HC Deb 11 March 1953 vol 512 cc1349-59
The Solicitor-General (Sir Reginald Manningham-Buller)

I beg to move, in page 25, line 18, at the end, to insert: (4) In any proceedings for an injunction restraining any person from charging prices for any products greater than those determined by the Board for those products under the said section seven, the court, if it is satisfied that the defendant has at any time charged for those products prices greater than those prescribed by the determination in question, may, whether or not it grants the injunction, order the defendant to pay to the Board such amount as may be agreed between the defendant and the plaintiff (whether the Board or the Minister), or as may be ascertained in such manner as may be directed by the court in accordance with rules of court, to represent the aggregate of the amounts by which the prices charged by the defendant for the products in question in all the transactions in which the determination in question was contravened by him exceeded the maximum prices prescribed by the determination. Any sums paid to the Board under any such order shall be treated by them as if they were sums paid by producers of the said products by way of contributions under a scheme made under section twelve of this Act. In the course of the discussion on the Question, "That the Clause stand part of the Bill" during the Committee stage, my hon. and learned Friend the Member for Middlesbrough, West (Mr. Simon) made some suggestions on this subject—although he had a little difficulty in making them—which we have considered very carefully. The effect of this Amendment will be to secure that when someone is brought before the court on an application for an injunction because the prices fixed by the Board have been exceeded, the court will have power, whether or not the injunction is granted, to order an inquiry to ascertain the amount of excess profit made on those products by the vendor in breach of the contractual stipulation implied by the Bill, and to order payment of that sum to the Board. There is also provision for avoiding the necessity of a reference of this character if the parties to the litigation can agree on a sum as being the excess profit.

The result should be, and I hope will be, that when proceedings of this kind are brought, the person against whom they are brought will, in the end, make no profit whatsoever out of breaking his statutory undertakings to the Board. He will have to pay back all the excess prices which he has charged and may also find an injunction granted against him. In addition, he may find himself penalised by a substantial bill of costs, not only in relation to the proceedings for an injunction but also in relation to the inquiry to ascertain what are the excess profits. In those circumstances, the Amendment adds substantial deterrent against a breach of the Board's price-fixing powers, and I hope it will commend itself to the Committee.

Mr. Mitchison

I beg to move, as an Amendment to the proposed Amendment, after the second "Board," to insert a sum not less than such amount and not exceeding three times. The effect of my Amendment will be to allow the court not merely to order payment of the excess price but to order payment of up to three times the excess prices. It is quite a relief to get away from the atmosphere of haloes into a little bit of crime. We have been placing haloes round all the iron and steelmasters individually and, somewhat to my surprise, collectively. The Federation was given a little bit of a halo last night, tarnished though it was by the reference to the hon. Member for Hall Green (Mr. Aubrey Jones) as a commissar, which shocked him into a complete silence which he has maintained ever since.

Not all iron and steelmasters, and not even the beatified Federation, are always good. They had a rather bad history in the iron and steel trade about quite a number of things, and I have heard it said—of course I have no expert knowledge about these matters—that at times there has been quite a big black market in iron and steel and iron and steel products. I have understood that to mean much the same as the black market in other commodities—that is to say, making a bit of money by breaking a law and making it by selling something for a price higher than that at which it should be sold because it is rather scarce, and because one can find someone to enter into this illegal transaction.

Both the proposed Amendment and my Amendment to it are concerned with the question of maximum prices. I suggest, first of all, that the injunction itself is a quite insufficient substitute for the criminal remedies which ought to be, not in place of it, but added as an alternative remedy. I shall not discuss the matter at length. As the Solicitor-General knows, this matter was discussed with a little heat in Committee, and I will not start that discussion again.

We must assume that there will not be criminal proceedings, even as an alternative. The position is, therefore, that someone who has broken a quite definite requirement about maximum prices—a requirement put in the clearest terms in the Bill and put there in the national interest and for the benefit of the community—can be dealt with only by proceeding for an injunction; and if and when an injunction is granted, or even if it is not granted, the most that the court can do to him is to order him to repay what he has gained out of that illegality.

That seems to me a scandalous state of affairs, and I should have thought that it would not frighten the black marketeer, big or small, in the least. It is a most admirable instance of "Heads I win and tails I certainly do not lose." If he wins, he gets away with it; he has made his illegal profit—for it is an illegal profit. If he loses, he is brought before the Chancery Court and the worst that can happen to him is to be ordered to pay back the illegal profit.

If we were dealing with a community of saints, I suppose we should not need injunctions or penalties at all, but we are dealing with ordinary human beings and with companies run by ordinary human beings, and we have to provide for the man who breaks the law as well as for the man who keeps it. We do not say that everyone will break the law, but we have to have some effective sanctions behind these maximum prices. To suggest that we can do it all by an injunction reminds me of a famous quotation. It does not come from HANSARD but from a much better book. Dealing with a steelmaster by an injunction looks to me exactly like the old remedy, which I may paraphrase: You may hunt him with thimbles, you may hunt him with care; You may pursue him with forks and hope; You may threaten his life with a railway share; You may charm him with smiles and soap. That is about the total value of an injunction in these circumstances. Of course, if he is not a Boojum and is a virtuous iron and steelmaster, no doubt it will be all right; but for the moment we are concerned with the bad Boojum in the iron and steel trade. There may be some; there have been some. Bringing such a man before the court and simply ordering him to pay back what are. in effect, illegal gains will not frighten him even a little bit.

I may be told that the Chancery Court cannot do this sort of thing. Well, it was the Government who suggested that we can do it all by an injunction, and if they intend to do it that way. I must ask, "Why should this man, this hypothetical criminal, get off any cheaper than a man who has been smuggling goods into this country and who is made to pay three times the proper duty?" What is the moral distinction between the man who. under the Customs and Excise Act, has to pay up to three times the proper duty, and the man who has been making an illegal profit by selling above the legal maximum price and then is told to pay back only the amount which he has illegally made?

I am not going to stress the point, but I can see no possible argument against some provision of this sort, and while I say quite frankly that I would have preferred a plain, straight, criminal penalty, as an alternative, at least let us give the court the power to put these additional damages on—for that is what they are called—by way of penalty.

6.30 p.m.

They have ways of dealing with defaulting trustees in the Chancery Court, and I understand they claim with some pride that when the criminal courts entirely failed to catch Mr. Bottomley, they caught him as a defaulting trustee more effectively than the criminal machinery could ever do. It must not be thought that I am saying that all iron and steelmasters are wicked. I am simply saying that in cases of this sort there must be some more effective sanction behind the price regulations—for that is what they are—than this bit of soap which the Government apparently think sufficient.

Mr. G. Darling

I beg to second the Amendment to the proposed Amendment.

The Solicitor-General

The hon. and learned Member for Kettering (Mr. Mitchison) has moved this Amendment with a moderate amount of heat, and I hope I shall be able to give him an answer which will satisfy him. First of all, I should like to make it clear to him—I am sure he appreciates it—that this procedure is not the procedure which is intended to deal with black marketeers because they are dealt with under the existing price control orders of the Defence Regulations. The Board's price control powers will apply solely to the producers affected by this Bill, so it will be seen that the question is within a narrow compass and a narrow field.

The hon. and learned Gentleman puts forward the argument that the procedure of this Bill does not provide an effective sanction against the individuals who are deemed by this Bill to be in contractual relationship with the Board. He asks why should they get off any cheaper. The short answer to the hon. and learned Gentleman is that in most cases they will not, and I will explain that to him in this way. Under the Defence Regulations it is quite true that there is a maximum penalty of not less than three times the amount covered by the offences.

When a person comes before the magistrates' court, as the hon. and learned Gentleman knows, there may be a long list of transactions but, in fact, a prosecution is only taken in respect of a sample selection, and so the treble penalty is limited to the offences that are, in fact, proved. Therefore, under the treble penalty procedure all that the black marketeer has made may not be collected. It is a rough-and-ready guide. It may be that the sample of offences will be proved, and there is a treble penalty in respect of them.

Under our procedure we are taking power to secure that, in fact, all that is made by the producer who disobeys the Board's determination on prices will be taken from him. He will lose the lot.

Mr. M. Turner-Samuels (Gloucester)

Could there not, in addition, be power to impose a penalty?

The Solicitor-General

I dealt with the question of criminal penalty in Committee, and, although the hon. and learned Gentleman the Member for Kettering referred to it in his speech, I do not think I should repeat my observations upon it. We discussed the subject with some heat during the Committee stage.

What I am saying here is that, while I appreciate the hon. and learned Gentleman's desire that a person who does not obey the Board's determination as to prices should not get off any cheaper, in fact, under our proposals he certainly will not get off any cheaper. In our view, the sanction against such a person will be strengthened by this Amendment and should result in the person who disobeys the Board's determination not making any profit whatsoever out of his disobedience. He may also have to pay all the costs of an inquiry to ascertain what he has made. That, in itself, will be a fairly substantial penalty, and on top of that he may find the court granting an injunction against him. I am sure that the hon. and learned Gentleman will not suggest for one moment that an injunction itself does not provide for pretty powerful enforcement measures.

Although the right hon. and learned Gentleman the Member for Neepsend (Sir F. Soskice) did suggest in Committee, as, indeed, did my hon. and learned Friend the Member for Middlesbrough, West (Mr. Simon) that a person might get away with some profits by disobeying the Board, we have now stopped that hole completely, and we have got a method which ought to act as a very effective deterrent on any individual disobeying the Board. We should remember that he will have to pay in the end all the excess profit he has made, and that is a little bit worse than a prosecution under the Defence Regulations whereby, although he may pay three times the amount in relation to the offences on which he has been convicted, he may not, in fact, lose all that he has made.

In addition, under our procedure he will have to pay the costs and he may have an injunction granted against him. We seek to give this power to grant an inquiry wherever the court thinks it proper to do so. I suggest to the hon. and learned Gentleman that it is not the case that under this procedure anyone who disobeys the Board will get off cheaper, but that by our Amendment we are effecting a considerable improvement in the Bill.

Sir F. Soskice

I do not think that the argument to which we have listened is a satisfactory one at all. To begin with, the hon. and learned Gentleman seeks, so far as I can understand his argument, to draw a distinction between black market offences and the offence of charging more than the permitted amount under this Bill. What is the distinction in principle between them? I cannot conceive any difference in moral culpability in each of the types of transactions. Both are wrong courses of conduct.

The distinction is probably that this particular type of transaction with which the Bill is now dealing will involve a larger gain to the malefactor than the ordinary black market transaction. Therefore, this type of transaction we are now considering is the worse of the two, and at least they should be put upon a par.

The hon. and learned Gentleman proceeds to say that the ill-gotten gains are to be taken from the individual. Does he not, as Solicitor-General, agree that there is all the distinction in the world between having a criminal decree registered against an individual and having something simply in the nature of a civil order? If the hon. and learned Gentleman goes to any citizen with the remotest self-respect and dignity and says to him, "Do you regard it as more serious to be condemned by a criminal court or to appear in a civil court?" he will say at once that it is far more serious to him, to his prospects and to the interests of those associated with him to be condemned in a criminal court.

There is still a wide distinction in the law of this country between a criminal and a civil sanction. A person who is threatened with a civil sanction gets off far more lightly than a person threatened with a criminal sanction. The scales are wholly unevenly balanced. The person who has not to fear a criminal court gets off with a far less penalty than a person who has to fear a criminal conviction.

The Solicitor-General says that in pounds, shillings and pence, although the black marketeer has to pay three times the amount of the benefit he gains, the offender against this Bill will, in the long run, pay more. I consider that a doubtful proposition. The Solicitor-General said a black marketeer had only to pay three times the amount of his benefit in a case proved against him. Equally, the offender against this Bill can only be called on to pay in the cases of over-charging proved against him. Both cases depend on proof.

The Solicitor-General

I think that the right hon. and learned Gentleman has fallen into error. Under the Defence Regulations the offender pays three times the amount in relation to each offence proved against him. That is to say, the penalty is limited to the number of charges preferred. If the right hon. and learned Gentleman reads our Amendment, he will see that once a breach of price determination is established—one breach—there can be an inquiry to ascertain in how many transactions an excessive price has been charged, and that the penalty is not limited by the amount proved in the first instance.

Sir F. Soskice

I do not resile from what I said. The over-charger will only pay in those cases in which, after the inquiry has been held, he is proved to have transgressed. There is, in principle, no distinction whatever and only a slight distinction in fact.

In the case of a black marketeer the prosecuting authority may select a number of transactions, and not make all the transactions in respect of which there has been black marketing the subject of a particular count in the indictment. That is the only distinction. In point of fact, in the case of serious black marketing a sufficient number of examples of wrong doing will be picked out and made the subject to a charge to bring home very fully to the malefactor the extent of his transgression.

The real distinction is that the black marketeer will have a conviction registered against him in the criminal court whereas the over-charger will not. So far as pounds, shillings and pence are concerned. the black marketeer will pay more. He has to pay three times what he benefited, whereas the transgressor against this Bill pays the amount of his benefit.

Why there should be this extraordinary tenderness shown to a person who may make a vast sum of money out of serious wrong doing really passes comprehension. It was only because we pressed the matter strenuously in what the hon. and learned Gentleman described as a heated controversy in our Committee discussions that he has even taken upon himself to require the over-charger to pay out the amount of his ill-gotten gains. But he boggles at going any further, and says that in no circumstances shall the over-charger pay more than that.

For some reason or other the Solicitor-General has got it in his mind that he simply cannot use what is the obviously required necessary degree of firmness in this Bill to ensure that the intentions of the Government are carried out. He seems to be terrified of the person who over-charges. That person is no better than a black marketeer. In fact, he is a black marketeer, and one of the worst type. As the Solicitor-General said when moving the Amendment, he is ready deliberately to break the terms of the Bill.

That would seem to us an absolutely inexcusable course of conduct but hardly, however, more inexcusable than the conduct of the Solicitor-General in viewing it so tenderly. The hon. and learned Gentleman is being completely pussy-footed about this and I hope even at this late stage he will realise that he has allowed himself to be put into a wholly inconsistent position. His position is utterly untenable.

If he will think over what real reason he can have for singling out people who drive a coach and horses through this Bill, first, by not even asking them to pay back their ill-gotten gains, and, when they are made to do that, by saying we should not treat them as ordinary black marketeers, he will see that he must alter his ways. He still has an opportunity in another place to remedy the matter. I hope he will take it and rub out of this Bill something which is about as indefensible as the whole purpose of the Bill itself.

6.45 p.m.

Mr. Robson Brown (Esher)

The hon. and learned Member for Kettering (Mr. Mitchison) inferred that there had been black market transactions carried out inside the steel trade. In fairness to the record of the steel-makers I would ask him if he knows of a single steel-maker who has been charged with being, and proved to be, a black marketeer at any time in any place.

Mr. Mitchison

I did not claim to be an expert in these matters. I should expect to find some experts on the benches opposite rather than on this side of the House. But, in the light of all I have read and heard, I cannot believe that there is no substance in the widespread allegations of black marketing in iron and steel.

Mr. Robson Brown

Would the hon. and learned Member accept my personal assurance that there has not been a single case at any time of a steel manufacturer being convicted of black marketeering? There have been a number in small firms on the fringe of the industry who were selling products three and four times removed from the steel industry. Their relationship with the industry is very doubtful, and we would be glad to be rid of them.

Mr. J. E. S. Simon (Middlesbrough, West)

I wish to thank my hon. and learned Friend for having met the point I raised. I am glad he resisted the Amendment of the hon. and learned Member for Kettering (Mr. Mitchison) for the reasons he gave, which seemed to be completely cogent and convincing. In addition, it would seem to be thoroughly objectionable that what is in the nature of a penalty or fine should, for the first time in recent years, be sent for trial by a judge of the Chancery Division sitting without a jury.

Mr. Turner-Samuels

I cannot allow that encomium of the Solicitor-General to pass without criticism. I cannot understand the attitude of the hon. and learned Gentleman. He said we would get back the ill-gotten gains of a person who overcharged. But that will not be imposing a penalty at all. It will merely force the person to pay back what he is not entitled to keep.

This Clause is not effective unless there is put into it a penalty. It is no argument for the Solicitor-General to say that by this Clause we get all the money back and that that is better than a penalty. He can very simply achieve that end by saying that the Clause shall provide for all the money to be got back and for a penalty as well.

Amendment to the proposed Amendment negatived.

Proposed words there inserted in the Bill.

The Solicitor-General

I beg to move, in page 25, line 41, to leave out from "exceeding," to the end of line 46, and to insert: one hundred pounds or to imprisonment for a term not exceeding three months or to both such fine and such imprisonment: Provided that, in the case of a second or subsequent offence, the maximum fine shall be two hundred pounds. This Amendment is clear in its terms. We said during Committee stage that we would give further consideration to the precise amount of the penalties. We have come to the conclusion that the penalty for a first offence should be £100 and for the second offence it should be £200, with a liability to a term of imprisonment not exceeding three months. We have not made the term of imprisonment longer for the second offence because of the difficulty with regard to election for trial arising only after the first conviction.

Amendment agreed to.