HL Deb 06 July 1964 vol 259 cc840-3

After Clause 12, insert the following new clause:

Notice of hirer's default

(".—(1)The provisions of this section shall have effect where goods are let under a hire-purchase agreement to which the principal Act applies, and that agreement, or any other agreement, contains a provision (however expressed, and whether limited to defaults in payment or not) whereby, apart from this section, on the occurrence of, or at a time to be ascertained by reference to, a default in the payment of one or more instalments or other sums payable by the hirer, such of the consequences mentioned in the next following subsection as are specified in that provision (in this section referred to as 'the specified consequences') would follow.

(2) The consequences referred to in the preceding subsection are that the hire-purchase agreement, or the bailment of the goods, shall terminate, or shall be terminable, or that the owner shall have a right to recover possession of the goods.

(3) If default is made in the payment of one or more sums to which that provision (in this subsection referred to as the relevant provision') applies, the specified consequences shall not follow by reason of that default unless the owner serves on the hirer, by post or otherwise, a notice (in this section referred to as a notice of default') stating the amount which has become due, but remains unpaid, in respect of sums to which the relevant provision applies, and requiring the amount so stated to be paid within such period (not being less than seven days beginning with date of service of the notice) as may be specified in the notice.

(4) Where a notice of default is served, the specified consequences shall not follow before the end of the period specified in the notice by reason of any default to which the notice relates; and, if before the end of that period the amount specified in the notice is paid or tendered by or on behalf of the hirer or any guarantor, the specified consequences shall not follow thereafter by reason of any such default.

(5) In a case where the specified consequences are that the hire-purchase agreement, or the bailment of the goods, may be terminated by notice given by the owner, a notice of default may include a notice terminating the hire-purchase agreement or the bailment at or after the end of the period specified therein in accordance with subsection (3) of this section, subject to a condition that the termination is not to take effect if before the end of that period the amount specified in the notice of default is paid or tendered as mentioned in the last preceding subsection.

(6) Without prejudice to the service of a notice of default in any way in which such a notice could be served apart from this subsection. a notice of default shall be deemed to be saved on the hirer under a hire-purchase agreement if—

  1. (a) is addressed to the person last known to the owner as the hirer under the agreement, and is delivered at, or sent by post to, the last known address of that person, or
  2. (b) in a case where that person has died, the notice,(if not served in accordance with the preceding paragraph) is addressed to that person's Personal representative (whether by that or any similar description, and whether for the time being there is any personal representative of his or not) and is delivered at, or sent by post to, the address which was the last known address of the deceased person.

(7) Where the person who, immediately before his death, was the hirer under a hire-purchase agreement has died, and his rights under the agreement have not yet passed to a personal representative,—

  1. (a) section 9 of the Administration of Estates Act 1925 (vesting of estate of intestate between death and grant of administration) shall not be construed as enabling a notice of default to be served on the Probate Judge (as defined by that Act) as being the hirer under that agreement, and
  2. (b) subsections (1) to (5) of this section shall have effect as if the deceased person had not died, and any reference in those subsections to default in the payment of a sum payable by the hirer shall be construed accordingly.

(8) At any time after the service of a notice of default and before the amount specified in the notice is paid or tendered as mentioned in subsection (4) of this section or the period specified in the notice expires (whichever first occurs) the goods to which the hire-purchase agreement relates shall not be treated—

  1. (a) for the purposes of section 4 of the Law of Distress Amendment Act 1908, as goods comprised in a hire-purchase agreement made by the hirer, or
  2. (b) for the purposes of that section or of section 38 of the Bankruptcy Act 1914, as goods which are by the consent and permission of the owner in the possession, order or disposition of the hirer.")

LORD DRUMALBYN

My Lords, perhaps I may trespass a little longer on your Lordships' patience. During the debate on the Report stage in your Lordships' House I undertook that the Government would introduce a new safeguard for a hirer who fails to pay an instalment when it is due. The present Amendment goes with Nos. 66, 68, 69, 90, 147, 149, 152 and 155. The noble Lord, Lord Shepherd, argued that a hirer might suffer hardship if he failed, either through an oversight or because of circumstances beyond his control, to pay an instalment on the date due; or a hirer might die and his family might not realise that an instalment was due. The noble Lord suggested that before the owner could repossess goods let on hire-purchase he should be required to send a notice warning the hirer of his default and giving him a week in which to pay. It was generally agreed that most finance houses and traders, in practice, do this and more, but it was felt that for the minority of cases a statutory pro-vision was desirable. This would be particularly useful where the hirer had not yet paid one-third of the hire-purchase price and so was not protected by Section 11 of the 1938 Act.

This new clause makes the provision which we undertook to introduce. It applies where the hirer defaults on an obligation to pay a sum of money clue under the agreement and the agreement gives the owner the right to terminate the agreement or to terminate the bailment of goods or to regain possession of the goods. Under the new clause the owner cannot exercise those rights on the ground of such a default unless he has served on the hirer a notice of default stating the amount due and requiring the hirer to pay it within a period of not less than seven days from the service of notice. If the hirer pays within seven days, the owner cannot exercise his rights. The owner may include in the notice of default a post-dated cancellation of the agreement, which naturally will be effective if the hirer does not pay up, and ineffective if he does.

I need not trouble your Lordships with the details of the clause, but will only point out that we have taken particular care to cover the case where the hirer has died and there may be no personal representative, or the owner does not know what the situation is. The clause ensures, on the one hand, that the owner will in all cases be required to serve the notice of hirer's default; on the other hand, it also ensures that there is in all cases somebody upon whom the owner can legally serve the notice. The other Amendments are consequential upon the insertion of the new clause. I beg to move that the House doth agree with the Commons in the said Amendment.

Moved, That the House doth agree with the Commons in the said Amendment.—(Lord Drumalbyn.)

LORD SHEPHERD

My Lords, this was a moment of satisfaction that I was not going to let my noble friend Lord Morrison of Lambeth prevent me from enjoying. I think this is one of the biggest break-throughs we have had in this Bill. For the first time, any hirer under a hire-purchase agreement is protected against the few of the hire-purchase companies that have brought disrepute to the name of the industry by seizing goods on the mere default of one payment. I think we must express our appreciation to the Government, and also to my honourable friends in another place who have pressed this point. I am pleased that the Government have gone even further to protect the interests of the family of a hirer who has died. This is again something that gives us great satisfaction, and we thank the Government and all those who have played their part in this break-through.

On Question, Motion agreed to.