HIRE-PURCHASE (No. 2) BILL [H.L.] (Hansard, 6 July 1964)

§ LORD DRUMALBYN

My Lords, I think it will be for the convenience of your Lordships if I deal with the Amendments in a series of groups with special reference to those which are of some particular interest and importance to your Lordships. The first Amendment makes an alteration in the Title of the Bill to take account of a complete change which Amendments Nos. 77 to 83 propose to make in Part III of the Bill. With the agreement of your Lordships, therefore, I think it would be convenient to discuss with Amendment No. 1 Amendments Nos. 77 to 83, and two consequential Amendments, Nos. 85 and 87. These Amendments propose the insertion of three new clauses and the deletion of the existing Clauses 23 to 27.

Part III of the Bill is concerned with protecting the man who buys a car in good faith and later finds that, because it was the subject of a hire-purchase agreement, he has no title to it. The existing provisions of Part III proposed to protect him by means of a system of licensing cards issued to hirers of cars the log books being held by the finance houses. This scheme was criticised, particularly by finance house interests, who anticipated inconvenience and expense to themselves, and possible abuse. There was also the possibility of some confusion in the period in which current hire-purchase transactions ran their course. The House will recall that the noble Lord, Lord Shepherd, voiced these 820 objections and proposed an alternative scheme, and I undertook to consider this. I made it clear, and so did my right honourable friend in another place, that the Government were determined to deal with the matter in this Bill but were prepared to consider alternative ways of doing so. We made the important proviso, that any alternative scheme, to be acceptable to us, must offer the innocent buyer as good protection as was given by the scheme in the Bill as it stood.

During the Committee stage in another place, a new clause was moved from the Opposition Front Bench embodying a scheme which did, in principle, meet this requirement. This scheme was, in essence, very simple. Where a car on hire-purchase was sold by the hirer to a person who bought it in good faith, not knowing it was on hire-purchase, the purchaser would get a good title. We were informed that this scheme was acceptable to the Finance Houses' Association, whose members conduct the greater part of hire-purchase business in cars. This was, of course, a vital point in considering a scheme which would debar them from recovering their cars after fraudulent disposals. This scheme offered a simpler way of dealing with the problem and, given that it was acceptable generally in finance house circles, the Government accepted the principle, and at the Report stage in another place introduced the three new clauses contained in Amendments Nos. 77, 78 and 79 to give effect to it. Since the new clauses are necessarily somewhat complicated, it may be helpful to the House if I explain how they will work.

The first two subsections of the new clause in Amendment No. 77 contain what is really the basic provision: that where the hirer sells the car to a person who buys it in good faith and without notice of the hire-purchase agreement, that person gets a good title, or, to be strictly accurate, as good a title as was possessed by the finance house who had let the car to the fraudulent hirer. The scheme is for the protection of the public, and, quite reasonably, the finance houses did not think that motor dealers or finance houses should be so protected, since they can and should be on their guard against buying cars which are on hire-purchase. The first two subsections, 821 therefore, apply only where the fraudulent hirer sells to a private purchaser—and that, to anticipate the definition in subsection (2) of the third new clause, means someone who is neither a motor dealer nor a finance house.

Subsection (3) of the first new clause deals with the case where the fraudulent hirer sells to a trade or finance purchaser—that is to say, a motor dealer or finance house. The clause does not protect such a purchaser, who remains, as now, liable to the true owner for detinue or conversion. The same applies to another trade or finance purchaser to whom he resells the car. But the first private purchaser will again get a good title, provided he buys in good faith and without notice of the hire-purchase agreement. In either case, whether the private purchaser has bought the car from the fraudulent hirer or from a trade or finance purchaser, the title he gets can then be passed on like any other title. The result is that the innocent buyer, or anyone claiming under him, is protected, but that a motor dealer or finance house who buys from the hirer is not. The only other provision of this clause to which I think I need draw attention is subsection (6), which makes it quite clear that the criminal and civil liabilities of the hirer who fraudulently disposes of a car and a trade or finance purchaser who takes it from him are not affected.

I turn now to the new clause which is Amendment No. 78. In practice, an innocent purchaser, just because he is innocent, may very likely not be able to trace back the channel through which the car came to him. To make the provisions work as intended, certain presumptions are necessary. Let me take a situation which is quite likely to arise. A man who has bought a car is approached by a finance house, who tell him that the car is theirs and was let on hire-purchase. He may have bought it following a newspaper advertisement, and may well not be able to produce the person who sold the car to him. The first presumption contained in subsection (2),therefore, is that that person was the hirer. This presumption operates equally where the roan who has actually got the car relies for his title on claiming under an earlier private person who 822 bought in good faith and without notice of the hire-purchase agreement.

The next presumptions deal with the case where it is proved that the man who has got the car—or, where appropriate, such a previous purchaser—bought the car from someone other than the hirer. Under subsection (3) it is presumed that the hirer sold to a private purchaser, who bought in good faith and without notice of the hire-purchase agreement, and that his title has been transmitted. Subsection (4) deals similarly with the case where it is proved that the hirer sold the car to a motor dealer or finance house, and makes similar presumptions regarding the first sale to a private prchaser. The new clause in Amendment No. 79 is concerned with interpretation, and contains the definitions and other provisions necessary for the new Part III. Amendment No. 85 introduces the necessary transitional provisions.

My Lords, fraudulent sales of cars on hire-purchase have caused real hardship to the victims. We are glad that it has been possible to introduce these provisions to protect such people in a reasonably simple way. We feel confident that they will be generally welcomed. I beg to move that this House doth agree with the Commons in the first Amendment.

§ LORD SHEPHERD

My Lords, I am sure the House is grateful for the introduction that the Minister has made to this first group of Amendments; and may I also say that we agree with his suggestion to consider this considerable number of Amendments by groups, and in subjects. Those who have taken an interest in this Hire-Purchase Bill will, I am sure, welcome it back rather as an old friend, although, unlike the old friend, when we take into account the Commons Amendments we may not be able to recognise the Bill, because (as I see the noble Lord, who is smiling, agrees) there is a major change in the Bill from what it was when it left us some months ago. I was indeed pleased that the Minister himself recognised the part that my right honourable and honourable friends played when the Bill was in another place. A great many of these important 823 changes and important improvements stem from their work. Their approach was not on a Party basis, but was designed to improve what they felt was a Bill that should be useful to the public but which, in view of the rush of the Government in introducing it, failed to meet many of the major points that we wanted to see and which we now see in this Bill.

My Lords, with regard to these Amendments I am glad to see that Part III of the Bill has been removed. I used a phrase previously which I would use again now: that the Government were taking a very large sledgehammer to crack a very small pea. It was a very cumbersome and expensive method that the Government then proposed, and I think they would also agree that it would have raised many difficulties, in particular as to the status of the log book. I think that in accepting the proposals made by my honourable friends in another place the Government have made a considerable advance. It will be much easier for the hire-purchase companies and also much easier for the hirer; and, of course, it will relieve the hirer of many of the fears which he had before, in view of the fact that he may have bought a car under a hire-purchase agreement without knowledge of it. We on this side of the House accept this group of Amendments and thank the Government for their acceptance of this principle.

On Question, Motion agreed to.