§
Lords Amendment: In page 6, line 38, after the ward "elsewhere," insert:
and may make it a condition of its award that the tenant shall undertake not to carry on the trade or business within such distance of the premises as may be specified in the award.
§ Sir W. JOYNSON-HICKSI beg to move, "That this House doth agree with the Lords in the said Amendment."
This is not a drafting Amendment. It was suggested in this House that when the tenant got an award for goodwill he might or might not make arrangements to carry on the same business in the next door premises. The landlord might let the old premises to a new tenant carrying on the same business as the late tenant, and if he had paid the tenant for the goodwill it would obviously be very unfair for the tenant to start next door in the same business. Therefore, it is proposed in this Amendment to make it a condition of the award that the tenant shall undertake not to carry on the business within such distance of the premises as may be specified in the award. Supposing the tenant says, "I will agree not to carry on within half a mile of the premises." Under those circumstances the tribunal would include that condition. Supposing a tenant received from the landlord £1,000 for the goodwill on condition that he did not start a rival business within half a mile of the old premises. I think that would be a fair condition to insert in the award. If the tenant says, "I will agree not to carry on my old business within ten miles," that would be all right. If on the other hand the tenant would only agree not to carry on his business within a hundred yards or even next door, then the tribunal would give him less compensation because he might be a rival to the new tenant. For these reasons, I think the Amendment is quite a fair one.
§ Sir H. SLESSEROne of my difficulties about this Amendment is in regard to its working. I do not think it has been sufficiently noticed that, by the operation of Clause 20 as amended, which we are soon to discuss, the tribunal is to be the County Court, and I suggest, merely for the guidance of the right hon. Gentleman, and in order that the Bill may be intelligible, that the ward "award" is no longer appropriate. Strictly speak- 463 ing, there will be on award at all; there will be a judgment. It is true that, under Clause 20 as amended, the tribunal may refer a matter for report to the Reference Committee, but the actual adjudicating body will be the County Court or the High Court, as the case may be. We are not dealing here with anything in the nature of an arbitration or statutory decision, but with the decision of a Court, and, therefore, I think the word "award" should be altered and the word "judgment" substituted for it.
Another difficulty that troubles me is, again, not a question of principle, but rather of appropriate language. It occurs to me that a difficulty may arise if the undertaking entered into by the tenant is not enforceable at common law by reason of its being unreasonably in restraint of trade. I do not know how far that point has been considered. As the right hon. Gentleman knows, certain undertakings not to practise a profession or business within a certain area are permissible in law if they are reasonably necessary for the protection of those making the covenant, but it may be that a particular undertaking not to carry on a particular business, being a collateral undertaking, is not itself a statutory undertaking; the tribunal makes it a condition of its judgment that the tenant shall enter into an undertaking, and then the question may be whether the undertaking so entered into is or is not unreasonable or incapable of enforcement at common law by reason of its being in restraint of trade. This last point, I quite agree, one might risk, but I am certainly satisfied in regard to the first point, that the word "award" is not the appropriate word.
§ Sir P. PILDITCHI think that the hon. and learned Member for South East Leeds (Sir H. Slesser) is quite right, but I think that he will find, and that the Home Secretary will find, that we shall have to go further in altering the wording, not only of this Amendment, but also of the Bill itself. If the Home Secretary will look at Sub-section (I, d) of Clause 4, he will find that is says:
The tribunal shall, in determining the amount of compensation for goodwill, have regard to"—464 and so on; while this Amendment which has been made in another place says that the tribunal:may make it a condition of its award"—and so on. That, obviously, is wrong.
§ Mr. D. HERBERTNo!
§ Sir P. PILDITCHI think we shall see in a moment that it is. If Clause 20 be altered as suggested, this decision may be either a judgment of the Court or, not an award, but a report of the referee. Under the new Clause 20, it is not contemplated that the referee shall be done away with. He has to hold his inquiry, hear witnesses, and make a report, and, if Clause 20 be altered as suggested, I think it will be necessary, in Sub-section (I, d) of Clause 4, after the word "tribunal," to add the words "or referee"; and then, in the Amendment which we are now considering, the words "judgment or report" will have to be inserted instead of the word "award."
§ Mr. HERBERTNo!
§ Sir P. PILDITCHSurely, the referee is entitled to hear evidence and bring his report to the Court, and unless one of the parties disagrees with that report, it will become the judgment of the Court. I do not know by what steps the wording can be reconsidered, but I think it will have to be on the lines I have suggested.
§ Mr. WITHERSWith regard to the second point raised by the hon. and learned Member for South-East Leeds (Sir H. Slesser), I do not think there is really any substance in it. This will be an undertaking given to the County Court, and not an undertaking as between the parties, and, therefore, its enforcement will not be at common law at all, but by proceedings for contempt of Court.
§ Mr. D. HERBERTI think the hon. and learned Member for South-East Leeds (Sir H. Slesser) is unnecessarily troubled over the word "award." Surely, a Court can award compensation. At any rate, if there be anything very serious in this point, the Bill will have to be revised in a great many other places where it is very much more important, if it has any importance at all. Sub-section (1, a) of Clause 4 refers to
the sum to be awarded as compensation.465 The Bill deals altogether with an award of compensation, and, so far as I know, there is no reason why any award of compensation should not be made by a County Court, which, already, to the best of my knowledge and belief, makes awards under several Acts of Parliament.
§ Sir W. JOYNSON-HICKSI really think the hon. and learned Member for South-East Leeds (Sir H. Slesser) is unnecessarily alarmed. If he will look at Clause 20 of the Bill, he will find that the tribunal is the County Court, that is to say, although the County Court will issue a judgment, we are giving it another name.
§ Sir H. SLESSERThat is also the High Court.
Sir W. JOYNSON-RICKSEither the High Court or the County Court will be the tribunal for the purposes of this Measure, and that tribunal will make awards exactly as a County Court, under the Workmen's Compensation Act, makes awards. I think the hon. and learned Gentleman will find, if he looks at that Act, that the word "award" is used in it. This Clause has been very carefully scrutinised by the Lord Chancellor and his legal advisers, and I think it may be taken that the word "award" relates to the decision of the tribunal. The referee merely reports to the tribunal; he does not make an award. The County Court is the tribunal. The referee sits as a referee and reports to the tribunal What he considers to be the right sum, and the tribunal then awards the sum to the tenant. I really think the matter is quite clear.
§ Sir H. SLESSERI do not want to press the point. I am quite sure that the right hon. Gentleman is wrong, but I do not want to delay the House, as the point is not of very serious moment.
§
Lords Amendment: In page 6, line 40, at the end, insert new paragraph:
(e) where the landlord proves that the value of the goodwill has been created or increased owing to restrictions imposed by the landlord, whether by agreement with the tenant or not, upon the letting for a competitive trade or business of other pre-
466
mises in the neighbourhood owned by or under the control of the landlord, the tribunal shall have regard thereto and may refuse the application for compensation or may award a reduced amount of compensation.
§ Sir W. JOYNSON-HICKSI beg to move, "That this House doth agree with the Lords in the said Amendment."
This is a new point. Where a landlord proves to the tribunal that the increased goodwill is due largely or entirely to the restriction by the landlord—to take the old case of the fruiterer's shop—of the carrying on of the trade of a fruiterer to one shop only in a long line of tenancies, as the landlord, in that case, has prevented anyone else from competing with the tenant in his business, it is considered that part of the goodwill created in the shop in question is created by the very fact of the landlord having kept everyone else in the business off the carpet, so to speak. This Amendment provides that in that case the tribunal may say, either that no compensation is due at all, because the goodwill is entirely due to this action of the landlord, or that the compensation may be reduced by such-and-such a sum, since the landlord has prevented any rival from coming and eating into the business of the tenant.
§ Mr. HARDIEThis is getting back to one of the real centres of fighting on this Bill, and, looking at the Amendment as it is drafted, one might almost accuse the hon. and learned Member for Gillingham (Sir G. Hohler) of having had a hand in it. It has been admitted in some way, somewhere, but not in this Bill, that there is something, which we cannot define at all, called goodwill, and we now see that, since it is likely to be something that will come to the tenant, a move is being made whereby the landlord may adopt methods to get whatever there may be to come in goodwill. The landlord wants to claim in contradistinction to the tenant who, by his diligence and industry, has improved his business and has something called goodwill as the result of his industry. The landlord also claims the goodwill, but, if he had let in, say, half a dozen fruiterers instead of one, how much goodwill would he have then? The goodwill would be one-sixth, but here we have the landlord coming in and saying that his is a full claim, because he has 467 not allowed other tradesmen to come in and compete.
This matter is not only serious from that point of view, but from another point of view, namely, that the community is going to be bled by high prices. If the landlord is going to combine with the tenant of a shop in order to keep out competitive shops, that is going to increase the price of the goods to the people who deal at those shops. This contention that the landlord is entitled to goodwill on the ground that he has saved the neighbourhood from competition is against every tenet held by hon. Gentlemen opposite, because they say that competition is the life of trade. Why should they compensate a man and give him what he claims as goodwill because he has taken away the whole foundation of the Tory principle, namely, competition? Where is the logic of the Tory party in bringing forward a provision like this? It means that the landlord will say to the tenant that, as he has not let in another tradesman in the same business, he is going to increase the rent of the shop, and, when he has increased the rent, he will say, on the tenant leaving, that that goodwill is going to be his because he has created the business by not allowing any competition with the tenant. Thus he gets it both ways; firstly, by making the poor deluded tenant—if there be such—think that he is going to get something for nothing, he takes it in rent, and then, under this Measure, he will get it again, because, having kept out competition, he has the right to the goodwill if there be any.
It is most unfair that this question should comes up between tenant and landlord. If the community creates a value, it ought to go back to the community, and in this case the value is created by the community—by the number of people who buy at the shop. It is true that the man who keeps his shop window clean and tidy will get more trade than the man who has his window full of bluebottles, but that is not goodwill; it is sanitation. Why should the man who follows the ordinary methods of cleanliness and sanitation claim to be superior? God does not give us all the same sort of brains. [Interruption.] I am sorry for the other side. You may have one man who has not a sharp enough brain to get rid of bluebottles from his shop 468 window, but that does not give the other man the right to claim goodwill. In this case, the goodwill belongs to the community, and I hope that this Amendment will not be agreed to. Having made the point that this is a counter-claim by the landlord on something which has always been held to belong to the tenant, there is no reason now why the landlord should be brought in in order to use a subversive inducement, because that is what it means. Here is a community which could have better shops if competition were allowed, and yet we are going to agree to a Clause to prevent competition. It is leaving far too much in the hands of one man.
§ Sir P. PILDITCHThere are, no doubt, some cases of the kind the hon. Member refers to where it is no disadvantage to a tenant to have a number of persons carrying on the same trade. There are markets of all kinds where it is some advantage to a tenant to be amongst people of the same trade, because people are in the habit of going there. But there are many cases where that does not apply. For instance, in one or two cases I know where a particular class of trade is permitted to be carried on at one of a number of shops that trade is barred for the rest of the shops because it is of such a special character that the introduction of another business of the same kind close to it would very much reduce the value of the goodwill. In circumstances like that, it would only be reasonable that this Amendment should be carried. The landlord has concentrated on one set of business premises a monopoly of carrying on a certain business there free from competition, and it would be unfair that he should be debarred from drawing attention to the fact before the tribunal in reference to the amount to be awarded in respect of goodwill. It seems to me this is only a reasonable Amendment. It would not apply at all to cases of markets where there is an advantage in two or three people of the same trade carrying on business together, but it would apply in cases where a man was carrying on a special trade and, in consequence, the actual amount of the goodwill would be very much increased.
§ Sir W. PERRINGI want to place on record my opinion that this is an entirely unnecessary paragraph. It is further 469 overloading the Bill and it is really useless. We do not pass laws for exceptional cases. We have to deal with things in general, and the conditions prevailing today in the distributive trade are such that we do not want restrictions. I believe in the old, individualistic principle of competition, and I know the soul of business is competition. Where you can get the element of competition into a district it attracts business and benefits the trader, and to suggest that one man should have a restricted right to a certain area is suggesting an impossibility. One landlord may control a terrace of six or a dozen shops, but what about the opposite side of the road? There is another very important factor in the distributive trades which must be taken into account when you come to assess compensation. I know it will not influence the compensation altogether, but to-day, tenants are spending sometimes six and eight times as much in advertising as they spend in rent, and the landlord says, "Because I restricted this trade to you in my terrace of shops, I have made your business and you are not entitled to compensation."
But this Clause has another nasty factor in it. It says, "Whether in agreement with the tenant or not," and although there may be no restrictive covenant in the lease as regards the restriction of the trade of the applicant or his neighbours, the landlord will be able to say, "I did not put any restriction into your lease but nevertheless I restricted your neighbours, although the tenant did not desire it, and by reason of this restriction you are not entitled to compensation." That is introducing a factor that is in conflict with the principle of the Bill. The Bill lays it down that the landlord is to pay for something which the tenant has created and which he may walk off with. The tenant has to prove that right up to the hilt every time, and it is surrounded with safeguards for the landlord which will in many cases, prevent him proving it. To suggest that the landlord may come into Court and prove—he cannot prove it, but it introduces into the Bill an element which may lead to litigation, prolong cases and increase costs. The Government have all along said it is their chief desire to make these compensation claims as cheap as possible. This is going to increase the cost. We had evidence 10 minutes ago 470 how lawyers differ and argue, and we shall have lawyers and experts arguing for weeks, months and years if they get the opportunity to show that the landlord has made the goodwill of the tenant. The tenant does not want these restrictions. He wants a fair field and no favour and he does not mind competition—that is the enterprising tenant. We are only dealing with him, because un-enterprising people will never improve anything and will never be entitled to compensation. This is an unnecessary Clause. It is only aggravating the claim. I know it is the last hour and there is not much hope of getting what we should like, but some day we may be able to prove that we are prophets in our generation and that the Government have put in a Clause which is not in the interests of either party but has only made trouble for those who have spent their money in justifying a legitimate claim.
§ Mr. MacLARENSince this Bill was introduced, I have been insisting on the absence of definition or of any guiding principle on this matter of goodwill. I go so far as to challenge the lawyers on either side of the House to attempt anything in the nature of a definition. I was extremely interested in the last phrase that fell from the mouth of the Home Secretary. It seemed to die away in an echo, but it was significant. He said the tribunal may hold the power in its hands to deny that any person has a right to this so-called goodwill.
§ Sir W. JOYNSON-HICKSNo, you must have been wool-gathering.
§ Mr. MacLARENPerhaps I was. Let us be candid.
Where the landlord proves that the value of the goodwill has been created or increased.What has been created or increased? The goodwill. Owing to what? To restrictions imposed. Now, for the first time on record in these Debates, we discover that goodwill is nothing more or less than the exertion of some monopolist. Some monopolists exert a power over a given area and can create what is called goodwill. If Dick Turpin comes along late at night and holds up passers-by, he is creating goodwill by blocking the traffic. I want to get this thing clearly explained, because I did not receive quite full satisfaction from the Home Secre- 471 tary. Is it meant by the Amendment that if a landlord, by virtue of being a landlord, prohibits other willing business men from venturing upon enterprises in a given area under his control, he will be able under this Amendment to claim some compensation, because the Amendment denies the tenant any right to this so-called goodwill? Do I take it that the monopolist, the man who has absolute control over the area, by virtue of having and exerting that power in prohibiting competition claims to have created goodwill? If this Amendment be carried, not only, in my opinion, has he been exercising a deterrent effect upon general development, not only has he hindered free development and free competition amongst his tenants, but he is to be compensated for having done so under the heading of goodwill. If I were asked what kind of goodwill this is, I should say it is nothing more or less than blackmail exacted by the landlord for exerting his powers in that way. If I was right in catching the last words which I thought the Home Secretary used, that, though there might be a goodwill attaching to such business, it would be within the power of the tribunal to refuse either to the landlord or the tenant the right to participate in it, clearly there is no use for the Amendment as it stands. If it is meant that the landlord may pocket something by virtue of the powers he has exerted as a landlord, anxious as I am to help the Home Secretary to get the Bill through, there is something here that requires a good deal of explaining away.
§ 6.0 p.m.
§ Sir ROBERT SANDERSPerhaps the hon. Member will allow me to give him a case in my own experience which I think is exactly to the point of this Amendment. Some years ago, I built a row of houses on certain land near London. I had a clause in every lease that they were only to be used for residential purposes. The hon. Member may object to that covenant being put in, but it was a covenant that all the tenants desired. They may have been right or wrong, but they wished to be in a row of residential houses and not a row including shops. As time went on and motor cars got more cheap and more popular, the tenants all wanted garages. On a bit of the land, I put up a number of garages. There were not quite enough 472 tenants to use the whole of them, so I let the rest of the stalls to a motor engineer. He knows that in that particular block of houses, he has an absolute monopoly, and he knows that by the use of the restrictive covenant the houses are only to be used for residential purposes. The business that he establishes, it seems to me, is a business that I have established entirely for him. And then when the lease comes to an end, because of the property which I have made and which I have developed, and in which his goodwill is entirely due to me, why should he claim compensation from me? That seems to be the case which is provided for in this Clause, which I think is a perfectly equitable Clause.
§ Mr. CRAWFURDI do not think the case against this Clause could have been put better than in the case to which we have just listened. I do not intend to deal with the concluding sentences of the right hon. Gentleman's remarks because they are outside the scope of the proposal. May I make an appeal to the right hon. Gentleman the Home Secretary? It was his endeavour upstairs, I think, that this Bill should be as short as possible, so that we should know what it was or was not. There were several occasions on which I and others made appeals, which we knew were hopeless, to extend the scope of the Bill, but the right hon. Gentleman could not do that because there were limits set for him. But within those limits the right hon. Gentleman endeavoured to keep the Bill a watertight thing, so that the tenant should have something definitely given to him. In these Amendments from another place, it seems to me, round the outline of the Bill is the penumbra. Here is one of the cases. I do not think it helps us. I do not think it helps anything. It makes the Bill more complicated. There is another interest which is wider than the interests of the tenant and the landlord combined, and that is the public interest.
When this Bill becomes an Act, as we all hope it will—and may I take this opportunity, in one brief sentence, as I was not in England on the occasion of the Report and Third Reading of the Bill, to say how much I appreciate what the right hon. Gentleman has done in this Bill—undoubtedly certain landlords, I do 473 not say the majority, will seek professional advice as to how they can evade it. They might have had the benefit of the contracting out, but we hope they will not have that. There will be this question of goodwill. A landlord, when a lease is drawn, may put in a covenant to say whether, in a tenant's particular occupation, whether it be a trade or a business, or the professional occupations which are now included in the Bill, he shall have any rights. Whereas between the landlord and the tenant that may be fair, and this Clause may be fair, supposing that that landlord acquires another block of property for a tenant folowing a similar occupation, this Clause may drive him to attempt to get rid of the other tenant. It may lead to unfair results as between one tenant and another. Supposing it does not do that. What does it do? It tends to create a monopoly, the benefits of which are shared both by the landlord and the tenants, and, I think, in the long run it tends to make the services of one kind or another less available and dearer to the public generally.
The hon. Member for North Paddington (Sir W. Perring) said a few minutes ago that he thought competition was the life of business. Surely, whether that be so or not from the point of view of the business man, competition is good from the point of view of the public. I think that in this case we have to look to the public interest.
§ Mr. RYEI would like to say a few words on the speech that was made by my hon. Friend the Member for North Paddington (Sir W. Perring), who stated that, in his experience, tenants did not want restrictions; they did not want other tenants to be debarred from carrying on their particular businesses, that is, the particular businesses of the tenants concerned. In my experience, that is not correct. I cannot imagine a case where a landlord has erected a series of shops—we will say, 12 shops in a new district—in which a would-be tenant, who intends to carry on a fruiterer's business, would not expect, and indeed ask, the landlord, during the currency of the intended lease not to let other of the premises for the purpose of a similar trade or business. It is all very well for my hon. Friend the Member for North Paddington to say that there are certain 474 traders who advertise. That is perfectly correct. There are, certainly, traders with a considerable amount of money who can advertise to a very large extent, but there are also a large number of business people carrying on the same sort of businesses who have not the means to advertise or to launch a large advertising campaign.
That particular class would most certainly desire to be protected by the landlord by a covenant debarring other tenants from carrying on a similar trade or business. If the landlord, in fairness to his own interest, it may be, puts that covenant in to prevent another tenant from carrying on the same trade or business, it seems to me quite clear that at the end of the term, part at least of the goodwill which has been created has been due to that bar or that restriction. I humbly suggest to the House that it would be manifestly unfair if the landlord had to pay for the whole of the goodwill attributable to the business carried on, because that business would necessarily have been enhanced by the very fact that no similar business could be carried on in the same block of buildings.
There is another ground, and it is this: The first business, the fruiterer's business, which has been so continually referred to in connection with this Bill, having been established for, say, seven years, it would be open to the landlord to offer a covenant not to let another shop when it became empty to the same trade, and at an enhanced rate, a special rent. The landlord gives up all that advantage, whatever it may be. I think that the Amendment is one which this House should accept, and I am sure the House will accept it.
§ Mr. DALTONI do not wish to prolong the Debate, but may I appeal to the right hon. Gentleman the Home Secretary to let us have a free vote on this Amendment? The arguments against it are very persuasive, and it is contrary, I suggest, to the general tendency of the Committee upstairs. If the right hon. Gentleman will be willing to leave it to the free vote of the House, we shall be willing to agree to that course.
§ Sir W. JOYNSON-HICKSrose—
§ Sir W. JOYNSON-HICKSI cannot withdraw it. I think, with the permission of the House, there is something that I ought to say. There is a little misunderstanding about this question. It does not say that where there are restrictive covenants there should be no compensation. It simply means that the tribunal will take into consideration the necessity for allowing compensation, first for what a man has done in his own interests, and, secondly, where there is any value attached to the restrictive covenant.
§ Mr. HARDIEDoes the right hon. Gentleman assert that it is possible for a man to create increased trade by restrictions?
§ Sir W. JOYNSON-HICKSIt is quite possible for a landlord to increase the facilities for trade which a man has in a particular building. I think that the Amendment is fair, but I am quite willing to leave the decision to the House.
§ Sir G. HOHLERI did not rise earlier, because I was desirous that this particular Amendment should go through without a long Debate. Then, to my great surprise, an appeal is made to my right hon. Friend the Home Secretary, by the hon. Member for Peckham (Mr. Dalton), to leave the decision to a free vote of the House. I do not think that that is right. Because one is desirous of getting these Amendments through in time so that they may be dealt with in another place, we are told we have not had sufficient arguments upon them. I was a little unfortunate in not being able to move the Amendments which I put down to this Bill on the Report stage. Let us look at this Clause. It is said by my hon. Friend the Member for North Paddington (Sir W. Perring) that there is some principle in this Bill. I confess that I fail to find it. I think it is the most unprincipled Bill that has ever been brought before the House of Commons. We are told by the hon. Member for Burslem (Mr. MacLaren) that he objects to it, and does not understand it, and so on. All I have to say is that that is his own fault. I gave him good instruction on this very subject.
All that this Clause proposes is, if it be true that the business for which the tenant is claiming the goodwill has not really been wholly created by him, but 476 has been, in part, increased by the restrictive covenants or otherwise by the landlord, then the tribunal shall take that into consideration. Is not that right? For instance, a man puts up a building estate and reserves—it is a common practice—one site of the property for licensed premises. Licensed premises are not within the purview of this Bill. Can it be said that a landlord who has reserved the very large area where there may be a licensed house, should be called upon to pay for the entire goodwill of the licensee without consideration of that which he has done himself, namely, imposed this restriction? It is a common thing in any new property or in any other property if it be a large property belonging to the same owner, to go to the landlord and say, "I want to take this as a grocer's or butcher's shop." Of course, this Bill has a far wider application than that. It is a common thing to say to your landlord, "Will you agree not to take any of your other property for a like purpose or within a certain radius?" This is commonly done, and yet when this tenant goes out, does he claim compensation which the landlord has largely secured him by virtue of the agreement in which he entered upon his tenancy?
What can be more just than that? In the case of this Clause, surely it is only just that that should be taken into consideration. I have always protested against this Bill, but I am in favour of this Amendment, because it is some measure of justice, and does to some extent relieve the landlord of the liability to pay goodwill to his tenant simply because the tenant has carried on the business ordinarily well. I am sorry that the Home Secretary did not insist upon this Amendment.
§ Sir J. POWERI support the Amendment. It is frequently the case that in a terrace of shops the landlord restricts the occupancy of each shop to a separate trade, and it is undoubtedly the fact that when he does let a particular shop to a particular trade the tradesman who occupies that particular shop gets an advantage. The landlord in doing that may be incurring a loss. He may undertake with his tenant not to allow more than one class of trade to be carried on in that terrace, and in order to keep to that agreement he may have to suffer 477 several of the other shops remaining empty when he could possibly have let them to a similar trade. I think the landlord is keeping faith with the tenant at some loss in such a case and is undoubtedly conferring a benefit upon the particular tradesman by not bringing competition next door to him. I am certain that the House wishes to be fair in this matter, and I do not see how it is fair in the case of the landlord, who has undoubtedly incurred a loss in this way, that afterwards he should be made to pay compensation.
§ Mr. MacLARENWill the hon. Member look at the words of the Amendment? It says:
whether by agreement with the tenant or not.The argument of the hon. Member is based upon the assumption that the agreement has been drawn between the landlord and the tenant. According to this Amendment, whether the agreement has been drawn up between the landlord and the tenant or not this benefit is to accrue to the landlord, because he has imposed a restriction.
§ Sir J. POWERI do not think the hon. Member's interruption is justified. I cannot think that the House wish the landlord to pay compensation for goodwill which has been created largely at his own expense. On these grounds, I have pleasure in supporting the Amendment.
§ Sir HERBERT CUNLIFFEI think this Amendment is in danger of being gravely misunderstood, and I would like to draw attention to one aspect of it. A very strong case has been made out in recent years for the community getting the benefit of the development of estates on the outskirts of large towns. A public authority may be developing an estate
§ and it may very well say, "We will only allow a certain number of shops of a particular trade in the particular area which we are developing." That would be a very fair thing to do. It would be an advantage to the development of the estate and it would give the tenant, to some extent, an advantage, because the tenant who is put in that position is able to create a trade which he would not otherwise be able to create if he were subject to competition from, say, half-a-dozen shops of the same kind. Supposing the public authority when the tenancy came to be determined is faced with a claim by the tenant for compensation for that which he has been able to create because the public authority have given him this whole or partial monopoly. Surely it would not be right that the compensation should be based as if the whole of that particular value which the tenant had built up had been wholly the result of his own effort.
§ Mr. HARDIEWhat right has the landlord to the benefit?
§ Sir H. CUNLIFFEI am not suggesting that the landlord has any right. That is not what the Amendment says. All that it says is that that fact shall be taken into consideration, and that the tenant shall not be compensated as though the whole of the value had been created by him. It is obvious that it would have been created because the community which, ex hypothesi, is the landlord, has given him a whole or partial monopoly. Surely, the tribunal which has to assess the compensation should take that into account. That is all that the Amendment says.
§ Question put, "That this House doth agree with the Lords in the said Amendment."
§ The House divided: Ayes, 131; Noes, 109.
479| Division No. 488.] | AYES. | [6.23 p.m. |
| Acland-Troyte, Lieut.-Colonel | Bourne, Captain Robert Croft | Clayton, G. C. |
| Agg-Gardner, Rt. Hon. Sir James T. | Brocklebank, C. E. R. | Cobb, Sir Cyril |
| Ashley, Lt.-Col. Rt. Hon. Wilfrid W. | Buchan, John | Cochrane, Commander Hon. A. D. |
| Baldwin, Rt. Hon. Stanley | Buckingham, Sir H. | Cooper, A. Duff |
| Balniel, Lord | Cadogan, Major Hon. Edward | Couper, J. B. |
| Barclay-Harvey, C. M. | Calne, Gordon Hall | Courthope, Colonel Sir G. L. |
| Beamish, Rear-Admiral T. P. H. | Campbell, E. T. | Crookshank, Cpt.H.(Lindsey,Gainsbro) |
| Benn, Sir A. S. (Plymouth, Drake) | Carver, Major W. H. | Cunliffe, Sir Herbert |
| Bennett, A. J. | Cassels, J. D. | Dalkeith, Earl of |
| Berry, Sir George | Cecil, Rt. Hon. Sir Evelyn (Aston) | Davies, MaJ. Geo. F.(Somerset,Yeovil) |
| Betterton, Henry B. | Chamberlain.Rt.Hn.SirJ.A. (Birm.,W.) | Davies, Dr. Vernon |
| Blundell, F. N. | Chamberlain, Rt. Hon. N. (Ladywood) | Drewe, C. |
| Boothby, R. J. G. | Clarry, Reginald George | Eden, Captain Anthony |
| Edmondson, Major A. J. | Kinloch-Cooke, Sir Clement | Sanders, Sir Robert A. |
| Fairfax, Captain J. G. | Lamb, J. Q. | Sanderson, Sir Frank |
| Falle, Sir Bertram G. | Locker-Lampson, G. (Wood Green) | Sandon, Lord |
| Fielden, E. B. | Long, Major Eric | Savery, S. S. |
| Forestler-Walker, Sir L. | Lucas-Tooth, Sir Hugh Vere | Smith-Carington, Neville W. |
| Forrest, W. | Luce, Major-Gen.Sir Richard Harman | Smithers, Waldron |
| Foxcroft, Captain C. T. | Lumley, L. R. | Somerville, A. A. (Windsor) |
| Gates, Percy. | McLean, Major A. | Stanley, Lieut.-Colonel Rt. Hon. G.F. |
| Gibbs, Col. Rt. Hon. George Abraham | Macnaghten, Hon. Sir Malcolm | Stanley, Lord (Fylde) |
| Grattan-Doyle, Sir N. | Makins, Brigadier-General E. | Stott, Lieut.-Colonel W. H. |
| Gretton, Colonel Rt. Hon. John | Manningham-Buller, Sir Mervyn | Stuart, Hon. J. (Moray and Nairn) |
| Harrison, G. J. C. | Marriott, Sir J. A. R. | Tasker, R. Inigo. |
| Harvey, Major S. E. (Devon, Totnes) | Merriman, F. B. | Thomson, Rt. Hon. Sir W. Mitchell- |
| Haslam, Henry C. | Meyer, Sir Frank | Titchfield, Major the Marquess of |
| Hawke, John Anthony | Murchison, Sir Kenneth | Turton, Sir Edmund Russborough |
| Headlam, Lieut.-Colonel C. M. | Neville, Sir Reginald J. | Ward, Lt.-Col.A.L.(Kingston-on-Hull) |
| Henderson, Lt.-Col. Sir V. L. (Bootle) | Nicholson, O. (Westminster) | Warner, Brigadier-General W. W. |
| Henn, Sir Sydney H. | Nicholson, Col. Rt.Hn.W.G.(Ptrsf'ld.) | Warrender, Sir Victor |
| Hennessy, Major Sir G. R. J. | Nield, Rt. Hon. Sir Herbert | Wells, S. R. |
| Hills, Major John Waller | Ormsby-Gore, Rt. Hon. William | Williams, A M. (Cornwall, Northern) |
| Hohler, Sir Gerald Fitzroy | Perkins, Colonel E. K. | Williams. Com. C. (Devon, Torquay) |
| Holt, Captain H. P. | Peto, G. (Somerset, Frome) | Williams, Herbert G. (Reading) |
| Hopkinson, Sir A. (Eng. Universities) | Pliditch, Sir Philip | Wilson, R. R. (Stafford, Lichfield) |
| Hopkinson, A. (Lancaster, Mossley) | Power, Sir John Cecil | Windsor-Clive, Lieut.-Colonel George |
| Horlick, Lieut.-Colonel J. N. | Pownall, Sir Assheton | Winterton, Rt. Hon. Earl |
| Hudson, Capt.A.U. M.(Hackney, N.) | Price, Major C. W. M. | Wood, E. (Chest'r, Stalyb'ge & Hyde) |
| Hudson, R. S. (Cumberl'nd, Whlteh'n) | Rentoul, G. S. | Woodcock, Colonel H. C. |
| Hurst, Gerald B. | Rhys, Hon. C. A. U. | Yerburgh, Major Robert D. T. |
| Illffe, Sir Edward M. | Rice, Sir Frederick | |
| Inskip, Sir Thomas Walker H. | Ruggles-Brise, Lieut.-Colonel E. A. | TELLERS FOR THE AYES.— |
| Iveagh, Countess of | Russell, Alexander West (Tynemouth) | Mr. Dennis Herbert and Mr. Rye. |
| Joynson-Hicks, Rt. Hon. Sir William | Sandeman, N. Stewart | |
| NOES. | ||
| Adamson, Rt. Hon. W. (Fife, West) | Greenwood, A. (Nelson and Colne) | Perring, Sir William George |
| Adamson, W. M. (Staff. Cannock) | Grenfell, D. R. (Glamorgan) | Pethick-Lawrence, F. W |
| Alexander, A. V. (Sheffield, Hillsbro') | Griffiths, T. (Monmouth, Pontypool) | Ponsonoy, Arthur |
| Ammon, Charles George | Grotrian, H. Brent | Potts, John S. |
| Attlee, Clement Richard | Groves, T. | Ramsden, E. |
| Baker, J. (Wolverhampton, Bilston) | Gunston, Captain D. W. | Remer, J. R. |
| Barker, G. (Monmouth, Abertillery) | Hamilton, Sir R. (Orkney & Shetland) | Richardson, R. (Houghton-le-Spring) |
| Barnes, A. | Hartshorn, Rt. Hon. Vernon | Ritson, J. |
| Barr, J. | Hayes, John Henry | Samuel, A. M. (Surrey, Farnham) |
| Batey, Joseph | Henderson, Right Hon. A. (Burnley) | Samuel, Samuel (W'dsworth, Putney) |
| Bondfield, Margaret | Hogg, Rt. Hon. Sir D.(St.Marylebone) | Scurr, John |
| Bowerman, Rt. Hon. Charles W. | Hutchison, Sir Robert (Montrose) | Sheffield, Sir Berkeley |
| Bewyer, Capt. G. E. W. | Johnston, Thomas (Dundee) | Shepherd, Arthur Lewis |
| Bromley, J. | Kennedy, T. | Short, Alfred (Wednesbury) |
| Brown, Ernest (Leith) | Kenworthy, Lt.-Com. Hon. Joseph M. | Sinclair, Major Sir A. (Calthness) |
| Buchanan, G. | King, Commodore Henry Douglas | Slesser, Sir Henry H. |
| Buxton, Rt. Hon. Noel | Kirkwood, D | Smith, Ben (Bermondsey, Rotherhithe) |
| Charleton, H. C. | Lawrence, Susan | Snell, Harry |
| Cluse, W. S. | Lawson, John James | Stephen, Campbell |
| Compton, Joseph | Lindley, F. W. | Stewart, J. (St. Rollox) |
| Connolly, M. | Livingstone, A. M. | Strauss, E. A. |
| Cope, Major William | Lowth, T. | Thomas, Rt. Hon. James H. (Derby) |
| Cove, W. G. | MacLaren, Andrew | Thomson, F. C. (Aberdeen, South) |
| Crawfurd, H. E. | Maclean, Nell (Glasgow, Govan) | Thorne, W. (West Ham, Plalstow) |
| Dalton, Hugh | Malone, Major P. B. | Thurtle, Ernest |
| Day, Colonel Harry | March, S. | Tinker, John Joseph |
| Dennison, R. | Margesson, Captain D. | Varley, Frank B. |
| Duncan, C. | Maxton, James | Viant, S.P. |
| Dunnlco, H. | Monsell, Eyres, Com. Rt. Hon. B. M. | Wallhead, Richard C. |
| Ellis, R. G. | Montague, Frederick | Wellock, Wilfred |
| Evans, Capt. Ernest (Welsh Univer.) | Morrison, R. C. (Tottenham, N.) | Whiteley, W. |
| Fenby, T. D. | Mosley, Oswald | Wiggins, William Martin |
| Fraser, Captain Ian | Naylor, T. E. | Wood, Sir Kingsley (Woolwich, W.) |
| Gardner, J. P. | Palin, John Henry | Wright, W. |
| Gillett, George M. | Parkinson, John Allen (Wigan) | Young, Robert (Lancaster, Newton) |
| Glyn, Major R. G. C. | Penny, Frederick George | |
| Gosling, Harry | Percy, Lord Eustace (Hastings) | TELLERS FOR THE NOES.— |
| Mr. G. W. H. Jones and Mr. Hardie. |
Motion made, and Question, "That this House doth agree with the Lords in the said Amendment," put, and agreed to.
§
Lords Amendment: In page 7, line 3, leave out the word "agreement," and insert the words:
in a collateral agreement, unless, in the case of an option, the terms of the option are such that the tenant could not reasonably be expected to exercise it.
§ Sir W. JOYNSON-HICKSI beg to move, "That this House doth agree with the Lords in the said Amendment."
Again, this is a necessary Amendment, which I am glad to say their Lordships have inserted to the benefit of the 481 tenant. In Clause 4, it is provided that if the tenant gives notice to clear out, or does not exercise his right to obtain an option for a further term contained in the lease or agreement, compensation shall not be payable. It was discovered, however, that a landlord might make the terms of the option of such an onerous character that no tenant could reasonably be expected to accept it; and that it would be an easy way to enable a landlord to prevent a tenant getting compensation. Therefore, we propose to insert these words, which are purely in favour of the tenant. Let me make an appeal to hon. Members in all parts of the House. We are getting on very slowly, and we do not want to sit up all night to consider these Amendments. I will promise to put before the House any salient points there are in the Amendments, but I hope hon. Members will allow them to go through without too much debate.
§
Lords Amendment: In page 7, line 16, at the end, insert new Sub-section.
(2) For the purposes of this Section, premises shall be deemed to be used for a more profitable purpose if, but not unless, the rent which the landlord could obtain for the premises if used for that purpose would be greater than the rent which could be obtained if they were used for the purpose of the trade or business carried on by the tenant.
§ Sir W. JOYNSON-HICKSI beg to move, "That this House doth agree with the Lords in the said Amendment."
This is not a drafting Amendment. If hon. Members will look at page 6 of the Bill they will see that there is a proviso to this effect:
In determining such addition the tribunal shall, if it is proved that the premises will be demolished wholly or partially, or used for a different, and more profitable purpose, have regard to the effect of such demolition or change of user on the value of the goodwill to the landlord.I think the words "more profitable purpose" should be explained in the Bill, and we have inserted this new Sub-section in order to carry out that suggestion.
§ Subsequent Lords Amendments to page 7, line 33, agreed to.