HC Deb 08 May 1941 vol 371 cc997-1004
The Deputy-Chairman

I think the first two Amendments on the Paper in the name of the hon. Member for Carmarthen (Mr. Moelwyn Hughes) and that in the name of the hon. Member for North Battersea (Mr. Douglas), may be taken together.

Mr. Moelwyn Hughes (Carmarthen)

I beg to move, in page 2, line 3, to leave out from "scheme," to "and," in line 5, and to insert: (a) to which the debtor and a majority in number and value of such of the said creditors whose debts have been proved assent; or (b) where there is one creditor whose debt has been proved or where there is one creditor whose debt constitutes a majority in value of the debts which have been proved, as to which the liabilities adjustment officer is satisfied; Provided always in each case that the scheme appears to him to be equitable and reasonable."

The Amendment is designed,' in the first place, to retain for this very desirable officer—the liabilities adjustment officer— all the powers given to him under the Clause as it stands, but by this Amend- ment it is sought to make further use of his services and to give them an extended scope, so that his duties will cover not only the quasi-bankruptcy duty of presiding in cases where there are many creditors, but will give him an opportunity of taking part in the settlement of affairs where there is only one creditor or where one creditor is the predominant creditor. That is the circumstance which will prevail in a very large number of cases for whose aid this Bill has been brought forward. The wording of the Amendment may, perhaps, leave a little to be desired in its exact terms. Perhaps the expression "is satisfied" gives him too wide a scope, but if my right hon. and learned Friend will accept the spirit of the Amendment and give the liabilities adjustment officer a wider scope of duties than he now has, we shall be quite satisfied. If not, to the extent of enabling him to approve a scheme in the circumstances outlined by himself, at least I would beg my right hon. and learned Friend to give him the right, of his own volition, when he has considered schemes affecting one creditor, to approve a scheme subject to submitting it to the county courts before it becomes effective. This Amendment stands in the names of two hon. Members, including myself, who are both members of the legal profession, although of different branches, and is designed to enable matters to be settled out of court rather than in court. I hope the fact that members of the legal profession are responsible for this Amendment will induce the Attorney-General to give it favourable consideration.

Mr. Douglas (Battersea, North)

I have an amendment in page 2, line 3, to leave out from "reasonable," to "and," in line 5, which I think may be discussed at the same time as this and which is intended to effect the same purpose. As the Clause stands at the present moment, it limits the operations of the liabilities adjustment officer in a way that does not seem to be necessary. The debtors are in any case protected by the provision under Sub-section (4) of this Clause by which they can have recourse to the courts if they are not satisfied with the scheme which is made by the liabilities adjustment officer. Therefore, as the debtors have that protection surely it will be far better not to reconsider the activities of the liabilities adjustment officer in the way which the Clause proposes at the present time. There are, as the mover of the Amendment said just now, many cases in which there will be one creditor whose debt exceeds in value all the rest put together. There are cases of people who owe money to building societies or other bodies on 'the mortgages of their houses, and I would like to point out that there is nothing in this Bill, so far as I can see, -which provides that in assessing the value of the debt for the purposes of this Clause any deduction shall be made of the security which is held by the creditor. It may be that the power which is given later to the Lord Chancellor to make rules is intended to enable him to make a rule dealing with this particular point, but I am doubtful about that. It is certainly far from clear, and unless it can be covered in that way a creditor of that kind will be able to use the whole value of his debt as a lever and will be able to prevent a scheme being made in the great majority of cases which might come before the liabilities adjustment officer.

I think it is very unfortunate that we are introducing a new procedure which departs from the old traditions of bankruptcy law—that we should fetter it by a condition which is appropriate to that but which is not appropriate to this new method. The result of the Clause remaining as it is at the present moment will simply be that the unfortunate debtor will have to make use of the more formal and legal procedure which is contemplated in the later Clauses of the Bill and which will involve him in additional expense in court fees and in obtaining legal assistance. Everybody knows that when a matter has to be dealt with before the courts people are, for their self-protection, forced to obtain legal assistance. If the matter comes before the liabilities adjustment officer, I presume that the proceedings will be quite simple and formal, so that there will not be the same deterrent to the debtor acting on his own behalf and so saving expense, trouble and inconvenience. On these grounds I hope the Attorney-General will be willing to accept a modification of this Clause.

The Attorney-General (Sir Donald Somervell)

I appreciate very much the general desire that as many of these cases as possible should be disposed of before the liabilities adjustment officer. On the other hand, one has to remember that the idea of that officer is that he should be a conciliation officer. What he is wanted to do, and what he is prepared to do, is to try and get people to agree, and it is because that is his function and because he has only limited compulsory powers, if I may put it that way, that he is able to adopt what the hon. Gentleman has just referred to—simple and informal procedure. When we came to consider this matter on that basis, we had to consider a case where all creditors did not agree and where there were, perhaps, one or two outstandingly unreasonable or non-agreeing parties. Under bankruptcy law in that class of case the whole thing would have had to have gone before a court. We thought that that proceeding in this class of case would be undesirable, despite the fact that this officer will not be tied by legal forms and procedure and will be able to communicate informally with the people concerned. So we thought it right to insert a provision, if the majority agreed, that this scheme should be operative unless the minority appealed to the court, and I think that is reasonable and fair. I do not think either of the hon. Gentlemen' who have just spoken would object to that. They want compulsory powers to go further.

The hon. Gentleman the Member for Carmarthen (Mr. Moelwyn Hughes) has an Amendment which deals with the case of the single debtor or where there is one single predominant debtor, and the hon. Gentleman the Member for North Batter-sea (Mr. Douglas) also referred to that case. I do not think it would be right to go further than we have gone in the Bill as it stands, whether there is one creditor or a number of creditors. I think if we were to adopt the methods here proposed, a strong case could be made that, if the liabilities adjustment officer is to have these compulsory powers, then he must be bound by certain principles of procedure and this would change his character, which I think would be unfortunate. In, the case of the single creditor if mortgagee or the landlord, as the case may be, and the debtor go before the liabilities adjustment officer and the debtor makes an offer and says "Here are my affairs; here is my boarding-house "—if he is a boarding-house keeper—"with nobody in it, or only a few people in it, instead of being full, but I think I can get through," and if, in such a case, the landlord or the mortgagee is not satisfied with an offer which the liabilities adjustment officer considers reasonable, then, I agree, the matter has to go to court. But I will see that it is made quite clear that in those cases the expense of going to court can be placed on the landlord or mortgagee who has forced the tenant to go to court, because he would not accept the offer which the liabilities adjustment officer considered reasonable. I believe that that is a better way of dealing with the problem and that to extend the powers of the officer too far would be, as I say, to alter his character.

Mr. Garro Jones (Aberdeen, North)

The right hon. and learned Gentleman has not met my hon. Friend's point to a very large extent, but there is considerable substance in the concession which he has indicated regarding costs. I attach a great deal of importance to it and would be very glad if he could inform us in what way he proposes to give effect to that safeguard.

The Attorney-General

Costs are usually left in the discretion of the court but if it should be found necessary to have a rule that the court shall have regard to any offer made by the tenant and approved by the liabilities adjustment officer, I will see that the necessary alteration is made.

Mr. Moelwyn Hughes

In view of the Attorney-General's statement, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Motion made, and Question proposed, "That the Clause stand part of the Bill."

Sir Adam Maitland (Faversham)

I wish to raise a question on this Clause, and if this is not the appropriate time for doing so, perhaps an answer can be given to it at a later stage. There is some uncertainty in the definitions in this Clause which may affect different classes of people, and one instance on which I think the Committee would desire to have some further information, is that, in which, under this scheme, the payment of rent is postponed. Is there any provision in the Bill—I have myself so far been unable to find one—that the person who owns the property in such a case shall be relieved of the payment of Income Tax upon it? In these days of high taxation, it seems very unfair if Parliament, by a legislative Act, has postponed the payment of a sum that is due, such as rent, to deprive the property-owner of his rent and yet under another enactment place him under the obligation of paying taxation on that sum at the present high rates. As I say, if I am premature in putting this point I am willing to postpone it to a later stage.

Mr. Garro Jones

May I make a suggestion? A great many questions will doubtless arise as to the effects of this Measure in relation to the Board of Inland Revenue. The hon. Member who has just spoken has referred to one only. Could the Attorney-General give the Committee an assurance that he is in touch with the Board of Inland Revenue, with a view to making the necessary provision against injustices to tax-payers arising under the Bill, as undoubtedly will happen unless this matter is dealt with on a broad basis?

The Attorney-General

The point mentioned by my hon. Friend the Member for Faversham (Sir A. Maitland) does not arise on this Clause. There is no Amendment on the Paper dealing with it and it was not as far as I know raised during the Second Reading Debate. I cannot do more, at the moment, than say that I will certainly look into it. I have been in touch with the Inland Revenue and while I cannot give any undertaking to deal with that particular matter, I certainly appreciate its importance. I do not think we can have a discussion upon it now, but as I say, I will look into it.

Sir Herbert Williams (Croydon, South)

Would the right hon. and learned Gentleman go as far as to point out to the Chancellor of the Exchequer the situation that may arise in these cases, so that he may be able to consider in the meantime introducing an appropriate Amendment in the Finance Bill, to deal with such matters?

The Attorney-General

Certainly.

Major C. S. Taylor (Eastbourne)

I wish to draw attention to one small point in connection with this Clause. Subsection (9) provides for registration of schemes of arrangement on the same register as that provided for under the Deeds of Arrangement Act, 1914. I understand that this Bill is designed to avoid any stigma of bankruptcy attach- ing to an individual in these cases, and therefore I hope that my right hon. and learned Friend will consider the advisability of having a separate register made under the provisions of this Bill. Otherwise, if the registration is to be under the normal bankruptcy procedure it will tend to cast the stigma of bankruptcy on the individual concerned.

The Attorney-General

I think the Bill itself meets, in substance, the point raised by my hon. and gallant Friend, by removing the stigma to which he refers. As regards the register, it might impose an undue burden on those who have to carry out searches if they were called upon to search two lists instead of one, and I cannot think that the mere fact of registration under the procedure now proposed would involve any unfairness to the debtor who has to go to the liabilities adjustment officer. I am, however, sympathetic to the idea, and I will look into it and if I find that it can be done without any inconvenience, I have no objection to these cases coming under a different heading. It may, however, be an unnecessary complexity to have two lists instead of one.

Mr. Woodburn (Clackmannan and Stirling, Eastern)

The Attorney-General has mentioned the case of the boarding-house keeper who, though unable to pay his rent at the moment, thinks he may be able to carry on his business. I foresee the possibility of tenants of another type finding themselves in serious financial difficulties to an extent which may affect a considerable number of the population. I refer to those tenants who have been "blitzed" out of ordinary houses and have lost their furniture and equipment and who, owing to force of circumstances, and because no other houses are available, may be compelled to seek refuge in houses which have been partially repaired. Under the law as it stands in Scotland, such a tenant under the contract of tenancy is required to pay the full rent if the house is wind and water tight. If such a tenant is in serious financial difficulties, I take it that he also would be entitled to apply to the liabilities adjustment officer to have an arrangement made between himself and the landlord for a suitable modification of the rent, to meet his difficulties and perhaps to compensate for the lack of amenities. That type of case will be very prevalent. The Bill covers big property owners and so on, and I would like to know whether the Attorney-General has foreseen the possibility of the liabilities adjustment officer functioning in the cases to which I have referred.

The Attorney-General

I do not think that on this Clause we can go into special questions arising between landlord and tenant in connection with repaired houses, a matter which is really covered by the Landlord and Tenant (War Damage) Act. However, under this Clause, anyone in serious financial difficulties can go to the liabilities adjustment officer and seek assistance to make arrangements with a landlord, or with anybody else, if he cannot meet his obligations

Question, "That the Clause stand part of the Bill," put, and agreed to.