HL Deb 14 October 1976 vol 375 cc634-9WA
Viscount COLVILLE of CULROSS

asked Her Majesty's Government:

Whether they can give a considered response to the question of hybridity raised during the Committee stage of the Aircraft and Shipbuilding Industries Bill on 11th October.

Lord PEART

After careful checking of the points raised on Schedule 2 to the Aircraft and Shipbuilding Industries Bill in the debate in Committee on 11th October on Amendment 30, the Government remain entirely satisfied that Schedule 2 as it stands is correctly drafted to express their intentions and does not involve any element of hybridity, for the following reasons:

Legal Issues

1. The Government are satisfied that:

  1. (a) A person who does repair or other work only for himself, such as a shipowner carrying out his own repairs or maintaining his own ships, is not "engaged in the business of repairing, refitting or maintaining ships". A good analogy would be a hotel company which launders its own linen; no-one would say this would make the hotel company into a company engaged in the laundry business.
  2. (b) Mere permission to a shiprepairing company to carry out work on a ship put by its owner in a drydock belonging to and operated by someone else does not constitute a licence to occupy a drydock. Furthermore, in the context of paragraph 3 of Part II of Schedule 2, a licence to occupy is confined to a licence to occupy by a person engaged in the business of shiprepairing and does not apply to a licence conferred on a shipowner as such.
  3. (c) A company with a contract to repair or refit ships, but which has subcontracted the work to another company or companies is nevertheless engaged in the business of repairing refitting or maintaining ships so long as it remains liable under its contracts with the owner of the ships and the sub-contractors.

General Interpretation

2. The criteria set out in paragraph 3 of Part II of Schedule 2 have from the start been based on the above. Otherwise, as was pointed out by the noble Viscount, Lord Colville of Culross, in the debate on Amendment 30, many shipping lines and shipowners who maintain their own ships and who have ships in drydocks from time to time would qualify for inclusion in the list of companies in Part I of Schedule 2. This was of course never the Government's intention and the Bill was drafted in such a way as to avoid this.

3. An example of this kind quoted by Lord Colville of Culross was the BP Tanker Company Limited. We have an assurance from that company that they do not hold themselves out as shiprepairers and have no recollection of any repair work being done by them on any other company's ship on or before 31st July, 1974. They have never advertised themselves as ship-repairers. They have within recent times advertised a commercial lay-up service for other shipowners in Brunei and Norway but this is not shiprepairing in any way. Further the company does not now, and did not on 31st July, 1974, have an interest in possession in or a licence to occupy a drydock or graving dock. Furthermore, the consideration that a company has power under its Memorandum and Articles of Association to maintain and repair ships or even to carry on the business of shiprepairing or maintaining ships does not mean that it is in fact engaged in that business. Companies normally have very wide powers and the nature of their actual business is in each case a question of fact. It is clear therefore that it would be wrong to include BP Tanker Company Limited as one of the companies meeting the definitions in paragraph 3 of Part II of Schedule 2.

Points arising from the Written Answer of 6th October.

4. The further questions raised on points covered by my Written Answer of 6th October are dealt with below in the order in which they were raised on the debate on 11th October.

Richards (Shipbuilders) Limited

5. The Government have a firm assurance from Tate & Lyle Limited that its subsidiary Sugar Line Limited in the relevant financial year did not hold itself out as a shiprepairer or in fact repair, refit or maintain the ships of any other person. It follows from 1(a) above that Sugar Line Limited was not engaged in the business of repairing, refitting or maintaining ships in the relevant period.

6. Sugar Line Limited does not therefore meet the definition of an associated shiprepairing company in paragraph 3(2) of Part II of Schedule 2 and its turnover should not be aggregated with that of Richards (Shipbuilders) Limited. For this reason it would be wrong to include Richards (Shipbuilders) Limited among the shiprepairing companies in Schedule 2.

7. Lord Colville of Culross asked whether the Government had asked Sugar Line Limited whether they themselves consider that they were in the business either of repairing ships or alternatively of maintaining ships. Neither this company nor its parent, Tate & Lyle Limited, are responsible for the interpretation of legal terms used in the Bill. Tate & Lyle Limited have provided the Government with the factual information set out in paragraph 5. The conclusion in that paragraph follows from that information.

8. In this context Lord Colville of Culross asked whether the Government apply the same interpretation both to repairing ships and to maintaining ships. The answer is, yes. The Government are satisfied that a company is not engaged in the business of repairing, refitting or maintaining ships if the only ships which it repairs are its own and equally the only ships which it maintains are its own.

Humber St. Andrews Engineering Company Limited.

9. In this case the facts are not in dispute. The Government agree that the trawlers "Esquimaux" and "Kingston Emerald" were on the relevant date in a drydock in Hull owned and operated by the British Transport Docks Board, that the accommodation of these trawlers in the drydock was arranged and paid for by the owners, Hellyer Brothers Limited and that Humber St. Andrews Engineering Company Limited was working on the ships in the drydock. But it follows from 1(b) above that neither Humber St. Andrews Engineering Company Limited nor Hellyer Brothers Limited had a licence to occupy the drydock. My Written Answer on 6th October did not state that the shipowner Hellyer Brothers Limited had a licence to occupy the drydock, and it is not correct to make any such deduction from that answer. Furthermore, Hellyer Brothers Limited as trawler owners who do shiprepair work only on their own ships were, in the light of 1(a) above, not engaged in the business of repairing, refitting or maintaining ships on the relevant date.

10. For all these reasons, therefore, it would be wrong to include either Humber St. Andrews Engineering Company or Hellyer Brothers Limited in the companies listed in Schedule 2.

J. B. Howie Limited and Western Shiprepairers Limited

11. In this case the facts in question are not in dispute. It follows from 1(c) above that Cammell Laird (Shiprepairers) Limited, who had a contract to refit the Venezuelan destroyers referred to by Lord Colville of Culross, were engaged in the business of repairing, refitting or maintaining ships at the end of the relevant financial year 1972. The Laird Group have confirmed that on 31st July, 1974 Cammell Laird (Shiprepairers) Limited had no interest in possession in or licence to occupy a drydock. Laird Group treated Cammell Laird (Ship-repairers) Limited as carrying on a ship-repairing business at the relevant dates as is evident from the treatment of that company's business in the company's accounts for the year ended 31st December 1972.

12. For these reasons it is right to treat Cammell Laird (Shiprepairers) as an "associated shiprepairing company" within the meaning of paragraph 3(2) of Part II of Schedule 2 and to aggregate its turnover with that of J. B. Howie Limited and of Western Shiprepairers Limited; but wrong to include it in the list of companies in Schedule 2.

Scott Lithgow Drydocks Limited

13. In this case the questions raised were factual. It was claimed that the documents in the company's public file in Edinburgh indicated in some way that the accounts for the year ending December 1972, which was the one year when the turnover exceeded the necessary turnover of £3.4 million, were not laid before the company in general meeting until after 31st July 1974. This claim may have arisen from a misunderstanding based on certain folio numbers appearing on the documents in August this year and in particular from the fact that the accounts for 1972 bore the folio number 32 and were not at that time in position following the annual return for 1973 which bore the folio number 31. As the accounts for 1972 were in position in August next to the annual return for the general meeting in 1974 and bore the same folio number as this annual return the inference was drawn that the accounts for 1972 were placed before the annual general meeting in September 1974.

14. This inference is incorrect and is based on a mistake which arose in the following way. Photocopies of the company's accounts were requested by a member of the public in August this year. A clerical assistant in Companies House in Edinburgh who took them from the company's file at the time put numbers on the accounts (the so-called folio numbers) before having them copied, in order to be able to marry together the appropriate annual returns and accounts after copying. In doing this she made a mistake; she failed to notice that the annual return for 1974 had attached to it a letter stating that no accounts were submitted to the 1974 annual general meeting and she wrongly numbered the accounts for 1972 with the same number as the annual return for 1974; namely, folio number 32. The copies of the documents were then handed to the person asking for them, wrongly numbered in this way. This may have misled the recipient of these copies into the wrong assumption that the accounts for 1972 were not placed before an annual general meeting until September 1974.

15. This mistake in numbering the accounts was later discovered by Companies House in Edinburgh and put right. That is why inspection of the company's file today will show the correct correspondence of the annual return for 1973 and the accounts for 1972, in agreement with the record on the company's minute book. The Government have a statutory declaration from the company's solicitor who has examined the company's minute book confirming that entries in that book show that the accounts for 1972 were laid before the annual general meeting on 11th June 1973.

16. It remains true therefore that the relevant turnover for the purpose of deciding whether the company should be included in the Bill if £3,403,118. Scott Lithgow Drydocks Limited is therefore correctly included among the shiprepairing companies in Schedule 2.