RENT RESTRICTIONS (NOTICES OF INCREASE) BILL. (Hansard, 15 May 1923)

§ THE LORD CHANCELLOR

My Lords, in moving the Second Reading of this Bill I wish to give your Lordships some information on its contents. As your Lordships well know, under the original Rent Restrictions Act, 1915, no increase of rent over the standard rent—that is, the rent on August 4, 1914—was to be recoverable. The Act of 1920—to pass over intermediate Acts—allowed an increase of the standard rent up to forty 147 per cent., mainly contingent on the landlord having done repairs, or carried out improvements, or paid increased rates: but before that increase could take effect a notice of increase was to be given in a form which was in the Schedule of the Act. Most people understood that to entitle themselves to increase the rent it was enough to give notice of increase in the scheduled form. Hundreds of thousands of such notices were given, and were accepted as sufficient; increased rents were paid in accordance With the notices, and paid for years after the notices were given.

After a time, however, some ingenious person took the point that notice to increase was not enough, and that there must also be, with or before the notice to increase, a notice to quit the premises. That view was founded upon Section 3 (1) of the Act by which it is provided that Nothing in this Act shall be taken to authorise any increase of rent except in respect of a period during which but for this Act the landlord would be entitled to obtain possession. Obviously, that provision is somewhat ambiguous for it might mean that in order to give a valid notice of increase the landlord must be entitled to actual possession, or it might mean that he must be entitled to obtain possession by giving the proper notice. The latter view was supported by the reflection that notice to quit must under the Act be a mere formality, because it could not be carried out and no one could be ejected under such a notice. However, it is needless to speculate as to what the Act meant because the matter has been the subject of final decision. The earlier decisions in Scotland were in favour of the view that notice of increase alone was enough. There were then the decisions the other way in England, and, ultimately, the matter came before the House of Lords which, in the case of Kerr versus Bryde decided by a majority that a notice to quit must be given before or with a notice of increase. Therefore it must be taken that that is the law and that all these notices of increase given without notice to quit are invalid.

The position so produced was formidable. The tenant had a right under Section 14 of the Act to recover all increases of rents paid without the landlord 148 having had the legal right to demand them or to deduct those extra rents from future rents, and the effect was that in many eases where the increase had been paid for a year or two years, or two and a half years, the tenant had a right to deduct the increases so invalidly paid, with the result that the landlord in many cases could get no rent at all. For several years to come, in some cases for five years, he would have lost his rent altogether. Most tenants—probably ninety per cent. of them, I think—refused to take advantage of what was an obvious slip. They had agreed to pay the extra rent which was payable because the landlord had spent the money in repairs or in extra rates and they refused to profit by what was plainly a slip. Others insisted upon their legal right and were urged to do so by associations of different kinds. And therefore the practice of refusing payment was growing, especially, as it happens, in Glasgow and in the Glasgow district where these notices to quit have not usually been given. Most of the owners in Glasgow and the district are not owners of a great deal of property, but owners generally of one house, sometimes of two; and they depend entirely for their living upon the rents of these small houses. In many cases bankruptcy and ruin stared these small owners in the face and there were urgent claims on the Government asking us to intervene.

On the merits of the case I think it is clear that the equity lay with the owners in this matter. They had spent on increased rates, or on repairs or improvements, the money in respect of which the increased rents were claimed and since the notices of increase they had paid the local authorities rates based upon the increased amounts. Therefore, so far as they were concerned they had fulfilled their part of the bargain, and when the rents were withheld they were left with their expenditure. It is true that they had mistaken the law, but it appears that they had not mistaken the intention of the framers of the law. Dr. Addison, who was the Minister responsible for the Act, has declared plainly that he never meant by this section that a notice to quit should be required. Sir Kingsley Wood, who was the Parliamentary Secretary of the Ministry of Health at the same time, and was responsible with Dr. Addison for the Act, has said 149 the same thing. The then Secretary for Scotland, who is now Lord Justice Clerk, said the same thing. And although, of course, one could not, for the purpose of construing an Act, refer to debates in Parliament, or to the opinion of Ministers, yet on the question of whether legislation should be brought in amending an Act, I think such references are permissible. On the other hand, the tenants had agreed to increases, they had accepted the notices of increase, and the notices would have been good if that which was a mere formality, the service of a notice to quit, had been complied with. And therefore His Majesty's Ministers thought they were bound in equity to put right this slip by legislation.

Unfortunately, the Government had just come into office. This was part of the damnosa hereditas to which they succeeded. The decision was given just a few days before they took office. There was to be a short Session in November, devoted almost entirely to Irish affairs, and there was no time to legislate on this matter during that Session. But the Prime Minister announced in a speech that this matter had been referred to a Committee, and that if this Committee reported that legislation was desirable the Government would propose legislation in the next Session—that is, the present Session—and that it would, of course, be retrospective. I repeated the Prime Minister's announcement in your Lordships' House. Accordingly, this Bill is now brought in.

The proposals of the, Bill are not difficult to understand. It provides that the notices of increase shall hold good, although not accompanied or preceded by notices to quit. But it provides that payments made and deductions made before December 1—that is, the day after the Prime Minister's announcement—shall stand good. There are two mitigating proposals. One is that, as the arrears which might be recoverable between December 1 and the passing of this Bill into law might be considerable, the tenant should only be called upon to pay them by instalments, which should not exceed an addition of fifteen per cent. to his standard rent. That gives the tenant who has fallen into arrear—although he has done so with his eyes open—time to pay. The second is that in any case where it is found that a house coming within the 150 Act is not reasonably fit for human habitation and is otherwise in bad repair the County Courts shall have power to suspend the increase of rent until the property is put into a fit and proper condition, and any increases of rent and instalments accruing during that suspension will be altogether lost to the landlord. Those are the proposals of the Bill. They have been very fully discussed in another place, where the Third Reading of the Rill was agreed to by a considerable majority.

There are, I think, two main objections-taken to the Bill and from rather opposite points of view, although they are often taken by the same persons. The first is this. It is said that the Bill is retrospective and objection is taken, not unnaturally, to retrospective legislation. That objection is not very plausible in the mouths of those who take it now on behalf of the tenants, because in the 1920 Act you will find in Section 14 a retrospective provision in the interests of the-tenants which they were not only glad to have but insisted on having.

The general view is that retrospective legislation is not desirable and that a special case must be made out for any-such proposal. This matter has been considered. There have been many Acts of Parliament passed which were, to a certain extent, retrospective, and perhaps I might be permitted to quote the judgment of a distinguished Judge, Mr. Justice Willes, in the well known case of Regina versus Eyre. The learned Judge said: Retrospective laws are no doubt primá facie of questionable policy and, contrary to the general principle of legislation by which the conduct of mankind is to be regulated, ought when introduced for the first time to deal with future Acts and ought not to change the character of past transactions carried on upon the faith of the then existing law. The learned Judge added:— But to affirm that it is naturally or necessarily unjust to lake away a vested right of action by Act subsequent is inconsistent both with the common law of England and the constant practice of legislation. And he said:— One instance of retrospective legislation, obviously just, to render valid the acts of persons who have fallen honestly into error may suffice. 151 Although I agree with the general principle, I venture to think that this Bill falls within the exception to which Mr. Justice Willes referred.

There has been an honest error on the part of landlords, and equity is on their side. And although it might be said that until the Prime Minister's announcement on November 30 last the tenants, having acted on what was the law, could not be deprived of their rights, yet since that date they cannot have been under any misapprehension. They must have known—it was published broadcast—that whatever happened after that date would be open to review by Parliament. Therefore, there could be no misconception either on the part of landlords or tenants. So I suggest to your Lordships that that objection, good as it is in general terms in regard to legislation that is retrospective, does not lie in regard to this measure.

The second objection which is taken is in the contrary direction and is that the Bill is not retrospective enough. In other words, the complaint is made that whereas those tenants who paid their rent before December 1 last are not allowed to recover it, those tenants who did not pay their rent are not compelled to pay it, so in that respect the honest man is' put in a position of disadvantage as compared with one who was more inclined to insist upon his legal rights. I would venture to submit to your Lordships that while that is a criticism which is quite true so far as it goes, the answer is that you must draw the line somewhere. You cannot go back to the Act of 1920. You cannot make tenants pay up the increases of rent for the two and a half years during which they have legally declined to pay. No one in the world would suggest that. You have to draw the line, which is perhaps an arbitrary line, somewhere, and the Government have thought it right to draw their line at the date of the Prime Minister's announcement and to stop at that date. Those who before that date paid the increases in rent meant to pay them and probably very few of them would now desire to have them back. On the other hand, those who since that date have not paid them have acted on the existing law but have so acted with a true knowledge that sooner or later Parliament might alter the position. I 152 submit that the objections are fully answered. This Bill is an attempt to remedy a manifest injustice and is a remedy of a fair and moderate kind. I hope that your Lordships will think it right to give the Bill a Second Beading. I beg to move.

§ EARL BEAUCHAMP

My Lords, there is to be an important debate later this evening and I am most unwilling to stand between your Lordships' House and that debate for any length of time, but it is impossible to allow a Bill of this kind to pass without making at any rate a few remarks. His Majesty's Government are, I think, a little unfortunate in regard to this whole question. This is the second Bill dealing with the question of rent that has been before your Lordships' House to-day. Most of your Lordships will also remember that no less than two Housing Bills have been introduced into another place in the course of the present Session.

As to the Bill which is before your Lordships for consideration at the present moment, the noble and learned Viscount on the Woolsack will, I hope, allow me to say that much as I envy him many of his gifts, that which I envy him most is the power of casting a veil of sweet reasonableness over a series of propositions which in ordinary circumstances would, I venture to think, somewhat surprise your Lordships. Let us consider of what this Bill consists and what it proposes to do. All those who up to December 1 paid their rent, or did not pay it, are to be left alone. The just and the unjust, so to speak, are to be treated on the same footing. The unjust are to be allowed to remain in possession of the rents which they should have paid and the just who did pay their rent are not to get any compensation for having paid that which they thought it their duty to pay. But after that date everybody is to pay whether or not they paid at the moment. All are equally liable.

To begin with, I think it is a considerable hardship upon people to be called upon to pay money which the law says it is not necessary for them to pay. It would be very hard in the case of people with large incomes. How much harder is it in cases of people with small incomes. 153 And here we find that all these tenants who since December I have not paid their rent are now expected to pay all the arrears from the small incomes which they have at the present moment. That is no small hardship upon them.

The noble and learned Viscount on the Woolsack spoke of the difficulties of the case, and we all agree that they are very considerable. He said that the line had to be drawn somewhere and that it was an arbitrary line. We all agree with that. Rut surely the necessity of drawing the line somewhere does not necessarily make a reason for legislation. This is, as the Lord Chancellor explained, a Bill containing a large measure of retrospection, and he quoted an instance in which this House and the other House of Parliament agreed to retrospective legislation. We all agree that there must be cases when retrospective legislation may become necessary, but surely they ought to be as rare as possible, and, if they are agreed to, there are one or two conditions which we ought to lay down as being of paramount necessity. First of all, they should remedy a general grievance, and next, they should command general assent. It seems to me that this Bill does not meet either of those two criteria.

Let us remember that the difficulty chiefly arises in Glasgow. Glasgow is the centre of the opposition to the payment, and it is there that the opposition to this particular Bill centres. It does not arise in most of the other towns in Scotland, and it does not do so for the very simple reason that in so many cases the landlords took care to obey the letter of the law. And indeed, there was no reason why they should not, for it was well known what was the state of the law. A text book was published in the year 1920 in which these words occur: Strictly construed the words just quoted mean that as a condition precedent to any increase of rent the landlord must give the requisite notice to terminate the tenancy, and thereafter serve the statutory notice of the increase of rent. Therefore it was not as if it were sprung as a complete surprise upon everybody that it was necessary to serve this notice. It was even in text books which were accessible to everybody, and was no new thing. These landlords who omitted to take the necessary precaution did so at their own risk, and on their own responsibility. 154 Here we have a case of making a discrimination, and I would ask your Lordships' House whether, after all, it is worth while to do it.

Naturally, we should not think of asking your Lordships to divide upon such a question this afternoon, but it is at any rate worth while to enter a caution in regard to legislation of this kind. The sums of money which are involved are not really very considerable. A private owner frequently makes mistakes of this kind, and when he makes such mistakes he stands the racket, and does not come to Parliament to ask that he may be specially favoured by retrospective legislation. In view of the fact that, honest error though it may have been, people suffer from honest error in much the same sort of circumstances, it seems to me far from wise in this particular case to remedy what is, after all, a comparatively small matter by so large a breach in the tradition of Parliament in regard to retrospective legislation.