§ Order for Second Reading read.
§ The SECRETARY of STATE for SCOTLAND (Major Sir Archibald Sinclair)
I beg to move, "That the Bill be now read a Second time."
The object of the Bill is to prevent the oppressive use of the sanction of imprisonment to enforce hire purchase contracts. Under this system of hire purchase the purchaser pays an instalment of the purchase price of an article, which, of course, in law remains the property of the vendor, and on the payment of this instalment the physical possession of the article passes to the purchaser. The contract always contains an obligation upon the purchaser to maintain the payment of these instalments at stated intervals, and it is a condition that, in the event of failure to make punctual payments, the article must be delivered back to the vendor, and that obligation is enforced by the sanction of imprisonment. The vendor has a right to go to the court and ask for a decree to make the purchaser deliver up the article, and, if he fails to perform that specific act, he becomes liable to imprisonment.
A particularly unsatisfactory feature which is common to most of these hire purchase contracts is that the purchaser is very often induced to bind himself to submit to the jurisdiction of a sheriff a very long way away. For example, a man living in Aberdeen, or even in the remote Highlands, may find that a notice is served upon him that he has to appear in the sheriff court at Glasgow. He may not be able to travel there. He may not even have the fare. If he makes no appearance in court, the decree will he granted, and, although the man may not have had the slightest criminal intent, and may not even be able to deliver up the article, the decree may be enforced at the instance of the pursuers. This is the grievance which the Bill is designed to remedy.
As the result of this situation, the Scottish Office and the Lord Advocate's Department in recent years have received a number of complaints that the system 1420 has worked oppressively and, therefore, my predecessor, Mr. Adamson, appointed a committee, which was presided over by Lord Fleming, one of the judges of the Court of Session, to inquire into the matter. Their report was presented in October last, and it is in accordance with their report that this Bill has been framed. It applies only to articles of a value not more than £20, because the committee reported that it is only in respect of such articles that serious complaints have been made, and they advise that the Bill should he so confined. In one respect we have gone beyond the actual recommendations of the committee, because they suggested that, if we were to deal with this question, we should also have to consider whether we should not require to make an amendment in the law relating to contracts of sale under which the passing of the property in the article sold is suspended till the payment of the last instalment.
The difference between the two cases is that, under the hire-purchase system, the property in the article remains with the vendor until all the instalments of the purchase price have been paid. Meanwhile, the article passes into the physical possession of the purchaser, but it is only on hire. The purchaser is only hiring it until the whole of the payment is made. Therefore, he can at any time, if he is dissatisfied with the article or if he does not want it, if he has paid the instalments due up to that date, give it back to the vendor. In the case of these other contracts for sale, although the article does not completely pass until the payment of the instalments is complete, nevertheless it is not on hire. It is, therefore, a contract of sale and the purchaser has no right at any time to return it to the vendor. We consider that these contracts should Le dealt with in exactly the same way as hire purchase contracts.
Clause 1 defines the contracts to which the Bill applies in terms designed to cover any agreement regarding an article not exceeding £20 in value if it has the essentials of a hire purchase contract or such a contract for sale as I have referred to. Clause 2 renders a contract invalid against a hirer, purchaser, cautioner, or guarantor if he has not signed it, and it lays down that he must be supplied with a signed copy of the contract in 1421 either of two ways which are specified. Clause 3 gives the hirer or purchaser power to terminate the contract subject to compliance with certain specified conditions. These conditions are a reasonable adjustment of the respective interests of the owner and the hirer or purchaser.
Clause 4 will render unenforceable any provision or agreement in the contract under which any person prorogates or agrees to submit to the jurisdiction of a particular court. That is to cut out the present oppressive conditions in many of these contracts whereby people abandon the jurisdiction of their own sheriff court in favour of one a long way away from their residence. Clause 5 enables a hirer or purchaser who has fallen into arrears of payment and has had to deliver up the article to obtain redelivery if within seven days he pays up the balance due under the contract with, of course, necessary expenses. Clause 6 empowers the court, when granting a decree for delivery, to include a warrant to the sheriff's officers to search premises and take possession of the article.
Clause 7 makes it incompetent to apprehend or imprison except by a warrant, which may be granted by the court only on special application where the court is satisfied that there is wilful refusal to comply with the decree. I hope the House will realise that in future it will be necessary to prove quite clearly in every case wilful refusal to comply with the decree of delivery. The Clause applies not only to persons concerned in the kind of contract which is specified in Clause 1, hire purchase contracts and contracts for sale, but also to any person who has failed to comply with a small debt decree for delivery. This is another respect in which we go a little beyond the recommendations of Lord Fleming's Committee, but it would clearly not be equitable to alter the law relating to civil imprisonment solely in favour of persons who have become the subject of sentence in connection with the contracts specified in Clause 1. I understand that some criticism has been expressed with regard to paragraph (iv) of Clause 7 under whichAn application for a warrant for the imprisonment of the same defender in respect of the same decree may be presented as new at intervals of not less than three months, so long as the decree has not 1422 been recalled and has not been complied with.As a matter of fact, that is really a provision which is very much in the interest of the persons concerned. If the sheriff knows that he has the power, if the man is deliberately obstinate and stubbornly refusing to give up an article—perhaps concealing it—which he is known to possess, be may quite well, provided that this paragraph remains in the Bill, sentence the man to imprisonment for two or three days just to show the power of the law and that he ought not to remain stubbornly refusing to obey the decree of the court. If, at the end of those few days, the man thinks better of it and comes out and gives up the article no more will be heard of it. If, on the other hand, that slight and merciful sentence is not sufficient, it will be possible for the sheriff to impose a longer sentence. I would impress upon the House that that will be only in the event of it being clearly proved that the article is in the possession of the man and that he is able to hand it over and is stubbornly in defiance of tilt court refusing to hand it over. It is only in such cases that this paragraph of the Clause will be used. Paragraph (vii) of the Clause provides that:The person on whose application a warrant for imprisonment is granted under this section shall not be liable to aliment or to contribute to the aliment of the person imprisoned thereunder.Up to now the purchaser, if he has failed to perform the obligations of his contract, has been sent to prison purely at the expense of the vendor and has remained there as long as the vendor chose if he refused to comply with the terms of the order of the court, and the vendor in such circumstances has been responsible for the payment of aliment. Now, under this law, nobody can be put into prison unless as a punishment for a, deliberate disobedience of the order of the court, and in these circumstances we feel that it is appropriate that the cost of imprisonment should be made a public charge.
Clause 8 requires any action competent in the small debt court to be brought in that court only. It clears up something which is a little obscure in the law at the present time. It is not quite certain whether an action for less than £20 may be brought in the small debt court or 1423 in the ordinary court at the option of the pursuer, or whether it can be brought only in the small debt court. We think that it is desirable to clear up the doubt in this Clause not only as regards actions in respect of the contracts to which the Bill applies but also in other cases too. We think that it clears the matter up in the way it would have been resolved by the courts. Clause 9 provides for the avoidance of any contract or agreement by which a party to a contract to which the Bill applies is deprived of any right conferred upon him by the Bill.
Only one point remains upon which the House will expect to be satisfied, and that is whether it is necessary to bring in this Bill; whether the grievance is sufficient to require a Bill to be introduced for the purpose. I can only say that not only have we received a considerable number of complaints of oppressive action under the present forms of contracts, but that actually there were in Scotland in 1929 no fewer than 265 persons imprisoned, under decrees arising out of hire purchase contracts. Those numbers were quite exceptional. They fell in 1930 to 63, but they rose again in 1931 to 84, and in this year, up to 26th February, 8 persons have been imprisoned under such decrees. The longest term of imprisonment in 1929 was 119 days, in 1930 it was 57 days, and in 1931 it was 51 days. In the two months of this year the longest term has been seven days. I hope that I have convinced the House by those figures that there is a case to be met and a grievance to be remedied, that it is right that we should proceed on the lines recommended by Lord Fleming's Committee, and that the Bill will redress a, real grievance without putting any stumbling block in the way of legitimate trade.
§ Mr. NEIL MACLEAN
The Bill, the Second Reading of which has been moved by the Secretary of State for Scotland to-day, is one for which, as he and Other Members of the House are probably aware, we have been agitating for a considerable time. Scottish Members have received many complaints with regard to the oppressive nature of the provisions of the law as imposed upon a large number of poor people in Scotland and which the Bill endeavours to correct. On speaking of the matter to English Members, those 1424 Members were astonished, and even today I have been informed by an English Member that he had not thought that Scotland was such a barbarous country as to conduct its affairs in the way it did by imprisoning these people. I pointed out to him that a number of people were in Brixton Prison for offences which came pretty near to the category in which those in Scotland were included. I hope, therefore, that if we get the Bill through without any serious objection—because there are one or two points I should like the Secretary of State for Scotland to consider as Committee points—England will follow suit with regard to some of her prisoners.
There is a Committee point which I wish to bring before the notice of the Secretary of State for Scotland in regard to the question of agreements. He will remember that in the Report of Lord Fleming's Committee they say that they cannot recommend a model agreement to be embodied in any Act of Parliament. The Secretary of State for Scotland will remember, as would also the late Secretary if he were here, that I have been insisting upon a model agreement being part of legislation because of the manner in which a number of agreements are put forward and have to be signed, very often without careful reading, by the ordinary working man or woman, and, sometimes, by young lads and young girls who cannot follow the complicated nature of the agreements which they are asked to sign. There is a point in the agreement which is oppressive and peculiar and is not dealt with at all in the Bill. I should like the Secretary of State for Scotland to see whether before the Committee stage he cannot consider whether it would be possible to put something into the Bill which would correct this particular grievance, or, rather one might almost say, complication which arises in the agreements which are issued to the hirers.
The case to which I refer is as follows. I am not going to read out the name of the firm, as one does not wish when trying to correct these agreements to pillory either a firm which is dealing with this matter or a hirer who has suffered imprisonment. This particular agreement is issued by a certain firm and has to be signed by every person who takes any article from them on the hire purchase system. It contains a clause, to 1425 which we used to take exception, which has been corrected in the Bill, namely, the surrender of the right on the part or the hirer to the jurisdiction promulgation of the particular court in which he is to be sued if it is necessary to proceed against him for arrears of instalments. That clause will be invalid and illegal if this Bill becomes an Act of Parliament. The clause reads:The parties here agree that this Agreement shall not be construed as an agreement for sale and purchase of the goods, except as provided for in clause 2 hereof,Then follows the part to which I take objection—and that the dealer supplying the goods is the agent of the hirer and not agent of the owner.The Solicitor-General for Scotland will appreciate that point. Suppose an individual goes into a cycle shop to purchase a bicycle or a gramophone on the hire purchase system. Naturally, he expects that the dealer in the shop from whom he buys the article, and where he signs the agreement, is the party from whom he is hiring the particular article; but the agreement says "No." That particular dealer is the agent of the individual who hires the article and not of the individual who supplies the goods originally to the shop. Consequently individuals have been taken to prison because of their ignorance of the actual meaning of the clause. This is what has actually happened. The individual hirer of an article, a bicycle, a gramophone or whatever it may be, is dissatisfied with it, takes it back to the dealer at the shop, expresses his dissatisfaction, and says that he does not want to have any more to do with it. He says that he is willing to pay a sum in compensation for the remainder of the period during which he ought to have paid the instalments. But the shopkeeper says: "I cannot take it back. I am not the agent for the particular firm that supplied the article. I am your agent. Consequently, I cannot take the article back. You will need to take it back to the firm that supplies these goods, and the address is so and so."
The individual may live some distance away. It may be a Glasgow firm with agents in Aberdeen. He cannot go to Glasgow, and it would be more expensive to send the article to Glasgow than to 1426 continue the instalments. Therefore, the man says: "I got the article from you, and I do not want it." He leaves the article in the shop, and goes away. The next thing that happens is that he receives a summons for "arrears of instalments or delivery of the article." The term "delivery of the article" is misleading to the individual because he says to himself, "I have delivered the goods. I have taken them back to the shop where I got them." The next thing that happens is that a sheriff's officer or two sheriff's officers come to his house one night when he is at tea, put him into a taxicab and take him to Duke Street Prison. The cost of the taxicab and of the sheriff's officers are added to the expenses which the individual has to pay before he is released. That is a very grave hardship. It is a deliberate evasion of the hire purchase system, or of a, legitimate hire purchase system. It cannot be considered a fair-minded hire purchase system. Therefore, I would ask the Secretary of State for Scotland and the Scottish Office to consider the point. If no Clause is to be inserted or no subsection inserted that will safeguard the hirer against any such agreement framed on these lines, we shall still find certain individuals liable to imprisonment because they do not read or they cannot understand the agreement.
If any lay Member were to read this agreement I question very much whether he would be able to understand it. I doubt very much whether any barrister in the House or any other legal representative would be able to give an opinion upon the agreement which did not conflict with the opinion that might be given upon it by some other barrister. Such a difference of opinion, I understand, would not be confined merely to this particular agreement, but my point is that if barristers or other lawyers would agree upon the interpretation of this common agreement, how on earth can the ordinary working man or woman, or a boy or a girl who in the springtime want to get a bicycle, understand something that cannot be understood by members of a profession trained to understand these things? That is one of the points that might be considered, as well as the other 1427 point to which the right hon. Gentleman said objection had been taken.
It does seem rather harsh that if an individual, because he is obdurate, is sent by the sheriff to prison for two days, when he comes out the sheriff has power in the Bill to give recurring sentences not exceeding six weeks, at intervals of three months. There ought to be some amendment of that provision. I hope that the Secretary of State for Scotland and the Solicitor-General will reconsider the Clause and try to produce wording, on re-drafting, that will not make it appear so oppressive and will not allow it to be oppressive in operation, in case some sheriff takes a very harsh view or a very strong view of a particular case that may come before him. There are other points which I hope we shall amend in Committee.
I do plead with hon. Members not to think that because this is a Scottish Measure it is of no importance. It is of considerable importance. The evidence of one of the sheriff's officers at the inquiry that took place—which is not included in the report of the inquiry—was to the effect that in 15 months he had arrested over 300 people for failure to continue paying their instalments. Of these 300 people, 285 were sent to prison. One man was imprisoned for 56 days and the sum in respect of which he served the 56 days in prison amounted to £2 17s. 6d. But for an arrangement made at the end of the 56 days, according to the present law of Scotland, which this Bill seeks to amend, that man might still he lying in prison for a debt of £2 17s. 6d. That is a state of affairs which ought to be ended. I trust that the House will give the Bill a Second Reading and leave it to the Scottish Members, with the assistance of the 15 English Members who will come to the Committee to see how business can be done in a Scottish Grand Committee, to make the Amendments that they consider to be necessary.
§ Mr. JAMIESON
I intervene in the Debate and address the House for the first time because I had at one time experience of practising in a court which is intimately connected with the subject matter of this Bill, the Sheriff Small Debt Court in Glasgow. That court is a great institution. Day after day it considers and disposes of anything up to 200 cases 1428 dealing with small sums not exceeding £20 with an expedition and a degree of justice which is unsurpassed by any similar tribunal. But justice is tempered with mercy, because in no case where a poor debtor is able to satisfy the sheriff that he will make a reasonable attempt to pay his debt by instalments is he not given an opportunity to do so. But justice, however blind she may he reputed to be, cannot shut her eyes to the terms of the contract which comes before a court, and in these cases of hire purchase or a sale by instalments the terms of the contract must be enforced.
It is neither the law nor the administration of the law which is the cause of the trouble, but rather that one party to a contract, by inserting terms in a complicated document, often unintelligible to the other contracting party, is able to make an unwarranted use of the process of law and so abuse it. I must decline the invitation which seemed to be addressed to me by the hon. Member for Govan (Mr. Maclean) to give an opinion as to the terms of the clause of the contract he quoted. There is a real need for this Bill. In these cases the bargain looks so attractive, the payments to be made look so small. I remember an advertisement which appeared in one of the Glasgow evening papers. After quoting the lines about "Little drops of water and little grains of sand" it went on to say:Little monthly payments, trifling though they be,Buy a lot of furniture, a home for you and me—At—".And then followed the address of a certain furniture warehouse. Could anything be more attractive to a young couple about to embark on the ship of matrimony? No doubt if they made a judicious selection of what was necessary for their home there would he mutual benefit to them and to the trader. They will have the satisfaction when this Bill passes of knowing that before they can be forcibly separated the sheriff will have to make due inquiries into the case. But it is not in those cases where necessaries are bought that trouble so often arises but in the case of luxury articles. It is impossible by legislation to distinguish between what is a luxury and what is a 1429 necessary, but in my own experience I have known many cases where, through a canvasser coming round, an article which was not wanted at all has been bought and there has been difficulty in paying for it. I know of one case where, in the house of a working man in Glasgow, there was installed, under the hire purchase system, a pipe organ, and when through the good offices of the Soldiers' and Sailors' Families Association an arrangement was finally made for its removal by the owner the woman of the house was most indignant that her pretty ornament should be removed. It was regarded as an ornament, and I believe that it had never produced a note, not even a discordant one.
That is an extreme case. But a real difficulty does arise where an article which is not a necessary, it may be a gramophone or an encyclopedia, or many of the things which are sold under these agreements, is installed in the house of a working man. What follows is simple. The little trifling payments which seem so little when the article is got and when a working man has a job become great when he is out of a job, or when illness intervenes, with its attendant expenses, or perhaps another youngster comes on the scene. He gets into arrears. The article is taken round the corner and replaced by a pawnbroker's ticket. Then comes a summons for delivery. Having parted with the article he probably ignores the summons for delivery, and he does not attend at the sheriff court, or it may be that he has signed a contract prorogating the jurisdiction, words which he does not understand, and it will cost him more than the value of the article to come to the sheriff court in Glasgow and explain the position. If it had been possible I should like to have seen it made illegal for canvassers to go from door to door selling goods under this system, but I realise that that would interfere with legitimate trading and would probably cause some hardship in country districts where necessaries can be bought under this system.
The Bill goes far to meet these difficulties. The contract must be signed. No longer will the working man find that his wife, or perhaps a too enterprising member of his family, has succumbed to the suave blandishments of the canvasser. The contract must be 1430 signed by the man who is responsible for the payments. Secondly, where the article proves to be a white elephant provision is made for its return on the payment of a reasonable amount to the trader and, most important of all, the debtor cannot be imprisoned without due inquiries by the sheriff, and only where he is wilfully refusing to deliver up the article. I notice an omission which I hope the right hon. Gentleman will correct in Committee. No provision is made for notice being given to the hirer that application for imprisonment is being made. Unless proper notice is given then the provision with regard to applying to the sheriff will be entirely stultified. I hope the right hon. Gentleman will have this matter remedied in Committee. The Bill, it seems to me, remedies the defects of which I have spoken, it keeps a true balance of equity between the trader and the hirer or purchaser; and for these reasons I give it my support.
§ Mr. BUCHANAN
In congratulating the hon. Member who has just spoken on his maiden speech, I recall that he is the fourth Conservative whom I have congratulated. Not one of the four did I want to see come to this House. One of them I took a very active part in trying to keep out, and if he were to stand as a candidate to-morrow I would take an even more active part in opposing him. I am glad that the hon. Member who has just spoken has made his maiden speech on a subject which affects the very poor. In these days, when maiden speeches are apt to be made during big Debates, it is as well that at least some Members should make their first speeches on a subject possibly with less colour but with as great a human appeal. I think I was the first Member to raise in the House the subject dealt with in the Bill, and I had a rather unfortunate experience. The hon. Member for Govan (Mr. Maclean) was not then a Labour Whip. I wish he had been. The then Labour Whip ordered one of his juniors to come in and get the House counted out against me, as the matter I was raising was not considered to be of sufficient importance for discussion.
1431 Reference has been made to the small debt courts. I think that in the main these courts are the worst conducted. I would not pay them the compliment that the hon. and learned Member for Maryhill (Mr. Jamieson) has paid them. The small debt court is worked quickly, often too quickly. In many cases, as in Glasgow even, there is room for improvement in the court's administration and work. I have only one or two criticisms of the Bill to offer. The hon. Member for Govan spoke of recurrent imprisonment. The sheriff has power to order imprisonment up to three months, and has power to give recurring sentences. It is true that the sheriff is not likely to give the maximum sentence. Assume that a man steals an article. What are the two articles that are commonly involved? They are bicycles and gramophones. In this hire purchase business about 85 per cent. of the articles are bicycles and gramophones. It is rarely that a cycle is valued at about £6 or £7. Suppose that a man steals a £7 cycle. Suppose that he steals it from a fellow workman who uses it to go to his work—a shocking offence. He is not stealing a cycle from a rich man, but is stealing one of the tools that a man needs for his work. All that he would get for the theft, even from the harshest sheriff, would be a month's imprisonment, and that would be the finish, even if he deliberately went out and stole the cycle.
Another man enters into a contract with another person, and this other person has power to get imposed on him a sentence far in excess of anything that could be imposed on him had he stolen the article. I admit that the Bill is an improvement on the old. I think that the three months' imprisonment ought to be considerably lessened. We ought to put in a fixed limit of sentence. We shall strongly oppose the recurrent sentences. We think that one sentence ought to finish a case. But if recurrent sentences have to be included in the Bill, the first sentence should be strictly limited to two or three days' imprisonment. It may be that the sheriff will want to pass a sentence that will have a salutary effect on a, man. If that be the ease, why not, the first time the man appears, limit the sentence to six or seven days.
1432 With regard to canvassing, my experience is that very seldom do the firms do the work of canvassing at all. In Glasgow it is often done on commission through lodges and clubs. A purchaser making a contract with a canvasser would be more particular than in making a contract with a neighbour in a club. What often happens is that a woman signs her husband's name. The person with whom she makes the contract knows that she is forging her husband's name. It is not an uncommon thing in money-lending. Once the woman has forged her husband's name it is possible to levy blackmail on the man, because he will not charge his wife with the forgery. I should like to see in the Bill a, provision that no contract should be signed without a, witness's signature. At the employment exchanges and in a host of things with which the Government are concerned, the signature of a witness is required, and often in things of little importance. In a hire-purchase contract of this kind there ought to be the signature as witness, of a neighbour or of someone of bona fide address. That is one of the things which might be included in this Measure. I have also some fear that under this Measure a guarantor can still receive a sentence of imprisonment, that is to say, a person who has not actually purchased an article but who has guaranteed payment for the article may even under this Bill be imprisoned. I am not sure if that is so, but I hope that point will be looked into in Committee.
On the question of the return of goods one of the difficulties arising there is that sometimes the goods are stolen and sold. It is not an uncommon case that a boy gets a bicycle and his father signs on his behalf. The boy steals the bicycle and his father is hauled up to the court. In order to avoid imprisonment he has to inform the court that his son stole the bicycle. The father often will not inform the court that his son has been guilty of theft and thus he goes to gaol. In a case of that kind where a father did tell the truth about his son, that fact ought not to be used for the purposes of criminal proceedings against the father. I think also that something might be done in this Bill to make sure that the purchase people take either one court or the other. If they are going in for criminal proceedings and trying to have 1433 people sent to gaol, then they ought not to be allowed to take civil proceedings in the small debt court at the same time.
These are points which we shall strive, to have altered in Committee. I welcome the Bill, as far as it goes, and if I may say a personal word upon this matter I would like to pay my tribute to Mr. Paterson, the secretary of the committee which dealt with this matter. I know his work as an official, and his desire to see that the small debt court is properly worked, and that poor people are decently treated. I think that both the present Secretary of State for Scotland and his predecessor were fortunate in having the services of such an official as secretary of the committee. I rarely, if ever, pay tributes to officials and perhaps it is not likely that I shall ever do so again, but on this occasion I feel, from a personal knowledge extending over the last 15 years, that this gentleman's work is well worth my humble tribute in this House. I hope that the various points which have been raised will receive consideration and that when the Bill comes up for its Third Reading there will be no opposition to it.
§ Major CHARLES MacANDREW
I should like to associate myself with what the hon. Member for Gorbals (Mr. Buchanan) said regarding the speech of my hon. and learned Friend the Member for Maryhill (Mr. Jamieson). I think we all enjoyed that speech very much and look forward to further contributions from my hon. and learned Friend in our deliberations here. While associating myself with the hon. Member for Gorbals in those references I cannot bring myself to agree with him in his view that to steal a bicycle from a rich man is not to commit the same offence as to steal a bicycle from a poor man.
§ Mr. BUCHANAN
I did not say that. I said that a man might steal a bicycle from a poor worker who required that bicycle in order to go to his daily work. I said that that was a shocking offence but that such a man would only get a month's imprisonment whereas if he took a bicycle under the hire purchase system he would be liable to a much more severe sentence.
§ 12 n.
§ Major MacANDREW
I beg the hon. Member's pardon. I thought he did mention the words "rich man" and I thought he meant that to steal from a 1434 rich man was not so bad as to steal from a poor man. I misunderstood what he said. I think this Bill is long overdue. I think the requirement dates back to 1895 when there was the case of Helby v. Matthews, about a piano, which has been so much talked of since. One of the unfortunate things in connection with this Bill, to my mind, is that under Clause 1 the articles which it covers are not to exceed £20 in value. I do not suppose that an article like a piano can be bought for less than £20, and, certainly, the pipe organ which my hon. and learned Friend the Member for Maryhill mentioned, would not come within the scope of the Bill,. I understand that the difficulty arises from the fact that it is desired to keep these matters within the scope of the small debt court but I am sorry that £20 is the limit. I think the really important part of the Bill is that which prevents the imprisonment of people for offences which they did not intend and in many cases did not understand. The Fleming Committee in their excellent report make it clear that:In some cases the persons who are imprisoned may have acted dishonestly but in the majority of cases we believe that the persons who find themselves in prison are honest and have no intention of defying the authority of the court.It is dreadful to realise from the figures which we had from the right hon. Gentleman that last year 84 people were imprisoned and in 1929, 264 people were imprisoned for things of this kind. For that reason I welcome the Bill. Although the report of the Committee does not recommend the drawing up by Parliament to some form of contract, I am in agreement with the hon. Member for Govan (Mr. N. Maclean) on that matter. The report makes it perfectly clear that some of the provisions of these contracts are very difficult to understand and even. Lord Fleming himself, a man of great knowledge and experience, says:The provisions of some of these agreements are extremely complicated and difficult to understand and it is not surprising to find that in many cases the hirers have no proper appreciation of the legal position.I think that is a very serious point and I hope that the Solicitor-General for Scotland when he replies on this Debate will tell us why it is considered undesirable that there should be some definite 1435 form of contract in these cases. The reason may be that it would have the effect of reducing the amount of perfectly legitimate business and that it would not be desirable to do so merely because of troubles which had arisen under this hire purchase system through the action of one or two firms who were not willing to trade very fairly. But I think it would be advantageous if the hirer were shown the difference between the cash price and the credit price. In connection with the Moneylenders Bill we made a great point of the fact that the borrower of money should know the rate of interest per cent. which he was to pay. I think if some method were devised of making it possible for the purchaser to see how much more he was paying by taking an article on the hire purchase system, than he would pay if he bought it for cash, it would be a great advantage in many cases and I hope we shall hear more about that point from the Solicitor-General. If we had a form of contract prescribed by Parliament it would get over two of the difficulties which we are seeking to deal with by Clauses 3 and 4. This termination of the contract, which seems absolutely essential, has apparently been very much misused in some cases.
In the Fleming Report there is a case of an article bought for £7, and the only way in which the hirer could get rid of it was by taking it back and paying £6 17s. 6d. If he could have paid another 2s. 6d., the article would have belonged to him. In the letter of the law that may be hire, but the spirit of that is really purchase, and I am glad to see that in Clause 3 there is a very fair method provided to meet such cases, for which we ought to be thankful. Clause 5, which provides that a man must be sued in the court of the district where he lives, is also an advance. I hope that when the Solicitor-General replies he will deal with the question of the contract and explain to us why it would not be advisable to have a form prescribed by Parliament. I know that in the Report, Lord Fleming did not seem to be in favour of it, but the reason is possibly that it would make it difficult for legitimate trade to be carried on if it were too much tied up by regulations. I have much pleasure in supporting the Bill as 1436 a great advance on anything that we have had before, and I hope that it will get a Second Reading to-day.
§ Mr. MAITLAND
I hope that hon. Members representing Scottish constituencies will forgive the temerity of the representative of an English constituency intervening in this debate, but I may with the more confidence claim their indulgence when I remind them that my forbears were Scottish. It may very well be that some of the principles which are embodied in this Bill, when they have been tried out in Scotland, will soon be extended to England. The Secretary of State for Scotland is, I am sure, to be congratulated on the reception which this Bill has received to-day. The speeches which have been made upon it have been largely concentrated upon remedies against the imprisonment of small debtors in Scotland, and with that object every Member in the House, I am sure, has the greatest sympathy, but may I point out one or two possible dangers with regard to one principle which is embodied in Clause 3? Clause 3 undertakes rather a difficult task, because in it we are trying to lay down in an Act of Parliament the conditions upon which articles purchased under the hire purchase system can be returned by the hirer to the owner, and we are trying to lay down what is a fair value for the subject matter of the contract.
The hon. and gallant Member for Partick (Major MacAndrew), who preceded me, expressed the hope that the Bill would be extended to articles of a value in excess of £20. I entirely differ from that view. I would like to suggest to those responsible for the Bill that, apart from those oppressive cases, which have been very fairly stated to-day, there is a large amount of legitimate business done on hire purchase terms, which, in these times of financial stringency, is a great convenience. I would ask the right hon. Gentleman not to lose sight of that legitimate volume of business which is done on the hire purchase system, as it is a real convenience to a vast number of people.
I have been asked by the Scottish Motor Trade Association, the British Cycle and Motor Cycle Manufacturers and Traders' Union, and the Motor Agents' Association to put forward certain points on this 1437 Bill. I do not know why they have asked me to do it, except perhaps that in the last Parliament I put down a Motion for the rejection of a Bill which was brought forward dealing with hire purchase, which covered a much wider scope than this Bill. They have asked me to say that they welcome the Bill, but that they would like the Secretary of State for Scotland to consider two practical proposals. The first is with regard to Clause 2, whether the Bill could be altered so as to provide that instead of the copy of the contract being given within seven days, it might be given within, say, 14 days. This is required for purely practical purposes and not in any sense with a desire to obstruct the purposes of the Bill. Their second point has reference to Clause 3, which lays it down that an article that is returned shall be returned after due allowance for reasonable wear and tear. These words appear very simple in an Act of Parliament, but when applied practically it may be a much more difficult matter, and they ask the right hon. Gentleman to consider whether he is satisfied that this provision covers all the agreements that would be involved.
§ The SOLICITOR-GENERAL for SCOTLAND (Mr. Normand)
We have had a Debate which has been very helpful to those who have had to consider the precise terms which this Bill should ultimately take. All the speeches which have been delivered were intended to be helpful and to bring before the House points which merit real consideration. One of those speeches was a maiden speech, and I believe that it is the privilege of anyone who is called upon to wind up a Debate in this House to congratulate any Member who has, in the course of the Debate, made a maiden speech. I would gladly avail myself of that privilege if I thought it was fitting and seemly to do so, but I do not think that one who is embarking upon that nervous ordeal himself is qualified to express the congratulations of hon. Members to those who have so triumphantly emerged from it as has my hon. and learned Friend the Member for the Maryhill Division (Mr. Jamieson). Nevertheless, I feel quite sure that the House would have endorsed the encomiums that would have been passed 1438 upon that speech if there had been standing here someone who was really qualified to utter them.
Certain criticisms have been passed upon the Bill, and the most important, I think, was that passed by my hon. Friends the Members for Govan (Mr. Maclean) and Gorbals (Mr. Buchanan), who asked that we should consider whether, instead of enacting that certain clauses or conditions in a contract should have no effect and that certain other clauses or conditions should be implied in any contract, we should promote a model contract and incorporate it in the Schedule to the Bill. I do not think that any of the considerations which have been laid before the House need be excluded from further consideration in Committee, but at the same time I should like to point out, here and now, that there are grave difficulties in the way of framing a model clause.
One has to remember the point which was brought out by the hon. Member for Faversham (Mr. Maitland), that in the main the business which is carried on under the form of hire purchase contracts is wholly legitimate business, is beneficial to both parties who take part in it, and should not be, therefore, unduly restricted, and, I think, should not be stereotyped by any form of statutory contract. That is the first point. It is said, however, that the contracts which are in use contain many clauses which are unintelligible, or, at all events, difficult to understand by those who are asked to sign them, and that is true. It is, unfortunately, true of almost all contracts. The hon. Member for Gorbals said that if barristers were asked to give an opinion between two parties to such a contract they would disagree. I am afraid that is, unfortunately, true of nearly all contracts, but it is at least true of statutory provisions. Anyone conversant with the working of the Workmen's Compensation Acts or the Income Tax Acts would have little confidence in the ability of Parliament to frame a statutory agreement which would escape differences of opinion in the minds of lawyers.
In a matter of this sort I think we should not interfere with freedom of contract beyond the necessity which the remedying of grievances actually requires, 1439 and it is that principle which has guided the drafting of the Bill as it at present stands. The hon. Member for Govan, however, did call attention to a particular clause which he read out from a contract of hire purchase which provided that the dealer should be held to be an agent for the hire-purchaser, and not the owner of the goods. That is a clause to which much attention has not hitherto been directed, and, consequently, it is a clause which needs careful consideration in the Committee stage, because if it has the effect which the hon. Member attributed to it, it certainly could be used for oppressive purposes. Therefore, it may be that that is another clause which will have to be considered before the Bill leaves this House.
The next important criticism was in regard to the Clause in the Bill dealing with recurrent sentences which the hon. Member for Gorbals linked with the Clause which entitles the sheriff to impose a sentence of six weeks' imprisonment upon a debtor for failing in his obligation to return an article and wilfully refusing to do so. I think it is, perhaps, well to clear up one or two misapprehensions about these two matters at this stage. First of all, a distinction was drawn by the hon. Member for Gorbals between the power given to a sheriff under this Bill to inflict a sentence of six weeks' imprisonment upon the defender in an action for the redelivery of an article which he had obtained under a hire purchase contract, and the probable sentence which the sheriff might inflict upon one who has committed a theft of precisely the same article, and he said that the sheriff would probably inflict a shorter sentence than six weeks' imprisonment. We shall certainly not exclude from consideration the point which the hon. Member makes—far from it; but the hon. Member, I am sure, will remember that when a man is sentenced to imprisonment for the theft of a bicycle, he is not able to release himself from imprisonment by the re-delivery of the bicycle to the owner, whereas in this Bill a man sentenced to imprisonment for wilful refusal to deliver the article is entitled to liberation forthwith upon his changing his mind, and handing the article 1440 back to the person who is entitled to its recovery.
Therefore, there is no real comparison between the sentence in the one case and the sentence under this Bill for wilful refusal to obey the order of the Court, because the latter sentence in all cases is shortened by the willing act of a man who is under sentence. The whole point of the Clause is to prevent the imprisonment of anybody either by accident, without his knowing what is going on, or without the sheriff being satisfied that he is in default. It has been suggested that it might still happen that a man might be imprisoned for failure to return a bicycle he had obtained under the hire purchase system because his son had sold the bicycle, and the father was unwilling to tell the Court the true facts of the case, and preferred to go to prison himself. When this Bill becomes law, a father will be in no such unhappy dilemma. It will not be for the father to prove that he is unable to deliver the article; it will be for the pursuer to prove that he is in a position to return the article, and accordingly that difficulty would not arise. It would be impossible for the pursuer, in the circumstances, to say that the man who obtained the bicycle was able to re-deliver the article. There was, however, a suggestion, I think made by the hon. Member for Maryhill, that it should be made clear in the Bill that it was necessary that notice should be sent to the defender by the pursuer in the action of his application to the Court for a warrant. I think that that is a point which certainly might be considered and probably given effect to. My own view is that, in the ordinary course, that would take place by order of the sheriff, if it had not already been done, before any warrant for imprisonment was issued by him.
The hon. Member for Faversham raised certain points upon Clause 3, namely, whether the reasonable wear and tear Clause contains sufficient protection for the bonâ fide trader. On that point, I would only say that we shall take into consideration any representations which may be made. It was not specifically recommended in the report. It is a Clause, however, which is intended only to carry out what are the reasonable and 1441 fair conditions upon which the hirer under a hire purchase contract should be able to return the article if he does not desire to complete the contract. I hope that this will be regarded as fair as between the two parties. It may be that the actual wording in the Bill will not entirely recommend itself to the Committee after the Committee has given it consideration.
One point was raised with regard to Clause 1 with which I ought to deal, namely, the signature of the person to the contract. Under this Clause it will be necessary that the purchaser to be held liable shall himself sign the contract. The signature of the wife or son or daughter of the person entering into the contract will not be available on which to found an action against a father or husband. It is suggested that the wife or daughter frequently takes upon herself to write the signature of the husband or father, but in common law such signature could not possibly bind the father or the husband unless in full knowledge of the facts he takes the contract upon himself by adoption. Under the Bill the only proper foundation for an action by a trader will be the actual signature of the person whom he wishes to sue and hold liable under contract. A contract of this character does not call for such a formality as the signature of witnesses. Two witnesses are required for certain formal deeds, but it would be an unknown development in our law that there should be witnesses to the signature of a party to a simple mercantile transaction of this character.
My hon. and gallant Friend the Member for Partick (Major MacAndrew) suggested that the Bill should provide that in every contract there should be nominated the principal value of the article sold, together with the interest which was being charged upon that principal. I am afraid that the suggestion would involve us in great complications, and I regard it as impracticable. It is taken, of course, from the provisions which relate to a contract by a moneylender, but in a money-lending transaction it is never difficult to separate the principal from the interest. A man goes to a moneylender for a loan, and the amount of money required is the principal. When a man purchases a definite article for a sum payable by instalments, it is difficult to say what amount is principal and what 1442 amount is interest. I suppose that my hon. and gallant Friend would say that the principal is the value of the article as sold for cash, but the article is not sold for cash and possibly it is never offered for sale on a cash basis at all. In any case, the value of the article subject to the contract of sale is the price stipulated in the contract. The whole price is stipulated in a series of instalments. In such a case, it would be impossible to distinguish between principal and interest. What protection would such a provision afford? It is true that it might be a warning to the customer that he was paying very heavy interest, but he ought to know whether the contract is unfair by adding up the total instalments. I cannot see in the suggested provision any additional protection for the purchaser or hirer, but I can see in it very great difficulties for the bonâ fide trader.
§ Major MacANDREW
I appreciate that it may be impossible to carry out, but does not the hon. and learned Gentleman think that if a person is thinking of buying an article under the hire purchase system and can ascertain that he is paying a high rate of interest on the principal, he will think twice before going on with the contract?
§ 12.30 p.m.
§ Mr. NORMAND
I agree that it may be done in many cases, but, on the other hand, there are many cases in which it is quite impracticable. I agree, too, that it would be a deterrent to many people if they saw the rate of interest, but after all you cannot protect people against all the consequences of their transactions. We are presenting a Bill which closely corresponds to the recommendations of a strong committee which gave the whole question very careful consideration. We are presenting a Bill, therefore, which adopts the suggested remedies for particular evils, and we would not rashly impinge on the sphere of free contracts unless we were sure that it would help to remedy a mischief. The actual mischief out of which this trouble has arisen is not that people have entered into these contracts, but that they have entered into contracts upon such terms and in such conditions as have resulted in their imprisonment without their having bad a fair chance of explaining the circumstances. It has always been a principle 1443 of law that when a man is hailed before a court a sheriff shall not issue a decree for the return of an article if he explains that it is impossible for him to make such delivery. The unfortunate thing is that the contracts entered into make it almost impossible in many cases for people to have that opportunity of explaining. That is the mischief which we are remedying, and I think that it is fully remedied in the Bill.
§ Mr. GEOFFREY ELLIS
May I put a point to which I do not want a reply now. Under Clause 1 articles not costing £20 in value are taken. That is all right when you are dealing with one article, but you may have contracts in which you are dealing with a number of articles, and I want to be assured that something is provided in the Bill that when these contracts are made it will not be possible to take out of the contract a number of articles which may be convenient to the hire purchaser, and leave in those which may be detrimental to him.
§ Question put, and agreed to.
§ Bill read a Second time, and committed to a Standing Committee.