§ (1) If a justice of the peace is satisfied, on information laid on behalf of a Secretary of State or the Board of Trade, that there is reasonable ground for suspecting that an offence under this Act has been or is about to be committed by any person, firm, or company, he may issue a warrant authorising any person appointed by a Secretary of State or the Board of Trade and named in the warrant to inspect all books or documents belonging to or under the control of that person, firm, or company, and to require any person able to give any information with respect to the business or trade of that person, firm, or company to give that information, and if accompanied by a constable to enter and search any premises used in connection with the business or trade, and to seize any such books or documents as aforesaid:
§ Provided that when it appears to a Secretary of State or the Board of Trade that the case is one of great emergency and that in the interests of the State immediate action is necessary, a Secretary of State or the Board of Trade may, by written order, give to a person appointed by him or them the like authority as may 820 be given by a warrant of a justice under this Sub-section.
§ (2) Where it appears to the Board of Trade—
- (a) in the case of a firm, that one of the partners in the firm was immediately before or at any time since the commencement of the present War a subject of, or resident or carrying on business in, a state for the time being at war with His Majesty; or
- (b) in the case of a company, that one third or more of the issued share capital or of the directorate of the company immediately before or at any time since the commencement of the present War was held by or consisted of persons who were subjects of, or resident or carrying on business in, a state for the time being at war with His Majesty; or
- (c) in the case of a firm or company, that the firm or company were or are acting as agents for any person, firm, or company trading or carrying on business in a state for the time being at war with His Majesty;
§ For the purposes of this Sub-section, any person authorised in that behalf by the Board of Trade may inspect the register of members of a company at any time, and any shares in a company for which share warrants to bearer have been issued shall not be reckoned as part of the issued share capital of the company.
§ (3) If any person having the custody of any book or document which a person is authorised to inspect under this Section refuses or wilfully neglects to produce it for inspection, or if any person who is able to give any information which may be required to be given under this Section refuses or wilfully neglects when required to give that information, that person shall 821 on conviction under the Summary Jurisdiction Acts be liable to imprisonment with or without hard labour for a term not exceeding six months or to a fine not exceeding fifty pounds or to both such imprisonment and fine.
§ The ATTORNEY-GENERAL (Sir John Simon)I beg to move in Sub-section (2) paragraph (b) after the word "by" to insert the words "or on behalf of."
I will not deal fully now with the point raised by the hon. Gentleman who has just spoken, but he will be interested to see the change which has been suggested, because Clause 2 and Clause 3 bear a great deal on the matter which he is raising. The object of this Amendment is in order that the powers of the Board of Trade to inspect the accounts of a company which has anything like a predominantly hostile composition may not only extend to cases where the directorate or share capital is predominantly German, but also to cases where the share capital is held on behalf of persons who satisfy that condition. There are many cases, of course, where nominees hold shares, and the control and operation of these companies could be arranged by the transfer of shares to nominees, and the object of this Amendment is to give power to deal with that state of affairs.
§ Amendment agreed to.
§ Sir J. SIMONThere are two or three other small verbal changes in Clause 2. I beg to move, in Sub-section (2), paragraph (c), after the word "a" ["in the case of a"], to insert the word "person."
5.0 P.M.
As the Committee passed the Clause, the power which the Board of Trade had conferred upon them was limited to a firm or company. It appears to us that that power ought to be enlarged to cover also the case of an individual person. As the Clause stands it would be limited to a firm or company, and I want to get the consent of the House to the insertion of the word "person," so that the paragraph will run "in the case of a firm or company or person," acting as agents for any person, firm, or company trading or carrying on business in a State for the time being at War with His Majesty. In any of those cases the Board of Trade may exercise the power to inspect the books 822 in order to see what is the trade which is being carried on, and to stop it supposing it finds that it is against the law.
§ Amendment agreed to; consequential Amendments made.
§ Sir J. SIMONThe Amendment which I am now about to move is a substantial one. The House will remember that on Thursday, when we reached Clause 3, the discussion went to show that Clause 3 needed to be a little further considered. I have done my best to give it further consideration, but, since the House did not sit on Friday, it was not possible to circulate with the Votes the suggested changes which appear on the printed paper, copies of which could be obtained at the Vote Office, and I assume that some hon. Members have provided themselves with them. In calling hon. Members attention to Clause 3. I hope the hon. Member for Sheffield will also observe that it really docs, though in a different form, go a very long way to meet the point which he raised just now. The scheme of the Bill is this: In Clause 1 we provide penalties for trading with the enemy, whether that be a common law offence, or whether it be a breach of the Proclamation. Then by Clause 2 we provide for the inspection of the books and documents of persons, firms or companies against whose trade there may be suspicion, with the intervention of a magistrate; in other cases such as the hon. Gentleman referred to, where the firm or company or person gives rise to suspicion, the Board of Trade may find out what are the facts. Of course, if it is found out, as the result of the inspection, that it is a case where there is really trade going on with the enemy, they can then prosecute. Then comes Clause 3, which is now in the form in which I ask the House to accept it. I hope and believe that it will really meet the difficulty which has been raised in regard to the Bill. I propose that the Clause shall run in this way. I put it down as an Amendment because it is so much easier to follow it than if it were moved in a series of scraps and odds and ends. Those hon. Members who have provided themselves with a copy of the Amendment will find that the beginning of the Clause is a little modi- 823 fied, and the conditions apply to paragraph (b) only, and, having said that, the Clause which I ask to have accepted runs in this way:—
"Where it appears to the Board of Trade in reference to any firm or company,
if either of those conditions are satisfied—
- (a) that an offence under this Act has been or is likely to be committed in connection with the trade or business thereof; or
- (b) that the control or management thereof has been or is likely to be so affected by the state of war as to prejudice the effective continuance of its trade or "business, and that it is in the public interest that the trade or business should continue to be carried on"—
"the Board of Trade may apply to the High Court for the appointment of a controller of the firm or company, and the High Court shall have power to appoint such a controller for such time and subject to such conditions and with such powers as the Court thinks fit, and the powers so conferred shall be either those of a receiver and manager, or those powers subject to such modifications, restrictions or extensions as the Court thinks fit (including, if the Court considers it necessary or expedient for enabling the controller to borrow money, power to create charges on the property of the firm or company in priority to existing charges)."
I hope that the House will think that in the form now suggested we really have done something to meet the case which was raised. Let me point out the fundamental principles of the Clause. It is directed to two classes of cases, and, in either event, the intention is that the Board of Trade shall be able to apply to the Court for the appointment of someone who will keep the business under control. The first case is that where an offence under the Act has been committed, or where it is likely to be committed, in the judgment of the Board of Trade. It is hardly necessary to say that a great deal of correspondence comes to the Board 824 of Trade from different quarters calling attention to these enterprises, and, of course, it is the business of the Department to do its utmost to keep an eye on such cases. You cannot legislate, and I venture to say you ought not to legislate, to suppress some enterprises in this country, the composition of which may appear to be preponderantly German or Austrian. It would be a most short sighted policy, and it would throw many people out of employment while gravely embarrassing certain branches of trade. In itself that would be indefensible, and obviously it would have the effect of leading to reprisals. That is not at all the way in which we wish to stand before the world. But that is quite a different thing from those cases in which the enterprises are under some suspicion and which require to be adequately surveyed and controlled. Therefore, wherever an offence has been committed, or wherever the Board of Trade thinks it likely that an offence will be committed, in connection with those enterprises, they are to have power to apply to the Court for a controller. They would never think of exercising that power on the mere information of some possibly biassed or possibly jealous competitors in this country. It would be intolerable. But wherever there is the slightest ground for interference, I think we may be confident that the Board of Trade will discharge their duty.
The second case is quite different, but just as important. There are certain enterprises which have been carried on in this country in times of peace—in the chemical trade and some other trades—which are mainly important for our own industries. The Lancashire trade, for example, is in danger of stopping because their direction in times of peace has been largely in the hands of those who have now left in order to take part on the side of our enemy in this War. Of course, our object is to preserve such enterprises for our own national benefit, and for our own national purposes, and, therefore, they must be preserved. We provide, in the second place, that in any case "where the control or management of a firm or company has been or is likely to be so affected by the state of war as to prejudice the 825 effective continuance of the trade or business, and that it is in the public interest that the trade or business should continue to be carried on," the Board of Trade may apply to the High Court. By that means some of these subsidiary industries, which have been necessary in order to maintain our great staple industries in this country, can be kept going in circumstances where it is to the public interest to keep them going, and where there is some danger of their otherwise languishing. Our object, of course, is not to put a spoke in the wheel of British native industries, but, in so far as the public interest requires, that application may be made by the Board of Trade to the Court for the appointment of a controller.
We avoid the use of the word "receiver," which is not a very happy word, if I may say so in the presence of the distinguished example I see opposite. We think the word "controller" is preferable. We do not mean to ask the Court to appoint an official for the control of a business which is in financial straits. Our object, indeed, is very much more like management and control than what is ordinarily implied by the use of the word "receiver." We propose that the Court shall be asked to define the powers the controller may exercise, the Court will have the duty of judging what is proper, and we shall be able to ask it to confer such powers as are necessary and proper in the circumstances of the case. The final words of the Clause are ("if the Court considers it necessary or expedient for enabling the controller to borrow money, power to create charges on the property of the firm or company in priority to existing charges"). Those words are inserted merely for the purpose of meeting any exceptional case that may arise where such power is necessary or right. Of course it is perfectly obvious that no Court will ever confer that power unless the very special circumstances of the case make it right to authorise their exercise. I should imagine that the Court would always, in conferring such powers, require a subsequent application to be made before granting them. The words have been put in because cases have been brought to our attention in which it seemed desirable to make that provision. These are the most important features of this Amendment, which involves rather a substantial change 826 of the Clause, and now framed in rather clearer terms, and I hope it will meet the difficulty raised and the criticisms which were made on Thursday last. I beg to move.
§ Question proposed: To leave out all the words after the first word "Where," and to insert instead thereof the words,
§ "it appears to the Board of Trade in reference to any firm or company,
- (a) that an offence under this Act has been or is likely to be committed in connection with the trade or business thereof; or
- (b) that the control or management thereof has been or is likely to be so affected by the state of war as to prejudice the effective continuance of its trade or business;
§ Sir F. BANBURYI do not in any kind of way desire to criticise or object to any part of the Amendment with the exception of the last two lines, which give power to create charges on the property of the firm or company in priority to existing charges. The Attorney-General, I am sure, will agree that a power of that sort is of a very dangerous character. If you are going to interfere with prior charges, you are going to strike a blow at all security and all kinds of credit, and you will enable people and foreign countries to say, where there is a similar case in a foreign country, that money may be borrowed and put in front of the charge which has been given to English credit. The Attorney-General was kind enough to say that he 827 agreed that it was a Clause which, I think he said, financial purists would probably very strongly object to. I think myself that a great many more people than financial purists, and I think anybody who has had any experience in finance or been in any kind of way connected with the investment of money or the raising of money for public companies, will agree that words of this sort are very dangerous. The Attorney-General said that he did not think they would probably ever be put into operation, or, at any rate, very rarely. If that is so, why put them in? If they are not going to do any good there is no point in having them in. The mere fact that they are in is certain to be used as a precedent on some other occasion where an attempt is being made to get in front of a prior charge. It is almost certain that it will then be cited that in a certain emergency that has already been done. I do appeal most earnestly to the right hon. and learned Gentleman that if he does not attach very much importance to these words to leave them out. He said he did not think they would ever be acted on, and under those circumstances, and in view of the very great danger which might be created for people who risk money on the fact that they are getting a prior charge. I do hope he will agree to leave those words out. I am afraid I do not see any encouraging sign that he will do so. I would ask, then, will he put in something which would distinguish the power of the Court to do this from the other powers which the Court has got, so that there should be some special indication as to the real seriousness of the application to be brought before the Court, and that it should not be included in the ordinary way with all the other powers of the Court, but that it should only be granted in very exceptional circumstances I gather that the right hon. Gentleman is rather inclined to meet me on that point.
§ Sir JOHN HARMOOD-BANNERI have in mind the case of importation of cotton from abroad where freight has to be paid, and I think it is absolutely necessary there should be power to enable the controller to borrow money. I quite agree, though, that if there was a mortgage, say, on property, you do not want to have a prior charge to that mortgage 828 Subject, however, to some words dealing with that, which I have no doubt the right hon. and learned Gentleman will find, I think it is absolutely necessary to have some provision of this kind in dealing with the big businesses to which this Bill is intended to apply.
§ Mr. BIGLANDI presume that the Court will in some way fix the salary of the controller. Is the country to pay that salary, or will the business in question be charged with the salary? With regard to the point raised by the hon. Gentleman the Member for the City of London, I am rather inclined to think that the Amendment proposed by the Attorney-General is sound, for this reason: It will only happen in very exceptional circumstances, where all the directors are enemies and where the controller would not be able to raise any money unless he had the power given under the Amendment. The Court, in adjudicating, would only grant the power in most exceptional cases, and therefore I agree with the Amendment.
Mr. DENNISSMay I suggest after the words, "power to make charges" to insert the words, "and in exceptional cases in priority to existing charges." I would like to ask as to the first line with regard to firm or company, why it is that there is no mention of person, since in the other Clauses it is person, firm, or company. There is no definition of firm. Does it include a business carried on by a single person? If so, the Clause would be all right, but I do not think the word "firm" would necessarily be construed in law as including the case of a single person. A single person carrying on business is not a firm.
§ Mr. SHORTTPerhaps the difficulty might be met if the power to borrow money and create a charge in priority to existing charges was made the subject of a special application to the Court in each case, so as to secure that it was only done in right and proper cases. I suggest that after the word "power" to insert the words "upon a special application made in each individual case."
§ Sir J. SIMONI really think it is necessary to keep the power in the Court to confer this right to create prior charges, but I am as anxious as anybody to limit it to proper conditions. The suggestion 829 made by my hon. Friend seems to me to meet the case fairly, and I hope the hon. Baronet will be, if not content, at any rate acquiescent. I suggest after the word "power" to insert the words "after a special application to the Court for that purpose." Then it would be quite plain that this would not be part of the general discretion, but would be a serious matter which would be brought in terms to the notice of the judicial authority. With regard to the other matter, the Court would have power to direct how the controller's salary was to be provided for, and I think the hon. Member is quite right in thinking that there is no reason why it should fall on public funds. I think if we leave the provision as it is, it is very wide and allows the Court to deal with the matter. The hon. Member for Oldham (Mr. Denniss) asks whether it is intended to limit this Clause to firms and companies, and not to include persons. Really, it was done deliberately, and, at any rate, at present I suggest we may leave it at that. There, are other places in the Bill where we do not include persons. If the hon. Member looks at Clause 2, Sub-section 2 (a), that is the case of a firm only, and (b) is the case of a company only, though it is quite true that in (c) the House has inserted a reference to persons. We thought that in this Clause we really had provided for what was substantial by including firm and company. The company is the important thing, and it is the company that is in the minds of hon. Members and of people outside. I do not think since we have power to prosecute individuals that we shall get ourselves into any embarrassment if we keep Clause 3 confined to firms and companies.
§ Question. "That the words proposed to be left out stand part of the Bill," put, and negatived.
§ Mr. SHORTTI beg to propose as an Amendment to the proposed Amendment, after the word "power" ["power to create charges"], to insert the words "after a special application to the Court for that purpose."
§ Amendment, to proposed Amendment, agreed to.
§ Proposed words, as amended, there inserted in the Bill.