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Partnerships (Prosecution) (Scotland) Bill [Lords]

Volume 561: debated on Monday 22 April 2013

Bill, not amended in the Public Bill Committee, considered.

Third Reading

I beg to move, That the Bill be now read the Third time.

The Bill takes forward the proposals of the Scottish Law Commission to address the loophole in Scots law that prevents the prosecution of partnerships that have dissolved. It addresses the limitation of the law in Scotland which meant that attempted prosecutions could not proceed following the serious fire at Rosepark nursing home in Uddingston, Lanarkshire on the night of 31 January 2004, when 14 people tragically lost their lives. Rosepark was run by three individuals who had come together to form a business partnership. Following the fire, the partnership dissolved. The partnership, as employer, was alleged to have committed offences under the Health and Safety at Work Act 1974. The Crown Office made three attempts to prosecute the partnership, but as the High Court had held that the partnership ceased to exist on dissolution, the prosecutions could not proceed.

In November 2012, the Bill was introduced to Parliament by the Advocate-General for Scotland. The Bill is one of only three Scotland-specific Bills introduced in Westminster since devolution. It reminds us that Scotland has two Governments and two Parliaments, both with their own contributions to make in improving the lives of people in Scotland.

The Bill marks a significant milestone. This is the first occasion when the House of Lords special Public Bill procedure for Law Commission Bills has been used in relation to Scottish Law Commission proposals. The special procedure allows non-controversial legislation to sidestep the competition for parliamentary time on the Floor of the House. The Bill demonstrates why that procedure is so valuable.

The Bill progressed through Committee in both Houses, allowing close and robust scrutiny of each of its clauses, with good opportunity for debate. It has received broad consensus from all sides. I thank the hon. Member for Glasgow North East (Mr Bain) and all hon. Members who have participated in the process.

The Government are grateful to the Scottish Law Commission, and in particular to Patrick Layden, who has worked tirelessly alongside the Advocate-General for Scotland and the Scotland Office to produce a Bill that provides a very simple, very sound solution that ensures that partnerships and culpable partners cannot evade prosecution by dissolving.

The support demonstrated by hon. Members is gratefully noted. We are particularly grateful to the hon. Member for Lanark and Hamilton East (Mr Hood), in whose constituency the Rosepark nursing home was situated. We also gratefully note the support of the Scottish Government. We are immensely grateful for the support demonstrated by the Lord Advocate, the Faculty of Advocates and the Law Society of Scotland, which have all broadly welcomed the Bill, in giving evidence to the special Public Bill Committee in the other place.

The provisions of the Bill are to be commenced the day after Royal Assent. The Bill makes valuable and necessary reforms to the law of partnerships in Scotland and I commend it to the House.

The Opposition endorse Third Reading. Throughout previous stages of the Bill both in this House and in the other place, right hon. and hon. Members have kept very much at the forefront of our minds the families and the 14 people who lost their lives in the dreadful fire at Rosepark nursing home in Uddingston, south Lanarkshire, which was caused by an earthing fault at the back of an electrical distribution box in a storage cupboard at the nursing home.

As I said in Second Reading Committee, a fatal accident inquiry in 2011 chaired by Sheriff Principal Brian Lockhart established that some or all of the lives lost could have been saved if a risk assessment had been conducted and if it had led to the taking of reasonable precautions. That could have avoided or minimised the loss of life. The inquiry found fault with the maintenance of the electrical installation at the care home; inadequate fire safety and drills; inadequate management of fire safety, which was found to be systematically and seriously defective; and weak interaction between the nursing home and Lanarkshire health board.

The laws we make in this House can never repair the feelings that arise from the loss of loved ones, but the Bill will ensure that others never suffer a similar lack of closure as a result of flawed processes in the criminal law caused by deficiencies in the law of partnerships in Scotland. We should therefore welcome the work of the Scottish Law Commission on the matter, its continuing contribution to keeping the laws of Scotland made by both Parliaments under review, and its recommending modernisation when necessary in the public interest.

In particular, we welcome the work predating the Bill that was done on the consultation process by the commission’s chair, Lady Clark, the former Member for Edinburgh Pentlands and former Advocate-General for Scotland; by the commission’s previous chair; by Lord Drummond Young; and by Mr Patrick Layden QC. Although the Scottish Law Commission consulted widely on whether it should attempt to deal with the problem by virtue of a comprehensive reform of partnership law, in the end, pending consideration of wider reforms, the commission settled on the more targeted solution of permitting partnerships to have a degree of continuing legal personality for a limited period in terms of criminal proceedings and prosecutions.

The Opposition welcome the fact that the Bill shows this Parliament’s continued belief in the importance of the reform of private law in Scotland under areas reserved to the UK Parliament under the Scotland Act 1998. Scotland has two Parliaments that make laws on behalf of its people. It is noteworthy that the Bill is the third Scotland-only Bill on a reserved matter to be debated in this House since the devolution of power to the Scottish Parliament in 1999. I hope there will be many more of them in the future, should the people of Scotland choose to remain within the United Kingdom in the referendum to be held next year.

The tragedy at Rosepark nursing home in 2004 claimed the lives of 14 residents. However, because the partnership that owned and managed the home was dissolved after the fire, but before the Crown Office in Scotland could initiate any proceedings for prosecution, the partnership could not be prosecuted. That principle was established in the case of Balmer v. Her Majesty’s Advocate in 2008. Following the decision in that case, the Scottish Law Commission published a discussion paper and consulted on possible options for reforming the law of partnerships in Scotland in this area. That consultation led directly to the Bill before the House this evening.

It is an important principle of commercial law that the legal personality of a company or partnership differs from that of the directors or partners. It is possible to prosecute a partnership in Scotland quite separately from the individual partners under Scots criminal law. Indeed, it is vital that we uphold the concept that legal persons, as well as the individual partners in their own right, can be subject to liability for actions deemed to be breaches of the criminal law.

Another core principle of the law of partnerships in Scotland is that of joint and several liability for civil and criminal obligations incurred by the partnership. Should a partnership be convicted of an offence following prosecution and be subject to a fine, then any or all of the partners may be held liable for payment of any such fine imposed by the courts. That has been seen as critical in ensuring that the law can attach responsibility for payment to at least one member of the partnership. That partner then has the right to seek recompense for the outstanding share of the financial liability thereby incurred from the other partners, through a civil action under the partnership agreement and the Partnership Act 1890.

The Bill closes the loophole in the law that was exposed by the Rosepark tragedy. It will permit a prosecution to be brought against a dissolved partnership up to five years following the deemed dissolution in respect of conduct that arose out of the partnership while it was still in existence. Actions in criminal law may also be brought against partnerships where the composition of partners or the membership structure have altered, where partners have left, or new partners have joined. Any member of a partnership may thus still be liable for any criminal offences committed while a member of the partnership and through any change in composition.

Circumstances that could give rise to prosecutions under the clause include: potential breaches of section 36 of the Health and Safety at Work etc. Act 1974; cases where an individual’s acts or omissions have been a cause of the offence; cases where an individual is held guilty, art and part, of a common-law or statutory offence; cases where an individual has aided, abetted, counselled or procured the commission of an offence under statute law; or cases where an individual has committed an offence with their consent or connivance, or even through neglect. The range of offences potentially liable for commission by individual members of a partnership was significantly widened by the Scottish Parliament, through section 53 of the Criminal Justice and Licensing (Scotland) Act 2010.

Should a partnership be convicted of an offence, any legal rule, whether in statute or common law, relating to the liability of the partners, applies as if the partnership had not been dissolved. This permits joint and several liability for any fine imposed by the courts following a successful prosecution, in line with sections 4 and 9 of the Partnership Act 1890 and subject to the provisions in clause 3 of the Bill. Any fine imposed following a conviction may be recovered against the assets of the partnership, or any or all of the individual partners, each of whom would have a right to claim a remedy for the other shares from assets of the partnership, or from the other partners’ personal assets. In some statutes, such as the Health Act 2006, the law restricts the payment of fines to the partnership assets only, but for a dissolved partnership under the Bill that rule will not apply, because if a partnership is dissolved there will be no partnership assets and any fine might otherwise prove to be unenforceable—that would be unacceptable.

The sole element of contention that arose during the passage of the Bill, in this House and in the other place, stemmed from clause 4, under which it is possible for someone to have joined a partnership after the commission of a potentially prosecutable offence and then face liability for some or all of any penalty applied by the court following a finding of guilt, despite the fact that that person was not involved at the partnership at the time of commission of the offence. That was a significant concern for the Law Society and others in Scotland, as many businesses are organised through the partnership model.

I moved a probing amendment in Committee, following similar amendments that had been moved in the other place, to test the arguments as to whether an exemption could be created for innocent partners who become members of a firm, but are unaware of any potential criminal liability that could give rise to conviction and the imposition of a fine, who then face demands to meet a share or even the entirety of a fine from personal assets in the absence of partnership assets or personal assets from the pre-existing members of the firm. We were reassured by the Commission that it is likely to keep the operation of this provision under review, and that a more comprehensive analysis of the potential reform of partnership law remains a possibility. In that spirit, we were happy to withdraw the amendment.

In conclusion, the Bill closes an important loophole that the unsuccessful attempts to prosecute the owners of Rosepark nursing home, following the fatal fire, brought to light. We cannot remove the suffering that the families and loved ones of the deceased have experienced in these past nine years, but we can ensure that, by enacting these reforms, other people affected by the conduct of partnerships are never put in a similar position again. That is the best tribute we in this Parliament can make to the 14 people who so tragically and unnecessarily lost their lives. For those reasons, the Opposition strongly support the Bill.

I would also like to add my support to the Bill. You may be witnessing an almost unique occasion, Mr Deputy Speaker: all parties in this House and the Scottish Government and Parliament support the Bill and are anxious for it proceed. As has been said, the genesis of the Bill was the Rosepark fire—a great tragedy in which many people unnecessarily lost their lives—and the inability, because of this quirk in Scottish partnership law, to prosecute. It is important that that is put right.

We had a good debate in Committee. The speech from the hon. Member for Glasgow North East (Mr Bain) probably went on as long as the Committee stage, but the Bill was considered in Committee in detail. As he said, the Law Society of Scotland still has a concern—I should perhaps declare a tangential interest as I used to be a member—regarding its impact on partnerships. We went into this in some detail, and I think none of us could come up with a way of dealing with this particular issue. However, it is important to make the change, irrespective of slight concerns. I hope the Bill proceeds. As the hon. Gentleman rightly said, there is nothing we can now do for the people who so tragically lost their lives at Rosepark, but we can ensure that it does not happen again. We have come together to do that.

The Minister and the hon. Member for Glasgow North East were slightly naughty to present the Bill as an argument for the Union, as it could have been introduced in any place that had the power to do so, whether in Edinburgh or London. The hon. Member for Glasgow North East said that this was the third Scotland-only Bill on a reserved matter to be debated in this House since devolution. It will undoubtedly be the last—the next will be in an independent Scottish Parliament.

With the leave of the House, I will seek to conclude this debate on the basis of agreement. I am sure that this will not be the last Bill affecting only Scotland brought before the House, but we will leave those debates for another day.

I concur with the hon. Members for Glasgow North East (Mr Bain) and for Angus (Mr Weir) that the Bill will, I hope, go some way to set right the wrongs of the Rosepark fire and bring some comfort to the families of the victims on that terrible evening.

I would like to thank members of staff in the Scotland Office and the Office of the Advocate General who worked hard to bring the Bill before the House. I am pleased that we can now move forward with it in a spirit of consensus in order to deal with an identified anomaly in the existing laws of Scotland. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read the Third time and passed.