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HL Paper 134HC 955

House of Lords House of Commons

Joint Committee on Human Rights

Legislative Scrutiny: Sixth Progress Report

Fourteenth Report of Session 2005-06

Drawing special attention to:

Civil Aviation Bill

Fraud Bill

HL Paper 134 HC 955

Published on 6 March 2006 by authority of the House of Lords and the House of Commons London: The Stationery Office Limited

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House of Lords House of Commons


Legislative Scrutiny: Sixth Progress Report

Fourteenth Report of Session 2005-06

Report, together with formal minutes and appendices

Ordered by The House of Lords to be printed 27 February 2006 Ordered by The House of Commons to be printed 27 February 2006


The Joint Committee on Human Rights is appointed by the House of Lords and the House of Commons to consider matters relating to human rights in the United Kingdom (but excluding consideration of individual cases); proposals for remedial orders, draft remedial orders and remedial orders. The Joint Committee has a maximum of six Members appointed by each House, of whom the quorum for any formal proceedings is two from each House.

Current Membership

HOUSE OF LORDS HOUSE OF COMMONS Lord Bowness Lord Campbell of Alloway Lord Judd Lord Lester of Herne Hill Lord Plant of Highfield Baroness Stern

Mr Douglas Carswell MP (Conservative, Harwich) Mary Creagh MP (Labour, Wakefield) Mr Andrew Dismore MP (Labour, Hendon) (Chairman) Dr Evan Harris MP (Liberal Democrat, Oxford West & Abingdon) Dan Norris MP (Labour, Wansdyke) Mr Richard Shepherd MP (Conservative, Aldridge-Brownhills)

Powers

The Committee has the power to require the submission of written evidence and documents, to examine witnesses, to meet at any time (except when Parliament is prorogued or dissolved), to adjourn from place to place, to appoint specialist advisers, and to make Reports to both Houses. The Lords Committee has power to agree with the Commons in the appointment of a Chairman.

Publications

The Reports and evidence of the Joint Committee are published by The Stationery Office by Order of the two Houses. All publications of the Committee (including press notices) are on the internet at www.parliament.uk/commons/selcom/hrhome.htm.

Current Staff

The current staff of the Committee are: Nick Walker (Commons Clerk), Ed Lock (Lords Clerk), Murray Hunt (Legal Adviser), Róisín Pillay (Committee Specialist), Jackie Recardo (Committee Assistant), Pam Morris (Committee Secretary) and Tes Stranger (Senior Office Clerk).

Contacts

All correspondence should be addressed to The Clerk of the Joint Committee on Human Rights, Committee Office, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general inquiries is: 020 7219 2467; the Committee=s e-mail address is [email protected].

Legislative Scrutiny: Sixth Progress Report 1

Contents

Report Page

Summary 3

Bills drawn to the special attention of both Houses 5

1 Civil Aviation Bill 5 Introduction 5 Financial penalties 5 Removal of right of appeal 8

2 Fraud Bill 10 Introduction 10 The effect of the Bill 10 The relevant human rights standards 11 The human rights implications of the Bill 11

(1) Legal certainty and the general fraud offence 11 (2) Legal certainty and the retention of the conspiracy to defraud offence 13

Bills not brought to the attention of either House on human rights grounds 15

3 Government of Wales Bill 15

4 National Insurance Contributions Bill 16

5 Consumer Credit Bill 18

Formal Minutes 19

Appendices 20 Appendix 1: Letter from Lord Davies of Oldham, Government Whips Office, House of Lords, re Civil Aviation Bill 20 Appendix 2(a): Letter from the Chair to Rt Hon The Lord Goldsmith QC, Attorney General, re Fraud Bill 23 Appendix 2(b): Letter from Rt Hon The Lord Goldsmith QC, Attorney General, to the Chair, re Fraud Bill 23 Appendix 2(c): Submission from JUSTICE re Fraud Bill 28 Appendix 3: Submission from Debt on our Doorstep re Consumer Credit Bill 35

Public Bills Reported on by the Committee (Session 2005–06) 36


Summary

The Joint Committee on Human Rights examines every Bill presented to Parliament. With Government Bills its starting point is the statement made by the Minister under section 19 of the Human Rights Act 1998 in respect of compliance with Convention rights as defined in that Act. However, it also has regard to the provisions of other international human rights instruments to which the UK is a signatory. The Committee publishes regular progress reports on its scrutiny of Bills, setting out any initial concerns it has about Bills it has examined and, subsequently, the Government’s responses to these concerns and any further observations it may have on these responses. From time to time the Committee also publishes separate reports on individual Bills. In this Report the Committee follows up questions which it raised in correspondence with the Government following an earlier report on the Civil Aviation Bill and comments substantively on the Fraud Bill, in the light of correspondence with the Attorney General. The Committee also explains why, in its view, the provisions of the Government of Wales Bill and the National Insurance Contributions Bill do not give rise to any significant risk of incompatibility with human rights, and, in light of a letter received from Debt on our Doorstep in connection with the Consumer Credit Bill, explains why the unfair credit relationship provisions of the Bill do not engage the human rights of borrowers.

Civil Aviation Bill

Following its previous Report on this Bill, contained in its Seventh Report of Session 2005-06, the Chairman wrote to Lord Davies of Oldham on two points arising from its scrutiny of the Bill. In this Report the Committee deals with these two points in light of Lord Davies’s reply. In respect of the powers included in the Bill for airport operators to levy financial penalties on aircraft operators in respect of breaches of noise abatement or noise control requirements, the Committee explains why it considers that these powers determine a civil right within the meaning of Article 6(1) ECHR, contrary to the view expressed by the Minister in his letter (paragraph 1.8). The Committee goes on to set out its view that the introduction into a contractual relationship of a power to levy financial penalties for regulatory purposes in the public interest, without also providing a means for contesting liability, reasonableness and the amount of such penalties, risks incompatibility with Article 6(1) (paragraph 1.11). The Bill also removes the current right of appeal to the Secretary of State against a decision of the CAA in respect of a route licence, without instituting an alternative appeal mechanism. After considering the justification for this provision which is contained in the Minister’s letter, the Committee concludes that the removal of the rights of appeal risks incompatibility with Article 6(1) ECHR because of the limitations on the scope of the court’s jurisdiction over factual matters on judicial review (paragraph 1.17).

4 Fourteenth Report of Session 2005–06

Fraud Bill

The Committee expresses its view that the new general offence of fraud in clause 1 of the Bill satisfies the common law and ECHR requirement that criminal offences be defined with sufficient clarity and precision to enable the public to predict with sufficient certainty whether or not they will be liable (paragraph 2.14). The Bill contains no provision to abolish the common law offence of conspiracy to defraud. In light of the Law Commission’s recommendation that the offence be abolished, the Committee asked the Attorney General to provide the Government’s reasons for retaining the offence. While seeing the force of those reasons, as set out in the Attorney General’s response, the Committee expresses its concern that the offence is a general dishonesty offence and therefore not compatible with the common law and ECHR requirements of legal certainty. The Committee urges the Government to reassess the issue on receipt of the Law Commission’s report on encouraging and assisting crime, and not to await the outcome of the review of the operation of the new Act (paragraph 2.25). The Committee also welcomes the Attorney General’s indication that he will discuss with Counsel whether in this special case it is appropriate for the Explanatory Notes to the Bill to explain why the Bill does not repeal the offence of conspiracy to defraud, and expresses the hope that such a sensible approach will be adopted in future in relation to other Bills where a human rights compatibility issue is raised by an obvious omission from a Bill (paragraph 2.26).


Bills drawn to the special attention of both Houses

Government Bills

1 Civil Aviation Bill Date introduced to first House Date introduced to second House Current Bill Number Previous Reports

9 June 2005 11 October 2005 HL Bill 53 7th Report of 2005-06

Introduction

1.1 In our Seventh Report of this Session we identified the main human rights issues raised by the Bill1 and explained why our Chair had written to the Minister about two points which gave rise to possible compatibility concerns.2 We indicated that we might report again on the Bill in light of the Minister’s reply.

1.2 The Minister responded to our queries in a letter dated 30 January 2006.3 We are grateful to the Minister for his prompt and detailed response and we now report further in light of his answers.

Financial penalties

1.3 Clauses 3 and 4 of the Bill introduce powers for airport operators to levy financial penalties on aircraft operators in respect of breaches by the aircraft operator of noise abatement requirements imposed by the Secretary of State4 or of noise control requirements imposed by the airport operator itself under a noise control scheme.5 In both cases, any such penalty shall be “of an amount specified in the scheme”6 established by the airport operator, and the aircraft operator is to be afforded an opportunity to make representations to the airport operator with respect to the matter either before or after the penalty is imposed.7 There is to be power to cancel the penalty where representations are received after the penalty is imposed. Penalties are to be used by airport operators to benefit people who live in the vicinity of the airport.

1.4 On our preliminary consideration of the Bill we had two concerns: first that the power to levy financial penalties conferred by clauses 3 and 4 is somewhat unusual because it is conferred on private entities (airport operators) and, second, that the levying of a penalty

1 Seventh Report of 2005–06, Legislative Scrutiny: Fourth Progress Report, HL Paper 98, HC 829, paragraphs 2.1–2.13

2 ibid., pp.19–20

3 Appendix 1

4 Clause 3, inserting new sections 78A and 78B into the Civil Aviation Act 1982.The Secretary of State has the power to direct the airport operator to establish, revoke or amend a penalty scheme, and it is a criminal offence to fail to comply with such a direction: new clause 78B(1) and (5).

5 Clause 4, inserting new sections 38A–38C into the Civil Aviation Act 1982

6 New clauses 78A(3)(a) and 38C(3)(a)

7 New clauses 78A(4) and 38C(4)


clearly determines a civil right within the meaning of Article 6(1) ECHR,8 but the Bill makes no provision for any subsequent challenge to any penalty imposed. We therefore wrote to the Minister asking, in view of the unusual nature of the power to levy penalties and its engagement of Article 6(1) ECHR, what remedies would be available to an aircraft operator who wishes to challenge a penalty which has been imposed on it.

1.5 In relation to our first concern, the Minister in his reply explains that the basis of an airport charging regime is contractual: airport operators set out the terms and conditions on which aircraft operators may use an airport’s facilities and aircraft operators accept those terms and conditions by their conduct in using the airport. At some airports, the Minister explains, the airport operator already levies, through its terms and conditions, noise supplements in respect of the use of aircraft in breach of noise amelioration requirements, such as departure noise limits, but other airports have been reluctant to take such steps in the absence of explicit power to do so. The provisions in the Bill therefore aim to regularise the existing practices at some airports, and to encourage their take-up by other airports. According to the Minister, clauses 3 and 4 merely supplement the contract law which governs charging by airport operators, by allowing an airport to include in its terms and conditions specific conditions that relate to compliance by an aircraft operator with a noise control scheme or other noise related measures.

1.6 In relation to our second concern, the Minister disagrees that Article 6(1) ECHR applies to the levying of a financial penalty by an airport operator, because in his view such levying of a penalty does not amount to a determination of a civil right. In his view, because the relationship between the airport and aircraft operators is contractual, the levying of a financial penalty by the airport operator is merely an exercise by a party to an agreement of what it believes to be its rights under that agreement. As such, the airport operator’s decision to levy a penalty is not determinative of any right of the aircraft operator, but merely gives rise to a dispute between the parties to the agreement, determination of which (by the court) engages Article 6(1) ECHR.

1.7 Although the Minister does not accept that Article 6(1) is engaged by the levying of a financial penalty of the kind provided for in the Bill, for the reasons given above, in his letter he sets out what he considers to be the opportunities for legal challenge to the penalties. The Minister distinguishes between challenges relating to the establishment of the penalty scheme by the airport operator on the one hand and challenges to the application of a scheme by an airport operator on the other. The former type of legal challenge is most likely to occur, in the Minister’s view, by way of judicial review in the Administrative Court. The Minister recognises that because clauses 3 and 4 of the Bill give airport operators a right not given to other legal persons it is possible that the power conferred on airport operators may be interpreted as a public function, making the operator subject to judicial review in respect of the exercise of that function. Legal challenges by an aircraft operator to the particular penalties levied by an airport operator, by comparison, can be made in the courts in the same way as any other contractual dispute between private parties: by not paying and disputing liability to pay in defence to an action

8 Although the amount of the penalties is not fixed by the Bill itself, and this indicator of whether the penalties will

amount to a “criminal charge” is therefore absent from the Bill, other indicators suggest that they will not, e.g. they apply only to a given group (aircraft operators) rather than the public as a whole, and one of the purposes of the penalties appears to be to compensate the local population for noise pollution.


to recover the debt, or by initiating proceedings (presumably for breach of contract) against the airport in respect of its alleged wrongful levy.

1.8 We have given careful consideration to the Minister’s reasoning but we do not accept the Minister’s view that Article 6(1) ECHR is not engaged by the levying of a financial penalty because such a levy is not determinative of the aircraft operator’s liability to pay. In our view this takes the contractual analysis too far and ignores the practical reality of how such a levy will operate and be perceived. In practice, the levying of a financial penalty for breach of a regulatory requirement concerning noise will appear to the party who is the subject of the penalty to be an administrative act of a public authority determining their liability to pay money in respect of a failure to comply with such a requirement. In our view, Article 6(1) applies to such decisions to levy penalties, which determine civil rights. We draw this matter to the attention of each House.

1.9 However, the Strasbourg case-law recognises that this does not mean that the decision-maker itself must be fully Article 6(1) compliant provided there is subsequent access to a court which does satisfy the requirements of Article 6(1) in which all relevant aspects of the decision to levy the penalty can be challenged. The Minister argues that both judicial review of the establishment of a penalty scheme and contractual remedies, such as defences to actions to recover penalties as debts, or actions for breach of contract, in respect of particular penalties will be available.

1.10 In our view, however, neither of these is likely to provide a sufficient guarantee of access to an Article 6(1) compliant court to challenge the penalties. The courts’ judicial review jurisdiction is unlikely to be wide enough to permit challenges to particular penalties which are liable to raise detailed factual questions (as the Minister himself acknowledges in suggesting that judicial review challenges are most likely to occur to the establishment of the penalty scheme rather than the application of a scheme to a particular operator). Leaving an aircraft operator to rely on a defence to a debt claim brought to recover a financial penalty also falls short of providing a positive right of access to court to challenge the penalty, and an action for breach of contract is unlikely to be an appropriate vehicle for challenging the imposition of a financial penalty.

1.11 In our view, the introduction into a contractual relationship of a power to levy financial penalties for regulatory purposes in the public interest (here, the reduction of noise pollution), without also providing a means for contesting liability, reasonableness and amount of such penalties, risks incompatibility with Article 6(1) ECHR, because it amounts to the introduction of civil penalties for regulatory offences without sufficient procedural protections for the offending party. In our view, in order to make compatibility with Article 6(1) ECHR more likely, the power to levy financial penalties which is introduced by the Bill should be accompanied by better safeguards such as those which have accompanied the introduction of civil penalties levied by regulatory agencies in other contexts such as competition and tax, for example a code of practice, precise specification of the level of penalty, and the provision of a full right of appeal on grounds of liability, reasonableness and amount of the penalty. We draw this to the attention of each House.


Removal of right of appeal

1.12 Clause 7 of the Bill removes the current right of appeal to the Secretary of State against a decision of the CAA in respect of a route licence. On our preliminary consideration of the Bill we were concerned that this risked incompatibility with the right of access to a court in the determination of civil rights and obligations in Article 6(1) ECHR because of the limited scope for the exploration of factual issues in an application for judicial review. We had two main concerns.

1.13 First, we were concerned that the Government’s justification in the Explanatory Notes was relying on case-law in which there was a layer of administrative appeal from the first instance administrative decision-maker (e.g. in the planning context to the Planning Inspectorate against a decision of a local planning authority) before a further opportunity to challenge the decision in an Article 6(1) compliant court. As far as we were aware, the courts had expressed their satisfaction that Article 6(1) was complied with in light of the combined opportunities to challenge the original administrative decision at, first, the administrative appeal level and then, subsequently, the judicial level. Second, we were concerned about whether the Council on Tribunals had been consulted about the removal of this right of appeal. We therefore wrote to the Minister asking these two questions.

1.14 The Minister in his reply has confirmed that the Government is not aware of any particular examples of the European Court of Human Rights, or a domestic court, accepting that the requirements of Article 6(1) are satisfied where there is no administrative appeal against the administrative decision-maker before any appeal or application for judicial review. However, the Government considers that Bryan v UK is authority for the requirements of Article 6(1) ECHR being fulfilled by a composite approach involving a decision on the merits by an administrative decision-maker at first instance, combined with an appeal on a point of law (or on classic judicial review grounds) to an Article 6 compliant court. In other words, argues the Government, a two-stage approach is sufficient: there is no necessity for an administrative appeal against the administrative decision-maker at first instance. For the composite test to apply, the Government argues, two conditions must be satisfied: first the decision must be in a specialised area of law, and there must also be adequate safeguards at the first hearing. The critical issue, it is said, is whether the administrative procedures provide the applicant with a fair opportunity to discuss the primary facts. Both conditions are satisfied in this cases, argues the Minister.

1.15 In relation to our second concern, the Government has confirmed that it did not consult the Council on Tribunals about removing this right of appeal, because it was under no statutory obligation to do so. It did, however, give careful consideration to the question of replacing the existing right of appeal with an alternative appeal mechanism, including one put forward by the Competition Commission. The purpose of the reform, however, is explained as being to reduce the regulatory burden on the industry and to ensure that the benefits of new bilateral capacity feed through to the consumer in the shortest possible time, and those aims can only be achieved by the removal of the right of appeal to the Secretary of State without the institution of an alternative appeal mechanism.


1.16 Because the points we raised on preliminary consideration of this Bill concerned the administration of justice and access to courts, we copied our letter to the Lord Chancellor for him to make any observations if he wished. We have not received a response from the Lord Chancellor to that letter, but the Minister’s letter informs us that Lord Falconer stated that he was content with the proposal. However, the letter also informs us that the Lord Chancellor suggested that the Department “would wish to consider carefully whether recourse to judicial review would be a suitable alternative to current arrangements”.

1.17 We note the Government’s helpful statement of the purpose of the removal of the right of appeal, and its view that this purpose can only be achieved by removing the right of appeal altogether without the introduction of any alternative appeal mechanism. However we also note with interest the Lord Chancellor’s comment that the Department should consider carefully whether recourse to judicial review would be a suitable alternative to current arrangements. That is precisely the concern that we identified in our earlier report on this Bill.9 We accept that the existing administrative procedures provide affected parties with a fair opportunity to dispute the primary facts in front of the initial decision-maker, the CAA. Our concern is that, following removal of the right of appeal to the Secretary of State, recourse to judicial review to challenge that initial decision will be insufficient to satisfy Article 6(1) ECHR because of the limited scope for the exploration of factual issues on an application for judicial review.

1.18 In the absence of any authority from either the European Court of Human Rights or a domestic court accepting that the requirements of Article 6(1) are satisfied where there is no administrative appeal against the administrative decision of the first instance decision-maker before any subsequent appeal or application to an Article 6(1) compliant court, we remain of the view expressed in our earlier report that removal of the right of appeal against decisions of the CAA in respect of route licences risks incompatibility with Article 6(1) ECHR because of the limitations on the scope of the court’s jurisdiction over factual matters on judicial review. We draw this matter to the attention of each House.

9 op cit. at para. 2.12


2 Fraud Bill Date introduced to first House Date introduced to second House Current Bill Number Previous Reports

25 May 2005 HL Bill 72 None

Introduction

2.1 This is a Government Bill, introduced in the House of Lords on 25 May 2005.10 The Attorney General, Lord Goldsmith, has made a statement of compatibility with Convention rights under s. 19(1)(a) of the Human Rights Act 1998. The Explanatory Notes which accompany the Bill set out the Government’s view of the Bill’s compatibility with Convention rights at pp. 15-16.11 The Bill received its Second Reading on 22 June 2005, was considered in Grand Committee on 19 July 2005 and by a Committee of the Whole House on 31 January 2006. No date has yet been set for its Report stage. Representations on the Bill have been received from JUSTICE and have been taken into account in the drafting of this Report.12

2.2 Our Chair wrote to the Attorney General on 20 December 200513 raising one particular point about the Bill’s compatibility. We are grateful for the Attorney’s very full and prompt response by letter dated 19 January 2006.14 In this Report we give our views on the Bill’s human rights compatibility in light of that response.

The effect of the Bill

2.3 The purpose of the Bill is to reform the criminal law of fraud by replacing the existing eight deception offences contained in the Theft Acts with a general offence of fraud which can be committed in three different ways: by false representation, by failing to disclose information and by abuse of position. It also creates new offences of obtaining services dishonestly, of possessing, making and supplying articles for use in frauds and of fraudulent trading by non-corporate traders.

2.4 The Bill is the culmination of a lengthy period of consideration of fraud law reform. In 1998 the Home Secretary asked the Law Commission to consider whether the introduction of a general offence of fraud would improve the criminal law. The Law Commission published its Report on Fraud in 2002, concluding that it would improve the criminal law and recommending both that the eight Theft Act offences should be repealed and that the common law crime of conspiracy to defraud should be abolished.15 In their place the Law Commission recommended the creation of two new statutory offences, one of fraud and one of obtaining services dishonestly.

10 As HL Bill 7

11 HL Bill 7-EN

12 Appendix 2c

13 Appendix 2a

14 Appendix 2b

15 Law Com No. 276, Fraud, Cm 5560, July 2002


2.5 The Government held a consultation on the Law Commission’s proposals for reform.16 Following the consultation, the Government decided to repeal the Theft Act offences as the Law Commission recommended and introduce a general offence of fraud, but to retain the common law offence of conspiracy to defraud, which the Law Commission proposed should be abolished.

The relevant human rights standards

2.6 The Bill engages the requirement of both the common law and human rights law that criminal offences must be defined with sufficient precision to enable individuals to foresee with a reasonable degree of certainty, and if necessary with the assistance of legal advice, the consequences of their actions.

2.7 This requirement of legal certainty is both a well established requirement of the common law and a feature of many different human rights standards. The most relevant here are the right to liberty in Article 5 ECHR (requiring any deprivation of liberty to be “lawful”, which includes the requirement that the law be sufficiently certain) and the principle of no punishment without law in Article 7 ECHR. The latter is not confined to prohibiting the retrospective application of the criminal law to an accused’s disadvantage, but also requires an offence to be clearly defined in law. The requirement is satisfied where the individual can know from the wording of the relevant provision and, if need be, with the assistance of the courts’ interpretation of it, what acts and omissions will make him liable.17

The human rights implications of the Bill

2.8 In our view the Bill raises two main human rights issues:

(1) whether the new general offence of fraud in clause 1 of the Bill is defined with sufficient precision to satisfy the requirements of legal certainty in both the common law and Articles 5 and 7 ECHR; and

(2) whether the retention of the common law offence of conspiracy to defraud satisfies the same requirements of legal certainty.

(1) Legal certainty and the general fraud offence

2.9 The Explanatory Notes to the Bill state that it has been suggested that the new general fraud offence in clause 1 of the Bill is tantamount to a general dishonesty offence, because of its reliance on the requirement of dishonesty, and that it therefore lacks sufficient legal certainty.

2.10 The Law Commission in its 2002 Report on Fraud was very clearly of the view that a general dishonesty offence, that is, one which is defined only by reference to whether the defendant had acted “dishonestly” in the eyes of the fact-finder, would not satisfy the common law requirement of legal certainty: such an offence “infringes, by a margin, the

16 Fraud Law Reform (May 2004)

17 See for example Kokkinakis v Greece (1994) 17 EHRR 397 at para. 52


key principles of maximum (not absolute) legal certainty and fair warning and thus, the principle of legality”.18

2.11 Although it was less categorical that a general dishonesty offence would be incompatible with the ECHR requirement of legal certainty,19 it was unequivocal about its incompatibility with the common law principle of legality: “… a general dishonesty offence, by not requiring as an element some identifiable morally dubious conduct to which the test of dishonesty may be applied, would fail to provide any meaningful guidance on the scope of the criminal law and the conduct which may lawfully be pursued”.20 It explicitly rejected the argument that inherent uncertainty can be satisfactorily cured by the promise of prosecutorial discretion: this cannot make a vague offence clear, and in any event it is not for the police and prosecutors to decide the ambit of the criminal law.

2.12 We agree with the Law Commission that a general dishonesty offence would be incompatible with the common law principle of legality. In our view it would also be in breach of the requirement of legal certainty in Articles 5 and 7 ECHR for the same reasons. The question is whether the new general offence of fraud introduced by the Bill is such a general dishonesty offence.

2.13 The Explanatory Notes state that the new general offence of fraud is not a general dishonesty offence. They point out that although the Bill introduces a new general offence of fraud,21 it also provides for three different ways of committing the offence (by false representation, by failing to disclose information, and by abuse of position).22 Although each way of committing the offence contains a dishonesty element, the Bill requires that the dishonesty be linked to a particular act or omission: dishonestly making a false representation, dishonestly failing to disclose information he or she is under a duty to disclose, and dishonestly abusing a position in which he or she is expected to safeguard another’s financial interests. The Bill also requires that the person must intend to make a gain for themselves or another or to cause a loss or the risk of loss to another.

2.14 In our view, in light of the above, the new general offence of fraud is not a general dishonesty offence. Rather, it embeds as an element in the definition of the offence some identifiable morally dubious conduct to which the test of dishonesty may be applied, as the Law Commission correctly observed is required by the principle of legal certainty. We are therefore satisfied that, as defined in the Bill, the new general offence of fraud satisfies the common law and ECHR requirement that criminal offences be defined with sufficient clarity and precision to enable the public to predict with sufficient certainty whether or not they will be liable. We draw this matter to the attention of each House.

18 Law Com No. 276, op cit. at para. 5.25

19 op cit. at paras. 5.29–5.33

20 op cit. at para. 5.28

21 Clause 1(1)

22 Clause 1(2)(a)–(c)


(2) Legal certainty and the retention of the conspiracy to defraud offence

2.15 The common law offence of conspiracy to defraud, however, which the Bill does not abolish, is a general dishonesty offence. The Law Commission described it as “so wide that it offers little guidance on the difference between fraudulent and lawful conduct.” Under the common law offence, it may be a crime for two people to agree to do something which, in the absence of an agreement, either of them could lawfully do. The Law Commission described this as an “indefensible anomaly” and recommended its abolition.23

2.16 JUSTICE argues that the common law offence of conspiracy to defraud compromises the principle of legal certainty. It argues that it is essential that those engaged in commercial and similar activity should be able to draw a clear line between hardheaded business practices and serious criminal offences.

2.17 In its Consultation Paper on the Law Commission’s proposals, the Government described the common law offence of conspiracy to defraud as being defined “very broadly” and the range of the offence as being “arguably unfairly uncertain and wide enough potentially to encompass sharp business practice.” It proposed to implement the Law Commission’s recommendation of abolishing the offence.

2.18 On our preliminary consideration of the Bill, we noted that the reasons for the Government’s apparent change of heart between its consultation paper and the publication of this Bill were not provided. The Explanatory Notes to the Bill were silent on the issue. In response to the consultation, however, it was notable that the CPS and the Serious Fraud Office argued in favour of retaining the common law offence, preferring to preserve the prosecutorial flexibility afforded by the width of that offence. However, as the Law Commission pointed out in its report, a vague offence cannot be rendered legally certain by reliance on prosecutorial discretion. We therefore decided to write to the Minister to ask for the Government’s reasons for deciding to retain the common law offence instead of following the recommendations of the Law Commission, and for the reasons for the Government’s view that the common law offence satisfies the requirement of legal certainty.

2.19 The Attorney General’s response sets out in detail the Government’s reasons for retaining the common law offence of conspiracy to defraud, at least for the time being.

2.20 First, he indicates that he does not consider that conspiracy to defraud fails to meet the requirements of Article 7 ECHR, in light in particular of the fact that there have to date been no successful Article 7 challenges to conspiracy to defraud, and of judgments since the coming into force of the Human Rights Act 1998 finding broad common law offences such as cheating the public Revenue24 and gross negligence manslaughter25 to be compatible with Article 7 ECHR.

2.21 Second, the Attorney General points out that the majority of those who responded to the Home Office’s consultation were opposed to the repeal of conspiracy to defraud, on the basis of serious practical concerns about the ability to prosecute multiple offences and the

23 op cit. at paras. 3.2–3.5

24 R v Pattni (Crown Court, 13 November 2000) at 15H–16G of the transcript

25 R v Misra [2004] EWCA Crim 2375 at paras. 62–65


largest and most serious cases of fraud, and a desire to see how the new statutory offences worked in practice before repealing the common law offence.

2.22 Third, the Attorney General argues that even after the implementation of the Fraud Bill there will be certain conduct that can only be prosecuted as conspiracy to defraud, as well as practical reasons for preferring that charge in some complex cases. In particular, there are certain limitations on the law of statutory conspiracy. For example, statutory conspiracy requires that the parties to the conspiracy must intend that the substantive offences be perpetrated by one or more of the conspirators themselves, and also requires a degree of knowledge of the substantive offence to be perpetrated. Repealing the common law offence of conspiracy to defraud, which does not contain these restrictions, would therefore, it is argued, leave potential gaps in the law on conspiracy, which it would be better to address in the context of the Law Commission’s forthcoming report on assisting and encouraging crime generally.

2.23 Fourth, there is no evidence that the common law offence of conspiracy to defraud is being used inappropriately: fewer than 7% of all defendants in fraud cases being prosecuted under the common law offence.

2.24 For these reasons, the Government explains that although it remains its aim to repeal the common law offence of conspiracy to defraud in the longer term, immediate abolition would create considerable risks for the effective prosecution of complex fraud cases. The Government therefore proposes to ensure that the need for retention of the offence is addressed in the Home Office’s review of the operation of the Fraud Act, which will take place 3 years after its implementation, and reassess the position in light of the operation of the new offences and the Law Commission’s report on assisting and encouraging crime.

2.25 We can see the force of the Government’s reasons for wishing to retain the common law offence of conspiracy to defraud for the time being. In particular, in the interests of coherent and principled law reform, we acknowledge the practical sense in awaiting the Law Commission’s Report on encouraging and assisting crime before deciding whether or not to abolish conspiracy to defraud. However, notwithstanding that other broad common law offences have so far survived legal challenge on the ground that they lack legal certainty, we remain concerned that the common law offence of conspiracy to defraud is a general dishonesty offence and as such is not compatible with the common law and ECHR requirements of legal certainty for the reasons given above. In light of the strength of this concern, we urge the Government to reassess the issue on receipt of the Law Commission’s report on encouraging and assisting crime, and not to await the outcome of the review of the operation of the new Act in several years’ time. We draw this matter to the attention of each House.

2.26 The Attorney General also indicated in his letter that he will discuss with Counsel whether, in this special case, it is appropriate for the Notes to explain why the Bill does not repeal conspiracy to defraud. We welcome this and express the hope that such a sensible approach will be adopted in future in relation to other Bills where a human rights compatibility issue is raised by an obvious omission from a Bill. We draw this matter to the attention of each House.


Bills not brought to the attention of either House on human rights grounds

Bills not giving rise to any significant risk of incompatibility

3 Government of Wales Bill Date introduced to first House Date introduced to second House Current Bill Number Previous Reports

8 December 2005 HC Bill 121 None

3.1 This is a Government Bill, introduced in the House of Commons on 8 December 2005.26 The Rt Hon Peter Hain MP has made a statement of compatibility with Convention rights under s.19(1)(a) of the Human Rights Act 1998. The Explanatory Notes which accompany the Bill27 set out the Government’s view of the Bill’s compatibility with Convention rights at paragraphs 869 and 870. The Bill is awaiting report stage in the House of Commons.

3.2 The Bill gives effect to the proposals in the Government’s White Paper, “Better Governance for Wales”, published in June 2005.28 The Bill introduces a formal separation between the executive and legislative arms of the Welsh Assembly, enhances the legislative powers of the Assembly, and introduces reforms to the Assembly’s electoral arrangements.

3.3 The Bill expressly provides that a provision which would otherwise be within the Assembly’s legislative competence is outside that competence if it is incompatible with the Convention rights.29 It also expressly provides that a provision of an Act of the Assembly or of an Assembly Measure cannot make modifications of, or confer power by subordinate legislation to make modifications of, the Human Rights Act 1998.30

3.4 The Bill also provides that the Welsh Ministers have no power to make, confirm or approve any subordinate legislation, or to do any other act, so far as the subordinate legislation or act is incompatible with any of the Convention rights.31 It also gives the Secretary of State power to intervene in order to restrain and if necessary reverse action by the Welsh Ministers which the Secretary of State considers would be incompatible with any international obligation, and to direct them to take action which is within their powers where this is necessary in order to give effect to an international obligation.32

3.5 In light of these provisions in the Bill we do not consider that the Bill gives rise to any significant risk of incompatibility with human rights.

26 As HC Bill 100

27 HC Bill 100-EN

28 Cm 6582

29 Clause 107(6)(c)

30 Schedule 5, Part 2, para. 3 and Schedule 7, Part 2, para. 2

31 Clause 80(1)

32 Clauses 81(1) and (2)


4 National Insurance Contributions Bill Date introduced to first House Date introduced to second House Current Bill Number Previous Reports

11 October 2005 19 December 2005 HL Bill 54 None

4.1 This is a Government Bill, brought from the Commons on 19 December 2005. Lord Mckenzie of Luton has made a statement of compatibility with Convention rights under s. 19(1)(a) of the Human Rights Act 1998. The Explanatory Notes which accompany the Bill set out the Government’s view of the Bill’s compatibility with Convention rights at paragraphs 82–88.33 The Bill is due to reach its Report stage in the House of Lords on 28 February 2006.

4.2 Three aspects of the Bill engage Convention rights, but none in our view gives rise to a significant risk of incompatibility with human rights.

4.3 First, the Bill confers a power on the Treasury to make regulations to create a retrospective liability for National Insurance contributions going back to 2 December 2004.34 As the Explanatory Notes correctly identify, such a power to increase a person’s liabilities retrospectively raises the question of whether legal certainty is interfered with in such a way as to breach obligations under Article 1 Protocol 1 ECHR. The Government considers that regulations made under these powers are capable of pursuing the legitimate objective of securing public finances and the fair distribution of the contributions burden, and are capable of maintaining a fair balance between the individual’s interest and the general community interest without placing an excessive burden on the individual, and therefore that the regulation making powers do not breach Article 1 Protocol 1. We accept this explanation. The requirement of legal certainty in Article 1 of Protocol No. 1 does not amount to an outright prohibition on retrospective taxation. In National Provincial Building Society v UK, for example, the Court held that a taxation measure which had been enacted with retroactive effect did not violate Article 1 of Protocol No. 1 because the interference was justified.35 We also note that the purpose of the regulation-making power is to target arrangements which are designed to avoid liability to pay contributions, and in that context we consider that there is a reasonable expectation that the law may change with retrospective effect in order to counter such avoidance activity.

4.4 Second, the Bill enables provision to be made requiring disclosure of arrangements which avoid NICs in a similar way to the disclosure provisions for tax introduced by the Finance Act 2004. That Act requires disclosure where use of the arrangements might be expected to confer a tax advantage, that tax advantage might be expected to be the main benefit, or a main benefit, of using the arrangements, and the arrangements fall within a description prescribed by regulations. The new power will enable the disclosure of information in relation to schemes seeking to avoid only National Insurance contributions. The power clearly engages Article 8 ECHR. The Government states that it is necessary in

33 HL Bill 54-EN

34 Clauses 1–4

35 (1998) 25 EHRR 127. The measure in question was s. 53 of the Finance Act 1991, retrospectively validating taxing Regulations which had been held to be invalid by the House of Lords.


the interests of the economic well-being of the country. In our view it is unlikely to give rise to any risk of incompatibility with Article 8.

4.5 Third, the Bill provides for the making of regulations which may provide for a system of penalties on scheme providers and individuals that use the schemes which are slightly higher than normal National Insurance contributions penalties.36 The Explanatory Notes rightly say that these may be regarded as criminal penalties within Article 6(1) ECHR. This observation is in our view correct in light of the decision of the Court of Appeal in Han v Customs and Excise Commissioners holding certain civil penalties in the VAT context to be “criminal” for the purposes of Article 6 ECHR.37 We welcome the Government’s acceptance at paragraph 87 of the Explanatory Notes that the provision of an independent appeal tribunal in the system of adjudication for such penalties would be necessary to make these provisions compatible in practice with Article 6.

4.6 In light of the above we do not consider that the Bill gives rise to any significant risk of incompatibility with human rights.

36 New section 132A(2)(b) of the Social Security Administration Act 1992, inserted by clause 7(2) of the Bill

37 [2001] EWCA Civ 1040


5 Consumer Credit Bill Date introduced to first House Date introduced to second House Current Bill Number Previous Reports

18 May 2005 19 July 2005 HL Bill 64 1st Report of 2005-06

5.1 We have received a letter dated 19 January 2006 from Debt on our Doorstep38 in connection with this Bill, which is awaiting Third Reading in the House of Lords and on which we have already reported.39 In our earlier report we concluded that the unfair credit relationship provisions in the Bill were not incompatible with Article 1 Protocol 1 ECHR because, amongst other reasons, creditors can and should be able to obtain sufficient guidance about the meaning of “unfairness” by seeking legal advice about the meaning of that term in other closely analogous contexts. Debt on our Doorstep points out that many borrowers will be on low incomes but not eligible for legal aid and will not therefore be in a position to obtain legal advice about the meaning of “unfair”. They argue that the Government will be acting incompatibly with its obligations under the HRA if it does not put in place measures to ensure access to specialist legal advice for borrowers.

5.2 In view of the advanced stage already reached by this Bill we do not comment in detail on this submission. We would merely observe that our earlier consideration of the compatibility of the unfair credit relationship provisions was concerned with whether they interfered with the creditor’s right to peaceful enjoyment of possessions by providing for the taking away of their property on a basis which was not made sufficiently clear in law. Debtors stand to gain by the operation of the unfair credit relationship provisions and their right to peaceful enjoyment of possessions therefore is not engaged by these provisions. The question of their access to advice therefore does not in our view arise when assessing the human rights compatibility of the unfair credit relationship provisions in the Bill.

38 Appendix 3

39 First Report of Session 2005–06, Legislative Scrutiny: First Progress Report, HL Paper 48, HC 560


Formal Minutes

Monday 27 February 2006

Members present:

Mr Andrew Dismore MP, in the Chair

Lord Bowness Lord Campbell of Alloway Lord Judd Lord Lester of Herne Hill Lord Plant of Highfield Baroness Stern

Mary Creagh MP Dr Evan Harris MP Dan Norris MP Mr Richard Shepherd MP

Draft Report [Legislative Scrutiny: Sixth Progress Report], proposed by the Chairman, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1.1 to 5.2 read and agreed to.

Summary read and agreed to.

Resolved, That the Report be the Fourteenth Report of the Committee to each House.

Several Papers were ordered to be appended to the Report.

Ordered, That the Chairman do make the Report to the House of Commons and Baroness Stern do make the Report to the House of Lords.

********

[Adjourned till Monday 6 March at 4pm.


Appendices

Appendix 1: Letter from Lord Davies of Oldham, Government Whips Office, House of Lords, re Civil Aviation Bill

Thank you for your letter of 16 January regarding the human rights compatibility of the Bill.

FINANCIAL PENALTIES

You have asked what remedies would be available to an aircraft operator that wishes to challenge a penalty that has been imposed on it. For the reasons set out below we remain confident that new sections 78A and 78B and 38A to C are compatible with the Convention.

You have correctly referred to the right of the aircraft operator to make representations before a penalty is imposed, but the aircraft operator also has that right after a penalty has been imposed and any scheme must provide for the cancellation of a penalty if an airport operator believes it appropriate—new clauses 78A(4) and (5) and 38C(4) and (5).

The basis of an airport charging regime is contractual; airport operators set out the terms and conditions on which aircraft operators may use an airport’s facilities and aircraft operators accept those terms and conditions by their conduct in using the airport. An airport operator’s freedom to contract with its customers is not unlimited. First, where the airport’s turnover exceeds £1 million the airport operator requires permission from the Civil Aviation Authority to levy airport charges (s 37(1) of the Airports Act 1986). Where an airport operator with sufficient turnover does not have the necessary permission he may not recover any charges purportedly due from any aircraft operator (s 37(8) of the Airports Act 1986). Second, contract law precludes the imposition of a penalty whereby one party seeks to recover from its contractual partner a sum of money that exceeds the damage actually caused by that partner’s breach of contract.

New clauses 78A and 78B and 38A to C allow an airport to include in its terms conditions that relate to compliance by an aircraft operator with a noise control scheme or other noise-related measures. Non-compliance with a noise control scheme may result in a financial penalty being levied on an aircraft operator. (The proposals in the Civil Aviation Bill do not affect the existing position in relation to the economic regulation of airports; by schedule 2 of the Bill ‘noise scheme penalties’ are explicitly excluded from the definition of airport charges in Part 5 of the Airports Act 1986 and s88 of the Civil Aviation Act 1982. An aircraft cannot be detained for non-payment of a noise penalty.) The proposals in the Bill are relevant where breaches of a noise control scheme do not inflict damage on the airport operator, but on the local community as a result of a temporary worsening of the noise climate at or near the airport.

At some airports the airport operator already levies noise supplements in respect of the use of aircraft in breach of noise amelioration requirements, such as departure noise limits. This is done through the airports’ terms and conditions. Other airports have been reluctant to take such steps in the absence of explicit power to do so. The provisions in the Bill aim to regularise the existing practices and encourage their take-up by other airports. In my Written Answer on 20 December 20051 I provided details of the airports at which penalties are currently used.

1 Column WA 241


We recognise that because the clauses give airport operators a right not given to other legal persons it is possible that the power conferred on airport operator may be interpreted as a public function. When performing a public function, private entities, such as an airport operator, may be subject to judicial review. A legal challenge in the Administrative Court would seem most likely to occur when the challenge relates to the establishment of the penalty scheme by the airport operator.

Where a challenge relates to the application of a scheme by an airport operator we consider that the existing court mechanisms for dispute resolution will be available to an aircraft operator. A dispute between an aircraft operator and an airport as to airport charges payable is justiciable by the courts in the same way as other contractual disputes. Section 88(12) of the Civil Aviation Act 1982 states that the right of an airport operator to detain an aircraft for non-payment of airport charges does not prejudice the right of that operator to recover the charges by action. Accordingly, the right to recover a debt owed by one party to another exists and the Civil Aviation Act 1982 does not restrict that right or affect the ability of the aircraft operator to dispute that the charges are in fact due. Similarly, where an aircraft operator disputes a noise scheme penalty he may challenge it, either by initiating proceedings against the airport in respect of its alleged wrongful imposition or by defending any attempt by the airport to recover the amount of the penalty from the operator. To the extent that there is an overlap between the ‘public’ and ‘private’ law elements in a challenge, we believe that an aggrieved aircraft operator will be able to advance arguments on both in any private law claim: Roy v Kensington Family Practitioner Committee,2 Wandsworth London Borough Council v Winder3 and Rhondda Cynon Taff County Borough Council v Watkins.4

In order for Article 6 of the Convention to be engaged there must be a determination of a dispute concerning a civil right or obligation. A determination must be both decisive and final. You have suggested that the decision by the airport operator would be determinative. However, as noted above our view is that the exercise by a party to an agreement of what it believes to be its rights under that agreement would not be final; disputes as to correct implementation of an agreement are justiciable by the courts. Moreover, in exercising its rights under an agreement a party would not be acting so as to resolve any legal claim or dispute; exercise of such rights would create a dispute between the parties determination of which engages Article 6: Kaplan v UK.5

REMOVAL OF RIGHT OF APPEAL

Turning to your next question concerning the removal of a right of appeal in Clause 7 of the Bill, the Government is not aware of any particular examples of the European Court of Human Rights, or a domestic Court, accepting that the requirements of Article 6(1) are satisfied where there is no administrative appeal against the administrative decision-maker before any appeal or application for judicial review.

However, we consider that Bryan v UK6 is authority for the requirements of Article 6(1) being fulfilled by a composite approach involving a decision on the merits by an administrative decision-maker at first instance, combined with an appeal on a point of law (or on classic judicial review grounds) to an Article 6 compliant Court. In other words, a two-stage approach, such as we are proposing in this instance, is sufficient. There is no necessity for an administrative appeal against the administrative decision-maker at first instance. 2 [1992] 1AC 624

3 [1985] AC 46

4 [2003] 1 WLR 186

5 (1980) 4 EHRR 64

6 21 EHRR p. 342


For the composite test to apply, two conditions must be satisfied. Firstly the decision must be in a “specialised area of the law”, where limited judicial review on questions of fact “can reasonably be expected”. We believe that this is clearly satisfied in relation to air transport licensing (see paragraph 56 of judgment of Lord Hoffman in Runa Begum v Tower Hamlets LBC7). Secondly, there must also be adequate safeguards at the first hearing. The critical issue is whether the administrative procedures provide the applicant with a fair opportunity to discuss the primary facts. We are of the view that these procedural rules are met (see regulation 26 of the Civil Aviation Authority Regulations8).

We can confirm that the Council on Tribunals have not been consulted about this right of appeal, as Section 8 of the Tribunals and Inquiries Act 1992 does not apply in this case. We did, however, give careful consideration to the question of replacing the existing right of appeal with an alternative appeal mechanism. Beside our general consultation on the proposal, which embraced the industry, the CAA, the Air Transport Users’ Council and other interested parties, we consulted the DTI and through them the Competition Commission on this specific aspect.

The Commission did put forward an alternative appeal mechanism based upon a new form of regulatory appeal which they have devised. We considered this carefully but found that it would both take considerably longer than the average time currently taken by the Secretary of State to determine an appeal and involve a greater number of hearings for which the industry participants would need to make extensive preparations. We concluded accordingly that the Commission’s proposal would not further the main purposes of the reform, which are to reduce the regulatory burden on the industry and to ensure that the benefits of new bilateral capacity feed through to the consumer in the shortest possible time.

I hope that this reassures you that in drawing up this proposal we sought advice from the specialist bodies which appeared to us to possess the greatest experience of the competition and consumer issues which lie at the heart of the route licensing cases over the allocation of scarce bilateral capacity. As however we have been unable to discover an alternative appeal mechanism which would be an improvement of the current system, I am persuaded that the aims of the reform can only be achieved by the removal of the right of appeal to the Secretary of State without the institution of an alternative mechanism.

We also consulted the Department for Constitutional Affairs when the Secretary of State wrote to colleagues on the Cabinet Committee for Domestic Affairs seeking their agreement to the reform. Lord Falconer stated that he was content with the proposal. He suggested that the Department would wish to consider carefully whether recourse to judicial review would be a suitable alternative to current arrangements, which we have done, but drew reassurance from the fact that the industry, the CAA and the Air Transport Users’ Council would be consulted.

I am copying this letter to the Lord Chancellor and to the Leader of the House of Lords.

30 January 2006

7 [2003] 2 AC p. 442

8 S.I. 1991/1672


Appendix 2(a): Letter from the Chair to Rt Hon The Lord Goldsmith QC, Attorney General, re Fraud Bill

The Joint Committee on Human Rights is considering the human rights compatibility of the Fraud Bill, and would appreciate your answer in relation to one particular point which has arisen from the Committee’s scrutiny of the Bill’s compatibility.

In the Committee’s view, the new general offence of fraud in clause 1 of the Bill is defined with sufficient precision to satisfy both the common law and the ECHR requirements that criminal offences be defined with sufficient clarity and precision to enable the public to predict with sufficient certainty the circumstances in which they will be liable to prosecution. The Committee agrees with the statement in the Explanatory Notes accompanying the Bill that the new general offence of fraud is not a general dishonesty offence. It accepts that, as drafted, clause 1 of the Bill embeds as an element in the definition of the offence some identifiable morally dubious conduct to which the test of dishonesty may be applied, as the Law Commission in its Report correctly observed is required by the principle of legal certainty.

However, the Committee is concerned that the Bill fails to abolish the common law offence of conspiracy to defraud. It notes that, unlike the new statutory offence of fraud in clause 1 of the Bill, the common law offence of conspiracy to defraud is a general dishonesty offence and as such may not be compatible with the common law and ECHR requirements of legal certainty. The Committee notes that the Law Commission described it as “so wide that it offers little guidance on the difference between fraudulent and lawful conduct.” Under the common law offence, it may be a crime for two people to agree to do something which, in the absence of an agreement, either of them could lawfully do. The Law Commission described this as an “indefensible anomaly” and recommended its abolition.

The Committee also notes that in its Consultation Paper on the Law Commission’s proposals, the Government described the common law offence of conspiracy to defraud as being defined “very broadly” and the range of the offence as being “unfairly uncertain and wide enough potentially to encompass sharp business practice.” It proposed to implement the Law Commission’s recommendation of abolishing the offence. The reasons for the Government’s change of heart between its consultation paper and the publication of this Bill are not provided. The Explanatory Notes to the Bill are silent on the issue.

In light of the above, please could you explain the Government’s reasons for deciding to retain the common law offence of conspiracy to defraud instead of following the recommendation of the Law Commission that it be abolished, and provide the reasons for the Government’s view that the common law offence satisfies the requirement of legal certainty?

I would be grateful if you could let me have your response to this query by 20 January 2006.

20 December 2006

Appendix 2(b): Letter from Rt Hon The Lord Goldsmith QC, Attorney General, to the Chair, re Fraud Bill

Thank you for your letter of 20 December.

I am grateful for your agreement that the general offence of fraud in the Fraud Bill satisfies ECHR requirements.


You have however expressed concern about the Government’s decision to retain the common law offence of conspiracy to defraud for the meantime.

You refer to the Government consultation on the Law Commission proposals. Your letter omits one word from the Government’s consultation paper: the paper said that conspiracy to defraud was ‘arguably unfairly uncertain’ (para. 4). This reflects the Law Commission view. The Law Commission stated that ‘general dishonesty offences (such as conspiracy to defraud) could perhaps be found to be compatible with the requirements of article 7’ (paragraph 5.33 of their 2002 Report). In view of the ECHR caselaw—some of which is referred to by the Law Commission—I would be sanguine about dealing with any challenge that might arise.

Article 7 of the ECHR requires that an offence should be clearly described by law. This requirement is met “where an individual can know from the wording of the relevant provision and, if need be, with the assistance of the Courts’ interpretation of it, what acts and omissions will make him liable” (Kokkinakis v Greece, 25th May 1993). The question is whether this foreseeability requirement is met by the offence of conspiracy to defraud. To date there have been no successful Article 7 challenges to conspiracy to defraud. However, the High Court has ruled that the common law offence of cheating the public revenue is compliant with Article 7 (see R v Pattni (13th November 2000)) even though it is heavily reliant on the element of dishonesty. Further, other broad offences have been found to be compatible with Article 7, for example, the Court of Appeal have recently held that the common law offence of gross negligence manslaughter is sufficiently certain (see R v Misra [2004] EWCA Crim 2375). Accordingly, I do not consider that conspiracy to defraud fails to meet the requirements of Article 7.

The Government’s consultation paper provided a statement of the arguments both for and against retention (paras. 37–38) and concluded by asking consultees whether they agreed that all the behaviour which is in practice rightly prosecuted as conspiracy to defraud could be prosecuted as fraud under the Bill (or under another existing law).

The majority of those who expressed their views on this point to the Home Office were opposed to the repeal of conspiracy to defraud. As is their normal practice, the Home Office published a response to the comments received, which makes this clear. I enclose a copy for ease of reference. The issue is dealt with at paragraphs 39–45.9 As you will see, there were serious practical concerns over the implications for repealing the offence voiced across a wide spectrum, including senior Appeal Court judges, in particular in relation to the ability to prosecute multiple offences and the largest and most serious cases of fraud. There was also a strong view expressed that that any repeal of conspiracy to defraud should only take place after the new offences had been tested by the courts.

It was against this background that the Government took the decision to retain common law conspiracy for the meantime.

We have also had debates on this issue in the House of Lords, both at second reading and in Committee.

We believe that the more general new offences in the Fraud Bill should ensure that almost all fraudulent conduct involving dishonesty will in the future constitute a substantive offence. However, even after the implementation of the Fraud Bill there will be certain conduct that can only be prosecuted as conspiracy to defraud. There may also be practical reasons for preferring that charge in some complex cases. Examples of such cases are given in an annex to this letter.

9 Not published. Available on Home Office website


The Law Commission identified some areas of potentially criminal conduct which may fall outside the Fraud Bill offences:

• dishonestly failing to fulfil a contractual obligation;

• dishonestly infringing another’s right.

In these cases they concluded that it would be an ‘excess of caution’ to retain common law conspiracy to defraud on the grounds that it might on occasion be useful in such cases.

Even if this view is accepted, a technical difficulty remains as regards conduct that cannot be prosecuted as statutory conspiracy because of limitations in that area of the law. For statutory conspiracy there is the requirement that the parties to the conspiracy must intend that the substantive offences be perpetrated by one or more of the conspirators, which can create a problem in cases where the final offence is committed by someone outside the conspiracy. Second, statutory conspiracy requires a degree of knowledge of the substantive offence to be perpetrated which means it is difficult to use against persons who are ignorant of the details of the fraud. Conspiracy to defraud does not contain the same limitations. It is true that depending on the circumstances both such types of cases may sometimes be prosecuted as aiding and abetting. However, that is not always possible.

In their report on fraud the Law Commission stated that these potential gaps in the law would be ‘more appropriately dealt with in the context of our work on assisting and encouraging crime generally, rather than as a problem peculiar to fraud’ (footnote 15 on page 101). This work is still ongoing. Thus, on the Law Commission’s analysis, the full conditions which would enable common law conspiracy to defraud to be repealed have not yet been created.

I do not think there is any evidence that the common law offence is used inappropriately. In 2003, 14,928 defendants were proceeded against in England and Wales for crimes of fraud; 1018 of these were for the common law crime of conspiracy to defraud. That means that fewer than 7% of all defendants in fraud cases were prosecuted under common law conspiracy to defraud.

One of the reasons for this is that the CPS issues guidelines to prosecutors that the use of this charge should be considered if:

• any substantive offences are no more than steps to achieve a wider dishonest objective

• the aim of the offending is to swindle a large number of people and conspiracy to commit substantive offences does not meet the justice of the case

• it should not be used if statutory conspiracy is more appropriate.

We would expect that the common law offence will be used to an even lesser extent after the Fraud Bill is enacted.

The backdrop against which complex criminal cases are investigated and prosecuted is changing, and the Government has stated it remains its aim to repeal the common law offence of conspiracy to defraud in the long-term. However, until this backdrop is more settled and the application of current and projected changes clear, the abolition of common law conspiracy to defraud would create considerable risks for the effective prosecution of complex fraud cases. As I said in the Second Reading debate, our approach is thus to reassess the position once the Government has had the opportunity to consider the operation of the new fraud offences and of the multiple offending provisions in the


Domestic Violence, Crime and Victims Act 2004; as well as the Law Commission’s forthcoming report on assisting and encouraging crime.

You may find it helpful to see the enclosed copy of a letter to me from Lord Justice Rose, and which addresses the issue of conspiracy to defraud. Having studied it and the other evidence, I am personally convinced that we must keep this offence, at least for the time being.

Whether there is a continuing need for retention of the common law offence is one of the issues that I will ensure is addressed in the Home Office review of the operation of the Fraud Act. The Government’s commitment to review the operation of the Act 3 years after its implementation is made in the Regulatory Impact Assessment.

The Explanatory Notes to the Bill do not deal with the issue, as repeal does not form part of the Bill. However, we will discuss with Counsel whether, in this special case, it is appropriate for the Notes to explain why the Bill does not repeal conspiracy to defraud.

19 January 2005

ATTACHED LETTER FROM THE RT HON LORD JUSTICE ROSE, VICE-PRESIDENT, COURT OF APPEAL CRIMINAL

DIVISION, ROYAL COURTS OF JUSTICE, TO THE ATTORNEY GENERAL

I see that there was some controversy in the Lords on 19 July during Committee Stage of the Fraud Bill on the issue of the repeal of the common law of conspiracy to defraud. I understand that it would be helpful to the House if I make clear the views of the Rose Committee on this particular point.

We discussed some aspects of the Government’s Consultation Paper on Fraud Law Reform with Home Office officials on 30 June 2004. White the Committee does not have the time or resources to analyse every provision of each Bill, we did make clear our views on some salient points, including the proposed repeal of conspiracy to defraud. We said that it would be risky to repeal common law conspiracy to defraud, as it can be the most effective charge in a case where multiple defendants are engaged in a fraudulent course of conduct. There are limitations on the law of statutory conspiracy, which has had something of a chequered history. All the judges present at the meeting agreed the Bill should not repeal common law conspiracy to defraud.

For the record, the other point on which we expressed strong concern was the idea of extending the new offence of fraud by failing to disclose information to situations where there is no legal duty to disclose.

We are content that the Government has met both these points in the Bill which is now before the Lords.

July 2005

Annex: Common Law Conspiracy to Defraud—examples of cases where the charge will be used even after the passage of the Fraud Bill

CONDUCT WHICH COULD NOT BE PROSECUTED IF CONSPIRACY TO DEFRAUD WERE ABOLISHED

There are limitations on statutory conspiracy which do not apply to the crime of common law conspiracy to defraud.

A practical example would be where a person allows his bank account to be used by a third party as a vehicle in the transfer of funds (typically from overseas) which form part of


a conspiracy to defraud. The defendant in this case may not know the details of the fraud (and hence not be guilty of a statutory conspiracy) but he may know enough for his behaviour to be regarded as dishonest, and for him to be charged with common law conspiracy.

CONDUCT MORE EFFECTIVELY PROSECUTED AS CONSPIRACY TO DEFRAUD

There will also remain cases where the interests of justice can only be served by presenting to a court an overall picture which cannot be achieved by charging a series of substantive offences or statutory conspiracies. Typically, such cases will involve:

• evidence of several significant but different kinds of criminality;

• several jurisdictions;

• different types of victims, e.g. individuals, banks, web site administrators, credit card companies;

• organised crime networks.

The following example illustrates a standard large scale “credit card scam”.

Over a period of time, A, B, C and others unknown:

• dishonestly obtain credit card numbers held abroad;

• dishonestly gain access to legitimate credit card balance checking services and select individual card holders with large amounts of credit available;

• conduct biographical research to gather sufficient personal information about compromised cardholders to be able to impersonate them;

• take over accounts, impersonating the account holders, changing the billing address and obtain duplicate cards (A does this);

• produce counterfeit identity documents then used to rent accommodation, internet “office space” and to open bank accounts.(B does this)

• use the accounts to purchase expensive goods which are then delivered to the accommodation addresses (C does this)

After the passage of the Fraud Bill it will be possible to prosecute A, B and C for substantive offences under that legislation but they have no “common purpose” that links them together under any single provision either of the Fraud Bill or of any of the Theft Acts.

As a result, the indictment against them would have to contain hundreds of separate counts; it is also almost inevitable that A, B and C would be tried separately. In those separate trials much of the evidence in one case would be deemed inadmissible in another. The new evidential rules on bad character, contained in the Criminal Justice Act 2003, might allow the introduction of additional evidence, but it would have to be given in each separate trial and the considerations would be different in each case.

On the other hand, if the case were prosecuted as a conspiracy to defraud the indictment would consist of one precise, clear and short count alleging that the defendants:


‘ … conspired together and with others to defraud banks, credit card providers and their customers by

• obtaining personal banking details;

• dishonestly using such information to effect changes of billing addresses;

• dishonestly obtaining goods and services;

• exposing banks to a liability to compensate account holders in the sums withdrawn’.

Thus the indictment can reflect the nature and extent of the criminal conduct in a way that prosecuting only the underlying statutory offences could not. It would provide the basis for an appropriate sentence under all the circumstances of the case in a way that prosecution for the underlying statutory offences would fail to do.

Appendix 2(c): Submission from JUSTICE re Fraud Bill

INTRODUCTION

1. JUSTICE is a British-based human rights and law reform organisation with around 1600 members. Its mission is to advance justice, human rights and the rule of law. It is also the British section of the International Commission of Jurists.

2. We are grateful for the opportunity to provide evidence to the Committee, and are happy for our responses to be made public. We have already briefed the House of Lords at Committee stage regarding this Bill, and will be providing them with a further briefing and suggested amendments at Report stage.

SUMMARY

3. We welcome the attempt in the Fraud Bill to simplify the existing law and reduce the number of fraud-related offences. Our concerns about its provisions centre upon overbreadth. Many of the new offences are overbroad, embracing conduct that we believe should not fall within the remit of the criminal law. The Bill also fails to repeal the very broadly defined offence of conspiracy to defraud.

4. Overbroad criminal offences can be applied arbitrarily, impacting upon the principle of legality, which is enshrined not only in Article 7 but also Article 5 of the European Convention. They can also affect the right to a fair trial under Article 6. We therefore recommend the amendment of some of the Bill’s provisions.

5. We are also concerned at the Government’s proposal to enact section 43 of the Criminal Justice Act 2003. An amendment was tabled to the Fraud Bill (but not debated) at Lords Committee stage repealing this section. We believe that the enactment of section 43 would compromise the fairness of trials in what are, necessarily, serious criminal cases. We therefore believe that it should be repealed.

CONSPIRACY TO DEFRAUD

6. We agree with the Law Commission that the offence of conspiracy to defraud is an ‘indefensible anomaly’ in the criminal law.10 Its definition is so wide as to encompass

10 Law Commission Report No. 276, para. 1.4


conduct agreed between two parties that, in the absence of the agreement, each could do lawfully. In our view, this is wrong in principle.

7. Further, offences with such wide definitions compromise the principle of legal certainty; it is necessary that an individual can know in advance whether his conduct is criminal11 and that the offence is clearly defined in law.12 In the case of this offence, it is essential that those engaged in commercial and similar activity should be able to draw a clear line between hardheaded business practices and serious criminal offences.

8. Article 7 of the European Convention also requires that

constituent elements of an offence such as, e.g. the particular form of culpability required for its completion may not be essentially changed at least not to the detriment of the accused, by the case law of the courts.13

9. We are further concerned by the impact of overbroad criminal offences upon the trial process. If an offence is overbroad, the details of the offence provided to the accused at charge may not be sufficient to allow him to know the details of the allegation against him and, therefore, to prepare his defence. If the prosecution are able to change the details alleged during the course of the pre-trial or trial process, because the charge selected is an overbroad ‘umbrella’ embracing a variety of different kinds of conduct, then this will evidently affect the accused’s ability to answer the charge.

10. We therefore support the repeal of the common law offence. The new offences in the Bill, together with other pre-existing offences, should be sufficient to deal with most fraudulent conduct that is rightly the subject of the criminal law. If there are gaps in the law these should, we believe, be dealt with by the creation of further specific offences, rather than a ‘catch-all’ provision. The Government itself, last October, noted that ‘[i]t is normally fundamental to a codification exercise such as this, that the common law should be repealed in favour of the new statute’.14

11. The Government has argued that some types of conspiracy cannot successfully be prosecuted in a single trial without this provision, as unless the conspirators have a degree of knowledge of the substantive offence to be committed, they cannot be guilty of statutory conspiracy.15 However, in some cases conspirators involved at early stages may be guilty of substantive offences, such as the offence in clause 7 of the Bill, which are sufficient to reflect their criminality. The law of statutory conspiracy could also be amended to cover this situation, in preference to maintaining an anomalous common law offence.

12. We therefore recommend that the common law offence should be abolished and, if necessary, new provisions be inserted into the Bill by amendment to cover circumstances where prosecution is appropriate but the existing statutory offences, in the Bill and elsewhere, do not apply.

CLAUSE 4: FRAUD BY ABUSE OF POSITION

13. We believe that this offence should only be committed where a person is under a legal duty to safeguard, or not to act against, the financial interests of another person. The use of the term ‘position in which he is expected to’ do so is vague, compromising legal

11 G v France (1995) 21 EHRR 288, 295 Com Rep, para. 32

12 Kokkinakis v Greece (1993) 17 EHRR 397 para. 52

13 X Ltd and Y v United Kingdom (1982) 28 DR 77, para. 9, EComm HR

14 ‘Fraud Law Reform: Government Response to Consultations’, para. 39

15 Lord Goldsmith, Lords Hansard, 19 July 2005, col. 1443


certainty, and is likely to lead to lengthy argument in court as to whether a person occupies such a position or not. A series of Court of Appeal rulings relating to various ‘positions’ may be needed to avoid inconsistent verdicts.

14. The current definition also gives rise to the question of who it is who is ‘expecting’ the defendant to safeguard another’s financial interests or avoid acting against them—is it the person whose interests are concerned, a third party, a ‘reasonable person’? If a person unreasonably expects another to safeguard their financial interests then this should not give rise to liability under this section. Further, if there was no legal duty to do so and the defendant was not aware that he was ‘expected’ to do so, he should not, in our view, be liable for this offence.

15. The requirement that there be a legal duty would not, in our view, make the ambit of the offence too narrow. It would apply to agents and trustees. It could also, we believe, apply to employees, either by virtue of inclusion (express or implied) of such a duty in their contract of employment or by the finding of an agent-principal relationship between them.

16. The need for the somewhat vague concept of ‘abuse’ of position arises from the use of ‘position’ in this clause. We believe that if the requirement of a ‘legal duty’ were imposed, the offence would be better expressed in terms of the dishonest ‘breach’ of a legal duty.

17. Further, we believe that the offence should only give rise to liability for intention to cause loss or risk of loss where the person suffering the loss is the same person to whom the duty is owed. It is, in our view, illogical that the mere existence of a duty towards party A may result in liability for an intention to cause loss to party B, who may be completely unrelated to A. What would therefore be required would be the dishonest breach of a legal duty to safeguard, or not to act against, another’s financial interests, intending by means of the breach to make a gain for himself or another, or to cause loss to the person whose interests he was under a duty to safeguard/not to act against, or expose that person to a risk of loss.

CLAUSE 5: ‘GAIN’ AND ‘LOSS’

18. Clause 5 (3) provides that ‘gain’ (in clauses 2 to 4) includes a ‘gain by keeping what one has, as well as a gain by getting what one does not have’. In our view, a distinction should be drawn between a situation where the defendant seeks to retain something to which he has a claim of right, or of which he is in lawful possession, and a situation where he seeks to retain an ‘ill-gotten’ gain—for example, the proceeds of crime—or property to which he is no longer legally entitled.

19. Further, we believe that the inclusion of loss of a chance in clause 5(4) should be restricted to the loss of a chance of something that the ‘loser’ had a claim to, or was entitled to bid for, etc.

20. Under the current drafting of these definitions, where a person is asked for a loan by a friend, and, because he does not wish to make the loan, lies to him—saying he has no money—he would arguably fall within the offence under clause 2. In our view, this is not conduct of a type that the criminal law should seek to restrain. The maker of the statement has kept only property that is rightfully his. The person to whom the statement was made has lost only a chance of something to which he had no lawful claim.

21. A further problem is that the intention to cause loss ‘by not getting what one might get’ may be difficult to prove. Unless the definition is to be wholly subjective (i.e. it would be immaterial whether there was a real chance of the loser making a gain as long as the


defendant believed that the chance existed), there may be scope for argument in court about whether there was indeed any chance of a gain being made. Even if the problems of proof are overcome, the sentencing exercise may be rendered difficult by arguments concerning the probability of the chance that was lost.

22. We therefore recommend firstly, that a person should not be guilty of fraud by virtue of retaining something that is and remains lawfully his, and secondly, that the loss of a chance should include only a chance of something that the loser could lawfully claim or for which he was entitled to bid, etc.

CLAUSE 6: POSSESSION ETC OF ARTICLES FOR USE IN FRAUDS

23. In its current drafting this offence does not contain an express mens rea requirement. This contrasts with the offence under Clause 7 (making or supplying articles for use in frauds), which requires knowledge that an article is designed or adapted for use in the course of or in connection with fraud, or intention that it be used to commit, or assist in the commission of, fraud.

24. The phrase ‘for use in the course of or in connection with’ in subclause 6(1) originates from the offence of ‘going equipped’ under section 25(1) of the Theft Act 1968. The courts have interpreted that section as establishing a requirement of intention.16 However, we believe that a fundamental element such as mens rea should not be dependent on judicial interpretation, particularly in the case of an offence such as this, where without mens rea possession of all kinds of innocent objects could result in liability.

25. Further, the phrase ‘in the course of or in connection with’ is in our view undesirable, as it could embrace articles with only a tangential connection to fraud. This is of particular concern in the absence of an express mens rea requirement, and in the context of an imprisonable offence.

26. We therefore recommend that the offence be confined to articles that the defendant intends to be used to commit a fraud or in furtherance of an offence of fraud, whether by himself or another person. There should be no need to prove that the defendant has a specific fraud in mind. Fraud should be defined by reference to clause 1 of this Bill.

CLAUSE 7: MAKING OR SUPPLYING ARTICLES FOR USE IN FRAUDS

27. In our view, this offence has been inadvertently drafted so as to include those whose actions should be legally justified—for example, the person who supplies an article he knows to have been adapted for use in frauds to the police, or the person who adapts an article that he knows has been made for use in frauds so as to render it unusable for that purpose.

28. In our view, a person should be liable under section 7(1)(a) when they make or adapt any article intending to render it suitable for use in the commission of, or the furtherance of, fraud, or when they supply or offer to supply any article knowing that it is designed or adapted for those uses.

PARTICIPATING IN FRAUDULENT BUSINESS CARRIED ON BY SOLE TRADER ETC

29. The offence of fraudulent trading under section 458 of the Companies Act 1985 is, in our view, undesirably vague. The offence of carrying on a business ‘for any fraudulent purpose’ under the section

16 See R v Ellames, 60 Cr.App.R. 7, CA


connotes an intention to ‘go beyond the bounds of what ordinary decent people engaged in business would regard as honest’ … or ‘involving, according to the current notions of fair trading among commercial men, real moral blame’.17

30. While we support the extension of criminal liability to those who carry on a business in order to commit offences of fraud, we do not support the extension of liability under an overbroad provision to new categories of person. We therefore recommend that either a new, tighter, definition of ‘fraudulent purpose’ is provided for in clause 9(5) or that the phrase is avoided in favour of reference to specific offences such as fraud and theft.

CLAUSE 11: OBTAINING SERVICES DISHONESTLY

31. While we are generally supportive of this new offence, we believe that more clarity is required in relation to the phrase ‘dishonest act’ in Clause 11 (1) (a). There should be a specific mens rea requirement for this offence, namely that the defendant ‘dishonestly’ obtains services, by an act, and in breach of subclause (2). While this may be what is intended, it could be argued under the current wording that an act is intrinsically dishonest, and therefore there is no need for a finding that the person was dishonest. In our view, such an interpretation would be contrary to principle and should be avoided by amendment.

CLAUSE 12: LIABILITY FOR COMPANY OFFICERS FOR OFFENCES BY COMPANY

32. We are concerned by the concept of ‘consent or connivance’ under this clause. There is no express requirement here that the individual corporate officer need have been dishonest or that he need have had the relevant intention as to gain or loss necessary for the specific offence to be committed.

33. We would welcome an express reference to the necessity that the corporate officer must act with the relevant mens rea and that his actions must form part of the fraud by the company, or assist in it.

CLAUSE 13: EVIDENCE

34. Subclause 13(4)(b) (‘any other offence involving any form of fraudulent conduct or purpose’) is, we believe, overbroad. In our opinion, provisions that provide for compulsory questioning should be narrowly prescribed. Therefore, if offences other than those in the Bill are to be included within the ambit of subclause 13(1), we believe that these should be listed.

TRIAL BY JURY

35. We believe that, in an adversarial system of justice, the availability of trial by jury in all but minor criminal cases is a fundamental right, vital to the maintenance of the rule of law, and that it should never be abridged.18 It provides a bulwark against oppressive or politically motivated prosecutions and enhances the transparency of the criminal process. It also promotes public confidence in criminal justice.

17 Archbold 2005, 30–143

18 We note Auld LJ’s argument that there is no ‘right’ to trial by jury, in his Review of the Criminal Courts. However, based on the recognition of such a right in the 6th amendment to the US Constitution, s24(e) of the New Zealand Bill of Rights Act 1990,and s11(f) of the Canadian Charter of Rights and Freedoms 1982, and s80 of the Commonwealth of Australia Constitution Act 1900, we are persuaded that it has the status of a fundamental right


36. The enactment of section 43 of the Criminal Justice Act 2003 would remove some of the safeguards of the adversarial process. For example, the tribunal of fact would hear inadmissible evidence during admissibility arguments, and it would be ‘case-hardened’, especially if a small and specially trained pool of judges were created to hear the judge-only cases. The ‘Diplock’ courts in Northern Ireland have been criticised on both these grounds.19 It is true that these disadvantages apply to the magistrates’ courts. However, there is an automatic right of appeal from magistrates’ courts to the Crown court, and the appeal consists of a re-hearing of the case.

37. We therefore believe that to provide for trial by judge alone in the Crown Court would compromise the fairness of trials. It would be particularly undesirable for standards of fairness to be lower in serious frauds than in other, perhaps less serious, cases. We do not believe that there is any principled justification for treating serious frauds differently from other indictable offences.

38. We agree that cases that are unnecessarily long and complex are not in the interests of justice and are extremely burdensome for all involved. However, cases can be reduced to a manageable length without removing jury trial, through a combination of measures, many of which have only recently been, or are soon to be, introduced and which have not yet had time to show their effects.

39. Both the Criminal Procedure Rules 2005 (which came into force on 4th April 2005) and the Lord Chief Justice’s protocol on the control and management of heavy fraud and other complex cases (22nd March 2005) make provision for active case management powers. Judges can control the length of cases by early identification of matters that are agreed and matters that are in issue, and by considering steps that can be taken to reduce the length of the trial. The parties can assist in this task, and indeed are mandated to do so by the procedure rules.20

40. The Government’s view, however, is that in a small number of cases case management powers will not go far enough. If this is indeed the case, there are other ways to help shorten trials and prevent trial collapse, such as the provision of alternative jurors who can step in, in the event of sickness or other necessary withdrawal from the case by one of the original jurors. In cases where there are multiple counts, the Domestic Violence, Crime and Victims Act 2004 already provides for the trial by jury of sample counts only if certain conditions are fulfilled, with the remaining counts to be tried by judge alone.21 This measure has yet to be brought into force.

41. Further, the new offences in the Bill themselves may shorten or simplify some trials—for example, if alternative counts have previously been charged in order to avoid technical defences to some of the statutory deception offences.

42. To consider so radical a measure as the abolition of jury trial in certain cases before allowing these measures to demonstrate their effectiveness would be, in our view, an overly hasty response. Nor is it necessary on the grounds that juries do not understand the evidence. We note the comments made by the trial judge to the jury at the end of the ten-month long Wickes fraud case:

19 Northern Ireland: Submission by Amnesty International to the Criminal Justice Review,5 May 1999, EUR 45/023/1999

20 Rule 3.3, CrPr 2005

21 See sections 17–21 of the Act


Those who may hereafter criticise juries’ appreciation of lengthy and complex fraud cases would have done well to see the care and attention that … you have given to the case throughout22

43. More recently, a juror in the Jubilee Line Case commented to the media that there was no difficulty with the jury understanding the evidence.23 Difficulties arose in that case in respect of some jurors because the case was allowed to drift on without proper control, for nearly two years.

44. Often the key issue in a fraud trial is whether the defendant’s conduct was dishonest, which is pre-eminently an issue which jurors, as ordinary citizens, are qualified to decide. Moreover, dishonesty is an issue that positively requires the decision of ordinary citizens so courts can ensure the legal test of dishonesty really does reflect the ordinary standards of reasonable and honest people.24

45. We therefore recommend that the Bill be amended so as to include the repeal of section 43.

14 September 2005

22 R v Sweetbaum and others, unreported, 25 November 2002

23 David Leigh writing in the Guardian, 24 March 2005

24 See the leading authority R v Ghosh [1982] QB 1053


Appendix 3: Submission from Debt on our Doorstep re Consumer Credit Bill

We write with reference to the Committee’s report in October 2005 on the Human Rights implications of the proposed Consumer Credit Bill and to ask that the Committee consider a further matter that appears not to have been covered by its deliberations at that time.

The Committee’s First Report of Session 2005-2006 outlined the Committee’s view on the Human Rights implications of the ‘unfair credit relationship’ proposed in the Consumer Credit Bill. Debt on our Doorstep is concerned that the lack of definition contained in the Bill will make it difficult for borrowers to understand their rights, and could prevent them from realising these.

In the report, the Committee comments that the meaning of unfair has been clarified, to some degree at least, by the comments of Lord Bingham’s judgement in the case of Director General of Fair Trading v First National Bank plc. Clearly, few borrowers will have a good understanding of those principles or how they relate the individual circumstances of their case.

The First Report of Session comments:

“ … we point out that the requirement that the citizen must be able to foresee the consequences of his conduct is subject to an important qualification ‘if need be with appropriate advice’. We also point out that one of the factors to which the court in its case-law explicitly has regard in deciding the level of precision required of domestic legislation is the ‘status of those to whom it is addressed’. The Court will therefore have regard to whether those affected by a law can be expected to obtain legal advice in order to clarify the consequences of the law for theme.” (Para 2.23—First Report of Session 2005–2006).

The Report of the First Session considered these issues particularly from the viewpoint of lenders, and concluded that lenders would be able to obtain specialist legal advice on these matters. However, we now ask that the Committee consider the implications of the new test from the perspective of borrowers, many of whom, although not all, will be on low incomes. Importantly, not all borrowers in need of advice will be eligible for support through the current Legal Aid arrangements.

We would therefore ask that the Committee clarify with Government whether all borrowers will be able to obtain access to the very specialised advice required. In the absence of clear criteria against which unfairness can be judged many consumers will have need to obtain Counsel’s opinion during any court action. If the Government does not put in place measures to ensure that access to this specialist advice is available to borrowers then we cannot see how it has met its obligations under the Human Rights Act.

We would be very grateful if the Committee would consider this issue further.

19 January 2006


Public Bills Reported on by the Committee (Session 2005–06)

* indicates a Government Bill Bills which engage human rights and on which the Committee has commented substantively are in bold

BILL TITLE REPORT NO

Charities Bill* 1st Children and Adoption Bill* 5th Civil Aviation Bill* 7th & 14th Commissioner for Older People (Wales) Bill* 6th Consumer Credit Bill* 1st & 14th Council Tax (New Valuation Lists for England)* 5th Criminal Defence Service Bill* 1st Crossrail Bill* 1st

Electoral Administration Bill* 11th Equality Bill* 4th & 11th European Union (Accessions) Bill* 5th Fraud Bill* 14th Government of Wales Bill* 14th Health Bill* 6th & 11th Identity Cards Bill* 1st Immigration, Asylum and Nationality Bill* 3rd, 5th & 11th Merchant Shipping (Pollution) Bill* 1st National Insurance Contributions Bill* 14th National Lottery Bill* 1st Natural Environment and Rural Communities Bill* 1st Northern Ireland (Offences) Bill* 7th Racial and Religious Hatred Bill* 1st Regulation of Financial Services (Land Transactions) Bill* 5th Road Safety Bill* 1st Terrorism Bill* 3rd Terrorism (Northern Ireland) Bill* 11th Transport (Wales) Bill* 1st Violent Crime Reduction Bill* 5th

sixth progress report crc · 2006-03-06 · sixth progress report fourteenth report of session...

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