HC Deb 14 May 1964 vol 695 cc683-708
5 (1) The provisions of this section shall have effect where a motor vehicle has been let under a hire-purchase agreement, or has been agreed to be sold under a conditional sale agreement, and, at a time before the property in the vehicle has become vested in the hirer or buyer, he disposes of the vehicle to another person.
(2) Where the disposition referred to in the preceding subsection is to a private purchaser, and he is a purchaser of the motor vehicle in good faith and without notice of the hire-purchase agreement or conditional sale agreement, that disposition shall have effect as if the title of the owner or seller to the vehicle had been vested in the hirer or buyer immediately before that disposition.
10 (3) Where the person to whom the disposition referred to in subsection (1) of this section is made (in this subsection referred to as "the original purchaser") is a trade or finance purchaser, then if the person who is the first private purchaser of the motor vehicle after that disposition (in this section referred to as "the first private purchaser") is a purchaser of the vehicle in good faith and without notice of the hire-purchase agreement or conditional sale agreement, the disposition of the vehicle to the first private purchaser shall have effect as if the title of the owner or seller to the vehicle had been vested in the hirer or buyer immediately before he disposed of it to the original purchaser.
15 (4) Where, in a case falling within the last preceding subsection,—
20 (a) the disposition whereby the first private purchaser becomes a purchaser of the motor vehicle in good faith and without notice of the hire-purchase agreement or conditional sale agreement is itself a letting under a hire-purchase agreement, and
25 (b) the person who is the owner in relation to that agreement disposes of the 25 vehicle to the first private purchaser, or a person claiming under him, by way of transferring to him the property in the vehicle in pursuance of a provision in the agreement in that behalf,
30 the disposition referred to in paragraph (b) of this subsection (whether the person to whom it is made is then a purchaser in good faith and without notice of the original hire-purchase agreement or conditional sale agreement or not) shall, as well as the disposition referred to in paragraph (a) of this subsection, have effect as mentioned in the last preceding subsection.
35 (5) The preceding provisions of this section shall have effect—
(a) notwithstanding anything in section 21 of the Sale of Goods Act 1893 (which 35 relates to the sale of goods by a person who is not the owner), but
(b) without prejudice to the provisions of the Factors Act (as defined by section 62(1) of the said Act of 1893) or of any other enactment enabling the apparent owner of goods to dispose of them as if he were the true owner of the goods.

to leave out "and 1958" and to insert "to 1964".

This is a technical Amendment to ensure that references in the British Nationality Act, 1964, to a country mentioned in Section 1(3) of the British Nationality Act, 1948, include a reference to Malawi.

Amendment agreed to.

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

Clauses 3 to 8 ordered to stand part of the Bill.

Schedules 1 and 2 agreed to.

Bill reported, with an Amendment; as amended, considered; read the Third time and passed.

40 (6) Nothing in this section shall exonerate the hirer or buyer from any liability (whether criminal or civil) to which he would be subject apart from this section; and, in a case where the hirer or buyer disposes of the motor vehicle to a trade or finance purchaser, nothing in this section shall exonerate—
45 (a) that trade or finance purchaser, or
(b) any other trade or finance purchaser who becomes a purchaser of the vehicle and is not a person claiming under the first private purchaser,
from any liability (whether criminal or civil) to which he would be subject apart from this section.—[Mr. D. Price.]

Brought up, and read the First time.

7.2 p.m.

The Parliamentary Secretary to the Board of Trade (Mr. David Price)

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

It might be convenient for the House to discuss at the same time the following two proposed new Clauses standing in the name of my right hon. Friend, entitled "Presumptions relating to dealings with motor vehicles" and "Interpretation of Part III", since the three go together. They will replace the present Part III and, at the appropriate time, I shall move to leave out Clauses 27 to 31.

Part III of the Bill is concerned with protecting the man who buys a car in good faith and later finds that, because it was the subject of a hire-purchase agreement, he has not title to it. The existing provisions of Part III proposed to safeguard him by means of a system of licensing cards issued to hirers of cars, the log books being held by the finance houses. This scheme was criticised, particularly by finance house interests, on grounds of inconvenience and expense.

The House will recall that on Second Reading my right hon. Friend and I said that our minds were not closed to alternative methods of achieving the same object, but we made it clear that we were determined to deal with the matter in this Bill. We made the important proviso that any alternative scheme, to be acceptable to us, must offer the innocent buyer as good protection as the scheme in the Bill as it stood. In Committee a new Clause was moved by the hon. Member for Sheffield, Hillsborough (Mr. Darling) embodying a scheme which did, in principle, meet this requirement. This scheme was, in essence, very simple; where a car on hire-purchase was sold by the hirer to a person who bought it in good faith, not knowing it was on hire- purchase, the purchaser would get a good title. We were informed that this scheme was acceptable to the Finance Houses Association, whose members conduct the greater part of hire-purchase business in cars. This was, of course, a vital point in considering a scheme which would debar them from recovering their cars after fraudulent disposals.

This scheme offered a simpler way of dealing with the problem and, given that it was acceptable in finance house circles, I said in Committee that we were glad to accept it in principle and undertook that, if the hon. Member withdrew his Clause, the Government would table provisions on Report to give effect to the scheme. I added that we had had only a short time in which to study the scheme but that I thought there were certain respects in which we should have to make improvements, in particular to strengthen the position of an innocent purchaser where there was no evidence to show that he or any other person had acted in bad faith.

The three new Clauses we are now considering carry out this undertaking. In drafting they are entirely fresh: but in substance they give effect to the scheme discussed in Committee. Since, unavoidably, they are somewhat complicated, it may be helpful if I go through them and explain how they work.

The first two subsections of the first Clause contain what is really the basic provision; that where a hirer sells the car to a person who buys it in good faith and without notice of the hire-purchase agreement, that person gets a good title—or, to be strictly accurate, as good a title as was possessed by the finance house who had let the car to the fraudulent hirer.

Under the Clause discussed in Committee, there was to be no protection for a purchaser who was a motor dealer or a body corporate. I said then that I thought that that went a little wide. The scheme is for the protection of the public and, quite reasonably, the finance houses do not think that motor dealers or finance houses should be so protected, since they can and should be on their guard against buying cars which are on hire-purchase.

The first two subsections, therefore, apply only where the fraudulent hirer sells to a private purchaser—and this, to anticipate the definition in subsection (2) of the third new Clause, means someone who is neither a motor dealer nor a finance house. Subsection (3) deals with the case where the fraudulent hirer sells to a trade or finance purchaser; that is, a motor dealer or finance house. The Clause does not protect such a purchaser and he remains, as now, liable to the true owner, for detinue or conversion. The same applies to another trade or finance purchaser to whom he resells the car. But the first private purchaser will again get a good title, provided he buys in good faith and without notice of the hire-purchase agreement.

In either case, whether the private purchaser has bought the car from the fraudulent hirer or from a trade or finance purchaser, the title he gets can then be passed on like any other title. The result is that the innocent buyer, or anyone claiming under him, is protected, but a motor dealer or finance house who buys from the hirer is not. The only other provision of the Clause to which I need draw attention is subsection (6), which makes it clear that the criminal and civil liabilities of the hirer who fraudulently disposes of a car, and a trade or finance purchaser who takes it from him, are not affected.

I turn to the second Clause—"Presumptions relating to dealings with motor vehicles." In practice, an innocent purchaser, just because he is innocent, may likely not be able to trace back the channel through which the car came to him. To make the provisions work as intended certain presumptions are necessary To take a likely situation, a man who has bought a car is approached by a finance house, which tells him that the car belongs to the finance house and was let on hire-purchase Our man, who perhaps bought following a newspaper advertisement, may well not be able to produce the person who sold the car to him and the first presumption, in subsection (2), there- fore, is that that person was the hirer. This presumption operates equally where the man who has actually got the car relies for his title on claiming under an earlier private person who bought in good faith and without notice of the hire-purchase agreement.

The next presumptions deal with the case where it is proved that the man who has got the car or, where appropriate, such a previous purchaser, bought the car from someone other than the hirer. Under subsection (3) it is presumed that the hirer sold to a private purchaser, who bought in good faith and without notice of the hire-purchase agreement and that his title has been transmitted. Subsection (4) deals similarly with the case where it is proved that the hirer sold the car to a motor dealer or finance house and makes similar presumptions regarding the first sale to a private purchaser.

To sum up, the effect of the presumptions is that it will be for the finance house to upset the title of the man in possession of the car by showing that the first private purchaser—whether he bought direct from the hirer or through trade channels—did not buy in good faith or bought with notice of the hire-purchase agreement, or that the title is in some other way defective; for example, because the car has been stolen. The third new Clause is concerned with interpretation and contains the definitions and other provisions necessary for the new Part III.

This, briefly, is what these Clauses do. Many hon. Members will have had cases brought to their attention in which innocent people have suffered real hardship as the victims of fraudulent sales by hirers of cars. The need to help people in this situation is clear and I am glad that, with the assistance of finance house interests, it has been possible to bring before the House the proposals contained in these Clauses.

Mr. A. J. Irvine (Liverpool, Edge Hill)

We on this side of the House welcome these new Clauses. We think that basically they are good in their purpose and in their fashion of achieving that purpose. What we are witnessing now is an occasion when the law is coming to the rescue of innocent purchasers of vehicles which are subject to hire-purchase agreements.

The Parliamentary Secretary acknowledged generously, and I think, if I may say so, accurately, that this reform in the law, as we regard it, derives, in the narrative of proceedings on the Bill, from proposals that we had the privilege to put forward in Committee. There are certain observations about the Clauses which I think it right to make. I feel that perhaps it would not be desirable for the House to think that we were dealing here with what can properly be regarded as a long-term or permanent settlement of the rather difficult issues that arise in this kind of case. In the course of our consideration of the Bill I have had occasion to mention one or two features of that kind and I feel it right to do so very shortly again.

It seems to me that it must be regarded in some sort as an interim provision when one bears certain factors in mind. As I understand it, when the subject is analysed it is found that what makes this provision possible is the fact that the finance houses have indicated their readiness to meet the relevant risk and to do so by way of their own indemnity scheme. That, so far as it goes, is an admirable circumstance—I have no doubt about that, and it is very welcome—but it does, to the extent that that kind of condition is implicit in the workability of the Bill, rather underline the impermanent character of what we are now legislating. By impermanent, I only mean that it reveals that we are considering here a branch of the law which very much needs and awaits clarification and consolidation, not only in respect of the particular items arising under these Clauses but more generally affecting hire purchase and also the sale of goods.

One has to remember that the effect of the Bill is that the new law will cover every case of hire purchase of a vehicle, including the case of the private individual who enters into a hire-purchase agreement and who may see his car, by virtue of what we are providing for in this new Clause, pass from a hirer to a third party who will acquire the title, and the owner, on this hypothesis, who has entered into the private hire-purchase agreement, will be left with his remedy against the hirer but his car will have gone. He is quite likely, either through ignorance or for other reasons, not to have available the benefits of indemnity that are very properly, naturally and correctly available to the finance houses, and yet we are legislating for such a one, and I think that the House should bear that in mind. All the while that we welcome these Clauses, the House should bear that in mind, and see in that again an indication that this can only be regarded as a proposal to fill a period of time before we get more comprehensive legislation in this field.

7.15 p.m.

There is one other factor that I wish to mention. The change that we are making in the law here, which the Government propose and which we are agreeing with and have really initiated upstairs, may well have the effect—I think this must be recognised—of tending to make purchasers of cars less careful and circumspect when they buy cars. If the law were, as it is not under this provision, that the good title passed only to a purchaser, in this hypothesis of the car being subject to hire purchase—that is, that the good title passed only to a purchaser who made reasonable inquiries to ensure that the car was not subject to hire purchase—there would be something to be said for that.

Study of the matters arising under the Bill has given to hon. Members concerned with it the most interesting opportunities—perhaps I should speak for myself—of studying the operation of a large number of activities related to the business of hire purchase. Few things have been more impressive than an acquaintance, albeit much too short an acquaintance, with the operations of what is called H.P.I.—an organization which runs an effective and nearly wholly comprehensive system of registration of hire purchase of vehicles and carries out a most impressive public service of which Government Departments, the police and others take advantage in one way and another.

We have in a body of that kind, at any rate in embryo, a kind of fabric of universal registration of cars subject to hire purchase which might usefully have been built into a provision of the kind that the House is now contemplating. As it is, the point is that we are really going rather in the other direction because in making this provision that in the circumstances with which the Clause is concerned the purchaser gets a good title we are, if anything—and the more time passes the more I think this will become apparent—encouraging purchasers to be more casual and rather less circumspect than they have been hitherto.

What the Bill is doing—this also should be clearly understood—is, in my view, somewhat drastic in character. It is saying that good title can pass from someone who does not possess it, and it does so without the long-term legislative safeguards which I have suggested might have been appropriate. It does so, however, at the risk of purchasers being less careful.

Nevertheless, what the Government have done to deal with this problem is basically right. We are quite sure that it is better than the original Part III, but the proposal is drastic in providing that someone who does not possess good title can, in effect, pass good title. I acknowledge that that method possesses a certain healthy robustness and pragmatism.

I appreciate that at this stage I cannot move—nor do I at present desire to move—our two short Amendments to the first new Clause, but I understand that all these matters are now under discussion and, if I might just mention the purpose of the Amendments now, as that may be the most convenient way of dealing with the matter—

Mr. Speaker

Order. I do not think that we can do that. We must get something read a Second time before seeking to amend it. I am afraid that we must stick to that rule.

Mr. Irvine

I am much obliged, Mr. Speaker. I understand that I would be out of order in seeking now even to draw attention to the merits of these Amendments?

Mr. Speaker

Yes.

Mr. Irvine

Then I have really completed my comments on the new Clause. There will be an opportunity later of bringing before the House rather minor improvements—to which, none the less, we attach some importance, and which derive directly from the character of the changes that the Clause proposes. They will be dealt with in due course. Overall, we welcome these proposals We think that this is a very marked improvement on the original Part III of the Bill. The propositions have, as I have tried to indicate, a practical and pragmatic quality that should be welcome to both sides of the House.

Mr. David Weitzman (Stoke Newington and Hackney, North)

I am a little alarmed by this proposed new Clause. I agree that it makes an advance and that the innocent purchaser ought to be protected in some way, but I very much agree with some of the remarks made by my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) about the character of the Clause. It goes rather too far on the other side. It is certainly right that an innocent purchaser should be protected as far as we can possibly protect him, but are we not now doing an injustice to the owner of the car?

The material words are that …a purchaser of the motor vehicle in good faith and without notice of the hire-purchase agreement or conditional sale agreement… is protected. I recognise that the court might well say that if a purchaser paid a small price that might be evidence on which the court could say that he had not purchased in good faith. It might also be said that the purchaser ought, in certain circumstances, to inquire into the hire-purchase agreement. But it seems to me that the Proper way of protecting the purchaser should be to make quite sure that in buying a vehicle of this kind, he does not, as it were, close his eyes.

It might well be that a purchaser in good faith, on the evidence, might buy a car on hire purchase where a considerable number of instalments were due for a comparatively small sum, and make no inquiries into whether or not there was a hire-purchase agreement at all. In those circumstances, I think it wrong that the owner should suffer. There should surely have been an obligation on the part of the purchaser to make some sort of inquiry before he concluded the deal of purchase.

I merely make that observation. I recognise that this new Clause is a step in the right direction, though I believe that it goes too far. Like my hon. and learned Friend, I hope that this is something in the nature of a temporary provision, and that, when we come to overhaul hire-purchase law, attention may be paid to this point so that the justice of the case might be met, and the owner properly protected.

Sir Eric Errington (Aldershot)

I support this new Clause, though with some degree of diffidence. The original Part III of the Bill involved a very large number of registration books, and the scheme would have had to be delayed for a number of months before it would have been effective. I am glad to see that that idea has gone, but I am not altogether happy about this Clause or the one that we are discussing with it. It is unfortunate that there will not be an opportunity for them to be more particularly examined.

I do not think that the question of an indemnity arises, because whether or not the principal people involved in these matters—the finance houses associations—have an indemnity scheme, it may not be applicable to everyone. A great deal of faith must be placed in the H.P.I. registration scheme to which the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) referred. That scheme very nearly ties up the position, except for those people who are, perhaps, not experienced in these matters—and those people probably provide the danger.

My main complaint is that these new Clauses are of considerable complexity. To me, at any rate, they are not very clear on the reading of them. I am not sure that the point that has just been made is not true, in the sense that one is not perfectly satisfied as to where the onus lies. As a typical example of what I mean, I quote subsection (5) of the second new Clause: Without prejudice to any other mode of proof, where in any proceedings a party thereto admits a fact, that fact shall, for the purposes of this section, be taken as against him to be proved in relation to those proceedings. The average individual, even though advised as to his legal position, might have some difficulty in deciding exactly how he stood in regard to that matter. However, there are difficulties in any attempt to deal with this very important matter. This seems to be a genuine attempt to deal with it. I am sorry that we cannot discuss the subject in greater detail but, with that reservation, I support the new Clause.

7.30 p.m.

Dr. Reginald Bennett (Gosport and Fareham)

I, too, am in favour of the new Clauses. They represent a courageous attempt to fill what would otherwise have been a lacuna in the Bill, as I think that it was always assumed that the idea of logbooks, and so on, would have been unworkable. This is a terribly late stage in the Bill for us to have to consider this matter for the first time. We are all voicing misgivings which we cannot clearly formulate that there must be some snags here and there and that there are some real difficulties on which some hon. Members have touched.

The intention expressed in the new Clause entitled "Protection of Purchasers of Motor Vehicles" is admirable. All three new Clauses hang together, but the trouble that we shall have when the Bill becomes an Act will be centred on the Clause entitled "Presumptions relating to dealings with motor vehicles", to which my hon. Friend the Member for Aldershot (Sir E. Errington) has referred.

The hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) said that undoubtedly there would be a tendency for the extra burden of making good loss to fall on finance houses. That is fairly evident. This will, I suppose, make hire purchase that bit more expensive all round. I do not think that we could have this series of new Clauses without running that risk. The real difficulty is that they put forward an idea which many people may not have thought of before. People may be encouraged, by inference, to see whether they can start a new form of crime which the new Clause will not be able to catch up with.

Suppose that a slightly crooked finance company and a slightly crooked buyer act in collusion. The buyer keeps his apparent good faith absolutely unsullied because it will be extraordinarily difficult to prove bad faith if the man actually has mens rea but is successfully keeping it under cover. I therefore feel that there will be great difficulty in defining and establishing good faith. This might wreck the whole of the admirable intention of the Clause.

There is no direct reference in the Bill to the arrangements by certain finance houses to set up the organisation known as Hire Purchase Information or to the suggestion made from time to time in our debates that there should be an indemnity scheme. There is no reference to the steps that a prospective purchaser should take to ensure that the car in question was free of encumbrances. I should like to know whether the Government have any thoughts on this subject, and whether, without committing them to legislative form, they have any intentions which they would like to see carried out in order that the finance houses supply the machinery for their own benefit so that both information and indemnity are arranged without it having to be laid down statutorily.

I should like to know whether it is the Government's view that this requires, as it seems to me to require, the finance houses to set their collective house in order so that there is one authority for information and indemnity of three quite separate trade associations and a certain number of activists on the outside. Presumably the activists on the outside will have no share in any indemnity contemplated.

I wonder whether my hon. Friend the Parliamentary Secretary is in a position to tell us how he expects this to work in detail, because once we leave the matter here, that is the end of it.

Mr. George Darling (Sheffield, Hillsborough)

I join hon. Members on both sides in thanking the Parliamentary Secretary for carrying out his promise—

Mr. Speaker

Order. If the hon. Member desires to move his Amendment, he may create a difficulty by speaking now.

Mr. Darling

My hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) will move the Amendment.

Mr. Speaker

But he has already spoken to this Question.

Mr. Darling

Then I had better move the Amendment.

Mr. Speaker

The hon. Member for Deptford (Mr. Silkin) may be able to move the Amendment. His name is to it.

Mr. Darling

I will move the Amendment, Mr. Speaker.

Mr. Speaker

Then I must call somebody else at this stage.

Mr. D. Price

I hope that I will be in order in replying to one or two points.

The hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) referred to the question of H.P.I. and people making proper inquiries. We considered quite a number of alternatives to Part III, and one was simply to allow good title where people had made an inquiry of H.P.I. But that did not seem to us to go far enough because it did not deal with the person who answered an advertisement in a newspaper or whose neighbour offered him a motor car. Suppose that he answers an advertisement in the newspaper. Mr. John Jones says, "Here is a motor car for sale and here is the log book with the name of John Jones on it". The title seems good.

This was particularly a case which we had in mind. The person who knows about H.P.I. will make inquiries. But he is not the person with whom we are dealing. Much of the legislation dealing with consumer protection is not concerned with the enlightened citizen. It deals with the person who is not aware of the existence of bodies like H.P.I. He is the one we are trying to cover. This is why we had these elaborate arrangements in Part III which the new Clause is to replace.

I cannot help feeling that the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) preferred the old Part III to what we are proposing now. When we conceived the idea of Part III we had his point very much in mind. As the hon. and learned Member for Edge Hill has conceded, and as I have conceded, what we are now proposing involves a certain surrender by the finance houses of what would normally be a right. Because we did not feel it right for us in Parliament to impose this on the finance houses, we started out with Part III and the rather complicated system of log books.

This is the answer to my hon. Friend the Member for Aldershot (Sir E. Errington), who asked why this was introduced at such a late stage. It was clear to us in the Government that this was a possibility, but it was equally clear that we should not have been entitled to ask the House to approve it until the finance houses said that they preferred this arrangement to the arrangement in Part III by which they would not have surrendered any of their normal common law rights and sale of goods rights as to good title. However, they felt that this was more convenient, less elaborate and less expensive. Therefore, hon. Members on both sides in Committee felt that it would be proper to do this. It is, as the hon. and learned Member for Edge Hill said, a pragmatic approach.

It may be said that this raises all sorts of issues about good title, but these will primarily arise on the review of the Sale of Goods Act, which is not No. 1 but No. 2 in the batting order for the implementation of the Molony Report. We can possibly leave the point there.

My hon. Friend the Member for Gosport and Fareham (Dr. Bennett) would tempt me into expressing an opinion on whether finance houses would be better organised in one trade association rather than three. Hon. Members on both sides are not tempted into saying whether craft unions or general workers unions are to be preferred and therefore I do not think my hon. Friend would expect me to express an opinion on the point that he raised. It is obvious that the major houses will, through their trade associations, run a collective indemnity scheme. The finance house which wishes to go its own way will be entitled to do so and will make its own insurance arrangements as it sees fit.

I end by echoing the remarks of the hon. and learned Member for Edge Hill as to the competence of H.P.I. I very much hope that through the work of the Citizens' Advice Bureau, quite apart from any continuing publicity which can be given over the whole field of hire purchase, the coverage will become even more complete than it is already.

Sir E. Errington

May I ask my hon. Friend whether it would be possible, either through Government sources or through an arrangement with the Finance Houses Association, to have a rather more simple document to illustrate to people the function of H.P.I.? It is interesting, as probably my hon. Friend will know that H.P.I. works not on names, but purely on registration numbers. If this could be communicated generally, it might be of value.

Mr. Price

The quick reply is that I indicated on Second Reading, in response, I believe, to the hon. Member for Sheffield, Hillsborough (Mr. Darling), that we were considering how the new provisions of the Bill, when it reached the Statute Book, should be publicised. I shall be happy to discuss with my hon. Friend the point which he has raised. We have not, however, quite made up our minds on the general question, which will cover the particular point raised by my hon. Friend.

Question put and agreed to.

Clause read a Second time.

Mr. Speaker

The first Amendment to the proposed Clause is that in line 8. I hope that I did not mislead the hon. Member for Sheffield, Hillsborough (Mr. Darling). If he moves the Amendment, his hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) can speak to it, but it will be on another Question.

Mr. Darling

Thank you, Mr. Speaker. I think that we have now cleared that up.

I beg to move, as an Amendment to the proposed Clause, in line 8, to leave out from "effect" to the end of line 9 and to insert: to vest the title of the owner or seller to the vehicle in the purchaser". I suggest that we take, at the same time, the following similar Amendment in line 16 of the new Clause.

Mr. Speaker

I think that we must; the second might fall.

Mr. Darling

Yes, Mr. Speaker.

The two Amendments cover a point raised in Committee by my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine). When the original Clause was before the Committee, and which we withdrew so that the new Clauses could be brought forward, my hon. and learned Friend pointed out that he was rather upset about the fact, to which he has again referred, that we were proposing to write into the law the principle that a hirer who has no right to the title of a car which he has just purchased should possess that right; the person who sold the car to him had no right to sell it and, therefore, the title could not pass.

The Government are, however, proceeding to write into the law the curious provision that the final purchaser can retain title to a car which the person from whom he bought it had no right to pass on. To overcome that difficulty, our Amendments propose to alter the wording of subsections (2) and (3) of the new Clause. I move the Amendment quite shortly, because it goes into the realm of legal discussion which can be dealt with far more capably by my hon. and learned Friend.

Mr. D. Price

I follow, I believe, the argument of the hon. Member for Sheffield, Hillsborough (Mr. Darling), but I do not think that the change which he proposes is necessary. It would not have the effect that he imagines. Subsection (2) of the new Clause provides that if a hirer disposes of a vehicle to a private purchaser, who buys in good faith and without notice of the hire-purchase agreement, that disposition shall have effect—and these are the words that the hon. Member seeks to omit— as if the title of the owner…to the vehicle had been vested in the hirer…immediately before that disposition. 7.45 p.m.

With the hon. Member's Amendments, the effect of the disposition to the private purchaser would be to vest the owner's title in him. I do not see how the proposed words, which go further than the wording of the new Clause, retreat from that position. I am glad to notice that the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) appears to support my contention. In our view, the subsections are satisfactory for the purpose which I have explained.

Two points arise from examining the wording of the Amendment. "Disposition" is defined in subsection (1) of new Clause No. 3 to include conditional sales and lettings on hire purchase in those cases. If the words proposed by the Amendment were used the title would pass at such dispositions. I am sure that that is not what the hon. Member for Hillsborough wants.

The second Amendment would also have the effect that in the case where the hirer had sold the vehicle to a motor dealer or finance house, the first private purchaser would get a good title even if the vehicle had been stolen between its acquisition from the hirer and its sale to the private purchaser. The wording of these things is tricky, but I am advised that the Amendment would not achieve what the hon. Member wants and would go even further than the words in the relevant subsections of the Government's new Clause. The words which we have put down enable only as good a title to pass as the original owner had. In other words, if the article is stolen, it is not converted to a better title. I hope that with these slightly complicated comments, the hon. Member will feel that the point is covered.

Mr. A. J. Irvine

As the House will understand, I am grateful to my hon. Friend the Member for Sheffield, Hillsborough (Mr. Darling) for moving the Amendment and the fashion in which he did it. My only regret is that his arguments for the Amendment did not prevail, as they should have done, in the mind of the Parliamentary Secretary. It is true that doubts upon the merits appear to be expressed by my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman), and, of course, one gives careful consideration to that.

Perhaps I may try to make clear our aim in the Amendments. In my observations on the Government's new Clause, I said that we were doing something anomalous in making statutory provision for the passing of good title in a chattel from somebody not having it to a purchaser of it, the vendor who was thus passing title being not merely somebody without title but someone who ex-hypothesi is in all likelihood acting unfairly and deceitfully.

That is a rather drastic provision to set out in the law and it is an anomaly. In terms of legislative expression, it should be dealt with with great caution. The manner of dealing with it creates anxiety. The manner of dealing with it is to go out of its way to provide—unnecessarily, I should have thought—that the hirer, the man who acts badly and incorrectly in the hypothesis which I have put forward, shall be treated, notionally at least, as a matter of law as having the title vested in him.

I may be quite wrong about this, but I do not see the necessity for that. That is the point we are on. As I say, there may be a factor which makes my proposition invalid, and the moment I recognise that that is so, I assure the hon. Gentleman, I will acknowledge it, but I do not see it now. It seems to me that the same effect takes place if, in what is rather an unusual type of provision, it is laid down, not that the disposer, the vendor, the hirer has got a good title at any point in the disposition, but that when a disposition from such a hirer takes place a good title accrues in the purchaser.

The Parliamentary Secretary may well ask, "Well, what is the difference?" It is possible that he thinks that the purpose of this Amendment to the new Clause is wider than it really is, because I fully acknowledge that the practical consequence of the change we recommend is not considerable at all, but, as I see it, it has no disadvantage, and it has the merit that, so far as the statute law of England is concerned, the statutory acknowledgment of the hirervendor—I call him that—acting in this fashion, the statutory acknowledgment for the purpose of the legislation, that he has a good title when he has not, is not made. That may be regarded as a piece of purism, but it seems to me to have sense and value. The provision that the title gives to the purchaser any notional right which the hirer-vendor has not is avoided, and not acknowledged as part of our law, and it seems to me that this has an advantage and that nothing is lost.

I felt this sufficiently strongly, I am bound to say, to ask myself, what was the reason why the matter had been dealt with in this way. Of course, as I have said before on this Bill and other Bills, one has the very greatest respect for the persons who concern themselves with trying to get these often difficult matters right, and I asked myself, why have they done this? Why has this been done by the Government? Why have they gone out of their way in this fashion to enshrine a title in this misbehaving hirer-vendor? I wondered whether the reason was that it was regarded in some way as protecting a remedy which might be available to the owner. But I cannot see why that should be so. Indeed, I would have thought, so far as any remedy by the owner of a vehicle is concerned, if there is any difference at all, his prospects of effecting that remedy would be rather better than otherwise if no notional title were conferred upon the first hirer.

So we are on a fairly narrow point, an interesting point, a point where the language of the proposed Amendment has the same effect as the original language, but is preferable, as we suggest, and as I hope I have perhaps now convinced the Parliamentary Secretary, to the language originally proposed.

Mr. Weitzman

I must confess that I had not at first appreciated the force of the argument in regard to this Amendment.

Mr. A. J, Irvine

Good!

Mr. Weitzman

What my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) is in effect saying is this. By this Clause we create something entirely new. We allow a departure from the ordinary conception in law that no one can give a better title than the owner's, that the hirer has no title at all and cannot pass it on to somebody purchasing it from him. What my hon. and learned Friend is saying, rightly, is that we are thus departing from this principle, and that if we are doing that sort of thing, it is important that we should limit it as much as possible.

Mr. Irvine

That is right.

Mr. Weitzman

If we leave in the words as they are in the new Clause, what we are saying is that disposition shall have effect as if the title of the owner or seller to the vehicle had been vested in the hirer or buyer immediately before that disposition. These words really set out, so to speak, the fact that we are saying that the hirer or buyer was the owner of the goods. What my hon. and learned Friend is seeking to do is to substitute the words to vest the title of the owner or seller to the vehicle in the purchaser". Notice that he does not refer to the hirer at all. In other words, he refers to the owner. What he is saying is that in the special circumstances created by this Clause we are vesting the title of the owner or seller; and we are not dealing with the hirer at all.

To that extent it limits this anomaly we are creating in our law. I would agree with my hon. and learned Friend and would support him in that the effect is exactly the same whether we use the one set of words or the other, but I think that from the point of view of the conception in law it would be better to adopt the words in the proposed Amendment to the Clause.

Sir E. Errington

Would the hon. and learned Gentleman clear my mind on this, if he can? I have been following what he has been saying. What I do not understand is, whether the proposed Amendment to the Clause is accepted, or whether the Clause remains as it is, will that have any effect on the third person who buys from the purchaser in these circumstances? I should like to be satisfied about that.

Mr. Weitzman

As I understand it, the position will be exactly the same, whether we have the rights contained in the Clause or whether we have the words of the proposed Amendment to the Clause. It is merely a matter of using words which limit, so to speak, this conception that we are departing from the law.

Mr. A. J. Irvine

That is right.

Dr. Bennett

I see the force in the argument deployed by hon. and learned Gentlemen opposite, but I should like to raise another point which is germane though not within the proposed Amendment to the Clause. Are we sure that the word "disposition" is the correct word, and that it is not "disposal"? I am a little worried about that.

Mr. R. M. Bingham (Liverpool, Garston)

It seems to me that really the choice lies between two types of transaction. The transaction proposed in the new Clause could be described, I think, as a notional disposition. I think that that would be a fair method of describing it. It is a disposition; it is given notional effect by the deeming provisions of the new Clause. So we have on the one hand a transaction which has the character of a notional disposition. On the other hand, the Opposition Amendment proposed to the new Clause would produce a transaction which I think could more accurately be described as a statutory vesting. I think that that would differentiate the two types of transaction.

I have at once to admit that I do not think there is a great balance of advantage in either form of transaction. It seems to me that on a notional disposition the purchaser's rights are more likely to be better preserved and safeguarded than they would be under the Opposition Amendment proposed to the new Clause.

8.0 p.m.

Mr. A. J. Irvine

I agree with the hon. and learned Gentleman's account of a notional disposition. It is in the sense that the hirer-vendor has no authority or title to sell. But I have the greatest difficulty in following the distinction which the hon. and learned Gentleman draws between the Government's provision, which has the effect of vesting the title in the hirer-vendor, and the provision in our Amendment vesting the title in the purchaser.

It may be that the hon. and learned Gentleman will think that all I am doing is stating the question—perhaps that is all I am doing—but I have not followed his argument that as between these two choices of method of dealing with this one can have for any purpose in law a different effect from the other. In arguing for this Amendment, I am concerned with the matter of form much more than with the practical consequences affecting any party. I am concerned to avoid a provision unnecessarily going out of its way to enshrine what in principle may be open to objection.

Mr. Bingham

The real point is how the vesting of the title goes. Under the Opposition's Amendment, the vesting could only be said to occur by operation of law. Under the Government's new Clause, the vesting will occur by reason of a disposition, admittedly a notional one. The disposition will be a sale. Therefore, one will have all the incidences of a sale attached to it. For that reason, I prefer the Government's new Clause.

Mr. John Silkin (Deptford)

I support my hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine), but I must confess that I have considerable sympathy for the Parliamentary Secretary at this moment in that he has had to listen to so many hon. and learned Gentlemen disputing the effect of the Clause.

There is considerable force in the argument that anything which appears to sanctify an evil doer, if I may take my hon. and learned Friend's point, ought to be frowned on by legislation, and, rightly or wrongly, this is the effect. What is said is that if A, a hirer, wrongfully disposes of a motor vehicle at one minute to ten to B, an innocent purchaser, the law, by some magic, makes him the real owner of the motor vehicle at one minute to ten. This cannot be right, and ought not to take effect.

I am puzzled by another point. It has been said that there may be no legal consequences, or no difference in legal consequences, as a result of this. But I notice that disposition is defined in the interpretation Clause as meaning not only a sale but a contract of sale. Let us suppose that the following situation arises. Suppose A contracts to sell, wrongfully, a motor car at one minute to ten to B, and suppose that for reasons which need not concern us the contract is never fulfilled. By that very simple process, A, as I understand it, becomes the rightful owner of the motor vehicle. I see the Parliamentary Secretary shaking his head. I hope I am wrong about this—

Mr. D. Price

indicated assent.

Mr. Silkin

—but it is a point which has worried me.

Mr. D. Price

As I understand it, what has been troubling the hon. and learned Member for Liverpool, Edge Hill (Mr. A. J. Irvine) is really a metaphysical point, but I am no less interested in that. As hon. Members know, I take considerable interest in the works of St. Thomas Aquinas.

The hon. and learned Gentleman claims that under our wording the title is passing to the first private purchaser, but that, as we have worded the provision, it presumes that there was a split second before the title passed and that the fraudulent hirer, as I suggest we call him, had for that split second in time good title. That is what the hon. and learned Gentleman is suggesting, and he says that his wording avoids this point.

We all agree that in practice it is relevant, but it is important in terms of getting our legal metaphysics correct. I am advised that the situation which has been troubling the hon. and learned Gentleman does not arise, and that subsection (2) of the Clause as drafted and the words that the hon. and learned Gentleman wishes to leave out do not confer a notional title on the hirer. I draw the attention of the hon. and learned Gentleman to the words "as if".

Furthermore, I would counter by raising one objection to his alternative words which I mentioned in my opening comments, that in certain circumstances—circumstances which are, admittedly, not likely to be frequent—it could involve the first private purchaser in having better title on other matters which would not be able to pass under our wording, because it will be within the knowledge of the House that this establishes good title only when in respect of a motor car under hire purchase. It is only in respect of the hire-purchase agreement, not in respect of other matters which may ensure that the car has not got good title.

As I read the hon. and learned Gentleman's alternative phrasing, it could involve the private purchaser getting a car which had been stolen and where under this Bill good title does not pass, it could establish good title.

Mr. Weitzman

I take it that what the hon. Gentleman means is that if the owner had a better title, a greater title, than the hirer, those words might be transferring greater title. Is that what he is saying?

Mr. Price

What I am saying is that that would be so—in other words, if the hirer had got a stolen car—because there is nothing in this which gives a good title on a stolen car.

I hope that that is sufficient to suggest to the House why we should prefer the words as drafted. Indeed, we can see the danger that I have just pointed out—a practical danger. I hope that the hon. and learned Gentleman, purist though I know he is—and I respect him for it—in legal draftsmanship, will accept that on the pragmatic level our words are as good as his. I will not concede that his words are metaphysically better, but even if he feels that they are, I suggest that there is just the one flaw in his own wording which I have pointed out.

Mr. Darling

By leave of the House, I thought for a moment, when the Parliamentary Secretary was replying to questions which had been put to him, that we were returning to the just price, and I felt somewhat apprehensive. Laymen such as I enjoy launching these legal discussions, because this is the easiest way to understand what these rather obtuse Statutes really mean. I had not been entirely convinced by the Parliamentary Secretary's arguments against our Amendments until he came to his final point when he referred to a practical danger. My hon. and learned Friend the Member for Liverpool, Edge Hill (Mr. A. J. Irvine) said for the first time, "There is something in this". In view of that, I beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Question proposed, That the Clause be added to the Bill.

Mr. Darling

I find that I am now in order if I thank the Parliamentary Secretary for carrying out his promise in Committee to accept the principle of the new Clause which we then put forward for the purpose of getting rid of the very complicated and, as we thought, completely unworkable Part III of the Bill. We thought then that we had found a simple solution to this very difficult problem, but when we agreed that our new Clause should be withdrawn and that the Parliamentary Secretary should have the chance to put something in its place, we did not expect that the three new Clauses which we have been discussing could turn out to be like this. Anyhow, we are grateful. I do not think that it would be fair to the House to prolong the discussion at this time, but there are one or two matters to which I should like to refer.

What I should like to say now is that these three Clauses can be only a temporary measure. We have to see how they work out. The consolidation and the Amendments which have to be made in anticipation of consolidation cannot be long delayed. It might be useful to let the three Clauses go as they are and let them be enacted and then see what happens, particularly on the issue raised by the hon. Member for Gosport and Fareham (Dr. Bennett), to see how the voluntary scheme for registration of hire-purchase transactions of motor vehicles and the voluntary indemnity scheme, which the major and reputable finance houses will themselves operate, work out. I am confident that the time will come when we shall have to take over, so to speak, the H.P.I. and have compulsory registration of all vehicle deals on hire purchase.

Sir E. Errington

It is not quite the position that the Finance Houses Association is to operate an indemnity scheme for everybody. I want to make it quite clear that this is a matter on which the companies will have to come to decisions for themselves, but it will certainly not be available for everybody.

Mr. Darling

Like so many useful and necessary voluntary schemes, the best people will come in and the others will stay out, but eventually they will get together if the scheme is beneficial to all concerned. We hope that the voluntary arrangements may go on and that they will be successful and that in the months ahead we shall have a chance to see how they work, particularly for registration.

I should also like to refer to what my hon. and learned Friend the Member for Stoke Newington and Hackney. North (Mr. Weitzman) said about the owner suffering under these arrangements. It needs to be said that 95 per cent. of the owners in transactions of this kind are the finance companies and that they have voluntarily agreed to bear the burden of costs of any fraudulent operation, enabling the innocent buyer to retain the car be has wrongly bought.

I am convinced that this is a temporary arrangement and that the quicker we can get consolidation the better. As a prelude to consolidation, we will now have the benefit of the experience of the working of these three Clauses.

Question put and agreed to.

Clause added to the Bill.