§ The Attorney-GeneralI beg to move, in page 20, line 8, after "lease," to insert "or."
There was some discussion in Committee on the wording of this Clause. Some wanted to leave out the Clause altogether. It deals with the question of the guarantor, and what I said in Committee was that I thought it was right that if rent under lease or interest under mortgage is reduced under the provisions of this Act, which enables that reduction to be made, the guarantor's liability should come down with it as provided by the Clause but that that should not happen in the case of other contracts. I think there was some misunderstanding at the time of the discussion in Committee as to what contracts were brought in by that wording, where it appeared in this Clause. It was only limited by the class of contract which was dealt with under Clause 6. The purpose we had in mind was primarily lease or mortgage, and I said that on the Report stage we would leave out this reference to contracts. The Amendments to this Clause which are in my name and the name of my hon. Friend the Member for Faversham (Sir A. Maitland) carry out that undertaking.
§ Sir William Davison (Kensington, South)I am much obliged to the Attorney-General for omitting the words "or contract." I think it will remove the possibility of misunderstanding in the case of securities obtained by local authorities for the carrying-out of contracts entered into by them. If the words "or contract" are now to be removed, should not the word "or" be inserted before the word "mortgage"?
§ The Attorney-GeneralThat is in the first Amendment.
§ Sir W. DavisonI am much obliged.
§ Mr. Garro JonesI would like to make an observation or two about this matter. I cannot see why a guarantor should, in ethics or in principle, be liable to a greater extent than the person he has guaranteed, neither can I see why a preference should be given to some sureties over other types of sureties. When a man undertakes to act as surety for another person, he makes that undertaking in the circumstances which then existed, and if those circumstances change, it seems to me that he is equally entitled with the debtor to some relief. While I am grateful to the extent to which the Attorney-General has made some concession, I do not think he has gone as far as he might have done.
§ Mr. SilvermanIt seems to me that it is a little late to raise some controversy about this, but I was engaged elsewhere on the Committee stage, and I had not the advantage of hearing the argument which led the Attorney-General to move (his Amendment. But I suggest that it was important and that it conflicts with the whole purpose of the Bill. This making of the guarantor liable to a greater extent than the principal would have been can be justified only on the basis that if the creditor is entitled to be paid by anybody and if there is anybody who can pay him, then he can be paid. But it was not intended in this Bill to apply that principle. In the Second Reading Debate it was said that this was an attempt by the Legislature to make all parties to a transaction, adversely affected by the war, make a common adjustment and bear the burden in common. In other words, not merely the debtor must be relieved if he is in difficulty, but the creditor must contribute to the loss and must share the burden to some extent in common with the other parties to the contract. If this Amendment is accepted, however, in all cases where there is a guarantor who has the ability to pay, the whole burden of circumstances, which nobody could have foreseen and which are not within the control of any of the parties, is to be borne, not by the debtor, who ex hypotkesi cannot pay, but by the guarantor, and the creditor is not to bear any burden or to share the loss in any way, and is to be an entirely privileged person in a trans- 1748 action which cannot be carried out, not by reason of the defect of any of the parties to it, but by reason of war circumstances which are beyond their control. I suggest that the Attorney-General has allowed himself on this occasion to be persuaded against his better judgment, and that the Bill as originally drafted was better. I think that, in yielding to whatever arguments may have been put to him, the right hon. and learned Gentleman has to some extent weakened the Bill. I do not know whether there is any opportunity for reconsideration of this matter, but if there is, I urge the Government to reconsider it.
§ Mr. WoodburnIt seems to me that any number of guarantors take on a liability in order to help other people. For instance, in Scotland, it very often happens that when a person has to give a guarantee with regard to rent, friends help him by acting as guarantors. Personally, I have given a guarantee for people who wanted to buy a house, but in doing so I did not contemplate a war as a result of which these people would be exceptionally liable not to pay their debts. There may be circumstances in which people who had acted in a number of ways to befriend other people may find themselves almost ruined by the absence of any protection under this Bill. I am sure that is not what the Government want, and I am inclined to agree with my hon. Friend the Member for Nelson and Colne (Mr. Silverman) that the Attorney-General has been persuaded against his better judgment to make this alteration. If the matter could be left to the discretion of the liabilities adjustment officer there might be something to be said for the Amendment, but I do not think the Bill should make it impossible for such an adjustment to be made.
§ The Attorney-GeneralI think there is a little misunderstanding concerning this matter. We discussed the matter fully in Committee, and it was pointed out that the only contract which would be brought in under the wording of this Clause was a contract which had been dealt with under Clause 6, Sub-section (4). The Bill never provided that in the case of debts the guarantor should be relieved of his liability. The only contracts which would be covered were contracts dealt with under Clause 6, Sub-section (4), 1749
where it appears to the court that it would be in the interests of all parties under a contract (other than a lease or a hire purchase agreement), which could be disclaimed under the last foregoing section that the contract should continue in effect in a varied form rather than be disclaimed, the court may in the liabilities adjustment order vary the contract accordingly.That is a case which will not very often arise perhaps, but instances were given of possible cases of contracts with local authorities where there is a guarantor more of performance than of a money payment; and I think that on the whole the Committee, came to the conclusion that the real purpose of this Clause was to (teal with the lease and mortgage cases, and that some misunderstandings would be removed by the omission of the word "contract," and that it was unlikely that there would be cases that would become subject to Clause 6, Sub-section (4)—which can only operate with the consent of everybody concerned—which would not: be covered quite well if the Amendment were made.
§ Mr. SilvermanAre we to understand that, over the whole range of debts and contracts, where it is impossible to perform them by reason of war circumstances and where there is a guarantor who can pay, the Bill leaves him still liable to pay when his principal is not liable?
§ The Attorney-GeneralNo, Sir. The principal remains liable, but being insolvent he is not able to pay. This Clause deals with cases where the court reduces his liability. For instance, he may be liable for £60 rent, but the court reduces his liability to £40. Then the guarantor's liability is reduced.
§ Mr. SilvermanIn fact, the principal would have to pay only £40, whereas the guarantor would have to pay £60?
§ The Attorney-GeneralNo; that is exactly what the Clause is intended to prevent.
§ Mr. SilvermanI am thinking of other contracts.
§ The Attorney-GeneralThe liabilities' adjustment officer cannot reduce the liability under any other contract.
§ Mr. SilvermanHe could provide for postponement and there would be a protection order, so that immediately payment would not have to be made.
§ The Attorney-GeneralIf there were a postponement of the liability, the guarantor would not be immediately liable.
§ Mr. WoodburnDoes not the question of the ability of the principal to pay his rent depend upon his ability generally to pay all the debts, and is it possible to except these when it comes to the liability of the principal and the guarantor in the other cases?
§ The Attorney-GeneralI do not quite follow the hon. Member.
§ Amendment agreed to.
§ Further Amendments made:
§ In page 20, line 9, leave out from "mortgage," to "the."
§ In line 10, after "lease," insert "or."
§ In line 10, leave out "or contract."—[The Attorney-General.]