caught by the offence, whereas under the current
drafting there is a real risk that we will get bogged down. I assure
the Minister, although I am sure that he does not need assuring, of the
ingenuity of defence advocates, who will find much to be pleased by in
the Bill. However, by the insertion of the phrase proposed by my hon.
Friends, some greater precision could be brought and some of those
arguments will be
avoided.
11.30
am Jeremy
Wright (Rugby and Kenilworth) (Con): Mr. Amess,
may I also welcome you to the Chair this morning? It is a delight to
follow my hon. Friend the Member for Torridge and West Devon (Mr. Cox),
although I suspect a disadvantage, but I will do my best. I want to
make a couple of points about the clause and to support amendment No.
2. It seems that
there are two difficulties with the use of the phrase expected
to in relation to the position that the clause describes. We
must be clearother hon. Members have already made reference to
itwho has the expectation and how realistic that should
be. Not every
expectation is realistic or reasonable. As Members of Parliament, we
know that. The Solicitor-General, as a Minister, knows that. The public
sometimes have expectations of their Government, which he may regard as
unrealistic or unreasonable. If that word is to be used, we must be
clear about how realistic or reasonable any expectation should
be. There is another
difficulty. The hon. Member for Wrexham (Ian Lucas) indicated that the
advantage of language such as expected to is that the
public will readily understand it, whereas a fiduciary
duty is something that must be interpreted by lawyers. We must
look at paragraph 7.38 of the Law Commissions report, which is
reported in paragraph 20 of the explanatory notes. I accept,
incidentally, that the Law Commission says that it does not believe
that fiduciary duties should be the limitation of the clause. However,
it goes on to
say: 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. It
seems clear that, in the Law Commissions view, lawyers would
have to be involved in the definition of expected to in
respect of the relationship that it describes. If that is so, the
legislation does not provide the clarity for which the hon. Member for
Wrexham is looking. It ought to be this Committees task to give
as much clarity to the law as we can at this stage and to save the
courts the job of doing so at a later date.
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