HC Deb 17 May 1895 vol 33 cc1487-96
*MR. T. GIBSON BOWLES (Lynn Regis)

had on the paper the following notice:— ''To call attention to the relations between the Department of the Board of Trade and the Judiciary; and to move—' That a Select Committee be appointed to inquire generally into the relations between the Department of the Board of Trade and the Official Receivers in Bankruptcy and between the Board of Trade and Her Majesty's Judges; and into all communications (whether by interview or correspondence) which have taken place in or since the year 1893 between any Board of Trade official and Mr. Justice Vaughan Williams, between any Board of Trade official and the Lord Chancellor, and between the Lord Chancellor and Mr. Justice Vaughan Williams, with refer-to, or connected with, Official Receivers or winding-up business.' The hon. Member said he had but a short time to make out the case for the Committee for which he asked. If he might judge from the numerous communications he had received on this subject, some of them from unknown persons and many from persons of consideration, there lay behind the matter a very grave public scandal. He was not going to give an opinion whether such a scandal existed or not; he was only concerned to show that there was an unanswerable case for inquiry. The Government would scarcely refuse it, for the credit, nay, the honour, of the Board of Trade was concerned in the investigation of charges some of which had been publicly made. The Government would feel that in a matter like this, which touched the independence of the judiciary of the country, and suggested that it had been tampered with by the undue interference of the Board of Trade, nothing short of such an inquiry would be adequate to give satisfaction to the public. Any suspicion as to the independence of the judiciary, or that they were being tampered with by a public Department, presided over by a Minister, was a matter so serious that it was most urgent that the suspicion should be removed. Such a suspicion undoubtedly did exist and had existed and had been growing for some time; and one development of it had been made public in the case of Mr. Justice Vaughan Williams. The whole truth as to that matter had not been made known; there had been only a partial revelation; and a full and complete revelation was awaited with terest. All that we knew was that Mr. Justice Vaughan Williams had tried a fall with the Board of Trade and had fallen on the upper side; but we did not know all the facts. We knew, indeed, that the Lord Chancellor had fully vindicated his own action in the matter, which it was, indeed, unnecessary for him to do, for no one supposed that he would lend himself to any improper conduct; he might have been ill-advised, but no one would suggest anything more. Mr. Justice Vaughan Williams had returned to the seat on the Bench which he was eminently fitted to adorn, and that incident was ended; but it was only a small part of the matter; it was only a symptom of a serious and deep-seated malady which still remained. It was not dealt with by the Lord Chancellor, who did not defend the Board of Trade, but left the case exactly where it was. He did not say that there had been any intention of serious or mischievous interference on the part of the Board of Trade with the course of the administration of justice; he was not imputing any improper action to the Board of Trade or its President; but they could not but be aware of the fact that it was an ambitious Department, grasping at one thing after another until it overshadowed the land. Further, they could not forget that there had been concerned in these judicial proceedings political personages allied with a political Party. In a case now open, and in a further case likely to be brought on, names had been mentioned of personages of political character and considerable political position. That being the case, any suggestion that there had been interference on the part of the Board of Trade with the action of the judiciary was unfortunate and ought to be cleared up. The whole matter arose from the action of the Board of Trade with regard to the Official Receivers. They were most important men; they had become more important than they were intended to be; they were not merely receivers, but they were often administrators; they did not merely wind up concerns, but they constantly carried them on. One official with a fixed salary of £1,200 or £500 had borrowed a million and a quarter of money in order to carry on part of the Liberator business, and was assisted by the appointment of a a manager with a salary, he believed, of £3,000 a year. An Official Receiver should not carry on business in this way. An inter-departmental committee of the Board of Trade was appointed in 1893 to inquire into the limits of the action of the Board of Trade as regards the liquidation of companies; and in the Report dated July 25, 1893, the Committee said:— There are, however, cases in which it seems to us undesirable, as a rule, that the Official Receiver should he continued in the office of liquidator. We refer to cases where large funds have to he raised and heavy fresh liabilities incurred for the purpose of carrying on a business for any length of time as a going concern. The Treasury approved of this Report of the Committee in a letter, in which they said:— In the opinion of the Board of Treasury the Official Receiver should he instructed in future not to act as permanent liquidator in any case unless the parties interested are unable to find a competent representative of their interests elsewhere. Whereas the Treasury recommended that the Official Receiver should not be permanent liquidator unless it were impossible to find anyone else, the Committee which reported subsequently suggested that he might possibly be allowed to be Official Receiver except in cases where large funds had to be raised and heavy fresh liabilities incurred. He wanted to know if the Treasury still absolutely held the opinion they held in 1893. The Secretary to the Treasury was asked on April 25 whether the Treasury adhered to the opinion contained in a letter of January 23, and he replied: "Certainly; the Treasury holds the same opinion."


said, that since the Committee reported, the Treasury had slightly altered its position in the matter.


said, it was rather unfortunate that they did not know that earlier. But it strengthened the necessity for inquiry by a Committee such as he had suggested.


said, that he had written to the hon. Member for East Marylebone giving a full explanation of the circumstances under which the Treasury had altered its opinion.


trusted the right hon. Gentleman did not think he attributed a want of candour to him. All the House knew there was no one in the House more candid than the right hon. Gentleman. The want of information was unfortunate to himself, because it altered his case. But an inquiry might throw a different light on the matter. The Board of Trade acted, they were now told, on the recommendations of the Committee. But that did not cover the case he had raised, because the Committee he asked for would have to deal with matters not merely since the Report of the Committee, or since the change in practice of the Board of Trade, but before. He proposed that the Committee he asked for should investigate the circumstances that arose in and after 1893. Even if the Board of Trade had adopted a new practice, still the old proceedings under which a grave public scandal arose required to be inquired into, not only for the credit, but the honour, of the Board of Trade. Let the House observe the anomalous position of the Official Receiver. Official Receivers were officers of the Court, but also of the Board of Trade, and therefore in the position of having to serve two masters, and, as usual, either had to hate the one and love the other or hold to the one and despise the other. The predominant partner—to use a phrase now in fashion—was the Board of Trade. It controlled their appointments, decided on their promotion, and might allow or disallow their expenses. The Board of Trade had, in short, the power of the purse. Which of the two—the Court or the Board of Trade—were the Official Receivers likely to love or hate? The question answered itself. If it should happen that the Court and the Board of Trade disagreed, which was likely to carry the day with the Official Receiver? Undoubtedly the Board of Trade, and improperly, because these officials ought not to be officers of the Board of Trade at all. As members of the Civil Service they were controlled by a department under the management of a political officer and not the Court itself. They were judicial officers, and should be under judicial authority. Had there been any difference between the Bankruptcy Court and the Board of Trade? He would read one of the extracts to show the kind of differences there had been. Mr. Justice Vaughan Williams, on March 19, 1894 (after, be it observed, the Report of the Committee of 1893), in dealing with the New Zealand Loan and Mercantile Agency, said the Report of the Official Receiver suggested two distinct grounds—that the Official Receiver had delayed his report too long, inasmuch as the winding-up order had been made in July, 1893, and the report was not delivered until February, 1894, and the Board of Trade had expressly claimed to control the discretion of the Official Receiver, both in respect of the expression of their opinion as to fraud having been committed and in respect of the presentation of their reports to the Court. So the Official Receiver, the fountain and origin of the report upon which alone the Board of Trade could act in cases of suggested fraud, was controlled by the President of the Board of Trade, who kept his hand on the tube through which alone the report could flow, and turned it on or off as he pleased. On March 6, 1894, Mr. Justice Vaughan Williams said practically the same thing, but put it more precisely. Speaking of the report of the Official Receiver upon which the Court could found its opinion whether there had been fraud, he said:— The report is made on the personal responsibility of the Official Receiver and is the basis on which the order for public examination is founded. This being so, the Board of Trade ought not, in my judgment, in any way to interfere with, or give directions to, the Official Receivers in the performance of this function. I do not think it desirable or proper that the Official Receiver should consult the Board of Trade in the matter. I therefore now direct the Official Receivers that in future they shall act on their own responsibility exclusively in these matters. The President of the Board of Trade, however, had not abandoned all right to give directions to the Official Receivers, because he had avowed that in certain cases he assumed the right to control them. Therefore he was at entire variance with the Court, which said that the Official Receiver should not even consult the Board of Trade. He submitted that in a matter of this kind, where such serious issues were raised as the independence of the judiciary, where uneasiness still existed in mercantile and legal circles as to the extent to which this action had taken place, was taking place, or might in future take place, it was most desirable that an inquiry of the sort he suggested should be held. He made no judgment; he waited for the facts. If it was refused the refusal would amount to a suggestion that there was something behind, something underlying it which it was desired still to conceal, something it was desired to keep back. In a matter like this, where the purity of the judiciary and its freedom from interference, upon which our lives and property depended, was concerned, it was important that no breath of suspicion should be allowed to remain on a system of which they were so proud. He hoped he had advocated this matter in moderate language. He made no imputation. He simply asked for a Committee of inquiry, which it was desirable and important should be instituted.


said, he would not lose a single moment in replying to the hon. Member, and he thought the House would pardon him for saying that he had listened with some indignation to the speech of the hon. Member. The hon. Member had taken credit to himself for having brought this matter before the House. He began by saying, and he repeated more than once, that this was a question affecting the honour of the Board of Trade, and there was a grave suspicion resting on the Department that political questions had been involved, that the Board of Trade was headed by a political officer, and that suspicions had arisen that the powers of the Board of Trade were misused in the interests of political persons. Surely any hon. Member—even the hon. Member who had just spoken—who had accustomed them to expect from him some neglect of the rules they were accustomed to in that House—ought to feel that when he used those words and talked of suspicion and grave discontent in mercantile circles and questions affecting the honour of a public Department, he should have afforded some proof of the truth of those allegations. He had advanced no proof whatever; he had given nothing at all in justification of the charges which he had hinted and insinuated against the Board of Trade, He owed the hon. Member the fact of the opportunity he had given him of declaring in the most distinct and solemn manner that there was not the slightest foundation whatever for any of these charges. He could speak with some freedom, because these things did not affect him, because every one of the matters to which the hon. Member had referred occurred before he came to the Board of Trade. [Mr. GIBSON BOWLES signified dissent.] The hon. Member shook his head. Perhaps he would explain?


The matter to which I referred, as the right hon. Gentleman very well knows, is not merely what occurred before he became President of the Board of Trade, but also the present practice of the Board of Trade, and whether it does not require alteration.


said, the hon. Member had pointed to nothing that had been done since he himself became President of the Board of Trade to which he could take exception. The relations between the Board of Trade and the learned Judge referred to in working the Act of 1890 had been friendly and smooth; no difficulty or collision of any kind had arisen between the Board of Trade and the Court, and no difficulty was likely to arise between them. He would state in the shortest possible way how matters stood. The Act of 1890 was, no doubt, an Act which there might be difficulty in working. The Official Receiver occupied a double position. He was, on the one hand, an officer of the Board of Trade, and, on the other, of the Court. It was clear to anyone who would read the Act of 1890 in connection with the Act of 1883, that the Official Receiver was, for many purposes, under the direction of the Board of Trade. It was also clear that he was for some purposes under the direction of the Court, and he admitted that if the Board of Trade, on the one hand, and the Judge on the other, were actuated by a desire to find grounds for controversy they might conceivably do so. But the relations of the Board of Trade with the Judge and the Court were so friendly that on friction had occurred. The view the Board of Trade took of the matter was that the report which the Official Receiver made under Section 8 of the Act of 1890 was to be his report, a report made on his own discretion, and contained his conclusions, and the Board of Trade claimed no right whatever to interfere with the substance of his report. The Board of Trade did not claim any right in any way to prescribe or to interfere with the full discretion which they believed the Legislature had intended to invest in the Official Receiver. That was the view that they had acted upon since they had obtained the opinion of the law officers of the Crown with regard to the functions of the Board of Trade under the Act of 1890. Of course, he could not lay the opinions of the law officers of the Crown upon the Table of the House, because they were confidential communications; but, in order to be sure that they were acting in accordance with the views of the Legislature, the Department had thought fit to obtain the opinions of the law officers upon the subject, so that they might be guided by them. The business of the Courts of Justice would be advanced by the Official Receiver having the benefit of such knowledge as the Board of Trade possessed, but they also thought that they should leave the Official Receiver free to act upon the information that he obtained independently. The statement made by Mr. Justice Vaughan Williams was, he believed, made under a misapprehension of the policy and action of the Board of Trade, an action, by the way, which had been taken before he entered upon his present office. The relations of the Board of Trade with the learned Judge were in every respect of a cordial nature. The Official Receiver had declared that not a day's delay had occurred in the matter referred to in consequence of the action of the Board of Trade, and nothing could be more unfounded than the suggestion that it had been the object of the Board of Trade to affect in any way the position of the Official Receiver. He should like to toke that opportunity of paying a tribute to the way in which the learned Judge had discharged his duties in reference to this subject. He should have referred to the very hasty and unjustifiable imputations which had been made against the Lord Chancellor had it not been so completely refuted that it was absolutely unnecessary that he should do so. With regard to the Liberator case, he thought it unfortunate that a question of such magnitude should be in the hands of any Government Department. The Liberator was one of a group of companies whose affairs were extremely intricate and entangled with each other, and, therefore, it was difficult to deal with them separately, but it was pre-eminently a case in which it was right that expense should be saved and litigation avoided as far as possible. That could best be done by placing all the cases in the hands of the same liquidator. Very much against their will the Board of Trade found itself drawn into allowing its Official Receiver to become liquidator to the different companies. It was also felt that, by having the liquidation in the hands of a public department there was more complete security to the public that all these alleged frauds would be more completely investigated. He also desired to take that opportunity of stating that, in accordance with the Treasury letter which had been referred to, the Board of Trade had appointed a Departmental Committee to inquire into the question which had been raised by the Incorporated Law Society, which had been presided over by Lord Justice Rigby, and which had prepared a very careful report on the subject. That report completely vindicated the action of the Board of Trade. The Committee, in their Report, said:— There are, however, cases in which it seems to us undesirable, as a rule, that the Official Receiver should be continued in the office of liquidator. We refer to cases where large funds have to be raised and heavy fresh liabilities incurred for the purpose of carrying on a business for any length of time as a going concern, or where the best mode of liquidating the affairs of a company appears to be the constitution of a new company. We suggest, for the consideration of the Board of Trade that the Official Receiver should be instructed as a general rule to take all reasonable means of discouraging his continuance as liquidator in such, case, by, for instance, informing the meetings that in the absence of express instructions from the Board of Trade his duties as liquidator are confined to the realisation of the assets with all convenient speed, and that if the parties interested required another policy to be pursued they should appoint an outside liquidator to carry it into effect. The Board of Trade entirely concurred with those recommendations, and, as far as they could do so, were giving effect to them; and their policy certainly was to give no encouragement to the Official Receiver to undertake the management of such cases. He had conferred with the Lord Chancellor as to the issue of a new rule on the subject, and in consequence the noble and learned Lord had abrogated Rule 45, so that now the creditors would have complete freedom to choose their own liquidator. He hoped that he had shown that the Department had made good the chief recommendation of the Committee, and that he had convinced the House that really there was no necessity for the appointment of the Committee asked for. It would be impossible for him to undertake to lay the confidential communications that had passed between himself and Mr. Justice Vaughan Williams or the Lord Chancellor upon the Table, because no Government could be carried on for a single day if such communications were to be made public. The Board of Trade were doing their best to carry out, in the interests of the country, the very difficult duty imposed upon them by Parliament in connection with the administration of these Acts. They were very well satisfied with the experience they had had of the Acts so far, and they believed that the more the Acts were worked in a cordial spirit, and in perfect confidence between the Department on the one hand and the Courts on the other, the better it would be for the commercial interests of the country.