Lords Sitting of 14 July 1942

Preamble
The House met, The LORD CHANCELLOR on the Woolsack.
BILSTON CORPORATION BILL.
Read 3a, with the Amendments, and passed, and returned to the Commons.

PRIVATE BILLS.
THE ACTING CHAIRMAN OF COMMITTEES (LORD STANMORE): My Lords, these Amendments are really a formal matter, providing for copies of Private Bills being sent to the Ministry of Works and Planning under its new name. I beg to move that they be agreed to.
Moved, That the Standing Orders relative to Private Bills, etc., be amended as follows:—
Standing Order No. 39, page 27, line 43, leave out ("and")
Standing Order No. 39, line 44, after ("Air") insert ("and at the Office of the Minister of Works and Planning")
Standing Order No. 39, page 28, lines 8 and 9, leave out ("and at the Office of the Commissioners of Works")
Standing Order No. 39, page 29, lines 4 and 5, leave out ("and at the Office of the Commissioners of Works").—(Lord Stanmore.)
On Question, Motion agreed to.
Standing Orders amended accordingly, and to be printed as amended.

MINISTRY OF HEALTH PROVISIONAL ORDER (POOLE) BILL.
Brought from the Commons; read 1a; to be printed, and referred to the Examiners.
ALLIED POWERS (WAR SERVICE) BILL.
Brought from the Commons; and read 1a. The Amendment made in the Commons to the Bill as circulated to this House to be printed
ISLE OF MAN (CUSTOMS) BILL.
Brought from the Commons, endorsed with the Certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act, 1911; and read Ia
MINISTRY OF HEALTH PROVISIONAL ORDER (CAERNARVON) BILL.
Read 2a (according to Order), and committed.
MINISTRY OF HEALTH PROVISIONAL ORDER (MOLD GAS AND WATER) BILL.
Read 2a (according to Order), and committed.

WAR DAMAGE (AMENDMENT) BILL.
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 LORD STANMORE in the Chair.]
Clause I agreed to.
Clause 2 [Amendment of the principal Act]:
THE LORD CHANCELLOR (VISCOUNT SIMON): The first Amendment in my name is really a drafting Amendment. There is no need to provide for paragraph 13 of the Second Schedule to have effect as originally included in the Bill. It is right that this change should be made. The matter is formal, and does not need discussion. I beg to move.
Amendment moved—
Page 2, line 19, leave out ("and in paragraph 13 of the said Second Schedule").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 2, as amended, agreed to.
Remaining clauses agreed to.
First Schedule [Amendments relating to the principal Act generally]:
THE LORD CHANCELLOR: The next is a drafting Amendment. It was a mistake to draw the Bill as originally drawn, and I ask that this correction be made.
Amendment moved—
Page 6, line 40, leave out from ("Act") to ("to") in line 42.—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is consequential.
Amendment moved—
Page 7, line 23, leave out ("restriction or outgoing") and insert ("or restriction").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, after paragraph 4, to insert:
" 5. Payments to owners of rentcharges.
(1) Where a value payment is to be made in respect of war damage to a hereditament and at the date by reference to which the disposal of the payment is to be regulated (in this para graph referred to as "the material date") there was subsisting a rentcharge created out of a proprietary interest (being either the fee simple or a tenancy granted for a term of a hundred years or more) in any land in the hereditament, or in any such land together with other land, a right to receive a share of the value payment shall vest in the person who was the owner of the rentcharge at that date, if he shows that the following conditions are satisfied, namely—

(a) that the amount of the rentcharge so far as attributable to land in the hereditament then subject thereto (in this paragraph referred to as" the charged land in the hereditament") exceeded the available annual value of that land as depreciated by the war damage; and

(b) that at the time when the question whether this condition is satisfied falls to be determined no building sufficient to make good the excess has been carried out, or, having regard to all the circumstances (including any undertaking required under paragraph (a) of subsection (3) of Section seven), is likely to be carried out within a reasonable period after the time when the discharge of the value payment becomes permissible.

(2) If the said right is exercised—

(a) the amount of the share of the owner of the rentcharge shall be an amount equal to the capital equivalent of the excess mentioned in the preceding sub-paragraph, so however that if the amount of the rentcharge so far as attributable to the charged land in the hereditament was greater by any sum than the available annual value of that land apart from any war damage the amount of the share shall be computed as if the said excess had been reduced by that sum; and

(b) so much of the rentcharge as is equal to the said excess shall be extinguished on the date on which the share is paid, and, as between the persons interested in the charged land in the hereditament on the one hand and in any other land subject to the rent-charge on the other hand, the proper share of the persons interested in the charged land in the hereditament of the liability for the
748
residue of the rentcharge in respect of any period after the extinguishment shall be treated as being an amount per annum equal to the available annual value of the charged land in the hereditament as depreciated by the war damage.

(3) Any question as to whether the conditions mentioned in sub-paragraph (1) of this paragraph are satisfied, or as to the amount of the said excess or of the share of the owner of a rentcharge, shall be determined by agreement between the owner thereof and of the proprietary interest out of which the rentcharge was created in the charged land in the hereditament, together with any mortgagee of either of those interests, or, in default of agreement, by reference to a referee as provided by subsection (5) of Section nine.
(4) Where the said right is exercised effect shall be given thereto out of so much of the value payment as is payable in respect of the proprietary interest out of which the rent-charge was created in the charged land in the hereditament, and—

(a) if apart from this provision any of the value payment would be payable under subsection (4) of Section nine to a mortgagee of that proprietary interest, then, if the mortgage had priority to the rentcharge, it shall be payable to him and effect shall be given to the said right out of any sums to which the owner of that proprietary interest would otherwise have been entitled under the provisions of that subsection as to mortgagees accounting, or, if the rentcharge had priority to the mortgage the sum payable to the mortgagee shall be reduced by the amount required for giving effect to the said right;

(b) if the rentcharge was itself subject to a mortgage at the material date, subsection (4)of Section nine shall have effect in relation to the disposal of the share to be paid in respect of the rentcharge as it has effect in relation to so much of a value payment as is payable in respect of a mortgaged proprietary interest, with the substitution for references therein to such an interest of references to the rentcharge;

(c) subsections (2) and (4) of Section nine, and sub-paragraph (2) of paragraph 6 of this Schedule, shall have effect subject to the provisions of this paragraph.

(5) Regulations may be made under Section ten (which confers power to make regulations as to claims for payments) as to the exercise of the said right and the manner in which effect is to be given to the said right where exercised, and in particular, but without prejudice to the generality of the power conferred by this subparagraph, regulations so made may make provision as to the matters aforesaid in cases in which the charged land in a hereditament is a part only thereof, or was in divided ownership at the material date, or in which a proprietary interest or rentcharge was subject to a mortgage at that date.
(6) In this Act the expression "rentcharge" means a rentcharge (including a fee farm rent) subsisting at law or capable of subsisting at law, and not being an interest or charge arising under a settlement within the meaning of the Settled Land Act, 1925, and means, where an apportionment of a rentcharge binding on the

749
owner thereof has been made, each of the apportioned parts and not the entire rent-charge.
(7) For the purpose of this paragraph the "capital equivalent" of the excess referred to in head (a) of sub-paragraph (I) shall be taken to be that excess multiplied by the number of years purchase which the rentcharge might have been expected to realize on a sale thereof in the open market on the thirty-first day of March, nineteen hundred and thirty-nine, if it had been subsisting on that day with the like incidents in all respects as it had at the material date, and the hereditament had been in the state in which it was immediately before the occurrence of the damage thereto, and the annual value of any land outside the hereditament subject to the rentcharge had been its annual value apart from any war damage.
(8) For the purposes of this paragraph the "annual value of the charged land in the hereditament as depreciated by the war damage" shall—.

(a) if that land is coterminous with the hereditament, be taken to be five per cent. of the value of the hereditament after the occurrence of the damage as ascertained for the purpose of determining the amount of the value payment;

(b) if that land is a part only of the hereditament, be determined by apportioning an appropriate part of the said percentage of the said value to that land.

(9)For the purposes of this paragraph the "annual value apart from any war damage" of any land shall, if that land was coterminous with land which constituted a contributory property or two or more contributory properties for the purposes of the instalments 0f
contribution for the year in which the war damage to the hereditament occurred (or, if it occurred before the beginning of the year nineteen hundred and forty-one, for that year), be taken to be the contributory value or the sum of the contributory values of the property or properties for that year, and, if it was not, shall be determined by valuation made by reference—

(a) primarily to the contributory value for that year of any such contributory property or properties as aforesaid which that land comprised or of which it formed part; and

(b) subject as aforesaid, to the rent at which that land or any part thereof might have been expected to let from year to year on the thirty-first day of March, nineteen hundred and thirty-nine, if it had been on that day in the state in which it was immediately before the occurrence of the damage to the heredirament, or, in the case of land outside' the hereditament which had then also sustained war damage, immediately before the occurrence of that damage, and the tenant undertook to pay the usual tenant's rates and taxes and the landlord undertook to bear the costs of the repairs and insurance and other expenses, if any, necessary to maintain the land in a state to command that rent.

(10) For the purposes of this paragraph the "available annual value" of the charged
750
land in the hereditament as depreciated by the war damage, or apart from any war damage, shall be taken to be the annual value thereof as so depreciated, or apart from any war damage, as the case may be, less the amount, so far as attributable to any of the charged land in the hereditament, of—

(a) any rentcharge having priority to the rentcharge in question to which the fee simple in that land was subject at the material date, or, where that tentcharge was created out of a tenancy of that land, to which either the fee simple therein or that tenancy or any superior tenancy thereof was subject at that date; and

(b) where that rentcharge was created out of a tenancy of that land, the rent reserved by the lease for the year in which that date fell.

(11) For the purposes of this paragraph the "amount attributable" to any land of a rentcharge, or of rent reserved by a lease, shall, where at the material date, that land was the only land subject to the rentcharge, or out of which the rent issued, be taken to be the whole amount of the rentcharge payable, or of the rent reserved, for the year in which that date fell, and, where it was not, shall be determined by apportioning or allocating to that land so much (if any) of that whole amount as may be appropriate, having regard—

(a) primarily, to any apportionment or allocation of that rentcharge or rent which may have been made otherwise than so as to be binding on the owner of that rent-charge or on the landlord, as the case may be, before the occurrence of any war damage to any of the land subject to that rentcharge or rent; and

(b) subject as aforesaid, to the proportion borne by the annual value apart from any war damage of that land to the annual value apart from any war damage of the other land subject to that rentcharge or rent.

(12) In the application of this paragraph to Northern Ireland there shall be substituted for the reference to the Settled Land Act, 1925, a reference to the Settled Land Acts, 1882 to 1890.
6. Payments to superiors and creditors in ground annuals.
(1) The last preceding paragraph shall extend to Scotland subject to the modifications specified in the following provisions of this paragraph.
(2) For any reference to a rentcharge created out of the fee simple in any land there shall be substituted a reference to a feuduty or ground annual payable by the owner of the fee simple in such land; references to the owner of a rentcharge shall be construed accordingly, and references to a rentcharge created out of a tenancy shall not apply.
(3). The right conferred by sub-paragraph (1) on a superior or the creditor in a ground annual to receive a share of a value payment shall not be exercisable until—

(a) in the case where the feuduty or ground annual is payable in respect of the charged land in the hereditament and also

751
of other land, the part of such feuduty or ground annual attributable to the charged land in the hereditament has been allocated thereon; and

(b) the feuduty or ground annual or the part thereof so allocated, as the case may be, in so far as it exceeds the annual value of the charged land in the hereditament as depreciated by the war damage, has been discharged.

(4) Where for the purposes of this paragraph a feuduty or a ground annual is required to be allocated or a feuduty or a ground annual or a part thereof so allocated is required to be discharged, the superior or the creditor in the ground annual shall execute and record in the appropriate register of sasines—

(a) a memorandum specifying the sum to be allocated and describing particularly or by reference the land on which it is to be allocated; or, as the case may be,

(b) a discharge of the feuduty or ground annual or part specifying the extent to which the same is discharged and describing particularly or by reference the land so disburdened;

and any such allocation or discharge shall be binding on all having interest."
The noble and learned Viscount said: This is the first and serious Amendment on which the House will have to spend rather more time. One is usually entitled to assume that as soon as the clauses of a Bill have all been passed what remains is small beer, but in this case the difficult matter arises in the Schedule, and I move, in the First Schedule, on page 7, line 32—that is to say at the end of the paragraph marked 4 on page 7 of the Bill—the insertion of a new paragraph which would be numbered 5 followed by a further paragraph which would be numbered 6. These Amendments are put forward in order to fulfil a promise which was made by the Government in another place to extend the benefit of payments under the War Damage Act to owners of rentcharges. Rentcharges are common as an incident of land development in some parts of the country, especially in Lancashire. Indeed I think it has sometimes been said that wherever a Lancashire builder has been at work you may be sure to find a rentcharge. They also occur very commonly in Bristol, and they are common in the North of Ireland. In Scotland feu duties and ground annuals, which are very similar in their general effect to rentcharges, are also of course most common.
I want to make plain to those who are interested in the subject that the proposal
752
I have to make has nothing to do with that class of rentcharge which is created under family settlements. It is not uncommon under a family settlement to make provision of that kind, but there is no need to bring this into the Amendment I am proposing, because such family charges are adequately provided for under the War Damage Act already by the payment that will be made for damaged settled land to the trustees of a settlement. What this very formidable, complicated Amendment deals with is rent-charge in the other sense. The argument is, and it appears to be a forcible one, that the owners of rentcharges created in the course of land development are exposed to suffer loss in the event of war damage for which at present no provision is made in the war damage legislation. I speak humbly about these high matters, but I think that I am correct when I say that such a rentcharge is real property; it is a legal interest in land which exists independently of the fee simple or any tenancy in the land, and as the Statute Law at present stands we have only provided for payments to the owner of the fee simple or to the owner of a tenancy in the land, so that the owners of rentcharges at present are excluded. The owner of a rentcharge has some effective remedies if he is not paid the half-yearly or yearly payments to which he is entitled. He might distrain, he has a right to take possession, he has a right to create a term of years in the land and to mortgage or sell the term to erase the arrears. There are various remedies with which he is provided if he is not paid what is due to him.
I think the reason why in the first instance the draftsman, and those who advise the Government on this technical matter, did not include rentcharges was that it was assumed that, at any rate in nearly all cases, the value of the rent-charge would not fall below the value of the bare site, and therefore, even though the building was destroyed, there would still be sufficient security for the owner of the rentcharge. That, however, is not always so, and there is this particular difficulty arising from a complication very common in Lancashire, that the owner of the land in the first instance lets the builder have it in return for a rentcharge, and then the builder when he builds a house may sell the property for what is called an improved rentcharge, the

753
amount of which tan only be covered if you include the value of the building. Therefore if the building is destroyed the holder of the rentcharge suffers and is at present without remedy.
At first the idea which was worked out, was quite a simple one, that you should simply say that the owners of rentcharges should be entitled to receive a payment in so far as they could show that the value of their rentcharges had been reduced by impairment of the security due to the damage to the buildings. That sounds very simple. But there are great difficulties here in simplicity, I am sorry to say. In the first place, it is very embarrassing to the substantial landowner if there has to be an endless multiplication of valuations to divide what is received between different claimants, and it is simply not worth doing if the amount is quite trumpery, In the second place, though the owner of the rentcharge may suffer when the house is "blitzed," if the house is going to be rebuilt in a year or two, or in quite a short time, what he suffers is only a loss in the meantime, and he will be right again as soon as there is sufficient security. There is, thirdly, the point that whatever you do you must not give the man who owns a rentcharge both a light to the whole of the rentcharge and also compensation. You have got, therefore, to have some plan which sets one against the other.
That is what this clause, which I must say is very ingeniously drafted, attempts to do. The present proposal is that a rentcharge owner should only come in, first, if his security has depreciated to a point below his rentcharge; secondly, if he can show that re-building is unlikely; and, thirdly, on the terms of giving up a right to so much of his rentcharge as is represented by the payment which he receives. Those principles I think will be recognized everywhere as valid. The draftsman would have been able to put this in a much less elaborate form into the Bill, into a much shorter compass, and in much less technical language, if it was not for a very annoying circumstance, which is that a particular area over which a rentcharge may apply is by no means necessarily the same area which is dealt with as a unit under this Bill. It is extremely common in Lancashire, for example, for the sites of two or three houses to be lumped together and made
754
the source out of which there is one rent-charge, whereas of course, each separate house would be a unit of valuation, and it may be of compensation when you apply the War Damage Act. I will not delay the Committee by expounding the subsidiary clauses of this draft which get over that difficulty. It involves apportionment and a number of difficult things of this kind.
I think your Lordships may take it that, subject to anything that may be said by noble and learned friends of mine who are much more expert in the matter, this very elaborate provision has been well devised. It meets the claim made by all kinds of people in the House of Commons who represent Lancashire and it appears in itself to be quite just. It only remains to entertain your Lordships for a moment by one or two other words of art. Your Lordships will note that the expression "fee farm rent" is also introduced into this paragraph. I will not endeavour to explain it. I think it is enough to say that under the Law of Property Act, 1925, a rentcharge is defined as including "fee farm rent". I think for present purposes we may leave it at that. When it comes to the arrangement for applying the Act to Scotland, that is quite outside any competence of mine, but I have been most carefully advised and indeed coached on the subject, and I am assured that the provisions which we are making to cover feu duties and annuals correspond in substance to what is proposed for England. I regret that I cannot entertain your Lordships at greater length on this most attractive portion of the law of property, but I have no doubt I have whetted your appetite for further information on another occasion. I beg to move.
Amendment moved—
Page 7, line 32, at end insert the said new paragraphs.—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is consequential. I beg to move.
Amendment moved—
Page 7, line 38, after ("hereditament") insert ("and of rentcharges (if any) to which it is subject").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is a verbal Amendment to remove an ambiguity. I beg to move.
Amendment moved—
Page S, line 49, leave out ("therein mentioned") and insert ("mentioned in Section sixteen").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is consequential. I beg to move.
Amendment moved—
Page 10, line 32, at end, insert ("or to any rentcharge").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved to insert after paragraph 7:
"8. Amendment of form of s. 9 (3) as to valuation of a proprietary interest free from certain charges.
In subsection (3) of Section nine (which provides for the valuation of a proprietary interest as if free from any charge or lien for securing money or money's worth), for the words 'charge or lien for securing money or money's worth' there shall be substituted the words 'mortgage or floating charge or to any rent-charge.' "
The noble and learned Viscount said: This is really identical in object with the earlier Amendments, and the same principle applies. I beg to move.
Amendment moved—
Page 11, line 44, at end insert the said new paragraph.—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved to add to paragraph 8 [Amendment of form of s. 9 (4) to make provision for mortgages of disclaimed leasehold interests and for successive mortgages]:
(2) In subsection (4) of Section nine, for the words 'exercisable by the mortgagee' there shall be substituted the words 'exercised by the mortgagee on the date by reference to which the disposal of the value payment is to be regulated.'"
The noble and learned Viscount said: If your Lordships wish for an explanation of this Amendment, I can give one, but I think it is probably sufficient for me to say that I am satisfied the Amendment is needed at this page.
Amendment moved—
Page 12, line 23, at end insert the said new sub-paragraph.—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved to add to paragraph 18 [Application of Principal Act to elementary schools transferred to local education authority]:
756
"(7) In the application of this paragraph to Northern Ireland—

(a) for the references to an elementary school, to transfer under the enactments mentioned in sub-paragraph (1) of this paragraph, to the local education authority for elementary education, and to the Board of Education there shall respectively be substituted references to a public elementary, school, to transfer under Section fourteen of, and the Second Schedule to, the Education Act (Northern Ireland), 1923, to the education authority within the meaning of that Act and to the Ministry of Education for Northern Ireland; and'

(b) the expression ' premises ' in relation to a school includes the teacher's residence (if any) and any land or buildings held in connexion with the school."

The noble and learned Viscount said: This Amendment is an application of the paragraph to Northern Ireland, and ought to be there inserted. I beg to move.
Amendment moved—
Page 16, line 45, at end insert the said subparagraph.—(The Lord Chancellor.)
On Question, Amendment agreed to.
LORD RANKEILLOUR LORD RANKEILLOUR moved, after paragraph 24, to insert:
Disposal of unclaimed balances of mutual insurance funds.
"25.—(1) The Board of Trade may by order provide that where the persons having the control of funds which fall to be distributed by virtue of subsection (2) of Section eighty-seven (which provides for the distribution of funds constituted before the passing of the principal Act for the purpose of providing indemnification against war damage) have been unable to trace the persons entitled to any moneys forming part of such funds, the Board of Trade may, if satisfied that reasonable steps have been taken for the purpose of tracing the persons entitled, authorize the payment of the moneys in question into an account specified in the order; and any payment into such an account authorized by the Board of Trade shall be a good discharge for the amount of the payment.
(2) An order made under this paragraph shall provide for the making of payments out of the account, in accordance with the provisions of the order, to persons claiming to be entitled to moneys paid into the account."
The noble Lord said: This Amendment deals with a very small matter, but it is of concern to some hundreds of people. I am rather inclined to follow the example of the noble and learned Viscount, and to say that I can explain this Amendment if requested, but inasmuch as it is of some complexity, and has been agreed to by the Board of Trade, I think probably I shall consult your Lordships' wishes best by formally moving.
Amendment moved—
Page 19, line 25, at end insert the said new paragraph.—[Lord Rankeillour.]
THE LORD CHANCELLOR: I shall imitate my noble friend's restraint and merely say that I am glad to accept this Amendment.
On Question, Amendment agreed to.
First Schedule, as amended, agreed to.
Second Schedule:

SECOND SCHEDULE.
Amendments as to ultimate incidence of contributions under Part I of the principal Act.
Mortgagors and Mortgagees.
4.—(1) Where—

(a) the whole or parts of different storeys of a house or building are occupied by two or more persons in different apartments or tenements and the house or building comprises more than one contributory property, but each of the contributory properties is used or suitable for use for residential purposes and has a contributory value not exceeding thirty-five pounds; or

(b) land which is farmed as a single unit or consists only of land so farmed together with other land either normally farmed therewith or, if it consists of or comprises buildings, intended to form part of the unit, comprises more than one contributory property, but the aggregate of the contributory values does not exceed five hundred pounds,

the house or building or, as the case may be, the land shall be deemed for the purposes of Section twenty-five to be a single contributory property to which that section applies.
11.—(1) At the end of sub-paragraph (1) of paragraph 6 of the Fourth Schedule there shall be added the folowing proviso:—
"Provided that where it is shown that the rent is greater by any amount than it would otherwise have been by reason of the landlord undertaking to bear any tenant's rates, or rendering or providing, or procuring to be rendered or provided any services or goods, the proportion appropriate to the tenancy shall be calculated as if the rent were reduced by the said amount."
(2) For the avoidance of doubt it is hereby-declared that for the purposes of the said sub paragraph (1) the proportion of rent to value—

(a) in the case of a tenancy under which no rent is reserved, is less than one quarter;

(b) in the case of a tenancy under which the rent reserved is not a money rent, is the proportion which the money value of the rent, or the annual equivalent thereof, bears to the value of the land.

General provisions as to indemnities.
12. A right to indemnity conferred by Part. I of, "or the Fourth Schedule to, the principal Act shall not be enforceable until the
758
discharge of the liability in respect of which the right arises:
Provided that on the discharge of part of the liability the said right shall be enforceable as respects a proportionate part of the amount of the indemnity.
LORD BALFOUR OF BURLEIGH LORD BALFOUR OF BURLEIGH moved, in paragraph (4) (1), after head (b), to insert:
"; or
(c) land which has been developed by a housing association (being an association within the meaning assigned to it by Section one hundred and eighty-eight of the Housing Act, 1936) for the purpose of providing houses for the working classes, if the developed land consists of or comprises more than one contributory property,''
The noble Lord said: The Amendment which I have put on the Paper attempts to do justice to a very deserving set of bodies, the housing associations. Housing associations have always had the sympathy of your Lordships' House in the work which they are trying to do, that is to provide houses at low rents for that portion of the population who can only afford low rents. They have done a great deal in the way of housing reform. At the end of the last war, when housing became a very urgent public issue, I think it is correct to say these societies really did whole-heartedly respond to the urgent appeal of the Government to do what they could to stimulate housing reform and to meet the shortage of houses throughout the country. Many of them had to contract considerable mortgage loans and at very high rates of interest—some up to 6½ per cent. I know of cases where societies borrowed from the Public Works Loan Board on terms of that kind. Under the War Damage Act, 1941, where the mortgage relates to only one property the mortgagee is required to pay a portion of the contributions on the property if the Schedule A valuation does not exceed £150, and in other cases the mortgagee is absolved from, payments. That is the circumstance which is making things very difficult at the moment for these housing associations.
There are two versions of my Amendment on the Paper, and if I may I will formally move the first. The second version, if I may be allowed to refer to it, is an attempt to meet certain objections which the noble and learned Viscount on the Woolsack is sure to make to the Amendment in its first form. I am going to appeal to the noble and learned

759
Viscount to help me in the matter because it is very technical and I think the object is one with which he will sympathize, although he will be the first to point out practical difficulties. My idea in putting in limiting words in the second version was to do something to remove the objections which I anticipate on the part of the noble and learned Viscount.
I would like to give one or two instances of the sort of way in which present arrangements are working to the detriment of these housing associations. I have here a statement by the Welsh Town Planning and Housing Trust Ltd. It is as follows:
''The annual contributions payable by our twelve societies amount to £4,994. It is a most severe handicap not to be able to recover the equitable proportions from mortgagees. We are already carrying the burden of increased cost of repairs and maintenance and higher taxation. The two societies at Rhiwbina and Burry Port, during the years of the industrial depression in South Wales, had to reduce rents (with the approval of the Minister) by 30 per cent., involving a loss of rent income of several thousand pounds. The P.W.L.B. refused to reduce interest rates (6½ per cent.). The societies cannot now raise rents (although tenants are earning higher wages); the P.W.L.B. continue to demand the 6½ per cent. interest: yet we are denied the comparable right of other mortgagors of claiming from the P.W.L.B. the equitable proportion of the War Damage Contributions."
I think it is relevant to say in connexion with that, that these housing associations were encouraged from official quarters to do their housing work when rates of interest were high. Official assurances were given that in bearing the burden of the high rates of interest and building at a time of big cost the societies would not be placed at a later date in a disadvantageous position. That has come about. These societies now, owing to the War Damage Contribution and the impossibility of passing it on to the mortgagors, are really in a very difficult position indeed. With these few words I beg to move the first version of my Amendment in order that I might have the advantage of hearing the reply of the noble and learned Lord Chancellor.
Amendment moved—
Page 22, line 22, at the end insert the said words.—(Lord Balfour of Burleigh.)
THE LORD CHANCELLOR: My noble friend raised this question when we had the main measure before us a year or more ago. His interest in housing associations
760
is well understood and I think that there will be a general feeling in the House—certainly I share it—that the work done by these associations is very meritorious. My natural inclination would be, therefore, to try to see if I could meet my noble friend. But as I pointed out to your Lordships in the last debate on the subject, so I must point out now, that really consistently with the scheme of the Act this is not possible. The great majority of the mortgages of the housing associations raise money generally on a large contributory property and are not in the least in line with the provisions which my noble friend has quoted from Section 25. The Treasury, and the other Departments concerned, I am informed have considered this matter with great care and sympathy. They realize that the housing associations have a very meritorious claim upon our sympathies. But just consider what is involved in what my noble friend has just said. He gave an instance in which an association has borrowed from the Public Works Loan Board. There are also—as he knows and as others in your Lodships' House know also—a great many instances in which housing associations have borrowed from local authorities, and the broad question is, are you in these matters to depart from the principle of Section 25 and to call upon the lender to take a share—I do not pause for a moment to discuss how difficult it would be to work it out—of the burden of contribution?
It is really fundamental to the view of the Bill that normally the relation between the lender and the borrower—between the mortgagee and the mortgagor—is of this kind: the mortgagee advances money at a rate of interest—usually a low rate—and he does it on the basis that that is the full extent both of his possible gains and his possible losses. If the mortgagor does well out of the loan and makes profits out of it, that does not advantage the mortgagee in the very least. He simply advances money at the rate quoted, and it is the borrower who takes the rough with the smooth as to whether he may make a good thing out of it or not. What my noble friend is asking is that because housing associations are, as we all agree, very meritorious bodies, in their case, as an exception, those who have advanced money to them should be treated in a different

761
way from which they would be treated if they were not housing associations. I do not think that it would be easy for your Lordships to agree that the local authorities that lend money to housing associations, or for the matter of that any other lenders, should be put in a quite exceptional position.
The trouble is, and I am sure that I very much regret it, that owing to the circumstances of the war some of' these associations are faced with very great difficulties. The instance which my noble friend quoted is an example. But this is not a difficulty which is to be met by this kind of thing at all. The burden of War Damage Contribution is not the only cause, or the main cause, of the difficulties in which some housing associations find themselves. It is not that at all. It is the fact that they have unhappily lost revenue owing to properties becoming vacant—what is called voids—or may be owing to the transfer or flight of considerable portions of the population. In so far as they are faced with an emergency, I am not denying it, but I must respectfully but firmly insist that it is not to be met by giving them this exception—this really unwarrantable and unjustified exception from the general scheme of the Bill. It must be considered in other ways. It has been stated that when housing associations have paid their ordinary annual outgoings they will not have sufficient net income to pay the contribution. Well it is the practice of the Inland Revenue Department to give careful consideration to cases in which a person charged is unable out of income or from other resources to meet the liability as it falls due. I am authorized to say that, in such cases, the Department is prepared, on being furnished with the facts of a particular case, to consider any proposals for extension of the time for payment.
But I am not prepared, and I hope that your Lordships will support the Government in this matter, to alter the general relation between mortgagor and mortgagee by which a mortgagee lends at a low rate of interest because all the risks of the enterprise do not rest upon him but rest upon the borrower. I am not prepared to alter that in this special case. If I did it would be the beginning of an avalanche of cases of all sorts and kinds. I regret very much that an association which has
762
borrowed money for philanthropic purposes should not get this assistance, but what we have to consider is would that justify a departure from the general principle of the Bill which I think by this time is approved by the judgment of all sensible people? I am bound to give the answer that it would not. I do not pause to say that the definition of "housing association" as a matter of fact might very well let in some people who are not quite in the mind of my noble friend. Much as we sympathize with the difficulties of these particular borrowers they cannot expect to be made a special exception because they have borrowed from local authorities or from public loan funds.
LORD BALFOUR OF BURLEIGH: I am indebted to the noble and learned Lord Chancellor for what he has said. What I intend to do is not to ask your Lordships to depart from the whole principle of the Bill except to very nearly the same extent that it has been done already. My Amendment goes in as (c) to paragraph 4 of the First Schedule. Now (a) and (b) are already two exceptions. It will be noticed that head (a) says that where—"
the whole 'or parts of different storeys of a house or building are occupied by two or more persons in different apartments or tenements and the house or building comprises more than one contributory property, but each of the contributory properties is used or suitable for use for residential purposes and has a contributory value not exceeding thirty-five pounds,"
then—
"the house or building … shall be deemed for the purposes of Section twenty-five to be a single contributory property to which that section applies."
It consequently gets relief. My Amendments is so drawn as to bring another small category, morally entitled to this relief, within the umbrella of those who are legally entitled to get it.
In those circumstances, I cannot understand the noble and learned Lord Chancellor saying that this is a derogation of the whole principle of the Bill. On the point of letting in other people who do not deserve it, I am aware that there is some substance in that, and, to meet that point, I have put down an alternative Amendment on the Paper, which in the circumstances I should prefer to move, if I may, by leave, withdraw the present Amendment.
Amendment, by leave, withdrawn.
LORD BALFOUR OF BURLEIGH LORD BALFOUR OF BURLEIGH moved, in paragraph 4 (1), after head (6), to insert:
"(c) land, the proprietory interest of which is vested in a housing association (being an association whose objects and constitution are within the meaning of Section one hundred and eighty-eight of the Housing Act, 1936, which defines a 'housing association') established for the purpose of providing houses for the working classes and the land by virtue of having been developed for that purpose consists of or comprises more than one contributory property and each contributory property has a contributory value not exceeding thirty-five pounds."
The noble Lord said: It may be that some further tightening-up is required, and, at the next stage, it might be desirable to amend the Amendment, so that instead of referring to a housing association as defined in the Act of 1936, the definition is made more narrow. The definition in the Housing Act, 1936, is as follows:
" 'Housing association' means a society, body of trustees, or company established for the purpose of, or amongst whose objects or powers are included those of, constructing, improving or managing or facilitating or encouraging the construction or improvement of, houses"
and so on. I would suggest that the words" or amongst whose objects or powers are included those of" be omitted from the definition in this Bill, so that it would read that a housing association
"means a society, body of trustees or company established for the purpose of constructing, improving or managing"
and so on. That would have the effect of bringing this body of admittedly meritorious people, as the Lord Chancellor has been kind enough to describe them, within the little exception provided for in this Schedule, and would bring them into line with the building societies' borrowers, who already get this relief. I hope that the Lord Chancellor will think that that will have the effect of achieving, in this limited way, what I think I am entitled to say that he would like to see done. In those circumstances, I hope that he will be able to accept the Amendment.
Amendment moved—
Page 22, line 22, at end insert the said words.—[Lord Balfour of Burleigh.]
THE LORD CHANCELLOR: I do not wish to detain your Lordships, but, although my noble friend is perfectly right when he says that he desires to add housing associations as a further category, (c), to the two categories which are called
764
(a) and (b) in the Second Schedule, realty he is asking for something which is not in the least like (a) or (b). The general scheme of the Bill is that under Section 25 of the original Act you will not get a limiting of the contribution unless you have a mortgage which is on a single property of a limited value, which is, broadly speaking, a building society mortgage. What is (a), to which my noble friend wishes to join his own proposal? Head (a) provides, in substance, that if there is a flat in which different persons occupy different tenements or apartments, each portion shall be treated as one unit. That is obviously sensible; if you have a law about small houses you must obviously have a law about small flats, and the fact that several of them are put together in a single building would be a very artificial reason for doing anything about them. Head (a) is not an exception, but a working out of the scheme.
What is head (b)? It deals with the agricultural case. The only instance in which, as the Bill stands, a mortgagee has to bear a share of the contribution for agricultural land is where he has advanced money to buy land, the land itself not being worth more than £500. Head (b) provides that
"land which is farmed as a single unit or consists only of land so farmed together with other land either normally farmed therewith or, if it consists of or comprises buildings, intended to form part of the unit, comprises more than one contributory property, but the aggregate of the contributory values does not exceed five hundred pounds,"
—so that that falls exactly within the £500 limit. My noble friend's housing associations may, and probably do, raise a very large loan over a very large area of properties which they own. This is not a case, therefore, of the addition of a little head (c), which is just like (a) or (b), just to make things comfortable; it is a totally different principle, and I do not see my way to agree to it.
LORD BALFOUR OF BURLEIGH: I do not wish to be pertinacious, but the Lord Chancellor said that if, say, six flats are included in one block, then they are to get the relief. If six houses, with a rateable value of under £35, are also included in one block, I think that they ought to get the relief too. I think it is an entirely analogous case, and I hope your Lordships will support me if I press it to a Division.
On Question, Whether the said words shall be there inserted?

CONTENTS.

Salisbury, M.

Maugham, V.

Barnby, L. [Teller.]

Davies, L.

Esher, V.

Atkin, L.

Fairlie, L. (E. Glasgow.)

Exmouth, V.

Balfour of Burleigh, L. [Teller.]

Gainford, L.

Rankeillour, L.

NOT-CONTENTS.

Simon, V. (L. Chancellor.)

Addison, L.

Jessel, L.

Norfolk, D. (E. Marshal.)

Bethell, L.

Latham, L.

Albemarle, E.

Blackford, L.

Mendip, L. (V. Clifden.) [Teller.]

De La Warr, E.

Boyle, L. (E. Cork and Orrery.)

Dundonald, E.

Monkswell, L.

Huntingdon, E.

Braye, L.

Palmer, L.

Lucan, E.

Bruntisfield, L.

Perry, L.

Manvers, E.

Cecil, L. (>V. Cranborne.)

Rushcliffe, L.

Ypres, E.

Clwyd, L.

Sherwood, L.

Denham, L.

Snell, L.

Chaplin, V.

Ebbisham, L.

Soulbury, L.

FitzAlan of Derwent, V.

Ennisdale, L.

Southwood, L.

Hailsham, V.

Faringdon, L.

Stanmore, L.

Trenchard, V.

Hampton, L.

Strabolgi, L.

Hardinge of Penshurst, L.

Templemore, L. [Teller.]

Aberdare, L.

Hare, L. (E. Listowel.)

Teviot, L.

Addington, L.

Hutchison of Montrose, L.

Wardington, L.

Resolved in the negative,, and Amendment disagreed to accordingly.
VISCOUNT MAUGHAM VISCOUNT MAUGHAM moved, after paragraph 6, to insert:
"7.—(1) Where the interest of a direct or indirect contributor in respect of a contributory properly to which Section twenty-five does not apply is at the revelant date subject to a mortgage as hereinafter defined and the amount secured by the mortgage at the relevant date is more than one-third of a sum equal to twenty times the contributory value, the contributor shall be entitled to be indemnified by the mortgagee to the extent set forth in subsection (1) of Section twenty-five, the sum equal to twenty times the contributory value being substituted in paragraphs (a), (b), (c) and (d) of subsection (1) of Section twenty-rive for the price of acquisition of that interest.
(2) Subsection? (2) and (3) and paragraph (b) of subssction (8) of Section twenty-five shall apply but so that in subsection (3) the sum equal to twenty limes the contributory value shall be substituted for the price of acquisition.
(3) For the purposes of this provision, the expression 'mortgage' shall mean any mortgage or charge on any property for securing money or money's worth which vests a legal estate in the mortgagee or confers upon him a legal interest within the meaning of Section one of the Law of Property Act, 1925, but shall not include any debenture or floating charge."
The noble and learned Viscount said: In moving the Amendment which stands in my name, I feel that the Committee deserves an apology for the jargon in which the Amendment is framed, because it is quite unintelligible to any person who
Their Lordships divided: Contents, II; Not-Contents, 47.
is not in a position to compare what is said there with the original Act and with the present Bill. The meaning of the Amendment is simply this. It is to extend the principle of Section 25 of the War Damage Act to other mortgages in the ordinary sense. The Amendment particularly leaves out of consideration such charges as debenture holders' charges and bankers' charges and all floating charges, and relates simply and solely to what may be called straight mortgages of houses and buildings.
In order that your Lordships should appreciate what I want, I must tell you what Section 25 of the original Act does. It gives a right to a mortgagor against a mortgagee in a very limited class of cases to a certain contribution towards the five contributions which are at present required from the owners of property in this country to help the Government with the payments which it is going to make in respect of war damage. I should like to make clear from the start, so as to brush that matter out of the way, that this Amendment does not affect the Government or the amount that the Government have to pay at all. It is merely a question between mortgagors and mortgagees. And although I am afraid I must take a little time in explaining to your Lordships why what I am suggesting is fair, in one sentence what I am going to contend is that it is fair and just that in

767
the cases which I mentioned—straight mortgages of land and property—the mortgagee should bear a share except when the amount secured, as compared with the value of the property, is such that he really is not an interested person. Now what does Section 25 do?—and I think those of your Lordships who have not yet been able to study it will be rather surprised when they find how limited it is. There are four conditions which have to be complied with before Section 25 helps a mortgagor. I will state them briefly, because they are wrapped up in verbiage which I am afraid laymen would not readily understand.
These are the four conditions. The first is that the amount secured on mortgage must be more than one-third of the price for which the property was acquired. The second is that the contributory value under Schedule A—because the amount you pay is called the contributory value, and is ascertained under Schedule A, where Schedule A applies, or according to the rateable value where there is no such basis available—the contributory value must not exceed £150. The third condition is this, that the property must be used, or be suitable for use, as a residence or must comprise a residence. In other words, all shop property is ruled out, and all those unfortunate small retail traders all over the country who are being driven out of their shops—no doubt quite properly—by diverse war measures which are thought to render such a course necessary, are not within Section 25. I have said it was £150, but, if it is agricultural land, I should have added that the Schedule A contributory value must be less than £500 annually. Then comes the fourth of the conditions. The mortgage must have been created to secure a capital sum on the occasion of the acquisition of the property or of the execution of the works of improvement on the property, provided, as I understand the rule, that the acquisition was of only one property.
I ask your Lordships what is the real suggested ground for keeping to the view that the advantage given to the mortgagor is to be limited to cases which are residential. Why should it be limited to properties which are under £150 annual value and, worst of all, why should it be limited to mortgages created for the purpose
768
of buying the property? What principle of justice is involved in that? The system which Section 25 has adopted in cases where the section is applicable is that the mortgagee must contribute from one-sixth of the mortgagor's liability to two-thirds of the liability, varying of course with the proportion that the amount secured bears to the price of the acquisition of the property. For the purposes of my Amendment, I have adopted precisely the same proportion, and have indeed worked in the Amendment which I have the honour to submit with Section 25 as it stands. I must express regret that I have lost two most valuable supporters—one my noble friend Lord Swinton, who has unfortunately had to go away on Government service, and the other my late noble friend Lord Stamp, who was greatly in favour of the sort of Amendment I have put before your Lordships. He made some observations when the matter was last before your Lordships which I shall take the privilege of reading. Lord Stamp, Lord Swinton, and I - did not have an Amendment before the House when the matter came up on the, last occasion on March 12, 1941, but we took the step of making some suggestions to the noble Viscount on the Woolsack who, I am glad to see, is still appearing for the Government in this case. We made some suggestions to him in the hope that the Government would see the justice of what we were contending for.
Lord Stamp, whose name is one of the most revered among your Lordships, was a moderate-minded man who expressed moderate things, but when he pointed out this extraordinary anomaly in Section 25—that it turned on the accident of the mortgage being raised for acquisition—he said this:
"If there are two people side by side, one of whom has bought the property with the assistance of a mortgage and the other of whom has found it necessary to borrow the money otherwise, why should these two people be in a different position?"
And he went on to say:
"One observes, 'When I bought the house I raised the money from A,' and the other says, 'I did not do that. I was in possession of the house for two years, but I wanted the money for other reasons.'"
Then Lord Stamp said:
"Could you have anything more arbitrary, more inexact, more unscientific and unfair as between two people?"
These words of Lord Stamp have just the same weight to-day as they had then. I remember speaking to him after the debate was over, and we both agreed that the argument had never been answered or dealt with at all Lord Swinton had the same view. The editor of The Economist, a journal which has a high reputation—certainly with me—made some observations a few days ago to the same effect. He dealt with other matters, I agree, but also with this matter of mortgages.
I suggest that the purpose for which the mortgage was created is wholly irrelevant to the question as to whether it is just that the mortgagee should make some contribution towards the amount due from the mortgagor. A man who borrows to send his son into medicine or to the Bar, to assist his daughter to marry, or to discharge his own debts, is just as much entitled to consideration as a person who has bought his house with the advantage of borrowed money, borrowing it probably from a building society or some other institution. As I understand it, there is another anomaly here. If a man has borrowed to buy two separate houses, Section 25 does not apply. I agree that the proviso to subsection (5) is a little difficult to understand, but that was alleged to be its meaning in the other place, and I understand there was no denial that that was what the effect was.
Now let me say something of a general nature before going on to tell your Lordships what I submit is the real justice of the case. I think it is true that the Government did not find themselves in a position to deal complete justice to everybody. It is a rough-and-ready scheme intended to meet an emergency, and the proportions in Section 25, for instance, are not scientific proportions; they go in jumps from one class to a different class. I do not expect to find in this measure—it would be silly to expect to find—complete fairness to everybody. "Rough justice" is what it has been called both in another place and here, and I should attribute, myself, very little weight to a particular hard case or hard cases which I could mention, if the principle involved is sound. But what is the principle of this measure? Surely it is this, that all persons with a real interest in land and buildings have to bear their share, all of them. The Government are going to come in after a sum
770
which is estimated, I think, to be £200,000,000, have been expended in discharging war liabilities, and the people who are going to contribute in the first instance to the money the Government are to find are not the general property owners of the country, but those property owners who have land and buildings. But why any particular class of those people should be singled out for exemption, I am totally unable to understand.
I have given you the illustrations of the man who has borrowed the money because he needs it, and I have given you the other case, but the real question is, are the mortgagees of land and houses owners of a real stake in the land and houses in question? Are they not really the people with a stake in it, and is it fair that they should pay no contribution at all? Let me pause here to ask your Lordships not to believe that this is a question of law or a question for lawyers. It is not. It is a question of the purest common sense, and has really nothing to do with law except to understand what the meaning of the word "mortgage" may be. It is a question of fairness, and I am going to urge your Lordships to support me in doing something which I submit is fair for all classes of the community who have been suffering during the last two years a grave hardship. Your Lordships will remember that under the terms of the Act (Section 92) contributions are to be treated for all purposes as outgoings of a capital nature, and your Lordships will remember that it is a capital tax on land and buildings which normally falls on owners of houses, on agricultural property and on certain fishing rights and things of that sort. There are five annual instalments of 2s. in the pound on the net annual value of the property which do not resemble an insurance premium in the very least. It is compulsory on owners of land and buildings. It is an outgoing of a capital nature, it is quite irrespective of the risk, so that people, we will say, who have houses in Appleby pay precisely the same as people who have houses in Dover, Portsmouth or Plymouth. Really, so far as I can see, it is no more of the nature of an insurance premium than Income Tax is.
The nature of the Amendment is one which relates simply to ordinary mortgages. Debentures, floating charges and deposits of deeds and bankers' charges

771
are left out, and I have left them out for the reason that I admit I did hear on the last occasion, and I have read more recently in another place, arguments which have some weight in relation to such things as debenture holders and floating charges. I admit, for instance, that the man who borrows money on overdraft which he may be called upon to pay off at any moment is in rather a different position from the man who has mortgaged his property for half or three-quarters of its value, mortgaged it definitely for a period which is expected to last for a considerable time—a permanent fixed loan with a fixed rate of interest. I will only just remind your Lordships—and it is the only scrap of law I intend to worry you with—of these facts as regards a mortgagor and a mortgagee. In the first place, the property passes to the mortgagee, under the definition which I have used in my Amendment. If the mortgagor wants to get it back he has to redeem—that is to say, he has to pay principal, interest and costs, and unless he does that it is the mortgagee's property; the right to take possession is vested in the mortgagee. It is true that since the War Emergency Powers Act he has got to get the leave of the Court, but apart from that the mortgagee is entitled to go into the property if he can get it without a breach of the peace, and if he does not find it easy to do that he can apply for possession to the Court. The mortgagee is entitled to sell after three months' notice unless the mortgage gives him a right to sell at an earlier date. The mortgagee's rights in the land are, therefore, far more valuable and important than those of the mortgagor.
The Legislature has agreed that there are cases where the mortgagee has taken possession or obtained a receiver, for they are actually the subject of a section in this very Act which we are proposing to amend. Who is going to tell me that after the war is over, and smiling times come once more perhaps, that the mortgagee is going to give up possession of the property to the mortgagor and that the mortgagor in most cases will be able to pay him? In the cases where the step has been taken of appointing a receiver, or where the mortgagee has been able to recover possession there in substance the interest of the mortgagor has vanished to a point at which it is practically invisible.
772
In theory he still has a right to redeem, but he has to find the money and in nine cases out of ten the real right of the mortgagee is in the property. I need not elaborate that. I might ask, does anybody suppose that with regard to the mortgagees in my Amendment there are 2 per cent. who would have lent the money but for the security of the property? Of course it is the property that is looked at in the mortgages which I am considering, not the possibility of getting the money by an action against the mortgagor.
I will ask your Lordships another thing. Supposing in a dangerous area, say, there is a strong probability of bombing, and this Act comes to an end, perhaps because for some reason the Government think it has expended its usefulness, or supposing, only in theory, we wipe it out, who is going, under a voluntary scheme, to insure the property, the mortgagor or the mortgagee? It is absolutely certain that in such a case the majority of the insurers would be the mortgagees. They are the people who are really interested in the great majority of cases. I should have thought that all that was absolutely clear.
Now I want to give your Lordships an illustration, if you will bear with me for one minute, because I think it is a fair one, and it will show you how great the interest of the mortgagee is in a case which is not a very surprising one. I am going to take the normal case of a house and premises worth £2,000, which has, accordingly, in all probability a Schedule A value of £100, because everybody knows that twenty times the Schedule A gives you roughly the value of the house. The property is mortgaged for three-quarters of its value which is the ordinary maximum that a prudent lender lends on the security of a house—that is to say, £1,500. We may take the normal interest rate at 5 per cent. In order to make the illustration clear I will not assume that the man is living in his property at the time we have to consider, but that he has had to go out, perhaps to go abroad to fight. He has let his house, and I will assume that he has been lucky enough to let it for £100, which is the same as the Schedule A value. His annual contribution is £10 and that is to go on for five years. As the law now stands, the mortgagor will get £100 for rent less

773
£10 for annual contribution, less £75 for interest on the £1,500. That is to say he will get, as the law now stands, £15 per annum, and out of that and of other property he has somehow to pay Income Tax, but I will not say anything about that because it is very fluctuating, and I do not know at what stage now he would get off. The mortgagee gets out of the property £75 per annum as compared with the mortgagor's £15. The mortgagee gets five times as much as the mortgagor. Yet there are people who pretend that the mortgagee is not interested in the property.
Now I want to tell your Lordships what will be the effect of my Amendment if it is passed. The mortgagee, under the terms of my Amendment, will contribute £5 per annum towards the £10 annual contribution. That is to say he will be left with £75 for interest, less £5 towards the contribution under the War Damage Act. The mortgagor, instead of £15, will get £20. The result is that the mortgagor will have an interest in the property of £20 during the war and the mortgagee's interest will be £70. Of course the mortgagee's interest will be much the greater.That is because the interest of the mortgagor in the land and property is always a right in a margin. The person who has got the real and prior right is the mortgagee. The mortgagor has got nothing but a margin and in the illustration I have given, where three-quarters is lent on mortgage, the interest of the mortgagee is very much more than the interest of the mortgagor. Yet the Government apparently adept a non possumus attitude and treat the mortgagee as if he were not really concerned as the person who has got the real interest in the property in question.
I come next to the main objection, as I understand it, to the Amendment which I put forward. The main objection is that the mortgagor has convenanted to pay principal, interest and costs. Is that really any reason for fixing on him the whole liability for these War Damage Contributions which neither the mortgagor nor the mortgagee contemplated at the time when the mortgage was entered into? I cannot see why, when the Government are distributing various amounts as due for War Damage Contributions to mortgagor and mortgagee, the mortgagee should be held not to be a proper person to discharge some portion of them if he has, as I have
774
established, a real interest in the land and house. Why not? I confess I cannot see it. The Government can do what they like and arc only concerned with the fairness of the proposal. In a large number of cases which the Government have not thought to bother about the mortgagors are unable now, and will be unable, to pay a penny. The diminution in the value of houses has been very great even in cases where they have not been damaged by bombs. In cases where they have the position is really tragic for the unfortunate mortgagor. The only real security of the mortgagee is in the property, and it is fair that he should bear a certain proportion of the burden.
There is only one other argument I have ever heard which is worth your Lordships' consideration. It is that this is an interference with the sanctity of contract. I cannot see what sanctity has to do with this matter of fairness. In a special emergency this war tax of a capital nature was imposed to meet the special case of war damage to property which falls on the just and the unjust alike. The damage will not be due to the acts or defaults of property owners. It is a misfortune which comes from the fact that we are at war with a foreign Power. The tax was an unforeseen and unanticipated one which the Government were perfectly entitled to impose equitably as between mortgagors and mortgagees. But the Act itself disregards such questions as sanctity of contract. We have in the Act the most elaborate interference with the rights of landlords. As between landlord and tenant there are enormous changes introduced as compared with the position which would exist if you left existing leases to operate. Yet I have not heard that anybody is shocked at that because it interfered with the sanctity of contract.
If your Lordships know anything about Income Tax—I hope you do not—you will be well aware that the Income Tax Acts all along have contained a provision that no contract or other instrument of any kind which seeks to throw liability on some party other than the person who is in receipt of rent or interest or other charge of that sort is to be valid. The Acts have always declared them void. That, you may say, is an interference with contracts. But has anybody ever thought it unfair? When the Crown is imposing Income Tax, it is entitled to say: ''We will impose a certain share of

775
that tax on the person who is going to receive the interest on a debt, none the less because he is a creditor and the other man a debtor." Why should it not be so? In this present Bill the sanctity of contracts is disregarded. The only reason I can think why landlords have been treated as they are by this Act, if it be true that the sanctity of contracts is to be regarded, must be that landlords for some reason must be regarded as criminals. By a parity of reasoning, I suppose, mortgagors must be regarded as misdemeanants. But if you are going to be fair to the mortgagors you must, I submit, have regard to the fact that the persons really interested in a vast number of cases are the mortgagees—they are predominantly interested. But although there are some cases in which the interest of the mortgagee is smaller, that, I suggest, is a matter for attempting a slight Amendment to my Amendment. I have taken the form or proportion which the Government have accepted, and I think it works out at something like rough justice as between mortgagors and mortgagees.
There has been no vote yet in either House on this particular Amendment. It was not voted on before in this House because it never was before your Lordships. It was not voted on in the other place because the Amendment then before the House included an Amendment which related to bankers' charges and debenture holders and floating charges, and there were interests arrayed against any interference with those particular interests. There was, however, very wide support coming from all sides of the House in the other place even with the Amendment in the wider form. The voting in fact on the Amendment was 87 against and 53 in favour of the Amendment. My conjecture is that limited as the Amendment now is it would have been carried, and I have, as I have said, the great authority of the late Lord Stamp, Viscount Swinton and other noble Lords, some of whom I hope will speak in this debate, in favour of the Amendment which I have put on the Paper.
I hope that we are not once more going to be favoured with a statement that this is a departure from the principle of the Bill. The real principle of the Bill is to be fair alike to all the people who have houses or land property. That is the
776
principle of the Bill. There is no principle in favour of treating mortgagors as if they had done something disgraceful, though the Government have long been urging legislation which has been encouraging them to buy their houses and also to borrow money from building societies on the faith of the security of the property. I have long been concerned in endeavours, to the best of my ability, to secure justice. Well, I am completely disinterested in this matter as I used to be in dealing with those matters which came before me in the past. I am not a mortgagor or a mortgagee. I am not even happy enough to be, so far as I know, a debenture holder. But I am interested in justice, and for the reasons I have given I urge your Lordships to support this Amendment on the simple ground that it is just and equitable. I beg to move.
Amendment moved—
Page 22, line 48, at end insert the said new paragraph.—(Viscount Maugham.)
LORD BARNBY: I am sure that the Committee will have been overwhelmed by the lucidity, the logic—and to use a phrase which the noble Lord emphasized—the common sense approach to the subject with which my noble and learned friend has been good enough to explain this Amendment. He referred to the debate on this point which took place when the principal and original Act came before the House, and he quoted in support of his reasoning the opinion of one who, alas! is no longer with us, but which opinion nevertheless evidently carries now, as it did then, great weight with your Lordships. This is shown by the wisdom of my noble and learned friend in deeming it appropriate to quote that opinion now. It so happened that that debate arose on an Amendment which was put down in my name, and for that reason I ask for the indulgence of the Committee in order that I may add some words on this particular point now. I think I shall have the sympathy of the Committee when I ask you to recognize the position in which I as a layman now find myself. The position for one like myself, inexperienced in the law and in speaking, is indeed one of some inconvenience seeing that I come in, as it were, between the expressed opinions of a former Lord Chancellor and the reply on behalf of the Government of the present Lord Chancellor.

777
I make that explanation in the hope that it may gain for me the indulgence of your Lordships, and I now venture to ask your attention to the simple aspects of this proposal. I think you will all understand my relief at my good fortune that, instead of moving the Amendment which stood in my name, a task which would have involved some attempt on my part to deal with the legal aspects, that task of dealing with legal aspects has been performed with the brilliance, skill and overwhelming conviction of which my noble and learned friend is a master. The explanation which he has given to the House relieves me of the necessity of attempting to deal with the legal angle at all. I feel that the Committee will have been convinced of the force of the analogy which he gave on the subject of interference with the sanctity of contract. When your Lordships hear from a former Lord Chancellor so clear an analogy I have no doubt that you will be convinced that, on the legal side, there is no foundation at all in what has been put forward on behalf of the Government by the Chancellor of the Exchequer in another place.
Speakers may well cite the case of a company the shares of which are held by a multitude of small investors on whom, therefore, great hardship may fall if they are forced into the position of being called upon to pay the whole of the War Damage Contribution which is a capital charge. In an instance which was quoted in another place and to which I propose to refer in a minute, an example was given of a company that had to pay £70,000 a year. I do not know whether the shareholders were large or small. That means that £140,000 of income is required in order to pay £70,000 net as War Damage contribution. It may well be, moreover, that this will be a case where the other £70,000 would have been paid anyhow under Schedule A.
I come back to this simple illustration, which concerns the common-sense view of the situation. Here is a mortgagor who, as I have tried to emphasize, may merit the good will and the support of the community, because he has been trying to provide housing accommodation for the working-classes. He finds it necessary to raise capital, because he probably has no capital of his own, and so he uses other people's money, making use of the
778
ordinary machinery for the purpose. He is helping to keep the country going, but hs is called upon to pay the whole of this contribution, without, should he have effected a mortgage, getting any contribution from the mortgagee. That does not seem good logic or good sense. It is not equity. My noble and learned friend said that during a long life he had been occupied in pleading for equity. He brings the richness of his accumulated knowledge to bear on this question, and gives the Committee the benefit of his long experience. I am sure that his arguments must be found overwhelmingly convincing.
It is a curious thing that, where a mortgage applies to a house of a rental of £150 and under a year, an exemption is made, but that exemption is denied to other cases which may be regarded as equally entitled to consideration. It is a curious thing that this provision applies to houses but not to tenements. If a man without much capital, who is trying to develop the country and provide accommodation for the working-classes, provides that accommodation in the form of houses, the Act applies; but if a company builds a large block, giving the same accommodation, upwards instead of horizontally—in the form of flats instead of houses—it does not apply. That stultifies the whole principle of the Bill, and there is no logic in it at all. I instance that as one example which I hope will appeal to the Committee. I hope that 'the Committee appreciate the difficult position which I am in, in speaking to an Amendment such as this, when I find myself confronted with those who are so qualified to speak on the legal aspects of the measure. This, however, is not a legal matter. If the Official Report of the proceedings in another place is studied, it will be clear that, because of the character of the measure, people are afraid of it; they think that it is something which they do not understand. It is plain, I think, that an overwhelming majority of the members of the other House do not understand it, and one might almost assume, from the attendance here to-day, that there are many members of this House who do not take any interest in it, even though they may be directly or indirectly affected—and we are all indirectly affected, because we are all taxpayers. This may seem to be a very involved question, but it is really a very simple one. It is a question which,

779
as my noble and learned friend has emphasized, is one of pure equity and common sense.
My noble and learned friend has emphasized that his Amendment does not include bankers' charges. This matter was raised in a debate in your Lordships' House on another occasion. I notice that my noble friend Lord Wardington is present, and he may have something to say on the matter. He will probably feel that when my noble and learned friend presses his Amendment to a Division, the Amendment will be adopted. In another place a speech was made by someone who has definite associations with banking and who, curiously enough, quoted as an example, to support his argument, the case of a very large property company which would be particularly interested in this matter. It was curious that he should have chosen this to illustrate his argument, because it is a case which affords the strongest support to the argument that the mortgagee should be asked to contribute something. When an Amendment dealing with this question was moved in another place, it was specifically provided that banks should be excluded, because short-term advances, of three months or so, could not be regarded as a definite mortgage. In any event, when it was argued that a portion of the contribution should be made by the mortgagee, it was provided that that should not exceed at the most 50 per cent. of the interest paid.
My noble and learned friend said that it was evident in another place that there was an "array of opposition" to the Amendment which dealt with this point. In that connexion there is one point which, with the indulgence of the Committee, I should like to make. The property owners who happen to be poor people who have mortgages are not organized, but the big banks, the insurance companies and the investment companies are strongly organized. It is a curious thing that the case put forward by my noble friend Lord Balfour of Burleigh, in the Amendment which he moved a short time ago, should not have received the support of Labour members of the Committee. His Amendment suggested something for the benefit of the smaller men, to alleviate distress in the case of the smaller men who have tried
780
to build houses for the working-classes. It is an amazing thing that Labour members of this Committee should have voted against it.
I am very glad that, as circumstances have turned out, I withheld my Amendment, and left the first attack to my noble and learned friend Viscount Maugham, who has been able to deal so brilliantly and so convincingly with the legal aspect of this matter. It is hard to understand that in a matter like this, where the hardship is often borne by small people who have organized themselves to build houses for the working classes, the Labour Party should be found in opposition. If, as I believe, the Committee support my noble and learned friend, then there will be an additional evidence of the inconsistency which has already been conceded by the Government in the case of the building society and the £150 line. My noble and learned friend emphasized the fact that there was no question of the sanctity of contract in this case, because the Rent Restrictions Act has already introduced something which has broken the sanctity of contract, and he gave the further instance of Income Tax.
Possibly the noble and learned Viscount is going to concede this point. At any rate, I am convinced he will see that there is logic in the wider concession being made, which would correct the injustices that already exist, and which is manifastly fair, and would exclude all the arguments of difficulty with regard to short-term loans, such as are made by banks, while meeting the argument so strongly put forward in another place for this necessary correction. And if the noble and learned Viscount does not concede this point to-day, I hope he will consider the propriety of making the concession at a later stage in the Bill. At any rate I hope I have convinced the Committee on pure logic and equity. The opinion of the noble and learned Viscount. Lord Maugham, is an emphatic one, and I suspect the Lord Chancellor might well feel doubtful about the fairness of this treatment of the mortgagor, which I consider to be harsh, though in the position in which he finds himself he has to adopt a different attitude. I hope that if my noble and learned friend presses his Amendment he will receive the support of the Committee.
LORD WARDINGTON: I would like to say a word on this rather difficult and vexed question of the respective responsibilities of mortgagees and mortgagors. I ventured to speak on the subject when it was before your Lordships this time last year, when the principal Act was being discussed, and I remember that the noble and learned Viscount thought I was wrong in the views I expressed at that time. I am, therefore, very diffident in rising to-day and saying that I am unable to accept or support his Amendment. I am all the more sorry because his Amendment has to a very large extent met the objections which I had formerly on two very important points, and I will not therefore refer to them—the objections regarding temporary fluctuating loans secured by a banker's charge on the one hand, and the difficulty in connexion with a debenture on the other. The noble and learned Viscount's Amendment has recognized those difficulties, and expressly eliminated the holder both of an equitable mortgage and of a debenture from liability to contribute. From the business point of view therefore, the Amendment is designed to get over those two practical difficulties.
But I would like to approach the subject, not merely from the point of view of what is administratively easy and practicable, and certainly not from the legal point of view, when I should have such a formidable opponent as the noble and learned Viscount, but, like both him and my noble friend Lord Barnby, I would like to approach it on the broader and more general grounds of what is equitable and fair and in accordance with common sense. I, like all other Englishmen, think I have a certain amount of common sense in my composition, and a sense of what is just and fair. It only shows what a funny thing common sense must be, because people who pride themselves on this quality differ when they test it on a particular point. Let me bring it down to quite the simplest form that I can. If I am the owner of a house, it is naturally my business and interest to protect it as far as I can against any damage which it is likely to suffer. I therefore insure it against fire. If I am unfortunate enough to live in a country which is liable to tempests and earthquakes I insure it against those possibilities, also against floods, burst pipes and frost, destruction of glass by hail, and anything else that I
782
can think of which is necessary or desirable. It is my property, and it is my business to look after it and to protect it as far as I can against these eventualities.
If, having done that, I wish to borrow a sum of money on it to put into a promising venture which I believe will yield me a considerable profit, would it be reasonable for me to expect that the mortgagee or the lender should be liable for any of those premiums, when all that he gets out of the transaction is a small fixed interest, and he has no interest whatever in any possible ultimate profit which is made? I do not believe there is anybody who can think that that would be fair. I know of course that the noble and learned Viscount thinks that the analogy of fire and other similar insurances is fallacious, and that War Damage Contribution is quite another matter, and he points out that this Bill deals, not with what might be called more or less ordinary and foreseeable risks, but with accidents due to a war. He pointed out to your Lordships that the mortgagors have already suffered very much from the depreciation of their property owing to the war, but mortgagees have also suffered very considerably. If fire and other similar insurance is not a proper analogy, I should like to draw your Lordships' attention to another measure which seems to me to be entirely on all fours and to constitute a complete analogy. The commodity insurance scheme under the War Risks Insurance Act, 1939, makes compulsory the insurance against war damage of goods for sale. No one has ever suggested, as far as I know, that, when these goods are pledged, the pledgee should contribute towards the cost of insurance.
LORD BARNBY: May I ask whether the contribution in that case is not a charge to trading?
LORD WARDINGTON: I do not think that the fact that the one is paid out of capital and the other out of income has really very much to do with the argument. I feel, myself, that the insurance of these goods owing to the war is very much on all fours with the insurance of property, and I cannot see why, in all fairness, house property should be specially favoured and not treated in the same way. I have another case where it seems to me to be quite inequitable to ask the mortgagee to bear the whole responsibility. Let us take the case of a limited company

783
formed for the purpose of dealing with properties. In its capital structure there are three classes of persons who have contributed to the erection of the buildings and their maintenance—the mortgagee, the preference shareholder, and the owner of the equity or ordinary shares. Why the mortgagee, of these three, should be expected to contribute and the preference shareholder, for instance, goes scot-free, I cannot see, in common sense, fairness, or anything else. It must not be assumed, as it sometimes is, that the borrower is generally poor and the lender rich, and that therefore the former should receive some special degree of compassion. Beneficiaries under a trust, the funds of which are invested in a legal mortgage of property, are often in dire need of their small incomes, and deserving of greater consideration than the mortgagor, who may be much better off than they are. It surely is not fair that their small incomes should be depleted by the deduction of the contribution to the relief of the mortgagor who, besides the property, has given his personal covenant, which is of value.
One further point seems to me worthy of mention. This Amendment leaves the holders of mortgages from third parties under liability to contribute. People are frequently kind enough to deposit their deeds and to pledge them to secure a loan for a friend, or to deposit their deeds in support of a guarantee for the same purpose. It cannot be regarded as fair to ask the mortgagees in that case to pay any of the contribution when it is quite uncertain they will have to resort to that particular security for the debt which the debtor will most likely discharge himself. If your Lordships think I am wrong, and that, on the contrary, you regard as equitable and common sense the suggestion that mortgagees should contribute, I confess I cannot find that ruling principle in the Amendment of the noble and learned Viscount. Under it, liability to contribute will depend not upon any particular principle, or on the nature of the interest of the party concerned, but merely on the form in which the relevant document is drawn. No doubt it has been framed with the object of overcoming the administrative difficulty of making banking securities and security for temporary advances liable to contribute.
Although I greatly acknowledge this concession in favour of banking securities,
784
I wish to be quite unbiased in my mind, and I cannot find any ruling principle of fairness in this. Moreover, even from a bank's point of view, bank mortgages are very often legal hard-and-fast ones which would not be eliminated by the terms of this Amendment. It is perhaps difficult, if not impossible, to frame a Bill of this kind without hardship or unfairness to anyone, but it has been most carefully considered and most patiently debated, and on the whole it appears to me to be as fair as it can be made. I hope therefore it will stand as it is, and that your Lordships will not think it right to accept this Amendment.
THE LORD CHANCELLOR: The argument in favour of this Amendment has been very powerfully and elaborately presented to the Committee, and the time has come when your Lordships generally would wish to know the view which is taken of it from this Bench. I shall try and state the arguments which I wish to present briefly, though the matter itself is complex and technical, and no doubt that makes it very difficult to deal adequately with the subject in a few words. The first consideration would ask your Lordships to weigh is this. This is a proposal greatly to extend Section 25 of the main Act—the War Damage Act, 1941, which became law in March of last year. The subject matter was discussed when the main Act was passing through the House of Commons. It was discussed, as your Lordships remember, in this House, and the clause was maintained without alteration by the majority of your Lordships.
VISCOUNT MAUGHAM: We did not vote on it.
THE LORD CHANCELLOR: Then it was maintained unanimously by this House! I quite agree that my noble and learned friend's Amendment was not available to the House of Commons. It is a most ingenious work of art which does him infinite credit, but the question was considerably debated in the House of Commons on this Bill, and the Bill comes up in the form in which we see it.
I have to say quite bluntly, on behalf of the Government, that our desire is that in this respect the Bill should stand as it is. As regards the merits of the Amendment, my noble and learned friend protested quite properly and naturally

785
that he was disinterested. I hope that in this matter we are all disinterested. I should think so. He pointed out that it is not a matter in which the Government have any concern in the sense that the Government have to find the money. The Government have no bias in the matter whatever. The Government have received a very great deal of advice and a great deal of consideration, and analyses have been devoted to this; subject for many months. The view of the Government is that in this admittedly imperfect world the Bill in this respect is about right. My noble friend may say he has devoted the whole of his life to the pursuit of justice. So also, I think, have others of us——
VISCOUNT MAUGHAM: I did not say all my life.
THE LORD CHANCELLOR: I hope most of it. At any rate he pointed out that he was deeply moved on this matter.
LORD STRABOLGI: He has sat on the Woolsack.
THE LORD CHANCELLOR: He was deeply moved on this subject, and feels about it no doubt most sincerely. So do other people. We really have to look at the thing without any prejudice on one side or the other, from the pure dictates of common sense to which my noble friend Lord Barnby referred. Indeed he said his view was that they were so powerful it was not necessary to go on speaking at all.
LORD BARNBY: I spoke mainly in support of my noble and learned friend.
THE LORD CHANCELLOR: Certainly, I understand that. It does appear that even so sensible a man as Lord Wardington takes exactly the opposite view. I could understand it if this proposal of my noble and learned friend which is now before us really had the slightest justification to be the application of principle. Justice no doubt depends amongst other things on trying at least to observe good principles. He claimed in the course of his speech that the principle was that all who had an interest in land and buildings should contribute to this War Damage Contribution. That is a principle. Whether it is the right principle I will examine in a moment, and whether it could be practically applied,
786
I will also consider in a moment. But the first point is that my noble and learned friend's Amendment does not embody that principle at all. He is careful to say—and I quite understand the reason, because he remembers the last debate—that his Amendment is limited to legal mortgages. He commends them to your Lordships by describing such things as straight mortgages. That is an expression which I myself do not know, but I am not so familiar with the law of mortgages as he is.
Supposing a man borrows money by the deposit of the title deeds of his house. That, as I understand, is not a legal mortgage. Then, according to this Amendment, if he does that, there is no principle of justice that requires that the mortgagee, the lender of the money, should contribute anything at all. Why not? If the principle is that the man who lends money on mortgage ought to bear a portion of this contribution, what conceivable reason is there according to common sense that he should only do so if it was a legal mortgage? Exactly the same consequences in common sense ought to follow in the case of an equitable mortgage. The first thing which a Court of Equity, about which my noble and learned friend knows so much more than I do, does is to see that the man who has the equitable mortgage is not denied the rights he would have if he had a proper legal mortgage. There is no possible distinction in principle whatever on which you should take the one and leave out the other, except this. If my noble and learned friend was really to write down an Amendment which embodied this principle, it would at once be exposed as being completely impracticable.
Then my noble friend wishes to leave out bankers' charges or floating charges, or debentures. A very distinguished Chancery lawyer has declared before now that he did not know what debentures were. That is what Lord Lindley said. Why should certain things be left out if the principle is that in the matter of this contribution for war damage people who have advanced money on security must be expected to take their share and pay their whack? What conceivable difference can it make in principle or in common sense that the advance takes the form of debentures? Indeed the thing becomes perfectly fantastic. Suppose you

787
have two builders working side by side, one of whom receives the money for developing his estate by what my noble and learned friend calls a straight mortgage. Then in the sacred name of principle such a person must contribute. But supposing the builder happens to be a limited company and raises exactly the same sum of money by issuing debentures; then he has not to contribute at all. It surely is quite obvious to everybody who looks at this thing that, whatever may be the merits of this proposal, it has not the smallest claim to be regarded as an application of a principle.
There is a second difficulty which I must state with the greatest respect to my noble and learned friend who has studied this subject and has presented it to your Lordships very persuasively. In this matter some regard must be had to practicability. The law is not always as technical as some people suppose, but if Acts of Parliament are so drafted, or are so amended, as to produce great complications, it is the fault of the Legislature. In this instance it would be the fault of the House of Lords; it is not the fault of the law or of the draftsman: Let us see what would be the result if we were to apply this principle. I think I remember on the last occasion that my noble friend Lord Wardington pointed out in reference to such things as floating charges or bank charges, or if you like bank loans, that you would at once get into a fearful complication because the particular loan which was charged on the house was also charged on a lot of other things as well. A man goes to his banker and says: "I want such-and-such a loan for the purpose of my business, will you lend me £2,000?" The banker says: "What security can you offer?" It is very likely, for it constantly happens, that he offers a collection of securities, he offers an insurance policy, he offers his reversion under somebody's will, amongst other things he may offer the title deeds of his house. You cannot determine what is the proper amount of this war risk contribution in respect of the house that should be borne by the mortgagee without going through the most elaborate valuation of all the items of the property. That is one of the reasons why my noble friend in his Amendment has endeavoured to exclude some of these cases, but as a result
788
he has completely sacrificed any principle there could be in the matter whatever.
Let me take practicability. If mortgagees are to bear a share of the contribution, elementary justice requires that the extent of the contributions which they are to pay should be related to the extent to which they are concerned in the preservation of the property—that is to say, to the relation between the amount of the mortgage deed on the one hand and, on the other hand, the value of the rest of the interests of the property mortgaged. Then, if a bank has got a legal mortgage on a particular property as well as a variety of other securities, which may be stocks and shares that are constantly changing their value, this Amendment would require that the authorities who were trying to work this scheme in order to find out how much the contribution should be from the mortgagee, will have to value all these items. I can only say that I have made inquiries about it from the War Damage Commission and that the persons responsible think that, as a matter of administrative machinery, this is a burden they are most unwilling even to contemplate.
VISCOUNT MAUGHAM: I am sure the noble and learned Viscount will pardon me. I only want to understand the illustration. I confess I do not understand it at the moment. The banker may lend £10,000. He gets a mortgage on part of the property of the borrower for, say, a couple of thousand pounds: what is the difficulty?
THE LORD CHANCELLOR: I should have thought that it did make a difference whether the mortgagee was really depending on the particular hereditament which is at risk of being destroyed or on a whole series of other securities. I should have thought it quite unfair to call upon the mortgagee to make the same contributions in respect of a house on which he held a legal mortgage if that was the only security he had, so that it really did depend on the existence of the house, as in the case of a house which was a mere make-weight in a whole series of securities which had nothing to do with the house. That is the suggestion I make. I do not believe, and those who have examined this confirm me here, that it could be worked with reasonable convenience and facility. The plain fact is that in order to define the extent of the contribution to be paid by

789
mortgagees, it would be necessary for a valuation to be undertaken in every case of the value of the freehold or leasehold property that is mortgaged, and other securities which are held in many cases.
My noble friend has spoken as if the only thing mortgaged is the fee simple. There are plenty of cases of mortgages o f leaseholds. The complications which would arise, in the opinion of those who advise me, who have been working at this thing in the Department for many months, are such that they really cannot face them. It may be said: "You protest that the Amendment does not carry out any principle but does the Act as it stands embody a principle?" I admit at once that Section 25 may very well be regarded as an exception. I think myself that it is well justified, and well justified on this ground. I am not using the language of technicality, but I am endeavouring to use the language of common sense. A contribution is required under Section 25 from mortgagees who fall within that section on the ground that the mortgage transactions dealt with in that section really partake more of the nature of a joint adventure between the mortgagee and the borrower than of a transaction in which capital is advanced on security and in which the borrower is intended to take all the risks. Substantially it is the ordinary building society case. Anyone who has been on the outskirts of London where estates are being developed by building societies, will have noticed placards stating that a certain house is offered and may be bought at 18s. 6d. per week, or whatever it may be. That is, of course, only in a manner of speaking. Strictly speaking, no doubt the occupier is the person who has mortgaged the property through the building society, and I am quite free to admit that were we to proceed with pedantic precision we should apply the same rule here as elsewhere. But as a matter of reasonable adjustment, and with the acquiescence of the building societies, we have said that if it is a case of a man acquiring his small house as his own residence, not worth more than £150 a year, there shall be a contribution made in effect by the building society.
LORD BARNEY: May I ask the noble and learned Viscount if he could explain at this juncture the distinction between houses up to £150 annual value and dwellings in the nature of flats which
790
would be of the same rateable value, which would form in the aggregate a building which would be the property of a company, the owners of which would be all small shareholders?
THE LORD CHANCELLOR: My noble friend makes a perfectly good point, and I do not reproach him because he has not read every word of the Bill. If he will turn to page 22, at line 9 he will find paragraph 4 and immediately under that subparagraph (a). I think I may summarize that by saying that that is proposed to meet the exact point he makes. I think he was right up to this moment that if a builder built a series of small houses horizontally, the proviso to Section 25 (5) would come into play, but if he built them vertically it might not come into play. That is a perfectly good point, and it is dealt with in paragraph 4 (a). He will have the satisfaction of knowing that, whether building was horizontal or vertical, as long as there is a residence within the limits of value laid down for the two cases, the same law will apply.
What I was saying was that Section 25 is admittedly in the nature of a limited exception. It is an exception to which the building societies agreed. It is true that the small man engaged in acquiring his house is really in effect in a joint venture with the building society, but outside that you really come to the point which I think myself is conclusive here. I do not speak hotly, because I know great authorities take a different view. If you try and apply the principle that lenders of money on mortgages must share with the mortgagors, then this Amendment does apply, but nobody knows better than my noble and learned friend Viscount Maugham, that if you applied it universally, you would get into a terrible confusion between equitable mortgages, floating charges, debentures and the rest of it. It is not the case that debentures are always issued by limited companies. There is a golf club which, finding itself short of money recently, raised money by issuing debentures to two or three of its more wealthy members. There is no sense in saying that you will not require a contribution if the lender is a debenture holder, but will require it if the lender is a mortgagee. That is a point of principle. The point of practicability is just as important. We must have a machine that will work. It is certainly not my wish to oppose my noble friend, but I assure him it is not a

791
practicable matter to enter upon an immense number of additional valuations which would have to be entered upon. It must be one of our objects to make this thing simple. At present it does not look too simple to judge from some of the Amendments I have moved this afternoon. I ask your Lordships to support the Government and not make the matter more complicated still.
VISCOUNT MAUGHAM: I cannot say that I am surprised at the attitude my noble and learned friend has taken, because the Government have rather a reputation for not accepting any Amendments moved from outside and for administering, if not a reproof, at any rate something like a reproof to those who bother them to consider something which they have not themselves thought of. Let us see where we are. In the first place, the noble and learned Viscount addressed to us some very excellent observations with his usual skill in reference to this Amendment. He tried to show that it was not the application of a principle and that accordingly it ought to be disregarded. I was prepared to make some observations on the subject of Section 25. But I knew very well that my noble and learned friend would be clever enough to see that all the observations he had previously been making were, in effect, destroyed by the fact that the Bill contains the elaborate provisions of Section 25.
It is no good saying that you must never touch the rights of mortgagees by requiring any obligation from them when you have already done it, and the only apology for doing it that came from my noble and learned friend was that in the case of the particular mortgages there described there was a joint adventure between the mortgagor and the mortgagee. My answer is that there is, to an equal extent, a joint adventure between a mortgagor and a mortgagee in practically every case where a mortgage exists. The mortgagee is acquiring the property subject to the right of the mortgagor to redeem. The mortgagor is putting himself in the position that he may be thrown out if he is not able to pay the money. That is a real joint adventure of a kind, and it is just as much a joint adventure if the money is borrowed for the purpose of a mortgagor sending his boy to a
792
University as if he borrows for the purpose of improving his property and putting an extra building on to it.
The real truth, I submit, is that the whole of the argument of the Government against this Amendment is one which rests upon this false view that if you cannot do complete justice on a particular principle you ought not to do justice at all. The suggestion they make is that the Amendment rules out debentures and floating charges, that therefore you have to agree that it is not a universal yardstick for justice, and that, that being so, you ought not to go on and do what you can do. I know that half a loaf is better than no bread, and I know that in the case of emergency legislation in particular you cannot deal with every case, but I think that my noble friend Lord Wardington must have felt a little bit uneasy when he heard the Lord Chancellor explaining that debentures and debts due to debenture and floating charges and bankers and equitable charges and so forth could not be differentiated from the Amendment which I have placed before your Lordships.
I have here—and I could read them to your Lordships if it were not that I do not wish to delay you—two passages in which Lord Wardington showed that these were different cases to that of the ordinary mortgage. Of course he is right. There is a distinction between them—they are cases of different sorts. I am not denying for a moment that you can put before me the case of a debenture which is exactly the same as that of a legal mortgage in a special case, but I do submit—and I am well aware of this—that in ninety-nine cases out of 100 a debenture is a different sort of thing to a legal mortgage, it has different effects, a different commercial value and different commercial result. That is the reason why, very largely, my noble friend Lord Wardington on the last occasion complained that the suggestion would hurt debenture holders, and, in the same way, he pointed out that there was the very greatest objection to temporary loans on the security of deposits of title deeds. These again are different in their nature to such instruments as I am asking your Lordships to help me about here.
I submit that really the argument against the Amendment is no more than this. I agree that it is imperfect. Let, it be so. I agree that it does not touch

793
some things which may be very near the line. Nevertheless, if it is fair to the people who are going to have the benefit of the Amendment, if it should become law, is there any reason in the world why we should not do it? This seems to me rather like what the noble and learned Viscount said not long ago with regard to logic chopping. I am not here to defend logic. I am here to try to do justice to these people, and if there are a certain number of cases that will not be within my Amendment I am sorry, but I know very well, as your Lordships also know, that with emergency legislation of this kind you cannot have complete justice to everybody. You can only do the best you can with the material and in the time available to you. My noble and learned friend asks, what is the matter with an equitable mortgage and why is not that included? I agree that there may be certain equitable mortgages that are only in form different to legal mortgages, but these are not normally cases of equitable mortgages. I am leaving them out because I want to cover the real genuine case where a mortgagee is deeply interested in the property in question because he has a legal interest in it, the case of a mortgagee who is entitled to foreclose, who is entitled to possession subject to leave of the Court, and to sell subject to giving a certain notice.
These cases, I venture to think, are obviously cases in which the mortgagee is deeply interested in the property, and, as indeed in normal cases, is far more interested in the matter of stake than the mortgagor himself. What is my noble friend's answer to that? I have listened with great attention and I have not noticed that any answer has been given to that at all. It is true that he says that the suggestion contained in the Amendment is not a practicable suggestion. That rested upon some advice that was given to him by somebody, we know not whom, and I do not understand why in the least it is not practicable. I do not follow his point about a banker having a legal mortgage. If a banker is, making an advance to a particular individual, say, an advance of £10,000, on the security of his land and his stocks, that is a normal case which any ordinary banker would have to deal with daily. In the ordinary way he could take a bankers' charge for that to cover the whole lot, and it would be generally for a fluctuating account with
794
an interest varying according to the bank rate.
That is the normal case. The noble and learned Viscount says to me—and it is true—that the bank may have a legal mortgage. Of course it may, but what docs it do in that case? I am taking the normal case, not an exceptional case. The bank, let us say, is lending £10,000 on the security of land and buildings and of certain stocks, and it wants a legal mortgage. It does not take a legal mortgage in any form except the ordinary form, at any rate in nine cases out of ten. I have seen plenty of these things when I was younger and a member of the Chancery Bar. In such cases, the bank would take a floating charge in the sense of a bankers' charge on the bankers' terms on the ordinary property, and take a legal mortgage for a specific sum with, as in any legal mortgage, a covenant to repay in six months, which is the ordinary term, and with the proviso for redemption, and all the rest of it; and the amount secured would be the amount which the bank considered was sufficiently secured by the property. The bank would not put in £10,000 if the property was worth only £2,000, because the amount would affect the stamps, and bankers do not throw money into the sea on stamps, any more than other people. The bank would therefore get the ordinary banker's charge on stocks and, if they wished it, take a legal mortgage for the value of the property, which might be anything you like up to a few thousand pounds.
What is the difficulty, if that is the case, in dealing with the Amendment before the Committee? There is no question of any valuation at all. This would be a case where the bank receives a mortgage in the ordinary form, or to use the words of the Amendment, a mortgage "for securing money or money's worth which vests a legal estate in the mortgagee," and that would be the bank. The bank would therefore have all the rights of a legal mortgagee. If I take it that the mortgage is for £2,000, a specific mortgage on property, that mortgage would be dealt with for the purposes of contribution in precisely the same way as a mortgage for £100 or £1,000 granted to someone who builds his property with the money or who, alternatively, after he has built his property borrows money on it for some proper purpose. I cannot

795
help thinking, with the greatest respect to the noble and learned Viscount, that this notion about the impracticability of this Amendment is really based on some misconception either of what the Amendment does or of what the real facts are.
I do not like to take up the time of the Committee any longer. I have dealt substantially, I hope, with the answers which have been made to me. But I ought to refer to the argument of my noble friend Lord Wardington, that people may mortgage properties for the benefit of third parties. That is a true observation. It is one of those rare cases which may sometimes occur; but, if I purport to mortgage my property for the purpose of
Resolved in the negative, and Amendment disagreed to accordingly.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, in paragraph 11, to leave out sub-paragraph (2) and insert:
"(2) For the avoidance of doubt it is hereby declared that the said sub-paragraph (1) has effect—

(a) in relation to a tenancy under which no rent is reserved, as if a rent were reserved under the tenancy bearing to the value of the land comprised therein a proportion of less than one quarter;

(b) in relation to a tenancy under which the rent reserved is not a money rent, as if the reference to the rent or the annual equivalent thereof were a reference to the money value of the rent or the annual equivalent thereof."

The noble and learned Viscount said: Sub-paragraph (2) is for the avoidance of doubt, but after it was produced there seemed to be some doubt as to whether it avoided the doubt, so here is the substitute
an advance of £1,000 to me, and hand the money over to a third party, I ought to pay my share of the annual contribution like anybody else, and I would get it from the person whom I was obliging. I can see no injustice there. It is a very rare case, but where it does occur it does not seem to me that it leads to any injustice. I am afraid that, with the very greatest respect, I am unable to accept the views of the noble and learned Lord Chancellor, and I ask the Committee to deal with the matter on a Division.
On Question, Whether the proposed new paragraph shall be there inserted?
Their Lordships divided: Contents, 5; Not-Contents, 34.
formula, which is said to avoid the doubt better. I hope it will.
Amendment moved—
Page 25, line 21, leave out sub-paragraph (2) and insert the said new sub-paragraph.—(The Lord Chancellor.)
On Question, Amendment agreed to.
LORD BARNBY LORD BARNBY moved, in paragraph 12, immediately before the proviso, to insert:
"Except in any case where the Commissioners of Inland Revenue have allowed the discharge of such liability to be deferred by reason of the fact that a payment in respect of expenditure on the making good of wax damage to property has accrued or is accruing but has not been discharged."
The noble Lord said: I drew attention to this point on the Second Reading, and I hope the noble and learned Viscount may see his way to give some concession on the matter. Where a ground landlord

797
and the owner of a lease puts up a building and there is a ground rent, it would seem only reasonable that, in the event of damage being done by enemy action and the payment being deferred, the lessor should be able to recover from the ground landlord before the quittance has been received for the payment for the damage to the building.
Amendment moved—
Page 25, line 32, at end insert the said words.—(Lord Barnby.)
THE LORD CHANCELLOR: An Amendment to similar effect was, I believe, proposed in another place, and the Chancellor of the Exchequer then explained that the Government could not accept it. It really is a necessary principle that the direct contributor should make his contribution first. If the direct contributor is able to recover from the indirect contributor before he has paid, there is no security as to what the direct contributor is going to do with the money. Moreover, if the indirect contributor had paid, but the Revenue had not received anything, the result might very likely be that the Revenue would deduct the contribution, and in effect, therefore, the deduction would be suffered twice. The thing will not fit in with the Bill. I am sorry therefore that I cannot accept the Amendment.
LORD BARNBY: I still hope that the noble and learned Viscount may be able to review the situation between now and the later stages of the Bill. I should like to point out that the reasons advanced in another place in opposition to this Amendment have since been dealt with rather at length from different sources, and there seems no reason why some such modification should not be made. But, while I am quite satisfied to leave the matter in the hands of my noble and learned friend, I will ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Second Schedule, as amended, agreed to.
Third Schedule [Amendments in Part II (Goods)]:
THE LORD CHANCELLOR THE LORD CHANCELLOR moved to add to the Schedule:
"7. Application of s. 88.
The provisions of Section eighty-eight (which relate to amendments by Defence
798
Regulations) shall apply to amendments of this Schedule as they apply to amendments of Part II of the principal Act."
The noble and learned Viscount said: I ask the Committee to insert this Amendment, and your Lordships may be glad to know, even at this late hour, that a consolidated Bill, which brings the whole of the provisions together, I hope in a more intelligible form, has been promised. It is necessary to make this Amendment in order that this consolidated Bill may be drawn up.
Amendment moved—
Page 27, line 35, at end insert the said new paragraph.—[The Lord Chancellor.]
On Question, Amendment agreed to.
Third Schedule, as amended, agreed to.
Fourth Schedule:

FOURTH SCHEDULE.

Consequential Amendments.

Provision of principal Act amended.

Amendment.

Provision of this Act on which amendment consequential.

THE LORD CHANCELLOR: The first Amendment to this clause is consequential.
Amendment moved—
Page 28, line 30, after ("therein") insert ("or of a rentcharge charged thereon").—[The Lord Chancellor.]
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is also consequential.
Amendment moved—
Page 28, line 23, at end, insert—

("Section seven, subsection (3), paragraph (c).

After "hereditament" insert "and of rentcharges (if any) to which it is subject."

First Schedule, paragraph 5.")

—(The Lord Chancellor).
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is also consequential.
Amendment moved—
Page 28, line 49, at end insert—

("Section nine, sub-section (5).

After "proprietary interests in the hereditament" insert "and of rent-charges (if any) to which it is subject".

First Schedule, paragraph 5.")

—(The Lord Chancellor).
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is also consequential.
Amendment moved—
Page 29, line 37, at end, insert—

("Section thirty-three, sub-section (2).

For "immediately before the occurrence of the war damage" substitute "at the date by reference to which the disposal of the value payment is to be regulated"

First Schedule, paragraph 6.")

—(The Lord Chancellor).
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is consequential.
Amendment moved—
Schedule 4, page 30, line 36, at end, insert—

("Section forty-five

In subsection (1), after "proprietary-interest" insert "or rentcharge", after "under-lease" insert "or a rent-charge being an equitable interest", and at the end insert "or the legal estate in respect of the rentcharge, as the case may be"; in subsection (2), for "to the legal term" substitute "thereto", and after "proprietary interest" insert "or rentcharge"; and in subsection (3) after "proprietary-interest" insert "or rentcharge".

First Schedule, paragraph 5.

Section forty-six

In subsection (1), for "a proprietary" in both places where those words occur substitute "an", and the words "Sections nine and fifteen of" shall be omitted.

First Schedule, paragraph 5.")

—(The Lord Chancellor).
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is consequential.
Amendment moved—
Page 31, line 40, at end, insert—

("Section ninety-six

After subsection (9) insert— "(9A) For any reference to a rentcharge there shall be substituted a reference to a feuduty and to a ground annual and any reference to the owner of a rent-charge shall be construed accordingly ".

First Schedule, paragrap 6.

Section ninety-six

After subsection (10) insert—
"(10a) Subsection (5) of Section three shall have effect as if for the words "any other incumbrance" there were inserted the words "any ground annual or other incumbrance and any liability to pay feuduty ".

First Schedule, paragraph 6."

—(The Lord Chancellor).
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is consequential.
Amendment moved—
Page 31, line 55, at end, insert—

("Second Schedule, paragraph 1.

After "pounds" insert "or, in the case of a payment to the owner of a rent-charge the amount whereof does not exceed twenty-five pounds per annum ".

First Schedule, paragraph 5."

—(The Lord Chancellor).
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The next Amendment is consequential.
Amendment moved—
Page 32, line 34, column 2, at the beginning, insert ("After 'proprietary interests' insert 'or any rentcharge,' and").—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The last Amendment is drafting.
Amendment moved—
Page 32, line 35, column 3, leave out ("paragraph") and insert ("paragraphs 5 and").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Fourth Schedule, as amended, agreed to.

COURTS (EMERGENCY POWERS) AMENDMENT BILL.
House in Committee (according to Order): Bill reported without amendment.
POST OFFICE AND TELEGRAPH (MONEY) BILL.
Read 3a (according to Order), and passed.

PENSIONS (MERCANTILE MARINE) BILL.
Read 3a, with the Amendments (according to Order).
THE LORD CHANCELLOR: I beg to move that the Bill be now passed.
Moved, That the Bill do now pass.—(The Lord Chancellor.)
LORD MARCHWOOD: My Lords, it is not customary, I know, to make a speech at this stage, but I wish to say how very much satisfaction this Bill will give to the Merchant Navy, and also to thank my noble and learned friend on the Woolsack for the great trouble he cook in making sure of the wording so that the eligibility to compensation would be in no doubt in the case of men affected by tuberculosis. I shall not detain the House after the long discussion we have had on another measure, but I do express indebtedness to your Lordships generally for the spirit in which the points we put were accepted.
THE LORD CHANCELLOR: My Lords, I am greatly obliged to my noble friend. I recognize that, as the Bill was first drawn, it gave rise to doubts, and it was much to be desired that these doubts should be removed. After two efforts they were removed, I believe to the general satisfaction.
On Question, Bill passed, and returned to the Commons.

SUBSIDIZED FOODSTUFFS.
LORD O' HAGAN: My Lords. I beg to ask the question standing in my name.
[The question was as follows:
To ask His Majesty's Government to give an up-to-date list of foodstuffs which are subsidized by the Government
802
and in each case the amount of the subsidy.]
THE MINISTER OF FOOD (LORD WOOLTON): My Lords, the list of foodstuffs which are being subsidized through my Department, and the amount of the subsidy in each case, vary constantly. In these circumstances, the most useful information which I can give my noble friend is based on the last quarter of the last financial year. During the period 1st January to 31st March, 1942, the cost of food subsidies, including freight and marine war risk insurance, was at the rate of £127,000,000 per annum after allowing for the profits (approximately £10,000,000) realized on certain commodities which are not subsidized. The principal foodstuffs which were subsidized during this period, and the annual rate of subsidy in each case, were as follows:—Flour, bread, oatmeal, and animal, feeding stuffs, £40,000,000; meat, £23,000,000 (of which approximately 25 per cent. was in respect of the pre-war cattle subsidy); potatoes, £20,000,000; sugar, £13,000,000 (of which approximately 50 per cent. was the beet sugar subsidy); milk, £2,000,000; National Milk and other milk schemes, £18,000,000; eggs, £11,000,000; tea, £3,000,000; milk products, bacon and ham, carrots, and various small items, £7,000,000. This policy has largely contributed to stabilizing the cost of living.
LORD O'HAGAN: I thank my noble friend for his reply.

CAPTURED ARMS AND EQUIPMENT.
LORD DENMAN LORD DENMAN had the following Notice on the Paper: To ask His Majesty's Government whether better facilities than exist at present can be given to managing directors of firms employed on Government work and other responsible persons concerned, to enable them to view arms and equipment captured from the enemy; and to move for Papers.
The noble Lord said: My Lords, I can explain in a very few minutes the purport of the question I have on the Paper. It is a question that suggests that facilities might be given to engineers and others engaged on Government work to examine arms and equipment captured from the enemy. I am well aware that such

803
facilities already exist, but I do not think that the present arrangements are as good as they might be, and I am quite sure they are not so good as those which existed in the last war. Then it was a comparatively easy matter to get an order to examine captured machines, which were assembled at a central depot conveniently situated in London. Passes were issued from an office in Kingsway. There was little difficulty in obtaining them, and no limit was placed on the number of representatives of any one firm desirous of examining such machines. To-day, if you apply to the Ministry of Production, this is the kind of answer you receive: "Information as to enemy practice is readily made available to contractors engaged on corresponding work in this country provided application is made through the proper channels." In the case of aircraft the application has to be made through the Society of British Aircraft Constructors, who make the necessary arrangements with the Royal Air Force establishment concerned, which I may say is situated in the country.
I have learnt something of these matters from the managing director of a large firm which supplies appliances that are indispensable to all aeroplane engines, all tank engines, motor cars, and motor cycles that are used in Libya. They are also fitted to all planes operating in this country to-day. This gentleman, who is himself a member of the Society of British Aircraft Constructors and who is, as your Lordships may imagine, not unknown in the armament world, reckons that it takes him about a week to get the necessary permission. If it takes him as long as that, it is reasonable to suppose it would take longer in the case of an unknown engineer who is not a member of this society. One suggestion I have to make is that this process might somehow be speeded up. I would also suggest that it should be quite possible to grant permanent passes to heads of firms employed on Government war work, or to their accredited representatives, for the purpose of viewing these enemy machines. In the last war, as I have said, there was a depot situated in London. No doubt there are excellent reasons why the depot or depots—because there are more than one—should be situated in the country, but I assume we have many of these machines captured from the enemy in
804
this country, and I make the further suggestion that it might be possible to place a subsidiary depot in London and another in the North of England where these machines could be inspected.
At Cairo, I am told, it is the case today that there is a regular war museum of captured tanks, etc. I would like to say here that I hope that some of these are shipped home promptly so that experts at home may have an opportunity of examining them, and especially I would say that this should refer to the tanks and guns used by the Germans in Libya. The manufacturer to whom I have just referred heard by accident that the appliances in which he is interested were to be seen with captured aircraft at a Royal Air Force establishment. The Germans and Italians have copied our designs in this matter, and naturally it is of interest to him to see exactly how they have done it, and whether they have improved on our designs. I submit that things of this kind ought not to be left to chance. As a general rule firms that are concerned, with this work should be notified when some machine in which a manufacturer is directly interested has arrived from Egypt or from some other theatre of war. I say advisedly "as a general rule," because it may be the case that with a new type of machine Government designers and experts want the first opportunity of examining it, or in the case of a new type of machine that may have been captured it may be that the War Department concerned does not wish the enemy to know anything about the fact. But subject to these exceptions, I suggest that the firms concerned ought to be notified.
I make these suggestions with diffidence because I have no expert knowledge of these matters, but I hope that possibly they may be considered by the Government Departments concerned. I may say that had my noble friend Lord Hankey been present he would have spoken in support of my proposals. I would remind your Lordships that Lord Hankey has only lately given up the post of Chairman of the Scientific Advisory Committee and of the Enginering Advisory Committee, so that he speaks with considerable "authority on these points. I would just add that it does seem to me that if these facilities can be more readily granted than they are to-day it is quite

805
possible that an engineer who is quite unknown to-day may devise improvements on German and Italian armaments or may hit on an invention that would be of real use to our war effort. I beg to move.
THE MINISTER OF WORKS AND PLANNING (LORD PORTAL): My Lords, in answering the Motion of my noble friend Lord Denman, in which he suggests that improved facilities should be given to managing directors of firms employed on Government work and other responsible persons to enable them to view captured arms and equipment, I would point out that, as your Lordships will realize, this subject really concerns three Government Departments, the Admiralty, the Ministry of Aircraft Production and the Ministry of Supply. I have been in consultation with the three Departments, with one of which I was associated for four or five months, and in all cases I have discussed it with the Minister concerned. I think the best thing, as my noble friends will agree, is to say what is being done and then see what more, if possible, might be done.
In the case of the Admiralty it is the regular practice to make use of, and to impart to firms, information about design, technique and manufacturing processes which may be gained from the examination of captured enemy equipment, and no difficulties are placed in the way of firms obtaining this information when it is in the national interest that they should have it. National interest is a point which the noble Lord made, and in some cases it may not be in the national interest to do as he suggests. It is quite impossible to lay down any general rule on this matter because there are cases in which it is in the highest degree: necessary that we should not disclose to persons who are not immediately concerned the state of our knowledge of enemy weapons or equipment. It must therefore be left to the appropriate Department to decide when it is, or is not, in the national interest that facilities should be given for the examination of captured enemy equipment.
As regards aircraft production, I have discussed this point with the Minister of that Department. He tells me that whenever an aeroplane or valuable piece of equipment comes into their hands in this country, they invite the chief designers of leading fighter, bomber or air-cooled
806
engine firms to examine the aircraft. If the aircraft is undamaged test pilots are invited to fly it. They also give full facilities to the technical Press to view captured aircraft and to describe them in technical periodicals. The Minister of Aircraft Production knows of no complaint that facilities to aircraft firms to view captured material are inadequate.
As regards the Ministry of Supply, they have a staff of tank and weapon specialists who are under the command of the Commander-in-Chief Middle East, and transmit any information on technical matters to the Departments concerned at the War Office and Ministry of Supply. Specimens of all captured weapons are sent back from the Middle East to the War Office, which provides the Ministry with its requirements for inspecting and testing them. Recently captured tanks have been brought back, examined and careful reports prepared by tank-producing firms. I myself have seen these reports and I can assure your Lordships that they are most thorough in every detail. Complete drawings have been prepared by manufacturing specialists doing similar work in this country and are embodied in a final report which has been circulated to all concerned. I was looking at the latest reports to-day upon the tanks that have come back. There were complete descriptions and analyses and photographs of turrets and armaments, brakes, gear boxes and cooling systems of the tanks. I think they were extremely well done and very elaborate in their details.
I would like to point out to your Lordships some difficulties. I do not wish to make any excuse, but there is a world of difference between this war and the last. In the last war we were fighting mostly in France, which is quite close to us, and it was much easier to send weapons over to this country than it is to do so at the present time when the fighting is being done a long way off in the East. But that is being attended to I think in the best way possible. As to the remarks and suggestions of my noble friend Lord Denman on the question of increasing the facilities he indicated, I would like to say on behalf of His Majesty's Government that I shall bring them to the consideration of the three Ministries concerned, bearing in mind what he said as to what happened in the last war, and I hope that will prove satisfactory to him.
LORD DENMAN: My Lords, I am much obliged to the noble Lord for his reply. I do not want to continue the discussion and ask leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

PRODUCER GAS.
LORD BARNBY: My Lords, I beg to ask the question which stands in my name:
[The question was as follows:
To ask His Majesty's Government' whether in view of the increasing needs to save shipping space, and the possibilities of so doing through substitution of producer gas driven road vehicles, to which attention has been drawn by debates in Parliament, information can now be given as to long-range plans for location and distribution of necessary substitute fuels.]
THE MINISTER OF TRANSPORT (LORD LEATHERS): My Lords, His Majesty's Government are fully aware of the necessity for relating the supply and distribution of fuel to the conversion of vehicles, and as part of the plans for this purpose the total present output of suitable anthracite, surplus to present producer gas demands, is being taken into stock by operating companies. Further development beyond the 10,000 of which I informed your Lordships on April 28, must largely depend on widening the range of suitable fuels, research experiments and tests to secure this are being energetically pursued.
LORD BARNBY: My Lords, arising out of that reply, may I with the indulgence of the House, ask the noble Lord in regard to the location of these fuels. In his reply he stated that suitable types of one kind of fuel were being taken into stock by operating companies. I put my question with the object of obtaining an indication of the policy of the Government in regard to a longer range distribution of fuel that would be needed throughout the country. The answer which the noble Lord has been good enough to give me suggests that those plans are not yet developed.
LORD LEATHERS: So far as fuel is concerned for the 10,000 vehicles that are being converted, the supplies will be made available at those points in the
808
country where the vehicles will be run for the selected business that has been taken for those concerned. It is not easy to describe it in any other words because these points are about to be determined. As your Lordships know, we have had to be very selective in the vehicles and the trades, and when they have been finally determined we will finally determine the precise points and road's where this service of fuel will be maintained. As regards further developments, my immediate difficulty is that I cannot see any additional anthracite being made available beyond that needed for the 10,000 vehicles that are now being catered for. We know there will be a need to consider the increased development of producer-gas vehicles, and it will require very close intensive study to find out how we are going to secure anthracite or other fuel which will be necessary properly and effectively to carry out this work. Intensive study and experiment will be needed to get increased output and I will do my best to ensure that it shall be available.

ARMED FORCES: LEGAL ADVICE.
LORD HUTCHISON OF MONTROSE LORD HUTCHISON OF MONTROSE had given Notice that he would ask His Majesty's Government whether they propose to introduce a scheme for giving free legal advice and aid to members of the Armed Forces of the Crown. The noble Lord said: My Lords, since my question was put on the Paper I have received through the courtesy of the Secretary to the War Office a copy of the A.C.I, dealing with this matter so far as the War Office is concerned. I wish to say only a few words on the subject. This Army reform dates back to the last war when there was an agitation for free legal advice because of conscription. Men coming into the Army who had had this advantage in civil life expected it in the Army. When I was at Cologne we tried unofficial methods which proved very successful in difficult cases, particularly matrimonial cases involving relations with German families. The War Office did not carry on the system, although pressed to do so, but voluntary societies have given help during this war. I know many cases where officers who have legal experience and are now commanding units give free advice to men to the great advantage of those men.
I think we in the Army certainly owe a debt of gratitude to the noble and learned Viscount, the Lord Chancellor, for the sympathy he has shown those who have tried to get this very necessary reform. There are two things in the A.C.I which I hope the noble and learned Viscount will be able to expound. I cannot understand why you should stop at the rank of sergeant in giving advice. It seems to me a sort of means test to determine whether a man should receive free legal advice or help in the case of litigation. Why stop at the rank of sergeant? I know of many cases of young officers whose financial position makes them in greater need than sergeant:; or sergeant-majors of free advice in legal matters and assistance in litigation if that follows. I think that is a point that might be considered with a view to amendment. Then there is the position of Scottish soldiers. They travel all over the world and unless some special arrangements are made for them, it may be that they will not find in a particular area advisers with sufficient experience of Scots law. I am very grateful that such a reform should have been brought in and I hope the noble and learned Viscount will be able to clear up the small points I have raised.
THE LORD CHANCELLOR: My Lords, I am glad to have the opportunity provided by the question of my noble friend to make a short statement on this important matter. In time of war, when the serving soldier is likely to be away from home and cannot leave his duty to attend to his own affairs, it seems to the Government, and I think it seems to all of us, of great importance to devise some adequate scheme to help him—or it may be to help her if she is a member of the Women's Auxiliary Services in connexion with the Army—in cases where he or she needs legal advice about his or her private affairs. If he gets into trouble—and in what I am saying the masculine includes the feminine—with the military authorities, that of course is; dealt with under the Military Code and his interests are already protected. Similarly if criminal proceedings are taken against him in the ordinary criminal courts the Poor Persons Defence Act, 1930, applies. But it must be very worrying to a serving soldier when at a distance from home not to know what to do about some civil difficulty such as the rent of his house or the claims of a building society or a hirepurchase
810
contract or the complaint of a neighbour reported to him by his wife.
We have had in this country for a long time past an organization for helping poor people with legal advice and assistance, an institution known as the poor man's lawyer. It was originally started, I think, in settlements like Toynbee Hall, and I know that I myself gave a little help there a generation ago. Advice is provided gratuitously by such organizations for those who need it. Here I would make an observation which I am sure will appeal to your Lordships. It is even more important to advise individuals, whether rich or poor, how their troubles can be adjusted without going to law than it is to leave the Law Courts to deal with them. There is also a poor persons litigation scheme established many years ago, and since then much developed, which has been organized between the Lord Chancellor's Department, the Bar and the Law Society—the Society representing solicitors—under which, when litigation cannot be avoided, poor persons may get the services of solicitor and barrister gratuitously.
I would like to take the opportunity of saying what I think your Lordships will confirm, that we are grateful to those professional men who most generously and whole-heartedly give the best of their professional services and time without fee or reward when needed in cases of that sort. Thousands of divorce cases and a considerable number of other cases in the High Courts are dealt with under this beneficent system. Under this system barristers and solicitors make the contribution of their services free. The State from public funds—one of the Lord Chancellor's not very extensive financial responsibilities—provides a remission of Court fees and a subsidy to the offices of the Poor Persons Committees throughout the country. That really was our peacetime system for ordinary people. But those are peace-time systems and, though they are very useful so far as they go, they are not sufficient for the needs of the serving soldier to-day.
I wish to acknowledge the good work which has been done under this head by some officers who have been charged with welfare work in the Army. I do not at all overlook the value of the welfare schemes that were set on foot, I think, early in the war. But in the view of the Army Council there is more that is

811
required to put this whole matter on a proper footing, and, as my noble friend has said, the Army Council has now issued this red book, in conjunction with an Army Council Instruction on the 4th July, which does represent the result of a great deal of discussion betwen the War Office and my Department. My noble friend said something about the limits within which the scheme applies. I will say a word about that. I think it must be clear that the rules which limit free assistance in litigation to those below a particular income limit must depend on the application of some test of means. I do not consider that these rules are suitable in the condition of Army service. You do not want to have an inquiry of that sort unnecessarily. A far better standard in many cases, I think, is rank, and the new scheme provides for both advice and assistance for soldiers up to and including the rank of sergeant.
I will say a word about that and as to whether we can go further in a moment. The only qualification is that an individual sending in an application should say that he has not sufficient private resources to enable him to employ a solicitor. That is not at all a means test, and I have no intention that there should be a means test. It does not involve any elaborate inquiry or test, but after all, it would be absurd to provide a scheme of this sort for use in the case of men of wealth who are serving—as men of wealth did in the last war—in the ranks. My noble friend has raised a most important point as to whether the rank limit could not be raised. He points out that a young subaltern in many cases may be as much in need of this sort of help and as awkwardly placed when it comes to paying for it as a man in the ranks. I appreciate the point, but I thought myself that it was important to get the scheme on foot and working. I have no authority to make a statement on the part of the War Office as to any extension of it. But I am sure that what has been said by my noble friend, and what is probably approved by every noble and gallant Lord in the House, will receive very full and careful consideration.
Now how is the scheme to work? The Army Council has arranged that in each Command there will be officers whose peace-time experience qualifies them to
812
give the best legal advice. For this purpose there has been established in each Command a Command Legal Aid (Civil Affairs) Section. That is an official organization and the staff of this Section will consist of officers who from their peace-time avocations are qualified solicitors or barristers or men who otherwise have experience in legal affairs. So much for advice in the Commands. There will also be in units and in formation headquarters Legal Advice Bureaux where barristers and solicitors serving in the Forces will give voluntary advice and help, and where, if necessary, civilian lawyers living in the neighbourhood will attend to supplement their labours. I attach great importance to this scheme whereby we are going to get help from skilled civilian lawyers who will come in and lend their services.
The main functions both of the officers in the Command Legal Aid Sections and the Legal Advice Bureaux, and particularly in the latter, will be advisory. That will not necessarily be in regard to litigation. They will advise people as to how they should proceed and what are their rights; and where the subject matter is likely to result in litigation in the High Court the officers will refer the papers to the local Poor Persons Committee or the Poor Persons Committee of the Law Society in London. The Law Society have throughout co-operated most loyally in the working out of this scheme and they have set up a special department of the Poor Persons Committee to deal with Service cases. This department will handle by far the largest proportion of Service matrimonial cases. That is not unimportant. Although the officers of the Command Legal Aid Sections will not themselves undertake litigation they will act as liaison between the Services Divorce Department or local Poor Persons Committee and the soldier. For instance, they will assist the Services Divorce Department in getting statements from the applicant and any necessary witnesses. Take a simple example. If, unhappily, a soldier acting under the advice of the Poor Persons Divorce Department decides to bring matrimonial proceedings, it is necessary that a statement should be got from the man himself who is actually serving—it may be in some part of this country or outside—and that statement must be furnished to those who are going to look after his interests

813
in the Court. The officers of the Command Legal Aid Sections will be in a position to obtain the statement and forward it to the Services Divorce Department.
Such is the general outline of the scheme. I cannot doubt any more than does my noble: friend that it is capable of conferring great advantages on the serving soldier. Such a scheme may provoke criticism. If you will only look through this little red book I am sure you will find that plenty of questions will arise in your minds on certain points. It may well be that some people may find it much easier to hit upon its imperfections than to appreciate its great value. But I am quite sure that the most important thing is to establish the scheme and set it working. When we have set it working, then we shall see whether or not it requires correction or improvement in one direction or another. Undoubtedly the serving soldier has been admirably helped in many ways by welfare officers, but at this moment there is no officially organized adequate assistance available to him, if he is a poor man, should certain legal difficulties assail him arising from his private life. This scheme, I hope and believe, is going to do a great deal to improve that situation. I venture to commend it to the House not only because it is calculated to promote the interests of justice—end we all want to do that—but because the morale of the fighting soldier will be strengthened by the knowledge that we in Parliament and in Government Departments are doing this much to help him in his difficulties.
There is only one other matter which I must mention. Although the scheme which I have just described, and which is in this little red book, applies only to the Army, my right honourable friend the Secretary of State for Air proposes to apply the scheme to the Air Force as soon as the appropriate arrangements can be made. Any question of the application of the scheme to the Navy is much more difficult, but I understand that the matter is being considered by the Admiralty. I have described this matter in some detail, because it is really one which affects vast numbers of people outside this House and which is, I am sure, of the greatest interest to your Lordships. I wish to make it quite plain that I am not overlooking or neglecting the
814
valuable services which have been rendered already under the welfare scheme; but it is the view of the Army Council and of my Department that it is possible, under this new scheme, greatly to enlarge and improve the organization of that assistance, and to bring in, I am proud to say, large numbers of members of the profession of the law, not only those who are serving in the Army but those who, on account of age or for other reasons, are still attending to their legal business, and who will come forward to give their full assistance, without fee or reward, for the purpose of making the soldier's life one such as we should wish to make it, in view of all his contribution to our defence and to the solution of our difficulties.
LORD ADDISON: My Lords, I am sure that the whole House and, when they come to know it, the Forces, will appreciate the great importance of this matter, and I should like to thank the noble Lord opposite for giving the noble and learned Lord Chancellor the opportunity of making this statement. I would wish the noble and learned Viscount to understand that, if I have criticisms to make, I am not in any way depreciating the immense value which may arise, and which we hope will arise, from this scheme for the members of the Forces who will benefit by it. It is not altogether new, as we have been told. I well remember the operation of it in the last war, and I know, too, that in this war the Welfare Department of the Army have dealt with many thousands of cases. I think that it is fair to say that so much did their work increase that a memorandum from them had something to do with the initiation of this wider scheme.
There are, however, certain questions which I should like the noble and learned Lord Chancellor to take account of with his Department. First of all, has this paper been issued formally or not? Is it at the present time, that is to say, an instruction to the Commands? I hope, for reasons which I shall mention, that it is not, although I want the scheme to go forward. Then I should like to ask the noble and learned Viscount to tell us why criminal offences are excluded from this scheme of advice. I am not a lawyer myself, and therefore I recognize that I may be treading on somewhat thin ice; but I cannot imagine why criminal offences are excluded. I should like to

815
thank the noble and learned Viscount for his courtesy in supplying me in advance with a copy of this booklet, together with a memorandum, which was very helpful to me and to my friends. So far as the first page of the booklet is concerned, matters affecting the status of the soldier, such as Courts Martial, pay, allowances and so on, are dealt with by Military Courts, but why should the soldier be excluded from any advice and assistance if the charge is a criminal one? He may be an innocent person, and I can see no reason for limiting the benefit in that way.
On page 7 there is another limitation which I should be glad if the noble and learned Viscount could explain, with regard to matrimonial cases. It states:
"The section will satisfy itself that the applicant is entitled to the benefit of the scheme, that he has a prima facie case and that he is not debarred by his own conduct from seeking relief."
That is an instruction to the Commands. What do the words "seeking relief" mean? I gather that if a man were cited as a respondent he would not be a person seeking relief, and therefore he would not be entitled to be helped. I may be quite wrong, and I expect that I am, but, if I am, the position should be made plain.
I now come to something much more serious—namely, to two important objections. The points I have raised so far have been questions which, as an amateur, I ask to obtain further information, but I come now to two very serious objections. I cannot for the life of me see why this scheme is limited to men of the rank of sergeant and under. I should like the support of the noble Lord opposite on this. There are thousands of young men in the commissioned ranks who may not be in the least better off than many privates and sergeants. They have given up their businesses, they may have young wives and a child or children, and they may have almost nothing but their pay to live on. There are thousands of them. I can assure the noble and learned Viscount, speaking for the whole Party which I represent, that we take the strongest possible exception to that limitation of the scheme. The scheme ought to be made available to anybody in the King's uniform because he is in the King's uniform. I notice that the noble
816
and learned Viscount expressed in advance his readiness to consider this objection, but it is a very serious objection, and I hope that this limitation will be removed before this leaflet is issued in an authoritative way.
This limitation seems to have been invented—I use the word "invented" deliberately—in order to get round the rules of the Supreme Court, which define what is a "poor person." It seems to have occurred to somebody that the expression "poor person" could be done away with by limiting this scheme to noncommissioned officers and privates. It is an invention which may have occurred to someone, but it has no relation whatever to the realities of life, and I hope that the noble and learned Viscount will ask his colleagues to think again about it.
There is another very serious objection which I have to raise. I cannot accept the explanation which the noble and learned Viscount gave us with regard to the means test in this scheme. He tells us that the applicant has to assure the persons concerned that he is not able himself to pay the lawyers' and other fees. On page 3 of the booklet, however, we find this:
"Every soldier applying for advice must, before being advised, sign a certificate on Form ' A '."
Form "A" is on the lines of which we have been told. It says:
"I have not sufficient private resources to enable me to employ a solicitor."
That, however, is not all. The adviser at the bureau must satisfy himself that the applicant has not sufficient private resources to enable him to pay his own lawyer, and it goes on to say:
"In assessing whether an applicant has not sufficient private resources to enable him to pay his own lawyer, the adviser will inquire from the applicant what his resources are and will apply roughly as a test the standard laid down in the Poor Persons' Rules (as amended) or their Scottish equivalent."
I leave the "Scottish equivalent" to the noble Lord opposite, but the Poor Persons Rules provide an income limit of £2 a week, or in exceptional cases £4, or a capital sum amounting to £50 or £100. However, the adviser has to inquire from the applicant what his resources are.
We object absolutely to this inquisition into the man's private means. It opens the door to all kinds of odious proceedings, and it ought not to be. I do not care what

817
the man's rank is—he is serving his country and doing his best. If he gets into trouble, and it is thought desirable—as it is—that this kind of service should be available to a man in the King's uniform, men he should not be exposed to this private inquiry into his savings and family circumstances. It may be thought that the Labour Party has got a bee in its bonnet about the means test. You can say that if you like—we object to it on principle. The Party which I represent will never agree to this. Not that I want to deprive lawyers of their proper remuneration—not at all, they are entitled to be paid, like other professional men, and they ought to be paid properly. If it is desirable—and I am sure it is—to make these facilities available for men, scattered as they are, and away from their homes and exposed to all kinds of difficulties, then we ought to be able to pay for it as self-respecting citizens, and have done with it. I do not want to be dependent upon charity. Pay the fee, if it is required to be paid, to some competent person to deal with the case.
I entreat the Lord Chancellor to convey to his colleagues our vehement objection to the private inquisition which may lie behind these words, and which we consider to be thoroughly objectionable. I do hope that he will get them withdrawn, and that we shall not start this thing with this odious—it really is odious—condition attached to it. It will lead to all kinds of unfortunate inquiries which ought not to be made, and it will prejudice the plan very much. As a matter of fact, I believe that this paper has not yet gone out to the Commands, and that gives us an opportunity. I am sorry to strike what seems to be a jarring note. It is not out of any lack of appreciation of the need of the scheme; but to these two points, the limitation of benefit to persons of the rank of sergeant or under and the means test as applied to every man in the British Army who happens to get into difficulties, we take the strongest possible exception. I entreat the noble and learned Viscount to get this amended.
LORD MOTTISTONE: My Lords, I wish to join with previous speakers in thanking the Lord Chancellor for—as he is constantly doing—giving his own careful thought to this problem, and I welcome the regulations proposed. I have not yet had a copy of the A.C.I., or
818
"Army Council Instructions," as I should prefer to call the book—these short initials are absolutely baffling to the ordinary man. Call it the "Army Council Instructions," and be done with it. I hope that the Army Council, and the Air Council too, will continue to employ welfare officers and to encourage those officers to be acquainted with the elements of the law because, as I know after two and a half years' experience of the war, it is an immense comfort to the men when the welfare officer can go and say, "You need not worry about that particular thing"—as in the case the Lord Chancellor quoted, when the man entered into a contract for hire purchase. The welfare officer says, "This will easily be adjusted," and the man goes about his business with his fears removed. Also the welfare officer can utter a word of warning, and that is extremely valuable. I hear that from all ranks of the Army, so I hope they will continue the welfare work.
But this goes further, and is very much needed. When the danger point comes and you have to go to law, I am sure this machinery will be of value, and on the whole I dare say it is very well advised. As for the limitation to the rank of sergeant and under, I go the whole way both with the noble Lord, Lord Hutchison, and with Lord Addison. I think that is a mistake on the part of the Army Council, due to the fact that they are accustomed to draft orders, when they say, ''The subaltern has so much, and the sergeant so much less; we will stop at the sergeant, because naturally he has got less money." If it comes to available resources, as has been pointed out, that may be wholly untrue. It is very often the case—in fact, I am told that in many units it is more often the case than not—that the subalterns and the second-lieutenants who are married have far less resources than the non-commissioned officers. As the object of the scheme is to avoid these real embarrassments to men who cannot afford to pay for legal advice, I would respectfully beg the Lord Chancellor to ask the Army Council—and the Air Council when they come into the scheme—to think again.
As for the other point, the inquisition, I think there is a misapprehension there. Naturally, I sympathize with the view of my noble friend, being Chairman of the National Savings Committee, and

819
also Chairman of the Army Savings Committee. You do not want a man to suffer because he has saved a little money for the sake of his wife and himself when his service is over. But to say, as Lord Addison did, that odium attaches to an inquiry whether a man can afford to pay or not, that is going too far, and I think on consideration he will agree.
LORD ADDISON: Have you read it?
LORD MOTTISTONE: Well, you have the advantage of me there, you have the particular words. But I had it from the Lord Chancellor himself that there was no intention whatever that there should be that kind of inquiry into the private resources of the individual. I think the intention was that the man should be asked: "Can you really afford to pay? Of course it is fantastic, the whole Army would laugh if you called yourself a ' poor person,' but if you are really hard up and cannot afford it, it docs not matter whether you are a sergeant or a subaltern." The Lord Chancellor will no doubt tell us when he replies what the Poor Persons Rules will be. I would respectfully suggest that, whatever those rules are, it should be made plain to the Army that the object is to relieve the anxieties of soldiers, whether officers or men, who really are too hard up to be able to provide the necessary funds for proper legal assistance. If they are so hard up through no fault of their own, there is this great organization being set up to help them out. I would not go beyond that and have too precise terms. I submit that that is the best way. Make the Army understand it, and I am quite sure there will be no discontent, no feeling that the soldier's private means are to be inquired into. They would just be asked, "Would it be fair and right that you should be regarded as a poor person?" And if a reasonable man says, "Well, I am satisfied," there is an end of it. With these two or three considerations I heartily commend the scheme to the House.
THE EARL OF LISTOWEL: My Lords, the House will appreciate, and excuse me on these grounds, that as a serving officer I have a particularly keen interest in the scheme the noble and learned Viscount has described. There has, everyone would agree, been a real
820
need for a long time past for an organized service of legal aid as a contribution to the morale of the Army. A man who is worried and preoccupied by his private affairs cannot, in the nature of things, be a first-class fighting soldier. The two essential requirements of any scheme of this sort are these. In the first place it should be administered by a staff of trained lawyers, men of experience in the legal profession, and in the second place that expert legal advice and, if necessary, access to the Courts should be available for every man in the Forces irrespective of his rank or pay or other irrelevant circumstances.
The scheme just described satisfies completely the first of these two criteria. It will set up the Legal Aid Sections at Commands and Legal Advice Bureaux at lower formations, and these bodies will be staffed by barristers or solicitors, whether they appear in uniform or in mufti. The sole criticism I should like to offer regarding this part of the scheme is that every effort should be made, and I am sure will be made, to avoid removing trained regimental officers from fighting units for whole-time legal work at Commands. The work at Commands is to be whole-time, and at the lower formations that will probably not be the case. May I make one suggestion? If the requisite staff cannot be raised from officers who are over age or in a lower medical category, it should surely be possible to employ members of the legal profession whose call-up has been deferred, either in their civilian capacity or, probably more economically, by giving them what are termed emergency Commissions.
Let me pass from the first requirement, which has been fully satisfied, with that small proviso which one hopes may prove unnecessary. The second criterion I mentioned was that every fighting soldier, without regard to any irrelevant circumstances (which from this point of view includes rank) should be in an equally favourable position to solve his legal problems. This criterion is far from being satisfied by the terms of the scheme. In the first place—and here I should like to support the plea that has been made by all the speakers in the discussion—it makes rank in the Army an essential condition for those entitled to benefit under its provisions. The beneficiaries are, in fact, limited to sergeants and other ranks.

821
The assumption that every man above the rank of sergeant can afford legal costs, and very often extremely heavy expense of litigation, is manifestly false. I shall not labour that point. It has been underlined by all the three speakers in this discussion that very often a young subaltern with a wife and family to support, and no private means, is in fact worse off than a young unmarried sergeant, and therefore in greater need of help in these circumstances. Yet neither junior officers nor warrant officers, or even staff-sergeants, because the line is drawn at the sergeant——
LORD LATHAM: Nor company sergeant-majors.
THE EARL OF LISTOWEL: And, as my noble friend reminds me, company sergeant majors as well, however limited their financial means may be in relation to their obligations, cannot look forward to relief under this scheme from the added burden of legal costs. To draw the dividing line in this way is extraordinarily artificial and bears little relationship to real economic hardship. If it were necessary (and the assumption is that it is necessary) to separate in this way the deserving from the undeserving, the test should surely be related directly to need—that is to say, to the amount of income left after the price of indispensable purchases has been deducted. It would surely be universally agreed that military rank is a rough and, very often, a misleading indication of its holder's financial circumstances.
The number of those entitled to benefit under this generous scheme is subject to yet another limitation. As my noble friend and leader has pointed out, those below the sergeant level will only be eligible if they have signed a declaration that they are unable to afford this service. Furthermore, according to the terms of the A.C.I., although the noble Viscount did not seem to be completely in agreement with this interpretation of it, there will be an inquiry by the officer' into the resources of the applicant. This inquiry will be based on the Poor Persons Rules. These are the terms of the A.C.I., and I very much hope the noble and learned Viscount will reply to the questions that have been raised in order to clear up what is a manifest contradiction between what he has said in the first
822
instance and what is laid down in black and white in this section of the A.C.I.
May I make a case on rather different-lines from the case made hitherto for the dropping of this particular income test? I am not objecting in principle to all income tests, or even to the application of income tests in the case of civilians who wish to benefit from poor persons' facilities in the Courts; but the validity of such a test should be dependent on its usefulness, and in this case it serves no useful purpose. Surely all services that help to maintain morale in the Army should be given to the troops free of charge. Mental fitness is just as essential to a satisfactory state of morale as physical fitness. If a soldier is supplied with hospital and dental treatment without inquiry into his means, so also should he be supplied with facilities for banishing worry from his mind. He can attend evening classes without paying a penny, and receive instruction in any subject under the sun, because it is recognized that an educated man is the more efficient soldier. Surely it is high time that we should acknowledge that a legal service as well as a medical and an educational service should be available to every member of all three Forces, if possible without regard to their rank or other circumstances.
There are three practical objections, I think, to the present test which I should like to mention very briefly. In the first place it will give rise to hard cases, particularly under the Poor Persons Rules if they are applied literally. The man who has managed to save £200 or £300 will be obliged to realize half of it at any rate, because otherwise he cannot qualify under the scheme, or he will have to forego his legal rights. If I am mistaken—and it all depends on that initial point—I shall be glad to have it pointed out. Secondly, there can be little doubt that most of the officers who can now afford the luxury of litigation and professional advice will continue their present habit even if they are entitled to make use of this new procedure. Senior officers of the Regular or Territorial Army—and they are the soldiers with sufficient private means—will always prefer to transact their legal business through the accustomed channels. It surely follows from this that a means test is unnecessary for the protection of the legal profession. Solicitors and barristers will continue to be employed by those of

823
their military clients who could afford to make use of their services in the past, and they will not be deprived of any new clientele, because the ordinary soldier is never likely to be in a position to afford their fees.
I submit that an income test of this kind is really superfluous as a protection for those who wish to earn their living by the law, that it is unnecessary as a means of preventing an abuse of the new procedure by those who can afford to employ solicitors, and that it is definitely damaging in border-line cases. Those of us who serve in the Army know that the Army Council Instructions are subject to alteration and amendment. I beg very humbly to submit that in the light of the criticisms, I hope constructive criticisms, that have been made by all the speakers this afternoon, it may be possible at a future date for this scheme to be reconsidered and to be improved by such of the suggestions as commend themselves to the Government and to the Army Council.
LORD STRABOLGI: My Lords, before the Lord Chancellor replies, I am going to ask him seriously to consider advising the authorities to withdraw the A.C.I. altogether. My noble friend informs me the instructions have been actually issued, but there is some confusion and conflict of evidence as to that. If they have been issued then they should be altered as Lord Mottistone suggested. If they have not been issued I would appeal particularly to the noble Lord, Lord Croft, that he should stop the issue. In a few sentences I will add something to what has been said already as a reason for doing so. In the first place this scheme does not provide any new service at all. All the work has been done by welfare officers, with this difference, that the welfare officers have not the limitations with regard to means or rank or the class of advice they can give, which are imposed by this A.C.I. Furthermore, welfare officers can help all soldiers. In this case the help is limited to the soldier or members of the A.T.S. and so on.
It is very important to remember that we are dealing with a scheme which, if it goes out in its present form, affects the whole Army, and will apparently be copied by a similar scheme for the Royal
824
Air Force, and even the Admiralty are considering something of the same sort. We are therefore talking about a scheme which affects directly or indirectly a very large percentage of the population of these islands. It certainly does affect an immense number of people, and we in this House must be very careful that no confusion or doubt is allowed to arise. May I add to the objections already made and to what was pointed out by my noble friend Lord Addison? There are other important limitations apparently for soldiers. In a case in the County Court, has he not to employ outside legal aid in the ordinary way? I would like to ask the Lord Chancellor if that is the case. For example, there are very frequent cases of applications to the Courts for separation maintenance or for affiliation payments. Is the soldier to be assisted there? According to the Instructions, apparently not. All this advice and help are given at present by the welfare officers without any limitation at all.
Now, like my noble and gallant friend Lord Mottistone, I had not had the advantage of seeing the little red booklet until my noble friend Lord Hutchison was courteous enough to lend me his copy, but I have been advised as to its contents. I come back to the question of assistance being given to the soldier in matters of divorce. This of course is important because a man who has matrimonial difficulties, as Lord Listowel has pointed out, is worried and accordingly the efficiency of such a man is impaired. According to the scheme what assistance do the Aid Departments, as I shall call them, give to the soldier in collecting evidence and preparing the case in connexion with the Legal Aid Bureaux? I think that is important. At any rate, this means that the evidence will be collected, not by the solicitor's clerks and people of that kind who usually do it in cases decided in the Divorce Court, but by officers or other ranks who will be in uniform. I appeal to my noble friend Lord Croft in this matter. He is not a lawyer. Does he consider it altogether fitting that officers and soldiers in uniform—not that the work is dishonourable—should be used to collect evidence? It may be suggested that the uniform gives them a certain prestige and that the evidence may have been collected under duress. That is a real danger and I suggest that it should be reconsidered. I hope

825
that will be taken up by my noble friend Lord Croft, and I hope the Lord Chancellor will have a suitable reply to make in regard to it. These are only one or two of the objections that we see in addition to those already dealt with so adequately by my noble trends and other speakers.
I am told that this scheme was drawn up by people who might have been better chosen for the purpose. The genesis of the scheme, I understand, arose from certain suggestions made by welfare officers themselves. These suggestions were referred to a committee of very eminent lawyers who are unfamiliar with Army life, assisted by a number of distinguished soldiers who are not acquainted with the law, with what result we see. I am unacquainted with Army life, I am also unacquainted with the law, but I have some little knowledge of what my fellow subjects and His Majesty's lieges think and feel, and, speaking from what I know of the Navy, if this sort of scheme is introduced there will be trouble. I dare say the same thing will happen in the Army. All sorts of difficulties will arise, although it is all done with the best intentions and with the desire to secure the happiness and welfare of the soldier. It would be better to leave it to the welfare officers until it is possible to bring out a better scheme.
THE LORD CHANCELLOR: My Lords, perhaps I may have leave to say a few words upon what has been, I think, on the whole, a very useful and helpful debate. The list of objections which the noble Lord, Lord Strabolgi, strung together—I gather out of a still longer list in his hand—almost made one feel that he did not want the scheme, although no one else has said that. This red book was in fact only issued to-day. I am sure speaking from my own knowledge of the matter, that it is far better to put the scheme into operation because then one can see what adjustments may have to be made. I am most unwilling to enter into the wholly unfruitful discussion of whether this is being done by the welfare service, which seems to be the impression of the noble Lord who has just spoken, because I do not wish to say one single word which would in the least depreciate what that service has done. The welfare service, however, so fax as I know, is not staffed by lawyers, and so far as I know it has not got its liaison and communications with the Law Society. I should feel
826
that I had wasted time if I had been negotiating with the Law Society in arriving at a scheme when the whole thing was in operation thanks to the welfare officers all the time. I am sure that those really interested in the welfare service will be glad that there should be this addition made to their own efforts.
Two or three points have been made in the debate which I must endeavour to answer. The noble Lord, Lord Addison, asked whether this scheme covered criminal charges. It does not, for the reason that the Poor Person's Defence Act provides the regular machinery by which people who cannot afford to defend themselves in a criminal court are assisted. This scheme is directed to matters in the nature of contracts and divorce and civil complaints for which there is not otherwise adequate help. My noble friend Lord Addison, who is a bit of a heresy hunter on this point, almost smelt the scheme to discover defects in it. His bull point was that he had been informed that there was some regulation which required investigation to discover whether a person asking for help has an income of £2 per week. I am sure he will be glad to know that in that respect he has been led up the garden path. The regulations do not deal with that. What they do provide is that the consideration which would determine whether a man should be helped is whether, excluding any pay or other emoluments, he has an income and assets which render it unreasonable that he should be assisted as a poor person.
LORD ADDISON: May I be allowed to interrupt in order to say that I derived the information which I quoted from the noble and learned Viscount's own office? Through the abundant courtesy of the officials there I was provided with this document which I hold in my hand, and that is where I find it set out. The noble and learned Viscount's own office provided me with a document which seems not to contain the latest information.
THE LORD CHANCELLOR: If the noble Lord will let me have the document after the debate is over I will see that suitable disciplinary action is taken. My idea is very much the same as the idea presented by my noble friend Lord Mottistone, that is that we do not want to go too closely into figures, but that it is

827
obvious that there must be some people who ought not to take advantage of a scheme like this because they can well afford to look after themselves. Indeed I would agree with my noble friend that in many cases they would prefer to do so. It is ridiculous when you are trying to do good to the serving soldier that you should be meticulous about these wretched inquiries which I dislike when they are not necessary just as much as the noble Lord dislikes them. The noble Lord also called attention to another point which shows that, I will not say a suspicious mind, but at any rate an inquiring and anxious mind has been applied to this red book. It is solemnly suggested that it is the intention of the Army Council, the Solicitors' Society and the Lord Chancellor only to help in divorce cases if the man is a petitioner. It would take some pretty strong language to make me think that that is what anybody meant to do. The red book provides that an applicant for help must show that he is not debarred by his own conduct from seeking relief. Everybody knows that exemplary as is the conduct of the British Army, there may be cases in which, whether rightly or wrongly, a serving soldier may be made a respondent. That of course is a case in which he is entitled to help provided he has really got a defence.
LORD ADDISON: I am awfully sorry to interrupt again, but may I be allowed to ask what is meant by the words "is not debarred by his own conduct from seeking relief"? What does "seeking relief" mean?
THE LORD CHANCELLOR: I should think it refers to the case where the man is the proposed petitioner and is seeking relief from the Court. It does not say and is not meant to say that a man shall not have any help unless he is a person seeking relief. Another point which I ought to mention is that relating to a man's rank. I must say that when I heard the objection first taken, I thought the noble Lord on the Front Opposition Bench wanted to include Field-Marshals, but I gather that it is not proposed that there should be no limit, but that the limitation of rank should be put higher. That may be so. I have no authority to give any pledge, but I shall be very glad to represent what has been said to the War Office.
828
I have no doubt they will carefully study the report of this debate and give due weight to everything that has been said.
There may be some who say that there is nothing new in this scheme and others who think that it is all wrong, but leaving those two points of view to knock their heads against one another, I think it can be said that this is a very considerable reform and that it will work sufficiently well to commend itself. If it is found to be the case that changes are needed, changes will be made. The great thing is that something has been done which ought to have been done before and I think our thanks are due to the noble Lord, Lord Hutchison, for raising this question.
LORD STRABOLGI: Would the noble and learned Viscount be good enough to answer the question I put about a soldier sued for affiliation?
THE LORD CHANCELLOR: I beg the noble Lord's pardon, I had no wish to avoid the question. Of course affiliation proceedings take place in a magistrate's court, a police court, and would not be covered by this scheme. The County Court is on the whole the poor man's court, and a great many cases go through the County Court without solicitors or counsel, but so far as this scheme is concerned it is a scheme which applies to litigation in the High Court. That is deliberate because experience has shown that it is there that help is chiefly needed. Undoubtedly the expenses there are greater and the machinery more complicated. It is for that reason that in peace-time the Lord Chancellor's Department has got a very considerable service which helps poor persons in divorce cases. I do not think that up to the present there has been any official scheme which assists in the County Court. I am sorry that I did not answer Lord Stabolgi's question on that before, but I had inadvertently overlooked it.
LORD HUTCHISON OF MONTROSE: My Lords, I would like to thank the noble and learned Viscount most sincerely for his extraordinary clear and lucid exposition of this new scheme. We may not agree with it—it has been brought in as something new in the Army—but it has produced a first-class debate. I am only sorry that more noble Lords were not present to hear this debate and to take part in it. As I say, this scheme has

829
introduced a new thing in the British Army, but at this late hour I do not wish to enlarge on what has already been so well said. But do not forget that Army Council Instructions such as these are never absolutely perfect when they are first issued. Very seldom have I seen an Army Council Instruction of this length which stood very long without alteration.
I only hope that my noble friend who represents the War Office so well here, and whom I see on the Bench to-day, will convey to the Adjutant-General the hope that he will support these Army Council Instructions in their various actions in the country. First of all he must see that the legal officers go out coutinually to the units and that the unit orders contain times well in advance of those at which these officers go to the various units. I am delighted to see that use is going to be made of the huts and other premises of the Y.M.C.A., the Y.W.C.A., the Salvation Army and other organizations rather than the orderly rooms for the purpose of consultations. This legal advice is tremendously important to the civilian soldiers whom we now have in the Army. The point regarding
830
limitation by rank has been very well put by various speakers. This rule has got to be altered, and no doubt in due time it will be put right. There is no finality to anything like this. It will go on and develop into a great scheme for the Army. I particularly hope that special arrangements will be made in respect of that splendid corps, the A.T.S., because the members of that corps will have many legal difficulties upon which they will wish to consult various authorities. I again thank the Lord Chancellor for the splendid answer which he has given. I wish this scheme well. I hope that good fortune may attend its progress and that it will do a great deal of good in the Army.

HORLEY DISTRICT GAS ORDER, 1942.
Special Order proposed to be made on the application of the Horley District Gas Company:
Laid before the House (pursuant to Act) for affirmative Resolution and referred to the Special Orders Committee.
House adjourned.