HC Deb 03 April 1917 vol 92 cc1219-28

(1)Where by virtue of any contract of tenancy any person is bound to do or abstain from doing or is under any liability if he does or abstains from doing any actor thing, and by virtue of any regulation made under any enactment relating to the defence of the realm the doing of such act or thing is restricted or enjoined, he shall not during the continuance of the contract or on the determination thereof be liable to pay any sum of money or incur any for feiture or other penalty in respect of the failure to do or the doing of such act or thing if and in so far as the failure to do or the doing of such act or thing is attributable to compliance with such restriction or injunction as aforesaid:

Provided that the relief afforded by this provision from the obligation to do any such act or thing in consequence of such a restriction as aforesaid shall be subject to the following provisions:—

  1. (a) If the restriction is removed during the currency of the contract the obligation shall be fulfilled as soon as may be after the restriction is removed;
  2. (b) If the restriction has not been removed before the termination of the contract the person to whom the relief is given shall be liable to pay as damages a sum equal to the expenditure (if any) which would have been entailed by the fulfilment of the obligation.

(2)Where upon any application by any party to a contract the Court is satisfied that owing to any restriction or direction imposed or given by or in pursuance of any regulation made under any enactment relating to the defence of the realm any term of the contract cannot be enforced without serious hardship, the Court may, after considering the circumstances of the case and the position of all the parties to the contract and any offer which may have been made by the party for the variation of the contract, suspend or annul the contract on such conditions (if any) as the Court may think fit.—[Sir G. Heuart.]

Clause brought up, and read the first time.

Sir G. HEWART

I beg to move, "That the Clause be read a second time."

May I say what is the purpose of the Clause, and its scope? It relates, and relates only, to contracts of tenancy. It is designed to meet the difficulty that sometimes under the Regulations made under the Defence of the Realm Act a tenant is required to do something which by his contract of tenancy he has covenanted not to do, or to leave undone something which by his contract of tenancy he has covenanted to do. Take, for example, the not rare case which occurs by reason of the work—the admirable work, if I may say so—of the War Agricultural Executive Committee. That: Committee, under the Cultivation of Lands Order of last year, may require, and does require, agricultural tenants to do certain acts, and to do those acts notwithstanding that their leases or their agreements of tenancy may require that they should not do them. There may be leases in which there is a covenant not to break up pasture. There are leases which provide for the payment of damages if pasture is broken up. Similarly there are leases in which there is a provision that the lessee shall leave the land in grass at the end of the tenancy. These are not uncommon cases. It would seem hard indeed upon the tenant in such cases that he should suffer penalties or incur damages because at the bidding of the War Agricultural Executive Committee, under the provisions of the Defence of the Realm Act, he is compelled to do, by reason of the requirements of the War, something which by his lease he is forbidden to do. A similar hardship occurs in the case of a tenant of a dwelling house, where, for example, there is painting to be done, and where, by reason of the Regulations made under the Defence of the Realm Act it is impossible for him to have the painting done. In that class of cases, and that class of cases alone, it is proposed to give the relief contained in this Clause. The relief is subject to this proviso:

  1. (a) If the restriction is removed during the currency of the contract the obligation shall be fulfilled as soon as may be after the restriction is removed;
  2. (b) If the restriction has not been removed before the termination of the contract the person to whom the relief is given shall be liable to pay as damages a sum equal to the expenditure {if any) which would have been entailed by the fulfilment of the obligation.
Sub-section (2) has a somewhat wider scope. It applies to any contract of whatever kind which comes with in its definition. It extends to contracts in general the kind of remedy which is given in Clause 1 to certain contracts, but only in cases where the difficulty arises by reason of Regulations made under the Defence of the Realm Act. I do not know that I need take up the time of the Committee further by explaining these matters. Both Subsections are designed to meet grievances which have come to the knowledge of the various Departments of the Government in the course of the War, and the Clause has been framed, and carefully framed, in order to meet those grievances, and not to go beyond them.

Mr. SALTER

There are one or two observations which I should like to make which perhaps my hon. and learned Friend will bear in mind between now and the Report stage. Dealing first with the second part of the Clause which is concerned with cases of hardship, I have nothing at all to say against it, because the Courts may be authorised to deal with such cases of hardship. I would suggest, however, to my hon. and learned Friend whether this part of the Clause might not be improved by giving the Courts power to vary as well as to suspend or annul contracts. Contracts to which this Clause applies will doubtless in most cases be partially fulfilled, and either suspension or annulment may sometimes be a very incomplete and inadequate remedy. It is a very great novelty, no doubt, to allow any Court to make a bargain for the parties. I cannot help thinking it might be expedient to entrust the judges with discretion, in the very exceptional circumstances of the present time, of varying as well as suspending or annulling contracts. As to the further part of the proposed new Clause, about that I have felt some little uneasiness, is it more than a declaratory Clause, and perhaps a not very happily phrased declaratory Clause? It appears to be a Clause providing for this state of things: A person has undertaken to do a thing which is lawful at the time when he undertakes to do it, but which becomes unlawful by subsequent enactment, and in that state of things the Clause provides, in short, that no action for damages shall be incurred. Is it not a long-established law that where a contract to do a thing is lawful at the time when the contract is made, and becomes a contract to do an unlawful thing by subsequent legislation, no action can be brought? Is it not merely a Section declaratory, in a narrow and an inconvenient way, of long settled law? If it is, my hon. and learned Friend will be the first to agree that it is undesirable to enact it. I suggest that to his consideration. Perhaps he will turn it over in his mind before Report.

There are two smaller points which puzzle me a little. I have some difficulty in reconciling the enacting part of this proposed new Clause with the second proviso. The enacting part provides, as I have just said, that where there is a nonperformance of a promise, in consequence of the performance of that promise having become illegal through subsequent legislation, then there shall be no liability to damages. Then comes the second proviso, which appears to provide that in that very case—that is, if the restriction should not be removed before the termination of the contract—the person to whom the relief is given should be liable to pay damages, and either I have read the thing unintelligibly—I have read it as carefully as I can—or else there is a. contradiction between the enacting part of the proviso, which provides that he shall not be liable for damages, and the proviso which says that he shall. The last point—a comparatively small one—to which I would ask my hon. and learned Friend to give his attention is the description of the proposed damages. The damages a person has to pay is "a sum equal to the expenditure (if any) which would have been entailed by the fulfilment of the obligation." I do not think that that can have been intended. Take a short, concrete instance. Take the ease of a tenancy of a house and garden for three years expiring next July upon condition that the landlord builds a wall round a garden, which might cost him some hundreds of pounds. Then comes a restriction which prevents him from building, and, if these words are to be read as they run, the sum to be paid in those circumstances to the outgoing tenant would be a sum equal to the expenditure which would have been entailed by building the wall, which might be two or three times the rent of the premises for the whole of the three years. The expression is not very happy, because I think I am. right in saying the damages are always greater, not by the cost to the person who breaks the contract, but by the damages sustained by the person who suffers. Is this not expressed in the wrong way? Should not the words be "sustained by the non-fulfilment"? That would put the matter right at once. I hope the learned Solicitor-General will consider whether any part of the first half of the proposed new Clause is desirable.

9.0 p.m.

Mr. BOYTON

Like the hon. and learned Member for Basingstoke (Mr. Salter), I do not rise in any spirit of criticism with regard to this new Clause, but only of inquiry. I take it that the object of this Clause is largely to relieve the lessee from the performance of a covenant for dilapidations and repairs during the War. But I observe that it says, "he shall not during the continuance of the contract or on the determination thereof be liable to pay any sum of money, or—"Those words make it practically impossible for landlord and tenant to agree between themselves over a money payment for an obligation which falls upon the tenant. It does seem to me that that is taking the option of contract between parties entirely away from them, and it would be better if the words "liable to pay any sum of money" were left out, and it was left to the parties to agree between themselves. Then does not the second part of the Clause go too far when it gives the Court the power to annul the contract? The hon. and learned Member for Basingstoke suggested "suspend or vary," which might be good, but "annul," I think, goes too far. I should be obliged if the learned Solicitor-General would clear up the doubts in my mind as to the position between landlord and tenant. As I said, I do not rise in any spirit of criticism. I realise, in times like these, that legislation is very necessary to prevent any unfair action on the part of landlords trying to force covenants against tenants who are quite unable, owing to the circumstances of the times, to comply with them.

Mr. POLLOCK

I should like to try to reinforce two or three of the points made by the hon. and learned Member for Basingstoke. First of all, I was interested to find that he asked power to vary, as I asked last night, but the learned Solicitor-General was unable to accept that alteration, and I confess I did not follow him. When I find the hon. and learned Member for Basingstoke asking that there should be something in between the extreme penalty of annulment and suspension, I desire to reinforce his observations. I do not think the hon. and learned Member for Basingstoke quite appreciated that Sub-section (1) applies "during the continuance of the contract," and with regard to the proviso (b,) that deals with the-question of what is to happen at the termination of the contract.

Mr. SALTER

I think the hon. and learned Member is wrong. The words are, "He shall not during the continuance of the contract or on the determination thereof."

Mr. POLLOCK

Be it so. Perhaps I am wrong. The learned Solicitor-General will tell us what he means about that. But if you are going to put in any damages at all, you had far better leave the question of damages at large to be settled by ordinary rules, which are far more flexible, and provide a suitable standard by which to measure, than put a purely arbitrary measure in the Bill itself. The last observation I desire to make is with regard to Sub-section (2),. which is of a much wider application than. Sub-section (1) which deals with a contract of tenancy only, while Sub-section (2) deals with wider cases of contracts which were not merely contracts of tenancy. If so, I hope he will move that as a separate and independent Clause, otherwise it is very inconvenient to find those words appended under a Clause which deals with a contract of tenancy and which are intended to have a much wider application.

Colonel GRETTON

With regard to the observations which have been made by my two hon, and learned Friends in reference to variation of contracts, it seems to me quite anomalous that the Court, on application made to it, can inquire into the variation of a contract proposed by one of the parties, and after having considered those variations, have the power to suspend or annul the contract. Surely if these variations have been accepted the Court should have power to enforce variations which are just and equitable. It seems that the words about continuing variations of contract are meaningless unless the Court has power to deal with this point. I am not trained in law, but I am a man accustomed to deal with business, and it certainly strikes me as anomalous that the Court should be required to take cognisance and consider certain things, and yet they are not able to deal with those matters.

Sir G. HEWART

I will endeavour to deal with the points which have been raised in the order in which they were raised. First of all, my hon. and learned Friend the Member for Basingstoke (Mr. Salter) and others raised a point with regard to Sub-section (2) of the proposed new Clause, and they contended that the power which was given to the Court in the cases to which the Sub-section applies ought to include power to vary the contract. The objection to that course is the same as the objection that I urged yesterday when a like Amendment was proposed with regard to Clause 1, and it is that it seems impracticable to put upon a learned judge of the High Court, or in the cases in which he would have jurisdiction a learned judge of the County Court, the task of making a new contract between the parties. It does at the first blush appear anomalous that a Court which is given power to suspend or annul is not given what at first might be thought the lesser power of varying. I submit to the Committee that when one looks at the Clause as a whole it is apparent that the power given to the Court is not a mere power to suspend or to annul, but such powers of variation are entrusted to the Court as ought to be imposed upon the Court by the existing provisions of the Clause. Let us see how it stands. When an application is made to the Court, the Court may take into consideration not only the circumstances of the case, and the position of the parties, but also any offer that may have been made for the variation of the contract.

Let us suppose a hypothetical case. A person who finds that, by reason of a restriction or direction imposed in pursuance of a Regulation under the Defence of the Realm Act, he cannot perform his contract goes to the Court and the learned judge ascertains that he has made a very reasonable offer, or what appears to be a very reasonable offer, to the other party to the contract. The judge may very well say that unless that offer is accepted the Court will exercise its power of annulling the contract. If the other party demands his pound of flesh, then the Court may annul the contract or postpone the performance of the contract. Therefore, I submit that the practical utility that could be got out of an express power of varying the contract in the Court is contained in the provisions of this Clause.

With regard to the criticisms made upon Sub-section (1), I gather that my hon. and learned Friend contends that it is superfluous, but I venture to say that it is not open to that criticism. It is true that where a contract lawful at the time of its being made is rendered unlawful by a subsequent enactment its performance is excused, but the cases which arise, and have caused considerable trouble and inconvenience, are by no means so simple.

Take the case I mentioned of a lease containing a covenant whereby the lessee undertakes to pay an additional rent if pasture is broken up. In a way that may be said to be a covenant not to break up pasture, nor would he be disposed to break up pasture unless some influence of an external kind were brought upon him to compel him to do so. The Cultivation of Lands Order requires him to break up his pasture. There is nothing unlawful in it, and it is contemplated by the lease itself, nor is there anything unlawful in his being required to pay the additional rent. I agree with my hon. and learned Friend that if the case were as simple as he supposes, a contract lawful at the outset rendered unlawful by subsequent legislation, there would be no difficulty and no occasion for this Clause. The difficulty arises because the cases are by no means of that simple character. Then the hon. and learned Member says that the proviso in Sub-section (1) of the Clause takes back that which the Clause itself gives, but I suggest to my hon. and learned Friend and to those who assented to his criticism that that is not quite fair to the words of the proviso. It will be apparent that Subsection (1) refers, as it is bound to refer, to covenants of two kinds, covenants to do certain acts and covenants to refrain from doing certain acts. There may be in the one case acts of commission and in the other case acts of omission. The proviso is more limited in its scope. The proviso relates only to covenants of a positive character, where there is an obligation to do some act or thing, as, for example, to take a simple case, to paint at stated intervals during the term or upon notice during the term. The tenant is excused from the performance of that covenant at the time when it should have been performed. Then cornea the proviso: If the restriction which prevents him from getting the painting done is removed—

Notice taken that forty Members were not present. House counted; and, forty Members being found present—

Sir G. HEWART

I was referring to the words in the proviso, and taking as an example a covenant in a lease to paint. What the proviso does is to ensure, if the restriction is removed during the tenancy, that the covenant shall forthwith be performed. On the other hand, if the restriction is continued until the end of the tenancy, the tenant is not to escape altogether from the burden of his covenant, but he is to pay a sum by way of damages. Criticism was directed to the measure of the damages. In ordinary circumstances the measure is the damage which is suffered by the person who has to be paid. Here, to ensure that the person who cannot fulfil his covenant at the time when it should be fulfilled shall not pay an undue amount in consequence of the non-fulfilment at the conclusion of the tenancy, a different measure is taken, I am so far in agreement with my hon. and learned Friend as to think that it would be well to substitute for the words "a sum equal to the expenditure," the words "a sum not exceeding the expenditure." Subject to that Amendment, I submit that the criticism upon the Clause fails. My hon. and learned Friend suggested, and others have also suggested, that this Clause contains material which may well be considered between the present hour and the time of the Report. I sincerely hope that it is not in the minds of members of the Committee that the Report Stage is going to be taken upon some other day. This is a Rill which, for various reasons, has suffered considerable delay since the Second Reading took place, and the matters in controversy have been so thoroughly thrashed out that I hope most sincerely, when the deliberations of the Committee have been brought to an end, that we may be able to get the Report stage of the Bill to-night.

Mr. POLLOCK

Will the hon. and learned Gentleman deal with the point I suggested as to dividing this into two Clauses?

Sir G. HEWART

I really do not think, with all due respect, that the difficulty which my hon. and learned Friend mentioned is so great as he seems to fear. The marginal note is "Relief in respect of certain contractual obligations." The Clause is divided into two parts. The first part relates to contracts of tenancy and the second part relates to contracts of various kinds. I do not know that any useful purpose would be served by dividing the Clause into two.

Mr. POLLOCK

There is no difficulty at all to those who are lawyers, but it would be easier for a great number of persons if there were separate catch-notes and the Clause were divided into two. It is a little difficult for a person who wants to understand it and has not got professional knowledge. I see no reason why it should not be done, and if it makes it a little plainer I hope that it will be done.

Colonel GRETTON

May I support what my hon. and learned Friend has said? Acts of Parliament in their general features should be understandable by laymen. If a layman does not understand it he cannot go to one learned in the law for advice, because he does not know even the outline of the law. It certainly is most difficult for a layman to understand this Clause. It really deals with separate matters, and I would beg the Solicitor-General, in the interests of the general public, if not of those learned in the law, to give way.

Sir G. HEWART

I am perfectly clear about one thing. The point is not worth a great deal of discussion, and I shall be quite happy therefore to divide the Clause into two.

Clause read a second time.

Amendment made: In Sub-section (1), paragraph (b,) leave out the words "equal to," and insert instead thereof the worde "not exceeding."—[Sir G. Hewart.]

Clause, as amended, ordered to be added to the Bill.