HIRE-PURCHASE (No. 2) BILL [H.L.]

HL Deb 21 January 1964 vol 254 cc853-930

5.15 p.m.

House again in Committee.

LORD CHAMPION

I am in some little difficulty about the next Amendment, No. 23, because I am sure my noble friend did not expect the House to be again in Committee in such a short time. My noble friend, Lord Peddie, said to me, "Hold on", and I looked at the list of speakers and said "Forty minutes"; the debate on the previous Bill has in fact taken about fifteen. I understand the noble Lord in charge of the Bill did in fact reply to Amendments Nos. 22 and 23 at the same time, and if that is so I think my noble friend did not propose to move No. 23.

LORD SHEPHERD moved, after sub section (1), to insert: (2) At the time when the goods are de livered in accordance with paragraph (a), (b) or (c) of the preceding subsection the owner or seller shall deliver, or cause to be delivered, to the prospective hirer or buyer a document acknowledging the receipt of the goods.

The noble Lord said: In moving this Amendment may I speak also to Nos. 26, 27, 28 and 29. The Bill requires that when a notice of cancellation has been served the goods should be delivered in accordance with the previous paragraph, and that in the event of damage the hirer will be liable for damages to the dealer. There is no detail in the Bill as to a requirement on the dealer when he takes delivery of the goods to issue a receipt. It is the practice, of course, that when you take delivery of goods from any where a receipt is given by the person receiving the goods. But in later Amendments I am trying to deal with the problems that may arise where damage is alleged to have occurred. It may well be that the goods have left the home in perfectly good order, but in the transit from the home to the dealer's store they may be damaged, and perhaps it may be due to negligent driving of the driver. We may therefore find a dispute between the dealer who receives the goods in his warehouse or premises and the customer.

I should have thought therefore, particularly when one considers there may be a feeling of vindictiveness between the dealer and the prospective hire-purchaser because he has cancelled the agreement, that it would be right when the goods are received back by the dealer or his representative a receipt should be given. I think that is quite clear, and I do not suppose the noble Lord would dispute with me in principle that the receipt should also indicate whether from a visual examination of the goods there are any defects or otherwise. I hope the Minister will agree—I know he will agree —that in the terms of the hire-purchase agreement the person who has signed a document on which goods have been delivered has custody; he in fact signs that he has received the goods in complete order, and therefore there cannot be any dispute as to the state of the goods when they are delivered to his premises. In those conditions I should have thought it necessary that the dealer himself should give a receipt and statement of defects, if any, when he takes the goods back.

Amendments Nos. 27, 28 and 29 deal with the position which may arise—I am thinking very much of electrical goods —when from the outward appearance the merchandise is in order, but when the goods are back in the dealer's premises and are perhaps put into use a defect appears. I know of many cases of serious dispute between the prospective hirer and the dealer, and it is difficult to find out who in fact is responsible for the defect.

My suggestion in Amendment No. 28 is that where damage or a defect has arisen for which the dealer may have a claim upon the prospective hirer, if there is no agreement between the prospective hirer and the dealer then the services of a certified valuer or surveyor —I am not sure whether the word "valuer" in the Amendment is correct; it should perhaps be "surveyor" —or at least an independent person with some experience of the item, should be called upon to certify as to the defects. This would mean that the evidence of a third party would be available if ever the dispute came to court; but I believe that if this procedure were adopted many cases which in fact go to court now would not go to court because a third party has intervened and has certified one way or the other, it may be to the benefit of the hirer or it may be to the benefit of the dealer. At least at this early stage of the collection of the goods by the dealer from the hirer there is clearly established the state of the goods. With those words, I beg to move the Amendment.

Amendment moved— Page 7, line 4, at end insert the said subsection.—(Lord Shepherd.)

THE CHAIRMAN OF COMMITTEES (LORD MERTHYR)

Would the noble Lord formally move Amendment No. 26 as an Amendment to this Amendment?

LORD SHEPHERD

I beg to move.

Amendment to Amendment moved— At end insert— ("together with a statement of defects, if any, apparent upon visual examination of the goods").—(Lord Shepherd.)

5.23 p.m.

LORD DRUMALBYN

We are here discussing a series of Amendments. Perhaps the best thing for me to do would be to give the views that we have on them. The difficulty about prescribing a receipt is simply this: that the proposal itself, though most sensible and entirely in accordance with what one would consider good business practice, would not be effective legally because there is no indication as to what would happen if a receipt were not given. I do not think it is desirable that we should prescribe in minute detail in a Bill what, after all, is, in the normal way, good business practice. People must be relied upon, at any rate up to a point, to protect themselves. Here, as I say, it would be ineffectual to put this in the Bill unless one also were to make it a criminal offence, or something of that kind, not to give a receipt, which seems a rather odd procedure.

Secondly—perhaps I might take this apart—if there were a receipt, obviously it would be a good thing to have a statement of the defects on visual examination, provided it was an agreed statement. Here, again, one may be up against some body who is accustomed to doing this kind of business and who is dealing with a housewife who is not, and I am not quite certain how the balance there would lie. By making it an agreed statement the housewife might be committing her self to something that, on reflection, she would later regret.

Then there is the point which the noble Lord mentioned, that, even with care, it may be that when the goods get back to the dealer's premises a defect which is not visual appears. The question then is how that should be evaluated. Again, the procedure which he is suggesting here seems rather more similar to arbitration than anything else, and I should have thought that the qualified valuer could deal only with the state of the goods as he sees them at that time, which, as I have already said, is not necessarily the same state as when they left the hirer's house.

So I think there are difficulties in all these suggestions. On the whole, while I would agree that many of them constitute the way in which an ordinary prudent person would act, I feel that it would be unwise to prescribe them in an Act of Parliament. I am bound to say that, rather than complicate the Bill in this way, this is perhaps some thing on which both of us might think a little more before the next stage of the Bill. I hope that the noble Lord will share my view that in these matters simplicity is a good thing, and while one wants to give the necessary protection to the consumer I do not think one needs to load the consumer with every possible kind of protection. I think that the consumer must be presumed to be an ordinary prudent person in matters of this kind, at any rate where the consumer, the housewife, is normally accustomed to taking delivery of goods and, indeed, of handing back goods. I do not think we should go out of our way in this particular provision to quite the extent the noble Lord is suggesting.

LORD SHEPHERD

I recognise some of the difficulties that the noble Lord has put forward in regard to accepting this Amendment, but I think the noble Lord would agree with me on this. I come back to this particular provision in an agreement that is in front of me: The hirer's acceptance of the goods shall be conclusive proof that he has examined the goods and has found them to be complete and in good order and condition, and in every way satisfactory to him. This clearly puts to the hirer the fact that by accepting the goods he is satisfied that he has got perfect goods. Then he decides to cancel. There may be a vindictive type of representative who has not only lost a contract for his firm but, as an individual, has lost commission. It may be quite a sizeable figure, and one can imagine the feelings of that individual salesman. He may feel that at least he can get something out of this hirer by alleging that the goods he has brought back are not as good as when they were delivered to him, and that whatever is wrong is due to the hirer's neglect.

In the Bill we say that he shall be liable for damages. I should not think that it would complicate the Bill or would make the position of the hirer more difficult if we were to include in the Bill the broad words that a receipt shall be given for the goods and a statement as to whether tile goods are satisfactory, as they were in fact when they were delivered perhaps three, four or five days before. If we have a case where the hirer himself has signed what is known in the trade as a clean bill, I should have thought he was entitled to receive a similar clean bill if the goods were all right, clearly establishing that they were all right when they left his premises. If there were defects then there should be some statement at an early stage by the dealer or the owner as to what such defects were.

There may be cases—I do not know —where perhaps three or four weeks later the dealer alleges that the goods which have been returned are defective and wants to take the man to court for the damages. We should try to avoid that position. I should not have thought that the principle behind my form of words would have complicated the Bill to any great extent, and I believe that it would provide a necessary protection for the hirer. As with nearly every other Amendment, the noble Lord says he is prepared to consider the matter again. I hope it is a genuine offer, and not one, as it is so often in Committee stage, of riding off the point made, and that he may be able to find the right sort of words at the next stage of the Bill. In those circumstances, I beg leave to withdraw the Amendment.

Amendment to Amendment, by leave, withdrawn.

Amendment, by leave, withdrawn.

5.31 p.m.

LORD AIREDALE moved to add to the clause: (8) The Board of Trade may by regulations provide that the relevant document shall set forth so much of the contents of this section as may be specified in the regulations; and the regulations may include provision as to the size and colour of the lettering to be used.

The noble Lord said: The Molony Committee reported that they had discovered that some hirers are uncertain what they are expected to do with goods when a hire-purchase contract is terminated. Clause 6 sets out quite clearly and briefly precisely what the hirer is to do having regard to the goods when the contract is terminated. All would be serene if only one could be sure that all the hirers would read what was contained in Clause 6 of the Bill, but one knows from experience that some of them will not. Therefore this Amendment empowers the Board of Trade to require that the salient features of Clause 6 shall be legibly included in the hire-purchase document for the benefit of the hirer, to enable him to know exactly the position in relation to return of goods if the contract is terminated. I beg to move.

Amendment moved— Page 8, line 10. at end insert the said subsection.—(Lord Airedale.)

LORD DRUMALBYN

This Amendment provides for the inclusion of the contents of Clause 6 in the document which the hirer signs. This would show what the hirer's liability would be if he cancelled the agreement, and, in particular, his liability for failure to take reasonable care of the goods. But it would not show the hirer that he had a right to cancel the agreement, or how he could exercise that right. It may be that the noble Lord is thinking of the copy of the agreement which is sent to the hirer and from the receipt of which the cooling-off period begins to run. "The relevant document" is defined in Clause 3(1). I think the noble Lord probably meant the copy of the agreement which the hirer is to receive. Subsections (3) and (4) of Clause 4 empower the Board of Trade to prescribe that this must contain a statement of the cooling-off rights of the hirer (or buyer) under Clause 3 and of matters relating to the exercise of those rights.

I should have thought that this enabled us to prescribe enough to make the hirer aware of his rights. Again, if we were to prescribe too much to be shown prominently, that would defeat the object. This Amendment raises rather a matter of balance—what is needed to make certain that we do not defeat our object. However, if the noble Lord feels strongly about this, we are prepared to have another look at the powers under subsection (4) and I hope that, with that, he will not wish to press his Amendment. I do not know whether he feels strongly on this point. I do not think there is a great deal to be gained by including the details of the liabilities and rights under Clause 6, but, as I say, we are prepared to look at it again if the noble Lord wishes it.

LORD AIREDALE

I am much obliged to the Minister for saying that. I feel strongly that paragraphs (a) and (b) of subsection (1) of this clause ought to be brought specifically to the attention of the hirer, in one way or another, in every case. Whether or not it is best done in the way I am attempting to do it, by giving the Board of Trade these enabling powers, I do not know; but I think that it ought to be done in some way, and I am grateful to the Minister for undertaking to look further into this matter. Therefore, I hope that a suitable way can be found of bringing to the hirer's attention these two paragraphs. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 6 agreed to.

Clause 7 agreed to.

Clause 8 [Dealer to be agent of owner or seller in respect of certain representations]:

LORD PEDDIE moved in subsection (1), after "that other person" to insert: or any such representations made by the hirer or buyer to that other person".

The noble Lord said: I will speak to Amendments Nos. 35 and 36 together, as the one is consequential to the other. This is a simple Amendment, with the purpose of making the dealer liable to the owner for representations made by him to the customer as though they had also been made to the owner. This gives the, owner a remedy against the dealer who is now deemed by Clause 8(1) to be the owner's agent. I feel that this is an equitable arrangement and it is an extension of the dealer's liability for misrepresentation to the owner as well as to the hirer. We think that the operation of this Amendment would reduce still further the risk of misrepresentation. That is the primary purpose of these two Amendments. I beg to move.

Amendment moved— Page 9, line 12, after ("person") insert the said words.—(Lord Peddie.)

LORD DRUMALBYN

I confess that I am somewhat perplexed by the way in which the noble Lord has moved this Amendment. As I read the two Amendments, they refer to representations made by the hirer or buyer, not by the dealer to the owner. I am at a loss to understand what kind of representations the noble Lord had in mind. I did not understand him to refer to any representations made by the hirer or buyer. I wonder just what he has in mind on this.

LORD PEDDIE

The purpose in mind here is to make the dealer liable to the owner for any representations made by him to the customer concerned. I take it that this Amendment covers that point.

LORD DRUMALBYN

With respect, I do not think the words would cover that point. The words seem to cover representations made by the hirer or buyer to that other person, that other person being presumably the dealer.

On Question, Amendment negatived.

5.40 p.m.

BARONESS BURTON OF COVENTRY moved to add to the clause: (3) Notwithstanding the provisions of subsection (1) of this section, any representation to which such subsection applies shall be deemed additionally to be a separate representation in like terms made by such other person to the owner or seller".

The noble Baroness said: This Amendment is much simpler than the" true measure of damage" principle, and I need not detain the Committee long, but I think it is important. As your Lordships will be aware, Clause 8 provides that any representations made by a dealer shall be made by him as agent of the owner or seller. Thus the finance house is bound by any representation, or of course by any misrepresentation, made by the dealer. I am hoping that the Minister will agree that it seems only right in these circumstances to make the dealer responsible also to the owner in respect of these representations, so that, while the owner is responsible to the customer, the dealer is without doubt responsible to the owner. I do not think that at the moment this is the case, and I wish to submit to the Committee that I think it would be quite wrong to enable a dealer to make whatever wild statements he may wish, secure in the knowledge that the customer had no redress against him since he was merely the agent of the owner, and that the owner had no redress because the statements were not made to him.

The Amendment I am now proposing to Clause 8, page 9, line 17, in no way reduces the protection given to the consumer. But I think it enables the finance houses to bring home any misstatements to the person who made them, and that I would submit is what we really wish to bring about. In fact I cannot see that this Amendment does other than provide simple justice. I should have thought it did not need any argument, and I hope the Government will think it right either to accept the Amendment or, if they cannot accept it as it stands, at least to accept the principle. Quite honestly, I can see no argument against the principle. I think it seems fair, it seems common sense, and I know at least the Minister will agree that, if we are to make real progress on this very complicated subject of hire-purchase legislation, what is done must appear to everyone, to the general public and to expert alike, to be common sense and to be fair. I beg to move.

Amendment moved— Page 9, line 17, at end insert the said subsection.—(Baroness Burton of Coventry.)

LORD DRUMALBYN

I quite realise that if finance houses are to be liable because of misrepresentations made by dealers, and, in particular, if they find hire-purchase agreements rescinded by hirers on these grounds, they want to be certain of parallel remedies against the dealer. But for two reasons—one tech—nically legal—I do not think this Amendment would have the desired result. First of all, an innocent misrepresentation which had induced the hirer to enter into an agreement would give him a right to rescission of the agreement. But the finance house, even if this Amendment were passed, would in practice not have been aware of the representations about the goods that the dealer had made, so that those representations would not have induced the finance house to buy the goods from the dealer, and would not give rise in those circumstances to the right of rescission in regard to that innocent misrepresentation. This is a technical point.

Secondly, it does not follow that, because a hirer can rescind a hire-purchase agreement on grounds of misrepresentation, a finance house could rescind the contract of sale between the dealer and the finance house. There is considerable doubt in law whether an agreement which has been completed—as the contract of sale will have been—can be rescinded on such grounds. However, the reality here is that the rights between the dealer and the finance house can readily be covered, and will almost invariably be covered, by means of an agreement between the finance house and the dealer, regulating their rights and their obligations arising out of hire-purchase transactions which the dealer negotiates. In practice there are already agreements of this kind and I see no reason why, if finance houses wish, they should not cover this matter in agreements which will regulate their relations with dealers after the Bill has come into force. So I do not see any reason to regulate these matters in the Bill. This Bill being essentially a Bill for the protection of the consumer, we do not want to do injustice in any way, but this is a matter that can be covered by agreement between the dealer and the finance house.

BARONESS BURTON OF COVENTRY

May I just ask the Minister whether he has been saying—and I am grateful to him for his reply—that he really feels that this matter of representation or misrepresentation by the dealer really and truly can he covered by arrangement or agreement between the finance house and the dealer; that there is no question that the dealer will be able to get away with a wrong misrepresentation whichever way it is made?

LORD DRUMALBYN

That is the advice that I have been given. I am told that is so.

BARONESS BURTON OF COVENTRY

Then I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 8 agreed to.

Clause 9 [Dealer to be agent of owner or seller for receiving certain notices]:

LORD PEDDIE

In the unavoidable absence of my noble friend Lord Chorley, he has asked me formally to move this Amendment.

Amendment moved— Page 9, line 44, at end insert— ("It shall, however, be lawful for the Owner or the Seller to require the hirer or buyer to deliver or post any notice rescinding the agreement (not being a notice of cancellation) to the Owner or Seller at a specified address provided that—

1. (a) the Statutory copy of the agreement shall have already been sent to the hirer or buyer;
2. (b) both this requirement by the Owner or Seller and the address to which the notice rescinding the agreement must be delivered or posted shall be clearly stated on both the hire-purchase or credit-sale agreement and the statutory copy thereof;
3. (c) the Owner or Seller shall not have previously authorised any other person who conducted antecedent negotiations to collect and receive instalments on behalf of the Owner or Seller").—(Lord Peddie.)

LORD DRUMALBYN

In that case, it seems that I shall have to explain what the Amendment means. Clause 9(5) of the Bill provides that the dealer is to be agent of the finance company for the purpose of receiving a notice from the hirer or buyer rescinding a hire-purchase or credit-sale agreement where the right to rescind arises at Common Law—that is to say, not from Clause 3—for example, as a result of innocent misrepresentation and not under the cooling-off provisions of the Bill. The Amendment would allow the finance company to require such a notice of rescission to be sent to it at a specified address and not to the dealer. This requirement is to be exercisable only if the statutory copy of the agreement has been sent to the hirer, if the requirement and the specified address were clearly stated on the agreement and on the statutory copy, and if the finance company has not authorised the dealer to receive instalments on its behalf.

The reason for providing that the dealer is to be the agent of the finance company for the purpose of receiving the notices mentioned in the clause, is to ensure so far as possible that the hirer is not confused as to the way in which he may exercise this right to bring the agreement to an end. The hirer may well have been in communication only with the dealer; if, for instance, he had been induced by a misrepresentation of the dealer to enter into the agreement and wished to rescind it, he would most probably inform the dealer. So it seems to me right that if he does so he should achieve his object. Under the Agreement he would be able to give such a notice to the dealer before the statutory copy of the agreement had been sent to him, but thereafter he would, if required to do so, have to send it to an address specified in the copy of the agreement. I think that this added complication would detract from the benefits conferred by the clause, and I am bound to say that I prefer the simpler provisions in the Bill.

LORD PEDDIE

I would accept the explanation given by the noble Lord opposite. I can only hope that my noble friend would do likewise. I have no hesitation in asking leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 9 agreed to.

Clause 10 agreed to.

Clause 11 [Implied conditions in hire-purchase by reference to sample or by description]:

5.51 p.m.

LORD SHEPHERD moved, in subsection (1)(a), to leave out "in quality". The noble Lord said: I move this Amendment, I must admit, with not a great deal of hope that the Government will be able to accept it, because the implications are that an amendment to the Sale of Goods Act would be necessary. The Bill states that there is an implied condition that the bulk will correspond with the sample in quality". In other words, we are restricting or limiting to quality the question of whether the bulk supplied corresponds with the sample offered. I have in mind what I think is a very wrong practice, where large organisations—I will not say all, but maybe one or two; I know of one in particular—purchase goods of British origin, knitwear in particular, from, say, a Nottingham company (knitwear of a particular style, a particular colour and of particular yarns), and place an order for, perhaps, 1,000-odd dozen. The article sells well, they know it will sell well, and they then place an order for, perhaps, 5,000 or 10,000 dozen of the identical article, the same being equal in quality, with Hong Kong or, perhaps, Japan, or Italy, in order to obtain a cheaper price.

Now it may be the case that the article is equal in quality in its early stages, but one well knows that materials that are made in different countries have different lasting properties. May I speak from my own experience in regard to knitwear manufactured in Hong Kong? I know of their difficulties as regards water shortage. Often, they have to use water that contains chlorine, and this certainly weakens the fastness of the colour that is used in the yarns. Therefore, it is possible, under the Sale of Goods Act, and it will be under this Bill, for an organisation to start a sales promotion and get it going on a perfectly good article manufactured in this country, and then, to reap the real benefits of their production, for them to go to an overseas market, or perhaps somewhere in this country, even, where the manufacture is not so good. In that case, the article may well come within the definition and be equal in quality, but its lasting qualities are quite different.

The purpose of putting this Amendment down was to draw the Government's attention particularly to the words "in quality", because they limit the implied condition, which I think we all wish to see, that the bulk will correspond with the sample on which the sale has been made. I should like the words "in quality" to be removed, so laying a clear onus upon those in business who make a sale to ensure that the article supplied is as the sample, and is not covered by this existing limitation. I beg to move.

Amendment moved— Page 11, line 13, leave out ("in quality") —(Lord Shepherd.)

BARONESS ELLIOT OF HARWOOD

I should like to support this Amendment. I have listened to the noble Lord, Lord Shepherd, and I think there is a great deal in what he has said. I wondered whether he was thinking about goods that had been, as it were, copied; and I was also wondering whether it might not also apply to goods which had been ordered in this country, made abroad and sent in. I am thinking, for instance, of somebody ordering a television set or some piece of equipment, and then receiving one which may be of the same quality but which may be of a different, earlier date, or which may be in some way different from the one which was actually chosen. I think that that would be most unfortunate; and if this Amendment will make it impossible for any of this kind of substitution to be carried out, then I hope very much that the Minister will accept it. What I should like to see in the Bill is a provision making it impossible for people to deliver an order which, although in appearance perhaps the same, is different from that which was actually ordered by the customer. In fact, they should be required to supply exactly the same goods as the sample on which those goods were ordered. I support this Amendment.

LORD PEDDIE

I hope that the Minister will find it in his heart to accept this very useful Amendment. Here is an interesting case where an additional two words "in quality", actually restrict the intention of this clause, because the reference to quality would seem to indicate that in its interpretation quality is to be the sole matter for consideration. There could conceivably be circumstances in which the bulk would correspond in quality and yet where there could be sent an article entirely different from the sample. The suggestion has been made to me that you could have the case of, say, a television set which was the same in quality but which was a different model: it could even be an earlier model. The factor of quality would be satisfied, but it would not suit the customer. The simple effect of this Amendment would be to require that the goods supplied be exactly the same as the sample. That is the purpose of the Amendment, and I would suggest that it is quite easy to accomplish. I support my noble friend.

LORD DRUMALBYN

I am afraid that, as I think the noble Lord, Lord Shepherd, anticipated, this is an Amendment which I must resist. All we are seeking to do in this clause is to implement paragraph 452 of the Molony Committee Report, and to bring the hire-purchase law into line with Section 15 of the Sale of Goods Act, 1893. As he anticipated—and he will find many references in the Molony Report to this —it would be quite inappropriate if, in a Hire-Purchase Bill, we started to legislate on sale-of-goods matters in advance of the further examination that is to take place of the whole sphere of the Sale of Goods Act and the Merchandise Marks Act. So I hope that the noble Lord will not press me on this matter. The subsection follows the wording of the corresponding provision in the Sale of Goods Act, and I do not see any reason to provide differently in respect of hire-purchase agreements. I do not want to argue the merits of this particularly, but even from the little that has been said in the course of this debate I think some idea of the complications involved does emerge—as to what is identical and what is different; in what respects it is different; how far it is description; how far it is quality, and the like. I feel we should not really get into that kind of field in a debate on this Amendment.

LORD SHEPHERD

I agree that it is difficult to compare like with like, but the noble Lord is, in fact, supporting this description at least for assistance in deciding like for like in regard to quality. I recognise the argument that we should not be ahead of any new move on sale-of-goods legislation. But I should have thought that we are not likely to see another Hire-Purchase Bill for many years. We might eventually find that the Sale of Goods Act has been amended and the Hire-Purchase Act out of date and not in conformity with it. Could the noble Lord say whether, if Amendment were made in the Sale of Goods Act, it would be possible to amend the Hire-Purchase Act within the same Bill?

LORD DRUMALBYN

It would.

LORD SHEPHERD

That knowledge is of some assistance. I hope that the Government will take note of the views that have been expressed and will bear them in mind when they prepare the next Bill dealing with the sale of goods. In the circumstances I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

Clause 11 agreed to.

6.2 p.m.

LORD SHEPHERD moved, after Clause 11 to insert the following new clause

Notice of arrears or default

"11A.—(1) Where goods have been let under a hire-purchase agreement to which the principal Act applies and the hirer has made default in the payment of any sum due there under the owner shall not enforce any right to recover possession of the goods from the hirer unless he has served a notice (in this Act referred to as a notice of arrears") on the hirer by registered post at his last known address requiring payment of the sum so due and default has been made in payment of such sum or part thereof for at least 7 days after such service.

2) Every notice of arrears shall contain or be accompanied by a document in the terms prescribed in Schedule (1A) to this Act."

The noble Lord said: I beg to move Amendment No. 40, and, if I may, I will speak also to Amendment No. 49. Although No. 40 can stand on its own, it would need to be passed if the Government felt that Amendment 49 could be accepted. At present, if there is a default by the hirer on a hire-purchase agreement when more than one-third of the hire-purchase price has been paid, the goods cannot be recovered without court action. But where the amount paid is less than one-third, a default in payment of merely one day, or perhaps, in law, of even one hour, or non-compliance with a particular term of the contract—and there are many of them—would give the owner and seller the right to recover immediately the goods covered by the agreement.

At the moment hire-purchase companies are not required by Statute to give a warning notice to the defaulting party. They have merely to recover the goods. The hirer has no chance of recovering the money paid, and, of course, under the Statute he may have to pay further sums to cover those items which are required by law. I think this is rather harsh. There may be many cases where default occurs through sudden sickness: perhaps where a person goes to hospital, or where he is already in hospital and is under sedatives and is quite unable to communicate with, perhaps, his wife in order that a payment could be made. Where you are dealing with reputable hire-purchase companies you find that they always give at least three or four notices of default before they take over the goods. My Amendment is aimed at that small number of hire-purchase companies who have brought the whole industry into disrepute. It lays down that no hire-purchase or finance company may recover the merchandise under the agreement when there is default, and less than one-third of the price has been paid, without giving the hirer notice by post that a default has occurred and that there would be seven days in which the hirer could make a payment to the hire-purchase company.

I would ask the Committee to remember that sickness may strike very quickly, and it may well be that the wife or husband may have no knowledge of the name and address of the hire-purchase company, or even of the fact that a payment is due on a particular day. If my Amendment were accepted, there would be no hardship upon those responsible and reputable hire-purchase companies who already do what I am suggesting in this Amendment; but it would give the relative in the home an indication that a hire-purchase payment is due and would allow the necessary payment to be made.

It is necessary for this Amendment to be passed if the Committee is to consider Amendment 49. Noble Lords in all parts of the Committee welcome Clauses 12 and 13—these are the clauses dealing with the deceased hirer. What happens now is that under the hire-purchase agreement, if the hirer dies there are provisions by which the hire-purchase company can recover the goods. Clause 12 of this Bill, in particular, makes such provisions void; but the position may arise that a person who is the hirer under an agreement dies before one-third has been paid. If there is a default, then the hire-purchase company has the right to recover. Death strikes very quickly. It may well be that both husband and wife are involved in an accident, that the husband is killed and the wife injured. In the circumstances the wife may be quite unable to make a payment under the agreement. Or the wife may be out of the country and so unable to take the necessary action.

I would stress that it may also be that the wife has no knowledge that the article—perhaps a motor car—was under a hire-purchase agreement. Even if she knows this, she may not know the name of the company, or the person to whom payment should be made; or she may not know the amount payable and the date of payment. She may be in complete ignorance. At the same time she may be suffering from considerable shock. Consider the case of a person who dies, say, on the last day of February; and where a hire-purchase payment is due on the 2nd March. It may well be that the person would not be able, apart from the matters I have dealt with, to make payment. Moreover, the wife may find herself in this position: that, because of the death of her husband, the estate is tied-up and the bank account frozen, so that she may not be able to lay her hands upon the money to make the payment, even if she knows that a payment is due.

The Government themselves recognise this position in Clause 13, where they give the courts power to delay action so that a personal representative may obtain letters of administration. The purpose of this Amendment, and of No. 76, is to ensure that where death takes place, the owner will have served on him a notice of default—there is a specimen in Amendment No. 76—in which the personal representative would inform the hire-purchase company that the hirer had died and that he was the personal representative. My Amendment then goes on to say that 28 days would be given for the person to be able to make payment of what is due, and that the owner or seller would not be able to recover the goods within that period. I think that 28 days is not too long for letters of administration to be made and a wife to find the money to make payments to the hire-purchase company.

We welcome Clauses 12 and 13, but when one thinks of the value of a hire-purchase agreement covering a car, perhaps worth £2,000, of which one-third is nearly £700 and of which £600 might have been paid, it seems to me that we should try to protect people, even though only a few are involved, from the consequences of the death of the hirer. I hope that the Government will accept the principle behind this Amendment. I beg to move.

Amendment moved— After Clause 11, insert the said new clause.—(Lord Shepherd.)

LORD DRUMALBYN

I congratulate the noble Lord on the way he has moved this complicated Amendment and made his intention clear. The main protection that is given by the Hire-Purchase Acts is the fact that the owner cannot repossess goods without a court order after one-third of the hire-purchase price has been paid. So I would say that the first subsection of the noble Lord's Amendment is really related to further protection to be given over and above the protection already given under the 1938 Act.

As I said earlier, the main purpose of the Bill is contained in Clause 1, which extends the protection given under the 1938 Act, and deals with the cooling-off provisions. Of course, there is no reason why we should not improve the protection under the 1938 Act, if that seems a good thing to do, but I think that we want to be pretty certain that the improvement is as clearly defined as existing safeguards, or we may be blurring the whole issue. In any case, I think that under the extension of protection that is given, a great deal of the bad habits that exist at the present time will disappear.

What the noble Lord is after is to deal with the period before one-third of the hire-purchase payments have been made. I think that there would be some practical merit in the Amendment if the owner could terminate the agreement for a trivial breach by the hirer and, in addition to recovering the goods, could get a lot of money back. In other words, if he could operate an early "snatch back", coupled with the contractual obligation to pay half the hire-purchase price, he would get the goods and what amounts to a contractual penalty. I referred to this possibility when considering the Amendment moved by the noble Lord, Lord Meston, last week, but now that the Bill provides that the provisions of the 1938 Act will apply, I doubt whether it would be in the practical interests of the owner to terminate an agreement and repossess the goods without giving notice to the hirer and allowing him an opportunity to pay the arrears.

In the ordinary way, in the case of default a finance house would only have the right to repossess, plus the instalments to date. In the case of default, the agreement would be terminated and the finance house could not claim the benefit of contract and extra payment as well. So we are merely concerned with the question of repossession. I think what we should bear in mind is that the finance houses are in business to finance hire-purchase. They are not interested in repossession and will not repossess unless they really believe that the hirer is not going to pay and fulfil his obligations. In that case they may repossess.

Then we come to the question: would it be right to provide by Statute that there should be a notice given? I am bound to say that I have some sympathy with the intention behind the first part of the noble Lord's Amendment, and I am certainly willing to give it further consideration, though again I must say without commitment; but to make the provision effective, it would probably have to go a good deal wider than the mere question of repossession.

LORD SHEPHERD

I am grateful for the intimation that the noble Lord has made, but want to put just this point. The noble Lord spoke of the trade custom of hire-purchase companies. This Bill is not aimed at the responsible hire-purchase company, but at the few companies who bring the whole business into disrepute. Whilst the noble Lord may say that this may not be necessary, I think that there are certain small sections of the trade where it is necessary, and it will give far greater protection, if the Minister can accept this point.

LORD DRUMALBYN

The noble Lord will appreciate that we did not have long to consider these Amendments, which give rise to complicated implications, and if the noble Lord would allow us, I would rather leave the matter there for the time being. But I think I should go on to say that the second subsection of his Amendment and the statutory notice set out in Amendment No. 76 are a different matter. They seem to me to be not only unnecessary in the light of Clauses 12 and 13, but also confusing, since they would appear to give a hirer's estate less favourable treatment than is already provided as the result of Clauses 12 and 13. I do not know whether this was intended. I am not certain how far the noble Lord was linking subsection (2) of Amendment No. 40 with the subsequent Amendments. Obviously they are linked merely by the wording of the Schedule.

LORD SHEPHERD

May I explain that I started off with Amendment No. 49 in mind, and in order to make it practical we found we had Amendment No. 40. So subsection (2) is linked closely with No. 49.

LORD DRUMALBYN

I take that point. The principle on which Clauses 12 and 13 are devised is that the successor of the deceased hirer should have as good a right as, but no better right than, the deceased hirer. The difficulty of the second clause the noble Lord moved is that it would give the deceased hirer's successor a better right than the deceased hirer, and as against that it would not propose any parallel safeguard for the owner. As we consider the further Amendments put down, I think this point will be clearer, and it may be that we ought to leave it to the discussion of the Amendments to Clause 13. Clause 13, I may say, is by far the most difficult clause in the Bill. If the noble Lord would agree to withdraw this Amendment, and not move the other Amendment when we come to it, I feel that the best thing is for us to consider later the interesting point he has raised about not repossessing before the one-third of the total hire-purchase payments have been made.

LORD SHEPHERD

I readily accept that and, in the circumstances, beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 12 agreed to.

Clause 13 [Recovery of possession of goods after death of hirer]:

VISCOUNT HANWORTH

The effect of this Amendment is that the protection afforded by Clause 13 of the Bill to the deceased hirer would not apply if prior to his death the hirer had improperly parted with the possession of the goods. and the hire-purchase company would not be prohibited from recovering the goods from a person who had stolen them from the hirer before his death. As the matter stands, the hire-purchase company could be liable to repay the deceased's personal representatives all monies paid by the hirer even when the goods have been stolen or wrongfully sold before the hirer's death. I beg to move.

Amendment moved— Page 12, line 9, after first ("to") insert ("and in possession of the goods the subject of").—(Viscount Hanworth.)

LORD DRUMALBYN

This is a simple Amendment, but, as I think the noble Viscount probably realises, it is by no means easy to effect. I think it might be for the convenience of the Committee if, before I deal with the Amendment, I say a few general words about the purpose of Clause 13, in order to put it into perspective. Clause 12 does what the Molony Committee recommended; that is to say, it makes void a provision in a hire-purchase agreement under which the death of the hirer terminates the agreement. In the general run of cases this will do all that is necessary. The hirer's personal representative then succeeds to his rights, which includes the protection the 1938 Act gave to the hirer during his lifetime. But there is the possibility of there being no personal representative, most probably because there is no will. Clause 13 has the effect of continuing for the benefit of the deceased hirer's estate the statutory protection in these cases, and also in cases where there is a personal representative but the goods are not in his possession.

The broad effect of the clause is that if the finance house could not have recovered the goods except by action during the hirer's lifetime, then it cannot do so after his death. But the clause does not envisage that anyone other than the estate should be entitled to take over the hirer's rights. All it does is to allow time for the personal representative to be constituted and defend an action for repossession in the normal way. This clause will cover, in particular, the case where the estate is small and there is no will. In such a case, the widow, for example, would not in the ordinary way go through the formality of taking out letters of administration.

I now come to the Amendment. I quite understand what it is intended to safeguard against; that is, the case where the hirer has during his lifetime improperly disposed of the goods. But I cannot accept the Amendment, because I think in attempting to cover a remote and much less frequent contingency it could prevent the clause from doing its work in a substantial number of practical cases. The implication of the Amendment is that the hirer would not have been entitled to the protection of Section 11 of the 1938 Act if he had not been in possession of the goods at the time of his death. But it is not as simple as that.

There are a variety of meanings which could be ascribed in the context to the word "possession". To pose just one example, can we be sure that a hirer who died in hospital was in possession of his car which for safe custody had been entrusted to his friend? Unless the provision is clear-cut, I fear it will not protect the hirer's estate as we wish. In the practical cases where there is default and the finance house wish to seek repossession, the clause enables them to do so. If they are worried, they can apply for an immediate order under subsection (3) of Section 12 of the 1938 Act giving directions as to the custody of the goods.

The noble Viscount has said that the goods might have been stolen before the hirer died. But I doubt whether that is really of practical significance. If the goods are stolen, the real problem is to find them. It has been argued that the protection which the clause gives to a person in possession should not extend to the estate. No distinction can be drawn in the situation we are dealing with here between different categories of people in possession. But, in the end, what can be protected is the estate. The clause seeks to protect the estate and does not, as I have said already, seek to give a greater degree of protection to the estate than the hirer enjoyed during his life. I hope that the noble Viscount will withdraw the Amendment, because I think the case he has in mind is an extremely infrequent one which would normally be dealt with in other ways. If we tried to exclude the particular case he has in mind, I am afraid we should find that we were excluding other cases where we want to give protection.

VISCOUNT HANWORTH

Am I to gather that the noble Lord does not think it possible to produce a redrafted Amendment which would in effect accomplish what I am endeavouring to do?

LORD DRUMALBYN

I am advised that it really is not necessary to do so. If for any reason the hirer was not in possession before he himself died, because he had disposed of the goods unlawfully, then the finance house would, in any case, have a right to proceed against the hirer, and that right would continue against the hirer's estate. So far as the recovery of the goods is concerned, they would be able to proceed in recovery in exactly the same way as they would be able to proceed if the hirer had not died. As I have said, the clause does not give any greater right to the estate than the hirer himself enjoys.

VISCOUNT HANWORTH

In the circumstances, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

6.30 p.m.

LORD DRUMALBYN had given Notice of four Amendments to subsection (1), the first being, in paragraph (b), after "made" to insert "against the deceased hirer". The noble Lord said: I think it would be convenient to take these four technical Amendments together. As I said, Clause 13 is designed to continue, for the benefit of a deceased hirer's estate, the statutory protection against repossession of the goods by the owner after one-third of the hire-purchase price has been paid. It prohibits an owner from recovering the goods, after the hirer's death, from the person in possession, except by a court order, and makes provision for the personal representative of the deceased hirer to intervene in the action. This prohibition does not extend to cases where the court made an order, during the hirer's lifetime, requiring him to deliver the goods immediately to the owner; if the court had come to the conclusion that while the hirer was alive he should no longer continue in possession of the goods, his estate should not be put in a better position.

With the clause in its present form, even if the court made an order against the person in possession, the protection afforded by the clause would continue for the benefit of any other person who may subsequently come into possession of the goods. This is not satisfactory, since the clause is intended only to act as a stopgap between the death of the hirer and the giving of an opportunity for the personal representative to intervene. Once the court has made an order in respect of the goods after the hirer's death, the clause should cease to have effect. The Amendments to subsection (1) of Clause 13 have been drafted to achieve this result. I beg to move.

Amendment moved— Page 12, line 18, after ("made") insert ("against the deceased hirer").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

LORD DRUMALBYN

I beg to move.

Amendment moved— Page 12, line 20, leave out ("and").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

LORD DRUMALBYN

I beg to move

Amendment moved— Page 12, line 22, after ("made") insert ("against the deceased hirer").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

LORD DRUMALBYN

I beg to move.

Amendment moved—

Page 12, line 24, at end insert ("and (d) no order under section 12(4) or section 13(4)(c) of the principal Act has (whether in pursuance of this section or otherwise) been made in respect of the goods against any person since the death of the deceased hirer").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

LORD DRUMALBYN

Subsection (7) deals with the case where, before the hirer's death, the court has made an order under Section 12(4)(b) of the 1938 Act. This is an order for the redelivery of the goods to the owner, the operation of which is postponed so long as conditions on payments or other matters laid down by the court are fulfilled. Any proceedings by the owner after the hirer's death to recover the goods from the person in possession are to be brought in the same action in which that order was made.

Subsection (7) in its present form does not make it clear how this right is to be asserted, and the Amendment sets out how this is to be done. It might have been thought that in order to bring the subsequent proceedings after the death of the hirer in the same action it was necessary to revive the action against a new defendant. But as judgment can be enforced by the issue of a warrant to seize the goods wherever they may be, all the owner requires to do is to apply for the issue of a warrant for the delivery of the goods. The Amendment makes clear that this is the action the owner should take, and it makes provision to enable the court to adjourn any application for such a warrant to enable the personal representatives of the deceased hirer to intervene. I beg to move.

Amendment moved—

Page 13, line 31, leave out subsection (7) and insert— ("(7) Where the circumstances specified in subsection (1) of this section exist, in a case where an order for the specific delivery of the goods has been made under section 12(4)(b) of the principal Act in an action against the deceased hirer, then, notwithstanding anything in subsection (2) of this section, any right of the owner to recover possession of the goods from the person in possession shall be enforceable in that action (and not in an action against that person) and shall be so enforceable by an application for the issue of a warrant of delivery; and the court may adjourn any such application in the like circumstances, and for the like purposes, as in accordance with paragraphs (a) and (b)of subsection (5) of this section the court could adjourn an action.").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

LORD DRUMALBYN

This is another technical Amendment. Section 17 of the 1938 Act provides that, so long as the owner is unable to recover his goods by reason of the statutory restriction in Section 11 (that is, after one-third of the hire-purchase price has been paid), he cannot, as an alternative, bring an action for damages for conversion on the ground that the hirer has refused to deliver up the goods. It is necessary to ensure that there is a similar ban on such an action by the owner against the person in possession where his refusal to deliver up the goods is justified by the restriction in Clause 13. This Amendment introducing a new subsection (8) achieves this. I beg to move.

Amendment moved—

Page 13, line 38, at end insert— ("(8) If, at any time when section 11(1) of the principal Act has effect in accordance with subsection (2) of this section, the person in possession refuses to give up possession of the goods to the owner, the person in possession shall not, by reason only of the refusal, be liable to the owner for conversion of the goods.")—(Lord Drumalbyn.)

On Question, Amendment agreed to.

Clause 13, as amended, agreed to.

6.38 p.m.

BARONESS BURTON OF COVENTRY moved, after Clause 13 to insert the following new clause:

Extension of powers of Court

". Section 12 of the principal Act (which relates to the powers of the court in certain actions by owners to recover possession of the goods) shall have effect as if there were inserted at the end of subsection (4) the following— 'or (d) where the agreement relates to a motor vehicle, make an Order for the delivery of the vehicle to the owner and on the application of the owner give judgment for such sum as the court shall think proper having regard to the total of the monies paid by the hirer or guarantor and the trade value of the vehicle at that date.'

The noble Baroness said: While your Lordships did not think it right to accept the true measure of damage as suitable for application as a general rule, I hope that you will not reject this Amendment out of hand for that reason without considering it further. The purpose of the present proposal is simple. It is to enable the court, on the hearing of an action for re-possession under the one-third rule at the request of the owner, and as an alternative to their other powers, to make an order on a true measure of damage basis. In other words, if the court is satisfied that it would be just to make an order returning the goods to the owner at the same time making an order for payment on a true measure of damage basis, they are to have that power.

This, of course, as the Committee will see, is a purely permissive power. The court is in no way bound to make such an order. Whether they do or not is entirely at their discretion. I do not propose to weary the Committee by repeating what I still consider the very strong arguments in favour of a true measure of damage clause, but I would merely stress that the Law Society, the industry itself, and the Consumer Council all supported such a clause, while the Committee on Consumer Protection endorsed it in principle and in theory, although fearing that it would lead to dispute.

It seemed to me the other night that this objection is in part at least the view of the Government, but I would submit that, in the circumstances envisaged by this Amendment, that objection must surely fall to the ground, since the value of the goods will not be in dispute in the sense that the Committee on Consumer Protection used the word. The parties in the circumstances in which this Amendment is to apply are by definition already before the court, which, after hearing evidence as to value, will come to such decision as it thinks just on the basis of that evidence. I know, of course, it may be that the court's valuation will not always turn out to be entirely accurate when the goods come to be sold, but I think nobody would deny that surely the courts can be relied upon to assess the measure of damage with sufficient accuracy, just as they do in connection with many other types of claim. I hope that in this Amendment, as the rule as to true measure of damage is to be applied only in a court of law, the Committee will at least be able to accept this modified provision. I believe that this Amendment will enable much of the injustice, which I fear will otherwise arise from the lack of a general true measure of damage, to be overcome. I would stress once more that this is a purely permissive power I am seeking. It enables the court to grant justice if, in particular circumstances, the court thinks that an order on these lines will provide justice. I beg to move.

Amendment moved— After Clause 13 insert the said new Clause.—(Baroness Burton of Coventry.)

LORD DRUMALBYN

I gather from what the noble Lady has said that she intends this to be an alternative remedy to the remedies which already exist and that it is not intended to be in substitution for Clause 15. Do I understand the noble Lady correctly?

BARONESS BURTON OF COVENTRY

If I might answer that, I think the answer is "Yes"; but what I was hoping to make clear to the Minister was that I was seeking an extension of the powers of the court and I was asking that that power should be purely permissive, to be used only if the court. wished.

LORD DRUMALBYN

The noble Lady herself recognised that this would make it necessary for the court to value the car or whatever might be concerned at the time when the action was brought and, of course, before the goods had been sold. I appreciate that the noble Lady is not treating this as part of the previous Amendments she has moved and that she would regard this at least as a concession towards the "true measure of damage" principle. But the fact is that it is very similar in scope, and I do not feel it would be right to traverse all the arguments that I have advanced at an earlier stage on this Amendment, which really has a very similar effect, the only difference being that it does not bring into account, as it were, the actual amount that is received when the vehicle or the goods are sold. This is the only real difference, and it seems to me that the noble Lady is really advancing the same proposition here in a different guise. It does not seem that it is compatible with the general protection that is given under the Acts, and, for the reasons I gave earlier, I feel bound to resist this Amendment.

BARONESS BURTON OF COVENTRY

I really am puzzled by the attitude which is taken up by the Government on this matter and which was taken up previously by two of my noble friends on my own Front Bench. I have no desire to traverse that Amendment over again, but I am truly mystified as to why the principle of a true measure of damage is to be rejected by such eminent voices, because I do not agree with them. It seems to me that a true measure of damage is pure equity and I stated last time that I was concerned with the principle and not with any actual wording.

Earlier this afternoon the Minister, when he was replying to some other Amendments—and I took down his actual words so I think I am quoting him correctly—said: "As with all other Amendments, I am perfectly willing to consider them." It seems that every time I or anybody else raises the question of a true measure of damage, it is the one thing that the Minister is not prepared to consider in any way whatsoever. Could the noble Lord tell me why he is not prepared to consider the general principle of a true measure of damage, even though he would not be committing himself any more than he would be committing himself on any other Amendment we have been considering?

LORD DRUMALBYN

The short and simple answer is that we committed this matter to the consideration of the Committee on Consumer Protection. They examined it for a very long time indeed, much longer than this House can possibily examine this matter, and their recommendation was quite clear: that while in theory a true measure of damage might seem more equitable, in practice it would give rise to considerable dispute and difficulty. In addition, I adduced the arguments of the protection of the consumer at the earlier stages of the arguments why we thought the right course was to ensure that the consumer should know as quickly as possible where he stood under the agreement. It is for these reasons that we have felt bound to stick by the Molony recommendations on this subject, recommendations which we support for the reasons that I gave at some considerable length on the last occasion.

BARONESS BURTON OF COVENTRY

I do not want to labour this matter, but, of course, Molony is very convenient.I am sure the Minister would never—at least, I hope he would not—accept the Molony viewpoint on guarantees. While I am not intending to invoke the question of guarantees now, I would point out that the Molony Committee could not have stated better than it did the reason why the present system of guarantees was completely wrong. Having gone through them all, it merely meekly said in effect: "We cannot do anything about it so we leave it as it is." I, for one, certainly do not accept that because Molony has said something, it is thus sacrosanct. On this question of a true measure of damage, I thought Molony just ran away from it. They said that it is equitable, it is right in theory but that they think it would lead to disputes. If the Minister is going to sit down under a reason like that, then, with respect, I think he is not as good a Minister as I thought he was. As I can get no support on this matter, for the moment I ask your Lordships' permission to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD SHEPHERD

Would it be convenient for the Minister if I moved this Amendment formally? I have already spoken to it on a previous Amendment with which I thought it was linked. I wonder whether the noble Lord can reply. I beg to move.

Amendment moved— After Clause 13, insert the following new clause—

Notice to representative of deceased hirer

(". Without prejudice to the operation of section 13 of this Act, where goods have been let under a hire-purchase agreement to which the principal Act applies and the following circumstances exist, that is to say—

1. (a) a notice of arrears has been served in accordance with section (11A) of this Act at any time before or after the death of a person, who immediately before his death was the hirer in relation to that agreement (in this section referred to as the deceased hirer');
2. (b)the goods are in the possession of a person who is a personal representative of, or a person (in this section referred to as 'an interested person') having an interest in the estate of, the deceased hirer, any interested person may, within the time prescribed for compliance with the notice of arrears, serve upon the owner a notice in the terms prescribed in Schedule (1A) to this Act; and if the owner recovers possession of the goods within 28 days of the service of such notice, a personal representative of the deceased hirer shall (without prejudice to any other right exercisable by him as the hirer in relation to the hire-purchase agreement) be entitled to recover from the owner, in an action for money had and received, all such sums as are mentioned in paragraph (a)of subsection (2) of section 11 of the principal Act.")—(Lord Shepherd.)

LORD DRUMALBYN

I am bound to say that I thought I had replied on this question. The central point here is the difficulty, as I said, in giving the successors to the deceased hirer a greater estate, if I can put it that way, than the hirer himself had before he died. I do not think it would be right to give the estate greater rights than the hirer himself enjoyed during his life. While I recognise the point of view here, it is a fairly extreme and uncommon case. Here, again, I feel almost bound to recur to the kind of point we were debating on the last Amendment. We have at the moment these very clear-cut remedies and very clear-cut safeguards and it seems unwise to erode them and to depart from them, particularly in one direction only, in what is perhaps the most difficult part of the whole Bill. I certainly would not exclude the possibility of thinking on this again. I should like to make it quite clear that I am by no means optimistic that we should reach any other conclusion than we have reached on this occasion, but here again it is a matter which we have not had a lot of time to consider and, as with all these other points, we wish to consider whether we can in any way improve the Bill between now and Report stage.

I would only say, if I can make a general point, that the time between the Committee stage and Report stage is fairly short and it may well be that we shall not have reached final conclusions on all the various points that the noble Lord has put by the Report stage, so I hope he will not castigate us too greatly if we have not done so. But I am saying that these points are the sort that we will consider.

LORD SHEPHERD

Is it a fact that the Amendment calls for this 28-day period as an increased right? I recognise that it is an increased right to that extent, and that extent only, but the Government themselves are changing. In the past, the death of the hirer was sufficient reason for the goods to be recovered, but the Government have accepted the view of Molony that the death of the hirer should not be the cause of family goods being recovered by a hire-purchase company. The noble Lord, however, says that this should apply only where more than one-third has been paid. It would seem to me, considering the justice of the case, a rather arbitrary figure on which to rest one's argument. hope the noble Lord will consider this point sympathetically. The Government Bill is there to protect the family property that may be in jeopardy because of the death of either husband or wife. If justice and protection is necessary for those who fortunately have paid more than one-third, I should have thought there was justification for having it for those who have paid less than one-third.

LORD DRUMALBYN

May I make this point? The practical situation here will normally be that a relatively small proportion of the total purchase price will have been paid. Very likely it is the breadwinner of the family who will have died. In those circumstances in many cases the successor, the widow or whoever it may be, will be only too ready to surrender the goods, knowing the source of income has dried up and she will riot be able to continue. The kind of case the noble Lord has in mind must be a relatively rare one, where there is difficulty in settling the estate, where the widow may be upset and all the rest of it and where subsequently she decides she would like to and can continue with the payments. That is probably a pretty rare case, and the question is whether we are going to alter the whole structure of the hire-purchase protection merely in order to meet this special case. That is what I have in mind. This is why I say I am not particularly optimistic in this particular case, and I am not really certain whether the cases are really so hard as the noble Lord seems to think at the present time.

LORD SHEPHERD

It is not only the question of the state the wife is in; she may have no knowledge that the car or property is under a hire-purchase agreement. However, I am sure the noble Lord will look at this matter sympathetically, and therefore I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 14 agreed to.

Clause 15 [Money claim after order for specific delivery]:

6.52 p.m.

LORD SHACKLETON moved, in subsection (2)(a), after "brought", to insert: or would have accrued due under the hire-purchase agreement, before the owner has recovered possession of all the goods, if the hiring under the agreement had not been terminated".

The noble Lord said: This is a rather technical and I think important point in terms of fairness to all concerned. As the Bill stands and as Clause 15 stands at present, a hire-purchase company might terminate a hiring under hire-purchase agreement for a motor car and apply to the court for an order for repossession, and the court will probably make an order suspended for as long as the hirer pays the hire-purchase company so much a month. Judging by past experience, it is unlikely that any monthly payment order made by the court will be anything like the monthly rental which is provided under the terms of the hire-purchase agreement. The position might then be that the hirer would make payments under this court order for the period, and then cease altogether. Where-upon the hire-purchase company has to go back to the court for leave to repossess the car.

I may misunderstand this, but this; is an exploratory Amendment. In any case, even if it does not have to go back, the situation may be worse in some ways, because the maximum amount of the claim is governed by what was the position at the date of the original application to the court months earlier, and no regard is taken of the additional use the hirer may have had from the vehicle or any depreciation which follows. This Amendment is intended to provide—and I suggest it is no more than reasonable—that where such a suspended order has been made the courts should take account of the position not at the date when the original order was made but at the date when the goods are eventually recovered. The point is that they would have been recovered at an earlier date if it had not been for the intervention of the suspended order, and this is to take into account the loss to the owner during that period. I beg to move.

Amendment moved— Page 15, line 28, after ("brought") insert the said words.—(Lord Shackleton.)

LORD DRUMALBYN

I realise that the noble Lord, Lord Shackleton, is concerned with the depreciation that may have occurred in the state of the vehicle since the action was brought. I also realise that the period may be of some duration if a postponed order has been made and it is only after a time that the hirer fails to keep up the payments required by the order. I think it is important to recognise that the protection afforded by the Act depends to a very large extent on the ability of the court to make a postponed order. We must therefore look very carefully at any suggestion that the terms of the 1938 Act should be, so to speak, stiffened up against the hirer. If they were stiffened up it might tend to deter the hirer from seeking such a postponed order. Will this Amendment do that?

We are considering a case where a hirer has paid at least one-third of the hire-purchase price and has then been unable to keep up his payment under the hire-purchase agreement. The court, having considered all the relevant facts—including, of course, and in particular, the means of the hirer—makes a postponed order. Under the postponed order the hirer will be entitled to continue in possession of the goods, no doubt on payment of smaller amounts than those under the agreement and with instalments spread over a longer period. In this case the hirer will not even have kept up the smaller payments, and the owner then automatically retakes possession without going back to the court; he does not need a further application to the court. Under the clause in its present form the owner can then claim any instalment in arrear when the action was brought and any further amount for which the agreement provides to bring the payments up to not more than one-half of the hire-purchase price, the court being entitled to take into account payments made under the postponed order.

Under the Amendment, however, the owner would be able to recover all amounts which would have become payable under the agreement right up to the time he recovers the goods, if the agreement had not been terminated—again, of course, taking into account payments made under the postponed order. This would mean that at the very moment the hirer was unable even to keep up the smaller payments the owner could proceed against him for the larger payments. It would mean that each time he made one of his smaller payments under the order he would have a potential liability to pay the difference between that and the larger payment under the agreement if eventually for any reason he found he was not able to keep up the smaller instalments. I should have thought it is just possible that you might run up against an unscrupulous hirer—there are no doubt unscrupulous hirers in these matters—but that such people were very much in a minority. We are, after all, really considering what is one of the central safeguards. The majority of hirers undoubtedly set out with the intention of carrying through to the end their agreements. If they cannot do so and an order under Section 12(4)(b) has to be made, then they will certainly do their best to fulfil this.

The real question is whether, if they fail to do so, the original contract should be reinstated. I really think that if we were to do this we should be going back on one of the major protections in the Bill, which, after all, bases itself on the supposition that in this contract it is the hirer who has to be protected much more than the finance house. I hope that after what I have said the noble Lord will withdraw his Amendment, because what is now being proposed is quite definitely a stiffening up of the 1938 Act in a way in which certainly we had not contemplated, and in a way which was not contemplated by the Committee on Consumer Protection. I would agree that from the point of view of the finance houses it would look fair; but, on the other hand, this is a matter of consumer protection, and I think we should adhere to the protection that is provided in the 1938 Act.

LORD SHACKLETON

This is a most astonishing argument, to point to the fact that there are some unscrupulous hirers as well as unscrupulous owners, and to say we do not therefore bother about them, and that the answer is that the great majority are scrupulous. We are legislating against the unscrupulous on either side. I quite agree with the intention, and that we support the Bill principally because it gives protection to the consumer. I really do not see why the noble Lord should suggest that one should revert to the original contract. Unless I am completely wrong, the original contract still runs. It may be not so important with smaller amounts, but with a large amount the actual value, particularly in the case of a motor car, after a further six months may be enormously reduced.

Obviously, I am not going to press this to-night, but the argument of the noble Lord seems to be on a par with the argument that he has consistently used to my noble friend Lady Burton of Coventry, that it is too difficult. He says it might seem fairer. My argument is that it would be fairer, not that it might seem fairer. Is there no provision by which protection could be obtained in this way? I would ask the noble Lord to consider this. I should think that the effect of this clause, if there is no redress, will be to encourage the courts to make much stiffer orders for repayments in order to guard against this particular matter. But the argument may work the other way, and I would ask that further consideration be given to this.

I cannot recollect the Molony Committee Report well enough to know how far that Committee examined this par- ticular point. I do not know whether any noble Lord can inform us on this. But this seems to me to be one of those small, but not unimportant, points on which there is a measure of unnecessary inequity. Obviously, I was wrong—and looking at the clause I thought quite probably I was wrong—in saying that owners had to go to the court again. Is the noble Lord not prepared at this stage to give any undertaking? He has not been too forthcoming; none the less, I would ask him to think again. Unless any other noble Lords wish to support my arguments, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 15 agreed to.

Clause 16:

Provisions as to guarantees and indemnities

16.—(1) A contract of guarantee relating to a hire-purchase agreement to which the principal Act applies, or relating to a credit-sale agreement to which the principal Act applies under which the total purchase price exceeds£20, and any security given by a guarantor in respect of money payable under such a contract, shall (subject to the next following subsection) not be enforceable unless, within seven days of the making of the contract of guarantee, there is delivered or sent to the guarantor—

1. (a)a copy of the hire-purchase agreement or credit-sale agreement, and
2. (b)a copy of a note or memorandum of the contract of guarantee, being a note or memorandum signed by the guarantor or by a person authorised by him to sign it on his behalf.

7.5 p.m.

LORD PEDDIE

My noble friend Lord Chorley has asked me to express his apologies to the Committee for his unavoidable absence, and has requested me formally to move Amendment No. 15 which stands in his name. I am assured that this makes for a closer definition of terms. I beg to move.

Amendment moved— Page 16, line 12, leave out from first ("of") to ("there") in line 13 and insert ("the making of the hire-purchase or credit-sale agreement to which the contract of guarantee refers").—(Lord Peddie.)

LORD DRUMALBYN

I was rather hoping that the noble Lord, Lord Peddie, would not move this Amendment, because it covers much the same ground as the following Amendment. I thought it more appropriate that we should discuss the point on the following Amendment, because in point of fact this Amendment does not go quite far enough; it does not quite cover the ground, and I could not accept it.

LORD PEDDIE

I agree, and beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

BARONESS BURTON OF COVENTRY moved, in subsection (1), after the second "guarantee", to insert: or the making of the hire-purchase agreement or credit sale agreement whichever shall be the later".

The noble Baroness said: As your Lordships know, the Bill provides that, for the protection of a person standing as surety for the payment of another's debt, copies of the agreement of guarantee and of the principal contract—that is, either of hire-purchase or of credit sale—shall be sent to the guarantor within seven days of the making of the contract of guarantee. With that principle I entirely agree. I am quite sure that guarantors should have this information, but I feel that a considerable technical difficulty may well arise as the clause is now worded, and the Amendment I am putting forward seeks to ensure that this is overcome.

I have asked various people about this and I believe that, as we laymen think happens so often, lawyers really do differ on the interpretation of the wording, and they differ here as to the precise point at which the contract of guarantee is made, and therefore as to the date from which the seven days is to run. I want to know: is the guarantee made when the guarantor signs the agreement form, or when the owner accepts the hire-purchase or credit-sale agreement itself, and thus carries out his part of the bargain? This really is the point at issue. I do not know what your Lordships feel about this, but I know that if I were to sign a guarantee to-day I should certainly imagine, whatever the lawyers may say, that I have made a binding contract as from to-day. I have some reason to believe that the intention of the clause is to make the seven days run from the day on which the principal contract—that is, the hire-purchase or credit-sale contract—is made. I think it is quite right that this should happen, but I am not quite sure that it will.

I should just like to make this point. I am sure the Committee will appreciate that if the seven days is to run from the date of the guarantor's signature, then in many cases the finance house will not even have received the documents by the time the copy is due. On that ground alone, I think the provision is impracticable. If, however, the meaning is that the agreement is made only when the principal contract is signed, and therefore the seven days runs from that date, then I think no problem arises. I should like to suggest to the Minister that it would surely seem best that the clause should say so with no ambiguity. I think also, of course, that we have to make provision for the case where the guarantee post-dates the agreement, as could happen, although rarely, when the seven days in any case will have to run from the date of the guarantor's signature, as to which in these circumstances no problem arises. My Amendment would cover this point quite adequately. I know that it is unwise to be unduly hopeful, but, as a number of well-qualified persons take a different view from the Government as to what this clause means, perhaps we can have this set down quite definitely. My Amendment does not take away any protection but ensures a workable provision free from doubt. I hope that the Government will accept the Amendment so that what is intended to be done is quite clearly set out. I beg to move.

Amendment moved— Page 16, line 13, after ("guarantee") insert the said words.—(Baroness Burton of Coventry.)

LORD DRUMALBYN

The noble Lady has asked me from what date the guarantee will normally run. I am advised that the guarantor guarantees the performance of the obligations of the hirer in return for the finance house entering into the hire-purchase contract. In legal terminology, the making of the hire-purchase agreement is the consideration for entering into the contract of guarantee, so that in those terms the clause as drafted is perfectly all right. It also would cover the point which the noble Lady also mentioned, where the guarantee is given subsequently to the contract's being entered into in these terms. It may be that a guarantee may be given in consideration of, say, a finance house not proceeding with repossession. The consideration then is the hire-purchase company's refraining from action. In that case the date of the guarantee would be subsequent to the date of the contract. But, as the noble Lady has said, the Amendment which she is proposing will make the matter quite clear and put it beyond doubt. Therefore, I have pleasure in accepting the Amendment.

On Question, Amendment agreed to.

LORD PEDDIE moved, in subsection (1)(b), to leave out "a note or memorandum of". The noble Lord said: To save the time of the Committee, I propose to speak to Amendments Nos. 53, 54 and 55. There will be no difficulty in understanding, and I should hope in accepting, these Amendments, for if the hirer or buyer is to be entitled to a copy of the agreement, then the guarantor (who undertakes these obligations on behalf of the hirer or buyer) should also be entitled to a copy of the agreement and not merely a note or memorandum thereof. The purpose of the first two Amendments is to achieve just that.

In support of Amendment No. 55, I would point out that it has been, and still is, the policy of the Hire-Purchase Acts to require the hirer or buyer to sign contractual documents personally and not to accept signatures per procurationem. Therefore this policy should be extended to guarantors who require protection against dishonest hirers—and there can, of course, be dishonest hirers, people who falsely assert that a friend or relative has agreed to act as guarantor and authorise them to sign the contract of guarantee. It is felt that these three Amendments effect a substantial improvement, and I hope that they can be accepted by the Minister.

Amendment moved— Page 16, line 17, leave out ("a note or memorandum of").—(Lord Peddie.)

LORD DRUMALBYN

It may appear that where we are substituting the agreement itself, or a copy of the agreement, for a note or memorandum in the earlier case, we shall do so also in the case of a guarantee. But the position is that under the general law a guarantee, to be enforceable, has to be evidenced in writing by means of a note or memorandum of it, and that note or memorandum has to be signed by the guarantor or by someone authorised by him to sign it on his behalf. The words of the clause as at present drafted simply reflect the legal position. Although it is usual for contracts of guarantee to be in writing and signed by the guarantor, this is not necessary. I am told that the present legal position does not appear to have given rise to any particular difficulty. In those circumstances, I hope that the noble Lord will feel there is no practical reason for altering the position as it is under the general law in relation to the particular type of guarantee with which the clause deals. This is essentially a lawyer's point; I do not think that it is a practical point.

LORD PEDDIE

I agree that it is a lawyer's point but, frankly, I am very dissatisfied with the reply that has been given. If I understand the reply aright, the law of guarantee makes it impossible to accept this Amendment. Is that so?

LORD DRUMALBYN

No. It is simply that there does not seem any good reason for imposing a different system of guarantee from that which applies under the general law of guarantee. In the normal way there is virtually no difference between the memorandum or note and the contract. I am told that in many cases, under the main provisions which provide at the present time for a note or memorandum of the contract, it is in fact a copy of the agreement which is supplied. I assure the noble Lord that there is very little in this matter.

LORD DOUGLAS OF BARLOCH

I accept the view which the Minister has put forward that a contract of guarantee must be evidenced by a note or memorandum in writing; that it cannot be done merely as an oral contract. However, I think that the phraseology used here is certainly a little misleading. It says: a copy of a note or memorandum of the contract of guarantee which implies that the note or memorandum is something different from the contract of guarantee. I cannot see why, if the noble Lord is so desirous of using the words "note or memorandum", it should not then read "a copy of a note or memorandum of guarantee". Why duplicate the thing? Surely the guarantee is a contract; there cannot be any doubt about that. Surely, therefore, it is sufficient to state the thing once and not to state it twice, for this leads to the impression (and I am not sure that it is not a correct impression) that one is talking about two totally different things.

LORD DRUMALBYN

I will, of course, take note of what the noble Lord, who is a lawyer, has said on this matter, and have a look at the point when considering the Bill.

Amendment, by leave, withdrawn.

LORD PEDDIE

On the first occasion when I spoke on these three Amendments I made comments with regard to No. 55. I would take the opportunity of reiterating the point that I made on that occasion in consequence of what I consider to be the quite unsatisfactory answer I received from the noble Lord opposite. There seemed to be a clear indication of the impossibility of achieving the desired result, the acceptance of this Amendment. All we are asking for in Amendment No. 55 is that we apply to the guarantor the same right as is applied to a hirer or a buyer, and ensure that a contract will be signed by the guarantor and not by someone else on his behalf. I think the contention here is a valid one: that the Bill should give greater protection both to the guarantor and to the hirer. Therefore I was particularly disappointed at the inability of the Minister to accept this Amendment. I beg to move.

Amendment moved— Page 16, line 19, leave out from ("guarantor") to end of line 20.—(Lord Peddle.)

LORD DRUMALBYN

The plain fact —and I cannot say more to the noble Lord on this point than this—is that this is something which, so far as I know, has not given rise to any difficulty in the past, and there does not seem to be any real reason why we should alter the general law in this particular case.

LORD PEDDIE

I certainly cannot accept the suggestion that there has been no difficulty in the past. If someone else can sign on behalf of a guarantor, and the guarantor can be held responsible although he probably has not given his permission for that guarantee to be extended, that is surely a circumstance with which we should deal if the opportunity presents itself. Whilst I have no evidence to the contrary, I very much doubt that there have been no difficulties in the past arising out of this. However, in view of the circumstances, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

LORD DRUMALBYN

It will be convenient, if the House is agreeable, to consider these three technical Amendments together. Under Section 6(1) of the 1938 Act, the hirer or buyer under the protection of the Acts has certain rights to obtain documents. The purpose of Clause 16(3) is to give the guarantor of a hire-purchase or credit-sale agreement under the Acts similar rights to obtain documents. At present that is not quite what the subsection does, and these Amendments secure that it will. The first would apply to all hire-purchase and credit-sale agreements however large. Amendment 56 limits it to agreements to which the principal Act applies—that is, to those not exceeding£2,000. Secondly, the rights given to a guarantor do not fully reflect those which a buyer already had in the case of a credit sale not exceeding £5, raised now by the Bill to £20. Under the Act of 1938, if there is a note or memorandum of the agreement the hirer is entitled to receive a copy of it. Amendments 58 and 59 bring the rights of the guarantor into line with the rights of the hirer in this respect. I beg to move.

Amendment moved— Page 16, line 28, leave out ("or credit-sale agreement") and insert ("to which the principal Act applies or to a credit-sale agreement to which that Act applies").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

LORD CHORLEY

I must apologise to the Committee for not having been in my place when earlier Amendments in my name were called. Unfortunately, I had duties elsewhere which I had to attend to. This is a very simple proposal, which really arises out of the fact that the modern week-end deprives us, in effect, of two out of four days in relation to these matters. The result really, is that unless we work on the basis of working days we shall, in effect, only have two days. In order to make quite clear that Saturdays are included in this, they have been expressly included in this Amendment. From the point of view of the practical working of this scheme, I think this is a very desirable, if not a very necessary, Amendment to the Bill. I hope the Minister will agree with it. I do not think there is any need to explain it at greater length. I therefore beg to move.

Amendment moved— Page 16, line 31, leave out ("four days") and insert ("four working days excluding Saturdays").—(Lord Chorley.)

LORD DRUMALBYN

The clause says: … any person entitled to enforce the contract of guarantee against the guarantor shall, within four days after he has received a request in writing from the guarantor … supply to the guarantor a copy of the hire-purchase agreement or credit-sale agreement … The noble Lord wants to leave out "four days" and insert "four working days excluding Saturdays". There really is no practical need for this change. The provision in the clause as it stands repeats the provision in Section 6(1) of the 1938 Act, which again has caused no trouble. The point is that, if the owner or seller does not supply the guarantor with a copy of the hire-purchase or credit-sale agreement, and a copy of the note or memorandum of the contract of guarantee, together with a statement of the financial details set out in paragraphs (a) to (c) of Section 6(1) of the 1938 Act, he is liable to the sanctions set out in Clause 16(4) of the Bill.

As the noble Lord says, the four days could include days on which the office of the owner or seller is closed but does this really matter in practice? If, due to this fact, the documents have not been supplied within the four days, the owner or seller would equally not be able to enforce the contract of guarantee on those days. He can supply the documents when the office reopens and then he will be in a position to enforce the agreement. As to the second sanction, then of course he has a whole month in which to supply the documents. So nobody is any the worse off simply because the four days may include non-working days as well as working days. I do not think there is any practical point that arises here.

LORD CHORLEY

This is a very good example of the sort of answer which comes from a Government Department where people are not practised in these matters. My information, which comes from finance companies who are engaged in this business, is that this does in fact give rise to difficulty, and that is the reason why I put the Amendment down. To those looking at it in the Board of Trade, it may appear that this is not so, but my information is that it does give rise to difficulty for people who are operating this business from the finance companies' angle. If it had not been for that fact, I would not have put down the Amendment. But if the noble Lord says that he will not accept it, I do not propose to divide the House and I beg leave to withdraw the Amendment.

LORD DRUMALBYN

I shall be very glad if the noble Lord will let me have examples and instances of where difficulty has arisen. Of course, if the noble Lord will do that, we will willingly look at them.

LORD CHORLEY

I am grateful to the noble Lord for that statement.

LORD PEDDIE

May I ask whether there is some virtue in using the words "clear days", as against "four days" or "three days"? Is there not some virtue in adopting the idea of clear days, so that the person involved knows more precisely the period of time involved?

LORD DRUMALBYN

I should have thought that was so. That is why we have "four days", rather than "four working days".

LORD PEDDIE

"Four days", not "four clear days".

LORD DRUMALBYN

If you say "four working days", it is not exactly clear what you mean. At any rate, we would have to look at the drafting if we were to make a change in this.

Amendment, by leave, withdrawn.

LORD DRUMALBYN

I beg to move Amendment No. 58.

Amendment moved—

Page 16, line 34, leave out from ("guarantor") to end of line 39 and insert ("the documents specified in the next following subsection. (4) The documents referred to in the last preceding subsection are:—

1. (a) a copy of the hire-purchase agreement or credit-sale agreement or, in the case of a credit-sale agreement under which the total purchase price does not exceed £20, a copy of any note or memorandum of the agreement; and
2. (b) a copy of a note or memorandum of the contract of guarantee; and
3. (c) a statement signed by, or by the agent of, the person to whom the request in writing referred to in the last preceding subsection is made, showing the matters specified in paragraphs (a) to (c) of section 6(1) of the principal Act (which relates to information required to be given to the hirer or buyer).").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

LORD DRUMALBYN

I beg to move this Amendment.

Amendment moved— Page 16, line 41, leave out ("the last preceding subsection") and insert ("subsection (3) of this section").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

Clause 16, as amended, agreed to.

[The Sitting was suspended at twenty-nine minutes before eight o'clock and resumed at half past eight o'clock.]

Clause 17 agreed to.

LORD DOUGLAS OF BARLOCH moved, after Clause 17, to insert the following new clause

County Court Jurisdiction

". Section 39 of the County Courts Act, 1959 (which prescribes the general jurisdiction of County Courts in actions of contract and tort) shall have effect in relation to hire-purchase agreements and credit-sale agreements to which the principal Act applies and conditional sale agreements to which section 17 of this Act applies as if for the reference to £400 there were substituted a reference to £2,000 or such larger sum as may from time to time be specified in any Order in Council made under section 1(3) of this Act."

The noble Lord said: On behalf of the noble Viscount, Lord Brentford, I beg to move the Amendment standing in his name. This is a very simple Amendment, the purpose of which is to confer upon the county courts jurisdiction to deal with proceedings arising out of hire-purchase agreements or credit- sales agreements which are subject to statutory control. If this Amendment is not passed the county courts will have jurisdiction in cases up to £400 and also jurisdiction in all cases arising under Section 12 of the principal Act relating to recovery of the goods which are subject to the contract. I know that if this Amendment is approved it will mean an extension of the power of the county courts beyond their normal limit. There are good precedents for such a course, however, and in this particular field the county courts have hitherto had jurisdiction with regard to actions relating to hire-purchase contracts. The county court judges have experience of dealing with them; the county court is a more economic tribunal than the High Court; it is a more speedy tribunal, and it would therefore be very much to the advantage of hirers that all disputes with regard to contracts should be decided in the county court.

I have said that there are precedents for giving an extended jurisdiction to the county court. One case which comes to my mind (it does not exist now, of course) was with regard to workmen's compensation, where the county court had unlimited jurisdiction no matter what the amount of the claim. That jurisdiction was given for very good reasons: it affected people, many of them not in an affluent position, and enabled them to have their cases decided speedily and economically. Exactly the same arguments apply in this case. I should say that this matter has been considered by the Law Society, whose members have great experience of dealing with matters of this kind, and they are strongly in favour of making this Amendment to the Bill. I hope, therefore, that the Minister will consider it and that it will meet with the approval of the Committee. I beg to move.

Amendment moved— After Clause 17, insert the said new clause.—(Lord Douglas of Barloch.)

LORD DRUMALBYN

During the course of the Second Reading debate I indicated that the cases to which Sections 11 and 12 of the 1938 Act would apply would come before the county courts notwithstanding they might exceed the normal jurisdiction of such courts. These are cases where the action is for the recovery of goods after one-third of the hire-purchase price has been paid. If the noble Lord will look at Section 12(1) of the 1938 Act, he will see that in these cases action must be brought in the county court, and the jurisdiction of that court will be automatically extended, I am advised, to cover such cases. Where the Act does not require the action to be brought in the county court, the ordinary limits of jurisdiction of that court will, as the Bill is now drafted, apply. There will therefore be a number of actions which may arise in connection with hire-purchase agreements not exceeding £2,000 which cannot be brought in the county court—and I appreciate, of course, that the purpose of the Amendment is to deal with such cases.

The position will be similar in relation to conditional sale agreements, since the Bill applies the 1938 Act to these agreements in the same way as the Act applies to hire-purchase agreements. As respects credit-sale agreements, the ordinary limits of the county court's jurisdiction will apply, since there is nothing in the 1938 Act which compels a seller to bring action in the county court. In the case of these credit-sale agreements, there is, of course, no question of the recovery of goods. I think that this is a matter which requires to be further considered and I hope that on my undertaking to do this between now and the Report stage of the Bill the noble Lord will agree to withdraw this Amendment.

LORD SHEPHERD

Before my noble friend responds to that invitation, may I ask the Minister whether he is aware that most county courts to-day deal with cases of hire-purchase recovery quickly—I think within five or six weeks? But I should think that the increase in the scope of the Bill from £300 to £2,000 would increase the amount of litigation that would come before these courts. Perhaps the noble Lord would undertake to discuss the matter with his noble and learned friend the Lord Chancellor, to see whether in certain cases there could not be an increase in the number of judges, and particularly in the number of bailiffs. I am told that there is a shortage of bailiffs to meet the duties imposed on them through the courts. I believe that it would be right for those who are responsible for the courts to anticipate the increased work. In no circumstances should we wish to see the reasonable period of from five to six weeks extended, to the disadvantage of both hirers and hire-purchase companies.

LORD DRUMALBYN

There was the fear that this would throw a good deal of extra work on the county courts, but to some extent, of course, it can cut both ways. Once an exact procedure is prescribed, then presumably cases will not take so long as when cases are outside the Act. The Lord Chancellor's Department were consulted on this point, and they considered that if there was an extra load, it would not be in any way crippling to the county courts. They believed that the courts can absorb whatever extra load would come about as the result of these Amendments of the principal Act.

LORD DOUGLAS OF BARLOCH

My noble friend has raised a perfectly fair point with regard to the administration which could, of course, arise in whatever court these cases were taken. I have no doubt that the Lord Chancellor will provide a sufficient number of judges, whether they are in one court or another. In view of what the noble Lord has said about giving consideration to this Amendment—and I think he has approached it in quite a sympathetic fashion—I am happy to ask leave to withdraw it.

Amendment, by leave withdrawn.

Clause 18 agreed to.

8.41 p.m.

BARONESS BURTON OF COVENTRY moved, after Clause 18 to insert the following new clause—

Amendment of section 4 of Law of Distress (Amendment) Act 1908

Subsection (1) of section 4 of the Law of Distress (Amendment) Act 1908 shall be amended to read as follows:— to goods belonging to the husband or wife of the tenant whose rent is in arrears nor to goods comprised in any Bill of Sale or settlement made by such tenant nor to goods in the possession, order or disposition of such tenant by the consent and permission of the true owner under such circumstances that such tenant is the reputed owner thereof unless such goods are in such possession, order or disposition solely by reason of their being or having been comprised in a bona fide hire or hire-purchase agreement made between any other person (as defined by subsection (c) of section 1 of this Act) and such tenant, nor to any livestock to which section 29 of the Agricultural Holdings Act 1908 applies;

The noble Baroness said: Many people interested in this problem of hire-purchase reform and legislation have criticised the Government for some time past for not bringing forward comprehensive legislation to deal fundamentally with these issues. I am quite sure the Committee will be in agreement with me when I say that many of us feel that only a Government having departmental assistance behind them can deal with these difficult problems. Some of us, inside this House and outside, are not quite sure how deeply the Government intend to delve into these matters to-day; nor are we quite sure how much time the Government feel they have to deal with all these details.

Having said that, I should like to express my appreciation of the fact that we have this Bill to consider. Nevertheless, in spite of the fact that the Minister surprised me rather pleasantly by accepting a recent Amendment of mine—for which I was unable to thank him, as we moved on to the next business—I am not at all sure that it is not the intention of the Government to stick to their brief. It seems to me that, whatever the arguments adduced on various matters, we are given the reply that the Minister has brought with him. I hope I am being unjust in saying that, but that is how it seems to me. I hope I am wrong, and that it is the intention of the Government to be as comprehensive as possible. As I am still living in that hope, I want to move this Amendment, because it concerns a matter that has needed attention for a good many years. The explanation must be somewhat technical, but it will not be long, and I feel, as a layman, that it is a longstanding grievance that we might well get rid of at this stage, if the Minister were able to help us. I stress that, because I do not believe that words which were used in 1908 were intended to have the effect which they did. I refer to certain words used in the Law of Distress (Amendment) Act, 1908, to which my Amendment refers.

The Committee will recall that while at Common Law the right of distress was not confined to the tenant's goods but extended to all goods on the premises, this strict rule has been eased over the years so as to provide, as seems only equitable, that one man's goods should not be seized to pay another man's debts. The object of the Act of 1908 was not, therefore, it seems to me, to extend the rights of landlords, but rather to diminish them by protecting goods which were not the property of the tenant. I believe that if we examine the wording of Section 4 of the Act it becomes evident that the intention of that section was not to strike at hire-purchase agreements, as they are usually understood, but rather to strike at fictitious and, as I would call them, improper arrangements into which a tenant might enter for the purpose of removing what were in truth his own goods from any attempt by the landlord to seize them.

The Minister, of course, will remember that the wording in the Act relates to goods comprised in any bill of sale, hire-purchase agreement or settlement made by such tenant. I would draw to the Minister's attention the comments made by the learned author of the Law of Hire Purchase, when he said: … the effect of an ordinary grammatical construction of the above-quoted words would appear to be that they do not except from the protection of the Act goods let to a tenant, but their object is to protect a landlord from being defrauded by a tenant making a fictitious hire-purchase agreement in respect of his own goods … The author, Mr. Earengey, went on to quote the case of In re Watson, in 1890. The only other case that I would bring before the Committee, very briefly, is Rodgers v. Martin, when Lord Alverstone said—and I would quote again, because this obviously carries much more weight than my comments: … the only reasonable meaning of that subsection is that goods are not to get the benefit of Section 1 if they are goods as to which the tenant himself has made an arrangement, by which he has sought to secure, for his own goods, the protection intended by the Act to be given to the goods of other persons only. I hope your Lordships will agree, especially having regard to the class of instruments with which hire-purchase is bracketed in the section, that the intention of the legislation has not in fact been achieved. It is interesting to note in this connection that goods on simple hire are not excepted from the protection given by the Act, which, it is submitted, gives added weight to the contention here maintained.

My submission is this. It seems to me that in this day and age no landlord should, or would, assume that because a tenant has goods on his premises they must in the normal way belong to him and therefore the landlord will be safe in allowing arrears of rent to accumulate. There is, of course, a very different and, I think, even more forcible argument. The Bill which we are now considering seeks to protect hirers by preventing the true owner from seizing the goods, once one-third of the price has been paid, without reference to the court, but I believe, that the effect of the Act of 1908 is that the landlord, who has no interest in the goods at all, can seize them at any time without reference to the courts whatsoever. If it is right that the hirer should be protected against seizure by the true owner, how much more should he be protected against the intervention of a third party? This seems to me to be a matter of consumer protection.

I will not weary the Committee with further details, but I believe that the Amendment which I am now putting to the Committee will, by an amendment of section 4 of the Act of 1908, adequately protect both the hirer and the owner against the seizure of goods by a landlord. This protection to goods that are the subject of an ordinary hire-purchase agreement (as opposed to any fictitious arrangement masquerading as such) is, I believe, in accordance with equity and entirely desirable for the protection of those principally concerned. I hope very much that the Minister will feel that this is an opportunity to rectify a longstanding error. I beg to move.

Amendment moved— After Clause 18 insert the said new clause.—(Baroness Burton of Coventry.)

LORD DRUMALBYN

I appreciate that the purpose of the noble Baroness's Amendment is to bring goods subject to hire-purchase agreements within the limited protection which the Law of Distress (Amendment) Act, 1908, already affords to certain goods of third parties in the possession of tenants against distress by landlords for rent. I am bound to say that I think the noble Lady has made a very strong plea in this regard, but may I first of all submit one or two considerations?

Goods the subject of a hire-purchase agreement may be excluded from the protection of the Act of 1908 for either or both of two reasons: first, by being goods, as the noble Lady made clear, "comprised in a hire-purchase agreement" they are specifically excluded as such by Section 4 of that Act; secondly, they may be excluded as being goods in the reputed ownership of the tenant. This second exclusion is a general one and not confined to cases where the owner's consent to the tenant's possession is derived from a hire-purchase agreement.

So far as the specific exclusion of hire-purchase goods is concerned, there is usually a clause in the agreement, I am informed, for its automatic termination on distress being threatened. Obviously, it cannot always be operative, but where such a clause does operate the goods cease to be comprised in the agreement and the specific exclusion in Section 4 of the Act of goods so comprised is avoided. I doubt in this respect whether the Amendment would have any practical effect. The Amendment, however, goes further than this and seeks to confine the general exclusion of goods in the reputed ownership of the tenant to cases where the owner's consent to the tenant's possession does not arise from a bona fide hire-purchase agreement.

The question really is whether goods on hire-purchase can be treated differently from other goods in the reputed ownership of the tenant. If it is right to exclude from the protection of the 1908 Act goods in the reputed ownership of the tenant, why should goods on hire-purchase be put on a different footing from other goods in that category, goods lent and so forth? It may be that a case could be made out for ceasing to exclude from the protection of the Act all kinds of goods in the tenant's reputed ownership, but the question we have to consider now is whether such a fundamental change ought to be made piecemeal in legislation dealing primarily with hire-purchase. I know that the noble Lady will say that here is a good opportunity, and she has undoubtedly made a strong case, but we feel that it would be necessary to consider the 1908 Act as a whole and to take into account the views which might also be expressed by the landlords in this matter.

We do not think we ought to deal with this matter piecemeal. This is the other side of the coin to the noble Lady's case, which we quite understand, that here we are legislating about hire-purchase and here is a chance to make the alteration which would appear to do greater justice. I think this is her view. All I can say, just as I said at an earlier stage when we considered the Sale of Goods Act that we ought to consider the Act as a whole and not piecemeal, is that here, with hire-purchase, I think the same considerations really apply to the question of distress.

BARONESS BURTON OF COVENTRY

In thanking the noble Lord for that very pleasant answer, which really did not get me a lot further, I am sure he will agree that it always seems to noble Lords, if they have made out a good case for something which should then be done, that they are then informed that "we cannot deal with something piecemeal". I think we are dealing piecemeal with hire-purchase at the present moment. I think it is "Heads I lose, tails the Minister wins". But he has listened patiently to my arguments, and possibly the next Government will deal with the amendment to the Law of Distress (Amendment) Act, 1908. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 19 agreed to.

LORD McNAIR moved, after Clause 19, to insert the following new clause:

Size of type of prescribed documents

". All agreements, statements, notices and other documents required or prescribed by this Act or the principal Act shall either be typewritten clearly and legibly or be printed in type of a size not less than the type known as 'ten-point Times'".

The noble and learned Lord said: I think we should all agree that it is of the first importance that a hirer should know exactly the bargain into which he enters. At present one of the obstacles which prevent that is that many or most of these hire-purchase agreements are printed in very small letters. Whatever may be the reason, I believe that to be a fact. It may be that the reason is that in the course of years hire-purchase agreements have become larger and larger in view of their complexity and the necessity of dealing with new points that arise from decisions of the courts. Whatever may be the reason, it is undoubtedly the fact that as a result of this very small lettering hirers are not encouraged to read these agreements and understand them. I feel sure that many who make the attempt give it up as a bad job when they realise the kind of print they have to tackle. This defect has been dealt with in Australia. Most or all of the Australian States have legislated for this purpose. My clause here is based very closely on the Victoria Hire-Purchase Act, 1959; but most or all of the Australian States have something similar.

In regard to the precise wording of the clause, I have copied the expression which occurs in the Australian legislation—namely, type known as "ten-point Times". I understand that expression also has a meaning in this country. If your Lordships want an idea of what it means, it can be easily ascertained by looking at Whitaker's Almanack under the title "Weights and Measures". There you will find a specimen of what is known as ten-point, though the word Times is not used. If your Lordships are prepared to accept this Amendment—I sincerely hope the Minister will encourage you to do so—I feel sure that if he consults the Government printers he will be able to produce a much closer definition of ten-point Times than those words themselves, which I have copied from the Australian Statute. I beg to move.

Amendment moved— After Clause 19, insert the said new clause.—(Lord McNair.)

LORD CHORLEY

May I add a word in support of the noble and learned Lord? I am moved to do so by the entry of my noble friend Lord Shackleton, who only the other day was adjuring us to bring more science into our legislation, among other things. This Australian Act to which the noble and learned Lord has referred is, in effect, a uniform Act relating to this problem of hire-purchase which has been adopted, I think, in all the Australian States of the Commonwealth, and it has been a good deal written about in the legal periodicals in this country over the last year or two. If Lord Shackleton's views about bringing science to bear upon legislation had been appreciated in the Board of Trade in the way I suggest they ought to have been, undoubtedly the experiences in the Commonwealth would have been more apparent in this Bill, but so far as I can see they have been disregarded completely.

This is a provision which I believe has worked most successfully in Australia. It is another way of handling a problem which my noble friends and I were concerned about on the first day of the Committee stage of this Bill, when we did not get much change out of the Minister, although in his usual charming way he said that he would look at our proposals. If he could undertake that the Board of Trade would use the extended powers which we want to confer upon them to deal with this matter, on the lines of the noble and learned Lord's Amendment, that would no doubt meet the case; but, undoubtedly, here is a really valuable provision which might be of great use to all the consumers whom the Government and we on these Benches wish to protect by this legislation.

LORD DRUMALBYN

I mean no disrespect to the noble and learned Lord when I point out that this is a starred Amendment and that we have not really had any opportunity to consider it in detail; nor was I aware that he had culled these exact words, as I understood him to say, from Australian legislation. There is, of course, a considerable advantage in prescribing that whatever type face is used should be legible and should be large enough to be readable, although there is the contrary difficulty that you may need so much bulk that you might hide in the bulk of paper involved. There are certain minor points which we should like to look at in this proposal, and we are also a little doubtful about how we would enforce such a provision. But, having said that, I shall be glad to look at this Amendment between now and the Report stage.

LORD LATHAM

Would the noble Lord be fortified in that resolve if I reminded him of, or drew his attention to, the fact that as far back as 1909 the then Member of Parliament for King's Lynn, Mr. Gibson Bowles, raised the question of the small type for conditions in insurance policies?

LORD McNAIR

I am greatly obliged to the Minister in charge of the Bill for promising to look into this matter. I realise that it is only within the last 24 hours that the Amendment has been put down, and I could hardly expect him to do more. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 20 [Extension of principal Act to Scotland]:

LORD DRUMALBYN

This is a drafting Amendment. I beg to move.

Amendment moved— Page 20, line 17, leave out ("19(6)") and insert ("19(7)").—(Lord Drumalbvn.)

On Question, Amendment agreed to.

Clause 20, as amended, agreed to.

Clause 21 [Extension to Scotland of provisions of Part I]:

9.4 p.m.

LORD DRUMALBYN

This Amendment looks rather formidable, but it is in fact an Amendment consequential upon the earlier Amendment No. 46 to Clause 13(7), and it is concerned solely with the application of Clause 13(7) to Scotland. I beg to move.

Amendment moved—

Page 21, line 15, at end insert— ("(v) in subsection (7), for the words 'by an application for the issue of a warrant of delivery' there shall be substituted the words 'by an application for the grant of a warrant to officers of court to search such premises in the occupation of that person as may be specified in the warrant and to take possession of the goods or any of them which may be found in such premises'; and at the end of the said subsection there shall be added the words 'Any warrant granted in pursuance of an application under this subsection shall be deemed to include authority to open, if need be, shut and lock-fast places for the purpose of carrying the warrant into lawful execution'.").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

LORD DRUMALBYN

Clause 13 gives a person in possession of goods to which a hire-purchase agreement applies the protection against repossession which the hirer would have had, had he lived. Section 17 of the 1938 Act protects a hirer who refuses to give up possession from an action for conversion and subsection (8) of Clause 13 does the same for a person in possession after his death. But it is unnecessary to extend this subsection to Scotland, since in Scotland the civil wrong known in England as "conversion" does not exist as such. There are remedies available in Scotland to an owner of goods who suffers loss when a person wrongfully detains the owner's goods. None of these remedies would, however, be available against a person who properly relies on the protection of Clause 13 of the Bill and it is, therefore, unnecessary in relation to Scotland to provide any additional protection. I beg to move.

Amendment moved—

Page 21, line 15, at end insert— ("(vi) subsection (8) shall be omitted;").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

LORD DRUMALBYN

This Amendment is consequential upon Amendment 58 which amended Clause 16.

Amendment moved— Page 21, line 33, leave out ("(3)") and insert ("(4)(b)").—(Lord Drumalbyn.)

On Question, Amendment agreed to.

Clause 21, as amended, agreed to.

Clause 22 [Special provisions as to registration and licensing]:

9.13 p.m.

LORD SHEPHERD moved to leave out Clause 22. The noble Lord said: I beg to move Amendment No. 65, which is linked with other Amendments which in effect delete Part III from the Bill. If I may, I should also like to speak to Amendments 65A and 67A, both of which are starred. First of all, I would apologise to the Minister for putting down these Amendments at such a very late stage, but there was difficulty in getting agreement to the proposals which in a few moments I shall put before the Committee. Secondly, I would say another word of apology. We have been making such wonderful progress that I feel rather reluctant in having to make what may be a somewhat lengthy speech, but, as the Committee will appreciate, Part III of the Bill is of very consider- able importance not only to hire-purchase companies but also to the motor trade.

Part III basically sets out to prevent hardship to the innocent purchaser of a motor car which is the subject of a hire-purchase agreement that has not been discharged. At present if a person were to buy a motor car with an undischarged hire-purchase agreement against it and the vehicle were traced, the hire-purchase company could recover the vehicle. The result is that the buyer would have lost all the cash he may have paid to the defrauding hirer. If we cannot find an alternative to Part III, then I myself would give reluctant support to it. I believe the Government have chosen here to use a steam-hammer to crack a peanut.

I ask the Committee to consider the problem, for I do not feel that the Government themselves are fully aware of its size. I have been fortunate in obtaining information from hire-purchase companies, and I should like to give it in detail as I think it is of considerable importance both to the Committee and to the Government. At present there are approximately 4 million motor cars which are under hire-purchase agreement. It is difficult to get the exact figures, but if we take the year 1963 there were 1,410,296 transactions in motor cars and vehicles of all types. According to the hire-purchase information I have, in only 700 cases had fraud taken place;in other words, one case in 2,000 transactions. If one takes the average amount outstanding on those agreements—and I have been given a figure of £200—we are considering an overall figure of £140,000. I would ask the Committee to remember that, because later on I wish to give an indication of the possible cost to the hire-purchase companies, and of course, indirectly, that will be upon the hirers.

I should not wish to disregard the cost to the buyer of a vehicle under a hire-purchase agreement—in many cases it can take most of his savings—but my case against the Government's proposals is in four parts. First, there is the security of ownership, and I maintain that, in fact, there may be a considerable increase of fraud, particularly during the next three years. Secondly, I think there will be an increased cost, not only to the finance houses but to the motor trade itself, and all this is eventually passed on to the individual hirers. Thirdly, I believe that the method adopted by the Government will be very restrictive throughout the motor trade. Fourthly, although this is not quite so important, I think the Bill will increase the difficulties of those persons who take cars under hire-purchase.

Let us take, first of all, the question of security of ownership. The log book, with which we are all familiar, has never been regarded as a title to the vehicle; it is merely a record of registration and licence. But I suggest that Part transforms the log book from this mere record of registration into a title to the car. The fact that you have a log book in your possession will clearly show that you are the owner of the car. I believe that the Ministry of Transport —the Ministry which has framed Part III—themselves recognise that, following the Bill, the log book will be regarded as a security instrument. They themselves therefore acknowledge that they are transforming the importance of the log book.

Part III requires the finance houses to store and keep the log books. This is obviously going to involve hire-purchase companies in many problems. First, there is the question of the storage, the space. I do not think this will be very difficult. It will be expensive, but it can be done. But since the log book becomes a security instrument and a very valuable document—far more valuable than it is to-day—it is obvious that the hire-purchase companies will have to adopt, first of all, methods of storage which are proof against fire. They will also have to make sure that these log books are secure from theft. I believe that if Part III goes through, hire-purchase companies will need to have many of their staff bonded as a security against theft. I visualise the hire-purchase companies having considerable difficulty in checking whether there have been thefts of log books. I am told that, in practice, a hirer's file is not brought forth—is not even looked at—during the period of the agreement, so long as payments are being made. Obviously, if the log book is going to be stored and is of such value, the hire-purchase companies will have to adopt very stringent arrangements for its protection.

The noble Lord, Lord Drumalbyn, suggested on Second Reading that what was being imposed was not disproportionate in cost or labour. I have been given a figure—it may not be all that accurate, but it is a reasonable indication—which indicates that the initial costs and the annual cost for the first year may well be in the region of £700,000. This is a very sizeable figure to impose upon this industry, unless, of course, it is the only way in which this can be done. But before proceeding I should like to ask the noble Lord: what is the real position of the log book? It has no seal; it has no watermark; it is printed on a piece of cardboard the type of which varies from district to district. In fact, I was told the other day of a very well-known hire-purchase company that wished to develop a new form of log book. The managing director, to help him in the deployment of his argument, had a log book slightly amended and then had it printed. I am told that, except for the amendments, the printed log book was identical in all respects to those which are being issued by the licensing authorities. Is it the Government's intention to find some way in which the trade and individuals can identify what is a genuine log book—something like the watermark that we put on our sterling notes? With the possibility of a tremendous concentration of log books in one or two areas, the possibility of theft or robbery will be greater—and once those log books are in circulation I think there will be some very dire effects on the trade.

I have dealt with that one side in regard to security of ownership. The motor trade is one in which speed is an essential factor. If I wish to sell my car in order to buy a new one, the quicker it can be done the better; and the dealer who buys my car, particularly if he is giving me a pretty reasonable discount on it, must be in a position to effect a sale as quickly as possible. Most dealers, in fact, try to adopt a sort of back-to-back arrangement: when they take a car in they have a possible buyer in view. The provisions of Part III do not, I believe, seriously affect the sale of new cars: I think they come in when we get into the secondhand car market.

This, as I see it, is what will take place. If a customer whose vehicle is subject to an undischarged hire-purchase or conditional-sale agreement wishes to part-exchange it for another vehicle, he will hand over the registration card and ask the dealer to settle the amount due to the finance company. The procedure will then be as follows. The dealer will send his cheque in settlement to the finance company concerned, unless the dealer is known to them. They will wait until the cheque has been cleared before sending the registration book to the licensing authority with the required instruction to send it to the dealer. In the meantime, as is the custom, the dealer will have to send any unexpired fund tax back to the licensing authority in order to obtain a refund.

At this point the dealer will be in possession of the traded-in vehicle but cannot expect to be in possession of the registration book for at least a further seven to ten days; in other words, the hire-purchase company will not release the log book until they have seen the money. Here is another difficulty: anyone who has either bought or endeavoured to sell a second-hand car knows that the sight of the log book is an essential factor in the sale. If the dealer finds a customer for the vehicle yet cannot produce the log book, whether a customer wishes to acquire the vehicle for cash or under a hire-purchase agreement, the dealer will be unable to tax the vehicle until he receives the registration book. There are many other aspects in which difficulty will arise, but in view of the time, I will not deploy arguments on those this evening.

I think that my noble friend Lord Shackleton raised the problem of a person who has a hire-purchase car and wishes to proceed overseas. Under present arrangements if you wish to take your car overseas you go to the Automobile Association or to the Royal Automobile Club and get a carnet; but the R.A.C. and A.A. will know that the general provisions under a hire-purchase agreement prohibit you from taking your car overseas without the permission of the hire-purchase company. Obviously, therefore, the R.A.C. and A.A. will not issue a carnet until they have written agreement from the hire-purchase company concerned. Therefore one can see a vast number of letters going backwards and forwards at summer time in order that hirers may take their cars overseas. That, if I may say so, deals with the case against Part III.

There is a suggestion—and I hope the Government will feel it is a good one—to deal with this matter. It will, I believe, provide the protection that we need for the person who, quite innocently, buys a car which is under a hire-purchase agreement. These proposals are set out in Amendments Nos. 65A and 67A. Amendment 65A says that the Board of Trade may make regulations to provide that those companies who undertake hire-purchase agreements shall notify the Board of Trade to that effect, and that the Board of Trade may thereafter require the finance companies, within fourteen days of the end of each quarter, to furnish a statement of the number of vehicles that have been let under hire-purchase agreements. The purpose of this is to establish the amount of levy that should be paid to the idemnity fund that is to be set up and controlled by the Board of Trade.

I will keep closely to my notes at this point, because I do not wish to get these proposals wrongly. What is proposed is this. Every finance company would be obliged to become a member of an idemnity organisation and to enter into appropriate covenants with it and with other finance companies who would be members of that association. Each finance company which is a member would certify quarterly to this organisation the number of transactions that it had entered into during the preceding quarter and a levy would be collected from each company. I have already indicated the approximate value of the vehicles involved in fraud—about £140,000. If there were a levy of half-a-crown per transaction, the fund would have an annual income of £170,000 and there would be ample funds to deal with the whole matter. If we were to raise £170,000 by a half-crown levy, this is very much lower than the cost that might arise as a result of Part III of the Bill—namely, about £700,000.

In the event of a hirer's conversion by fraud of a vehicle let under a hire-purchase agreement, the company would trace the vehicle in the ordinary way as at present. Having traced the vehicle and having been satisfied that the purchaser had bought it in good faith, and without detriment to the finance company's interest, the finance company would explain to the purchaser that his case was covered by an indemnity fund, and that unless he preferred to surrender the car and take steps himself to bring the vendor to book, the finance company's claim would be met by the fund, provided that he was willing to sign a written statement of the circumstances in which he acquired the vehicle and to testify in any civil or criminal proceedings which might subsequently be taken against the person responsible for the fraud.

In the event of an innocent party's agreement to do this, the hire-purchase company would be prevented from recovering the vehicle from the innocent buyer. Subsequently, the hire-purchase company would proceed, exactly as they do to-day, against the hirer for fraud, in either the civil or the criminal court. If it were not possible to obtain a settlement from the hirer, then the finance company would obtain the sum involved from the indemnity organisation.

That is the scheme proposed, which I believe (I speak subject to correction) has the support of the major hire-purchase companies in the motor trade. The noble Lord knows me well enough now to know I am not likely to be taken in by the hire-purchase companies' case. I listened to it with a considerable amount of sympathy, but with suspicion in the first instance, but I must say that I came away convinced that the proposals would meet the point the noble Lord gave to us on Second Reading, which would be likely to throw sand into the speedy working of the motor trade and for which we should look for an alternative.

I think that this proposal, which has emanated from the hire-purchase companies, is worthy of consideration. First, the position of the hirer who commits fraud is no different from what it is to-day. Secondly, the position of the innocent buyer will be that which the Government wish to see, and with which we all agree. If he has innocently bought a car he should not suffer by it. Thirdly, the hire-purchase companies themselves recognise this problem and within their own finances are prepared to provide the indemnity fund. What seems to me most important is that they themselves are willing that the Board of Trade should set up the regulations for this indemnity fund; and I believe that with some persuasion they would be prepared to agree to the Board of Trade looking into this particular field a good deal more thoroughly than they have in the past and exerting a greater control over those hire-purchase companies which, as I said earlier, have brought the trade into disrepute.

I apologise to your Lordships for having spoken at length, but I wished to get this case in Hansard, for the consideration of not only the noble Lord opposite but also those wonderful servants in his office who have to be convinced, just as we have to convince the Minister. I beg to move.

Amendment moved— Leave out Clause 22.—(Lord Shepherd.)

9.32 p.m.

LORD DRUMALBYN

I am sure I speak for all noble Lords when I say how grateful we are to the noble Lord, Lord Shepherd, for having explained this matter so fully and set out so many of the considerations that have led to his putting down the series of Amendments to leave out these clauses, and secondly, and more recently, the clauses which he would propose to substitute. The noble Lord was good enough to say that he would hardly expect us today to do more than say that we would consider these new clauses, and, indeed, that is what I propose to do. The noble Lord has, as he said, got into Hansard a full explanation of the way in which he thinks these clauses will work, and we shall have to go through them to see whether they will work in that way and whether there are any snags.

Of course, as is well known, we ourselves considered a number of different alternatives when we went into this matter and heard evidence from the various bodies concerned. One can make no complaint that at that time the finance houses had not thought up this particular scheme, although it might have been more helpful if they had. We have adopted the alternative which we thought was the simplest and surest. On the face of it, the one outstanding difference between the clauses which the noble Lord has down and those in the Bill lies in the treatment of the innocent purchaser, because although he says, probably quite truly, that the position of the innocent purchaser in the end will be the same as under the Bill, the legal position will not be quite the same. The Bill gives the innocent purchaser an absolute title to the car, whereas under the noble Lord's scheme it is conditional upon the innocent purchaser's satisfying private persons, the finance houses, and we are not certain how this would work out in practice. We should obviously have to give this matter more careful consideration than has been possible in this short time.

I think I am right in saying that the earlier ideas of the finance houses, and, indeed, the scheme which the noble Lord mentioned to me informally at an earlier stage, did not really involve legislation or the Board of Trade coming into the matter at all. I think further consideration by the noble Lord and by the finance houses has shown them that we should certainly have to come into it to some extent, and I am not certain that we should not have to come in to a greater extent than the scheme as at present expounded would suggest.

I do not know whether noble Lords would wish me to say how the scheme proposed in the Bill would work, but I will willingly do so if noble Lords wish it. I think it is fairly plain sailing. In view of the situation in which we find ourselves, namely, that the noble Lord has suggested the deletion of all the various clauses dealing with vehicle ownership, and dealt with the log book and the position of the innocent purchaser, I think the best thing would be, if noble Lords agree, that I should agree to consider the noble Lord's new clauses, and that in the meantime we should proceed with the Bill as drafted, because the noble Lord has said that if no better scheme can be devised he would be prepared—and I agree that only then—to accept the clauses in the Bill. With that brief intervention, I wonder whether we could perhaps—unless other noble Lords wish to intervene—adopt this procedure, at any rate, at this stage.

LORD GREENWAY

The noble Lord has been discussing cars on h.p. He probably has not thought of the 2 million people who own boats on h.p. He has not mentioned one word of that. The other thing I want to say is this—and I may be out of order. We have wives here, and my wife said to me, "For God's sake! don't waffle."

LORD PEDDIE

I will take that advice. I will take the noble Lord up on the point that he made, when he offered to explain how the question of special provisions would operate under the Bill.

LORD GREENWAY

It is an h.p. Bill.

LORD PEDDIE

The point which interests me, and creates a measure of doubt in my mind as to how this would operate in practice, is this. On some operative date the Board of Trade would introduce regulations which would make the document a title to ownership. But prior to the introduction of the regulation by the Board of Trade there would be many of these documents already in the possession of people who had purchased cars under hire-purchase. The result would be that people would be governed by regulations of the Board of Trade and would have this registration card or whatever it is called, but there would be a considerable number of people who would have the log book or registration book prior to the operation of the regulation. I cannot see how that circumstance would be dealt with. I mentioned this point on Second Reading and, quite seriously, I should like to know how one would get over that difficulty. I welcome provisions of this character which deal with circumstances such as those with which this clause deals, but I am still not clear in my mind how it would operate. If the noble Lord opposite would do something to help me in that direction I should be obliged.

LORD DRUMALBYN

First, may I reply briefly to the point raised by the noble Lord, Lord Greenway? The reason why we have not been talking about boats is because this Part of the Bill deals only with the licensing of mechanically propelled vehicles on conditional sale, but I will take note of what he has said.

LORD GREENWAY

That applies to craft as well.

LORD DRUMALBYN

I should like to look into that point. I do not think the legislation concerning it is exactly the same.

On the points that the noble Lord, Lord Peddie, raises, I do not think it is true to say that in any legal sense the proposals here would in any way change the position of the log book in regard to title to ownership. The noble Lord, Lord Shepherd, suggests that it will come to be regarded as a title to ownership. This is a point which is very difficult to deal with within the framework of this particular scheme. It is true, of course, that the licensing card would be issued instead of the log book, and it would be very unwise for any intending purchaser to contemplate buying a car unless the log book were available: but it is not the same thing as saying that it becomes in any way an instrument of ownership or of title. I think one must counter that right away; one would not want that impression to get abroad.

On the second point, that of the three-year gap, this, I am afraid, is bound to be inherent in the scheme. Indeed, the new scheme could not come into effect at the earliest until the Bill as a whole came into operation, and the date of operation of the regulations to be made might even be two or three months later than that; I do not know. Then, of course, there would at that moment be literally a backlog of a large number of hire-purchase cases, some of them extending with instalments over three years, which would not have been subject to this procedure at all. It would only be from the start of the scheme that the licensing cards would be issued in lieu of the log books. This, undoubtedly is one of the disadvantages of the scheme. On the other hand, we have to start somewhere and under this scheme this is the only way one can start.

We thought very carefully as to whether one could in some way or another call in all the registration books; if we could discriminate between registration books relating to hire-purchase transactions and other registration books, and call in all the registration books relating to hire- purchase transactions and retain them. Quite obviously, anybody who was thinking of defrauding would say that he had lost his registration book and could not send it. One would have difficulties of this sort, and we were not able to see any way to deal with this matter. One has to admit that this is one of the disadvantages of the scheme and, in this respect, I would concede that the scheme which the noble Lord, Lord Shepherd, has put forward has advantages. I do not know how quickly it could be brought into effect, but obviously it would have an advantage in that respect. I am not saying it has advantages in all respects. I hope that I have met the points raised by the noble Lord, Lord Peddle. If there are any others I shall be glad to try to deal with them.

LORD PEDDIE

I am glad that the noble Lord opposite has conceded that there are serious disadvantages in the scheme outlined in the Bill itself. While no one on this side has indicated that the log book itself would be a title to ownership, there is not the slightest shadow of doubt that it would come to be recognised as such. Indeed, that idea is inherent in these proposals. It is perfectly obvious that the Minister himself is not clear, nor could he be clear, on precisely the method which would be adopted to deal with the terrific backlog, as he described it, of people who had taken out hire-purchase agreements and possessed a log book and those who, at the same time, would have under the regulations, instead of a log book, a registration card.

An innocent purchaser of a motor car could be presented with the log book; it would be looked upon as being a title but there would be no title at all. That purchaser would be caused to think in such a manner because of legislation of this character. Therefore, although I welcome the effort on the part of the Government to achieve these objectives, I think it has been indicated quite clearly before the Committee to-night that there are very serious disadvantages in the proposals contained in this Bill.

LORD SHEPHERD

I thank the noble Lord, and, if I may say so, also the Committee for patiently listening to me, and I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 22 agreed to.

Clause 23 [Protection for purchaser from apparent owner]:

9.46 p.m.

LORD PEDDIE

I will not detain the Committee long on this Amendment. The purpose of this Amendment is to extend the protection of Clause 23 to repairers of motor vehicles who act in good faith but in circumstances where they cannot enforce their usual lien against the owner, for example because the hire-purchase agreement has been determined automatically or by notice before the hirer delivers the vehicles for repair. I beg to move.

Amendment moved— Page 25, line 7, after ("pledge") insert—("and any contract whereby the purchaser undertakes to execute repairs or improvements to the vehicle").—(Lord Peddie.)

LORD DRUMALBYN

So far as the intention of this Amendment is concerned, I think one can best see its effect by considering the position of the garage owner who repairs a vehicle not subject to hire-purchase. Could we just look at this point first. In such a case, subject to the normal conduct of his business, the garage owner, as the noble Lord mentioned in passing, has a right to detain the vehicle until the cost of repairs has been met by the owner. The Amendment envisages that in any case of a vehicle subject to hire-purchase this right is ineffective, because the person who commissioned the repair is not the legal owner; and since the owner has the right, in certain circumstances, to repossess the vehicle, the garage owner can be left with an unfulfilled claim for repairs.

We are advised that the law already protects the garage owner adequately in such circumstances. Provided that the hirer's possession of the vehicle is lawful, the garage owner has in law an implied authority on behalf of the true owner to carry out all reasonable repairs to the vehicle to keep it in running order. And because of this authority the repairer can exercise a lien on the vehicle which will prevail against the legal owner. The extension of the definition in Clause 23(5) of "disposition" in the way proposed in the Amendment is therefore unnecessary; the protection which the noble Lord wishes to confer upon repairers already exists in law. Indeed, it exists to a wider extent than the protection which the Amendment seeks to give, because as the law stands it operates in all cases of vehicles subject to hire-purchase and other such agreements, whereas the Amendment would operate only in the case of a vehicle on hire-purchase for which the registration book had been improperly released.

LORD CHORLEY

I hope the noble Lord will ask his legal advisers to look at this point again, because I should have thought there was quite a strong argument in favour of the view that if the hire-purchase agreement had been determined by the owner any implied authority would have been revoked; and I think it is very doubtful indeed whether the legal advice that the noble Lord has received is correct. It is rather an off-the-cuff opinion, but it was the one on which we based this Amendment, and I think there is a good deal to be said for it.

LORD DRUMALBYN

By all means, I shall be glad to have a look at one lawyer's opinion as against another's. We will certainly look at this again. As I say, this is the advice I have received, but I shall be glad to look at the point again.

LORD CHORLEY

The Minister would agree that if by any chance his legal advice was wrong there is a real grievance on the part of the garage owner, and if there is any doubt about this the garage owner ought to have protection.

LORD DRUMALBYN

Yes, I perfectly agree with this; but in the advice that was given to me it was not indicated to me that there was any doubt about it at all. However, in view of what the noble Lord has said, I will certainly look at it again.

LORD PEDDIE

I thank the noble Lord for the explanation and for the assurance he has given. I am glad of the intervention of my noble friend who drew attention to an important point in regard to the determination of the agreement, and as to the effect on the garage proprietor who has undertaken expense and then the agreement is determined. I do not think that was adequately dealt with by the Minister. However, in view of the explanation and assurances, I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 23 agreed to.

Clauses 24 to 27 agreed to.

Clause 28 [Information as to rate of interest or charge]:

9.53 p.m.

BARONESS BURTON OF COVENTRY moved, in subsection (1), in the proposed new Section 2A(1)(c), to leave out "formula" and insert "rule". The noble Baroness said: If it would be for the convenience of the Committee, I would seek permission here to speak to Amendments Nos. 72, 73, 74, 75 and 77. I think that will save considerable time. In our Second Reading debate I seem to remember that nobody except the Minister (and I am not sure even about him) seemed happy or confident about the method of calculation suggested by the Government for working out the true rate of interest to declare in advertisements. I should like to make it perfectly clear that my Amendment is merely an attempt to have the present suggested special method looked at again. Being no mathematician, I hope that I shall not have any searching questions directed to me at this hour of the evening; but if the general consensus of opinion in the Committee is not in favour of my proposal, then I should hope that we might see whether something better can be worked out. I am quite sure that each one of us who spoke on this point in our earlier debate felt that this calculation really was too difficult for us.

The Bill provides that the rate of interest or charge, where this is to be shown in an advertisement, shall be calculated by a special method. Cer- tainly I, and I think the rest of the noble Lords who spoke before on this point, am in favour of the principle; but the method proposed in the Bill is, unhappily, by means of a formula which I think is exceedingly complicated and cumbersome, and it was attacked by almost every speaker in the Second Reading debate. I remember that the Minister found that the formula enabled the trader "readily to calculate" the charge, but I think we all felt that the Minister's mathematical ability was certainly above the average—and certainly above our own in this respect. The formula is set out in Schedule 3, and I suggest that it has only to be examined for the difficulties to be plainly evident. I am sure we shall all agree that where failure to comply with the law will result in the commission of an offence, as is the case here, the requirements of the law should be set out as clearly as possible.

I suggest that the Amendments proposed to Schedule 3 (and the minor Amendments to Clause 28, page 27, at lines 20, 22 and 28 are consequential on the alteration of the formula) achieve considerable simplification with an error. I will say at once that this error is in all cases on the high side. To take an example, a flat rate of 10 per cent. on a one-year contract paid monthly would show a "true rate" of 17.9 per cent. as the Bill is printed, or of 18 per cent. if the rule set out in the Amendment were followed. I would grant to the Minister that as the period grows longer the difference grows greater, and I think that the Government may well say that this error in the longer periods is unacceptable. If that is the case, and if the formula used in the Bill were accurate, I would accept it.

But, in passing, I would say that the multiplier which I have used for these longer periods here was based on the formula given in the District Bank Review for June 1956. I am informed that this is quite widely accepted. I think that the Minister will agree that there are a number of different formulæ all of which purport to give the "true rate of interest", but they all give widely differing answers. The figures I have chosen emphasise the point I am making, that in this field where the "exactly right" answer is apparently incapable of calculation and where the "roughly right" answer can vary so much, it is ridiculous, especially in a mere advertisement, to provide the complications appearing in this Bill.

I hope very much that the Government will think it right to make a fresh start and to look again at this difficulty. I would emphasise the point once more that I am not necessarily asking the Government to accept the solution which I put forward, but suggest that the solution which they have put forward really does not provide a sensible answer. I beg to move.

Amendment moved— Page 27, line 20, leave out ("formula") and insert ("rule").—(Baroness Burton of Coventry.)

LORD DRUMALBYN

Clause 28 of the Bill relates to advertisements which indicate that the credit terms offered represent a specified rate of interest or charge, and the object of the clause is to prevent the potential consumer from being given misleading information about the cost of credit. That being so, it is clear that the tolerance of error in such a case cannot be very great. The effect of the clause is that if a rate is stated in an advertisement to which the Advertisements (Hire Purchase) Act, 1957, applies, it must be expressed as an annual rate and must be calculated on the basis of the amount of the cash price less any deposit which remains outstanding after each instalment is paid. The clause specifies that the rate must not be less than that produced by the formula set out in Schedule 3, to which the noble Lady has referred. I think, therefore (I believe neither of us is a mathematician), that one has to be guided in this matter by the experts; and one has to consider the effects of the rival formulæ here, if I may put it in that way.

The effect of the noble Baroness's Amendment would be to replace the formula given in the Schedule by a different formula, which the noble Lady's Amendment describes as a "rule". In using this "rule" one has to select a multiplying factor which differs according to the length of the agreement. I mention that only because there is the possibility of error in the choice of the multiplying factor—I do not exaggerate that. But assuming that the right factor is selected, how accurate is the "rule"? My Department has calculated some examples. I certainly do not intend at this time of the night to give your Lordships all the details, but I must report that our conclusion is that the results given by this "rule" result in too wide a margin of inaccuracy. The rate obtained by using the rule is often as much as 3 per cent. in error. To quote just one example, in a supposed case where the instalments were to be paid weekly over one year, the true rate was just under 21 per cent., yet the "rule" gave it as 18 per cent. In most cases the rate given by the "rule" is too low and would mislead the consumer to that extent, though there are a few cases where the rate given is too high. For that reason, bearing in mind that the whole purpose of the clause is to give the consumer a fairly close idea of what the rate is, I do not think that it would be right to accept the Amendment.

Perhaps I may add some more general remarks on this point. There were several different formulæ which we could have included in the Schedule. In choosing we had to consider both accuracy and simplicity. The formula chosen—and, as I said before, I was too rusty in mathematics to be able to follow how it was arrived at—is, I am sure, fair to all concerned. It gives a very close approximation to the true rate. The possible margin of error, I am told, is 0.1 per cent. either way on the annual rate, so that if 15 per cent. were the annual rate it might be shown as between 14.9 per cent. and 15.1 per cent., and I should have thought that was adequate for the present purpose.

Of course, it would have been possible to obtain rather more accuracy with a still more complicated formula, but considering what has been said about the formula, perhaps this will do. I myself do not think that we need be frightened of the formula. I am quite certain that anyone in business has to work out many more complicated sums than this. After all, one is given a clear indication of what the symbols stand for and one merely fills in the symbols with the amounts concerned. You do simple subtraction sums and then a little multiplication and division.

I think it would be easy to exaggerate the complication of this particular formula. Nobody is suggesting that everybody should know how it is arrived at. The fact is that it gives a fairly close approximation of the true rate, and I think it would be well to accept it.

BARONESS BURTON OF COVENTRY

Obviously, I have no wish to delay the Committee. I think that much of what the Minister has said is correct. However, I was concerned not with the margin of error, but with whether people would understand the formula. I still think they will not. I hope I am wrong and that the Minister is right. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clause 28 agreed to.

Remaining clauses and Schedules agreed to.

THE CHAIRMAN OF COMMITTEES

I beg to move that the House do now resume.

Moved, That the House do now resume.—(Lord Merthyr.)

LORD SHEPHERD

On this Motion, may I say to the noble Lord, Lord Drumalbyn—I believe this is the first Bill in this place he has been in charge of—how grateful we on this side are for the way in which he has conducted his part of it? I think he will agree it has been a constructive debate, and I hope we shall see some results of it at the next stage.

LORD DRUMALBYN

I am most grateful to the noble Lord. For my part, I should like to say from our side how much we appreciate the co-operation we have had in getting the Committee stage through, I think rather more quickly than we expected to. I should also like to say how much we appreciate the helpfulness of the Lord Chairman in this regard.

VISCOUNT GOSCHEN

My Lords, under Standing Order No. 16, I propose that the noble Viscount, Lord Bridgeman, do now sit Speaker.

Moved accordingly, and, on Question, agreed to.

House resumed, The VISCOUNT BRIDGEMAN on the Woolsack.

Bill reported with Amendments.