Clause 9
Fraud Bill [Lords]
4:30 pm
Mike O'Brien (Solicitor General, Law Officers' Department; North Warwickshire, Labour)
The amendment is designed to rationalise the wording of clause 9 by focusing solely on the fraudulent nature of the offender’s conduct. In my view, it is unnecessary.
The new fraudulent trading offence originates with a recommendation in a 2002 Law Commission report on multiple offending. It was based on what the commission concluded was a gap in the law that arises because it is possible to prosecute UK incorporated companies for fraudulent trading but not to pursue other fraudulent traders for that offence.
Clause 9 extends the fraudulent trading offence in section 458 of the Companies Act 1985 by creating a corresponding offence that will apply to all businesses not already covered by the 1985 Act. Logically, the wording of clause 9 must follow that found in section 458—hence the wording in the Bill.
It is important to bear it in mind that clause 9 creates a parallel offence linked to the existing fraudulent trading offence. The rationale and structure of the new offence flow directly from the Companies Act offence, and as such attract the case law that attaches to it. If we were to start changing the legislation, the courts would be busy trying to work out why we changed precise wording in section 458. We must remain consistent. Initiating a change here would have consequences for the interpretation of section 458. Therefore, it is sensible and desirable that the wording of clause 9 should stay as it is.
We used the phrase to ensure that we got the parallel offence right. The new offence applies to businesses that obviously are not companies. The creditors can be creditors of the business, but the business is not of itself a legal person in the sense that companies or individuals are legal persons. A partnership, or another business relationship, may not of itself be a legal person, and the creditors can be creditors of the business, but the business is not a legal person in its own right; rather, the creditors will be creditors of the owners of the business, who may or may not be the defendant.
I hope that that answers the hon. Gentleman’s concerns, and that he can withdraw the amendment.