CLAUSE 37.—(Cancellation costs.) (Hansard, 15 July 1946)

§ The Solicitor-General
I beg to move, in page 32, line 35, to leave out "terminating," and to insert: termination, whether by agreement or otherwise.'' This Amendment is designed to meet a point which was made by the hon. and learned Member for Daventry (Mr. Manningham-Buller). The Clause deals with cancellation costs, and as it reads at the moment, it includes only such costs as are incurred by way of compensation paid for the purpose of determining a contract. The point made by the hon. and learned Member for Daventry was that the ambit of the Clause should be somewhat extended to include damages which had to be paid necessarily as the result of terminating a contract. If the claimant in respect of cancellation costs found himself in the position in which he could not determine the contract by paying compensation or by negotiation, and determined it without having agreed upon terms as to determination, and in consequence was held liable in damages to the other party, the hon. and learned Member for Daventry made the point that he should be entitled to claim as cancellation costs the amount of those damages.
The Amendment which I have moved would extend the definition of the costs in such a way as to include an amount of damages awarded by a court. That is a concession to the point of view adduced from the other side of the Committee by the hon. and learned Gentleman the Member for Daventry (Mr. Manningham-Buller). I ask the House to say that it is fair and right and to approve this Amendment.

§ Mr. C. Williams
I have on occasions been rather unkind to the hon. and learned Gentleman but I should like now to say quite shortly that I appreciate the fact that he has accepted the point of view of my hon. and learned Friend the Member for Daventry (Mr. ManninghamBuller). I feel sure that this will be a general improvement, and I regret that my hon. and learned Friend was not present to thank the hon. and learned Gentleman personally.

§ Sir P. Bennett
I beg to move, in page 32, line 39, to leave out from 994 surrendered," to the end of the Subsection, and to insert: in connection with any event forming the ground for a claim for rehabilitation costs as defined by subsection (5) of section thirty-three of this Act.'' We are still on the question of cancellation costs and the present Amendment puts this position forward. In introducing this Clause the Chancellor has recognised that contracts which are alleged terminal expenses should be set against excess profits but as the Clause is drafted it is very narrow because it applies only to leases or such contracts as arc surrendered as a consequence of determination of a contract for the provision of goods or services which were used during the war years. That narrows the relief because many contractors have taken dispersal premises arid will in many, perhaps the majority, of cases not have cancelled the leases arising out of these immediately on the cancellation of the war contras:. The supposition that directly a war contract is over the contractor will be able to cancel all his leases, vacate his dispersed premises and close down is quite erroneous. He will have to make many arrangements and very often the dispersed premises will be on his hands for other purposes such as peacetime production. These arrangements are made by war contractors and traders whose business has been dislocated by the war and for that reason they will carry on. I know of many businesses where the original works have been completely upset; the companies have been instructed by the Government to take over dispersed premises, which they would like to close down because they are expensive to run but they cannot do so because they have not yet been able to get their main factories back to proper working conditions.
In these circumstances we feel that an Amendment which was refused in Committee because it opened the door too wide has a great deal to be said for it. Accordingly we have redrafted it and suggest the present Amendment, the effect of which would be that parallel to the claim of any person for rehabilitation costs the costs of cancellation of contracts should also be the subject of relief. We feel that this would allow the kind of case to which I have referred, and which was put forward on the Committee stage, to benefit without in any way making the position so wide that others would benefit who ought not to benefit.

§ Sir A. Gridley
I beg to second the Amendment.

§ The Solicitor-General
I am sorry, but we feel that we cannot possibly accept the Amendment. It is very difficult to understand exactly what it means or how far it would go. I should have thought it was extremely doubtful whether it would confer the measure of relief which the Clause as it stands confers. Clause 37 has a very specific and clearly definable object. If the claimant himself was supplying war goods under contract, and has lost that contract because the war has come to an end, he can claim, as cancellation costs, those costs which he has incurred in terminating contracts which he had for the supply of goods to him. That is perfectly intelligible, and is what the Clause as at present drafted provides. One must have clearly defined circumstances in which the rights of cancellation costs will arise. As the Clause stands at present that right to qualify is clearly intelligible. The Clause provides a clearly defined field.
What the Amendment does I really do not know. What the words in connection with any event forming the ground for a claim for rehabilitation costs extend to, it is impossible to say. They are hopelessly vague. They might mean anything or nothing. They might extend to almost anything or they might include practically nothing. This is not a good bit of drafting, and certainly does not improve upon the Clause as at present worded. I therefore ask the House to say that the Amendment does not carry matters any further, and must be rejected.

§ The Solicitor-General
I beg to move, in page 33, line II, at the end, to insert: or, if the circumstances so require, until such later date as the Commissioners may allow, being a date not later than the end of the year nineteen hundred and forty-nine. This is another concession to the point of view advanced by the right hon. Member for the Scottish Universities (Sir J. 996 Anderson). Hon. Members will remember that, in respect of terminal expenses, the Government have moved and the House has approved an Amendment extending the qualifying period from the end of 1948 to such period as the Commissioners think proper, not being later than the end of 1949. That was in relation to terminal expenses under Clause 33. The Amendment I move is precisely analogous, doing the same thing in relation to cancellation costs. Having approved the one the House is asked to say that it is only right and proper, as a necessary corollary, to approve the other.

§ Mr. I J. Pitman
I would like to take the opportunity of thanking the Chancellor of the Exchequer, through the Solicitor-General, for this Amendment. I take it that the Amendment largely meets the purpose of an Amendment which was proposed just now relating to any firm which had dispersed its factories as a result of Government orders and has to continue in those dispersed premises until 1949. I hope that the Chancellor will not bar the door too quickly at a later stage, against a further extension beyond 1949 if there are still cases in which hardship is being done. This is allowing the principle that it will take quite a time to clear up the mess of the war, and if there should be, as two hon. Members have said there might be, instances where hardship would be done through the too rigid application of a time limit, I hope it will be open to make a further Amendment later. Meanwhile I thank the Chancellor for this.