HC Deb 17 April 1917 vol 92 cc1593-7

(1) Where any sum has, whether before or after the passing of this Act, been paid on account of any rent or mortgage interest, being a sum which by virtue of the Increase of Rent and Mortgage Interest (War Restrictions) Act, 1915, would have been irrecoverable by the landlord or mortgagee, the sum so paid shall be recoverable from the landlord or mortgagee by the tenant or mortgagor by whom it was paid, and may, without prejudice to any other method of recovery, be deducted by such tenant or mortgagor from any rent or interest payable by him to the landlord or mortgagee.

(2) If any person in any rent book or similar document makes an entry showing or purporting to show any tenant as being in arrears in respect of any sum which by virtue of the said Act is irrecoverable, or if, where any such entry has before the passing of this Act been made by or on behalf of any landlord, the landlord, on being requested by or on behalf of the tenant so to do, refuses or neglects to delete the entry, he shall on summary conviction be liable to a fine not exceeding-ten pounds.


I beg to move, in Subsection (1), to leave out the words "whether before or"["where any sum. has, whether before or after"].

Since this new Clause was printed--it is not, of course, in the original Bill—it has created some interest and perhaps anxiety among people who have in mind the relation between landlord and tenant. The difficulty that the parties interested see is the apportionment of rates and rating which has gone on in a good many cases where there have been increases, and it would be a difficult matter of account to settle up these outstanding cases. It would seem, therefore, to the parties most interested that if the Solicitor-General could see his way to leave out the words "whether before or," and make the Clause read "after the passing of this Act," it would be better. I hope he will see his way to grant this.


I beg to second the Amendment.


I hope the Solicitor-General will not accept this Amendment, because part of the trouble which has; arisen in connection with this matter is covered by words in the Bill. The complaints which have reached me and many other Members of the House in regard to these matters are complaints which go a very long way back. There is a remedy provided now in the Bill, and if the words are left out, as suggested by the hon. Member opposite, that remedy will not apply in those cases. I hope, therefore, that the Solicitor-General will refuse to. accept them.


I fear I cannot accept this Amendment. The Act which is being amended provided that these excess rents should not be recoverable by the landlord notwithstanding any agreement to the contrary. Nevertheless, in fact, as we know,. rents in excess have sometimes been claimed and paid. All this Section is doing is to provide that in cases where that has happened the tenant may recover back the excess. I see no reason for taking out the words as suggested by the hon. Member.


I am glad the Solicitor-General has refused to accept the Amendment. I think it would add to the difficulty of the whole question in relation to these rents. Only recently, since the Debates on the Committee stage of this Bill, most of us have received an enormous quantity of correspondence showing us cases where the rents have been raised far and away back in 1914, and where the people are actually paying that rent at the present time. I may tell the hon. Gentleman that only in my correspondence to-day there is an account from a paper of the Debates on this Bill, and of people having been advised not to pay any more of these rents.


I should like to ask a question on this Clause as it stands. The terms are made retrospective. Suppose that before this Act was passed a mortgagor and a mortgagee have agreed that the mortgagor should pay an increased rate of interest owing to the increased value of money during the War, and that an agreement has been arrived at without any undue pressure on the part of the mortgagee, and the mortgagor is quite competent to look after himself and make an agreement knowing what he is doing. Could the mortgagor, although that increased rate had been paid by him under no compulsion, but purely voluntarily under an agreement with the mortgagee, turn round and say, "True it is that I paid this increased interest by agreement, but under this Clause I can demand it back" I Am I right in thinking that that is the effect of the Clause? If so, it appears to me a most extraordinary form of legislation. Let me illustrate in this way. The mortgagor and mortgagee may be on perfectly fair terms of bargaining. The mort-gagee may say, "Ten years ago I lent you money at 3½or 4 per cent." Now the normal rate is 5 or 6 per cent., and the mortgagee may then say to the man to whom he lent money, "I should like to increase the rate of interest." The mortgagor may perfectly well, consistent with looking after himself, say, "I want to be on good terms with my mortgagee; I will pay him one-half per cent. more. [Laughter.] Yes, that is quite an intelligible thing, especially with a view to the future. The mortgagor may, as I say, being desirous of being on good terms with his mortgagee, say," I will pay you one-half per cent. more. "Do I really understand that the effect of this Clause is that, although an agreement of that sort had been entered into perfectly voluntarily the mortgagor may go back on it under this Clause and say," True it is I have given you some more interest, but give it me back"? I said a moment ago that it may be desirable for a mortgagor to be on good terms with his mortgagee. Let me illustrate what I mean. As soon as the War is over the mortgagee in most cases will be entitled to call in his loan, and with a view to avoiding such a result the mortgagor may very well say, "It will pay me now to pay an additional rate of interest to my mortgagee so that he may not call in the loan immediately the War is over, and that I may have the advantage of having my loan continued although the War has come to an end." For that reason he may be willing to pay an increased rate of interest. I would ask the Solicitor-General to tell me how the matter stands, and whether this Clause really has the very extraordinary result I have suggested?.


Before the Solicitor-General replies I would like to suggest that the hon. and learned Gentleman who has just spoken has used an argument which does not on the face of it appear to be sound. I have never in my experience known a case of a man who has borrowed money from another man and has requested him to increase the rate of interest. There are very few people who have borrowed money who would not be glad to find that they were going to have a refund under this Act. I do not see that the good feeling between these two gentlemen would be in any way affected. If by law the one who has lent is not entitled to increase the rate of interest, then if the one who has borrowed wants to get on good terms with this particular financier there is nothing easier than for him to say, "Although the law docs not permit me to pay a larger rate of interest now I shall be very pleased to pay it when the War is over." I cannot see any reason why the introduction of this Clause should cause any friction between two men who have had a financial transaction. I suggest that the Clause should remain as it is.


The hon. and learned Gentleman has called attention to one particular hard case which may arise under a Clause designed to relieve an enormous number of hardships. Let us see exactly what is the position first. The hon. and learned Gentleman supposes a case in connection with which, contrary to the Act of 1915, there has been what I may call an excessive rate of interest.


Increased, not excessive.


Excessive within the meaning of the Act of 1915, otherwise this proposed Clause has no bearing on the matter. It deals only with the excess interest, so far as it deals with interest at all, which under the Act of 1915 is irrecoverable notwithstanding any agreement to the contrary. What has happened hitherto, therefore, is in the case supposed that the mortgagee has relied on the good will of the mortgagor to continue to pay a rate of interest which, ex hypothcsi, is irrecoverable. He may go on doing so.

Amendment negatived.


I beg to move, at the end of Sub-section (2), to insert the following new Sub-section:

"(3) This Section shall be construed as one with the Increase of Kent and Mortgage Interest (War Restrictions) Act, 1915."

Probably that would be sufficiently inferred from the Clause as it stands, but I desire to make it quite clear.

Amendment agreed to.