HC Deb 19 October 1954 vol 531 cc1084-90

(1) Notwithstanding anything in Part I of this Act, no person shall be entitled to a payment under sections six, eight, nine, eleven or twelve of this Act by virtue of a transaction between companies which at the time of the transaction were associated companies.

(2) Where a company is the holder of a claim holding, then, for the purpose of ascertaining whether or not that company is entitled to a payment in respect of the holding under Part I or Part V of this Act, any act or event which occurred in relation to another company which at the time of that act or event was, or after that time but before the twenty-sixth day of February, nineteen hundred and fifty-four, became, associated with the company which holds the claim holding shall be treated as having occurred in relation to the company which holds the claim holding, and an interest in land held by any other company for the time being associated with the company which holds the claim holding shall be treated as being held by the company which holds the claim holding.

(3) For the purposes of this section, a company shall be treated as associated with another company if, and only if, within the meaning of section one hundred and fifty-four of the Companies Act. 1948, one of those companies is a subsidiary of the other, or both those companies are subsidiaries of the same holding company.—[The Lord Advocate.]

Brought up, and read the First time.

The Lord Advocate

I beg to move, "That the Clause be read a Second time."

The principle underlying this Clause is a quite simple one, that a group of associated companies is to be treated as one person for the purpose of entitlement to a payment under Part I or Part V of the Bill. In other words, transactions and claims between associated companies are not regarded as qualifying for payment under Part I by subsection (1) of the new Clause. On the other hand, payments will not be debarred simply because the claim is in the hands of one member of the group while the act or event giving rise to compensation occurred in relation to another member of the same group. The idea is to treat these associated compaines as one person for the purposes of compensation.

Mr. D. Johnston

I wish to ask two questions in reference to the new Clause, which, so far as I can see, is a very sensible one. The associated companies are affected only, according to the new Clause, by Clauses 6, 8, 9, 11 and 12—that is B, C, and D class claims, except under Clause 12—but under Clause 12 there is a claim for residual payments in cases analogous to cases A and B. If Clause 12 is brought in, is it not necessary to bring in Clauses 4 and 5, which are Class A cases, because the analogous A cases are brought in by Clause 12?

The second question is: in view of the Amendments we have made and the Amendments to Clause 6 subsection (7), is it not now necessary that that Amendment should be taken note of in this new Clause and appropriate amendment made in this new Clause?

Mr. Hector Hughes

Like so many of the Amendments we have been discussing today, this new Clause is intended to extend privileges to a new class. It extends the rights hitherto enjoyed under this legislation by companies to associated companies.

Recently in the courts and in the Press we have heard of certain scandals arising out of that kind of thing—one company associated with another in the holding of land or in the collecting of rent—which gave rise to a great deal of unhappiness and fraud. It was very difficult for people who had contact or business with one of these companies to know under which thimble was the pea. It was very difficult for people doing business with one of these companies to know who was the proper person to sue and who were the directors amenable in certain circumstances. The Committee should consider this new Clause with meticulous care with a view to seeing whether or not it opens the door to that kind of thing.

The explanation which has been given by the right hon. and learned Gentleman opposite so far has not satisfied me, at all events, that this is the right kind of Clause to incorporate in the Bill. The Clause seems to be associated in thought or in idea with the ideas underlying the earlier Amendment to Clause 6. That Amendment, the Committee will remember, related to persons who are jointly entitled to a claim holding. People who are concerned in a company are people who are jointly concerned in a certain enterprise or interest. Now we have this Amendment, which is related to the persons indicated who are jointly entitled to a claim holding.

The new Clause relates to a company which is the holder of a claim holding. One thing that it does above all others is to extend to associated companies, so that where one company is the holder of a claim holding and becomes associated with another company they shall both be entitled to the benefits, whatever they are, under this Bill.

Questions which I invite both or either of the Government spokesmen opposite to consider are: why should this benefit be conferred on companies? Why are not individual holders benefited in a similar way? What "act or event"—that is the phrase in the new Clause—is contemplated by those three words? What is the significance of the date mentioned in the new Clause, namely, 26th February, 1954, and what is to happen if the "act or event" occurs outside the dates specified?

Subsection (1) of the new Clause seeks to impose disabilities on persons mentioned in the particular Clauses set out therein—Clause 6, which deals with Case B payments, namely, in "compulsorily acquired" cases; Clause 8, which deals with Case C payments: Clause 9, which deals with Case D payments; Clause 11, which deals with Case B claims, and Clause 12, which deals with Cases A and B which are residual payments.

On that, I ask the right hon. and learned Gentleman why the Government seek to exclude from the new Clause the other Clauses which are not there mentioned? They are, Clause 4, which deals with payment where development charge was incurred by the claim holder or his predecessor in title to land; and Clause 10, which deals with payment, in Cases A, B and C, to persons deriving title to a claim holding from the original claim holder. The Ministers concerned should give answers to these questions.

Certain answers occur to me because I have given great study to these Clauses, but they may not occur so readily to non-lawyers or to persons who are pecuniarily or financially affected by the Bill. We all know that tragedies have occurred arising out of this kind of thing. The Pilgrim case, Mr. Pilgrim's suicide, is very fresh in our minds. That arose out of a set of circumstances concerning a valuation of his land, land in which he had invested his life savings and was then offered a very small sum for its compulsory acquisition. This is not only a technical matter, but may be one of life and death to people whose moneys are put into the purchase of land of this kind.

It is, therefore, essential that the Committee should scrutinise this new Clause with the most meticulous care with a view to defining its limitations and seeing exactly why it is being put into the Bill and why, under it, associated companies should be singled out for special treatment.

6.15 p.m.

The Lord Advocate

The hon. and learned Member for Aberdeen, North (Mr. Hector Hughes) seems to be under the impression that this new Clause is conferring some kind of benefit upon associated companies. In fact, of course, it does the very reverse. The hon. and learned Member made great play of what fraudulent tenancy arrangements between associated companies might possibly lead to. I am happy to say that that kind of thing is not very common in Scotland.

The object of the new Clause is to treat, for the purposes of this Bill, all these legal personae—associated companies—[Interruption.]—these legal persons in the eye of the law who are really closely related and controlling one another, as if they were one person, not a number of different persons. That is the effect of the new Clause. Therefore, the very fraudulent fictitious transactions which the hon. and learned Member envisaged and deprecates are the very things which are to be regarded as utterly out of the picture in connection with this Bill. That is what the new Clause is designed to do—to treat all these associated companies as if they were just one company.

The hon. and learned Member for Paisley (Mr. D. Johnston) asked me why certain Clauses were referred to in subsection (1) of the new Clause while certain others were not, in particular cases A, B and C. Case A is not really relevant to the present question. Clause 5 is concerned with cases in which a development charge has been paid to the Board. Subsection (1) of the new Clause is concerned solely with transactions in land between associated companies, not those of associated companies in relation to the Board. It is concerned solely with transactions in land between associated companies, and no development charge arises in regard to those cases. Accordingly it does not seem to me necessary to refer to further Clauses than those already mentioned in subsection (1) of the new Clause.

Mr. Johnston

I follow the right hon. and learned Gentleman's argument on that point. Will he deal with my other point as to the necessity for an Amendment to meet the Amendment which has already been made to Clause 6?

The Lord Advocate

I am very sorry that I forgot that. The hon. and learned Gentleman raised the point of whether provision should be made in this Clause for joint holdings. The idea is that this provision, which will treat all these various concerns as if they were one concern, is the appropriate method of dealing with associated companies. I think that if we were to incorporate provisions about joint holdings we should only complicate the matter. The new Clause says that these associated companies are to be treated as one, not as joint holdings, for the purposes of the Bill.

Mr. T. Fraser

I think the Lord Advocate said in reply to my hon and learned Friend the Member for Aberdeen, North (Mr. Hector Hughes) that he was quite wrong in thinking that this new Clause conferred a benefit upon the associated companies. I think he made it quite clear that in his view this would not lead to any additional payments from the Exchequer to associated companies. [HON. MEMBERS: "No."] I gathered so. I rose merely to ask whether the reason we are taking this new Clause on Recommittal and not on Report is because it will impose further charges on the Exchequer. I wonder if he will make the point clear, because we gathered from his reply to my hon. and learned Friend the Member for Aberdeen, North that this would not impose a charge.

The Lord Advocate

I do not think I said that it will not impose a charge, I did not mean that. It certainly will impose a charge. But if the hon. Member will look at subsection (1) of the new Clause, he will see that what it says is that nobody shall be entitled to a payment under certain Clauses of this Bill, by virtue of a transaction between companies which were associated companies. The primary purpose of this subsection, which is what I have been dealing with, is that associated companies are to be treated as one person and not as a group, or as different people who might otherwise qualify for payment.

Mr. Willis

The question still has not been answered. If these people would have been entitled to payment without this Clause, and they now cease to be so entitled because of this Clause, how does that increase expenditure, which is the question asked by my hon. and learned Friend a short time ago? I think that we should have an answer to this, because I have been trying to puzzle out why this Clause appears on Recommittal stage instead of Report stage. Earlier the right hon. and learned Gentleman said that this Clause conferred no new benefit on anyone, and I think that we are entitled to a much clearer exposition of the matter.

Mr. Hector Hughes

May I draw the attention of the right hon. and learned Gentleman to subsection (2) of the new Clause? He confined himself to subsection (1) and said that that subsection, and therefore the whole of the new Clause, does not confer any advantage on anyone—meaning thereby a company. But look at subsection (1) which states: Notwithstanding anything in Part I of this Act, no person shall be entitled to a payment under"— so-and-so— by virtue of a transaction between companies which at the time of the transaction were associated companies. Then subsection (2) goes on to say—I leave out phrases in order to make my meaning clear— Where a company is the holder of a claim holding, then for the purpose of ascertaining whether or not that company is entitled to a payment in respect of the holding under"— so-and-so— shall be treated as having occurred in relation to the company which holds the claim holding.… Surely that would give a benefit, would transfer a benefit from what I might call the primary company to the associated company. Ex hypothesi the associated company does not have any interest in the matter at all until it comes within the purview of this subsection. The company that has the benefit is what I call the primary company and this Clause transfers to what it calls "associated companies" certain benefits in the words to which I have just referred.

It seems clear to me—I hate to say it—that the learned Lord Advocate has misconstrued the whole Clause by confining his attention to subsection (1) and leaving out of consideration altogether the words in subsection (2) which I have just quoted.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

Bill reported, with Amendments; as amended (in the Standing Committee and on recommittal), considered.

The Clerk at the Table informed the House of the unavoidable absence, through indisposition, of Mr. SPEAKER from the remainder of this day's Sitting.

Whereupon SIR CHARLES MACANDREW, The CHAIRMAN OF WAYS AND MEANS, took the Chair as DEPUTY-SPEAKER, pursuant to the Standing Order.