§ 7.35 p.m.
§ Baroness Carnegy of Lour
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.—(Baroness Carnegy of Lour.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The LORD SKELMERSDALE in the Chair.]
§ Clause 1 [Offence of property misdescription]:
§ Lord Coleraine moved Amendment No. 1:
Page 1, line 6, after ("made") insert ("in writing").
§ The noble Lord said: In moving the amendment I apologise to the Committee for not being present when the Bill was discussed on Second Reading. I should have liked to outline my general feelings about it and given some indication of where my amendments would lead. Unfortunately, I had not realised that this modest-seeming Bill was draconian in the new offences of absolute or strict liability that it could create. Nor had I realised that it is, in all but name, a government Bill, even if it is a Bill where the Government's tail is being firmly wagged by both the Office of Fair Trading and the Consumers' Association. The Government say that they could not find parliamentary time for the Bill. I feel surprised that this year at least they were not able to find the time in the legislative programme. I also wish to express reservations as to whether this is the kind of Bill to be passed by the Government through the means of a Private Member's Bill.
§ I sincerely congratulate my noble friend Lady Carnegy on the cogent way in which she presented the Bill at Second Reading. Those congratulations must be tempered by the fact that when I read the debate the next morning I immediately came to the conclusion that there were considerations which had not been dealt with and amendments which ought at least to be discussed at later stages of the Bill.
§ Since then, I have had discussions with my noble friend about the amendments I am moving and the question I shall ask her on Clause 2. I received from her the comprehensive briefing provided by the Consumers' Association. No doubt Members of the Committee also received it as well as the notes on clauses.
§ I took the opportunity over the Recess to read the reports on the Bill in another place. I am sure that I need not remind the Committee that the proceedings took up over seven hours of Private Members' time on Fridays, much of it spent by Members swapping anecdotes about the behaviour of estate agents.
§ By contrast, the Bill was, according to Hansard, in Standing Committee in another place for only seven minutes. On Third Reading my honourable friend Mr. Coombs suggested—I thought with a measure of pride —that the Bill had passed through Standing 715 Committee quicker than that. He said that it was evidence of the great goodwill shown to the Bill during its passage through another place that the Committee stage was completed so rapidly. I do not wish to follow too closely in my honourable friend's footsteps.
§ On Second Reading in this Chamber my noble friend Lady Carnegy said that the Bill had the support of the Law Society. I have made inquiries of the Law Society and I was informed it does not support the Bill except in so far—
§ Lord Coleraine
I am moving Amendment No. 1. Perhaps the noble Lord thinks I am making a Second Reading speech. I hope that he will bear with me a little longer because I should make clear, as a solicitor, the position of the Law Society on this matter. The Law Society does not support the Bill except in so far as it has indicated its acceptance of the amendments made to the Bill in Standing Committee with regard to the some 250 solicitors who practise as estate agents in England. As I am a solicitor myself I should add that I have not been advised by the Law Society on my amendments, nor do I practise in the estate agency field. I endorse the Law Society's acceptance of the changes made in Standing Committee.
Amendment No. 1 is intended to restrict the offence of making false or misleading statements to statements made in an estate agent's selling particulars, advertisements and other written documents, and in pictures and in such other methods of signifying meaning referred to in Clause 1(5) (c) as are of a permanent character. I have to confess that the amendment is unclear in a material respect as a result of my drafting. I have no intention of pressing the amendment today.
I am aware of the support for the Bill shown by the three professional associations of estate agents. The Royal Institution of Chartered Surveyors has informed me that, for fear of losing the Bill, it hopes that no attempt will be made in this Chamber to amend it. The Incorporated Society of Valuers and Auctioneers has written to me to say this amendment adds nothing to the Bill as it would provide that flattering, incorrect, oral descriptions of property would still be lawful.
The National Association of Estate Agents has informed me that my amendment would leave the public without recourse when an oral misstatement is made in the course of business and that the association would not like to see the sellers of property being permitted to make false or misleading statements with impunity.
I shall attempt to answer those points but, first, I wish to reassure the Committee that I fully share the desire of the associations that the estate agency profession should be a profession with the very highest standards. In large measure that is what it already is. I understand the wish of the associations to get rid of those whom they perceive to be cowboy operators 716 who both lower the standing of the profession in the public eye and compete unfairly with their more virtuous brethren.
However, I fear that, though criminalising the making of false and misleading statements may lead to the demise of the cowboys and result in an improvement in standards, it will do so at the expense of unreasonably stifling competition, innovation and enterprise. It will raise the costs of house buying and house selling, it will slow down the house buying and selling processes and we shall move back towards the 19th century. Those who are involved in professions concerned with the transfer of land have for long been hoping to escape from the 19th century.
A particular danger in criminalising oral false or misleading statements is that the estate agent must depend on information which he receives from third parties such as local councils, solicitors and other agents. An estate agent may receive a telephone call from a prospective purchaser who has seen a house and the purchaser will ask him questions. The estate agent then makes a few telephone calls and passes on the information he receives. In my opinion it would not be right for the estate agent innocently making a false or misleading statement in such circumstances to be left with no other defence in criminal proceedings than the due diligence defence mentioned in Clause 2. To protect himself, an agent who is asked such questions will often have to decline to give information until the information he has received has been checked and carefully laundered to see whether it will pass the due diligence test. That is what I mean when I suggest that the effect of this provision will probably lead to a slowing down of the process of house transfer. That will cause considerable irritation to prospective house purchasers who only ring up to obtain a little information.
A further reason for proposing this amendment is to be found in Clause 5 of the Bill, which concerns the time limits for bringing proceedings. I understand that, in the case of a trial on indictment, the time limit may be as long as three years from the making of the statement. It is not sensible, given the fallibility of memory both of the estate agent and of the person who complains about the estate agent, that a statement made orally should be capable of constituting an offence in such circumstances. I should point out that the person who when in the employ of the person who is charged made the statement complained of may be dead or may long have left the district by the time the offence is discovered and prosecuted.
I suggest that it would be reasonable and desirable in a Bill relating to the estate agency profession to make provisions additional to those which appear in the Trade Descriptions Act. There might reasonably be a distinction between the treatment of false and misleading statements made intentionally, knowingly or recklessly and of those made innocently or carelessly. I suggest that it might be reasonable that only oral statements in the former category should be prosecutable, while those in the latter category should not. Those who have drafted this Bill have not made 717 that distinction. It is in that context that I suggest that, as a general rule for the Bill, only statements in writing should be criminalised. I beg to move.
§ 7.45 p.m.
§ Lord Boardman
I understand my noble friend's reluctance to allow prosecutions based on weak oral evidence which may be three years old. However, I believe he went too far when he said that no such prosecutions should be brought. Of course it is nicer for a court to be provided with a written document which shows quite clearly that false representation has been made. However, there must be many cases where there is clear oral evidence that an estate agent made a false representation about a material factor when a number of people were present. If that evidence is clear, I see no reason why a prosecution should not be brought. If the evidence is not clear, those authorities which may bring a prosecution would presumably feel that it was not right to do so. Therefore I find it difficult to accept my noble friend's amendment. Indeed it might well be said that if a prosecution could not be brought unless there was written evidence, there would be mighty few prosecutions brought in many circumstances. I do not agree with the amendment.
§ Lord Williams of Elvel
I emphasise to the Committee that I speak in a personal capacity as this is a Private Member's Bill. I disagree with the amendment of the noble Lord, Lord Coleraine, and I agree entirely with the objections of the noble Lord, Lord Boardman. Further to what the noble Lord, Lord Boardman, has said, I must add that, if oral assertions were excluded from the ambit of this Bill, that would not be in line with the provisions of the Financial Services Act. The noble Lord, Lord Boardman, and I discussed that Bill on many occasions in 1986. Therefore I oppose the amendment.
I, too, took no part in the Second Reading debate on the Bill. I am provoked into keeping the Committee even later by speaking on the Bill partly for the reason that I was very impressed by the way in which my noble friend Lady Carnegy of Lour presented the Bill to the House and the power of the arguments of noble Lords on the other side of the Chamber. I am not opposed to the Bill; I am in favour of it.
I should like to point out very strongly indeed that I was not a little disturbed by the suggestions made by my noble friend Lord Coleraine which were directed at my noble friend Lady Carnegy of Lour. I want to make it absolutely clear to him that in this Chamber we speak only for ourselves; we are not the spokesmen or delegates of interested parties. That is a fundamental and very important point.
§ Lord Coleraine
I am sorry to interrupt my noble friend but I did not follow his complaint. If he has a serious complaint to make if he would rephrase it I shall try to understand it and respond in due course.
I was not making a complaint but merely stating that I was disturbed by the fact that he 718 suggested that my noble friend Lady Carnegy of Lour was nothing other than a spokesperson for a consumer association. That is not the position.
§ Lord Coleraine
Now that my noble friend has explained his criticism rather than complaint, I can make it clear that I had no intention of suggesting that my noble friend Lady Carnegy spoke otherwise than for herself. I said that this was a government Bill and that I felt that as such it should have been introduced by the Government. If the Official Report shows me to have said something that suggested that my noble friend was speaking for outside interests, of course I shall be the first to regret what I said.
This is getting extremely silly. This is manifestly not a government Bill. This is not the first time that a Private Member's Bill has created a new criminal offence. I know that some people think that when a new criminal offence is proposed in a Bill in Parliament it should be a government Bill. This is not a government Bill.
I am implacably opposed to the amendment for the reasons which have been extremely well stated by the noble Lord, Lord Williams of Elvel, and supported by my noble friend Lord Boardman.
The amendment is also technically wrong. If my noble friend wanted the amendment to go through he should have considered the fact that in Clause 1(5) (c) —which is nothing other than a definition clause—it is clearly stated, in relation to the making of a false or misleading statement about a prescribed matter, that:A statement may be made by pictures or any other method of signifying meaning as well as by words and, if by words, may be made orally or in writing".My noble friend should have made it clear that the last three words, "or in writing", should be deleted from Clause 1(5) (c). However, that is a technical point.
The amendment goes to the heart of the Bill and to weaken that aspect of the offence would be wrong.
§ Lord Macaulay of Bragar
I apologise to the noble Lord, Lord Coleraine, for missing the beginning of his introduction to the amendment. It was entirely my fault. In so far as I heard what he said I should like to make two short contributions.
As I understand it, there is a social purpose behind the Bill. It is to protect the public from the very people to whom the noble Lord referred—the cowboys in the estate agency and other related businesses. I find it very surprising. If one wants to catch a cowboy, one has to find his horse. In this field he is making misleading statements either on the telephone or at the site, persuading people to buy a beautiful mansion which then falls down round their ears after a couple of years. The noble Lord's reference to Clause 5 bears that out. A timescale is given so that the person who has been misled by the cowboy and finds the house falling about his ears for a specific reason which can be identified and attributed to the false statement can take action against that individual.
For that and the other reasons expressed by other speakers I do not support the amendment.
If it is convenient I should like to put the Government's view. This is a Private Member's Bill which has properly been brought to this 719 House after full examination in another place. Although it is a Private Member's Bill it has the full support of the Government, including the provision of drafting services from the beginning. The Government have made no secret of that and I made it clear to your Lordships at Second Reading.
Perhaps I may point out to my noble friend Lord Coleraine that the report of the Director General of Fair Trading in March last year recommended, among other things, that the provisions of the Trade Descriptions Act 1968 should be extended to cover descriptions of property. The Government agreed to do that when parliamentary time became available. The Bill which is before us, should your Lordships approve it, would produce the equivalent effect of extending the Trade Descriptions Act, a point which was made by the noble Lord, Lord Williams.
Perhaps I may turn to the point raised by my noble friend Lord Coleraine about the Law Society. The Department of Trade and Industry has been consulting the Law Society on the Bill from the beginning. Therefore I am surprised that if the society has difficulties with the Bill it has left it until now to raise them.
Turning to the detail of the amendment, the amendment to Clause 1(1) would restrict the coverage of the Bill to false or misleading statements which are made in writing. It would therefore disapply the Bill in respect of oral statements and also in respect of a range of other methods of describing property such as photographs, drawings, plans and models, as well as recent developments such as video films. The proposed amendment to Clause 1(1) would also be inconsistent with Clause 1(5) (c), which gives a deliberately wide scope to the way in which a statement may be made so as to include such non-written communications.
Of course I accept that buying a house is different from, say, buying a used car. In the latter case one might well be persuaded to buy a car on the strength of an oral description by the salesman. One can envisage an Arthur Daley character assuring the customer that it is a one-owner car with genuinely low mileage. When buying a house, on the other hand, the buyer will almost certainly have the benefit of professional advice before making a final commitment. The buyer's solicitor and surveyor will normally be able to check the accuracy of any descriptions. It is therefore unlikely that the buyer will be prejudiced to the same extent.
However, it is also possible for the house buyer to suffer significant loss without going through with a purchase. An oral statement made by an estate agent or builder might cause a prospective purchaser to incur travelling expenses to look at the property, perhaps taking time off work to do so. What is more, the consumer might incur solicitors' or surveyors' fees, or both, before finding that the oral description is false and deciding not to buy. Although, therefore, the situation with regard to buying a house and buying a car is different, the mischief to the consumer as the 720 result of an oral misdescription could well be similar in magnitude. I do not see why they should be treated differently in law.
I accept my noble friend's point that estate agency is a different type of activity and that property is a more complex product. Nevertheless, I do not find that a compelling reason to remove oral misdescriptions from the scope of the Bill. An estate agent is engaged by a vendor as expert in marketing property. It seems to me, therefore, that one is entitled to expect an estate agent to do more for his commission fee than simply regurgitate the information given to him by a vendor or by someone else. If he is not sure about something he should check it out and not make a statement about it. Of course there will be a due diligence defence under Clause 2 in the event that he misdescribed something.
Finally, I consider the point about time limits for prosecutions something of a red herring. The enforcement authorities under the Bill are the trading standards departments, which have considerable experience of enforcement of this type of provision. It is inconceivable that they would take a prosecution on indictment in a case in which there were doubts about someone's memory of something that had been said a long time ago. However, one needs to retain the possibility of prosecution in a serious case where, for example, the defendant admitted that he had made an offending oral statement, albeit as much as three years later. I hope that the noble Lord will agree that it would be better not to impose this narrower scope on the coverage of the Bill.
§ 8 p.m.
§ Baroness Carnegy of Lour
This amendment would seriously weaken the Bill by restricting its coverage to misdescriptions made in written statements and excluding those made in oral statements and in other ways to a client when viewing a property or perhaps over the telephone. The prospective purchaser could be greatly misled—just as much misled and potentially as seriously—by an oral description as by a written one. My noble friend on the Front Bench gave examples of how that could happen. I could add to them if the Committee so desired.
As my noble friend the Minister said, the amendment is also technically defective, but we do not need to go into that at the moment because my noble friend says that he will not press the amendment. I agree with my noble friend Lord Coleraine that there can be difficulties of proof in the case of oral statements, but it would be wrong to exclude oral statements from the coverage of the Bill simply on those grounds. A number of noble Lords agreed with that point. In other areas of the criminal law such as the Trade Descriptions Act 1968 both written and oral representations are covered. The lack of any distinction does not create enforcement problems in those other areas.
My noble friend said that this was a government Bill. Noble Lords have taken him to task on that point. My honourable friend Mr. Anthony Coombs, who has worked so hard on the Bill with many groups of people, would certainly not feel that it was a 721 government Bill. It has the Government's backing, but it is very much his Bill and he has been helped by very many people.
One group which has helped has been the Institute of Trading Standards Administration. It will be responsible for enforcing the Bill. It tells me and my honourable friend in another place that enforcement problems concerning oral statements under the Trade Descriptions Act are far from insurmountable. Often, all they need is for the oral statement to be heard by more than one person so that one person's evidence can be corroborated by that of another. It points to a number of successful prosecutions for false or misleading oral statements under the Trade Descriptions Act which I can quote if that would be helpful to the Committee. I shall not take up the Committee's time unless it so desires.
As my noble friend Lord Coleraine will probably know, the legal textbook Consumer Trading Law Cases and Materials by Miller and Harvey refers to many cases in which the offending misstatement was oral; that is on page 480. I understand that it is the view of O'Keefe, a leading authority on trade descriptions law, that:in principle an oral statement is no better or any worse than a written statement in the application of trade descriptions".The Institute of Trading Standards Administration is insistent that oral statements should remain covered by the Bill. Such coverage is particularly significant given the amount of information that is passed on orally in relation to property sales. Regardless of the number of prosecutions likely to be brought for oral misdescriptions —and it may not be large —such coverage would still have a significant deterrent effect.
It would be all too easy for unscrupulous agents, towards whom the Bill is aimed, to exploit the gap created by the amendment. It is important —the noble Lord, Lord Macaulay, made this point —that the Bill has a social purpose. It is important that that gap should not be created.
The amendment might easily lead to written particulars that are skimpy and uninformative, with information about matters requiring verification and inspection being passed on by word of mouth by an agent, safe in the knowledge that, if false or misleading, he would not face criminal sanctions.
I listened carefully to what my noble friend Lord Coleraine said about the special nature of estate agency. Property is a complex product to sell. An agent markets what is not his own and relies on information supplied by third parties. However, I am not persuaded that the amendment should be accepted. The complexity of the product makes it all the more important that greater care is taken over the accuracy of the descriptions. If an agent is paid to sell property, it seems reasonable to expect him to do more than merely rely on the information given to him by the vendor.
My noble friend spoke about time limits and other noble Lords have referred to this matter. He said that it is not reasonable, given the fallibility of memory, that an oral statement could be an offence if the time limit for bringing the prosecution may be as much as three years. But trading standards officers will mount 722 a prosecution only if they can prove beyond all reasonable doubt that an offence has taken place. The time limits are consistent with those in the Trade Descriptions Act 1968, which covers oral statements and which has stood the test of time. The three-year period recognises the possibility that the description might not come to light until some time after the property has been sold. Given the expense and magnitude of a property purchase, one would expect those concerned to have a clearer memory about how it had been described than perhaps one would have concerning the sale of smaller items such as a fridge.
I think that I have replied to most of the points that have been made. My noble friend Lord Coleraine referred to the possibility of making a distinction between that which is said innocently and that which is said intentionally, but my understanding of the Bill is that the due diligence defence meets that point. That is why it is there. I recognise that my noble friend is anxious about the implications for estate agents, solicitors acting as estate agents and builders who may say something by mistake, but I believe that for the Bill to be useful—it is widely held to be potentially very useful—spoken as well as written misdescriptions should be covered. I hope that my noble friend will not press his amendment.
§ Lord Coleraine
I am grateful to all noble Lords who have spoken even if they have been unanimous in condemnation of the amendment. The original intervention by my noble friend Lord Boardman dealing with the question of time limits for prosecution shows how unwise one is to muster several arguments in support of a proposition. The weakest or least important of them will be seized, knocked about and eventually returned to base. That is what happened to that argument.
The measure imposes a new offence of strict liability. It is in the context of the purchase or sale of houses. It will make estate agents spend a great deal of time getting their facts right, but they will do so at the expense of the service that they provide to their client and the service that they provide in a sense to the applicant for the property. It is bound to slow matters up. With regard to the point that the estate agent is the servant, the employee or the agent of the seller of the house, I was surprised to hear both my noble friend the Minister and my noble friend Lady Carnegy pray in aid and suggest that the estate agent was being paid a fee for doing his job and that he should do a proper job. It may sound cynical but clearly the estate agent who is providing bad or false information will in many cases by his own lights —and possibly by the lights of his vendor —be earning his fee many times over.
My noble friend the Minister referred to my remarks about the Law Society. I can assure him that the fact that the Law Society does not support the Bill is in no way to be taken as indicating that the Law Society opposes the Bill. I did not suggest that it should be so taken. In fact I made it quite clear that the Law Society was not advising me in regard to these amendments and I have no reason to suppose that it either supports or opposes them.
As I made clear when I introduced the amendment, I am well aware of the defect in drafting. I said that I 723 should not press the amendment tonight and I certainly do not intend to do so. I shall obviously consider all that has been said when I have a chance to read the Official Report tomorrow. In the meantime I beg leave to withdraw the amendment.
§ The Deputy Chairman of Committees (Lord Skelmersdale)
Is it your Lordships' pleasure that this amendment be withdrawn?
§ The Deputy Chairman of Committees
In that case I put the Question: that the amendment be agreed to?
§ On Question, amendment negatived.
§ Lord Coleraine moved Amendment No. 2:
Page 1, line 18, leave out from ("unenforceable") to ("by") in line 19.
§ The noble Lord said: In moving this amendment it may be for the convenience of the Committee if I speak also to Amendments Nos. 4 and 5 in my name. All three amendments deal with the possibilities of the civil liability of estate agents to those whom they mislead.
§ In that context, Amendment No. 2 is a paving amendment for Amendments Nos. 4 and 5. However, I shall address the Committee on the basis that Amendment No. 2 is a probing amendment. There are questions to be answered, whether or not the matters referred to in Amendments Nos. 4 and 5 are proceeded with.
Clause 1(4) of the Bill provides:
No contract shall be void or unenforceable, and no right of action in civil proceedings in respect of any loss shall arise, by reason only of the commission of an offence under this section".
§ I understand from the notes on clauses that the subsection is a standard type of provision, and I merely seek guidance. However, it strikes me as curious that the words used in the latter part of the subsection refer not to conviction of an offence but to "commission of an offence". That suggests to me that if the facts constituting the commission of a criminal offence amount to a civil wrong also, a civil action may not be brought unless there is some other reason for bringing civil proceedings —some other grounds on which a claim may be made. It seems to me that if that is the meaning of the subsection it is an unsatisfactory state of affairs.
§ On the other hand, if the intention of the full subsection is to provide that a civil right of action is not acquired by reason of the conviction alone, I should have thought that that fact ought to be self-evident, that it ought to go without saying and that the words proposed by the amendment to be omitted are otiose and confusing and should be deleted.
§ Amendment No. 4 would create a statutory duty enabling anyone who has suffered loss as a result of a false or misleading statement which is an offence under the Bill to sue for damages the person committing the offence. As I understand it, the amendment would not necessitate the prosecution of the offender for taking a civil action. That would certainly be my intention. It is what I would consider 724 right and proper and I hope that the Committee would also do so. I am not in favour of prosecutions under this Bill when they can be avoided. Too much criminalisation brings the law into disrepute.
§ Amendment No. 5 would make the amendment needed to the Long Title to take account of the civil statutory duty, the Long Title at present being limited to the criminal offence and to connected matters. I beg to move.
§ 8.15 p.m.
§ Lord Boardman
I do not agree with the meaning that my noble friend attributes to the subsection as it is at the moment; namely, that no one could bring a civil action in any circumstances which also gave rise to a criminal court action under the Bill. I do not believe that that is the meaning. The amendment, taken with Amendments Nos. 4 and 5, is intended to make the Bill grounds upon which civil proceedings can be brought.
It would be a great pity to introduce civil rights action under a Bill which is designed for the very limited purpose of criminal action. By extending it to civil action, all sorts of different circumstances might arise bringing other matters within the scope of the Bill. I believe that it would be far wiser to keep it to the narrow cause that is here; namely, that certain action —misleading statements —made by an estate agent's business will give rise to criminal proceedings, if indeed the evidence is there. It would be a great mistake to extend the Bill to give civil rights which can be, and indeed are, dealt with in other ways.
§ Lord Williams of Elvel
Am I to understand that the noble Lord is speaking to Amendments Nos. 2, 3, 4 and 5?
§ Lord Williams of Elvel
So we are discussing Amendments Nos. 2, 4 and the consequential amendment in the Long Title, Amendment No. 5. I am grateful to the noble Lord. I find it embarrassing to agree with the noble Lord, Lord Boardman, the whole time, but I wholly agree with what he said. We had a discussion at Second Reading about the problems of civil action and criminal liability. I gained proper assurance, both from the noble Baroness, Lady Carnegy, and the Minister that nothing that happens under this Bill, if it is enacted, would affect any possible civil recourse. So I cannot see why any of these amendments are either necessary or desirable.
Perhaps I may first reply to the noble Lord, Lord Coleraine, on the point he made about the Law Society. I apologise if I misunderstood his first point but I am grateful to him for making the position clear. I fully appreciate that in tabling these amendments my noble friend seeks to protect the position of people who may suffer loss as a result of property misdescriptions. However, I submit that the amendments are unnecessary.
Clause 1(4) does not deprive aggrieved parties of any of their rights of action for compensation under existing law but merely means that the commission of an offence under the Bill does not itself result in any 725 further civil rights. In this respect the Bill mirrors the position under similar consumer protection legislation, for example, Section 42(2) of the Consumer Protection Act 1987.
Additionally, because the Bill would create a new criminal offence of property misdescription, the aggrieved consumer in effect would have another string to his bow. In the event of a conviction for an offence of misdescribing property, the aggrieved party would be able to apply to the court for a compensation order under the Powers of Criminal Courts Act 1973. The consumer who is adversely affected by a misdescription also has recourse to compensation by way of a civil action for misrepresentation. That would remain the position under the Bill as drafted, whether or not the misdescription was the subject of a prosecution.
I hope therefore that my noble friend will accept that the consumer is in no way prejudiced by the provisions of the Bill. On the contrary, its effect is to give the consumer an extra course of action which in practice is a much simpler one to pursue than that proposed by my noble friend.
§ Baroness Carnegy of Lour
I thank my noble friend on the Front Bench for that explanation. He has saved me much time and trouble by explaining this slightly complex matter. It is likely that the amendment arises from a misunderstanding concerning Clause 1, line 18, which appears specifically to preclude a mechanism for civil redress. It states:No light of action in civil proceedings in respect of any loss shall arise, by reason only of the commission of an offence under this section".For the reasons that my noble friend has just given, I assure my noble friend that his amendments are not necessary.
Clause 1(4) does not remove the entitlement to civil redress. It merely prevents the development of an additional entitlement to civil redress for an offence, which would be unnecessary and might give rise to confusion and argument. There are precedents for such a provision. The Bill mirrors the provision under similar consumer legislation in that respect. For example, in Section 41(2) of the Consumer Protection Act 1987 there are two forms of redress which my noble friend outlined under civil proceedings and criminal proceedings respectively.
The victim is not entitled as of right to compensation under criminal law as he is under civil law. It is up to the court to decide whether it is appropriate. The levels of compensation are for the courts to decide, although the jurisdiction of magistrates' courts is limited to £2,000 for each offence of which the accused is convicted.
The Committee will understand that since we already have in place two mechanisms for redress for victims of property misdescriptions it is unnecessary and confusing to provide a third. In effect, the amendment of the noble Lord, Lord Coleraine, provides a third means of redress. I hope that he will agree that it is unnecessary. Having heard the explanation, I hope that he will withdraw the amendment.
I thank my noble friends Lord Astor, Lady Carnegy of Lour, Lord Boardman and the noble Lord, Lord Williams of Elvel, for having put so eloquently and so much better than I could have done precisely the position that I would have taken.
§ Lord Coleraine
I do not wish to spend time on the drafting aspect of the clause to which I referred in Amendment No. 2. I hope that my noble friends will read what I said. I shall read what they said about the effect of the clause. As I understand it. the clause clearly states that one cannot produce a civil claim out of the commission of an offence. The Bill creates no further civil claim. I should have thought that that was self-evident. For that reason I suggested that the phrase in question might be otiose.
With regard to the amendment giving civil right of action, I believe that there has been a misunderstanding about the rights that are said to exist now to protect applicants for houses who find themselves misled by estate agents. The Minister stated that there would be an action for misrepresentation. As I understand it, the common law provides that there is an action for fraudulent misrepresentation, but the fraud —the knowledge that the statement is untrue —or the recklessness in making the statement, has to be proved.
It is correct that the Misrepresentation Act 1967 gives remedy for innocent misrepresentation. However, that applies only when a contract has been concluded. In most cases where there has been a concluded contract, the party suffering from a misrepresentation will have ample remedies already. The Bill makes provision for the case where there is no concluded contract but where someone has wasted money on a survey which he will not regain.
My noble friend Lady Carnegy referred to the Powers of Criminal Courts Act and stated that a court could award compensation when convicting under the Act. That is perfectly correct. However, I do not believe that it is the right mechanism. It would he better if a person were to have the right to go to a small claims court and bring civil proceedings. To receive compensation under the Powers of the Criminal Courts Act there has to be a prosecution. I should have thought that if the person who wanted the compensation had to go to the weights and measures offices to ask for a prosecution he or she might not wish to do so.
I do not suggest a third remedy where two already exist. I suggest a remedy which would be appreciated by all those for whom the Bill has been drafted. However, I accept the argument that the provision is outside the intention of those who drafted the Bill and widens its scope. In the circumstances, on this occasion I beg leave to withdraw my amendment.
§ On Question, amendment negatived.
§ Lord Coleraine moved Amendment No. 3:
Page 1, line 24, leave out from ("it") to ("is") in line 25.
§ The noble Lord said: The amendment removes from the Bill the provision that a statement is misleading if what a reasonable man may be expected to infer from any omission from it is false.
§ I do not consider the provision to be logically acceptable. Whatever is not included in the statement is omitted from it. That leaves a very wide area indeed in which a weights and measures official may fish. I believe that courts are already well accustomed in appropriate cases to find that omissions render statements false. I do not see the desirability of having this provision codified in the Bill. Too great an attempt to define the law in such a case seems likely only to confuse estate agents and all others who have to interpret the Bill. It is only likely to benefit lawyers.
§ The notes on clauses to the provision are economic. I believe that there may be precedents for such provision. If there are, no doubt they will be brought to my attention. In the meantime, I beg to move.
§ Lord Williams of Elvel
I do not find the arguments of the noble Lord, Lord Coleraine, persuasive. I believe that the Bill as it stands is right. I therefore shall not support the noble Lord's amendment.
§ Lord Boardman
I share the sentiments of the noble Lord, Lord Williams. I have not been persuaded by the arguments. There must be many cases where a statement is made which is correct in itself but gives a misleading impression to the potential purchaser. For example, a purchaser might ask, "Is there water?" The agent might say, "The well is over there," when in fact the well has been empty for three years. That surely is a misrepresentation. For that reason I feel unable to support the amendment.
§ 8.30 p.m.
I, likewise, do not support the amendment. An omission from a statement can be every bit as important as the making of a misleading statement. For example, if the estate agent concerned fails to mention the fact that the house has been built over a disused coalmine and could be subject to subsidence, that is a material and important fact. In criminal law this Bill places a duty on the agent concerned to include material facts in a statement like that. For that reason the critically important words, "or from any omission from it", which my noble friend wishes to delete run to the very heart of the Bill. I suggest that this amendment should be vehemently opposed.
I have difficulties of principle with this amendment. Clause 1(5) (b) is designed to avoid a situation where someone might legally be able to describe a property using a statement which, although accurate so far as it went, left out some material particular which, had it been included, would have conveyed a significantly different impression to the prospective purchaser.
Perhaps I may give two hypothetical examples to illustrate that. A house may be described as handy for local shops. It may be that the only handy shops are a video hire shop and a hairdresser. A school may be 728 listed among the local amenities without the qualification that it is only a sixth form college. Those are not particularly good examples.
I stress that they are hypothetical. I am sure that Members of the Committee opposite could think of much better examples. However, it seems doubtful to me whether, without reference to an omission, those statements would be regarded as misleading under the Bill.
I should like to draw my noble friend's attention to Section 21 of the Consumer Protection Act 1987, which contains a very similar form of words in relation to misleading statements about prices. The purpose of that formula is to make it clear on the face of the Bill that those marketing property will not be able to tell half truths about a property if the effect of omitting information is likely to mislead potential buyers.
§ Baroness Carnegy of Lour
I thank Members of the Committee for making the points which I wished to make on this amendment. The wording in the Trade Descriptions Act makes the coverage of omission implicit rather than spelling it out in the Bill. This amendment would follow that. The wording of the Trade Descriptions Act has allowed for numerous prosecutions to be brought when omissions have been made. Therefore, my noble friend asks why there needs to be specific reference in this Bill to omissions from statements.
As my noble friend Lord Astor said, there is a precedent in the Consumer Protection Act. The wording there is very similar to what we have in the Bill. It was felt that it is very important in relation to the sale of property to pinpoint the fact that omissions are covered. Therefore, it was considered wise to make specific provision.
The Institute of Trading Standards Administration expressed very strong views on this issue in its response to the Consumer Association's consultations prior to the drafting of the Bill. It stated:The Institute feels strongly that … the Bill should regulate whereby the absence of information given in the description of property … becomes an offence … We recognise that the wording of such a Section may be difficult but the issues are of such importance that we feel they should be addressed".Given that the practical effect is the same, no matter whether coverage of omissions is implicit or explicit, surely it is helpful to make the point clear to the professions and to builders by spelling out in the Bill that they are liable to prosecution if they render a statement misleading by omission of information.
The Minister gave what he said were theoretical examples of omissions. I could add more if Members of the Committee wish me to do so. In short, this clause deals with half truths as regards information. It should be absolutely clear from the Bill that if a property seller chooses to make a statement about a prescribed matter, he must not leave out important information without which the statement could seriously deceive prospective purchasers. If in doubt —for example, because information on a matter cannot be verified —there is nothing to prevent the 729 agent saying nothing at all on that matter. I hope that with that explanation my noble friend will withdraw his amendment.
§ Lord Coleraine
I wish that I could withdraw the amendment. I am grateful to my noble friend for what she said by way of explanation in regard to omissions from statements. If anyone asks, "What shall I do if there is any doubt as to whether something which is omitted from a statement will make it misleading?" the answer will be, "Do not say it". The ultimate result will be that nothing will be said in the particulars and the person who is looking for a property will be no further forward.
On Second Reading my noble friend drew attention to a case known to herself where an agent had said that there was a septic tank. Unbeknown to the purchaser, there were two connections to the septic tank, one from the property for sale and another from another property. Two points arise on that. First, had the agent made a misleading statement? I doubt it because certainly in England —I do not know whether matters are different in Scotland —if someone is told that there is a septic tank, he will not deduce anything from that statement as to the number of connections to it.
However, the other point is that, where an agent is in difficulties as to how to describe something thoroughly, he will, if the Bill is passed with this provision in it, come to the conclusion that the best thing he can do is to say that the property enjoys private drainage. Even that may worry him. Therefore, he will leave the matter out of the particulars altogether.
I make the apocalyptic prophecy that there are aspects of this Bill — and this is one of them —which will make it more difficult for people to buy and sell houses, however well intentioned it may be. Having said that, I commend the amendment to the Committee.
§ On Question, amendment negatived.
§ On Question, Whether Clause 1 shall stand part of the Bill?
§ Lord Williams of Elvel
Before we leave Clause 1 I should perhaps return to a point I made at Second Reading, which was that the Bill —which generally I support —creates an offence the nature of which is not known. First, it is only subsection (7) of Clause 1 which indicates the order which the Secretary of State may make to determine what is the criminal offence to be prosecuted, if it is prosecuted under the Bill. It is not until that order is promulgated that we will know what the Bill is about.
Secondly, there is no provision in the Bill as to when it should come into force. Under normal circumstances when the Bill receives Royal Assent, as I hope it will, it will become an Act of Parliament. It will then create a criminal offence the nature of which the public at large do not understand and could not possibly understand unless the order at that time were to be promulgated.
730 I ask the noble Viscount to give an assurance before we leave Clause 1 that the order, which will indicate to what properties and activities the Bill relates, will be made before Royal Assent.
I said on the last occasion, but I am happy to say again, that the prescribed matters relating to land to which the Bill will apply are to be specified in an order made by the Secretary of State. The Government will consult widely before making such an order. It would be presumptuous for the Government to consult widely before making an order if they did not have a Bill. We have said that we shall consult widely before the Secretary of State makes an order. I hope that that in some degree will satisfy the noble Lord, Lord Williams.
I have made many mistakes in my life, not least is falling for the undoubted charm and persuasive ability of my noble friend Lady Carnegy to convince me to look at the Bill and indeed read the Second Reading contributions. An even worse mistake was to read the Second Reading contribution of the noble Lord, Lord Williams of Elvel. That provoked me into doing a tremendous amount of hard work this afternoon on a point relating to what he said. It is somewhat arcane, but it is important.
It is a well established fact that the passing of the Bill and the receiving of Royal Assent amount to precisely the same thing. The significance of the date of Royal Assent is that unless the contrary intention appears it is also the date of commencement.
As I said earlier, the most important fact about the Bill is that it creates a new criminal offence. In addition, it creates the defence that may be brought to bear by a defendant. It sets out the rules in the schedule for enforcement and —an important point —it is on the commencement of the Bill (which can only be on Royal Assent) that a solemn and important duty is placed on the enforcement authorities. Schedule 1, paragraph (1) reads,and it shall be the duty of each such authority to enforce the provisions of this Act within their area".If, for the sake of argument, the Bill receives Royal Assent on 2nd August, the Act is stating that a duty is placed on the enforcement authorities to enforce a law about which they know nothing. It comes down to a question of drafting style. I ask my noble friend seriously to consider taking the best possible advice —I suggest that must be from my noble friend on the Front Bench —on the efficacy or otherwise of having a specific statement within the Bill; namely, a commencement clause. For example, it could state that Clause 1(5) (d) in effect places a duty on the Secretary of State to make the order binding, or describe the parameters of the offence.
Clause 1(7) is basically the nature of the order. It states:An order under this section may —(a) make different provision for different cases, and (b) include such supplemental, consequential and transitional provisions as the Secretary of State considers appropriate".That gives rise to another point in subsection (7). I am surprised that there is no amendment at this stage that there should be an affirmative rather than a negative resolution. I believe very strongly that at 731 Report stage —perhaps I could humbly suggest this to my noble friend Lady Carnegy —an amendment should be tabled to make this an affirmative rather than a negative resolution. When Parliament is creating a new criminal offence it is essential that Parliament agree to the order containing the parameters of that offence, which is what the nature of the order will be about and it will probably also include commencement provisions on the affirmative procedure rather than the negative procedure.
Those are the only points that I wish to make and I ask my noble friend to consider them. I shall be obliged if my noble friend the Minister, even at this late hour, will indicate his views.
§ 8.45 p.m.
§ Lord Boardman
I understand the point made by the noble Lord, Lord Williams. However, surely once the Secretary of State has consulted widely, as my noble friend indicated he will be doing in making the order, it is at that stage that the offences are created against which the Bill is aimed. There must be many measures which define what an offence will be after the Bill has become law. I should not have thought that unusual.
§ Lord Coleraine
I am not sure that my noble friend Lord Boardman is correct. However, it seems to be clear from what my noble friend the Minister did not say that the consultation processes will not be concluded by Prorogation. Therefore, it seems sensible to bring into the Bill at Report stage a provision that the Bill should be brought into effect by commencement order.
I agree with my noble friend Lord Morris in regard to the affirmative resolution. Where the offence is basically to be created by order it is right that both Houses of Parliament should have the opportunity of discussing the matter.
§ Lord Williams of Elvel
Perhaps I can echo the words of the noble Lords, Lord Morris and Lord Coleraine. Is not the proper procedure for the Bill to have a commencement section? The Bill will receive Royal Assent and become an Act. The order and the consultations relating to it will all have taken place and the commencement and the order will come at the same time. In that way everybody knows exactly what offence is being committed and there is no offence prior to that.
I apologise for rising once again. I am grateful to my noble friend Lord Coleraine and the noble Lord, Lord Williams of Elvel. They reminded me of an important point I failed to make. One of the effects of a specific commencement order in the body of the Bill would be to compel the Secretary of State to follow through his duty to make the order within a specific time. As it stands, this very important Bill could sit on the shelf forever and a day until whatever time the Executive thinks fit. The only duty placed upon the Minister is that,a prescribed matter is any matter relating to land which is specified in an order made by the Secretary of State".732 With no commencement provision, he can take that course five years hence. That will be sad. I know that we have had an undertaking from the Minister, but it would be very sad if the Bill were not brought into operation as soon as possible.
§ Baroness Fisher of Rednal
I do not wish to follow on about the points raised in the past 10 minutes, though I support everything that has been said. I thank the noble Baroness, Lady Carnegy, for being most helpful and kind as regards the two points that I raised at Second Reading. I understand that the claims that I made then about a false claim as to a reduction in price shown in a previous advertisement, and the jargon which is used by estate agents about new instructions, can be included in Clause 1. I am grateful that the noble Baroness was able to give me that information.
However, while those matters can come under Clause 1, there is nothing that gives me satisfaction because that provision need not necessarily be prescribed. I say to the noble Baroness that it will give me greater satisfaction if she can encourage the Secretary of State to put into operation what I want and can say that it will be prescribed in the Bill —namely, the two points which were not thought of by the Bill's original proposers in the other place. Perhaps these matters were overlooked. They might have been included if they had been drawn to their attention earlier. I am well aware that consultation has already taken place with the Incorporated Society of Valuers and Auctioneers and with the Royal Institution of Chartered Surveyors.
The Minister has said that the Government have given a commitment to consult. The noble Baroness has also told us that there will be full consultation outside this place. I ask to be included in that consultation, together with, with some justification, the consumer protection department of the City of Birmingham. It gave me chapter and verse as regards the points I raised. It has done a great deal of research on misleading price advertisements. I feel sure that it would be very helpful also to the Department of Trade and Industry and to the Government generally if the consumer protection department's view were expressed. I believe that the Institute of Trading Standards Administration might also be consulted. It is the body which has to police the Bill.
The points which I raised at Second Reading have been adequately covered by the noble Baroness, Lady Carnegy. But I ask her to give more consideration and put more push behind the requests that I made earlier.
I wish to re-emphasise on behalf of the Government that the Bill will have no practical effect until the order is made. No offences can be committed. I also emphasise that we want the Bill. The Government are extremely keen to have it. We have discussed this evening the effects of the main offence for which the Bill provides even though the detail of the characteristics of property to be covered are to be left to be prescribed by order made by the Secretary of State. I believe that we all know what property misdescriptions are. I do not think that there is any doubt about that. This is not a case where the nature 733 of the offence is unknown until subordinate legislation is made. The Government have given an undertaking to consult widely on the list of prescribed matters before making an order. A copy of the consultation document will be made available in the Library of this House. I am happy to give that assurance to the noble Baroness, Lady Fisher.
I turn to the point made about the negative and affirmative procedure. There are plenty of precedents for similar orders under consumer protection legislation made by way of the negative resolution procedure. For example, there are the safety orders made under the Consumer Protection Act 1987 and marking orders under the Trade Descriptions Act 1968. Given the pressures on the time of your Lordships' House and that the draft order will be subject to wide consultation, I do not see the necessity for the affirmative procedure.
§ Baroness Carnegy of Lour
A genuine point has been made which my noble friend on the Front Bench has not met. I refer to the lack of a commencement order and the position which is then created if the Bill becomes law and there is a pause before the order is laid. In those circumstances we should look at the 734 matter to see whether that is correct. I have not had an opportunity to take advice on the matter and I am unable to do so during discussion on a Private Member's Bill. I wish to find out about that. At the same time I might take advice on whether it should be by the affirmative or negative resolution procedure. That means that we require a Report stage and I hope that it will be a short one.
I hope that most of the anxieties which noble Lords have expressed have been met during the discussions that we have had and that this clause will stand part of the Bill.
§ Clause 1 agreed to.
§ Clauses 2 to 5 agreed to.
§ [Amendment No. 4 not moved.]
§ Remaining clauses and schedule agreed to.
§ In the Title:
§ [Amendment No. 5 not moved.]
§ House resumed: Bill reported without amendment.