LIABILITY FOR WAR DAMAGE (MISCELLANEOUS PROVISIONS) BILL [Lords]. (Hansard, 7 September 1939)

§ The Solicitor-General (Sir Terence O'Connor)
I beg to move, "That the Bill be now read a Second time."
This Bill comes to the House from another place, where it passed through all its stages yesterday. In regard to this Bill, as in the case of another recent Bill dealing with war damage, we are greatly indebted to the Uthwatt Committee for the labours which they undertook over a considerable period of time, and for their advice and recommendations, which have resulted in this Bill. I am sorry that hon. Members will not have had very much time to read the recommendations of that committee, as they were published only a few days ago, but fortunately this is a Bill which is not likely to excite any contentious interest. I propose to summarise what the Bill seeks to do and shall do so on the assumption that the House consists exclusively of laymen. It is a Bill to relieve bailees of their obligations. For the benefit of my lay colleagues, let me describe roughly what a bailee is. I should say that a bailee is any person having in his possession the goods of another person for whatever purpose. I except burglars from that category, and so perhaps I ought to have said "lawful possession." This Bill relieves such persons of the liability of bailees in respect of goods in their possession which suffer loss or damage as a result of war. War damage is very widely defined in Clause 8, as the House will see. It is defined as loss or damage caused by or, in repelling, enemy action, or by measures taken to avoid the spreading of the consequences of damage caused by or in repelling enemy action. At Common Law bailees are liable only for negligence. Provided that they act carefully in regard to the goods in their possession, there is no liability at Common Law. Certain exceptions to the Common Law which limited even the obligations of a bailee in regard to negligence were made in the Innkeepers Liability Act and by the law in relation to common carriers. 592 Apart from the Common Law, bailees remain liable, even where they have not been negligent, in respect of express terms in contracts of bailment that are made. An example of that is that a bailee may by contract make himself liable where he detains goods after the conclusion of the contract of bailment, or if he departs from the terms of the bail. The express contracts that exist between people who lend goods, or warehouse them, or perform other acts of bailment, impose such obligations as that the goods should be kept insured, that they should not be moved from place to place, and that the bailee should make himself responsible for all risks.
It is quite clear that most contracts of bailment—perhaps the commonest cases are hire-purchase agreements—were made in circumstances in which nobody contemplated that the hire-purchaser, the bailee, would render himself liable to compensation for war damage. The Bill excludes war risks from the contracts of bailees, except in cases where it is expressly provided for in the contract that the bailee is to remain liable. Even where there is an express term in a contract that the bailee will stand war damage, we propose to make two exceptions, which will cover the vast majority of the cases of bailment. They are to be found in the proviso to Sub-section (1) on page 2.In all hire-purchase agreements to which the Act of 1938 applies, or hirings for less than £20 a year, even if there is an express term in the contract saying that the bailee is liable for war damage, this Bill will relieve the bailee from all such liability.
Clause 2 deals with the similar situation arising in the case of people who have goods on sale or return. Goods under £25, as the House will see from the proviso, are in no circumstances to be subjected to liability for war damage in the hands of the holder of the goods, whether or not he has contracted to pay or insure for war damage. In relation to goods of greater value on sale or return, the bailee equally is not to be liable for war damage unless he has entered into an express contract to cover war damage according to the terms of the contract.

§ Mr. Ammon
How does that affect people who are storing furniture?

§ The Solicitor-General
They are covered under Clause 1. If the furniture 593 is damaged as a result of war damage, the warehouseman is not responsible except in the case where he enters into an express contract to cover war damage. If the furniture has been deposited under a contract made before the War, such a provision would be most unlikely to be in such contract. Clause 3 deals with the case of innkeepers and relieves them of liability. My hon. and learned Friends in the House may think that that is an overlap with Clause 1, but there are certain cases which seem to suggest that the innkeeper is not a bailee, so that it was thought wise to have the provision in for safety. Clause 4 deals with the case of pawnbrokers. The pawnbroker is subject to express statutory provision, and the scheme of Clause 4 is that the loss has to lie where it falls. If by fire pledged goods are destroyed, any obligation between the pledger and the pledgee is dissolved and the pledger of the goods will only be liable to pay any loan which he may have had if he comes along to redeem the goods.
Clause 5 deals with the somewhat curious situation of the person who has dutiable goods in store on which he owes duty. The first Sub-section relieves the owner from liability to duty where the goods are completely lost before the duty is paid. Sub-section (2) deals with the case in which goods are damaged in store, and two sets of circumstances have to be envisaged. The first is the class of case where the goods are subject to an ad valorem duty. That case did not present the Committee with very much difficulty. In the case of an ad valorem duty the owners are to be charged only on the value of goods undamaged, which seems a simple and fair way out. Much greater problems presented themselves to the Committee when they came to consider how to deal with goods which were charged not on their value but on their weight. It was not practicable to arrive at any simple solution, but the one which is proposed is that the person whose goods they are is to be given an option. He can either pay the duty and take the goods as they are, or he may surrender the goods to the Revenue and not pay the duty. That was the best that the Committee could suggest. Clause 6 is the Scottish application. Clause 7 enables the provisions of the Bill to be enacted by the Parliament of Northern Ireland. Clause 8, to which I 594 have already called attention, is the interpretation Clause. I hope that the Bill is non-contentious and fills a gap.

§ Mr. Pethick-Lawrence
In the rather brief interval which I have had for studying this Bill it appeared to me to meet a very important need. The Solicitor-General has explained it with considerable lucidity, and I think it meets with the general approval of the House. My hon. Friends offer it no opposition.

§ Mr. Ammon
In my constituency there is a contractor making clothing for the Army. If a bomb falls on his factory and destroys the goods, who is to bear the cost of the damage, the contractor or the State?

§ The Solicitor-General
That is a very much wider question than this Bill, which deals only with a bailee in possession of property which belongs to somebody else. The hon. Gentleman's question is one of war damage.

§ Mr. Pethick-Lawrence
Is there a statement in such contracts as to how far the goods are the property of the Army or whether they remain the property of the factory?

§ The Solicitor-General
My right hon. Friend reminds me that if the goods were the property of the Government, the Government would lose them. If they are not the property of the Government, they are embraced within the scope of war insurance.

§ Mr. Dingle Foot
I have not had an opportunity properly to read the Bill or to appreciate (fully everything that it contains, but I should like to ask the Solicitor-General a question. The Bill relieves a bailee of his contractual liabilities, but how far does it relieve him from the consequences of his own actions? One can conceive of cases in which goods would be exposed to war damage through the negligence of the bailee. It is possible to think of circumstances in which a bailee would not take the precaution which he ought to take to protect goods against war damage. What would be the position of a bailee in such circumstances?

§ The Solicitor-General
At the moment I am not certain what the situation is in the case which the hon. Member envisages. Practically all contracts of bailment are in writing and, therefore, oust the Common Law relation as to negligence. It is difficult to conceive of a contract of bailment which does not come within the scope of Clause i, that is to say, even in the case of negligence. If the resulting damage was due to war, the bailee would not be responsible.

§ Mr. Gallacher
I would like to ask a question in relation to Clause 4, which deals with pawnbrokers. In many working-class areas pawnbroking transactions are common. Paragraph (b) says: unless (in a case of damage) the pawner redeems the pledge, he shall not be liable to repay the loan. That is to say, he shall not be liable but if the owner redeems the pledge and pays the full amount to the pawnbroker, the owner will get a damaged article in return. Are any arrangements made whereby the pawnbroker will submit to the owner a statement of the original character of the article so that the latter may make a claim under war insurance, or is the owner only to have a damaged article in return for payment?

§ The Solicitor-General
I cannot envisage a case of the kind which the hon. Member has in mind, where difficulties would arise under the War Insurance Act. I am not saying that it is not so, but, if I remember rightly, the Pawnbrokers Act of 1872 provides a method by which, in the case of fire, the value of the article could be ascertained by adding together the amount of the advance, the profit of the pawnbroker and 25 per cent., I think, over. So that Parliament has already fixed a value for the article in pledge, and if it was necessary to claim on the basis of value there is a method already by law by which that value could be obtained.