§ Order for Second Reading read.
§ 7.0 p.m.
§ The Solicitor-General (Sir Peter Rawlinson)
I beg to move, That the Bill be now read a Second time.
The apparently rather and provisions of this Bill do not conceal any controversial questions of policy because its provisions are merely consequential upon other Measures already approved by the House. Its object, quite simply, is to restore to county courts their jurisdiction in cases relating to land conferred upon them by the County Courts Act, 1955, which has been indirectly reduced to a very marked degree by the reassessment of rateable values.
As I shall explain to the House, the revaluation which took place in 1956 and the increase of rateable values which resulted, took away from county courts almost one-half of the jurisdiction conferred upon them in the previous year. As the House will appreciate, the revaluation now taking place will certainly make further inroads into what remains. As hon. Members know, the county court is a local and easily accessible court which involves litigants in lesser expense and often lesser inconvenience and travelling attendance, while this drastic change will impose considerable hardship upon those litigants who are compelled to go to the High Court and thereby compelled to ensure high costs. As this result is largely indirect, we feel it right in this Bill to extend county court jurisdiction and to restore the position to what it was in 1955.
With those words of preface to the Bill generally, I turn to its provisions and the reasons for them. I can best do this by explaining the basis of subsection (1) of Clause 1, which deals with actions in the recovery of land and actions in which the title to land is called in question as well as some proceedings for relief against the lessor. The history of the matter is that, under Section 48 of the County Courts Act, 1934, the county courts had jurisdiction to entertain any action for the recovery 483 of land where neither the value nor the rent of the premises exceeded £100 a year. The County Courts Act, 1955, provided that the amount by reference to which the jurisdiction of the county court was limited should be £100 in net annual value for rating instead of £100 yearly value or rent.
As hon. Members will know, the net annual value is the rent at which property might be expected to be let if the tenant were responsible for all the outgoings, the insurance, repairs and maintenance. This was a substantial increase in 1955 since, according to the Evershed Committee on whose recommendations most of the 1955 Act was based, a yearly value of £100 was roughly equivalent to a net annual value of £60. The County Courts Act, 1959, consolidated these previous enactments relating to county courts. Section 48 of the 1959 Act reenacted Section 48 of the 1934 Act, as amended in 1955, by providing that the county courts should have jurisdiction to entertain any action for recovery of land where the net annual value for rating of the land in question does not exceed £100.
However, the increase in rateable values which took place in 1956 has consequentially had the effect of removing from county court jurisdiction a large number of premises Which the 1955 Act had brought within it. The average increase in net annual values of all types of property was 81 per cent. So the county court jurisdiction has been reduced almost by one-half of what was intended by Parliament in the 1955 Act. The further increase in rateable values which will take place when the new valuation lists come into force on 1st April, 1963, will cause an even greater reduction in the jurisdiction of the county court.
It is estimated that the average increase over existing net annual values will be 125 per cent., making a total increase of 308 per cent. since 1955. So unless the limit of £100 which was mentioned in Section 48 of the 1959 Act is raised to the same extent, the county court will lose jurisdiction over a vast number of premises which were formerly within it. This surely is something we should wish to avoid.
484 Subsection (1) accordingly provides that Section 48 shall be amended by raising the limit of the county court jurisdiction in actions for the recovery of land from £100 to £400 in the net annual value for rating. The other subsection to the Clause and the other Clauses of the Bill make corresponding provisions relating to other enactments which have been affected in the same way.
I shall refer shortly to the other Clauses and their effect. Clause 2 deals with the right of appeal from a county court on questions of fact, a right which is conferred in certain actions relating to land. Since it is estimated that the net annual values will be four times larger in 1963 than they were in 1955 when the figure of £60 was fixed, a figure of £240 might have been substituted, but, as hon. Members will see, the figure in the Clause is £200. When fixing a figure upon Which depends a right of appeal, a lower figure and a round figure, I suggest, is clearly preferable, so it has been fixed at £200 and not as might have been as a matter of mere mathematics at £240.
Clause 3 concerns property where the value in question is not separately rated. By Section 200 (2) of the 1959 Act, such property is taken to have a net annual value for rating equal to three-fifths of its value by the year. This was provided because in 1955 a net annual value for rating of £60 was regarded as roughly equivalent to a letting value of £100, which was the estimate of the Evershed Committee. Rateable values at that time were still based on 1934 rental values and next year, 1963, they will be based on current rateable values. Therefore property not separately rated should be taken to have its full value by the year.
Subsection (2) of Clause 3 removes the anomaly whereby a position could arise where a county court has jurisdiction in respect of the whole of the hereditament but not in respect of an unrated part. This could occur where property having no separate rateable value forms part of a rated hereditament. If a part is let at a high rent because it is furnished or because services are provided, the value by the year might be greater than the whole hereditament.
Clause 4 increases the jurisdiction of the county court to take into account increases in rateable value in cases under Part II of the Landlord and Tenant Act, 485 1954, and also other Acts set out in the Clause. They deal with the grant of new leases. The figure in 1954 and in those other Acts was £500 and, applying the same considerations to which I have been referring earlier and to maintain the jurisdiction of the county courts, this figure is increased from £500 to £2,000.
The only other matter to which I think I should draw the attention of the House is the extent to which it is necessary and, indeed, possible to take into account the effect of the revaluation which is now in progress and which comes into effect next year. In this connection I would refer to paragraph 4 of the White Paper on the Revaluation for Rates in 1963. That paragraph states:It is estimated that the average increase in the gross values of houses between 1939 and 1963 as a result of the 1956 and 1963 general revaluations alone will bring them to about four times the 1939 figure.That is why in this Bill and in my speech that figure has been taken as being a sufficiently accurate estimate for the purposes of this Bill.
There are two points which I might usefully mention in conclusion. One is that the current revaluation will not affect the application of the Rent Acts to any property anywhere, and the second is that the Bill does not and will not cut down the jurisdiction of the High Court, because the jurisdiction of the county court is now, as it always has been, a concurrent jurisdiction and the plaintiff, therefore, if he prefers, can bring his proceedings in the High Court.
I hope that with that explanation the House will welcome this Bill as a sensible Measure conferring benefits upon litigants.
§ 7.12 p.m.
§ Sir Frank Soskice (Newport)
This Bill, in a sense, must be regarded as a minor nightmare for a Law Officer. It is arid. It is introduced against a very melancholy background, namely, the estimate as to the effect of net annual values at the 1956 and 1963 revaluations, It is extremely complex. It covers a long list of quite separate and isolated points which arise as a result of the effect of that revaluation.
A Bill like that is extraordinarily difficult to explain. That is why I think we should all be extremely grateful to the 486 Solicitor-General for having made it—speaking for myself, and I think I am speaking for other hon. Members—. pellucidly plain in his introduction of the Bill. He was, I thought, a trifle optimistic when he said that he hoped the House would welcome this Bill, because the word "welcome", generally understood, implies a degree of spontaneous expression of joy. I should have thought it would be more appropriate to say, whilst I do not in the least complain of the gladsome note in the phrase which he used, that the House is perfectly ready to realise that this is a necessary Bill because it preserves the existing jurisdiction of the county courts.
I should have thought that we would unanimously wish to express our commendation of the very great service rendered by our county court judges. When we studied this Bill I suppose we all looked carefully at its provisions to see whether any of them imposed an additional burden upon the very heavy burdon already resting upon the shoulders of county court judges. Had it done so, I feel that the House would have desired to discuss more carefully the basic principles upon which the Bill is framed. The Solicitor-General has, by his clear account of the Bill, made it easily acceptable that the Bill in no sense increases the load on the county court judges at the moment.
The Bill, as a necessary corollary of the effect of revaluations, simply preserves the existing scope of the jurisdiction which county courts exercise in actions touching questions affecting land. After all, they provide for the ordinary citizen in his own district a ready and inexpensive means of obtaining justice. Actions which go to the High Court, in spite of all the efforts that have been made, must of necessity remain more or less expensive, and they are proceedings which strike some degree of fear into the bosoms of most citizens.
Therefore, I should have thought it was certainly in the public interest that although, considering the work at present done by the county court judges, we should be jealous and anxious not unduly to increase it, it should nevertheless continue to be performed by them as they at present perform it. The Solicitor-General has explained that it is precisely that which the Bill achieves.
487 The Bill has a number of Clauses and, as I have said, covers a wide variety of different points arising in relation to different enactments which concern the administration of justice in matters touching land. I do not feel that I can usefully comment on any of the points with which the Solicitor-General has dealt. On matters of drafting, perhaps when we come to look at the Bill rather more closely in Committee we may wish to raise questions.
In particular, if the Solicitor-General will look at Clause 4 he will see there that the expression used is "rateable value" simpliciter, whereas in all the other Clauses the expression used is "net annual value". Probably the explanation is that somewhere in the Acts referred to the words "rateable value" are defined, and they are probably defined somewhere as being equivalent in the terms of those Acts to net annual value. In fact, I believe there is such a Section in one of the Acts—I cannot remember which it is—which provides such a definition. That is probably the reason, and if the Solicitor-General would kindly enlighten us that would probably obviate the necessity for some discussion in Committee. Perhaps, in any case, he will be so kind as to look at it in case there has been an oversight in the drafting, although I am sure there has not been.
I do not think I can usefully add anything to what has already been said. No doubt, we shall look more closely at the individual subsections at a later stage. We are now discussing the general principle of the Bill. For the reasons that have been given by the Solicitor-General in his very lucid speech, I feel that we should all say that this Bill is necessary and that we should congratulate him on bringing it forward and hope that it has a speedy passage to the Statute Book.
§ 7.18 p.m.
§ Mr. Niall MacDermot (Derby, North)
Whether Or not we should so far forget ourselves as to welcome this Bill, I think we can all agree with my right hon. and learned Friend the Member for Newport (Sir F. Soskice) that it is a necessary Bill, and congratulate the Solicitor-General on the lucid manner in which he presented it.
488 A little while ago some of us might have had some doubts, and even hesitation, about restoring, as this Bill does, the jurisdiction of the county court to what it was before, because a few years ago there was a considerable evil in the administration of justice in the county courts in the way of delays. There were many complaints about that; many actions were being held up and adjourned, with long delays in the adjournments.
As I understand it, there has been a tremendous improvement in that respect in the last year or two, and I should Like to take this opportunity of expressing appreciation for all that has been done in the last year or two, including the appointment of many additional deputy county court judges in order to speed up and improve the work of the courts. Generally speaking, there is, I believe, considerable satisfaction in the profession now at the way the courts are working.
I take this opportunity, however, of raising what is, perhaps, a relatively minor mischief which occurs in county court practice as compared with High Court practice. It is something which could arise under the Bill, not in connection with claims for the recovery of land, but where there is a money claim involving a question as to the title to a hereditament.
There is a provision in the county court rules that, if a defendant pays into court the amount claimed, or what he thinks is the right amount, within eight days of the service of the summons upon him, and the plaintiff takes out that payment into court in satisfaction of his claim, the plaintiff is then, in the normal course, entitled to only what are called his fixed costs. These fixed costs are certain costs laid down in an appendix to the rule and which the plaintiff has to claim on the face of the summons.
Those familiar with this branch of practice will know that the fixed costs are far less than the ordinary costs incurred by a solicitor acting for a plaintiff to which he would be entitled, and which he would recover in the ordinary way from a defendant on the taxation of costs. I will illustrate the point by some hypothetical figures.
In an ordinary action for damages for personal injury brought in the county 489 court a solicitor is acting for the plaintiff. Before the time comes for the issue of his plaint, the solicitor will, more often than not, quite properly incur fairly substantial costs. He has many investigations to carry out. He has witnesses to interview, and the witnesses may have dispersed or gone to other employment in various parts of the country. He will conduct negotiations arising out of the accident. There may be proceedings in the magistrates' court, for example, which he will have to attend. He will obtain reports from doctors about the injuries received by the plaintiff. In quite a small matter, the costs can easily mount up in this way to as much as 20, 30 or even 40 guineas. In such a case, the fixed costs, so called, would not, I am advised, be mare than about 8 guineas.
The vast majority of claims of this kind never come to court. They are negotiated between the solicitor acting for the plaintiff and, usually, an insurance company acting for the defendant. It is the common practice that, when a settlement is reached, the basis of the settlement is that the defendant will pay not only the agreed amount of damages but the plaintiff's solicitor's costs, or, if the parties cannot agree, such costs as will be awarded on a taxation.
The mischief of the rule is this. Where a settlement is not reached and the solicitor, therefore, has to issue a summons, the defendant derives an advantage by disposing of the action by means of a payment into court. This payment into court may be payment of the full amount claimed, and the advantage the defendant gets is that he then has to pay, in the ordinary case, only the very limited fixed costs.
The rule was quite rigid until a few years ago. In 1959, it was changed to give a discretion to the court so that a plaintiff receives only his fixed costs unless the court otherwise orders. However, the Court of Appeal, considering this rule, laid down in 1960 that the meaning of the rule is that only in exceptional circumstances should anything more than the fixed costs be ordered. I am told—I have not seen the report myself—that there was a case only two or three weeks ago in which the Court of Appeal put an even more rigid interpretation on the rule than before.
490 The explanation of the rule as put by the Court of Appeal in the first case to which I referred, Hopkins v. Manners, reads almost ironically in view of what has been happening in practice. It was said by Lord Justice Pearce thatThe object of the rule was to promote a speedy settlement of just claims".I am advised that what is happening in practice is exactly the opposite in some cases. Some unscrupulous defendants—I regret to say that some insurance companies are included—are deliberately adopting the practice of not settling claims by negotiation in order to restrict their liability for costs. They find out during the negotiations what the amount is which the plaintiff will be prepared to accept. They will not offer that amount. They will not conclude the negotiations, and they leave the plaintiff to issue a summons. So soon as the summons is issued, the amount claimed, or the amount which the defendant thinks that the plaintiff is claiming, is promptly paid into court, that amount being far more than has ever been offered before.
In this way, a defendant is limited to having to pay the fixed costs unless the plaintiff, on taking out the summons, can persuade the registrar or county court judge that it would be proper to order further costs. However, in view of the ruling of the Court of Appeal it is exceedingly difficult for a plaintiff to satisfy the court that anything exceptional in the way of costs has been incurred so as to entitle him to more, and, moreover, he runs the risk of having to incur still further abortive costs in taking cut the summons itself.
In seeking to explain the rule further, Lord Justice Pearce in the same judgment said:It is hard that a plaintiff who has incurred costs should not receive them in full; but it is also hard that a defendant who has paid a sum into court with a general expectation of limiting his liability to the amount of costs indorsed on the summons should find it increased after the acceptance of his payment in.If that be a hardship to the defendant, it is a hardship which arises only as a consequence of the provisions of the rule. If the rule were abolished or altered, there would be, so far as I can see, no hardship to the defendant at all. It is a normal consequence of having to settle any claim that the defendant has to pay the reasonable 491 costs incurred by the plaintiff, and this rule, of course, is embodied in all other provisions for payment into court both in the High Court and in the county court. If the defendant does not pay in within the eight days, the normal rule applies and, if the plaintiff accepts the money, he is entitled to costs properly incurred up to the date of payment in.
This mischief does not arise directly, but it can arise indirectly under the Bill. I urge the Solicitor-General and the Law Officers to look at the matter. If their inquiries show that there is this mischief, as I suggest, it would, perhaps, be a matter which could be referred with a recommendation to the Rules Committee rather than be the subject of amendment in an effort to deal with it in a somewhat cumbersome way under the Bill.
Subject to that point, I commend the Bill to the House, as, I am sure, all hon. and right hon. Members will.
§ 7.28 p.m.
§ Mr. Leo Abse (Pontypool)
I endorse what has been said by my hon. Friend the Member for Derby, North (Mr. MacDermot) in emphasising the hardship which arises as a consequence of the rule to which he referred. Unfortunately, there is no doubt that a considerable number of defendants are adopting this practice. The Solicitor-General will readily understand that in a county court case the burden falls upon the solicitor for the plaintiff to prepare his case almost completely by the time he issues his summons. Unlike what happens in the High Court, the trial in the county court will not be long postponed. The solicitor cannot rely on having time. No competent solicitor, therefore, will commence his proceedings without first ensuring that his medical reports and engineers' reports are available and that advice on evidence has been taken from counsel. The bulk of the work has been done at the time the summons is issued.
If in negotiating, as, unfortunately, is happening on a wide scale, a demand is made by a plaintiff for a certain amount, very much less is often offered by insurance companies, and, although they know that an action may commence, first, they think that perhaps the plaintiff can be frightened off because rather 492 than start his action he will take something less, and, secondly, they are confident that if the action is started at all the work done by the plaintiff need not be paid for, and that the trivial sum which arises on fixed costs when the money originally demanded by the plaintiff is paid into the court—for the defendant may know that there is full liability—is all that the plaintiff's solicitor will collect. The burden of this falls not on the solicitor but on the people who have suffered accidents, industrial accidents in particular, because, unfortunately, there seems to be a practice in certain insurance companies dealing a great deal with this type of action to make this type of response.
I hope that the Solicitor-General will appreciate that this is a widespread complaint among solicitors and that, unfortunately, county court judges are becoming embarrassed by it. If the Solicitor-General looks at recent cases he will find that the registrar has awarded more than the fixed costs, that on appeal county court judges have awarded far more and that the insurance companies pursue the case to the Court of Appeal, where the judges evidently feel bound by the rule and feel unable to do anything but to apply it in the strict sense to which my hon. Friend the Member for Derby, North referred. I urge that considerable weight should be attached to this matter because it is a widespread and growing mischief and is clearly becoming more harsh on more and more defendants.
The second and only other point that I wish to raise on a Bill which restores jurisdiction to the county courts is this. I wish to enter a caveat. We well know that it is often simple for us in this House to impose new or to restore old burdens on courts, and that the weight of work which, as a consequence, falls on the courts can be very heavy. This has been happening in the last year or two to such an extent in magistrates' courts that clerks to the magistrates are groaning under the weight of Betting and Gaming Acts, Licensing Acts, and so on. We therefore should be very careful about the jurisdiction that we give to the county courts since we know full well how hard they are working and the burdens which they are carrying.
One of the biggest burdens which county court judges have to carry should 493 be removed. The county courts are being reduced, to a large extent, to debt-collecting agencies for hire-purchase companies. I do not believe that it is right that county court judges, as a consequence of an Act nearly 100 years old, the Debtors Act, 1869, should have the indignity thrust on them of being compelled to squander, as they must, hours of their very valuable time in cajoling and coercing thousands of debtors to hire-purchase companies to make weekly repayments. Is it really the function of county court judges, whose maintenance is paid for by the taxpayers generally, to reduce their courts to being outside departments of hire-purchase finance companies? After all, the problems that arise as a consequence of bringing judgment summonses before county court judges, all of whom are suffering severely from this, stem from the irresponsibility of hire purchase companies in giving reckless credits. Because of this, our county courts are jammed and clogged every month.
I am aware of the considerable strains arising in many county courts in South Wales. I am sure that this applies to county courts in many of the industrial and urban areas, where hours of the judges' valuable time are being spent in dealing with an avalanche of judgment summonses from hire purchase companies, which, I believe, are seeking to exploit the threat of a committal to prison, which is available, to extort high interest hire-purchase payments out of their victims. This is not good enough. It is time that the judges were freed from this work which should be within the jurisdiction of registrars. It is only the considerable dignity of judges that prevents the courts from becoming a complete shambles.
This jurisdiction in the county court judge—it is in him alone, since it cannot be delegated to a registrar—means that on county court day there are not only hundreds of debtors in court but, unfortunately, scores of children. These children are usually with their mothers. Judges realise that the worst thing that they can do is to compel the attendance of husbands, because it only makes matters worse if the husband is dragged away from his work. These children are sensing the atmosphere of fecklessness and lack of concern which arises from 494 this huge accumulation of debt. They take it as part and parcel of their regular life that they should attend court almost monthly. All the awe and majesty that should be within a county court is being lost.
I am well aware that there are judges who are deeply concerned about mothers with babies in their arms being questioned and cross-examined about their means or the means of their husbands. Because of the present jurisdiction, this has to be done in open court. I do not think that our county courts were ever intended to be used as instruments for debt collecting in this way. Society has changed since 1869. The hire-purchase system is spreading. At a moment when we are considering making a marginal increase in the jurisdiction of county courts, it is right that we should consider how we can relieve the county court judges of burdens such as this. It the Solicitor-General looks into the matter, he will find that hours are spent in this way. Worse still, solicitors, litigants and counsel are being held up for days sometimes because of these judgment summonses clogging the courts.
I am sure that we are all grateful to the Solicitor-General for the lucid manner in which he explained this complex Bill to us. I trust that he will pay attention to the minor complaints which have been made, since I am sure that they have been made only with the intention of trying to help the splendid work which county courts are doing.
§ 7.39 p.m.
§ The Solicitor-General
With the leave of the House, I should like to reply to some of the points which have been raised.
First, I deal with the point raised by the right hon. and learned Member for Newport (Sir F. Soskice). As he anticipated in posing the question, the words "the rateable value" are used in Section 37 of the Landlord and Tenant Act, 1954, but I assure him that the wording in Clause 4 will be looked at again.
The House had the advantage of hearing both sides of the legal profession on the point raised by the hon. Members for Derby, North (Mr. MacDermot) and Pontypool (Mr. Abse). Although I will certainly study the point 495 afresh, it is one which has been referred to the Rules Committee following the judgment of the Court of Appeal to which reference has been made. It is still under consideration and for consideration by that Committee.
I understand that the difficulty, which obviously one would hope to overcome, is to devise a satisfactory formula which will not open the door to an order for taxed costs in each case. Nevertheless, it is a matter which both hon. Members have emphasised and one which most certainly needs consideration.
In regard to the points raised by the hon. Member for Pontypool in the caveat that he issued, a great burden is thrush upon the county court judges, as the hon. Member has said. In the light of his comments, I will certainly examine the difficult task which they will have to do. The county court has, and must have, the power to commit and this might not be thought to be satisfactory unless carried out by the judge himself. Nevertheless, I will bear in mind the points raised by the hon. Member.
In regard generally to the hon Member's caveat, the Bill represents only a shift. Because there has been a shift under revaluation, there would be a shift to the High Court away from the county court. As the hon. Member clearly understands, the Bill puts back that shift into the proportion and into the position in which it should have been and in which, we hope, it will be.
In moving the Second Reading, I referred to the concurrent jurisdiction of the county court. That is so in respect of Clause 1. With regard to Clause 4, however, the jurisdictions of the county court and the High Court are, as hon. Members will appreciate, mutually exclusive.
§ Mr. MacDermot
Before finally leaving the point which I raised, can the Solicitor-General explain what is thought to be the reason why, in the circumstances which we are discussing, the plaintiff should not get his taxed costs? The plaintiff gets them in all other cases in which he accepts a payment in promptly. He does in the High Court and in other cases in the county court. I cannot see the need far this rule.
§ The Solicitor-General
I appreciate that the interpretation by the Court of Appeal has had such a restriction upon it as to render the unfairness to which the hon. Member has referred. I understand that although this matter is under consideration by the Rules Committee, one of the difficulties in mind is not to make a fixed formula which, on some occasions, could also effect or influence an injustice the other way.
I appreciate that the right hon. and learned Member for Newport said that to invite the House to welcome the Bill was a touch of exuberance in which a Law Officer should not permit himself to indulge. I am, therefore, grateful that the right hon. and learned Gentleman and, I understand, the House realise that the Bill is necessary and are prepared to give it a Second Reading.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Committee of the whole House.—[Mr. Rees.]
§ Committee Tomorrow.