The Scottish Law Commission has published its Report on reform of the criminal law on partnership. (You can find the Commission’s full report here). The starting point for reform was the case of Balmer v HM Advocate which held that it was not possible to prosecute a partnership which had been “dissolved” by the partners. In other words, a partnership could escape prosecution by the partners agreeing to wind it up.
The Commission’s long term solution to this lacuna is to reform partnership law altogether by bringing into place a two stage winding up process. The first – “break up” – stage would bring to an end the partnership’s ability to carry on business. The second “dissolution” stage would mean the end of the partnership altogether. The second stage could only be reached after all potential liabilities, including criminal liabilities, had been dealt with.
Pending this broader reform the Commission suggests a short term fix: that the Crown may prosecute a partnership for up to five years after its dissolution.
But what of the partners of a dissolved partnership? If – as the law stands – it’s not possible to prosecute the partnership, can the Crown turn its fire on individuals? The Commission Report provides current examples where partners can be prosecuted for offences committed by the partnership. However these examples all rely on the partner bearing some individual responsibility for the offence. The Commission notes that the existing law makes it very difficult for the Crown to prosecute a partner for offences committed by the partnership. It considers changing the law so as to place the burden on the partner in the firing line to prove that he was either ignorant of the offence or tried to prevent it.
The Commission emphasises that dissolution of a partnership should in no way prevent the prosecution of a partner who is individually liable, but as the Commission states, this is difficult to prove. Should it be any other way, when a person is facing a serious offence, and conviction can lead to imprisonment?
The Commission’s proposals if enacted will mean that where a partnership has committed an offence every partner is presumed guilty until he proves his innocence. But the concern of the case of Balmer was that a partnership could escape justice by dissolution. That concern can be addressed – as the Commission recommends – by preventing a partnership from dissolving until all criminal liabilities have been met.
Is it necessary to go further, and create this new individual, criminal liability for all partners? According to the Commission the Crown Office certainly thinks so, but the Senators of the College of Justice do not. Time will tell whether the prosecutors or the judges are on the right side of this debate…
On December 14, 2011