HL Deb 24 October 1973 vol 345 cc690-721

5.35 p.m.

THE LORD CHANCELLOR (LORD HAILSHAM OF SAINT MARYLEBONE) rose to move, That the Southern Rhodesia (Distribution to Creditors) Order 1973, be approved. The noble and learned Lord said: My Lords, I rise to move the Motion standing in my name giving approval to the Southern Rhodesia (Distribution to Creditors) Order 1973. This is a highly technical Order, but I will try to describe its effect so far as possible in popular language without misleading the House as to the legal technicalities.

Though the need for making the Order arises solely from the state of affairs created by the illegal Declaration of Independence, none of the political issues associated with that declaration which commonly engage the attention of the House arise in connection with the Order. I therefore make no reference to those issues in my remarks to-day, and I imagine that other speakers will not wish to discuss them either.

The subject matter of the present Order was first raised in the House in a Question put down by my noble friend Lord Napier and Ettrick on February 14 and subsequently referred to by myself in a Statement made on April 18, which at that time seemed to command general support in the House. However, I think perhaps I should remind the House of the circumstances which gave rise to the Order and the previous discussion. These circumstances arise out of the rights of the stockholders of Southern Rhodesian Stock registered in London under the Colonial Stock Acts, the principal Act being the Act of 1877. These Acts provide for the registrar of the colonial stock (in this case the Bank of England) or—and I am quoting—"other agent of the colonial government to meet the redemption payments and interest out of monies of that Government.

Since the unilateral and illegal Declaration of Independence the necessary funds to meet the Southern Rhodesian Stock, the interest and redemption payments to date, have not been provided to the Bank of England by Mr. Smith's Government, and the stockholders in the United Kingdom have remained unpaid. I understand that at least some stockholders outside the United Kingdom have been paid, but of course of that I have no certain or precise knowledge. To the best of my knowledge and belief the amount remaining unpaid and outstanding by way of interest payments and redemption payments is now about £53 million.

This is, of course, not the only obligation in the United Kingdom which the Government of Southern Rhodesia—by which I mean (and I will not repeat it throughout) the lawful Government of Southern Rhodesia, which does not at present exist—have failed to meet, and which, when and if lawful authority is restored there, they will have to meet in due course. There are other creditors of the Southern Rhodesian Government who stand in the same situation, notably Her Majesty's Government here, who are owed a good deal of money which they have had to pay out to the International Bank for Reconstruction and Redevelopment to service debts for which the Government of Southern Rhodesia are primarily responsible. That is, they have had to pay the International Bank, as guarantors, and also by direct Exchequer loans, whereby the Government of Southern Rhodesia are in default of repayment. It is impossible to estimate the full amount which may be due to other creditors unless and until this is established either by court proceedings or, if this Order is approved, by proceedings under that Order. I think that the total amount outstanding to Her Majesty's Government is about £37 million.

The Colonial Stock Acts make it absolutely plain beyond a peradventure that Her Majesty's Government here are not liable to make good the loss of the stockholders in respect of their redemption and interest payment. But exceptionally the Acts do envisage a situation in which proceedings could be brought in the British courts in effect against the Colonial Government (in this case the Southern Rhodesian Government), in the case of non-payment. The procedure provided for in the Act of 1877 is known as a Petition of Right, and takes the form of a Petition to the Queen. I see the noble and learned Lord, Lord Gardiner, is in his place, and he will remember that when we first went to the Bar this was a fairly familiar procedure, but I do not suppose that many noble Lords at present in this House know much about it. It became obsolete for every other purpose after the Crown Proceedings Act 1947, and although it was generally believed to have been abolished by a section of the Cyprus Act 1960—I think it is so stated to have been repealed in Halsbury's Statutes—a Mr. Henry Franklin, one of the stockholders concerned, established in the courts last year that this universally held belief was erroneous. Following his success he, and other stockholders, commenced proceedings by way of Petition of Right, and in some cases have received judgments establishing the amounts due to them. No doubt other stockholders would be able to do so; that is to say, the list of those who have actually brought proceedings is not complete.

However, as noble Lords will probably know, and all of us who practise in the courts know very well, it is one thing to receive a judgment but, as many judgment creditors find out to their cost, it is altogether another thing to be paid, and these judgments will be absolutely fruitless (that is to say, they will yield nothing), unless it can also be established that there are assets available in this country belonging to the lawful Government of Southern Rhodesia to meet them; in fact, assets in the hands of an agent, to quote the Colonial Stock Act, of the Southern Rhodesian Government, to which Section 20 of the Colonial Stock Act applies. They must be in the hands either of the Registrar (that is, the Bank of England), or some other agent of the legitimate Government.

Whether there are any such assets apart from the sum of £41, is a matter of dispute, and it is a matter of dispute which will ultimately have to be decided by the courts as a question of law. As regards the sum of £41, I do not propose to say anything more about it because it has already gone. The first of the petitioners has taken it under his judgment. In any event, I suppose that the House would think, as I do, that a sum of £41 to distribute between £53 million-worth of creditors under the stock can safely be ignored. At any rate, it has gone and no longer exists. Therefore, whether there are any such assets available to meet these potential or actual judgments is a matter of dispute which ultimately has to be decided by the courts as a question of law. The Bank of England has already commenced proceedings in the commercial court for a declaration that these are not funds available to meet the judgment, and the governor, or whatever the appropriate phrase is, of the Reserve Bank of Southern Rhodesia, has also commenced a similar action for a similar declaration. These questions will have to be decided by the courts as a matter of law.

The question of law depends principally upon the status of the funds of the Reserve Bank of Southern Rhodesia, which has a number of funds frozen in this country. The funds are substantial (I think the figure is between £8½ million and £9 million), but they are quite insufficient to meet the claims of the stockholders, which proved to date amount, as I have said, to the best of my knowledge and belief, to £53 million, and still less to meet the other creditors of the lawful Government of Southern Rhodesia, including of course Her Majesty's Government who have had to pay out these sums by way of guarantee and who are also entitled to receive the repayment of the direct loans.

One argument would be that the Reserve Bank of Southern Rhodesia is to be treated as an entity separate from the the lawful Government of Southern Rhodesia, and that its funds are not liable to meet the judgments, and it is not an agent of the Government within the meaning of the Colonial Stock Acts. That is one side of the case, and presumably that will be put by the plaintiffs in the two sets of proceedings I have referred to. On the other hand, it could be argued that some, or all, of the Reserve Bank's Funds are available to meet the judgments on the basis that the Reserve Bank is an agent of the lawful Southern Rhodesia Government. As this question is obviously sub judice between the claimants and the Bank of England and the Reserve Bank, I must not express any opinion whatever as to which of these two alternative views is the right one. It will fall to be decided by the courts.

The consequences of what I am about to say are material. If the Reserve Bank and the Bank of England are right, the consequence will be that the claimants will get nothing, so far as one can tell, until the restoration of lawful authority in Rhodesia, when of course they will have their rights and no doubt there will be assets to meet them. Their judgments until then would remain barren until the restoration of lawful government in Southern Rhodesia. However, since the funds are totally insufficient to meet all the claims even of the stockholders, let alone the other creditors, I am afraid that we cannot simply adopt a supine attitude and do nothing whatever about it until the courts have decided the question. If we did that, as I explained to the House in April on the former occasion to which I referred, the funds would be seized on a first-come first-served basis. The early birds would get the whole worm, and the later birds would remain wholly unfed. I do not propose to give the details, but although there are one or two fairly small early birds most of them are the large birds who have both the know-how and the funds to have protected their rights. So the general effect would be that the smaller the claimant the less he would get. This would be quite contrary to every principle of justice and law, and I think that this was accepted by the House on a former occasion.

One alternative to "First come, first served", would have been to stay all civil proceedings in this country in respect of claims against the Southern Rhodesia Government by an Order made, like this, under the Southern Rhodesia Act. Such a course had great merits on the grounds of simplicity, and I think it would have had considerable merits on the grounds of public morality. As I told my noble friend Lord Napier and Ettrick on February 14, it was at one time at any rate being contemplated as the right course by Her Majesty's Government. Even now it may turn out to have been the best course to take. But, rightly or wrongly—and I shall submit rightly—the Government decided against that course; and they decided against that course, which would certainly have been highly controversial, because of arguments of principle which personally I find quite overwhelming. It would have involved all the controversy incurred by the then Government in the Burnnah Oil case (and there have been one or two other cases in recent years where retrospective legislation has been passed to deprive litigants of a right that they had) since it would have taken away ex hypothesi a right of action in the claimants which the courts, rightly or wrongly, had decided to exist, and it would have done so retrospectively after the courts had decided that the remedy was available. On balance, therefore, and on reflection, the Government abandoned the second alternative, and as they had already rejected the "first come, first served" principle, they reached, as the only just and practicable solution, the solution proposed in the present Order.

Now the solution proposed in the present Order is based on existing legal principles when a debtor or a fund has insufficient assets available to meet the claims upon it; and, as I have already pointed out, in this case either the fund has no assets or, on the alternative view, the fund does not have anything like enough assets to meet the claims upon it. Of course, if it has no assets no prolem arises: any judgments which may be obtained will be altogether fruitless, even if this Order is not passed. But the Order proceeds on the basis that that view cannot be treated as certain unless and until the courts so decide. We have therefore got to legislate against the possibility that the courts will decide in the opposite way, and we have got to legislate against that possibility while it is still in the future; and in that event we shall be faced with what I submit is the familiar situation, that a fund or a debtor exists upon which there are claims in excess of the total amount of the fund.

Now the answer which we give in the Order, and which I gave when I made my Statement to the House, is, in effect, that the rules of bankruptcy or companies winding up should prevail by analogy. What happens, if I may explain rather simply, is this, as noble Lords will be aware. Suppose somebody gets a judgment against a debtor who cannot pay. If the debtor is an honest man, he will present his petition of bankruptcy and then all the creditors are brought in and they get paid a dividend from the funds which he possesses and which are available to meet the payments. Their right of action is excluded; the right which remains is a right to a dividend in the bankruptcy. The essence of this, which has been the basis of our system of commercial morality for many years—I do not like to think how long—is that all the creditors are then treated equally, except for secured creditors and a few preferential creditors, and a dividend or dividends is declared until the fund is exhausted. I put this forward as the only view which does substantial justice here between all the claimants.

My Lords, at this stage I should like to deal with a criticism which has been levelled on behalf of the stockholders. I do not want to criticise the stockholders in any way. They are people who are entitled to redemption payments from the Southern Rhodesian Government, and who have not received them; they are entitled to interest, and they have not received that interest. But, of course, the effect of what they are seeking to do is to get their debts preferred in this country over any other creditors there may be; and, quite apart from legal technicalities, one has to consider whether that is substantial public justice or not. This is the question which has to be considered. The stockholders claim that they alone should share in the fund—that is to say, the fund about which the courts will decide aye or no whether it is available to meet this debt—if the courts declare it to be available. The Order provides that all the creditors let in under the Order should be treated equally. This is the rule in insolvency, with one qualification; namely, that some insolvency debts owed to Her Majesty's Government would have preference over ordinary debts—and Her Majesty's Government claim no such advantage here.

The Acts—that is to say, the Colonial Stock Acts—make no difference in the quality of the debt or right which the stockholders possess and those of other creditors. The Colonial Stock Acts do not make them preferred creditors and do not make them secured creditors. They have no preference over other creditors; they are neither secured nor preferred. They have only the one procedural advantage, which is to bring the proceedings in other words, they have the advantage which can trigger off the insolvency of the fund by obtaining a judgment, and thus establishing that there is an insolvency. It is to be understood that they will naturally seek to obtain an advantage over other creditors. These things are perfectly legitimate in the way of argument; but my submission is that if they were allowed by Parliament to do so it would be an unfair advantage.

The effect, if this were a private affair, would be that the debts which were provable in bankruptcy would include all debts or liabilities, present or future, certain or contingent, to which the debtor is subject at the date of the receiving order or to which he might become subject before his discharge by reason of any obligation incurred before the date of the receiving order, and ordinarily would include foreign creditors. Of course, the only reason why foreign creditors cannot obtain judgment in these courts is that they would normally have to seek a judgment in Southern Rhodesia, but for obvious reasons they cannot do that because the only people whom they could sue in Southern Rhodesia would be the illegal Government, and we do not want to encourage that. Equally, the only reason why the Crown could not sue is that, on the hypothesis that the funds are available, the Crown already has the funds in its own hands, and cannot sue itself. It could, however, without passing an Order, transfer the funds from one pocket into another, and so render them not available. In fact, it has not sought to do that. What it has sought to do is to treat itself like any other creditor in a bankruptcy.

Now there are one or two minor matters which I think I ought to establish. It may be the case that other funds alleged to be funds of the Southern Rhodesian Government emerge, but if so they will be dealt with in the same way under the Order. At present, the only funds in question are those of the Reserve Bank held in the Bank of England on its behalf. I am told, as I have said, that these amount to between £8½million and £9 million. Both the Bank of England and the Reserve Bank have brought test proceedings against Mr. Franklin, who is the first of the petitioners, to establish that the funds are not funds of the Southern Rhodesian Government available to meet claims against the Southern Rhodesian Government. That matter, as I have said, is sub judice. If the actions succeed, then the judgments will be fruitless: if they fail, then the assets of £8½ million to £9 million will fall to be distributed under the Order. As I have said, the claims against the assets amount to £53 million, and so far as is known there is in addition between £30 million and £40 million more in respect of other creditors, including Her Majesty's Government—say, about £90 million in all.

My Lords, with this explanation I do not think that I need deal, unless I am asked to do so, with the actual form of the Order. Article 2 has already taken effect to meet the gap between the making of the Order and its coming fully into operation with the approval of Parliament. It has therefore no practical significance for the purpose of the debate. If the Motion fails, the Article will fall with it. If it succeeds and the Secretary of State decides to bring the Order into operation, it will be superseded by the Order. The organ selected for administering the funds is the Foreign Compensation Commission, and probably the House will agree that it is the most suitable body for the purpose. It is a judicial body staffed by lawyers. We could not use the Companies Winding-Up Court or the Bankruptcy Court for an operation of this kind, and I think the analogy of a bankruptcy would break down if we tried to do so, because the claims submitted will include, or may include, a number of claims which would not strictly be provable in a bankruptcy. I have done my best to explain this highly technical matter, and I think the best thing to do now is to move formally and to leave the House to discuss the merits of the Motion.

Moved, That the Southern Rhodesia (Distribution to Creditors) Order 1973, be approved.—(The Lord Chancellor.)

6.0 p.m.

LORD SHEPHERD

My Lords, I am sure that the House will be indebted to the noble and learned Lord for his very full explanation of what is a very highly technical Order. Like the noble and learned Lord, I shall not refer to the cause of the Order, the seizure of power in Rhodesia by the Smith régime; but perhaps the noble and learned Lord would confirm that there is nothing within our sanctions policy which would prevent the Government of Rhodesia from paying these stockholders if they so wished.

When the noble and learned Lord (I think on April 18) made the Statement which this Order follows, my noble friend Lord Beswick, speaking at fairly short notice, said that we on this side of the House approved and agreed with the decision taken by the Government. After a good deal of anxious thought we are still of the same view. It seems to us that there are two issues which have to be decided. The first is that if the stockholders are to have the first entitlement to what sums may be available, is it right that it should be on the basis of "first come, first served"? We think that the figures given by the Solicitor General in the House of Commons last week illustrate what the noble and learned Lord has said: that it is not the small individual stockholders who are at the head of the queue. The Solicitor General said that there had been some 86 claimants who had entered claims amounting to about £3 million, of which some £2¼ million had come from the banks. I understand that there are a number of pension funds that may be affected, but I think that it would be quite wrong to believe that what we are doing by this Order is prejudicial to the small claimant. In many ways perhaps he will be better off as a consequence of this Order. So I should not have thought that in equity there could be any disagreement with the Government proposals here.

The most controversial aspect, I suppose, is whether the Government on behalf of the taxpayer, since it is the taxpayer's money, should put themselves into the same position as the stockholders for any claim that could be made on the assets of Rhodesia. One can have sympathy with a stockholder but I think that in equity one needs to protect the taxpayer's interest, and I therefore feel, with some reluctance, that the Government have made out a case in this regard.

My Lords, I should not like to sit down without saying one word about Mr. Franklin, whom my honourable friend Sir Elwyn Jones referred to as a modern John Hampden, who created the present difficulties by his success in the courts. This is the second piece of legislation of this type in which I have been involved. The noble and learned Lord referred to the Burmah Oil legislation. In that particular case, of course, the Burmah Oil Company had been clearly warned by at least two Administrations that if they did succeed in the courts certain steps would be taken to see that they did not eventually succeed. They proceeded in the full knowledge of this. However, to the best of my knowledge, Mr. Franklin was not warned as to what would be the consequence of his success in the courts. Undoubtedly he has incurred considerable cost in making his case in the courts. While I can fully appreciate the view of Her Majesty's Government that as they were not party to the recent court cases they had no responsibility in the matter, in equity, since the Government are in fact now making an Order which (shall we say?) will delay any settlement of Mr. Franklin's claim, I should hope that the Government would give very sincere consideration to ways and means by which Mr. Franklin's expenses could be met without necessarily creating a precedent. While I personally—and I am sure that this applies also to most Members of this House who have studied this particular case and who have a certain anxiety about this Order—would accept that it is necessary in the public interest, I feel it would make everyone a good deal happier if Mr. Franklin had not to suffer the considerable loss that he obviously will suffer as a consequence of it. With those words I would say to the noble and learned Lord that we on this side of the House give support to this Order.

6.6 p.m.

LORD WADE

My Lords, I share the views which have just been expressed by the noble Lord, Lord Shepherd, with regard to Mr. Franklin. In my view he certainly deserves our sympathy. But I am not in agreement with the noble Lord, Lord Shepherd, on some of his other observations. I think that we shall all agree that this Order does not make particularly easy reading. I shall endeavour not to add to the complexities, but in my view there underlie this Order some issues of principle. At the outset I should mention that I am a holder of a small amount of this stock, not on my own behalf but in the capacity of a trustee. Strictly, therefore, I do not think it is necessary to declare an interest because I have no beneficial interest either directly or indirectly. Nevertheless, it is perhaps worth mentioning briefly the circumstances of this trust. The stock was purchased, on the advice of the trust's brokers, some time before U.D.I. The beneficiaries are as to part charities and as to part an elderly lady who has an interest for life; and ultimately the capital all goes to charity.

In some respects this is typical of other funds where part of the capital is invested in this particular stock. One thing is clear—and on this I know we all agree. The political controversy of U.D.I. does not arise here. It is true that this Order became necessary as a direct consequence of U.D.I. but we are not arguing about the Smith régime—that is irrelevant. The issue is between the Government and the stockholders. I would differ a little from the remarks made as to the type of stockholders. I should have thought that the particular trust I have mentioned was in some respects fairly typical. I think that there are probably a number of persons of comparatively small means who are affected. Some of the stock is held by individuals, some by trusts for pension funds, some by trustees for individuals.

THE LORD CHANCELLOR

My Lords, I think that the noble Lord has misunderstood the point that was made. There are a number of quite small beneficiaries in one way or another and I did not mean to suggest anything to the contrary. What the noble Lord, Lord Shepherd, was referring to, and what I had referred to was that if the stockholders were met out of inadequate funds on a "first come, first served" basis we already know, from the order in which people have obtained their judgment, who would come first. In the main they are not small stockholders.

LORD WADE

My Lords, I was quite well aware of that particular point and I was going on to deal with it later. But there have been some references to a large amount being held by banks, and I was going to say that, so far as I can ascertain, these moneys are, or may be, held on behalf of individuals. So again we really cannot distinguish between large holders and small holders. In any case, I am not suggesting that one should not have sympathy for the stockholder because it is a bank. But I should have thought the sympathy should lie with Mr. Franklin and his fellow stockholders.

But much more is involved here than sympathy. It seems to me a question of principle. The whole history of this matter has, I think, shown the Government not in an entirely satisfactory light. I am thinking particularly of what was said, or was not said, when Mr. Franklin started his proceedings. One could take statements point by point of argument, but I would prefer to keep to what I regard as the crucial point. As your Lordships are aware, Mr. Franklin embarked on a long legal battle. The Government put forward such defences as were available to them, but Mr. Franklin did succeed in obtaining the Petition of Right and the court said, "Let right be done." It was following that decision, and following the decision to ascertain what funds were available, that the Government introduced this Order; and I suggest that this Order is intended to alter the rules in the middle of the game.

It is interesting to compare this with the Burmah Oil case. The noble and learned Lord the Lord Chancellor was in another place at that time, but I think I am right in saying that he did not regard the War Damage Bill with great enthusiasm—perhaps that is an understatement. Of course, my Lords, this case is not precisely the same as the other; two cases never are precisely the same. But there is a certain similarity; namely, that the rules were altered in the middle of the game, or should, I say, in the middle of the proceedings. In the Burmah Oil case the question was whether the claimant was entitled to compensation. It was fought right up to the House of Lords, and in its judicial capacity the House of Lords decided that the claimant was entitled. The amount still remains to be considered, but the House of Lords decided that on principle the claimant was entitled to compensation; and before any further stage could take place the Government of the day altered the rules so that the claimant could not receive any compensation.

In this case it would seem to me that the question was this: Was the petitioner entitled to proceed with the claim9 The decision of the court was, "Yes". The Petition of Right was granted, and the Government then decided to alter the law under this Order; not by taking away the right altogether from Mr. Franklin and other stockholders, but by diluting the pool by bringing in other creditors—the main one being Her Majesty's Government—and in that way diminishing Mr. Franklin's prospect of recovering what is due to him. I was interested to read a remark of the Solicitor General in another place on October 17 of this year, which was only last week. I am quoting from Hansard, column 368, and he used these words: …by accepting now claims by creditors other than stockholders, the pool has to that extent been diluted. I think that that really is the main issue.

Turning to the Order, and without going into it in any detail, I think that there are two main purposes, apart from the procedural matters such as bringing in the Foreign Compensation Commission. The first is to ensure that the stock- holders should take pari passu. As I understand it, all parties are agreed about that. There is really no dispute that the stockholders should take on an equal basis and not "first come, first served". Whether an Order is necessary to bring that about I should not like to say. I am not absolutely certain that it is necessary, but if it is, I should have thought there would be no dispute on that issue. But the second purpose of this Order is to dilute the pool after Mr. Franklin had obtained his Petition of Right, and it seems to me that that is open to very strong objection on grounds of principle. I know it has been suggested that this is justified because the general taxpayers would benefit. While listening to the noble and learned Lord the Lord Chancellor I kept on thinking to myself: why should the justification of helping the general taxpayer be brought in, if it was all so clear on legal principles anyway? I think the argument that it is necessary—

THE LORD CHANCELLOR

My Lords, I think that again the noble Lord, Lord Wade, has misunderstood the point I was putting. The point I was putting was not that the Order was justified on the basis that the general taxpayer was benefited but that the general taxpayer was also a creditor of the lawful Southern Rhodesian Government and therefore just as much entitled to his money as Mr. Franklin is to his.

LORD WADE

My Lords, I do not want to take up a great deal of time by quoting the Solicitor General, but I have in mind some of the remarks made in another place and I was not referring specifically to the noble and learned Lord the Lord Chancellor. It seemed to me that it was put forward as an argument and I suggest that that particular argument should be regarded with great caution. Of course the Government must be concerned with the interests of the taxpayer, but where does this particular argument lead? It seems to me that if it is taken to the logical conclusion, whenever a claim succeeds against the Government or a petitioner succeeds in a claim which will or may affect the possibility of money accruing to the Government, the Government would, on that argument, be entitled to alter the law for the benefit of the taxpayer, and I think that that is a dangerous line of argument. The purport of what I am saying is that it tends to undermine the basis of the rule of law. When I turn to the Order itself, my difficulty is that it is not amendable. If it were, it would be a simple matter to attempt to delete a portion by amendment in Committee. That we cannot do, and therefore I should have thought the proper course for those who are unhappy about this would be to ask the Government to take the Order away and bring it back in another form. Failing that, I should have thought that in this case the proper course for those who are uneasy about this Order would be to resist it, and I hope that the majority of your Lordships will be of the same opinion.

6.18 p.m.

LORD GRIDLEY

My Lords, I intervene in this debate only because many people of standing and repute and of varied interests have expressed to me their concern about this Order. I am a completely disinterested party in the sense that I do not own and have never possessed any Rhodesian stock and I have no financial interest in the outcome. Also, my Lords, I am not a lawyer, and on the legal complexities which seem to stem from the Order in Council, naturally, I have had to receive advice. I feel extremely nervous about putting forward some of the advice that I have received because it is completely contrary to what the noble and learned Lord the Lord Chancellor stated in his speech from the Woolsack. I am, as I have said, quoting from advice received and not speaking as a qualified solicitor or lawyer. The advice I have received is that the Order in Council would appear to represent an attempt by the Government to nullify retrospectively that court decision by a Petition of Right that went against them. As regards the rights of an individual, as I think the noble and learned Lord has confirmed—he will correct me if I am wrong—an individual Colonial stockholder can sue in the United Kingdom in respect of Crown debts incurred in Colonial or former Colonial territories: and I am advised that in the case of Mr. Harry Franklin, the procedure for him to do so was in order and covered by Section 20 of the Colonial Stock Act 1877 and the Crown Proceedings Act 1947. It would seem therefore—I say this advisedly and based upon advice, and repeating words which I think were stated by the noble Lord, Lord Wade—that in the middle of the game the Order would appear to be an attempt to change the rules.

My Lords, many other points on this issue have been drawn to my attention, and no doubt they will be covered by other noble Lords who will follow me in this debate. It would be utterly tedious for me to mention them all, and I will confine myself to two only. Here, while not questioning anything the noble and learned Lord has said, I would refer to a debate in the other place on October 17 when this Order in Council was debated. My honourable and learned friend the Solicitor General, at column 347 of Hansard, in reply to a question, had this to say regarding Rhodesian funds: There is no way in which those sums due to Her Majesty's Government, which are sums due to the taxpayer, can be recovered. While agreeing that it is possible that there was no legal way, is it not the case that at least some of the Southern Rhodesian funds have already been spent? For example, in 1967, was not £275,000 paid to the German printer of Mr. Smith's Government's bank notes. I do not know, but was not this a payment from Southern Rhodesian Government funds? Again, referring to this debate on October 17, and referring to column 348, my honourable and learned friend the Solicitor General, in reply to a question as to whether he knew what funds were available for distribution, said that he did not know. With respect, I find it difficult to follow that the Government really did not know, for by an Order in Council in 1965 the Government took over the Reserve Bank and appointed Sir Sidney Cain and new directors to run it, charging them to take control of all Southern Rhodesian assets.

The Order in Council would appear to have given the Secretary of State for Foreign and Commonwealth Affairs complete power to instruct the Bank and to control its affairs. Surely, if the Government now do not know, or did not know, what funds were available for distribution, they have the power to secure this information. Since 1967, and since the Second Reserve Bank of Rhodesia Order, Sir Sidney Cain and his fellow directors have ceased their operations. They had called in all the assets, and there was no more work for them to do. Sir Henry Hardman is now Governor and Trustee, with no directors.

It is for these reasons that I have anxiety and doubt about the present Order which we are debating, and I have no doubt that some noble Lords will echo some of the sentiments that I have expressed. I am disturbed by the Order in Council.

6.24 p.m.

LORD EBBISHAM

My Lords, I wish to intervene only quite briefly in this debate. At the outset I should perhaps mention that although I have no personal interest in any foreign bond, I am a member of the. Council of Foreign Bondholders. My noble friend Lord Trevelyan, who is the Chairman of the Council, has asked me to express his apologies to your Lordships as he has had to leave for an inescapable engagement. Had he been here, I understand he would have put forward views which are similar to those which I wish to put forward, and doubtless he would have done it much more ably than I shall.

Like other noble Lords who have spoken, I would give a welcome to the effect of the Order, which enables the holders of Rhodesian stock to be treated equally in any distribution of funds that there may be. That is obviously right. But what fills me with dismay is the power which the Government are taking to put their claims on an equal footing with the stockholders. As the noble and learned Lord has made quite clear, if a distribution were made on this basis there would be precious little left for the stockholders. I cannot say that I have been fully persuaded by the arguments of the noble and learned Lord on the Government's rights in this respect. Noble Lords may have seen last week an article in The Times by Mr. Bernard Levin which sets out what I think can only be described as the wriggles and prevarications to which the Government have resorted in this matter. Even now, I understand there is still an unsettled question as to whether a representative Petition of Right can be presented. The Council of Foreign bondholders many months ago presented such a Petition, and I believe the papers are still in the Attorney General's Department, and still unanswered.

My Lords, whatever the legal position in this matter may be, I am quite persuaded that in the minds of many people the action which the Government are taking regarding their own claims is morally very questionable. I was hoping that the noble and learned Lord on the Woolsack might have been able to say that, even though the Government were taking this action, they would not insist on their claim being made, but I realised as the noble and learned Lord went on with his speech that this was not likely to be said. However, I would ask him to see whether the Government might not even at this stage take second thoughts on this matter, even though the Order may be passed.

6.28 p.m.

LORD FOOT

My Lords, as the noble and learned Lord who sits on the Woolsack began by saying, this is a very complicated matter. But, to my mind, when you have stripped it of some of the technicalities, the issue that confronts the House this evening is a simple one. It is also an important issue, and one which ought to be of particular concern to this House, because I believe it involves constitutional questions of some importance. I do not want to introduce a jarring note into this debate, which has been fairly blandly conducted up to now, but I am bound to say that I believe that a very great wrong is being done under this Order, and I would crave the indulgence of the House to explain why I take that view.

I am hound to say, my Lords, that I am greatly disappointed that both in the other place and here to-night the official Opposition should have given their approval to this Order. We therefore are left on these Liberal Benches with what assistance we might get from the Cross-Benches, and possibly from some noble Lords who sit on the Government Back Benches.

The noble and learned Lord when opening this matter was talking about the alternative courses which the Government considered when Mr. Franklin was successful with his Petition of Right and when he successfully got his judgment. He said, as I understood it, that the Government had then considered whether they might not introduce an Order which would simply stay all proceedings against any funds in the hands of agents in this country which might be funds of the Rhodesian Government. He said, "We rejected that course because that would have been to act retrospectively; that would have had all the objections of retrospective legislation." My Lords, I cannot understand—and I still hope that the noble and learned Lord the Lord Chancellor may be able to explain this to me—how anybody can contend that this Order is not a piece of pure retrospective legislation. Because what has happened? Mr. Franklin seeks his remedy by Petition of Right. On that matter he is strongly opposed by the Government, who say that the law is not behind him. He, however, carries the day and is proved to be right and the Government are proved to be wrong. Then, having got his Petition of Right, which enables him to sue in the English courts, he in fact sues and obtains a judgment which says that such-and-such a sum of money shall be paid to him because he is entitled to it as a right.

What does this Order propose to do so far as Mr. Franklin's judgment is concerned? It proposes, not entirely to abrogate the judgment; what it proposes to do is to diminish the judgment by saying to him: "You are not going to be paid and we are going to make arrangements whereby you will not be entitled to the money which the court has said you should have." If the Government had thought that the court was wrong about that, or if the Reserve Bank of Rhodesia or the Bank of England had thought that the court was wrong, they could have taken the matter to appeal. But they have not, because they are not prepared to challenge the finding of the High Court. So under this Order the Government are taking the course of saying: "Though the court has said 'Let right be done' and has specified the right that should be done, let that right be undone and let them substitute for it different rights, rights vested in different people." That is the situation so far as Mr. Franklin's judgment is concerned; the noble and learned Lord will tell me if I misinterpret it.

If only the Government would concede frankly and openly that this Order is in fact retrospective, then we could go on to discuss the real issues in this case. I suggest that the real issue is this: are there any circumstances in which retrospective legislation can be justified; and, if there are, is this one of them? Is this a case where retrospection is something which can be tolerated and justified? I suggest that that is the real issue. If one comes to look at the matter in that way, one can see that this Order has one retrospective aspect which is justifiable and one retrospective aspect which is unjustifiable. The first of them is the part of the Order which provides that, instead of Mr. Franklin and those people who have got judgments being allowed to take all, leaving those at the end of the queue with nothing, there shall be a pro rata, pari passu distribution among all the stockholders according to their holdings. When I speak about distribution, I am assuming, as the noble and learned Lord has throughout, that we have to await the outcome of the present proceedings brought by the Bank of England and the Rhodesian Reserve Bank to decide the issue as to whether they are in fact in possession of funds belonging to the Rhodesian Government and they are therefore available for distribution.

On this question, therefore, as to whether all the stockholders should rank equally there is no dispute, no argument; nobody is arguing that at all, and for a very good reason. Because when Mr. Franklin took his proceedings as an individual and established that he was entitled to the Petition of Right and got his judgment, although under our legal processes it was no doubt necessary for him to act as an individual, in reality he was acting as the representative of all stockholders. When he obtained his judgment, what was affirmed was not only the right of Mr. Franklin to the monies that were due to him but the right of all the other stockholders to be paid from the available funds in this country to meet their claims for capital redemption and interest. So nobody is arguing about that. But if the state of the law is in such disorder that there was ever a risk that first come would be first served, and the people at the head of the queue would get all they were entitled to and the people at the end of the queue would get nothing, then there was every justification for introducing an Order of this kind—although it is technically retrospective so far at any rate as Mr. Franklin was concerned because it diminishes the amount of money he personally will recover. But that is a pure technicality.

When we turn to the other side of this Order whereby the Government are saying, "We are not only going to ensure an equal and fair distribution between the stockholders who have established their legal right to this money, but going to pass an Order which will put on the same level as the stockholders all the other creditors of the lawful Southern Rhodesian Government, whether it be the British Government themselves or whether it be someone else", they are engaging in an exercise of an entirely different nature; and engaging in retrospective legislation, which I would suggest is wholly objectionable for this reason. At the same time, this Order does two things. First of all, it takes away a legal right vested in the stockholders as has been determined by a British court of law, and it diminishes the amount of monies that might be available to meet the claims of those people who have established a legal claim. We know what the extent of the reduction is. We know that if in this future action which still has to take place it is determined that the funds which are in the hands of the Reserve Bank of Rhodesia are in fact available for distribution, that sum is in the nature of about £9 million. If this Order were not passed, and if we had regard only to the stockholders, there would be £9 million available for distribution among the stockholders, who have total claims of £53 million. If, on the other hand, the other creditors are brought in on an even basis with the stockholders, it means that the amount which the stockholders will receive will not be £9 million but about £5.3 million. That is very significant to the stockholders. It is a reduction of a little less than half of the amount which they might receive, and it will be significant to them.

What, however, will be the benefit to the other creditors if they are allowed to come in and share equally with the stockholders? The noble and learned Lord has told us that the main creditor is Her Majesty's Government, on behalf of the British taxpayer. How much will they get out of this £9 million? If they are to be treated on equal terms with the stockholders they will get about £3.7 million, which is absolutely insignificant when one considers the taxpayers as a whole. It matters nothing to the taxpayers, it matters a great deal to the stockholders—but that is a practical point.

The matter of principle, which I suggest is really the issue here, is that the Government should not deprive a person of a right which the court says he has and at the same time confer upon the other creditors a right which they cannot enforce in any English court. The ordinary creditor of the Rhodesian Government has no right of action in respect of his claim in the English courts. The only persons who have such a right of action against Rhodesian funds in this country are the stockholders, under the procedure of the Petition of Right. So what the Government are doing is vesting in the creditors a right which they could not enforce in law and at the same moment taking away from the stockholders a right which the courts say they ought to have. That is what is happening here to-night; that is what the Government are doing, and I suggest that this is a matter that ought to be one of considerable concern to this House.

I do not know Mr. Franklin: I have not met him and would not recognise him if I saw him; I do not know if he is here to-night. But it is a little ironic that this man, who has gone through all this effort, who has successfully defeated the Government on a matter of law, who has established this right on behalf of himself and his fellow stockholders, should have to listen to what is quite clearly a piece of retrospective legislation taking away his right, being proposed by the Lord Chancellor of England. It seems to me that the Motion for the approval of this Order comes singularly ill from the noble and learned Lord who sits on the Woolsack. In recent weeks, and indeed over the years, I have listened many times to the noble Lord, speaking as eloquently as he does about the rule of law, about the importance of obedience to the law, and saying that the people should accept the law whoever they may be—employers, trade unionists or anybody else; that this is the basis of any kind of decent social existence. Only recently, I heard him, at secondhand, speaking at the Tory Party conference—and a very eloquent speech it was. It is an irony that it should fall to the lot of the noble and learned Lord to come to this House to seek approval of an Order that will take away or diminish rights which the courts of this land have declared are vested in individuals.

6.44 p.m.

THE LORD CHANCELLOR

My Lords, I will not reply to the personal attack with which the noble and learned Lord, Lord Foot, concluded his remarks because I shall proceed to show both that they prove the wrong thing and that he is entirely misleading the House about the legal position. Quite obviously, if we did not have to legislate at all the law would remain as it is—that is to say, "First come, first served", and everybody who has spoken hitherto, including the noble Lord himself, has recognised that we cannot proceed on that basis. In other words, we have got to change the law, and the question is in what sense we have to change it, and how and on what principle.

The first thing I want to say is this. Assuming that we have to change the law, is it true and to what extent are we taking away anybody's rights? The answer is that we are not taking away anybody's rights. We are arranging, after judgment has been obtained, for the proper distribution of a fund which is insufficient to meet the legal claims that are put upon it. The stockholders have their rights; Mr. Franklin has his rights—he is a stockholder; the Government have their rights as a guarantor because they have to satisfy the claims of the International Bank for Reconstruction and Development, and as guarantor they are entitled to recover, as a matter of law, from the lawful Government of Rhodesia what they have had to pay under the guarantee. The Government have their legal rights as a lender in respect of the balance of their debts which they have lent to the lawful Government of Rhodesia and in respect of which it is in default. It is therefore on exactly the same footing as the stockholders.

I agree with the noble Lord, Lord Wade, that this is a question of principle, but I earnestly ask the noble Lord, Lord Wade, who put his case with great courtesy, if he will allow me to say so, and the noble Lord, Lord Foot: who is right on the question of principle? I put to the House that the question of principle must be decided in favour of the principle on which the Order is based because, supposing you have a number of creditors, it is right to prefer one class of creditor to another if he is a secured creditor. That is to say, if he can say, "I have a charge on the assets", he can be in advance of those who have no charges on the assets; but one thing which has not been advanced on behalf of the stockholders is that they are secured creditors. They are not secured creditors.

The second way in which you can advance one class of legal creditors to another is on the ground that they are preferred creditors. It has not been suggested that these people are preferred creditors; they are ordinary creditors; they are not entitled to preference as a matter of law. If the assets available to meet the obligation, which has not been taken away, are insufficient to meet the obligation they are not in law preferred creditors; they are ordinary creditors. How therefore can it on any principle of morality be said that they ought to be given an advantage over other classes of creditors? Now it is said by the noble Lord, Lord Foot, that the other classes of creditors would have had to sue in Southern Rhodesia but not in these courts. Be it so. But I am not satisfied that that is so, because Her Majesty's Government, who are the principal creditor, are entitled to their money in right of Her Majesty's Government, and the only procedural reason why Her Majesty's Government cannot sue is that, on the hypothesis that the assets are available, which is the hypothesis upon which the Order proceeds, they already have the money in their pocket and they are perfectly well entitled, I would have thought, to transfer it from one pocket to another, which as a matter of fact they are not proposing to do.

But be it so; let us assume that the argument of the noble Lord, Lord Foot has a certain amount of validity. The fact is that when an insolvency is created foreign creditors—namely, precisely those who are entitled to sue in foreign courts and not ordinarily entitled to sue in English courts—are allowed to prove in bankruptcy. That is elementary law. If it be as the noble Lord, Lord Foot says, which I do not accept, that all these creditors are entitled to sue only in the Rhodesian courts, I would have submitted humbly that the mere fact that you are proceeding on bankruptcy principles means that you have to apply bankruptcy principles, and foreign creditors, who, for these purposes, the creditors would be, would be entitled to rank pari passu with all other creditors, including the stockholders.

LORD FOOT

My Lords, I hesitate to interrupt the noble and learned Lord, but I did not say that these other creditors might be able to sue in Rhodesia. What I said was that the other creditors—and if we may leave aside the British Government for a minute and just consider the other creditors as such, as opposed to the stockholders—have no right of action against Rhodesian funds in this country. That is what distinguishes them from the Rhodesian stockholders who have been found to have a special remedy, and that is the Petition of Right and the judgment under the Petition of Right. It is in that sense that I was saying that the stockholders are, if I may use the words, as it were, in italics, preferred creditors.

THE LORD CHANCELLOR

My Lords, I was trying to explain to the noble Lord why he was wrong. Obviously the petitioners in the Petition of Right have a right of action in this country, and, equally obviously, if we did nothing to change the law those Petitions of Rights would yield judgments, and those judgments would be satisfied on a "first come, first served" basis. That is admittedly not what we are going to do. I am pointing out to the noble Lord that if you apply bankruptcy principles, and the whole philosophy of this Order is that you do, so far as they can be applied equally, you have to admit those without a right of action to sue in the British courts. You have to allow foreign creditors to prove in the bankruptcy.

What I have said to the noble Lord, and what is beyond dispute, is that the words "secured creditor", the words "preferred creditor", have a technical meaning in English law. The noble Lord, Lord Foot, really owes it to the House to admit candidly that the present stockholders do not have that status in English law, either as secured creditors or as preferred creditors. I am sorry to speak with a little heat about this because it is a technical matter, and it is quite intelligible that people at first sight would not understand what I admit to be questions of principle underlying this particular argument. But the noble Lord, Lord Foot, saw fit to close his remarks with a peculiarly offensive personal attack on me, and I think I am entitled to rebut it with a certain amount of feeling on my part.

Having said that, I go back, with thanks, to the noble Lord, Lord Shepherd, at the beginning of the debate. I am grateful to the noble Lord, Lord Shepherd, because he agreed that this was a difficult matter. He conceded that his Party had had a certain amount of anxiety about it, which I can say was shared by everybody on behalf of Her Majesty's Government who considered the matter too. We came down on the side that we have, and I was heartened to know that with exactly the same kind of doubts and difficulties the Labour Party came down on precisely the same side, and therefore I should like to thank him. If I may return to the matter of costs at a later point, I will try to do so if the noble Lord reminds me. There is one other point in his speech with which I will deal now. He appeared to be under the impression that Mr. Franklin had not been warned that special action would be taken. He was told on December 22 (at least I think it was he) by a letter written on behalf of the Attorney General: Accordingly, steps may be decided upon which may preclude or postpone relief being obtained in the United Kingdom by your client". That was in connection with the Petition of Right. The phraseology of the letter was appropriate to the action which was then being considered, and which gave rise to the question by the noble Lord, Lord Napier and Ettrick.

LORD SHEPHERD

My Lords, I was only seeking to show the slight difference between the Burmah Oil case, where the Burmah Oil Company was told in specific terms that the Government would take action, whereas in this case there was a degree of doubt.

6.55 p.m.

THE LORD CHANCELLOR

My Lords, I was about to come, in connection with Lord Wade's speech and, subject to the question of costs which the noble Lord, Lord Shepherd, asked me to deal with, to the Burmah Oil case. With respect, there is no analogy between that case and this at all. He is right in saying that after careful and considerable argumentation I spoke in the House of Commons in a former Parliament against the decisison of the then Government. But I did so in terms which were quite different from those which the great majority of my own Party would have supported. I had a particular point of view with which I will not trouble the House at this late hour. But it was critical of the then Government.

All I want to establish now is that there is no analogy at all between the Burmah Oil case and the present one. The Burmah Oil case was one in which the Government retrospectively, rightly or wrongly (and that is an argument I will not enter into), decided to deprive a party of his right of action. This is a case in which, the right of action having been established, the question is how you distribute inadequate assets when the right of action has been established, and nobody is going to get a penny of this fund who does not establish a right of action, a debt. The stockholders do it by Petition of Right until the Order is brought fully into operation and thereafter by proving in the "liquidation", if I may call it that. Other creditors will have to prove in the liquidation, too. They are in exactly the same position; none of them is deprived of his right of action, but they are asked to share on an equal footing in what limited assets may be available. The question is whether the stockholders should be given an advantage, which I claim to be an unfair advantage, or whether they should be made to share and share alike with other people with legal rights, even though some of those other people might have had to sue in the Rhodesian courts to get their rights instead of in the courts of this country.

That deals with the point about altering the rules. Of course, all bankruptcy, in one sense, alters the rules. If you get judgment against your neighbour in this country for £1,000 and you find that he can pay, you get judgment for £1,000; and if he does not pay you satisfy it by levying execution on his goods and chattels and you are satisfied in full. If he subsequently goes bankrupt, you are all the luckier because you do not have to disgorge if it was an honourble transaction. But if you get judgment against your debtor for £1,000 and he or any one of the other creditors brings a petition of bankruptcy, the bankruptcy relates back to the act of bankruptcy relied upon and you will not get your £1,000. You will have to share in the insolvency. That is exactly what is proposed here. The only sense in which we are altering the rules is that of course bankruptcy and winding up, which are the analogies adopted, do not apply to a lawful Government of either a colonial country or an independent country. The nearest approach that I can find whore the Companies Winding-up Rules did apply was the case of the Russian Bank for Foreign Trade in about 1933. A Czarist Russian Bank was discovered to have a branch with assets in this country long after the Soviet Revolution, and the Companies Winding-up Rules were applied to the assets in this country. This, I should have thought, was a fairly close analogy with what is now being approached here. But except in the sense that we are applying bankruptcy rules, which seems to me to be the right analogy, I completely deny that we are altering the rules while the game is in progress.

Of course the real issue is exactly what was put, I think by my noble friend Lord Ebbisham. The question is whether on a limited fund the stockholders should get the whole fund and share it between them, or whether other creditors should be entitled to share in it, too. This is a question of principle, and I do not deny it. I do not think it is quite as easy a question of principle as the noble Lord, Lord Foot, seemed to think. He has misled himself and, in consequence, misled the House. But the case I have put could not be more shortly stated. The advantage which is claimed for the stockholders could be claimed legitimately only if they were preferred creditors or secured creditors: and they are neither; they are ordinary creditors.

I do not want to delay your Lordships for too long, so perhaps I may deal briefly with the question of costs. I do not want to say anything which is in any way depreciative of Mr. Franklin. This kind of argument goes on much more widely than one would necessarily think. It is perfectly legitimate for stockholders to seek to protect their rights, but he chose to pursue a course of action against which he was warned and which I myself think was wrongheaded. This was because I think he was trying to get an advantage which in equity he should not have got. I can quite understand why he did it and there is no kind of criticism which applies. He was entitled to do it.

He took out an originating summons for a decision as to whether a Petition of Right lay. He was opposed by the Crown and he won. I understand he got an order for costs. That was because he was a successful litigant, and it is not proposed by the Crown that that right to costs should be diminished in any way because the order is against Her Majesty's Government in right of the United Kingdom. So I can see nothing unjust about that. He then went on with a Petition of Right, and whether or not he was entitled to costs on that Petition I do not know. It is a question for the courts to decide. Again I do not see that there is any call for Her Majesty's Government to intervene: either he is entitled to them or he is not. He then sought to interrogate the administrator of these stocks in the Bank of England by way of cross-examination. His application failed and it was in fact held to be a misguided application. I do not think he was entitled to costs there. He undertook proceedings and he failed. Whether there was an order made against him or not I do not know, but at any rate he did not succeed. Finally, there are two sets of proceedings which are pending against him. One is brought by the Bank of England: if he wins he will certainly get his costs, and I understand that the Bank of England has promised to pay his costs even if he loses. There is a similar proceeding by the Reserve Bank, in which case the Reserve Bank will be liable for the costs if he wins, but I do not think any similar undertaking to pay his costs if lie loses has been made by the Reserve Bank.

I think that covers the costs. So far as I am familiar with the situation as it exists at the moment, there will be costs to which he is entitled. They will be greater if he wins. There will be some costs payable to him in any event and others that he will not get if he loses. I do not think any special action by Her Majesty's Government is called for. If and so far as—as the noble Lord, Lord Foot, says—he is acting on behalf of persons similarly placed, I should have thought he had a very strong moral claim to be indemnified, at any rate to their share of the amount at stake, by his fellow suppliants. But that is a matter between them and him.

I hope I have said enough to indicate, first, that I am not abrogating the rule of law, contrary to what the noble Lord, Lord Foot, said—and many of the things which the noble Lord said are at any rate open to question. I have suggested that he was plain wrong. Of the speeches to which we have listened from my noble friend Lord Gridley (to whom I must say a word in a moment) and my noble friend Lord Ebbisham I make no complaint at all, but I have tried to answer them, except in one point. May I say, in passing, that I fully understand the difficulties under which my noble friend Lord Gridley was labouring in a highly technical matter, and I do not complain at all that he should have made it very plain in this House that he was relying upon information which he had received from a professional source. The only point I wish to make to him relates to a payment of £275,000 which, to tell the truth, I had never heard of until he raised the matter; but I understand that the Reserve Bank did pay £275,000 to meet the cost of the destruction in Germany of Rhodesian banknotes printed prior to U.D.I. by a German firm. That, of course, was a liability of the Bank. What is in dispute here is whether the funds in the Bank are the liability of the Bank at all, and that is sub judice. That is the best answer I can give the noble Lord at the present time.

Of course I know nothing of the internal affairs of the Reserve Bank and its relationship to the Rhodesian funds. I imagine that there are members of Her Majesty's Government charged with this matter who would know a little more; but broadly speaking—and I am speaking now without prior instruction from those who know better—I think I am right in saying that, on the whole, when Her Majesty's Government appoint people to operate a bank of this kind on behalf of an institution which is no longer operative they would not seek to look into the details of a customer's account. That would explain any defect in the detailed knowledge which my learned friend in the House of Commons may have shown.

I am afraid I cannot take the matter any further, unless there is anything I have not dealt with. Despite what the noble Lord, Lord Foot, said, I ask the House to believe that I have tried to apply my mind honourably to this. I have come to an answer different from his. This is both our misfortunes, but I do not myself think that I have anything to be ashamed of.

LORD WADE

My Lords, may I ask the noble and learned Lord the Lord Chancellor just one point, in case there is any confusion? Would he agree that there is a very great difference between a Petition of Right and a petition in bankruptcy?

Resolved in the Affirmative, and Motion agreed to accordingly.