§ Motion made, and Question proposed, "That this House do now adjourn."—[Mr. T. G. D. Galbraith.]
§ 10.59 p.m.
§ Lieut.-Colonel Marcus Lipton (Brixton)
Ever since I was elected to represent Brixton in 1945, I have had complaints from constituents about the activities of a very elusive property owner masquerading under various names from accommodation addresses. The best known of these fictitious names was D. Brady.
The course of events has revealed the existence of a slum empire, cunningly operated, with a degree of victimisation and villainy startling in scope and ruthless in its operation. When warrants for the arrest of Brady for non-compliance with court orders, obtained by local authorities under the Health Act, became numerous, the Brady nom de plume was discarded.
In order to guard and preserve the slum empire and keep it in being, a regiment of limited liability companies was formed, some registered in this country, some in Dublin. When it was necessary to bully, blackmail and swindle tenants or prospective purchasers of the slum properties in question, English companies threatened proceedings against the unfortunate victims. When, however, a local authority found it necessary to take proceedings to recover rates, for example, it was either impossible to find out the real owner, or it was discovered that the ownership had been transferred to an Irish company outside the jurisdiction of the British courts. The head and centre of the complicated mass of trickery was discovered to be Arthur Bertram Waters, of 16, Alleyn Road, West Dulwich.
I came to the conclusion that the way to get at the slippery rogue who was the real owner of these properties was to "smoke" him out of the labyrinth in which he had lurked so long. For this reason, I took every opportunity to advise my constituents, whether tenants or purchasers, to stop paying rents or mortgage repayments. The most effective way to deal with a slum racketeer is 172 to hit him where it hurts most—in his pocket. Even if Waters ends in prison, that would not necessarily recompense all the people whose lives and living conditions he has made miserable and intolerable for many years, and whom he has swindled and blackmailed.
When the slighted tenants and purchasers became sufficiently widespread, Waters had to come into the open so far as to appear as plaintiff at the Lambeth County Court to protect his ill-gotten gains. I am glad to say that while he may have been able to escape the net of the criminal law, the learned judge proved to be a nut too difficult for Waters and his legal advisers to crack, even on appeal. If I may say so without undue complacency, the campaign upon which I embarked has so far yielded more satisfactory results than the combined efforts of Scotland Yard, the Director of Public Prosecutions, or the Law Officers of the Crown. It culminated in the judgment of the Court of Appeal in the case of Morelle Limited v. Waterworth on 16th June.
The plaintiff company was Irish, being one of many operated by Waters. Ever since I have been trying to find out what the Law Officers of the Crown intended to do about this judgment, in which Lord Justices Singleton, Denning, and Morris upheld the decision of the learned judge at the Lambeth County Court. The law has now been made clear, as will be seen from extracts from the judgment of the Court of Appeal, which I shall read.
Lord Justice Singleton quoted the judgment of the county court judge, in which the county court judge said,Before a company can hold land as part of its permanent possessions a licence in mortmain is necessary; the principal Acts are those of 1888 and 1891. Under those Acts land may not be held by a corporation save-by licence from the Crown unless the company is incorporated or registered under the Companies' Act. Companies not incorporated or registered have no right to hold land unless they have a licence.Lord Justice Singleton, in his judgment, said,I agree with the county court judge, and in my view the appeal should be dismissed.Lord Justice Singleton, in his judgment, expressed himself as follows:The case gives rise to some interesting speculations, which have been mentioned. One. 173 is that if the company has not a place of business in this country it is rather difficult to serve it with notices under the Housing Acts or under other Acts.He went on to draw attention to Section 407 (1, c) of the Companies Act, 1948, and to the provision requiring that:… the names and addresses of some one or more persons resident in Great Britain authorised to accept on behalf of the company service of process and any notices required to be served on the company.That applies, of course, to any company carrying on business in this country.
Lord Justice Singleton went on to say:If the company has no place of business in this country and is an oversea company, I do not know how notices could be served so as to be effective. That may be the reason for an oversea company holding property here remaining without a place of business in this country. It may be, too, as was suggested, that it is regarded by the company as being some help to them in regard to revenue questions, although I hope that the revenue authorities can look after that side of the matter; and it may be that if the company has no place of business in this country, the collection of rates by the local authority is made more difficult in the case of house property such as this. … If an oversea company wants to do business in this country, and to do it properly, there are no difficulties.When Lord Justice Denny expressed his views in the matter, this is what he said in the Court of Appeal:Here is a foreign company which does not establish any business office in England and does not register itself in any way. By so doing it puts itself in a position, if not to defeat its obligations entirely, at least to make it most difficult for its dues to be collected from it. It makes it difficult for the tenant to recover on the landlord's covenants. It makes it difficult for the rating authority to obtain rates, or the housing authority to see that the houses are kept in proper condition, or even for the revenue authorities to obtain their proper taxes. So far as all these matters are concerned, it is like unto a dead hand. We have a modern application of the law of nearly 700 years ago. The transfer to this company is void without a licence from the Queen, and no licence has been granted. In the old days the forfeiture was not automatic, but under the wording of this statute it is quite clear that the forfeiture is from the date of the assurance, so that it operates at once without any entry by the Crown; and the tenant can take advantage of it, because he is liable to the Crown for the rent from that date.That is what was laid down in the Court of Appeal.
Arthur Bertram Waters is still operating from 77, Gloucester Place, W.1, 174 assisted by a solicitor who, in his full-time employment, is called Alan George Bainton, whose conduct will, I hope, be investigated by the Law Society, and another employee called W. Leslie.
Let me read a notice which was pinned up at the office at 77, Gloucester Place, which, I hope, will deter honest people from having any dealings with Waters and his gang. This is what the notice says:To all staff. When answering the telephone, don't say anything until the caller has given name and address. If the caller refers to sales advertisements for houses, obtain the telephone number so that the negotiator can establish contact. Don't give any information about property. Say the gentleman dealing with the matter is out and you will tell him about it.That shows the methods followed by this company in the conduct of its business.
The Attorney-General and his predecessor have said repeatedly that they must have time in which to consider the implications of the judgment to which I have referred. How much more time does the right hon. and learned Gentleman want? He is surely not going to grant a licence to this rogue landlord who is no longer entitled to collect any of the rents or mortgage payments on the properties affected by this judgment. All these properties have been forfeited to the Crown.
My constituents, as well as the Lambeth Borough Council and many other local authorities in the London area, are surely entitled to know where they stand. They want to know for how much longer the Government are going to disregard the law as laid down by the Court of Appeal. My constituents who are closely affected by this judgment are law-abiding citizens. I hope that in his reply the right hon. and learned Gentleman will indicate that he, too, is a law-abiding Attorney-General, resolutely determined to pursue the public interest by giving practical effect to the decision of the eminent judges to whom I have referred.
It may be that it is awkward, difficult and tiresome for the right hon. and learned Gentleman suddenly to find himself the owner of a derelict slum empire, but that is what has happened. I hope that the Attorney-General will be able this evening to make some announcement as to the action that, in my submission, 175 he is bound to take in the light of the decision to which I have referred.
§ 11.12 p.m.
§ The Attorney-General (Sir Reginald Manningham-Buller)
The hon. and gallant Member for Brixton (Lieut.-Col. Lipton) began his speech with an indictment of a man named Waters. I wish to make it quite clear that I do not appear at this Box for the purpose of saying anything at all in defence of that man.
The hon. and gallant Gentleman then went on to say that he thought that his campaign had been more successful than the combined efforts of Scotland Yard, the Director of Public Prosecutions and of the Law Officers. I naturally have no objection to the hon. and gallant Gentleman seeking to pat himself on the back if he can accomplish that physical exercise. But it is only right that I should at least attempt to satisfy him that his implied criticism of Scotland Yard and of the Director of Public Prosecutions is ill-founded, as indeed, I believe, is his criticism of the Law Officers.
The hon. and gallant Gentleman did not mention that Mr. Waters has, in fact, been prosecuted twice. He was convicted on the first occasion, and the conviction was quashed by the Court of Criminal Appeal. The fact that it was quashed was not the fault of Scotland Yard, the Director of Public Prosecutions or of the Law Officers. Mr. Waters was then prosecuted again in respect of other alleged offences, and, on that occasion, the jury found him not guilty.
The hon. and gallant Gentleman then went on to assert that the law had been made quite clear by the decision in Morelle Limited v. Waterworth, and he said that that decision established beyond doubt that all the properties to which he had referred had been forfeited to the Crown. He said that it might be awkward for me to find myselfthe owner of a derelict slum empire.I am sure that the hon. and gallant Gentleman does not consider me in any capacity to be the Crown. I assure him that I am not the owner of any derelict slum empire. I fully appreciate the doubtful position of the other tenants of Morelle Limited and of the companies 176 connected with Mr. Waters which are registered in Eire, and I hope to be able to make a statement with regard to the position in the near future.
The judgment to which the hon. and gallant Gentleman referred was published on 23rd July, and it has very far-reaching and unexpected implications which it is really not possible to ignore. It affects many other interests than the interests of the tenants to whom the hon. and gallant Gentleman referred, and not least it affects the Crown. The effect of the judgment is not confined to companies registered in Eire, and it does not extend to all companies registered in that country. The Mortmain Acts lay down that land assigned to a corporation in mortmain without a licence shall be forfeited, or subject to forfeiture, to the Crown, and for this purpose a corporation includes foreign States, limited companies, and chartered bodies.
As I say, a corporation includes all those varieties of organisations. There are, of course, some statutory exceptions. Companies, including oversea companies registered under the Companies Acts, are excepted; many chartered bodies are given a general licence, and the corporations within the meaning of the Mortmain Acts which are now principally affected are foreign States, livery companies and a very few unregistered oversea companies. The first point I want to make is that the effect of this judgment, if it is correct, is not confined to companies registered in Eire. Of course, it does not apply to individuals, even if resident abroad.
The judgment of the Court of Appeal came to some as a surprise and has, I think, been subject to a certain amount of criticism in the law papers. Until this decision an assignment in mortmain was thought to be restricted to freeholds and leaseholds which were colourable as freeholds, that is to say, a lease for a term of years so long as to be clearly an evasion of the Acts. In practice, that meant a lease for 99 years or longer. Now this decision has held that the Mortmain Acts apply to include all leases.
Secondly, forfeiture, until this decision, was believed to be at the option of the Crown, that is to say, that on an assignment in mortmain the land was subject to forfeiture at the option of the Crown and that the forfeiture did not operate until the Crown sought to exercise the option. 177 Now under this decision, the court have held that forfeiture is automatic. That has many obvious and serious implications.
Many corporations have taken short leases in good faith without a licence. Many corporations, acting in good faith. have applied for a licence after acquiring the freehold, and the Crown has remitted forfeiture. If the decision of the court is right, in the first case, the leases are vested in the Crown, even if they are short leases by companies acting perfectly bona fide in their belief of what the law was thought to be before this decision. So perhaps are the freeholds vested in the Crown, because the remission of forfeiture may not operate to vest the Crown's title in the petitioning purchaser.
But these are not the only implications. In consequence of this decision, the Crown may in law be the owner of a great deal of property of which it has never heard, and in many cases this property may be in the form of leases subject to onerous repairing and other covenants which the Crown certainly would not have accepted if it had had any choice in the matter. Indeed, one must recognise that the tenant who has failed to observe repairing covenants may be able to avoid his liabilities by assigning to a corporation towards the end of the term, so that the title and his liabilities, in view of this decision, pass automatically to the Crown.
In deciding whether or not this decision is correct and binding upon the Crown, regard must be had to all these matters. and the hon. and gallant Gentleman may perhaps agree that possibly a decision of such far-reaching implications should in any case be referred to the highest court in the land. But, of course, the Crown was not a party in the decision in Morelle v. Waterworth, so the Crown could not take that case to the House of Lords. Nor were any arguments advanced on the hearing of that appeal on behalf of the Crown. I am sure the hon. and gallant Gentleman will agree that a decision to embark on litigation and pursue the litigation right up to the House of Lords is not one that should lightly be taken. Views differ among many people as to whether, if an appeal were taken to the House of Lords on these very matters, the decision of the Court of Appeal would be upheld or reversed.
178 As I said when I began, the judgment of the Court of Appeal was not published until 23rd July. I know that some time has elapsed since then. Some people have had the good fortune to be on holiday. There has been the Long Vacation for most barristers. I can assure the hon. and gallant Gentleman that this matter is being most closely and carefully studied at the present time and as a matter of urgency, because one well appreciates the doubts and uncertainties that now exist until some decision is in made.
I hope that I have been able to convince the hon. and gallant Gentleman that there are considerable implications following upon this judgment, and that before one decides whether or not to seek to get the matter tested in the highest court in the land, it is essential that the matter should be most closely and carefully reviewed. As I have said, I sympathise with the other tenants of Morelle Limited and all these other companies associated with Mr. Walters, but I must point out that the Mortmain Acts were not intended to be a weapon for use against wicked landlords. Their object was to keep land on the market, to prevent the creation of something like a monopoly in land. We know that in fact the Court of Appeal has held that the Acts in this instance defeated the claims of Morelle Limited in an action in which they were plaintiffs, but it really was not the object or intention of those Acts that they should be used as weapons against wicked landlords.
The criminal law exists, civil proceedings can be taken. As I have said, criminal proceedings have already been instituted in connection with these properties. I said the other day, in answer to a Question put by the hon. and gallant Gentleman, that I would gladly consider any further evidence he may like to make available, if he could make any available, with a view to seeing whether any charge would lie in respect of any other matters, but one cannot proceed merely upon a judgment in the county court.
There is, of course, the possibility, which I think the hon. and gallant Gentleman recognised, of either forcing Mr. Waters in one of his capacities to institute an action himself, or, it would 179 seem to me, of some of the tenants themselves instituting civil actions in the county court. However, I will say no more upon that now, because that really is not the main point raised by the hon. and gallant Gentleman in this debate. He was concerned to know what was happening in view of the decision in Morelle Limited v. Waterworth. I hope I have said enough to convince him that the matter is extremely difficult and corn- 180 plicated, upon which the views of many lawyers may differ; and I hope I have also convinced him—and I hope he will accept my word for it—that the matter is being closely and carefully considered at the present time as a matter of urgency.
§ Question put, and agreed to.
§ Adjourned accordingly at Twenty-seven Minutes past Eleven o'Clock.