§ 5.53 p.m.
VISCOUNT COLVILLE OF CULROSS
My Lords, I suppose that all your Lordships will agree that the operation at auctions of rings of those who are bidding there is objectionable. It does the person who is selling the items which are open to auction an injustice, in that the price that is received is probably far too low. More widely, if this happens with any degree of frequency at all it tarnishes the image of the auctioneering profession and the market which it serves, wherever that may be. I would not for one moment wish the House to suppose that because I present this Bill to amend previous legislation there is anything in it to suggest that auctioneers and other people who take part in auctions are in any way widely dishonest. It must be the rarest possible exception, and one which I have no doubt is greatly resented by the honest members of the profession and those who take part.
Nevertheless, in the years about 1925, 1926, and 1927, people were concerned about the operation of rings in the auctions of livestock, pigs, sheep, cows and so on, at agricultural markets. More recently, it has been in the picture and fine art world that an occasion has been seen where it seems highly suspicious that an auction ring may have operated. That, of course, was the case of the picture by Duccio. This is a matter that has been investigated by the right honourable gentleman the President of the Board of Trade, and he has in his hands a report which, for reasons he set out in his statement of March 18, he does not think he 829 can publish. Nevertheless, having made those investigations he has advised members of another place that the legislation to which I am now hoping to persuade your Lordships to give a Second Reading, would be an improvement in the law.
The provisions of the 1927 Act were very simple. They made it an offence for a dealer—and a dealer is defined in the Act—to enter into an agreement, or give or offer any gift or consideration to any other person as an inducement or reward for abstaining from bidding at a sale by auction, and anybody who accepts the gift, or attempts to persuade another bidder to take part in such an agreement, is also guilty. The difficulty about it is that it was a summary offence, and so not only are the penalties confined—at least they arc now confined—to six months' imprisonment or a fine of £400, but there is also the general provision in the Magistrates' Courts Act which means that no prosecution can be brought more than six months after the offence.
The result of that Act of 1927 has been extremely poor, in that I believe there has been only one prosecution, and I do not even know whether that succeeded—and it was a very long time ago at that. One of the difficulties that always emerges if you are attempting to investigate a ring operating at an auction is that it may be very difficult indeed to collect any evidence. It is quite plain that the people concerned are hardly likely to go around explaining to all and sundry what they have done, and it may be very difficult for the police—and indeed for anybody investigating—to come upon anyone who is prepared to give evidence. So the time may pass by and the six months may run out.
I am not suggesting that some bulls and other agricultural animals are not of extreme value—indeed they are—but nowadays the amount of money that can be made in the sale and purchase of works of art, furniture, pictures and so on is, as your Lordships will all know, astronomical. Therefore, the penalties under the 1927 Act may not seem to be altogether consonant with the gravity of the offence. Therefore it occurred to my honourable friend the Member for Folkestone and Hythe that amending legislation would be a good plan, and he introduced the Bill which I am now recommending to your Lordships.
830 The provisions of the Bill are not very difficult to understand. Clause I increases the penalties which can be imposed upon those who are caught under the offence as in the 1927 Act. Of course, magistrates are still confined in the same way as they were before, because in the case of a summary prosecution that is the most that magistrates can ever impose by way of penalty In addition, there is now provision for a prosecution on indictment, and that will carry an unlimited fine and a maximum of two years' imprisonment, or both. Your Lordships may think that this is much better fitted to the sort of money which can now be made by this sort of dishonest conduct.
Furthermore, the time during which the magistrates, on a summary offence, can try a matter of this sort has been expressly extended in subsection (2) of Clause 1, so that it is five years rather than six months, subject to a certain limitation in that the Attorney General (who of course had always to sanction a prosecution under the 1927 Act) must bring the prosecution within three months after the date on which evidence, sufficient in his opinion, comes to his knowledge. The same thing applies in Scotland, except that the Lord Advocate replaces the Attorney General.
Clause 2 was put in at the Committee stage in another place as the result of an Amendment moved by my honourable friend the Member for Southend, West. With the greatest possible respect to him, however, I do not think he got is quite right, and I propose, if this Bill is given a Second Reading to-day, to ask your Lordships in Committee to consider one or two Amendments to it. It is, I think, probably a good idea. What the clause is at any rate intended to produce is a power in the court to strike off, as it were, the person convicted from going to any more auctions and participating in them for a certain length of time. The period certainly ought to be one of not more than one year, in the case of summary conviction, and not more than three years in the case of conviction on indictment, whereas the clause as it is printed says, "not less"; and that is plainly a mistake.
There is also a difficulty, as I believe the clause is at the present moment being 831 read, in that it is not altogether certain how wide is the discretion of the court in exercising this sort of power. My intention, although I should be very glad of the views of other noble Lords upon this matter, is that the court should have a fairly wide discretion. For instance, as the Bill stands the court could order only the person convicted—or both persons: because there are probably two if there is an agreement—not to attend or participate in auctions. Or possibly, if the person convicted was a member of a firm, and it did not appear that, on the whole, the firm was too reputable, the whole firm might be told that they could not go to the auctions or participate in them for the prescribed period. I believe that at the moment the Bill can be read so that there is only one form of order which the court can make, and that is to prevent the person convicted and his representative from going. I think it ought to be rather more widely drawn, so as to give courts a greater discretion according to the facts of the case. Again, I hope to move an Amendment to that effect.
I would further propose that there should be a procedure whereby a person who has had an order of this sort made against him can apply to the court after a certain length of time, as one can in the case of a disqualification and a taking away of one's driving licence, to have the ban removed. Those are suggestions which I would wish to discuss later in the Committee stage, together with any others which noble Lords may make on this clause.
I believe that, although the court might not often impose an order of this sort, the possibility that it might be done if a person was convicted will add to the deterrent power of this legislation. It may well be that if the fine were substantial it would be something which the person convicted disliked very much. But I believe that he would be still more apprehensive if the danger of taking part in a ring and being found out and convicted was that he would not be able to go to any more auctions—and perhaps nobody else would be able to go on his behalf—for a given period of time. I therefore think that, with a few Amendments, Clause 2 is probably one which ought to remain in the Bill.
832 Clause 3 deals with the civil matter of recovery, from the people who have been engaged in the ring, of the loss which the seller has suffered as a result of the operation of this dishonest conduct. Noble Lords may think that it will not be altogether easy for the seller to prove the agreement between the people who have operated in the ring, but I would remind the House that Section 11 of the Civil Evidence Act 1968 is, as I believe, now in force, so that if those who operated a ring had already been convicted, evidence of that conviction would now be admissible in the civil courts. Therefore, there is a slight improvement in the possibility that the person who has been cheated in this way will be able to obtain redress under Clause 3.
Although the sale must take place after the coming into force of this Act, that power will apply even if the agreement had been made before the commencement of the Act. So that if there is a standing arrangement, or something of that nature, whereby somebody is cheated, he can then go back and use that power as a method of recovering from those who have been dishonest in this way the money lost through the operation of the ring. That clause really supersedes Section 2 of the 1927 Act, which gave a somewhat similar power but on a rather more limited scale. There is nothing new in Clause 4, because that only repeats the requirement that a copy of this Bill, together with one of the 1927 Act, should be displayed at auctions. Clause 5 says only that the Act will come into force one month after it is finally passed.
My Lords this Bill is a very simple extension to the existing law on the subject, but an extension which one hopes would put rather more teeth into this matter and enable the police to take action, and effective action. Subject to the Amendments to which I have referred—and I have not mentioned all of those which may be necessary to Clause 2, although I think I have mentioned the most important—the Bill has the extra teeth of the possibility of actually taking away the right of a dishonest person, a dishonest bidder or auctioneer, to go to auctions for a given period of time. With that explanation, I hope that the House will feel that this is an acceptable measure, 833 and will therefore be prepared to give it a Second Reading. I beg to move.
§ Moved, That the Bill be now read 2a.—(Viscount Colville of Culross.)
§ 6.7 p.m.
§ LORD STRABOLGI
My Lords, I am sure the House is grateful to the noble Viscount, Lord Colville of Culross, for introducing this Bill. It had all-Party support in the other place and, as he said, it also has the support of the Department concerned. I agree with almost everything that the noble Viscount said; in particular, that the 1927 Act needs revision. As he pointed out, the penalties under it really bear no relation to what is required, and hardly act as a deterrent today, in view of the enormous sums involved. I agree also with the noble Viscount that it is necessary to make these offences indictable, if required, and for there to be no limit on the amount of the fine.
But, as he said, these offences will be very difficult to prove, and in fact there has been only one prosecution since the 1927 Act came into force. The noble Viscount asked when that was. I believe that it was in 1928, when I suppose it was fresh in everybody's memory, and there has not been one since. But I agree that, in spite of the difficulties, this Bill is necessary and I hope that when it becomes law it will serve as a deterrent.
Of course, rings are not at all a modern problem. I believe that they were operating in ancient Greece. They were certainly common in France in the 18th century, and I have no doubt that they will operate again from time to time in the future. But one hopes that this Bill will have the effect that, if the rings do operate, they will operate far less effectively; and indeed will be, as Sir Basil Blackwell has said, "like tarts driven off the streets".
The noble Viscount mentioned the Duccio case. I do not know whether this Bill would have caught that case at all. Here was a picture which was put up at a country auction at Ardwick Court in March, 1968. Of course, we do not know the full facts, because the Board of Trade has not published them. What we do know is that it was catalogued incorrectly as Siennese School, 15th century—. "Sienese" being spelt with two "n's"— 834 instead of a Trecento painting, which was attributed even at that time to Duccio. In actual fact, in the auction it fetched £2,700. A City art gallery was the underbidder, but did not feel it could afford to go to any more, or did not wish to go to any more. At the knock-out it is suspected that it fetched only £7,000, so that might well have been the amount that it could have fetched at the public auction. There may, of course, have been a second knock-out in London later among the "big boys", but I do not know.
Of course, the National Gallery, who did not appear to be aware that the painting was being sold at all, although their provincial colleagues knew about it, had to pay £150,000. I think it was probably cheap at the price. It is a beautiful little painting. It has a tremendous quality and power, and is a very worthy addition to the other Duccios in our national collection. I think the point should also be made that if it had been put up for auction in London at one of the big houses, with the full panapoly of publicity and probably correctly catalogued, it would have fetched far more and would have cost the nation more when the nation decided, rightly, to keep it in the country after the purchase price had been offered by the Cleveland Art Gallery.
I think these rings operate mainly at the smaller auctions. In London, at any rate, I think there is very little evidence of them. There is a wide dissemination of catalogues; there are private people taking part; there is expert advice and publicity, and there is a keen public interest. It is at the smaller auctions in London and elsewhere that it is necessary for the vendors to be on the alert. But here again, my Lords, the law cannot stop people from acting foolishly or being swindled. What it can do, and what this Bill attempts to do, is to punish the guilty and to give restitution to the innocent when malpractices come to light.
The Bill also only really protects the vendor at auction sales, as is made clear in the preamble. It does nothing to protect the buyer from various abuses. As was said rightly by The Times on July 29, 1967:Almost no other type of sale is so open to deceitful and fraudulent practices as the auction".835 The Bill does nothing about "puffers", who are used to inflate prices. It does nothing about "trotting" or "taking the bids from the ceiling" by a dishonest auctioneer. It does nothing about illicit commission agreements between an agent, perhaps acting for an overseas buyer, and his accomplice, not to keep the prices low, as a ring does, but to inflate the price to the full limit of the commission so that he can get the largest amount of commission possible. The Bill does nothing about these things, but I agree that it does protect the vendor to a certain extent.
On the other hand, my Lords, I have certain reservations about some of the clauses, and I welcome the invitation of the noble Viscount to try to improve these in Committee; and I note that he himself will be putting forward some Amendments. I am not really happy about the word "dealer". According to Clause 3(5), this has the meaning assigned to it by the 1927 Act, but does this cover the modern type of part-time dealer who does not necessarily intend to re-sell the goods when he has purchased them but may decide to do so at a later date, possibly some years later? The meaning of the word "dealer" I think is particularly important, because under Clause 3(1) the seller is able to avoid the contract only if one of the parties to the agreement to abstain from bidding is a dealer.
There is also the question of the exclusion provision in Clause 2. Here, I wonder whether it is right to exclude the convicted person's representative for long periods from all auctions. The representative might be only an employee; he might be a member of the family who was himself quite innocent. His living could be in jeopardy. He might want to attend sales privately. For example, he might earn his living in the furniture trade but he might privately be a stamp collector, and he might like to go to stamp auctions. But under the Bill as it stands at present he will be excluded, possibly up to three years, from every type of auction sale. I suggest, therefore, that the Bill really needs a definition of "representative" at the end of Clause 3 following the definition of "dealer". But these are probably points that we can go into in more detail in Committee.
836 We in this country have two of the finest auction houses in the world. I know that the Bill will be welcomed by them and by the great majority of reputable auctioneers throughout the country—and I fully endorse the tribute which the noble Viscount paid to them. It will also be welcomed by the British Antique Dealers' Association, which forbids its members to take part in rings; and by all honest dealers—the vast majority—in the fine art trade. It will be welcomed also, not least, by those members of the public who, in an ever-increasing number, care for beautiful things and are rightly indignant at the malpractices and rackets which have been going on. I warmly support the principles of this Bill, and I hope that the House will give it a Second Reading.
§ 6.15 p.m.
TI1E EARL OF MAR
My Lords, I entirely agree with the noble Lord, Lord Strabolgi, in the fact that these rings are to be found at every country auction, and that they work to a large degree there.
§ LORD STRABOLGI
My Lords, I am sorry to interrupt the noble Earl, but I did not say "every country auction". I said that they were more likely to occur at the smaller auctions—no more than that.
THE EARL OF MAR
I thank the noble Lord. They do. I have seen them working. But I think the main thing is for auctioneers to know their article; and if they have advised their customers as to what possible price they can expect to get for it, or even find out if they do not know, I think that will go a very long way towards stopping these rings. I wonder whether something on those lines could be incorporated in the Bill.
§ 6.16 p.m.
§ BARONESS PHILLIPS
My Lords, it may be useful if I say a few words about the Government's attitude to this Bill. As your Lordships will see—and as, indeed, the noble Viscount, Lord Colville, has outlined—the Bill has three main purposes. The first is to extend the time within which summary proceedings may be commenced for offences against the Act of 1927. The second is to enable more serious offences against that Act to be prosecuted on indictment, without time 837 limit and with appropriately higher penalties. The third is to break the link which the present Act imposes between the special right of redress in the civil courts which it gives to a seller whose interests have suffered from the operation of an auction ring and a successful prosecution of the person he seeks to sue; and at the same time somewhat to improve the aggrieved seller's rights.
My Lords, these are modest but very useful improvements of the law on auction rings. We are bound to recognise—and this has been emphasised—that there is always likely to be difficulty in obtaining adequate evidence of the operation of an auction ring. That stems from the very nature of this kind of malpractice. But at least we can, as the Bill proposes, remove the additional difficulty of having to act to get the evidence in double-quick time; provide penalties more appropriately related to the prices which some classes of goods now fetch at auction, and set the seller who is willing and able to present a case in the civil courts free to do so. With one reservation, therefore, we welcome this Bill and I hope that your Lordships will find it acceptable.
My own reservation—and it seems also that of Lord Strabolgi and, to some degree, of the noble Viscount, Lord Colville of Culross—concerns Clause 2. This would introduce a new kind of penalty. I think it is evident from what the noble Viscount, Lord Colville of Culross, recognised in introducing the Bill and from the subsequent speech of my noble friend Lord Strabolgi, that a number of Amendments will be needed in Committee before this clause is really fit for proper consideration by the House. Even then, I believe your Lordships will want to think very carefully about the implications and likely effectiveness of this proposed new penalty before deciding to endorse it, notwithstanding the merit which its sponsors in another place obviously attributed to this provision. However, that point can be considered at a later stage. For the moment, let me conclude by saving that we very much hope that the House will this evening give a Second Reading to this Bill.
§ 6.21 p.m.
VISCOUNT COLVILLE OF CULROSS
My Lords, I am grateful for the welcome 838 that the Bill has received from the three speakers. May I just mention very briefly the points that have been raised? The noble Baroness, Lady Phillips, said that a new kind of penalty was set out in Clause 2. I do not think that this is so. There are all sorts of provisions in the law whereby people who commit certain kinds of offences are prevented from operating in that field for a certain length of time. The classic case is that of the person who has his driving licence taken away. Also there are internal rules about jockeys, who are not allowed to race for a certain period if they have broken the rules of the Jockey Club. There are various other circumstances of that sort: doctors or solicitors who could be struck off for malpractice. I do not see that there is anything novel in principle, so long as the drafting is right. I agree with the noble Baroness that a great deal of work must be done on the drafting. I hope that your Lordships, nevertheless, will consider this matter and will take part in the Committee stage, to make sure that we get it right.
The noble Earl, Lord Mar, suggested that we might put something in the Bill about reserve prices. I do not think that there is any necessity for legislation about reserve prices. That goes on now. It is a wise thing, I believe, if you are selling by auction, to get the advice of the auctioneer, who will, if he is petent, tell you what is the right reserve. I do not think that there is a necessity to pass legislation on the matter to improve the situation which already exists. I agree with the noble Earl that it is often a wise thing to get the advice of the auctioneer; and if this debate does anything to spread that particular course of action then no doubt he has served a useful purpose in raising the matter.
The noble Lord, Lord Strabolgi, dealt with rather more complicated subjects. I do not think there is any need for a definition of "representative". Either the person is a representative of the person convicted or he is not. It is not very difficult to discover; there is no technicality involved. He is either there on behalf of the person convicted or he is not and he is there on his own account. If you can prove a link between them I should have thought that that was enough. But there are points on defences for representatives which I have in 839 mind to put down as Amendments. When he sees them, perhaps the noble Lord will be satisfied.
He mentioned the question of the confinement of the provisions of Clause 3 to those who have been defrauded in this way by dealers. It would be something that one would have to consider very carefully, if one were to extend the scope of this legislation beyond dealers. A dealer is defined in Section 1(2) of the 1927 Act as…a person who in the normal course of his business attends sales by auction for the purpose of purchasing goods with a view to reselling them.That is very much what the noble Lord said. If you start introducing the idea of recourse against people who are not dealers, you are going to get into a much wider field than has ever previously been taken in relation to auctions. You would also be introducing a civil remedy which is wider than the criminal proceedings can go. The criminal proceedings relate to dealers. I do not think that the civil proceedings ought to go any wider than that. Indeed, one of the points that I made was the difficulty of finding evidence for civil proceedings. It would not be available if a person not covered by the criminal clauses of the Bill and the 1927 Act was not the person convicted. There is enormous difficulty here. On this matter I think it would be right to leave the Bill as it is.
I do not know the facts about the Duccio case. If what the noble Lord says is what happened, then I am glad to accept his statement. We are all hampered. I do not think that anybody knows the facts about it except the Board of Trade. A great deal of the discussion in another pace on this Bill was concerned with the question of whether or not the report should be published. The decision has now been taken by the Government—I can understand the reasons for it—that it should not. We shall not know until the papers eventually come out of secrecy in, I think, 15 years' time, whether or not there would have been 840 any opportunity to prosecute. The indications given by the right honourable gentleman the President of the Board of Trade were that it would not have been possible. That does not matter; the point is the principle. I use it merely as an illustration of the sort of thing that may or may not have happened. The problem is rings, wherever they operate.
I am glad to know that the House, on the whole, agrees that this is a requisite piece of legislation to deal with them. It certainly is not an attempt to draft for the Greek or the French Parliaments. I have no doubt that I should find it an interesting exercise to attempt to draft this Bill in ancient Greek; although I doubt that it would be a very progressive task. I am sorry to see that my noble friend Lord Denham is not here, being the expert on mock auctions that he is, to revel in the "puffing", the "trotting", the "bids from the ceiling" and the "commission agreements". He had, in fact, a finer range in technical terminology even than that when he was dealing, with mock auctions. I do not think I would put those into the Bill. If the noble Lord, Lord Strabolai, can find a proper method of expressing them in Parliamentary language, then his Amendments would form the basis of a fascinating discussion. I look forward greatly to seeing them on the Marshalled List in due course. Having thanked noble Lords and the noble Baroness for the welcome that they have given to this Bill, I hope that it will now be given a Second Reading.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.