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Lord Goldsmith: My Lords, as is clear from the Bill, if the bank can demonstrate that that it is its property it will be able to recover it.

One of the difficulties—with respect, the noble and learned Lord did not deal with this point, although the noble Viscount, Lord Bledisloe, made it well and clearly—is the fact that there are people in relation to whom it is not possible to say, "You committed this particular crime". But it may be possible to say that what they plainly possess in terms of property is the proceeds of crime. Precisely which crime—a bank robbery on this day, a drug trafficking offence on that day, proof of which is required by the criminal law—cannot be demonstrated.

The noble and learned Lord rightly puts the High Court judge before us as an object of admiration and fairness. If a High Court judge is persuaded—otherwise no order is made—that property held by someone is the proceeds of unlawful conduct, the question is whether or not that property should be taken from that person who has no right to keep it.

What is the burden of proof in such circumstances? I have dealt with this matter at every stage—Second Reading, in Committee and on Report. No one has ever gainsaid what I said. It is this. Although the civil standard applies—that of the balance of probabilities—the decisions of the courts make very clear indeed that where the issue is serious misconduct, although that is still determined on the balance of

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probabilities, because of the inherent unlikelihood that serious criminal conduct has been committed the courts require more cogent proof.

Lord Goodhart: My Lords, is the noble and learned Lord the Attorney-General contending seriously that under the Bill as it now stands it would be possible for a court, without any evidence that any particular unlawful conduct has occurred, to come to the conclusion that the assets of the respondent must have been acquired by some unspecified unlawful conduct? That is not how I read the Bill.

Lord Goldsmith: My Lords, a High Court judge will have the duty to consider whether or not a particular property which is identified is the product of some unlawful conduct. What evidence the court will be persuaded by will be a matter for the court. I do not disagree with the example given by the noble Viscount, Lord Bledisloe, of someone who plainly has very substantial means, has never done a day's work in his life and cannot explain—that is a part of it—where any of it came from when questions are put. It is the easiest thing for someone to say, "You say that these are the proceeds of crime. I can tell you that I acquired this in this or that way". But he puts forward no credible explanation for that; and there is other evidence which suggests that he has been mixing in criminal circles: he has been taking aeroplane flights to Colombia, or whatever it may be. The judge will have to decide.

Lord Goodhart: My Lords, I am sorry to intervene again. Under Clause 244, the matter the court has to decide on the balance of probabilities is whether it is proved that any matters alleged to constitute unlawful conduct have occurred. That makes clear that a matter which constitutes unlawful conduct must have occurred.

Lord Goldsmith: My Lords, there will be certain cases where no doubt specific unlawful conduct is identified. The point I make is that there will be cases where, for example, it will be apparent that the property someone is holding may be the proceeds of a bank robbery or of drug trafficking. One cannot tell which it is but one can be satisfied—not the police; it is not a police state; not me; not the director—but the court is satisfied that those are the proceeds of unlawful conduct. In those circumstances, the court will be able to make the order.

I remind noble Lords of what I said about the standard of proof. It is important for two reasons. Because it is so important, I hope that noble Lords will bear with me while I read again these words that,

    "When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation, the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury . . . built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation".

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The court would have to be satisfied—

Lord Renton: My Lords, I am grateful to the noble and learned Lord for giving way. Would he bear in mind that Clause 244(1) refers to,

    "conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part"?

As criminal law is brought into operation there, surely the principle of the burden of proof, which, as was said by the noble and learned Lord, has for centuries been beyond reasonable doubt, should apply.

Lord Goldsmith: My Lords, as I explained on Report—it has not been contradicted by the noble and learned Lord—time and again in the civil courts an allegation of a criminal act is made in the context of a civil proceeding. In those circumstances, what the court does is precisely what I have just read from the words of the noble and learned Lord, Lord Nicholls of Birkenhead. It decides that question on the civil standard, but applying the preponderance of that probability taking account of the need for more cogent evidence.

I have previously given examples. That happens in any libel actions and it happened in Re. H itself. The allegation underlying a care proceeding was that the father was guilty of raping the daughter. The whole question in the case was whether that allegation had to be determined on the criminal standard or in relation to something less. Obviously, the finding even in civil process would be very damaging to the father. Your Lordships' House in its judicial capacity held that on the balance of probabilities, but that more cogent evidence was required.

As it happens, the noble and learned Lord, Lloyd of Berwick, was on the panel. I have with me what he said. On that occasion, interestingly, he had no difficulty with the proposition that a civil court might find somebody guilty of a criminal offence in the sense that it found that he had committed that criminal offence. In fact, the noble and learned Lord was in a minority in suggesting that one should not have that heightened standard. His view was that the standard of proof should merely be a simple balance of probabilities. One understands why the noble and learned Lord said that. There is a critical difference between a criminal process and a civil process. In a criminal process, someone is convicted and goes to gaol or is at risk of going to gaol. That is not the case when someone is found in a civil process to have committed some disreputable act. At Report stage I gave the example of a case, which the noble and learned Lord tried when he was a puisne judge and I was a junior member of the Bar, involving forgery, deceit and lying. There was no suggestion at any stage that, despite the importance of those allegations, they could be dealt with only before a criminal court.

Lord Thomas of Gresford: My Lords, will the Minister confirm that it is not the case under the Bill that mere possession of property, which is thought to

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have been obtained dishonestly in some way or other, is sufficient for the provisions to come into effect? Clause 244 states:

    "Conduct occurring in any part of the United Kingdom is unlawful conduct if it is unlawful under the criminal law of that part".

It continues:

    "The court or sheriff must decide on a balance of probabilities whether it is proved . . . that any matters alleged to constitute unlawful conduct have occurred".

It is not for the person to explain where his property came from; it is for those seeking to recover that property to demonstrate on a balance of probabilities that unlawful conduct—that is, unlawful conduct under the criminal law—has actually occurred. The response of the noble and learned Lord has given an entirely different impression.

Lord Goldsmith: My Lords, I have been absolutely consistent throughout. Clause 308 is where one needs to start in this regard. It states:

    "Property obtained through unlawful conduct is recoverable property".

That is what the court is considering: whether the property is obtained through unlawful conduct. I stand by what I said. The court might be satisfied to that heightened standard that the property was the proceeds of unlawful conduct, but it could not be said whether it involved the proceeds of the bank robbery on 14th June 1963 or on 16th June 1980. It might even be satisfied that the person had committed both. But which are the proceeds of crime? What has the person done with the proceeds in the mean time? On the question whether one can trace that back to the Midland Bank as opposed to Barclays Bank: no, the court would not have to do that.

On the European Convention, I respect the fact that the noble and learned Lord takes a different view from that of the Government. I have throughout said that we recognise that we are to some extent in uncharted territory. The Government's view—the better view—is that this matter will be held to be civil, not criminal. That is under the Strasbourg jurisprudence. I draw support from the fact that there are decisions from your Lordships' House, the Privy Council and Strasbourg supporting that result. The Government have said throughout that we accept that this is likely to be challenged. The sort of people who we are talking about, if we are right about them, will have pots of money, which they will not want to give up without a fight and they will challenge the decision. The Government should—this line was previously and rightly taken by the Opposition—be able to propose the legislation, have it tested in the courts and establish whether we are right, as we believe we are, not on a wing and a chance but because we have looked at the matter very carefully and concluded that we are right and will be held to be right. If there is something wrong with that, let us have the judgment of the court so that we can amend it in a way that makes sense and which reflects what the problem is; it should not be dealt with in some other way.

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In order to emphasise what is so extraordinary about the amendment of the noble and learned Lord, I want to contrast two different people. The first is someone who is not said to be the person who has committed the unlawful conduct but who is holding the property, such as a wife or an associate. The amendment would accept that that person can be proceeded with under Part 5, with all the rigours of that part. One could go back 12 years and the case will be decided on the balance of probabilities, the standard of proof that I have identified. Part 5 will operate. If the person is said to be the culprit or is likely to be the culprit—not the person who is less culpable—under the amendment of the noble and learned Lord, that person cannot be proceeded against at all.

I shall explain why I say, "not at all". As I have made clear throughout the Bill's passage—it is very clear that this will be the position—there will be a hierarchy of proceedings. If it is possible to pursue criminal proceedings, they will be pursued. A decision will be made by the prosecutors about whether to proceed without regard to the fact that there is a civil process as well. Only if the prosecutors form the view that it is not possible to proceed will the civil process come in. After that, there are the taxation provisions.

What would happen under the amendment of the noble and learned Lord? The amendment says that if the person who is proceeded against is someone who is said to be guilty of unlawful conduct, that person is entitled to insist on going to the Crown Court. But for what would they go to the Crown Court? For a trial? But the prosecutor has already decided that it is inappropriate to proceed by way of trial. That cannot happen. But what if the prosecutor proceeds? What if the reason why it is not possible to proceed against the person is because he has sufficiently distanced himself from the actual criminal acts? The court may be absolutely convinced that he is holding the proceeds of a bank robbery but it may not know whether he is a bank robber, a conspirator or simply a fence—someone who is holding the property. He cannot be convicted on any of those grounds because one cannot convict him when one does not know which of those applies. He is entitled to keep all of that money although a court is satisfied that he was guilty.

What about the situation raised by the noble Viscount, Lord Bledisloe? What if the clearest possible evidence is that the person was guilty of committing a fraud outside the United Kingdom which we cannot prosecute? That is a very common problem these days because, as noble Lords well know, crime is global. If there is drug trafficking or human trafficking in a foreign country, we cannot bring the relevant person to the Kingston Crown Court or the Old Bailey. That person is entitled to say, "You cannot try me in the Crown Court, therefore I can keep all of this property". Those are considerable loopholes.

The extraordinarily absurd result is that one can proceed against the wife, someone who is not really culpable, but not against someone who is culpable. That is a manifest nonsense. Why is that said to be justified? On the basis that there is a right to trial by

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jury? There is a right to trial by jury for criminal offences, but this is not a criminal conviction. One does not go to gaol, the matter does not go on one's rehabilitation of offenders record and one has an appeal to the Court of Appeal. It is a civil process like any other civil process.

With respect to the noble Lord, Lord Kingsland, I say that it is impossible to describe this amendment as improving the Bill. If it is agreed to, it will mean that it will not be possible to proceed against a person who is holding the proceeds of crime even though a court can be satisfied of that by convincing evidence, unless one can convict that person of a specific crime.

The noble and learned Lord, Lord Lloyd of Berwick, considers that to be right because he does not believe that Part 5 should stand part of the Bill. As I said, I respect that. The Government happen to take a different view about it. But for the Opposition to say that the amendment would make the Bill more workable when they are driving a huge hole through it is simply false; it simply is not possible to maintain that point of view.

I turn to the final point—the Article 7 point—of the noble and learned Lord's amendment concerning retrospectivity. We debated this matter on Report at considerable length. Again, I invite noble Lords opposite to consider the consequence of this part of the amendment. It would mean that it would not be possible to proceed against a person who was currently holding the proceeds of a crime committed in the past. Therefore, if the amendment were agreed to, the provision would operate only in relation to crimes committed in the future. We are talking about a grossly denatured remedy because the provision would apply only far off in the future and the effect of the act would be gravely reduced.

The Government take the view that the provision is not contrary to Article 7 of the European convention. I explained on Report—I do not want to weary your Lordships now—why that is so. The noble and learned Lord referred to the case of Welch. As I said on that occasion, there are five distinguishing features. While one could argue about one or two of them, one could not do so in relation to the others. The most important of them is that in Welch there was a penalty because the individual had already been convicted of five counts of conspiracy to supply class A drugs. Welch was sentenced to 22 years in prison and, on top of that, the court said, "What's more, there will be a confiscation order". The Court in Strasbourg said, "That's a penalty". That is not the process that is taking place here.

Again, I recognise that there is a difference between us concerning what the Court in Strasbourg will say—if we get that far. But, having considered the matter extremely carefully, the Government's view, contrary to, and respecting fully, that of a former Law Lord, is that the Government will prevail in the courts. It is right that the Government should be allowed to proceed. I believe that many Members of your Lordships' House are of the view that it is important, as the noble Baroness, Lady Buscombe, said, that we

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should be able to deprive criminals of the proceeds of their crime; otherwise, as the noble Lord, Lord Kingsland, said at Second Reading, leaving criminals with the working capital of crime would have a corrosive effect on society. If noble Lords agree that depriving criminals of the proceeds of their crime is the objective that we seek to achieve, they will reject the amendment.

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