HC Deb 27 November 1917 vol 99 cc1958-66

"Nothing in this Act shall deprive any person upon whom the agreement contained in the Schedule is not made obligatory of any right to require money owing to him by a person upon whom the agreement is made obligatory by this Act"—[Mr.Runciman.]

Brought up, and read the first time.


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

The object of this new Clause is to deal with the point which we discussed a little earlier in the evening, namely, that where leans have been made by bankers to colliery proprietors or coal-owners, that those loans should be repayable if the colliery proprietor is under an obligation to repay them, and that this agreement, in so far as it interferes with the rights of bankers who are not parties to it, should allow them to remain outside it. I do not know whether the Government propose to. Accept this Amendment?


accept it


Might I ask your ruling, Mr. Whitley, as to how this new Clause is in older at all? You have consistently throughout the evening ruled on various Clauses submitted that they were out of order. The Clause now moved seeks specifically to contradict Clause 22 of the Schedule, which says specifically, No dividends shall be paid and no loans repaid in respect of any undertaking without the consent of the Controller. As, I understand this new Clause, it nullifies altogether the effect of Clause 22 of the agreement. I should like for our guidance to know whether you are going to allow this Clause, which interferes with the agreement, when you have consistently throughout the evening ruled out of order other Clauses which sought in any manner particularly to touch this agreement?


As it was first submitted to me, this Clause would undoubtedly have had that effect, but as it is now put before me I do not think that is so. I have made careful inquiries to see if it was a breach of the agreement, and I think it is not so. I think it does not dp anything more than clear up, in the Bill certain rights of third parties, as to which, at any rate, it seemed very doubtful whether they were or were not affected in the Bill.


May I refer to Clause 22 of the agreement? It seems, as far as anything in the agreement is clear, the clearest Clause in the Bill: No dividends shall be paid and no loans repaid in respect of any undertaking without the consent of the Controller. I would submit that that is perfectly clear and specific, and that, I submit, is now being varied by this Clause.


I do not think myself the Clause will do that. It seems to me to be a declaratory Clause, and, therefore, in order.


Then I would like to ask the Solicitor-General if he will tell us, as this is a very interesting point, and we have had no opportunity of considering it, what new ground is covered by this new Clause, and what would be the effect of it?


I can only do, what I am always prepared to do, and that is to do my best to answer a question put to me. I should that thought myself that the Clause really adds nothing to what is contained in the Bill and takes nothing away from it. The Bill does not purport to deprive any person, upon whom the agreement is not made obligatory, of any right. What the right may be is a very difficult question to determine. Suppose, for example, an individual or a banking corporation were to require repayment from a person upon whom the agreement is made obligatory, and the Coal Controller were even in that case to refuse his consent, a state of affairs would arise which would be, to say the least, interesting; but still I think it would be perfectly true to say that nothing in the Act would deprive that person of his right, whatever that right may be.


I am very much obliged to the learned Solicitor-General. I feel that he has laid down undoubtedly good law, but I must confess, as a plain, ordinary man, how we should act under the circumstances which he has detailed I am still a little in the dark. But I do not wish in any way to rush him on this Clause. I presume when the President of the Board of Trade rushed in and accepted it he was aware of its effect, and as my right hon. Friend is a business man, unaccustomed to Parliamentary and legal subtleties, perhaps I may appeal to him to give an explanation. I should certainly value the pure 'business interpretation which he would put upon it. Let me put to him a very plain question. Supposing I have an overdraft on my colliery at the bank, and supposing the Coal Controller will not give his consent to the repayment, what will be the effect of this new Clause? That is point number one. Point number two is, Would the bank be precluded from suing me in such a case? That is not a legal matter at all, but one of everyday occurrence, and I would like the right hon. Gentleman to explain the real meaning of the Clause and why he has accepted it.


I am afraid we must accept the interpretation which has been put upon the new Clause by the Solicitor-General. As reference has been made to my absence, I would like to explain that it was not due to any intentional discourtesy on my part, but I have been away attending to important matters connected with the railways.


I am sure we shall all be ready to accept the explanation which the right hon. Gentleman has given, because we are all aware how serious the situation is. The position in regard to this Amendment is one which demands some little consideration and further explanation. We are in this position. Paragraph 22 of the agreement expressly says No dividends shall be paid and no loans repaid in respect of any undertakings without the consent of the Controller. A penalty is also imposed under Subsection (1) of Clause 1 of the Bill, which provides: If any person pays any dividend or repays any loan in contravention of the provisions of the said agreement, he shall be liable on summary conviction to a fine not exceeding fifty pounds, and to forfeit to His Majesty the amount of any dividend so paid or loan so repaid. We have the statement of the Solicitor-General that this Clause does not substantially affect the rights of third parties under the agreement, but I am at a loss to understand his reference. He says that creditors under the agreement are not affected by Paragraph 22. That statement comes with some surprise, because in his justification of the latter part of Sub-section (1) of Clause 1 of "persons whom the agreement affects" he justified the retention of that expression on the ground that there were a number of people affected by the agreement upon whom no rights were conferred and upon whom no obligations were imposed as being owners under Clause 1, but that there were a number of people who were affected by other provisions. Now it seems that paragraph 22 undoubtedly makes creditors of all coal undertakings that have lent money and constitutes them as people affected by the agreement. If that is so then Clause 1 deprives them of their rights and the Clause now proposed by the right hon. Gentleman the Member for Dewsbury (Mr. Runciman) is in complete contradiction of Clause 1 which provides that nothing in this Act shall deprive such persons who are persons affected by the agreement of any right to obtain the repayment of loans. I do not think that we should leave this interesting piece of legislation with any greater pieces of absurdity than it has already been proved to contain. This proposal would be an added absurdity introduced by the House of Commons.

There is a further point. Even granting that this new Clause would operate and that a creditor was entitled to sue and recover judgment, I want to know if he got judgment would he be entitled to be paid? It seems to me that if the debtor paid under the judgment he would incur a penalty under Clause 1, because that is perfectly definite. I hope the Solicitor-General will look at this point: First of all, say, a creditor who exercised the right which is safeguarded under this Clause about suing a debtor who is a person affected by the agreement, and recovered judgment, and the debtor paid, would the debtor not be liable to a penalty under Clause 1, because that Clause as it stands is perfectly definite and admits of no exception? It says: If any person pays any dividend or repays any loan in contravention of the provisions of the said agreement, It would be a contravention of the agreement. The paragraph is particularly definite— he shall be liable, on summary conviction, to a fine not exceeding £50 and to forfeit to His Majesty the amount of any dividend so paid or loan so repaid.


That has gone.


I do not think the whole of it has gone.




Not the whole of the penalty, but the penalty which may be imposed upon a person for improperly paying any dividend or repaying any loan. That was omitted.


I am sorry. That gets rid of the absurdity of the penalty still being imposed, but it seems to me a very strange thing that, in spite of that being removed we should still have the inconsistency of paragraph 22 of the agreement. It surprises me, after all the Amendments which would modify the agreement have been ruled out of Order, that we should have this Amendment accepted. It really introduces into the Act terms which are absolutely contradictory of paragraph 22 of the agreement.


I must just protect myself again on that point. Of course, it is not for me and I am not equipped to deal with purely legal points. When this Amendment was submitted to me by the right hon. Gentleman, it did not appear to me that it conflicted with my previous ruling. I still think that is the case. Where I can, I always stretch a point in favour of an amendment and not against it.


I want to know what is the protection where there is prohibition for paying a debenture debt which is due? The trust deed, as a rule, provides, if the debenture is not paid on its due date, that the debenture holders can apply for a receiver to be appointed. What protection would there be in that case? A debenture debt of £20,000 or £30,000 is due to be paid on a certain date. You cannot pay because you are forbidden by the Controller. The person who holds your debentures at once appoints a receiver to take charge of your colliery. How are you protected against that danger? There ought to be in the Bill soma protection in such a case against your creditor coming and winding you up or appointing a receiver to take charge of your colliery. That is an undesirable thing, and it is right that we should know how it is going to be met.


I cannot help thinking that my hon. Friend's alarm is assumed for controversial purposes. It is groundless for two reasons. In the first place, it is to be expected that the Controller is a reasonable person and is not going to refuse his consent unreasonably. I think we ought to assume that. Secondly, suppose that in the particular case that was imagined, a debenture became payable and the Controller refused his consent, I cannot believe that it would be possible for the debenture holder success, fully to apply for the appointment of a receiver, for other reasons and for this reason, that the coal mine, ex hypothesi, is under the control and in the possession of the Coal Controller.


The hon. Member for Pembrokeshire (Mr. Roch) has rendered very valuable service in drawing our attention to this introduction in terms. If I understand the proposal of the right hon. Gentleman the Member for Dewsbury it is designed to get rid of the difficulty which appeals to his mind and the minds of other hon. Members, that no banker will lend rapidly unless some such Clause is included in this Bill. As the hon. Member for Pembrokeshire pointed out, when a banker looks to paragraph 22 of the agreement and finds that no dividends shall be paid and no loans repaid in respect of any undertaking without the consent of the Controller he will naturally feel diffident about lending. As we are unable to get rid of this in the agreement itself, as that would be out of order, we can only move Amendments, as the right hon. Gentleman the Member for Dewsbury has done. But that, again, is checkmated by the paragraph in the agreement. I would ask the Solicitor-General to reconsider the position, which, I think, he agrees is a serious one. He says that the Controller is likely to be a sensible man and will not refuse his consent; but I may point out to him that in the interests of the Bill and of financing the industry many bankers would be loth to make advances unless this point can be cleared up. The solution of this matter rests with the Government, and if the Solicitor-General is unable to offer a solution at the present time they might come to some arrangement with those who signed the agreement whereby the penalising paragraph could be abrogated or amended before the Bill actually becomes law.


May I say that I should regret very much if the Solicitor-General was placed in any difficulty because of any delay in giving 'him notice of this Clause. The hon. Member for Hexham (Mr. Holt) and I drafted this New Clause immediately after our discussion before dinner. We handed a copy of it not only to the Table, but also to the representatives of the Government. I regret that the Solicitor-General did not have sufficient notice.

Colonel F. HALL

This is a Clause which makes the Bill even more unintelligible. It seems that what we agree to in the Bill we disagree with in the Schedule, and that what we agree to in the Schedule we disagree with in the Bill. It only proves the absolute necessity, when matters have to be discussed in this House, of our having an opportunity to go into the whole question. The Government themselves are to blame to a large extent for having brought in a Bill containing an agreement which is not an agreement and which cannot be discussed in this House. That is bound to put the Government and the House in a most extraordinary position. The Solicitor-General must very often have found himself more or less at his wits' end to be able to give a reply to the various questions that have been put, because he realises as well as anybody the difficulties with which he and the House are faced. I hope it will be a lesson to the Government and the House that whenever any such Bills are introduced in future, they should be brought forward in such a form that they can be discussed line by line and Clause by Clause.


If the proposed new Clause can be admitted as in 'order I think every Member of the House will welcome it, because it certainly removes a very serious difficulty. It must be clear to everyone that in large undertakings like the sinking of collieries it is often necessary that considerable advances in money from time to time should be secured from bankers, and, in view of the constant necessity there is for developments in various directions in the coal trade, I consider that the provision in the agreement that neither dividends nor loans can be paid without the consent of the Coal Controller is bound to have a serious effect in delaying the developments which will take place, and which are absolutely necessary in the economic and commercial interests of the country. We shall have to make a great economic recovery after the War, and it is of the highest importance that we should have an abundant and cheap supply of coal, which can only be got by working to the larger and deeper seams to enable us to get coal at a lower price than is possible if we confine our operations to the working of very thin, poor seams. Therefore, it is of the utmost importance that every financial facility which can possibly be given to the coal trade should be given. This is one of the great defects of the Bill, that the operations of a great industry are to be unnecessarily hampered and hindered in a way that is against the real commercial interests and the economic progress of the country. I hope this new Clause will be the forerunner of other new Clauses which will still further remove the grave difficulties in the way of the prosperity of a great industry by this ill-advised and wholly unnecessary Bill.


It is important that it should be possible to get banking facilities. The Solicitor-General said, and I quite agree with him, that the Coal Controller is not likely to be unreasonable in refusing to allow dividends and loans to be paid, but the Coal Controller may be replaced by someone else by the time this comes about who may not take such a reasonable view, or, in any case, if the same Controller exists or not, bankers may not consider it a sufficiently good guarantee to rely on the reasonableness of the Coal Controller allowing loans to be repaid. It may be said that the Coal Controller is a reasonable man, but the Bill provides that he can refuse permission for the repayment of loans. I am very glad that you have ruled, though it does seem rather contradictory, that this Clause is admissible.


I want the President of tie Board of Trade to consider what would be the effect of this Clause. Whether the Coal Controller is a reasonable man or not, it is certain that several months or weeks may elapse before you can get permission from him to pay back your loan. That is quite certain. We know that the Departments are so overburdened with work that they cannot possibly get through it in time, and delay will be occasioned. The result of that will be—


That will arise on the Schedule. It does not arise here.

Clause read a second time, and added to the Bill.