HC Deb 20 October 1953 vol 518 cc1830-40
Sir Lynn Ungoed-Thomas (Leicester, North-East)

I beg to move, in page 3, line 42, to leave out "custodian," and to insert "competent authority."

The Chairman

I think that this Amendment and the next one, in page 4, line 9, leave out "custodian," and insert "competent authority." should be taken together.

Sir L. Ungoed-Thomas

This is purely an Amendment seeking information, and I will explain why it was put down. I see that in Clause 3, page 3, line 42, the words follow those in Clause 2 (1, c). I gather that they do so almost word for word, with the substitution of the word "custodian" in page 3, line 42, for the words "competent authority" in Clause 2 (1, c). I should like to know why the difference is made, because I should have thought that prima facie the words "competent authority" should have been brought in somewhere. I gather that the intention in line 42 is to cut down the competent authority to the custodian, and doubtless there is some good reason for that. I should like to know what is the explanation.

The Attorney-General (Sir Lionel Heald)

I should like to help the hon. and learned Gentleman if I can. As to the first of the two Amendments, as I understand it no competent authority except the custodian would have endeavoured to transfer property within these words "to or for the benefit of …" and so on. That wording is taken from the Trading with the Enemy (Custodian) Order, 1939, Article 3 (ii). Therefore, our view was that in this case, in page 3, line 42, there was no need to insert the words "competent authority."

If I might anticipate what may happen, I should say that we feel that the second Amendment has considerably more justification because in that case the effect of substituting "competent authority" would make it apply also to various persons who were appointed under the Trading with the Enemy Act to wind up businesses, and so on. There is no objection to that so long as the provision is confined to cases where the custodian still has the property or the proceeds in his possession. Therefore, if the hon. and learned Gentleman would agree, I suggest that he might have the second of these Amendments but not the first.

Sir L. Ungoed-Thomas

I am very much obliged to the learned Attorney-General for that explanation. I was puzzled whether in the case of line 42 there would be cases in which either the Board of Trade or an administrator would be involved, but I gather that that is not so. Therefore, obviously there is no point to that Amendment.

I was glad to hear what the Attorney-General said about the Amendment in page 4, line 9, but that, of course, is without prejudice to the Amendment which is next on the Order Paper with regard to whether or not it should be confined to property in possession or under control at the time. In view of what the hon. and learned Gentleman has said, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Amendment made: In page 4, line 9, leave out "custodian," and insert "competent authority."—[Sir L. Ungoed-Thomas.]

Sir L. Ungoed-Thomas

I beg to move, in page 4, line 11, after "control," to insert: and if the property were dealt with in the circumstances specified in paragraph (a) of subsection (1) of section two of this Act, the said property or the value thereof shall be recoverable from the competent authority to the same extent as it would have been recoverable from the person mentioned in the said paragraph (a) if this Act had not been passed. As it stands sub-section (4, a) limits the right of recovery from the custodian or competent authority of the property in his possession or under his control without providing for any remedy where he has parted with the property or proceeds. This point was raised elsewhere, it was left rather open and, as far as I am aware, there has been no explanation by the Government. The words which we propose to be inserted would provide that where the property or proceeds which were wrongly in the hands of the custodian were disposed of by him, the innocent owner should have a statutory right to have them made good to him. There may be some good technical reasons, so I hope that there will be a reasonable explanation of why those words are not included.

Mr. H. Strauss

I confess that I was puzzled by the Amendment when I first saw it on the Order Paper, because I was not sure that the reference to the circumstances was really that which was intended by the hon. and learned Gentleman. However, I think I have gathered the intention behind this Amendment, and that the hon. and learned Gentleman wants me to deal with it on general lines and not worry too much about the wording.

I cannot advise the Committee to accept this Amendment. On Second Reading I drew attention to the rights that are retained under subsection (5) of this Clause. Notwithstanding that the custodian has parted with the property, the Amendment asks that he should be liable and responsible. It is worth examining how he would have parted with the property. He will either have transferred it to an administrator of enemy property or he will have released it. If he has handed it to an administrator, the owner has a right of recovery under the existing law, as the hon. and learned Gentleman is aware. If, however, the property has been released we think that subsection (5) is appropriate and that it is not right to make the custodian liable.

Supposing the competent authority were a person other than a custodian, the effect of the Amendment would be more serious still. Such a person could, in practice, only be a controller appointed by the Board of Trade under Section 3 (A) of the Trading with the Enemy Act. If a controller no longer had the property or proceeds in his possession or under his control it would mean that he had completed the winding up of the business and had obtained his discharge. In those circumstances, it would be difficult to create new rights against him as the Amendment proposes.

4.45 p.m.

I think the hon. and learned Gentleman will see that those observations have some force, but I would bring a further point to his attention, because it may influence him in his knowledge of what may be involved in this discussion. As far as Allied persons are concerned, who were enemies merely by reason of the occupation of their territories, they have been free to sue ever since their territories have been reoccupied. Further, Germans have been free to sue since the state of war was terminated in July, 1951, and the courts have never been closed to neutrals.

The hon. and learned Gentleman will appreciate, therefore, that by this indemnity we are, in effect, imposing a time limit. We are saying that these custodians and competent authorities must now have security. When it is remembered that some classes of people have at all times had a right of action and that the others for the periods I have mentioned have had a right of action, it will be seen that there has been no widespread suffering by reason of this part of the Clause which the Amendment seeks to alter. In those circumstances, I hope that the hon. and learned Gentleman will not press his Amendment which, in any event, I could not advise the Committee to accept.

Sir L. Ungoed-Thomas

I apologise to the Committee for not having been here at the beginning of this discussion but, unfortunately, I was detained elsewhere. As a result I feel hesitant about going over ground which doubtless has been covered already by my hon. Friend the Member for Leicester, North-West (Mr. Janner). The difficulty I feel is this: the custodian has property in his hands. He parts with that property. At the moment of his parting with it that property has nothing to do with gathering the fruits of victory or prosecuting the war. He is in precisely the same position, or should be in precisely the same position, in parting with what is in his hands as anybody else who parts with property which he holds.

What is given under this Bill is a clean indemnity. We are anxious to make sure that the principle of indemnity should not extend beyond prosecuting the war and gathering the fruits of victory. If that is the first principle to be established, there is no conceivable reason why an indemnity should be given, beyond that, when he makes a payment out——

Mr. H. Strauss

We are not dealing here with payments.

Sir L. Ungoed-Thomas

No, with a transfer, but the same principle applies as to the payments under the earlier Clause. When he makes a transfer out there is no conceivable reason why he should be protected. There may be an answer to this. I am not saying that I am making an irrefutable case, because this Bill is full of complexities, but I am presenting my difficulty to the hon. and learned Gentleman as I see it. There appears to me to be no reason why an indemnity should be given to the custodian any more than an indemnity is given to a bank or to anybody else who pays out money; that is my difficulty.

Therefore, if the custodian, the competent authority, or whoever it may be, transfers property in circumstances in which there would be a right of action against the transferor of that property, it seems to me that that right of action should also be preserved as against the competent authority. I hope that the hon. and learned Gentleman understands the point I am making, although I do not say that it is necessarily correct. What we seek to do, therefore, is to preserve such right of action as the real owner would otherwise have.

I appreciate that the other subsections to which the Parliamentary Secretary referred preserve a right of action against the transferee to whom the custodian has transferred the property, provided that it is not a transfer on sale—that is one thing; so that if there is a transfer on sale, as I understand it, there is no right of action as against the transferee. Therefore, if the right of indemnity is given to the custodian, without any right against the custodian and without any right against the transferee, the true owner of the property is left without any remedy whatever.

Secondly, the right against the transferee might have been effective for a number of either practical or legal reasons. Previous trusts, for instance, are preserved in priority to the transferee, and so on. It seems to me, therefore, that the indemnity which the Bill provides results, or might result, in the true owner of the property being deprived of all remedy of any kind.

I fully appreciate that in my analysis of all this, I may have overlooked some essential point which is an answer to it. Not only is the Bill itself full of complexity, but the whole background to it is complex. I hope that the Parliamentary Secretary will be able to show either that my fears are groundless or that, at any rate, by administrative action the kind of hardship which I and my hon. Friends have in mind will be met.

Mr. H. Strauss

I can add very little in answer to what the hon. and learned Member said, except that there was one interchange before he was able to arrive which may be germane to the argument. It might be an attractive thought that a bank—we are not talking about money, but I give this example because the hon. and learned Member gave it—had released money wrongly, and one could say that a mistake had caused it to remain liable; but the fact is that the bank would not release it until there was overwhelming proof and no possibility of mistake.

If, however, the custodian and the authorities had acted throughout on that principle, it might have been very much against the interests for whom the hon. and learned Gentleman and his hon. Friend the Member for Leicester, North-West (Mr. Janner) have so often spoken in their arguments. Very often both the releases of money and, in some cases, the transfer of property were precisely to these people who may have been refugees and who produced not, perhaps, a proof which finally, when all the facts are known, is shown to be complete, but which seemed to be quite sufficient to justify the payment or release, and it was quite properly made by the authority. I do not suppose that that authority thought much about anything except doing their duty in the prosecution of the war, but had they stopped to think about it or asked their lawyer friends they would have heard that war is normally followed by an indemnity Act to cover their bona fide actions.

The hon. and learned Member gave a description, from which I do not differ in toto, about the sort of actions of people that we wish to indemnify, but I thought he drew it a little too narrowly. Perhaps a more accurate way of looking at it would be to refer to Clause 1, which, after all, has received the unanimous assent of hon. Members and is in rather wider terms than those which the hon. and learned Member mentioned.

I am sorry if some of these matters sound technical. Although we permit property to be followed in suitable cases, we do not allow damages. This right of action that the hon. and learned Member suggests is something very like damages for conversion. One has to bear in mind the problems which had to be dealt with and, sometimes, the rapidity of action. Take, for example, the urgent necessity of clearing the docks when there was imminent fear of air raids. Was that work to be held up for the most elaborate proofs of what was the real ownership of the goods? It really would not have been practicable.

What we must do is to see that those whom we indemnify satisfy the three conditions that are laid down in Clause 1. The hon. and learned Member may take some pride, perhaps, for some of the things that that Clause contains, because they are some of the things for which he contended. I think he will appreciate, however, that the indemnity which he described in his last speech was really too narrow and that we ought not to deprive of an indemnity those who have parted with property in the circumstances which I have mentioned.

Mr. Eric Fletcher (Islington, East)

One has always to be particularly careful when being asked by the Government to pass a Bill containing indemnity provisions. That is my only excuse for inviting the Committee to look somewhat critically at the Clause before we pass from my hon. and learned Friend's Amendment.

I do not accept everything that the Parliamentary Secretary has just said. He said that in some respects a claim for damages was like a right of property to a chose in action; but that is not the main burden of my remarks. He said that there was some analogy between a claim for damages and a claim to property.

Mr. H. Strauss

What I thought I said was that we do not in any of these Clauses concede a right to damages. I was pointing out that the Amendment was giving something very like damages for conversion.

Mr. Fletcher

If that is the argument of the Parliamentary Secretary, it does not appear to be anything like giving a claim for damages. The object of the Amendment, as I understand it, is to preserve for the true owner of the property a right to his property.

I well appreciate that administrative convenience makes it desirable, if not necessary, that a Measure of indemnity should be passed to enable the custodian, the competent authority, or whoever it may be, to deal with this property, which would otherwise remain in dispute for a long period. This is what worries me. Just now the Parliamentary Secretary said that he would urge the Committee to bear in mind that it has always been possible for neutrals to bring proceedings and, since 1951, it has been possible for former German subjects to bring proceedings. But what we have not yet heard from any Government spokesman—I hope that before we pass from the Amendment we shall have a reply—if to what extent have claims been either indicated or formulated which may fall within the scope of this Amendment?

5.0 p.m.

We are being asked by these three Clauses, which I understand from the Explanatory Memorandum are grouped together, to pass a Measure of indemnity. Before the House passes a Measure of indemnity, the only object of which can be to deprive rightful owners of their existing rights—there has never yet been a Measure of indemnity in this House which had not that for its object—we should know to what extent in the opinion of the Government are true owners of property being deprived or likely to be deprived of their rights.

The Parliamentary Secretary said that neutrals have always been able to bring claims in the High Court and, since 1951, German subjects have been able to bring claims. I should like to know what claims have either been formulated, or indicated, or pressed upon the custodian, or the competent authority. In other words, what is the extent of the indemnity which the House of Commons is being asked to give by this Bill? I feel that it is the duty of hon. Members, before giving the Government any indemnity Measure, to curtail the provisions of the indemnity Measure to the limit which is strictly necessary to give effect to the motives of administrative convenience on which it is put forward.

I have heard nothing yet from the Government Front Bench which seems to make any argument for resisting the introduction into subsection (4) of Clause 3 the words of this Amendment, which are intended to qualify the indemnity provisions and to make sure that the indemnity does not extend beyond what is properly necessary for the requirements of the Bill. In seeking to refute the Amendment, the Parliamentary Secretary referred to subsection (5) of Clause 3, but there is nothing in that subsection which deals with subsection (4). The Parliamentary Secretary has said on more than one occasion that this is a highly technical Bill which is difficult to understand and I entirely agree. It seems to me that subsection (5) is merely a qualification of subsection (3).

I hope that we shall not pass from this Amendment without having some much clearer explanation than we have had so far as to why we should not limit subsection (4) of Clause 3 by the qualification suggested by the Amendment. That is to insert words after the word "control," to make quite clear that the subsection only applies if the property is dealt with in the circumstances of paragraph (a) of subsection (1) of Clause 2 and that the property shall be recoverable from the competent authority to the same extent as it would have been recoverable from the transferee. In other words, we must try to preserve to the true owner of the property the rights he already has either against the custodian or against the transferee. That is the question to which I hope we shall have an answer before we conclude this debate.

Mr. H. Strauss

I think we are agreed on the complexity of this matter. There are three possible cases of what may have happened. One is that the custodian has sold the property and in that case the true owner has a right to the proceeds. In the second case he may have transferred to an administrator of enemy property and in that case, under different legislation, there is a right against the administrator. There is the third case in which it has gone to another transferee and in that case I agree we have to look at subsection (5) to see what are the rights of the true owner.

In my submission that is right in an indemnity Measure and preserves the general intention of the Measure. The principles of Clause 1 give a necessary indemnity and not too much. At the moment, I cannot give information as to what claims may have been adumbrated or appeared in correspondence. I expect the hon. and learned Member is as familiar as anyone in the Committee with what has got as far as the Courts, but there are strong indications for believing that there cannot be many who feel themselves aggrieved and feel barred by this indemnity.

Sir L. Ungoed-Thomas

I am very much obliged to the Parliamentary Secretary. I am sure that in this Bill we are all trying to arrive at a fair and just solution, but I am still in some difficulty, despite what he has said. I understand from the Parliamentary Secretary that there is a proper right of action against the administrator which obviously would meet the difficulty I have in mind and also, of course, the Bill meets the difficulty where there are proceeds of sale in the hands of the custodian.

But where there has been a sale of the property, and, therefore, there is no right of action by the true owner against the transferee, that right of action has gone by this Bill. The custodian has disposed of the proceeds of sale, not to the administrator but in some other way as in one of the categories of cases which the Parliamentary Secretary very fairly mentioned. He has sold the property, has received the proceeds of sale and disposed of the proceeds of sale. In that case there is no right of action against the custodian.

As I understand, there is, in these circumstances, no right of action against anybody. If that is correct, quite obviously there is here a possible injustice. There may well be cases in which a custodian has sold property the proceeds of which he has disposed of. If it is correct, as I understand it to be from my perusal of the Bill and the observations of the Parliamentary Secretary, that that person, in those circumstances, has no remedy, I should have thought that there is obviously a lacuna here which the Government should look at.

I would ask, therefore, because this is no party Measure—there is no kind of party point involved; we all have the same object in mind, namely, the importance of getting the best Bill, fair to all parties, that we possibly can—that if I am right the Government should look at this point before the Report stage to see whether anything can be done to remedy that injustice.

Mr. H. Strauss

The hon. and learned Gentleman put his point most clearly. The fairest thing for me to say to him is, without for one moment indicating that there is any case here which we can meet, because I want to tell the hon. and learned Member quite frankly that I do not think there is, as there has been a great deal of careful examination of this Bill, that he has made a perfectly fair request that my hon. and learned Friend and I should look at this matter. We certainly will do so.

Sir L. Ungoed-Thomas

I am very much obliged, and in view of that I do not wish to press the point. I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

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