COMMONS AMENDMENT (Hansard, 1 November 1976)

§ The LORD CHANCELLOR

My Lords, I beg to move that this House doth agree with the Commons in their Amendment No. 18. This Amendment would 972 take out of the Bill the clause which extends the power of the county court to make administration orders against judgment debtors. In advising the House to accept the Amendment, I should like, however, to make a few observations. An administration order requires the debtor to make regular payments, and provides for their distribution rateably among the creditors. It is a means of doing distributive justice, on the one hand between the creditors and the debtor and on the other between the individual creditors. At present, these orders can be made only where the total indebtedness is stated not to exceed £1,000, but that figure can be increased by Order in Council.

The main purpose of Clause 8 was to facilitate the making of administration orders against self-employed debtors, who, if I may say so, are very hard to get at. At present, an administration order can be made only, first, where the debtor applies for it or, secondly, where a judgment creditor applies for an attachment of earnings order. The clause enables the court, whether or not there has been an application of the kind I have mentioned, to make an administration order if the judgment debtor has other debts which ought to be dealt with together. The clause has, however, been criticised severely, perhaps surprisingly having regard to its limited scope, by representatives of the legal profession and by honourable Members in another place. The Government tried to meet these criticisms by Amendments, but their efforts did not succeed in carrying the other place.

My Lords, I doubt whether this opposition would have been so vehement had it been possible to include the clause in a Bill unconnected with bankruptcy, for the clause has won a fair measure of support both from the county courts and from practising lawyers. However, opinion has been divided, and in my view it would not have been prudent to persevere with the clause against such strong objection from representatives of those who would have been involved in, or affected by, its practical application. What is needed now is a pause for reflection and reconsideration in the light of the various arguments which have been advanced for and against the clause.

I believe that the clause has served a useful purpose, however, by helping to crystallise 973 the arguments and by focusing attention on the administration order procedure, which I am sure could be used more frequently with advantage to creditors and debtors alike. I should like to stress two points. First, even with the omission of Clause 8 the administration order procedure is considerably strengthened by this Bill, for Clause 9 imposes the sanction of bankruptcy for non-compliance with an administration order, whatever the amount of indebtedness. Secondly, the arguments over Clause 8 have brought into prominence the existing power of the court to make an administration order where a creditor applies for an attachment of earnings order.

This power is of great importance where the debtor has a number of liabilities. The court may make the order of its own motion, even where it does not grant the application for attachment of earnings. This power, backed as it will be by the sanction of bankruptcy under Clause 9, is worthy of attention. Since the court can take the initiative by imposing an administration order upon an employed debtor, there seems no reason in principle why it should be precluded from taking a similar initiative against the self-employed.

My Lords, I hope that these remarks will suffice to satisfy the House that, although the idea behind Clause 8 is sound and sensible, it would be better to omit the clause from the Bill in order to give further time to seek agreement on the improvements needed to strengthen the machinery for enforcement against self-employed debtors. I hope that, with the co-operation of those concerned, it will he possible to take the earliest available opportunity to legislate for this purpose. Having made that commercial, I now beg to move.