Part of Clause 4 – in the House of Commons am 12:00 am ar 20 Hydref 1969.
Yes, Mr. Speaker, but only a small number of Members had the pleasure of hearing the matter in Committee. In the House the opportunity is shared by a much greater number. The difficulty is that if one tries to be too quick, either in terms of quantity or speed, the whole thing is unintelligible. It may well be that an extra 10 per cent. of time, if that results in a little more understanding, is time very well spent.
The Amendment seeks to leave out subsection (2) of the Bill as it stands, and that subsection leaves out Section 47(4) of the principal Act. So, by leaving out the subsection we bring back the other provision, but we do not suggest that it should be put back in precisely the same form as that in which it has been for some time, because this has a financial limit in it, and for the same reason that it has been accepted that all the financial limit should go up, so we accept that this limit, too, should go up. So instead of putting back £40 as the cutoff figure, we propose a cut-off figure of £75.
For the benefit of the House, let me endeavour to simplify the matter in this way. I am not quite sure whether the purpose of the subsection was fully understood in Committee or would necessarily be understood at first glance in the House or elsewhere. The subsection has the very clear and definite purpose of providing for fixed costs. That is its principal purpose. The purpose is not basically the alleviating of hardships, and the rest. The primary purpose is to give power to make rules providing for costs in the cases listed in the subsection. It provides for fixed costs in debt-collecting cases as distinct from cases in which there are issues between the parties, and the case has to go to court and time is taken in placing the respective merits of each side before the court.
There is a belief, and things have been said on the Treasury Benches in Committee and in the Chamber which might foster the belief, that under Section 47(4) all one is dealing with is the giving of extra benefit to the very tiny cases, but that is not so at all. The subsection deals with fixed costs in debt-collecting cases, and under Section 47(4) rules have been made which provide for costs at each different level. So let not the House think that this provision deals only with the little cases and the giving of special benefits to them.
There is a perfectly logical reason why Parliament has for a very long time now drawn this distinction between contested and uncontested cases. When one is dealing with debt-collecting cases—the kind of cases referred to in subsection (4)—ex hypothesi these will be just procedural steps: the issuing of the writ, the signing of judgment by default because the defendant has not entered a defence, or, at the very most, the signing of an order for judgment under Order 14. So one can make a good guess in advance what is involved in the case before it starts. It is therefore possible to have fixed scales of costs.
It is necessary and desirable to do that because—I do not know whether the learned Solicitor-General has any more personal knowledge of this than I have, but I am sure that professional clients will have told him, as they have told me—the fixing of the amount of costs to be paid by the other side can take a lot of time and cost money. Therefore, where it is possible, it is quite sensible to have fixed scales of costs.
The learned Solicitor-General has already referred to the intention of his noble and learned Friend to make rules under Section 99 of the Judicature Act, 1925, providing for fixed costs, in undefended cases. This point was made by the permanent under-secretary to the Under-Sheriffs' Association in the letter to which I have earlier referred and to which the Solicitor-General referred in connection with the last Amendment. I hope that if he has not already done so, the Solicitor-General will be able to give the House an assurance that rules providing for fixed costs will be made under Section 99 of the Judicature Act, 1925, if we are not successful with this Amendment. If the Government were to accept the Amendment, or if it were carried on a vote, that would be unnecessary.
There is another respect in which these undefended cases are distinguishable from the defended cases, and that is that, ex hypothesi, not one of them can take any judge time at all. By definition, the cases to which Section 47(4) apply cannot take any of If anything happens that that case has court and so takes itself would take it Section 47(4).
When, in subsection (1), we were talking about Section 47, which is the first place in the passage of the Bill where we talk about having a cut-off figure below which no costs are paid—not just county court costs as against High Court costs, but no costs at all—the reason for having that cut-off was that it was necessary to deter people from bringing in the High Court cases that should be brought in the county court because it was necessary to save some of the time of the High Court judges and move work which would otherwise take their time over to the county courts.
That is a consideration that simply does not apply when one is dealing with Section 47(4), so, on the face of it, it seems wholly illogical to have the same cut-off figure of £100 in both situations when the considerations relating to the two are totally different.
Here, I want to demonstrate what Section 47(4) does, and to illustrate the point I made earlier that we are here not simply concerned with the tiny sums, and not simply trying to give some extra benefit to those who sue for small sums in the High Court. The present position under Section 47(1) is that if a plaintiff recovers over £400, he gets High Court costs. If he recovers between £75 and £400, he can recover only county court costs. And if he recovers less than £75, he gets no costs at all. That is the situation in relation to contested actions.
I will demonstrate how uncontested actions stand, in comparison, when one considers the application of Section 47(4) as it is applied now by means of rules made under it. If a plaintiff in an uncontested action recovers £300 or more, the costs which he recovers under these fixed scales of costs are equivalent to High Court costs. That is the distinction. In a contested case he must get £400 while in an uncontested case, if he gets £300, he obtains the fixed costs which are the equivalent of High Court costs.
In a case involving between £75 and £300 he gets costs on county court Scale IV. In a contested action involving between £75 and £400, he gets county court costs. In an uncontested case involving between £40 and £75 the plaintiff recovers county court costs on Scale III, whereas in a contested case, if he gets less than £75, he obtains no costs at all.
This distinction has been drawn thus far, and drawn for very good reasons indeed. These have resulted in there being just that little bit less discouragement to plaintiffs to bring actions in the High Court when they are uncontested; and my hon. Friends suggest, as we did in Committee, that that makes good sense.
It is also to be observed from the figures I have given that a most important consideration arises; that the safeguarding of the defendant has been looked after in both instances. As for the looking after of defendants, I agree that when a plaintiff has a choice of bringing an action in two courts one must remember that, if he chooses one court where the other would have done, one must have some provisions for safeguarding the defendant from having to pay more in the other event.
But we should not carry this looking after of defendants to the extent that some people appear to believe. Indeed, one recently published report seems to suggest that all creditors are cruel ogres, out to take the last penny from the purses of debtors, and that all debtors are defenceless widows. Hon. Members will have had sufficient experience in their constituencies to know that the reverse may just as easily be true.
Many of the hardest cases with which we must deal are those involving, for example, people who, one would have thought, would have known better than to have taken advantage of, say, a small trader, perhaps a builder, having obtained credit from him which they did not need and which he could not afford and then, by failing to meet their obligations, driving him out of business. I suspect that few hon. Members cannot have come across this or similar cases.
We must, of course, look after defendants, but we must not think that they are the only people who must be looked after. We are trying here to look after the creditor as well as the debtor, remembering that it is essential in a credit system, which is what we have in this country—many of our transactions are based on this principle—that there is a creditable system for the enforcement of judgments for collecting the amounts which creditors are owed.
4.45 p.m.
Is there or is there not any reason for abolishing the distinction as to costs which has been in use for a very long time indeed; the distinction between costs rules applicable to contested cases and those applicable to uncontested cases? When one has a situation in which the main ground for fixing the cut-off in Section 47(1) at £100 is absent when one turns one's attention to uncontested cases, then it is, on the face of it, strange to adopt the same cut-off figure for both.
There may be certain points that I have overlooked. If so, I hope that the Solicitor-General will make his views clear. I will mention some of the possible reasons why such a distinction might be necessary, and on each I will briefly indicate why my hon. Friends do not think that they are reasons for taking the contrary view to that which I am urging.
If it could be said that the High Court cannot cope with all this uncontested work or that it is in some way slowing down the High Court work or making it difficult, I could see a good reason for saying, "We should take steps to persuade—the Solicitor-General's word—or drive—the word I used in Committee—people who are collecting debts below a certain amount into the county court." As far as I know, however, there has never been any suggestion from the High Court that it cannot perfectly easily deal with this debt collecting work or that it is in any way making the work of the High Court difficult or embarrassing it in the other work that it must do.
If it could be said that the sheriffs have more judgments to cope with than they can, then I could follow the Government's argument for saying that more of these uncontested cases should be persuaded or driven into the county court. But here the position is the contrary. The danger is not of overloading the sheriffs, but of taking so much away from them that their task may be rendered difficult.
If it could be said that the county court has a more efficient system for debt collecting that is at present underemployed, then I could follow the argument for saying that we had better drive some of this work from the High Court into the county court. But thus far I have never heard anybody so argue. Some committees have said that it is as good as that of the High Court, but I shall give two good reasons, which have emerged recently, for doubting this. In any event, I have never heard anybody say that the county court has an excellent system which is at present underemployed.
Some people take the view that it is wrong to have a choice in debt collecting. I hope that I summarise the Payne Committee's Report accurately when I say that that Committee believed that there should not be a choice; that debt collecting up to £750 is a process which should be started only in the county court. This is one approach and, done that way, there would be no choice.
As for implementing arty of the recommendations of the Payne Committee, I hope that we will not fall into the error of taking isolated parts of reports of this kind and think that they are applicable on their own. The whole essence of the Payne Report seems to be the substitution of an entirely new enforcement machinery for that existing now, both in the county court and the High Court.
The new enforcement office and administration orders to be used for the enforcement of High Court and county court judgments would be an entirely different set-up from that existing now. It seems inappropriate to consider any of the other main recommendations.
Another reason that has been advanced for doing what the Government seek to do and resisting what we seek to do is that there is a necessity to protect debtors as to costs. In Committee, I had not looked at the scales of costs laid down under the Rules of Court under the authority of Section 47(4). I gladly acknowledge that it was only when the Solicitor-General drew attention to Order 65 in Committee that I appreciated that it was the relevant order.
Since then, I have looked at them and all that I can say is that if the costs paid to a solicitor for doing his debt collecting in the county courts are even less than those prescribed under Order 47(4) no wonder no one wants to go into the county courts. There could not be the slightest possibility of a suggestion that the costs prescribed under Order 65 are extravagant. They are little enough for doing the job. If the county court costs for doing the same job were even less, rather than saying that that is a reason for driving people into the county courts I should be more inclined to draw the inference that it was highly necessary that county court costs should be improved. That would be very much in line with the thinking of the Prices and Incomes Board and the Wynn Committee.
What else has been advanced in favour of not doing what we seek to do in this Amendment? The Solicitor-General gave us some quotations in Committee to which I will not refer now, but he cannot have realised at the time but may have discovered since, what the position was. He suggested that there was a conflict between the views of the Austin Jones Committee and the first interim report of the Evershed Committee, one having suggested that the county court was as good as the High Court—that was the Austin Jones Committee—and the Evershed Committee having said that it thought the High Court was a bit better than the county court.
Within a few months slightly differing views were expressed by these two reports. What the Solicitor-General had overlooked was that four years later, when the Evershed Committee had had a lot more time to consider this matter, when it had had every opportunity to take account of what was contained in the Austin Jones Report and the representations made by the Association of County Court Registrars, it still thought that the distinctions we are talking about ought to be retained. It recommended that the cut-off figure be raised, but resisted the strong representations made to it that Section 47(4) should be abolished. On the contrary, it states specifically that it ought to be retained. I am not aware of anything that has happened since or anything said by any committee since to cast doubts upon that.
That leads me, naturally, to the quotation which the Solicitor-General took
from the Payne Report which he relied on as support for his proposition that Section 47(4) should go. He has probably had another look at it since and will realise that the part he quoted at Clause 43 was, unwittingly I am sure, not complete and that what the Payne Committee said was:
We are therefore of the opinion that, if the commencement of actions for recovery of debts within the county court jurisdiction is still to be allowed in the High Court and our enforcement system is to be introduced, subsection (4) of section 47 should be repealed.
We do not yet know whether the new enforcement system recommended by the Payne Committee will be adopted. Even if the decision of the Government is to adopt it, it has not yet been taken, or made public. If it has been taken and has yet to be made public it will be some time before it can be implemented. This is what I mean by saying that we should not take a recommendation out of the Report in isolation.
It is true that we can find words in the Payne Report saying that Section 47(4) should go, but when one looks at it it is part of a sentence which has two "ifs" in it. Those "ifs" represent two conditions. The first is satisfied because we are proposing to keep the two alternative methods of debt collecting specified. The second of those "ifs", if "our enforcement system is to be introduced" is something of which we have no knowledge. We do not know whether it will come about and if so when.
Whatever evidence may have been before those committees we now have a good deal of information, which ought to be of the greatest assistance in deciding the question in this Amendment. This is a Bill in which many practising lawyers have taken a considerable practical interest. They have not sat back and, after it has all been passed, written saying, "Why did you do so and so?"—a sequence of events with which we are all familiar.
In this case individuals practising in the law, the Law Society and the Under-Sheriffs' Association, singly and collectively, have put their views before the Committee, the House and the Government while there was still time to pay regard to them. It is no exaggeration to say that they all expressed the view that the High Court process of execution may, if not always, be more efficient and suitable. Certainly, in a very large number of cases it is more suitable, effective, expeditious and only slightly more expensive, if at all, than the county court.
If that was not enough we also have the experience with a great Government Department. The House and the public know that the Department of Health and Social Security, unhappily, has to collect a great number of debts. It has to collect sums due on stamps which people have not put on cards; it has to collect overpayment, and so on. A great many of these debts are for modest sums. That Department has changed its practice of debt collecting and recently adopted the practice of starting all debt collection actions for sums of £40 or more in the High Court rather than the county court. I am told that there has been a dramatic improvement not only in the total amount recovered, but in the amount of costs recovered. I asked the Solicitor-General if he could give me the figures, but he was not able to do so. I could give them to him if he wanted them, but perhaps he now has them.
5.0 p.m.
The Solicitor-General must know that in this instance where we have debt collecting on a substantial scale and a body concerned with debt collecting on a substantial scale which has tried both—the county courts and then changed to the High Court which it has found much more expeditious and satisfactory—we should consider very carefully before depriving people other than Government Departments of those benefits.
The Crown stands in a very privileged position in relation to the costs penalty Section 47. The citizen may be subjected to costs penalties under Section 47, but it does not apply to the Crown. Therefore, the significance of what has happened to this Department is twofold. First, it provides the evidence, if we need further evidence, that what the practitioners have been telling us is right and that the High Court provides a more effective system for debt collecting. Secondly, it would be wrong to enable the Crown to go on enjoying that more favourable method of debt collecting and penalise the rest of the citizens.
For those reasons, plus others mentioned in Committee which I may have left out inadvertently or to keep within the bounds of order, I hope that even at this eleventh hour the Government will accept that what is in issue is a modest distinction in the consequences as to costs between two types of action raising different considerations concerning court time and costs. Since there is a distinction, the law should recognise it. Cannot we do the same? Anybody else would in practice in terms of business. Usually, when there are two situations different conditions prevail in them. This distinction has been recognised for a long time without detriment to anybody and so we are told by the practitioners, much to the advantage of many. I hope that even at this eleventh hour the Government will be prepared to maintain this distinction at least until we know what is to happen about the wider recommendations of the Payne Committee and that they will accept the Amendment.