HOUSE OF COMMONS.

STANDING COMMITTEE D.

COURTS (EMERGENCY POWERS) BILL

OFFICIAL REPORT.

617

THE COMMITTEE CONSISTS OF THE FOLLOWING MEMBERS—

O'CONNOR, Mr. T. P. (Chairman).

Adamson, Mr.

Barker, Major

Barrand, Mr.

Beauchamp, Sir Edward

Bowerman, Mr.

Brassey, Major

Breese, Major

Britton, Mr.

Broad, Mr.

Campion, Colonel

*Chadwick, Mr.

Clay, Lieut.-Col. Spender

Clough, Mr.

Cory, Sir Clifford

Davies, Mr. Alfred Thomas

Davies, Mr. Thomas

Devlin, Mr.

Finney, Mr.

Foreman, Mr.

Graham, Mr. Duncan

*Greenwood, Sir Hamar

Hogge, Mr.

*Houston, Mr.

Hurd, Mr.

Johnstone, Mr.

Jones, Mr. Haydn

Kelly, Mr. Edward

*Kenworthy, Lieut.-Commander

Kenyon, Mr.

*King, Commander

Lindsay, Mr.

M'Donald, Dr.

*Maclean, Mr. Neil

*Malone, Lieut.-Colonel

Molson, Major

Munro, Mr.

Murchison, Mr.

Murray, Major William

Neal, Mr.

Nicholson, Mr. Reginald

*O'Grady, Captain

O'Neill, Captain

Pennefather, Mr.

*Philipps, General Sir Ivor

*Philipps, Sir Owen

Pownall, Lieut.-Colonel

*Raeburn, Sir William

*Renwick, Mr.

Roberts, Mr. Frederick

Royce, Mr.

Seager, Sir William

Seddon, Mr.

*Sexton, Mr.

Solicitor-General for Scotland, Mr.

Strauss, Mr.

*Sturrock, Mr.

Tootill, Mr.

Weston, Colonel

Williams, Colonel Penry

Williams, Lieut.-Commander

Willoughby, Lieut.-Colonel

*Wilson, Mr. Havelock

Wilson, Mr. Tyson

Woods, Sir Robert

Yeo, Sir Alfred

Young, Mr. William

* Added in respect of the Courts (Emergency Powers) Bill.

Mr. Colomb and Mr. Throckmorton, Committee Clerks.

618
619 STANDING COMMITTEE D Tuesday, 12th August, 1919

[MR. T. P. O'CONNOR in the Chair.]

COURTS (EMERGENCY POWERS) BILL

The CHAIRMAN: Is it the pleasure of the Committee that the proceedings should be officially reported?

Committee signified assent.

CLAUSE 1
(Amendment of s. 1 of 7 & 8 Geo. 5.c 5)

(1) Section one of the Courts (Emergency Powers) Act, 1917, which confers on the court power to suspend and annul certain contracts shall have effect as if— (a) For subsection (1) thereof the following subsection were substituted:— "Where, upon an application by any party to a contract entered into before the first day of January nineteen hundred and seventeen, the court is satisfied that, owing to the prevention or restriction of, or the delay in, the supply or delivery of materials, or the diversion or insufficiency of labour, or the shortage of shipping, or the alteration of trade conditions occasioned by the preesent war, the contract cannot be enforced according to its terms without serious hardship, the court may, after considering all the circumstances of the case and the position of all the parties to the contract and any offer which may have been made by any party for a variation of the contract, suspend or annul, or stay any proceedings for the enforcement of, the contract or any term thereof or any rights arising thereunder on such conditions (if any) as the court may think fit: "For the purpose of this subsection where an offer made before the first day of January nineteen hundred and seventeen, was binding on a contracting party if accepted within a specified period expiring after that date and was so accepted after that date, the contract shall be deemed to have been entered into before that date." (b) In subsection (2) thereof for the words "any ship" there were substituted the word "shipping" and for the words "suspend or annul the contract or stay any proceedings for the enforcement of" there were substituted the words "suspend or annul, or stay any proceedings for the enforcement of":

(2) Subsection (3) of the said section so far as it limits the duration of that section, shall cease to have effect.

Mr. NEAL: I beg to move, In Sub-section (1), paragraph (a), after the word "contract" ["any party to a contract"] to insert the words "(including a contract confirmed by 620 Act of Parliament or Order having the force of an Act)."

Colonel Sir HAMAR GREENWOOD (Department of Oversea Trade): I accept this Amendment.

Mr. RENWICK: I have an Amendment down which I think ought to take precedence.

The CHAIRMAN: No; unfortunately the word "contract" precedes yours.

Amendment agreed to.

Mr. RENWICK: I beg to move, in Subsection (1), paragraph (a), to leave out the words "first day of January, nineteen hundred and seventeen," and to insert instead thereof the words "fourth day of August, nineteen hundred and fourteen." This is an Amendment of the Courts Emergency Act, 1917. When that Bill was under consideration there was an Amendment moved by Mr. Peto to leave out the words "fourth day of August, nineteen hundred and fourteen," and to insert in place thereof the words "seventeenth day of July, nineteen hundred and sixteen." That was exactly on all fours with what I am proposing at the present time. It is very instructive for the Committee to hear what the then Solicitor-General (Sir G. Hewart) said in regard to that, and I commend it to the learned Gentleman in charge of the Bill— "Why, Sir, if that date were to be substituted, the effect would be this—and I am not sure that it is not the real intention of the Mover of the Amendment that this should be the effect—that for a whole period of two years from the 4th day of August, 1914, up to the 17th day of July, 1916, a building contractor should have had the opportunity of entering into a building contract with notice of the war, and notice which was a notice of one kind in the Autumn of 1914, of another kind in the Spring of 1915, and of another kind at each successive period as the two years went on; and having entered into that contract with his eyes open, or I should hope partly open, and having stood to gain whatever benefit he might hope to gain from that contract, may now turn round and say, 'Notwithstanding that I entered into this contract, it may be two years after the war had begun, nevertheless, because the difficulties I have experienced are due to the war, I claim the right to go to the Court.' …. I am told that the thing has got worse as time goes on. May I suggest to my hon. Friend opposite that it may have been among the calculations or speculations of the builder that prices would get better? I submit, however, with all earnestness, that-if once we depart from the clear and obvious line of demarcation. which is suggested by the date of the outbreak of war, we. venture upon a sea which has no shore. An alternative date, 16th July, 1916, is suggested. I rather gather I am 621 right in my conjecture that that date was selected because it was upon that date that the actual prohibition was made against building … X submit that it is impracticable, and that the line which has been chosen, and chosen after careful deliberation for this Clause—that is to say, the line which is between the pre-war contract and the post-war contract—is the true line of division. I trust the Committee will see the reasonableness of that course, and the difficulties and dangers which would arise from the proposed alternative and later date."—[OFFICIAL REPORT: 2 April, 1917; cols. 1059–60; Vol. 92.] Why, if it was dangerous in 1917, is it safe now? If the 16th of July, 1916, was impracticable then, surely the present Solicitor-General is not going to say that it is safe to alter the date now. There is an enormous difference between a pre-war contract and a contract entered into after the war had stopped. In the one case we had our eyes closed, in the other we had them wide open. I would call upon the Solicitor-General to give us some idea as to why this Bill is required. It is a most extraordinary state of affairs. I turn to the OFFICIAL REPORT of 3rd July, 1919, and I find that this Bill was rushed through the House late at night and with about twenty lines of explanation by the President of the Board of Trade. Not a question was put and not another speech was made. No explanation was given, and the right hon. Gentleman told us that it had been asked for by several trade associations. I have inquired and I am not able to find a single traders' association which has asked for it. I have not heard that the Associated Chambers of Commerce or anybody else express any desire for the Bill. Therefore, I would like the Solicitor-General to take this opportunity of telling us what we were not told on the Second Reading—why they want the Bill, and what is the reason why, if it was dangerous to alter the date in 1916, is it safe to do so now.

Sir H. GREENWOOD: I hope the hon Member for Newcastle is not mixing me up with the Solicitor-General.

The CHAIRMAN: The Solicitor-General is not a member of the Committee.

Sir H. GREENWOOD: He is not a member of the Committee. No one regrets more than I do that the mistake which the hon. Member has made is a mistake. As one of the Under Secretaries to the Board of Trade, I have been requested by the President of the Board of Trade to take charge of this Bill in the Government's interest. In reference to this Amendment, first of all, what- 622 ever arguments the then Solicitor-General may have used, I have no doubt they were good arguments at the time, but since that time we have had over two years of war. The hon. Member wants to know the reason why this Bill was introduced. That is really a Second Reading question, but, with the consent of the Chairman, I will just say very briefly that the Bill was introduced primarily for the reasons that made it essential to introduce the original Bill — the Court (Emergency Powers) Act, 1917. This amending Bill is introduced because certain contracts cannot be fulfilled — reasonably fulfilled — owing to the direct action of the Government or to exigencies arising out of the war, such as shortage of labour or materials, two states of things not contemplated in their entireties when the original Act of 1917 was passed. It would be impossible to accept the Amendment of the hon. Member without destroying the Bill, for the whole object of moving the date forward from 1914 to 1917 is to cover a large series of contracts that were entered into in the interval, and which cannot be fulfilled without great hardships upon one of the parties. More than that, Government control has increased to its fullest magnitude since 1914, and it is because of that increase—this is one reason—of Government control, that we ask the Committee to move the date forward to 1917. No one knows better than the hon. Member that a great many people are involved in these contracts, and that it is through no fault of their own that a party or sometimes the parties to the contracts cannot fulfil them either in the letter or the spirit. We only wish to provide for those cases where the fulfil ment of the contract would entail undue harshness upon one of the parties. I hope the hon. Member will not press this Amendment to a Division, but, if he does, I must ask the Committee to save the Bill by rejecting the Amendment, because the Bill would be destroyed if it were accepted.

Mr. RENWICK: Why do you fix the date January, 1917? Why not July, 1918? Why January 1st? It seems to me that the same cases of hardship which would occur with the one date would occur with the other.

Sir H. GREENWOOD: No, I can assure my hon. Friend that the date was fixed after full consideration of the various Acts and Orders in Council which, practically speaking, handed the industries of this country over to Government control, and in that way made it impossible for individuals to fulfil their contracts.

623

Mr. RENWICK: That really means that those who entered into contracts after January, 1918, are left out of the Bill altogether. It seems a most extraordinary state of affairs to me.

Amendment negatived.

Mr. RENWICK: I beg to move, in Subsection (1) paragraph (a), to leave out the words "or the alteration of trade conditions." I should like to call the attention of the Committee to this most extraordinary state of affairs. If they compare the original Act with the present Bill, they will find a very material alteration put into this Bill—I will not say smuggled into it, but it is here. It is to the effect that insufficiency of labour or shortage of shipping or the alteration of trade conditions occasioned by the present war shall be taken into consideration. Does the hon. Member in charge of the Bill recognise what that means? As regards the alteration of trade conditions, they have been wholesale. They have been occasioned by the war, by the action of trade unions and by the action of masters' associations. Surely the Government are not going to leave words like that in the Bill. The effect will be to fill the courts with law suits. There will be an enormous amount of litigation arising out of it if you put in words of this description. Why was it not put in the original Act? As soon as the war started, there were alterations to trade conditions in every direction, as the hon. Member knows and as we all know. There was an immediate alteration. We were curtailed upon every side. Yet these words were not put in the original Act. Now it is proposed to put them in this Bill, and, therefore, I move to leave them out. Perhaps the hon. Gentleman in charge of the Bill will give us an explanation which will be acceptable to the Committee, but unless I get that I cannot see my way to withdraw the Amendment.

Sir H. GREENWOOD: The words "or the alteration of trade conditions" which the hon. Member wishes to exclude from the Bill, were put in because of the actual fact that there were alterations of trade conditions between 1914 and 1917 that made it impossible for contracting parties to carry out their contracts without serious hardship. It is because we are trying to save men from suffering these serious hardships through no fault of their own, that we put in "or the alteration of trade conditions," as one of the grounds for enabling them to go to the courts 624 of the country to obtain relief, if they cannot, as they do in most cases, make an amicable arrangement with the other part to the contract. I would ask the hon. Member not to press this Amendment to a Division, because I can assure him—and he knows very well, as a great shipping man in the greatest of all shipping countries, the North country—the great alterations in trade conditions that have taken place and the hardships that flow therefrom to the contractors.

Mr. RENWICK: I should like to reply to what the hon. Gentleman has said. I want to point out this: I have already told the Committee that there were alterations to the conditions previous to August 4th, 1914, and immediately after, but notwithstanding that, the words were not put into the Bill of July, 1917. The hon. Gentleman has not yet told me why. I would also like to point out that contracts entered into between August 4th, 1914, and January 1st, 1917, were post-war contracts. As the then Solicitor-General told us, people had their eyes open to that and they knew what the conditions were. They entered into contracts, therefore, in the hope of making money, and because they have not done so, some of them wish to wriggle out of their contracts. There is a difference between the contracts entered into. I have every sympathy with the man who wishes to break a contract that he entered into before the war, but none whatever with the firm who wishes to break its contract entered into after the war commenced, well knowing the altered conditions of trade. Therefore, I must press my Amendment.

Amendment negatived.

Mr. RENWICK: I beg to move in Subsection (1), paragraph (a), after the word, "case" ["or the circumstances of the case"] to insert the words "so far as they may have been affected by the present war." I think these words are very necessary. I am advised by very competent authorities to that effect, and that when a case comes before the court, the person who wishes to repudiate the contract ought to be compelled to show, and show very clearly to the court, in what way he has been prevented from carrying out his contract by what has happened during the war. We all know the difficulty, when we go into court, as to the judge's rulings. The judges say, "I have no power to do this," or "I have no power to do that," but we want to make it quite clear that we have the power to ask the court to take these facts into account. 625 Surely there is no one who has entered into a contract who wishes to take advantage of any other means of geting out of his contract, except by what has happened during the war. I hope that the hon. Member in charge of the Bill will accept this most reasonable Amendment. I cannot understand how he can refuse it. He has squared some other Members and surely he might square me as regards this.

Sir H. GREENWOOD: It is one of the great regrets of my life that I am not able to arrange with the hon. Member. I cannot use the word "squared" with any colleague. I cannot accept the hon. Member's Amendment, first, because it does not add anything to the Bill as it stands. Every circumstance of the case and the position of the parties to the contract will be and are taken into consideration by the judge before whom the matter comes.

Mr. RENWICK: It is at the will of the judge. We want to be able to say to the judge, "Do take these things into account."

Sir H. GREENWOOD: I think all that is met already by the wording of the Bill. The circumstances of the case, the position of the parties to the contract, and the subsequent lines of the Clause we are dealing with give the judge full power. I am not for taking away one jot of the power of a judge in dealing with these matters. I would give him the fullest power. I should remind my hon. Friend that no one can come to the court unless he has a contract, the fulfilment of which would mean serious hardship to him-self. I can assure my hon. Friend that what he seeks to do by the words of the Amendment is already done.

Mr. RENWICK: It is not in the opinion of those who advise me.

Mr. HURD: I would refer the hon Member to line 17 of the Clause.

Sir H. GREENWOOD: I would not venture to put myself up as a greater adviser on the law than the learned gentlemen who advised my hon. Friend, but, as representing the Government, I can assure him that all the best advice that we can command, as to the actual working of the original Act of 1917, has shown us that the judges have full power to do justice between man and man. Therefore, I hope, he will not press his Amendment. 626

Sir WILLIAM RAEBURN: The hon. Member for Newcastle (Mr. Renwick) has been looking across, I think rather reprovingly, as if he thought someone might get up to help him. May I tell my hon. Friend that there are contracts made since the war which would have ended in the ruination of one of the parties. I speak with knowledge, because I placed a contract myself with shipbuilders, after the war had started, not knowing how long the war was going on. They were ignorant on this point, and so was I. Had the contract been in force—of course for a while it was suspended by Government regulation—but had we been called upon to fulfil the terms of the contract, it would have meant absolute ruin. It went into a sum of something like 100,000. With all deference to my hon. Friend I think that the original Act was necessary when it was passed, and that I he prolongation of it is as essential as the original Act. I do not think anyone will suffer any legitimate or honest hardship by it.

Mr. RENWICK: That is not the point. My Amendment in no way affects that, but we want to make it perfectly clear that we shall not take advantage of anything except what may have been affected by the present war. It would not have affected the case the hon. Member mentioned.

Mr. HURD: But the hon. Member is overlooking line 17, where the same phrase occurs "occasioned by the present war" Does not that cover the whole point?

Mr. RENWICK: I do not think so.

Amendment negatived.

Amendment made: In Sub-section (1), paragraph (a), after the word "or" ["or stay any proceedings"] to insert the words "with the consent of the parties amend as from such date as the court may think fit or may." [Mr. Neal]

Mr. RENWICK: I beg to move, in Subsection (1), paragraph (a), after the word "fit" ["as the court may think fit"] lo insert the words "In assessing the extent of relief which may be given to a contractor the court shall take into account whether or not the contractor has benefited or otherwise by interference by the Government with the liberty to carry out the contract; and evidence upon these matters shall be admissible if tendered by either party to a contract or if asked for by the court." It is notorious, as the hon. Member for Dumbarton (Sir W. Raeburn) has pointed 627 out, that while there are great hardships in cases where firms entered into a contract and in carrying them out now will be ruined, there are, on the other hand, innumerable cases where, owing to certain firms being able to get rid of contracts which they had taken at low prices, they are enabled to do Government or some other work at a big profit. Those are lucrative contracts and an enormous sum of money is made. It is where a firm wishes to repudiate a contract that we want the power to call upon them to show how they have suffered, or may suffer, any pecuniary loss by the contract they seek to have annulled. We want to show—and we can show—that there are many of these firms who have made enormous profits. We want to see what profits they really have made in place of those contracts they desire to have annulled. We want the power to call evidence, if necessary, and it will be for the court to say whether we are within our rights in asking for it. This Amendment has been put down at the request of well-known and experienced business men who know exactly how the land lies. It will not injure the person who has not made money or profit by any annulment of a contract, but it will prevent those firms who have made a big profit from continuing to benefit by the cancellation.

Sir W. RAEBURN: I do not know—I am not lawyer enough to be able to say—whether the Act otherwise would give the judges power to call evidence enabling them to take into account those considerations which the hon. Member has just mentioned, but I do know that what he has said are the facts. I know of cases where the Government has stepped in and taken over a large stock of steel required for another shipbuilding contract and allowance has been made to the builders for the increased price. So that if the builders now say "We have lost so much by this and cannot carry on," I think it only right that credit should be given for the advantage they have had from the Government. I do not know whether the words are necessary. It may be that, as the Bill stands, any judge would take that into consideration, but if that is not the case, then I think that something on the lines suggested by my hon. Friend should be inserted.

Sir H. GREENWOOD: I have gone into this Amendment with all the care I could command, and I can quite see the point my hon. Friend makes. Shortly it is this: That an individual should not be relieved of the obligations of his contract if by reason of his 628 inability to fulfil it he has thereby been enabled to do still better on some other contract. If I may say so, that legally is confusing two things. First of all, the whole question of Government interference is dealt with in the original Act of 1917, Section 2, Sub-section (1). Where the Government interferes in any specific contract, and a man can show that serious hardship results from that interference, he can come to the court to be relieved of the burdens and obligations of the contract. That is the law. My hon. Friend wants it to go further and say if a man finds himself unable to fulfil one contract, but has been successful in securing other contracts from the Government or elsewhere and has made money, he shall be held to the first contract because he has made money out of the second.

Mr. RENWICK: Oh, no! I do not say that. The Amendment says "assessing the extent of the relief which shall be given." While we may compel a man to pay damages for not carrying out his contract, I do not think we can compel him actually to carry out the contract. That is an entirely different thing.

Sir H. GREENWOOD: At first I was rather taken by the words, but I think my second thoughts were best. The Act of 1917 covers everything that has been raised in this Amendment. I think the Court can now take into consideration every possible circumstance that may arise in any case that comes before it, and I regret I cannot ask the Committee to accept this Amendment.

Mr. RENWICK: Undoubtedly the court can go into the question, but in certain cases already tried it has not been taken into account. Instead of stipulating that it may be, we want it laid down that it shall be. If the words of my Amendment are not quite to the point, I have another Amendment drawn up by legal gentlemen if the hon. Member will look at it.

The CHAIRMAN: You might bring it up on the Report Stage.

Sir H. GREENWOOD: The point simply comes to this. My hon. Friend agrees that if he were sitting as a judge he would take into consideration every point he raises in his Amendment. If a judge acts according to my hon. Friend's Amendment he will take into consideration all the facts.

Mr. RENWICK: I am aware of that, but we want to say that he shall, not that he can.

629

Sir H. GREENWOOD: I am one of those who believe that learned counsel can be engaged at a perfectly reasonable fee to see that he exercises his power.

Amendment negatived.

Further Amendment made: In Sub-section (1) paragraph (b), after the word "or" ["or stay any proceedings"] insert the words "with the consent of the parties amend as from such date as the court may think fit or may." [Mr. Neal.]

Clause, as amended, ordered to stand part of the Bill.

CLAUSE 2 (Short Title) ordered to stand part of the Bill.

NEW CLAUSE
(Pending Actions).

"Nothing in this Act shall apply to cases where an action has already been commenced and the writ issued." [Mr. Renwick.]

Brought up, and read the first time.

630

Mr. RENWICK: I beg to move, "That the Clause be read a second time." There are several cases pending at present, some of them in an advanced stage, and it has been pointed out that in such cases advantage ought not to be taken of this Act. I think, with all deference to my hon. Friend, and as a last shot, he ought to accept this Clause. I have tried to make an active fight with little encouragement or support from my Friends on either side. Seriously, where a case is practically ready for trial, I do not think it right that either side should come in and take advantage of this new Bill which has not been passed yet.

Sir H. GREENWOOD: The very fact that there are these cases pending is in itself the best justification for the Bill, which is intended to avoid serious hardship to honest business men.

Question put, and negatived.

Bill, as amended, ordered to be reported.

The Committee rose at five o'clock.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE.

O'Connor, Mr. T. P. (Chairman)

Barrand, Mr.

Beauchamp, Sir Edward

Broad, Mr.

Campion, Colonel

Clay, Lieut.-Colonel Spender

Clough, Mr.

Davies, Mr. Thomas

Greenwood, Colonel Sir Hamar

Hurd, Mr.

Kenworthy, Lieut.-Commander

King, Commander

Lindsay, Mr.

Murchison, Mr.

Neal, Mr.

Raeburn, Sir William

Renwick, Mr.

Roberts, Mr. Frederick

Sexton, Mr.

Weston, Colonel.

Willoughby, Lieut. Colonel