HC Deb 08 May 1941 vol 371 cc1015-24

Amendments made: In page 8, line 7, after "Where," insert" at the date of the protection order."

In line 11, leave out "or this Act."— [The Attorney-General.]

Major Milner

I beg to move, in page 8, to leave out lines 20 to 23.

According to the Clause, it would appear that the courts can only reduce the rent if the lettable value of the premises has fallen owing to war circumstances or to an amount less than the lettable value at the date of the Order, but in an evacuation area, for example, the lettable value of premises in general may have risen, and in such an area and in such circumstances it might not be possible for the tenant to obtain a reduction of rent. It seems to me that some provision ought to be made for such a case. I gather that here the Government are trying to legislate by areas, so to speak, although I feel it would be more desirable to legislate on the merits of each particular case. I recognise, of course, that a landlord is entitled to consideration, and that it would perhaps be a hardship on him in some cases, though not in all, that if the premises were vacant and he could get a higher rent he should be compelled to take a lower rent, but it does not seem that he will be in any worse case than any ordinary creditor who, under this Bill, may have to forfeit some part of his claim. At any rate, I am drawing the attention of the right hon. and learned Gentleman to this point as one which seems to me worthy of consideration.

Mr. Woodburn

I feel that this part of the Clause is of tremendous importance to a large number of people because it will give blitzed tenants the right to have some adjustment of their rent made by the liabilities officer if war damage or war circumstances have altered the circumstances in which the rent agreement was made. But a difficulty arises over the words "lettable value," because where practically a whole town has been blitzed the lettable value of such houses as remain may have risen considerably owing to a shortage of housing accommodation. A landlord might argue that though the condition of the house had deteriorated by more than 50 per cent., though the tenant might be able to occupy only one room, yet the lettable value of the house had actually increased, and certainly not diminished, owing to the scarcity of houses. I should like the Attorney-General to look into the point, because it is already raising considerable difficulties. I have heard of landlords in a severely blitzed area who have said that they would rather see their houses stand empty than reduce the rents by one penny. It cannot be the intention of the Government to cover cases like that, and I think the Clause should be altered in such a way as to refer to the condition of the houses as well as to its relative lettable value in comparison with other houses.

The Attorney-General

This Clause was not intended to deal with the problem of blitzed houses, and I do not think it does. It was intended to deal with cases like that, say, of a boarding-house in London or on the East Coast with a pre-war rent fixed on the value of boarding-house property in the area. Where the conditions have changed to the disadvantage of boarding-house keepers the landlord will, in 9 cases out of 10, if the tenant is a good tenant, have made a remission of the rent voluntarily, but the idea of this Clause is that the court should be able to say in a case coming before it, "If the landlord turned you out he could not get more than a certain rent for the house and therefore, having regard to all the circumstances, we reduce the rent by a certain amount." We put it that that rent should not be reduced below the value at which the premises could be let. We think that is right. If you are to give power to vary the contract under which a man is to remain in your house, it is right that you should set this limit to the variation. You should not leave the matter completely at large, which would put upon the court a discretion which really would not be fair.

In moving the Amendment, my hon. and gallant Friend spoke about the reception areas. In the main, people in those areas are not doing so badly. The hard cases arise in evacuation areas. He took a case where the value of the house was maintained or increased and the tenant said that he wanted his rent reduced. If hardships are to fall, not by reason of this Measure but because of war conditions, on a great many people who own property, they will also include hardships in letting the property. If a man who owns a house is in a position to say, "I could get another tenant at so much," it would be wrong to reduce the rent below that amount, and it would be an impossible discretion to confer upon the judge. It would be impracticable to accept the Amendment.

Major Milner

I am not quite sure that the Attorney-General is right in his argument. Is he not giving a preference to the landlord in this case? There will be debtors who have to take advantage of this Measure. Merely because they happen to be in an area where rents have increased, are they to be deprived of obtaining a reduction in their rents, and are their landlords to have a preference over other creditors?

The Attorney-General

No. The other creditors would be put into the position in which my hon. and gallant Friend would put the landlord. It would not be fair to say to the butcher, "You have to go on supplying meat to this man at two-thirds of the ordinary price "Equally, you should not say to the landlord, "You must continue to let this man have possession of your house at a reduced price."

Major Milner

I am obliged to my right hon. and learned Friend. We are all trying to get the most desirable results. There is another argument which supports the right hon. and learned Gentleman's appeal, which is that if a landlord can get another tenant at a higher rent, he will be compelled by this Bill to continue to let to the present tenant at the same rent, that is to say, the rent which the tenant was previously paying. To that extent the landlord will be damnified, in that he will not be able to go into the open market and get a higher rent. Having regard to what the right hon. and learned Gentleman has said, I am willing to withdraw the Amendment, but I am not altogether happy about the position.

Mr. Woodburn

I have read the Clause again, and I am unable to see how a tenant in a blitzed area such as Clyde-bank, placed in a serious financial difficulty and unable to pay his rent, cannot apply for the benefit of this Measure and for the liabilities officer to adjust his rent with his landlord.

The Attorney-General

It is my fault. I did not mean to imply that persons who come under this Bill might not have their houses blitzed or that a house where a reduction of rent was in question might not have been blitzed. I wanted to remove what I thought was a misapprehension in the mind of my hon. and gallant Friend, and to make it clear that the general intention of the Clause was to cover, and that the Clause did cover, the case of a blitzed tenant who, without being in financial difficulties, felt that his case had to be dealt with.

Mr. Woodburn

I am glad that that point has been cleared up. I see also the possibility of a large family, where the income has been seriously reduced, perhaps by the death of a breadwinner, finding itself in such serious financial circumstances that it is unable to pay the rent. So far as I understand the matter, the words "letting value" make it possible for the landlord to insist on the payment of the full rent, because the lettable value, owing to the area being blitzed, is perhaps above what the normal rent of the house would be. I referred him to the case—I hope there are very few like it, but I understand that there have been cases—where landlords in a blitzed area insisted on the full rent from people whose work necessitated their coming to the house, and would not have,an adjustment of this kind. It will be a great service to people who are suffering these difficulties if it is made clear that this Measure will bring them relief and adjustment of their difficulties upon a fair basis as between landlord and tenant.

Major Milner

I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendments made:

In page 8, line 23, after the third "the," insert" liabilities adjustment."

In line 29, after "Where," insert" at the date of the protection order/'

In line 31, after "may," insert" provide in the liabilities adjustment order."

In line 34, leave out "vest," and insert "for the vesting of."—[The Attorney-General.]

Sir H. Williams

I beg to move, in page 8, line 37, after "price," to insert and not being less than such a sum as added to the amount already paid by the debtor in respect to the hire-purchase price will equal the value of the goods at the date of the order. This Amendment is one which I think is of rather substantial importance. I am moving it at the request of a body known as the Conjoint Conference of Public Utility Associations, with which are associated all the municipal and company gas and electricity undertakings, and in addition I know that the Amendment has the approval of the Hire-Purchase Trade Association. When goods are out on hire purchase the reason is, as a rule, that the man who is seeking the ultimate ownership of the goods does not want to pay all the money down at once, and therefore, instead of entering into a transaction involving a direct sale, he enters into such a transaction that he can spread the cost over a substantial period of time. It happens that from time to time hire-purchase transactions come into the courts, indicating that some of these transactions have features which are not too desirable. Of course, it has always been the bad cases which have come before the courts. It is very important to bear that in mind, for so far as 99 per cent. of hire-purchase transactions are concerned, I think they have been fair to both sides. It has only been the bad cases that have received publicity, and as a result there is, in the minds of some of those who administer the law, a measure of prejudice against the hire-purchase trader. I know that from what a number of them have said to me. They sometimes feel that the man who is buying the goods on hire purchase is always right, while the seller is always wrong.

What is the position of the hire-purchase trader so far as this Bill is concerned? He is a person who is a secured creditor. I am not very expert in regard to the law on banks and the rest, but he is a creditor who has a security. He is a form of creditor such as is included in the first Sub-section of this Clause, which also deals with secured creditors. Let us imagine that, whenever you rented a house, you were forced to have a hire- purchase agreement so that ultimately you became the owner, and that Clause 1 applied exclusively to such people. If we apply the same principle to that, it will be seen that as the man is to have the house there is not much difference. We have just accepted a Sub-section under which, if it were made similar to Subsection (3), the tenant of the house would be informed that the house belonged to him since he had paid so many years' rent. There is some analogy; I do not want to push it too far.

Let us take another case. This Bill is primarily designed for the benefit, not of private individuals, but of people engaged in trade, because I think, broadly speaking, the Attorney-General will agree that the Bill is designed to keep afloat people in business who are in great difficulties because of the effects of the war on districts in which they carry on their business. I am a trader, and for the purpose of my trade I need plant and machinery and I need materials. Over a period of years I may buy far more materials than machinery, but I do not buy the materials on hire purchase. I get deliveries at frequent intervals, and I get a monthly account due for payment within so many days, and in a period of, say, six years the supplier of the materials will have been paid for probably 95 per cent. of what he has supplied. Now we come to the person who has provided the machinery on which those materials will be turned into something that can be sold. That person, instead of sending in a bill once a month for, it may be, a hundreth part of the plant and getting paid for it— in which case the hundreth part has passed definitely to the trader—allows the trader to have the use of the whole plant and, if so much a month is paid for so long, the whole of the plant belongs to the trader. That brings us to the position in which this Bill is to apply. There are two creditors; one is the hire-purchase trader, and the other the one who has supplied materials. The latter has already had 95 per cent. of his bill paid in the past, and the hire-purchase trader has perhaps had only half of it, yet under this proposal he is to be treated infinitely worse than the supplier of the material.

It is no business of mine to defend hire-purchase traders because they are hire-purchase traders, but it is only fair and just that all classes of creditors should have an equal measure of justice given to them, and after all, it should be remembered that not every debtor is necessarily an entirely virtuous person. We must not base laws on the assumption that all creditors are rogues and all debtors angels. That, broadly speaking, is not true—I am inclined to think, in general, it is very much the reverse of true. It is the man who, in the ordinary way, does not incur heavy debts for whom I have the greatest respect. I think there is a substantial case for this Amendment, or alternatively for some other Amendment which will give some reasonable protection to the hire-purchase trader, first of all against the debtor who may be, in part, not too honest. But in any case I see no reason why a mortgagee, for example, should be put in a preferential position as compared with a hire-purchase trader. I think there ought to be equal justice for both.

I realise to the full that I am dealing with a matter in connection with which my own personal experience is very limited. I have tried to see the position fairly, and I sincerely trust that the Attorney-General, even if he cannot accept my Amendment in this form, will at least assure me that something will be done to protect the very large and very legitimate interests at stake. After all, the public utilities to which I have referred, both company and municipal, represent a capitalisation of £2,000,000,000. They are substantial people, and the money of the ratepayers is concerned to a substantial extent. The legitimate interests of the shareholders in the large public utility company are also at stake, and there is the general question of fair justice as between citizen and citizen. On those various grounds I move this Amendment, and hope the Attorney-General will find himself in a position to give me an encouraging reply.

The Attorney-General

When we were considering the provisions of this Bill it became clear that, whereas we had put what I call a stop upon the power of the courts to reduce rents, and while there is also a stop on the power of the courts to reduce mortgage interests, there was no such stop when we came to the exercise of discretion with regard to a hire-purchase contract. Under the strict bankruptcy law I think the hire-purchase trader is in a somewhat exceptionally favourable position. He can, I think, insist either on getting the full balance of the instalments or on taking possession of the article. In this class of case we felt that it would be unfair as between him and other creditors if that was the position, particularly having regard to the power of the courts in dealing with rent and mortgage interests. Hire purchase is a somewhat hybrid form of transaction. It is subject to the Purchase Tax, but it is in the form of hire, and has always presented certain difficulties in the direction of knowing exactly the fair way to treat it. I have always felt that if one could get a stop—that is to say, a figure below which it would be unreasonable to value the goods—it would be a prudent thing to do. But that would be difficult. It would seem to leave the matter too much at large, and I was not sure that it would be welcomed by those interests concerned. The value is usually fairly low at the date of the order. The goods must have been used, since they are not as a rule vested in the debtor until there has been a substantial number of payments. The vast majority of those affected are, I agree, honest and reputable traders, taking an important part in the commercial life of the country, and I was not sure that they would rather have a stop.

I do not think it would be reasonable for the county court to make a vesting order if the sums paid or to be provided for did not amount to the present value of the article. If those concerned would like a provision to that effect inserted in the Bill, I am perfectly prepared to do that. We cannot accept the Amendment in its present form. I think that this condition would be better inserted as a proviso. Moreover, it does not cover the possible case of where 75 per cent. or 80 per cent. of the instalments might have been paid, and the court might properly make a vesting order without providing for any further payment. The Amendment assumes that there will always be provision for a further payment. We are very anxious to make it clear that we are trying to consider the interests of all concerned. This is not a debtor's relief Bill, but an attempt to get a fair arrangement between creditors and debtors, to tide people over a difficult time. I do not think that this proposal will operate unfairly to the debtor. I think it is a perfectly fair method to adopt, and I recommend the Committee to accept it in principle.

Sir H. Williams

I am very grateful to my right hon. and learned Friend for what he has said. If I may, I will ask those at whose request I have moved this Amendment to get into touch with him in order to find agreement upon some proper form of words. I ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Sir H. Williams

I beg to move, in page 9, line 3, at the end, to add: Provided also that no contract shall be varied under this subsection unless the parties to the contract have received notice of the proceedings before the court under this Act. I put this Amendment down at the request of the Federation of British Industries, upon the executive committee of which I happen to serve. They were a little perturbed because they thought there ought to be a security that nothing should be done without all parties concerned being informed. I rather gathered from the Minister's speech that, instead of being put into the Act, that will be done administratively, after the Bill has been passed. Perhaps my right hon. and learned Friend will be good enough to put that on record. Then I will ask leave to withdraw the Amendment.

The Attorney-General

I quite agree with the principle that those concerned should be informed, and we shall provide for that to be done.

Amendment, by leave, withdrawn.

Clause, as amended, ordered to stand part of the Bill.