HL Deb 16 May 1977 vol 383 cc465-78

3.10 p.m.

The LORD CHANCELLOR

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, that the House do now resolve itself into Committee.—(The Lord Chancellor.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clauses 1 to 4 agreed to.

Clause 5 [Appeals etc. from courts-martial]:

The LORD CHANCELLOR moved Amendment No. 1: Page 2, line 35, leave out ("Where") and insert ("Without prejudice to section 31 above, where").

The noble and learned Lord said: This is a technical Amendment to make it clear that there is no conflict between the new Section 33A of the Courts-Martial (Appeals) Act, which enables an appellant, whether successful or unsuccessful, who is not in custody to be awarded his out-of-pocket expenses, and the existing Section 31 which enables a successful appellant to be awarded his full legal costs. I beg to move.

On Question, Amendment agreed to.

Clause 5, as amended, agreed to.

Clause 6 agreed to.

The LORD CHANCELLOR moved Amendment No. 2: After Clause 6, insert the following new clause:

"Extent of powers of receivers and managers in respect of companies.

—(1) A receiver appointed under the law of any part of the United Kingdom in respect of the whole or part of any property or undertaking of a company and in consequence of the company having created a charge which, as created, was a floating charge may exercise his powers in any other part of the United Kingdom so far as their exercise is not inconsistent with the law applicable there.

(2) In subsection (1) above 'receiver' includes a manager and a person who is appointed both receiver and manager".

The noble and learned Lord said: This Amendment inserts a new clause which enables a receiver or manager appointed by the court in one part of the United Kingdom to exercise his powers over the company's property situated in another part unless they are inconsistent with the law of that other part. It extends and replaces Section 15(4) of the Companies (Floating Charges and Receivers) (Scotland) Act 1972 which will be repealed by an Amendment to Schedule 5. It implements a proposal originally put forward by the Scottish Law Commission in 1970 in relation to Great Britain. I beg to move.

Viscount COLVILLE of CULROSS

I have looked at the background to this. Clearly it was something that could not be put into the 1972 Act because that applies only to Scotland and this is intended to be applied nation-wide. I should have thought that this was just the sort of thing that should go in the Bill and, as the noble and learned Lord is adding a clause here and a clause there, perhaps he will welcome other people's attempts to do so also.

The LORD CHANCELLOR

I am most grateful to the noble Viscount for that gracious and tolerant attitude towards this something of a rag-bag Bill, as most Administration of Justice Bills are. However, I cannot promise that the particular pets of his choice will necessarily get fair wind, but we shall see when we come to them.

On Question, Amendment agreed to.

Clauses 7 to 13 agreed to.

Clause 14 [Right of audience in county courts]:

Viscount AMORY moved Amendment No. 3: Page 9, line 28, leave out ("solicitors' employees") and insert ("persons employed in solicitors' offices").

The noble Viscount said: The reason for this Amendment is very narrow and I hope that I can explain it briefly. As I understand it, this clause empowers the Lord Chancellor if he thinks fit to give directions to permit selected employees of solicitors a right of audience in county courts. The object of this Amendment is to extend the same right under directions from the Lord Chancellor to similar grades of employees who are employed not directly by solicitors but in the legal departments of local authorities. The categories referred to are precisely similar and it would seem right and appropriate that both categories should receive the same rights, if so directed by the Lord Chancellor, to have audience in the county courts. They have the same qualification and I am told that Section 223 of the Local Government Act 1972 already permits such persons, even if employed by local authorities, to have limited rights of audience in magistrates' courts. Therefore, it is really pari passu and I suppose that one can say that what is sauce for the goose ought to be sauce for the gander, if I may coin a phrase. I do not think that I need describe it any more clearly. May I express the hope that the noble and learned Lord will see the point of my suggestion and perhaps give it his blessing.

The LORD CHANCELLOR

The noble Viscount has explained that the purpose of this Amendment is to extend the scope of Clause 14 to cover persons employed in the solicitors' offices of local authorities or other national and public undertakings. If one assumes—and I think it is a reasonable assumption—that in this context one is talking of legal executives, then I am happy to agree that the proposition put forward by the noble Viscount is a sound one. It is really not easy to distinguish, where litigation is concerned, between the work done by a legal executive employed by a solicitor in private practice and that done by another legal executive employed by a local authority.

The most important factor to bear in mind as regards the public interest is that the legal executive appearing before a county court judge must be under the supervision of the solicitor who has the conduct of the proceedings and who is, at the end of the day, responsible for them. That is essential if the proper professional standards are to be maintained so that the judge can indeed have as much confidence in the legal executive appearing before him as he would have in the solicitor charged with the conduct of the proceedings.

With respect, the Amendment seems to be drawn in terms which provide that safeguard and accordingly I am happy to accept the Amendment in principle. However, I am not absolutely confident that the words "solicitors' offices" will necessarily cover the legal departments of every local authority or corporation. Sometimes the head of such a department is, for instance, a member of the Bar. However, if the noble Viscount is willing to permit me to look again at the drafting of the Amendment, I can assure him that it will be dealt with on Report.

I should like to add a few remarks in relation to what the noble Viscount, Lord Colville of Culross, raised earlier concerning the scope and nature of the direction which I propose to give under this clause. My intention is to make an initial direction giving Fellows—but only Fellows—of the Institute of Legal Executives the right of audience before a county court judge in open court, but only in two circumstances. The first would be on an unopposed application for an adjournment. The appearance of a Fellow on application for an adjournment would have to be confined to unopposed applications because, of course, if the application is refused the trial might have to proceed at once and in those circumstances the Fellow would not be able, as of right, to conduct the case. Secondly, there would be a right of audience on an application for judgment by consent; that is, where the case is compromised and the terms of the judgment have been agreed beforehand by the parties to the dispute.

I shall certainly keep a close eye on the operation of the direction which I intend to make, and in due course I, or my successor, will have to consider whether it should he extended or varied, or even, if the exercise of this new power proves unsatisfactory, rescinded. However, I have no reason to believe that that might come to pass. Before seeking to amend the direction in any way, I would consult the profession and the Judiciary in the matter. If the noble Viscount is content with my suggestion, and after the noble Viscount, Viscount Colville of Culross, has spoken, perhaps he would indicate his willingness to withdraw the Amendment, which I think might be the better course.

3.21 p.m.

Viscount COLVILLE of CULROSS

May I say to the noble and learned Lord the Lord Chancellor that I am grateful for the latter and more general part of what he has just said. I was going to raise this once more on the Question, That the clause shall stand part. There has been a certain interest from the Law Society about the form of the direction that the noble and learned Lord would make. He has now explained it, and I hope that that will satisfy them. I believe that they had in mind that if the experiment was successful and attracted the support of the Judiciary, they had one or two other senior staff whom they might at some stage seek to include in the scheme. However, I believe that they would be content to leave that for a while to see how this initial stage works. I am sure that if any further question arises they will approach either the noble and learned Lord or myself, but for the moment it is a very satisfactory answer.

Lord HALE

I say, frankly, that I have come here not having seen the Amendment, but would my noble and learned friend recall one other fact. There is at the moment a Royal Commission sitting on these matters, on which I think they will say that the Law Society have given the most generous co-operation. To my knowledge inquiries are going out to solicitors who are being pressed to provide all the information that the Royal Commission may seek to have.

Of course I am very happy with my noble and learned friend's assurance, but while the Royal Commission are considering this point the question of consulting them might arise. I do not know whether one can consult a Royal Commission while they are sitting. I appreciate the assurances given by the noble Viscount, Lord Colville, and by the noble and learned Lord the Lord Chancellor, that there has been some contact with the Law Society. I have no opposition of course, but I hope that we shall not prejudice the situation by making amendments of this kind at this moment if the Royal Commission are likely to be able to report in a reasonable time.

The LORD CHANCELLOR

There has been consultation with the Law Society. Their main concern has been that the right of audience should only be conferred upon Fellows of the Institute of Legal Executives, and that the class of work which they should be able to deal with would be limited on the lines I have indicated. Where there has been so much common agreement in the profession and the Judiciary and, if I may say so, in my own Department, it is not really necessary to wait upon the outcome of the Royal Commission. I am sure that with their membership and chairmanship they will not tarry unduly, but I think that it is reasonable to proceed on the lines of the noble Viscount's Amendment.

Viscount AMORY

I am very glad indeed that my noble friend Lord Colville and the noble Lord, Lord Hale, are present to receive the impact of the last part of the observations of the noble and learned Lord because these matters are far too difficult for me. I was watching my noble friend carefully and I think I saw him give a nod of about two-thirds of an inch, which I take to be approval. I will not comment further on that. I should like to thank the noble and learned Lord. What he said about the need for the legal executive to be responsible to some legal senior is perfectly clear and reasonable and right, for the type of individual I am thinking of is the legal executive who might be a managing clerk, or somone like that, and would not be a solicitor.

I am very grateful for what the noble and learned Lord said. Bearing in mind what he has said, I am quite sure that he will produce an Amendment of the kind I am looking for. I have been here about 15 or 16 years, and I have never once succeeded in producing an Amendment which could be adopted in the words I have brought forward, so there is nothing new about this to me. But I go away in a state of some exultation because this is the closest I have got to having my Amendment accepted. I beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clauses 14 and 15 agreed to.

Clause 16 [Register of county court judgments]:

On Question, Whether Clause 16 shall stand part of the Bill?

3.26 p.m.

Viscount COLVILLE of CULROSS

This is the point about the register of county court judgments. On Second Reading the noble and learned Lord told us a little about the history of the proposals we have here. He had originally intended to abolish the register altogether, he said: but this drew upon his head a considerable volume of criticism and he decided to put forward the compromise which was in fact previously outlined to the House and part of which is in the Bill. Some of it of course depends upon regulations, which we have not yet seen and which may vary from time to time.

It has been my lot this time to receive the volume of representations. In considering what a short time it is since the Bill emerged, and no doubt the difficulty in finding out who I was, I was surprised at the large number that have reached me. They come from what I believe is called the credit industry and also from a number of large multiple retailers, and all say that the register as it stands is invaluable to them.

What I suspect has happened is that the purpose of the register has altogether changed. We were told on Second Reading that the sum has been £10; that is to say, if you are a judgment debtor and you fail to pay within 28 days, if the sum is £10 or more you now find your name placed upon the register. There is of course a central register which anybody can consult upon the payment of a fee.

I do not know what the origin of the register was in 1854, and I have not succeeded in finding out by research, but whatever it may have been then the use that is made of it now is very widespread and, I am told, extremely important. Anybody who wishes to obtain credit, especially a small amount of credit, is liable to be checked up on by the person supplying him with that credit. The modern method of doing it is to approach a credit reference agency of some sort or another, unless the firm is large enough to keep its own system. Those credit reference agencies use the county court judgments register on, I suppose, the basis that if anybody has got to the stage of incurring a debt and been taken to the county court to be forced to pay it, but still has not paid it after 28 days, he may be described as a bad payer, and he is the sort of person who does not get credit from whatever source it may be.

Although I do not often go to the county court, even I have heard judges and registrars say that they cannot imagine why a particular person who has come up for summary judgment of one sort or another was ever given credit. The shop-keeper, or whoever it may be, is blamed by the Judiciary for giving extended credit to this person and then complaining to the county court that the person has not paid. A good deal of trouble is taken to avoid this, and, as I said, the register is used.

I entirely understand the noble and learned Lord wishing to restrict the number of entries on this register; I quite appreciate that it is consuming in terms of manpower and time, and everybody wants to make economies in the public sector at the present time. However, I am also impressed by two other points. First, the information that I have been given—I do not know whether this is similar to what the noble and learned Lord received at the time—is that a very substantial number of people whose shortfall in terms of debt has been less than £50 are checked up on by means of the credit reference agencies; and by "very substantial" I mean over half of them. These of course would no longer be registered at all, with the result—considering that the firms and the industry concerned are as worried as they say they are—that they would have to go back to the old days, they tell me, of compiling their own register from other sources, which may be much more unsatisfactory. But I shall return to that shortly.

Secondly, when we discussed this matter on Second Reading the noble and learned Lord and I were in agreement that one of the difficulties about these registers, and certainly the private ones which are compiled from the county court register, is that they can easily constitute an invasion of privacy, in that nobody can find out what is in them concerning themselves. As from today that is completely cured, because, as we heard over the weekend if we were listening to the media, the introduction of certain provisions in the Consumer Protection Act now enable people who are refused credit by any retailer, and I should think by anybody else, to find out why. If it is because their name is on a list, they can, for the payment of a fee of 25p, get the list altered and corrected. Indeed, if there is something they wish to insert, they can have it inserted in place of what exists. This seems to me to be an admirable step forward and it relieves my mind greatly of the use of these registers.

It occurs to me, however, that if the noble and learned Lord reduces the liability of the official register to the extent that there will not be on it anything like all the names of the people with whom the credit givers are concerned, they will, as I said, have to make their own lists from whatever sources they can get—from tittle-tattle, hearsay, from the corner shop, in the pub and so on—where they may or may not be told correctly. This will lead to a proliferation of lists and, I should think, a proliferation of mistakes.

It so happens that a programme on television on Saturday night picked out one mistake that had been made in the official register prepared under the auspices of the noble and learned Lord's Department, but I am told that that is one in several million and that they are renowned and esteemed for their accuracy. I shudder to think what may happen in the case of some of the others; there will be a great number of lists which will not necessarily tell either the whole truth or any truth at all, and that I would wish to avoid.

I therefore ask the noble and learned Lord to look at this matter again. Of course I understand that he wants to save money and manpower, but there is now a responsible public role that is being fulfilled by this list. Has the noble and learned Lord considered whether it would be best to continue on the present basis but to charge an economic price for the information that is being accorded to those who use it? I understand that he has just put up the fees, but it may be that that will not be enough. My understanding of the situation is that those who use this register of judgments consider it to be so valuable that they might be prepared to pay an economic price so that it should go on giving the information that is at present available to them, particularly in view of the two other points that I have made; that is, the new ability to correct mistakes and, in the absence of this list, the proliferation of other, less reputable, ones. I hope the noble and learned Lord will consider this, and while he will not necessarily wish to give me in reply a decision or announcement today, I believe there is a serious point here and one where the private and public interest could be reconciled.

The LORD CHANCELLOR

I am grateful to the noble Viscount for raising interesting questions about Clause 16. I am sure that what he said about the volume of correspondence that he has received reflects concern on the part of those in business who give credit to their customers, and I certainly do not want to make their position excessively difficult. I am bound to say, as the noble Viscount said, that when I considered this matter I had it in mind to abolish the register because it constituted an invasion of privacy, but the volume of correspondence I had took me away from that possibly virtuous path. As the noble Viscount said, the Consumer Credit Act coming into being will diminish the possible mischief which, without it, might have existed. Accordingly, I decided not to proceed with my initial proposal because of the representations I had that it would damage the commercial credit arrangements of the country and could increase the number of bad debts, which of coures I have no interest in encouraging.

There was another substantial reason why I took a different view. All Govern- ment Departments, as the noble Viscount indicated, must in the present economic situation save as much as they can both in direct expenditure and in manpower. To seek to achieve that, I decided to raise the amount in respect of which unsatisfied judgments shall be registered to £50 instead of the present figure of £10, and, as has been pointed out, that £10 figure has stood since 1852. What the equivalent value would be today in terms of that I do not know, but it would certainly run into a far higher figure than the £50 I have in mind. But already I have had representations about the £50. I hasten to say that I am not dogmatic about the figure of £50, and I am very willing to consider what lower figure might be acceptable both to commerce and the interests of saving manpower and money that I have in mind.

I have to tell the Committee that in terms of saving manpower, it is likely that the £50 limit may save something like twice the number of posts as would be saved by raising the limit to, say, £30. Any saving would not, of course, be immediately achieved in any event, but it might be accomplished over a year or so as the effect of the change worked its way through the system. Accordingly, it is something that I have seriously to bear in mind if there is to be a reduction of the £50 figure.

The noble Viscount raised the question of the raising of fees by charging fees for the use of the services of the register which covered the costs of running it. Since 1st April the fees charged to the credit reference firms which make extensive use of the register have in fact, as has been pointed out, been increased, though the fees charged to individuals for searching the register for copies of entries in it have not been increased since October 1975. As a result, it may be expected that the register will cover its own expenditure in this financial year. But the register in turn depends for its operation on the fact that judment debtors in county courts are required normally to pay those judgment debts into court and not directly into the hands of the creditor. Accordingly, each county court has to make a record of payments and is in a position to know when a judgment debt for more than £10 has remained unpaid for more than 20 years after judgment and accordingly to notify the register.

Viscount COLVILLE of CULROSS

Did the noble and learned Lord mean 28 days?

The LORD CHANCELLOR

That is what I said, did I not?

Lord HAILSHAM of SAINT MARYLEBONE

The noble and learned Lord said 20 years.

The LORD CHANCELLOR

Dear me, what a slip of the tongue conies to one in the period of anecdotage! The accounting involved in each county court is very labour intensive because there are many payments and often very small amounts by way of instalments. It is that function that is so expensive in manpower, but it is essential if the register is to continue to operate on its present basis; that is, the automatic registration of a judgment debt of whatever amount it may be remaining unpaid after a certain period. The estimated cost of running the register in this financial year is £420,000 and it is expected that that will be met by the fees now charged, but the judgment debt accounting function costs something like £3½ million a year and that is where I hope to make the saving.

As to the rule-making power which will be provided by this clause, perhaps it may be useful for me to say that it will, in particular, enable me to make regulations whereby the name of a judgment debtor, which has been entered on the register, will be automatically removed when he satisfies the judgment debt in full. At present the judgment debtor has himself to take the initiative for this to be done, and that can often cause injustice.

Accordingly, as I have said, I am not dogmatic about the figure of £50. I am very willing to look at it again, but I feel that it is important that the clause should remain in the Bill and that we should endeavour to reach a figure that will satisfy commercial users and save both money and manpower in the way I have in mind.

Viscount COLVILLE of CULROSS

I know that the House wishes to listen to the Statement of the noble Lord the Leader of the House. May I just thank the noble and learned Lord for what he has said? I believe there is a very straight choice to be made here: either we must come to a sensible compromise or we shall do quite a bit of damage—the sort of damage that will be felt in extra prices passed on to people who buy goods in shops. That is something which I know the Government would not wish to become a by-product of this situation. May I leave it that the noble and learned Lord may like to have some further contacts with the industry? Would he also be prepared to work out—since, after all, I suppose that a good number of the staff concerned in the recording of the payments which are or are not made must have to do so in the ordinary course of their work in any event, because otherwise the court itself will not know whether the debt has been paid—the extent to which he can separate out the extra cost of transferring that information additionally on to the register? That seems to me to be the area for which payment is not at the moment being made and, if the staff were financed from the industry itself, presumably there would be no harm done to the noble and learned Lord's aspirations as to the public sector expenditure side. Perhaps, therefore, there is room for further negotiations about this. If there is anything that I can do to help the noble and learned Lord, he may be assured that I will do so. Meanwhile, I certainly should not wish to take the clause out of the Bill at this stage. I only wished to use this opportunity to speak about this matter and to have the sort of discussion that we have had. Perhaps we can return to it at a later stage.

The LORD CHANCELLOR

I am grateful to the noble Viscount and I shall certainly communicate with him and, perhaps, draw upon the massive correspondence that he has apparently received. I hope that we can come to a right solution on this matter.

Lord BROWN

May I seize this opportunity to make a slightly general point? I do not know whether it is in support of my noble friend or not. On previous occasions I have drawn attention to the necessity that is constantly with us for indexing financial limits in legislation. If £10 was right in the last century, it certainly cannot be right today, so, whatever the intentions of Parliament many years ago, they have certainly not been carried out if the same financial figure remains in the Bill. If we would only move towards indexation of financial limits, a lot of the discussion that takes place in this House need never take place and the original intention of Parliament would hold, whereas, at the present moment, the original intentions of much legislation of even five years ago are no longer being carried out because of inflation. In making this comment I was told by my noble and learned friend the Lord Chancellor on the previous occasion that I was prognosticating the future trend of inflation. I am doing nothing of the kind. I am merely saying that it is a wise provision to take account in the legislation of the fact that inflation can occur. If it does occur, any financial limits in the way of penalties or other limits put into Bills become out of date as soon as there is any serious inflation. So I just make this general point once more and I hope to have the opportunity of making it whenever this point arises in the House.

The LORD CHANCELLOR

This is becoming a King Charles's head of my noble friend, but it is none the worse for that. It raises an interesting point which we have discussed in the House before. The effect of what I have in mind is that I should be able to make regulations which will enable the figure of indebtedness which requires to be registered to be dealt with by regulations instead of by amendment to an Act of Parliament.

Baroness LLEWELYN-DAVIES of HASTOE

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.