§ Order of the Day for the House to be put into Committee read.
§ Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
§ On Question, Motion agreed to.
§ House in Committee accordingly:
§ [The EARL OF ONSLOW in the Chair.]
§ Clause 1 [Services of liabilities adjustment officers in effecting schemes of arrangement]:
§ THE LORD CHANCELLOR (VISCOUNT SIMON)Here is an Amendment which is pure drafting in order to make the clause quite clear. I beg to move.
§
Amendment moved—
Page 2, line 7, leave out (" those ") and insert (" their provable ").—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ Clause 1, as amended, agreed to.
§ Clause 2 [Appointment, services, salaries and staff of liabilities adjustment officers]:
§ VISCOUNT MAUGHAMWill your Lordships allow me to mention one matter which I have been asked to put on behalf of a very numerous body of civil servants—namely, the gentlemen who for a number of years past have been acting as Official Receivers? The position is this. The insolvency work, with which these men are fully acquainted, is already greatly diminishing, and the probability is that it will become almost extinct except in special cases during the continuance of the war. What these gentlemen are very anxious the Lord Chancellor should do is that he should consider, in his appointments under 932 Clause 2 of the Bill, what great opportunities these gentlemen have already had for learning all the details of insolvency work, and how anxious they are that they themselves may receive very favourable consideration in the matter of the appointment of the liabilities adjustment officers pursuant to Clause 2. It does not require any amendment, but they will be greatly relieved in their minds if they know that the noble and learned Viscount the Lord Chancellor has this matter thoroughly within his knowledge.
§ THE LORD CHANCELLORI am glad my noble and learned friend has mentioned this matter, if only because the announcement will give some relief in quarters which are naturally anxious. Undoubtedly the training of an Official Receiver is very appropriate to the work which is likely to fall on these liabilities adjustment officers. The Government, I believe, have already secured a promise from the Board of Trade that some of the officials of that Department shall be made available. The suggestion that my noble and learned friend makes is entirely consonant with our intentions, and I hope that I may be able in course of time to issue a list which will show that these very deserving and experienced officials will get an opportunity.
§ Clause 2 agreed to.
§ Clause 3:
§
Application for adjustment of debtor's affairs.
(2) Where it appears to the Court that a prima facie case has been made out as to the matters specified in paragraph (a) or paragraph (b) of the last foregoing subsection, the Court may make an order, to be known as a "protection order," and, while any such order is in force,—
§ THE LORD CHANCELLOR moved, in paragraph (a) of subsection (2), after "land," to insert "or of property let under a hire-purchase agreement." The noble and learned Viscount said: This is 933 little more than a drafting Amendment. The protection order was intended to have the effect of staying proceedings against the debtor for the recovery of goods let under a hire-purchase agreement, but some doubt has been expressed as to whether such goods could be described as the property of the debtor. Therefore it is perhaps convenient to insert these additional words which will make the intention quite plain. I beg to move.
§
Amendment moved—.
Page 5, line 2, after (" land ") insert (" or of goods let under a hire-purchase agreement ").—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ THE LORD CHANCELLORThe next two Amendments are purely consequential. I beg to move.
§ Amendments moved—
§ Page 5, line 13, after (" land ") insert (" or of goods let under a hire-purchase agreement ").
§ line 14, after (" land ") insert (" or taking possession of goods let under a hire-purchase agreement ").—(The Lord Chancellor.)
§ On Question, Amendments agreed to.
§ Clause 3, as amended, agreed to.
§ Clauses 4 and 5 agreed to.
§ Clause 6:
§ Powers of Court with respect to leases and other contracts.
§
6.—(1) Where the debtor is in possession of any premises held on a lease or tenancy, or is holding over any premises, after the determination of a lease or tenancy, by virtue of the Rent and Mortgage Interest Restrictions Acts, 1920 to 1939, the Courts (Emergency Powers) Acts, 1939 and 1940, or this Act, and the Court proposes to exercise its power so as to allow the debtor to retain possession of the premises, the Court may in the liabilities adjustment order provide that the rent shall, during the period for which the order is in force or any less period, be reduced to such amount as the Court thinks fit, which may, in the case of a dwelling-house to which the Rent and Mortgage Interest Restrictions Acts, 1920 to 1939, apply, be less than the rent permitted under those Acts:
Provided that the rent shall not in any case be reduced unless the lettable value of the premises has fallen as the result of war circumstances, or to an amount less than the lettable value at the date of the order.
(2) Where the debtor is in possession of any property let under a hire-purchase agreement, and any part of the hire-purchase price remains unpaid, the Court may, if it thinks fit to do so having regard to the value of the
934
property at the date of the order and the amount already paid by the debtor in respect of the hire-purchase price, vest the property in the debtor, either immediately or after the payment of such further sums (not exceeding the balance of the hire-purchase price) as may be specified in the liabilities adjustment order, and the person who let the property under the agreement shall be entitled to prove for the balance of the hire-purchase price less any sums required to be paid as aforesaid, but shall not have any other remedy against the debtor or the property.
§ THE LORD CHANCELLOR moved, in the proviso in subsection (1), after "unless," to insert "in the opinion of the Court." The noble and learned Viscount said: The object of this Amendment is to prevent litigation on the question whether the Court has made a mistake in its estimate of the lettable value of property. The Court will no doubt have heard the evidence of the parties, including probably information from the assessment committee of the latest valuation of comparable property in the neighbourhood, and it is not thought fair that the Court's decision should be capable of being upset by proceedings in a higher Court. Therefore it is thought right to insert the words "in the opinion of the Court."
§
Amendment moved—
Page 8, line 21, at beginning insert (" in the opinion of the Court ").—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§
THE LORD CHANCELLOR moved to insert after subsection (1):
(2) For the purpose of determining under subsection (3) of Section nine of the War Damage Act, 1941, the value of the debtor's interest in any premises to which the last foregoing subsection applies, any reduction of rent made under that subsection shall be disregarded. ''
§ The noble and learned Viscount said: Under Section 9 (3) of the War Damage Act, 1941, the value of a proprietary interest is the amount that it might have been expected to realise on a sale on March 31, 1939, if it had been subsisting on that day with the like incidence in all respects as it had immediately before the occurrence of the damage. If the Adjustment Court reduces the debtor's rent under Clause 6 (1) of the Bill and the premises sbsequently receive war damage for which compensation is ultimately paid under the War Damage Act, the reduced rent will make the debtor's interest more 935 valuable than it would otherwise be and consequently the debtor will be able to claim an unfairly large proportion of the compensation. The Amendment is inserted to cure that injustice. I would point out that it was not possible to insert these words earlier—though they had not escaped notice—because that could not be done until the War Damage Act had received the Royal Assent.
§
Amendment moved—
Page 8, line 23, at end insert the said new subsection.—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ THE LORD CHANCELLOR had given Notice of Amendments in subsection (2), to alter "property," wherever that word occurs, to "goods." The noble and learned Viscount said: The five Amendments on the Paper to leave out the word "property" and insert "goods" have been put down in view of the fact that it is proposed to introduce a new definition of "hire-purchase agreement." With your Lordships' permission I will move them together.
§ Amendments moved—
§ Page 8, line 24, leave out (" property ") and insert (" goods ")
§ line 27, leave out (" property ") and insert (" goods ")
§ line 29, leave out (" property ") and insert (" goods ")
§ line 33, leave out (" property ") and insert (" goods ")
§ line 36, leave out (" property ") and insert (" goods ").—(The Lord Chancellor.)
§ On Question, Amendments agreed to.
§ Clause 6, as amended, agreed to.
§ Clause 7:
§ Mortgagees.
§ (4) In considering under the last foregoing subsection whether the rate of interest payable on the amount secured by the mortgage should be reduced, the Court shall have regard to any reduction in the annual value of the mortgaged property due to war circumstances.
§ THE LORD CHANCELLORThe first Amendment to this clause is purely formal. I beg to move.
§
Amendment moved—
Page 9, line 25, leave out (" the mortgagee of any mortgaged property ") and insert (" any mortgagee ").—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
936
§
THE LORD CHANCELLOR moved to leave out subsection (4) and insert:
(4) The Court shall not reduce the rate of interest under the last foregoing subsection, unless the annual amount payable by way of interest at the existing rate exceeds the net annual profits which in the opinion of the Court the mortgaged property could at the date of the order reasonably be expected to produce, and any such reduction of the rate of interest shall be limited to the extent of that excess.
§
The noble and learned Viscount said: As this is a rather more important Amendment, perhaps I might just give a short explanation of it. It is proposed to leave out subsection (4) in the Bill because I think its meaning is obscure. As it stands in the Bill it reads:
In considering under the last foregoing subsection whether the rate of interest payable on the amount secured by the mortgage should be reduced, the Court shall have regard to any reduction in the annual value of the mortgaged property due to war circumstances.
§ The direction to "have regard to" does not always indicate what you have to do when you have had regard to it. I think the right form of the subsection is that which I am now proposing to substitute. The true principle must be that the Court should, in reducing the rate of interest on a mortgage, be concerned only with the question whether the mortgagee, while he is being kept out of his security, is getting a fair return on his money in all the circumstances of the case.
§ It would not be found that the mortgagee necessarily does badly. If the Court were to lift its ban on any dealing by the mortgagee with the property, the mortgagee's rights would be either to realise it immediately or to take possession of it or to appoint a Receiver of the profits. Immediate realisation might be very much against the interests of the mortgagee, but the proceeds could be invested and earn some interest. The value of appointing a Receiver would depend on the profits obtainable at the time, but there might be at least some profits. Under subsection (3) the mortgagee has the advantage of getting some interest on his money without the necessity of realising at what may be a bad moment. The Amendment enables the Court to relate the interest to the profits which the mortgagee would have obtained if he had been allowed to appoint, and had appointed, a Receiver. In other words 937 you cannot get more out of the property than the property will yield. The property may, in many ways, have lost a great deal of value, but it is not right to tamper with the rate of interest beyond a point at which it represents what can be got out of the property.
§
Amendment moved—
Page 9, line 44, leave out subsection (4) and insert the said new subsection.—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ Clause 7, as amended, agreed to.
§ Clause 8 [Provision for securing payment of sums in respect of property or under contracts retained or adopted by the debtor]:
§ THE LORD CHANCELLORThere is a drafting Amendment to this clause. I beg to move.
§
Amendment moved—
Page 10, line 27, leave out (" property ") and insert (" goods ").—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ Clause 8, as amended, agreed to.
§ Clauses g to 22 agreed to.
§ Clause 23:
§ Extent of Part I.
§ (4) Any reference in this Part of this Act to the Courts (Emergency Powers) Acts, 1939 and 1940, shall include a reference to the Courts (Emergency Powers) (Scotland) Act, 1939, and any reference to Section one of the Courts (Emergency Powers) Act, 1939, and to subsection (5) of that section shall respectively include a reference to Section one of the Courts (Emergency Powers) (Scotland) Act, 1939, and to subsection (4) of that section.
§ THE LORD CHANCELLOR had given Notice of two Amendments to subsection (4)—namely, to leave out "Any reference in this Part of this Act to the Courts (Emergency Powers) Acts, 1939 and 1940, shall include a reference to the Courts (Emergency Powers) (Scotland) Act, 1939, and"; and, at the end, to insert "and any reference to a bankruptcy petition shall include a reference to a petition for sequestration." The noble and learned Viscount said: The first Amendment is pure drafting. There was a reference to the Courts (Emergency Powers) Acts which is no longer needed.
938
§
Amendment moved—
Page 22, line 21, leave out from beginning to (" any ") in line 23.—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ THE LORD CHANCELLORThe insertion at the end of the subsection is necessary in order to be sure that we have allowed for the Scottish procedure.
§
Amendment moved—
Page 22, line 27, at end insert (" and any reference to a bankruptcy petition shall include a reference to a petition for sequestration ").'—(The Lord Chancellor.)
§ VISCOUNT MAUGHAMMay I say one word before we go on to the next clause in the Bill? I do not quite know whether the matter which I am going to mention is one that is quite properly in order, but it is a species of reminder. Some of your Lordships, at any rate, will know that in the Bankruptcy Act which now exists there is, in Section 148, a very important and widely extending clause which makes an exemption in respect of all Stamp Duty for the various documents, deeds, orders and so forth necessary in bankruptcy proceedings, and I am anxious to know that the Government have not omitted a similar clause with suitable modifications from this Bill with the deliberate intention that such stamps should be made payable. The matter is, perhaps, one which could best be left to be dealt with in another place.
§ THE LORD CHANCELLORI am grateful to my noble and learned friend for being good enough to mention this to me privately a day or two ago. I have had communications with the Treasury, and I agree with my noble and learned friend in thinking that if anything can be done it would be, perhaps, more appropriately done by Amendment in the other House. It is true that there is a most valuable concession in respect of Stamp Duty made under a section of the Bankruptcy Act, and if there are going to be a great many cases of conveyances to trustees under this Bill the amount of stamps is going to be quite considerable. As we are dealing with people who, in the main, are very hard pressed, it may be that we shall be able to recognise that to some extent the stamp law should be modified in their favour. I must not say more on this now; I have had no chance yet of seeing the Chancellor of 939 the Exchequer. But there is no harm, I think, in my saying that personally I shall be very glad if anything can be done.
§ On Question, Amendment agreed to.
§ Clause 23, as amended, agreed to.
§ Clauses 24 to 26 agreed to.
§ Clause 27:
§ Interpretation.
§ 27.—(1) In this Act unless the context otherwise requires the following expressions have the meanings hereby respectively assigned to them:—
§ "hire-purchase agreement and "hire-purchase price" have the same meanings respectively as in the Hire-Purchase Act, 1938;
§
THE LORD CHANCELLOR moved, in subsection (1), to leave out the definition of "hire-purchase agreement" and insert:
'hire-purchase agreement' means any agreement defined as a hire-purchase agreement by Section twenty-one of the Hire Purchase Act, 1938, and also includes any agreement for the sale of goods under which the price is payable by instalments and the property in the goods remains in the seller, notwithstanding that the buyer is in possession of the goods, until such conditions as to the payment of instalments or otherwise as may be specified in the agreement are fulfilled; and any reference, in relation to a debtor, to goods let under a hire-purchase agreement shall be construed as meaning any goods delivered to the debtor under a hire-purchase agreement and in his possession, being goods the property in which remains in the seller or letter thereof;
'hire-purchase price' means the total sum payable by the hirer or buyer under a hire-purchase agreement in order to complete the purchase of goods to which the agreement relates, exclusive of any sum payable as a penalty or as compensation or damages for a breach of the agreement.
§ The noble and learned Viscount said: Amidst a bunch of, I am afraid, very uninteresting Amendments, this particular one has a certain flicker of interest. It appears that it is not enough to use the definition of "hire-purchase agreement" which has already been put upon the Statute Book because it is believed in some quarters that there is another arrangement which produces very much the same results but which, none the less, would not be called a "hire-purchase agreement." It is a special arrangement in the nature of conditional sale which, of course, passes the possession, but it is so 940 arranged as not to pass the property, and the property does not pass to the purchaser until the final instalment has been paid. We mean our Bill to apply to that just as much as to anything else and I have enlarged the definition so as to produce the result which we intend.
§
Amendment moved—
Page 25, leave out lines 1 to 3 and insert the said new words.—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ THE LORD CHANCELLORThe next Amendment is consequential.
§
Amendment moved—
Page 25, line 5, leave out (" it is estimated that ") and insert ("in the opinion of the Court ").—(The Lord Chancellor.)
§ On Question, Amendment agreed to.
§ Clause 27, as amended, agreed to.
§ Remaining clause agreed to.