§ 3.30 p.m.
§ The Joint Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. F. V. Corfield)
I beg to move Amendment No. 107, in page 63, line 36, to leave out "house or other building" and to insert "premises".
This Amendment, Mr. Speaker, is identical with a number of others in the Bill, and I think that we might conveniently take them together. The others are Nos. 131, 132, 133, 134, 151, 152, 153, and 154.
§ Mr. Corfield
These are really drafting Amendments, but they refer to the provisions in the Bill governing the power of a local authority to charge the premises in order to cover any unrecovered expenditure. During the Committee stage some doubt was expressed by the hon. Member for Birmingham, Aston (Mr. J. Silverman) whether the words in the Bill covered the land and any other buildings in the curtilage but not actually part of the house. My advice is that the Bill as originally drafted covered these matters, but I accept that the proposed words are clearer.
§ Amendment agreed to
§ Further Amendment made: in page 64, line 12, after "18(5)", insert "of the Act of 1961".—[Mr. Corfield.]
§ Mr. Corfield
I beg to move Amendment No. 109, in page 64, to leave out lines 22 to 25.
Mr. Speaker, may we take, at the same time, the next Amendment, No. 110?
§ Mr. Corfield
These are both drafting Amendments, though they differ a little in their effect. The reason for the omission of the lines in both cases is that 32 they are no longer required because of a later Government Amendment, No. 167, in Clause 87, page 89, line 39, at the end to insert:(3) References in this Part of this Act to expenditure incurred in respect of a house subject to a control order include, in a ease where the local authority—
references to the sums so defrayed by the local authority, and to the net cost to the local authority of so providing housing accommodation.
- (a) require persons living in the house to vacate their accommodation for any period while the local authority are carrying out works in the house, and
- (b) defray all or any part of the expenses incurred by or on behalf of those persons removing from and returning to the house, or provide housing accommodation for those persons for any part of that period.(4) For the purposes of this Part of this Act the withdrawal of an appeal shall be deemed the final determination thereof having the like effect as a decision dismissing the appeal.whereby similar words are inserted as a new subsection (4) to Clause 87, which applies to the whole of this part of the Bill.
The inserting of the new subsection (6) into Clause 61 in place of lines 7 to 10 clearly has a rather different meaning, however. It is not directly connected with the deletions except in so far as this is a convenient place in the Bill to insert these provisions. They arise from Section 23(4) and (5) of the 1961 Act, which provides that responsible officers of a company can be equally responsible with a company for any offence committed under Part II of the 1961 Act. This Amendment introduces the same provisions into this Bill.
§ Mr. James MacColl (Widnes)
I have no desire to say anything about the omissions—they are, as the hon. Gentleman says, drafting and, so far as I can see, do not raise any point of principle—but I think that the hon. Gentleman took the addition in Amendment No. 110 rather lightly. This is the only response which the Government have made to a long campaign which began in 1961 and continued in Committee. The matter was raised by my hon. Friend the Member for Brixton (Mr. Lipton), in a new Clause, which was not called, by which he sought to have something a little more vigorous done about the 33 mushroom company and the evasive director.
When we were discussing this matter in 1961 on an Amendment similar to this one, we raised in terms the problem which is presented by the company which either changes its name so rapidly that proceedings against it are of very little value, or changes its directors, or its directors change their names, in such a way that it is quite impossible to keep track of them.
When this matter first arose we put forward two possible ways of trying to tackle the problem, not only by trying to introduce into the penal provisions the formal director, a person whose name appeared in the documents of the company, but by trying to get behind that name and find out the person who had beneficial ownership of the company. We made two attempts at this and tried two different drafts. The then Minister, with all the resources that he had to advise him, failed to take up this point or to find any adequate alternative. We thought then that this was a very great pity, and we observed it with regret.
Since then there have been changes, and the problems, like the problems of Rachmanism, have arisen again, and we now attach a good deal more importance to the matter than we did in 1961. What has happened since 1961 shows that the Clause in the 1961 Act, and, therefore, the Clause in the Bill, even with the Amendment applied to the provisions about the control order, is not in itself sufficiently effective to do the job.
In Committee, we looked at the comparable problem of registration where one registers the owners of houses in multiple occupation. One also wants to look at the problem of how one catches the person behind the company. Since 1961 there has been a great deal of talk about these problems. I draw the attention of the right hon. Gentleman—I am sure he is familiar with it—to an article in The Times on 7th January. That was not us talking in the Committee. It was not even the Opposition talking. It was an article written by an impartial investigator, and the Minister is always telling us that he wants the facts and is interested to hear them.
34 The Minister got the facts in January, 1964, and I am very sorry that he did not take a little more seriously the information which The Times produced about this problem. The Times said:Behind a complex of shifting limited liability companies is the same man—Mr. Arthur Bertram Waters. Inquiries by The Times have revealed that after lying dormant for some years Mr. Waters is busy reorganising his companies. Unstaffed offices at Brighton and Hove are being given as the new registered offices for companies old and new, often under the nominee name 'Edwards'. In fact, the real headquarters of the entire Waters business is an unimpressive office in Clapham Park Road, S.W., from which some 250 freehold and leasehold properties north and south of the Thames, many of them nearly 100 years old, are controlled.That is precisely the kind of property with which the Amendment is concerned and to which we have attempted to direct the attention of the House on more than one occasion.
The article went on:A variety of names appear on the files of the companies as directors, secretaries and shareholders.This is exactly the point which we have raised in dealing with this criminal liability of directors and other officers of these companies. It went on:Often they are past and present employees of Mr. Waters, including the office manager and typist. On occasions, registered offices of the companies have been given as the usual residential addresses of company officials. In few cases are they other than addresses at which mail ca n be collected at intervals".This is precisely what we were saying earlier about trying to get proper addresses registered.
The article added:Mr. Waters's son, Hugh Graham Waters…is now helping to run the business. In an interview with your Correspondent at the office in Clapham Park Road he agreed that the 'Mr. Edwards' who appears as a director on the files of a number of the companies was 'in a sense' himself.This is the precise point of the evasive director who has the real ownership of the company.
The article quoted him as saying:'It is a nominee name we use'.Later, referring to an old friend of my hon. Friend the Member for Leicester, North-West (Sir B. Janner)—Mr. Brady—the article said:Mr. Lipton once suggested in the House of Commons that Arthur Waters and Brady were the same person.
§ Sir Barnett Janner (Leicester, North-West)
I hope that my hon. Friend will allow me to correct his statement: Mr. Brady is no friend of mine.
§ Mr. MacColl
My hon. Friend's reputation would stand even the involuntary slur of being associated in that way. Everyone knows that he has done a tremendous public service in exposing this show.
The article continued:His son denied it.'I understand that an Irish firm of accountants provided someone who would come over and give his name for our activities in this country and that the agent's name was Brady '.We are all familiar with the shop which sells limited companies to land-lords who can use them for their purposes of transferring property to avoid prosecution, but I did not know before that there was a personnel management which could give names of men of straw who could be used for similar purposes. This points to another glaring weakness in the Amendment and the failure to be able to make this part of the Bill bite.
My final quotation from the article illustrates the problem of chasing from one company to another:The most recent registered office of a number of companies is 3 and 4 Preston Street, Brighton. On the door of the two-room office in the London and Manchester Assurance Co. building is the name of J. Edwards and a list of six companies: Providers of Homes, Metropolitan and Surburban Estates, Various Tenancies, Various Tenancies (South London), Various Tenancies (Pollock and Deacon) and Various Tenancies (Four). Staff in the assurance company offices knew little of their new neighbours. Mr. Edwards hardly ever comes here…two elderly ladies used to call in every afternoon…the mail is collected occasionally…we get people in here who have travelled all the way from London and are worried about evictions and that sort of thing,' your Correspondent was told.3.45 p.m.
This article appeared in The Times three months ago and confirmed what my hon. Friends and I have been saying and what has been known to anyone who has made any attempt to enforce the 1961 Act. This will be an inherent weakness in the Bill. The kind of man who goes in for this kind of racket in a big way will be able to shift his name, shift his address and have bogus addresses, so the two elderly 36 property and trying to collect the money ladies can collect the mail and the man responsible will never be served with a notice because one will never be sure where he is. There will be the difficulties of the Irish firm supplying names of men of straw to appear as secretaries and typists, and so on.
It is urgent that the Government should try to tackle this problem of pinning down the beneficial owner of a company so that this facade of trickery and fraud can be brushed aside and so that this penal Clause will bite on the man who gets the profits. I cannot believe that it is too difficult to do that, and I very much hope that it will be done in a later Amendment.
§ Mr. Marcus Lipton (Brixton)
I strongly support what my hon. Friend the Member for Widnes (Mr. MacColl) has said. For many years the Government have refused to tackle this problem with energy and decision. I remember that on 17th June, 1952, I asked the then Minister of Housing, the right hon. Member for Bromley (Mr. H. Macmillan), to ensure that the correct names of property owners were recorded with the rating authorities. He replied:I do not think that any steps are called for on my part."—[OFFICIAL REPORT, 17th June, 1952; Vol. 502, c. 977.]That is the attitude which the Government have taken ever since.
My hon. Friend spoke of the difficult ties in the way of local authorities trying to identify the real owner of property. Unfortunately, Lambeth Borough Council has a long experience of dealing with Brady, alias Waters, alias all the other names of companies owning properties in Lambeth and other parts of London. I will quote one case to help to pinpoint the difficulty.
A short time ago, one of the companies to which my hon. Friend referred, and which was mentioned in this remarkable article in The Times of 7th January, Various Tenancies (South London) Limited, was the owner of a number of leasehold and freehold properties in my constituency and neighbouring parts of south London. The borough council carried out certain repairs to one of these properties because Brady, alias Water, et cetera, refused to carry them out. Instead of going to the trouble of registering the charge on the 37 over a long period afterwards, the borough council took proceedings in the county court to recover the cost of £50, or whatever it was, due from the owner of this property.
The council obtained judgment, but it was not possible to enforce it because no one on whom the judgment debt could be enforced could be identified. The only possibility open to the council was to obtain an order for the compulsory winding up of the company as the money had not been paid. It obtained an order in the High Court, the company not appearing or being represented.
A day or two after the winding-up order had been made, the company suddenly decided to come to light, and it tendered a banker's draft for the amount of the judgment debt, asking the council to consent to the rescission of the winding-up order. The borough council, very wisely, did not accept the proposal, taking the view that it was not in the public interest that companies of this kind should continue to own property in London and elsewhere.
The company then asked the court for a stay of the operation of the winding-up order and its motion was heard on 11th November. The judge delivered a provisional judgment, acceding to the motion for a stay on the strict understanding that within 14 days there should be filed on behalf of the company further evidence dealing with the following points. I ask the right hon. Gentleman to take note of the further evidence which the judge required:
The extraordinary thing is that further investigation revealed that here was a property-owning company, operating in Brixton and other parts of London, which was compelled to file a statement of its affairs. Here was a company with a nominal capital of £500, only £2 of which had been paid up. The company operated with some cash kept in the desk of the registered office. These are the 38 kind of people we have to deal with. They flour every provision of the Companies Act.
- "(i) The exhibition of balance sheets in accordance with the company's statutory duty for each year since incorporation or, alternatively, adopt as a balance sheet the statement of affairs lodged already with the Official Receiver.
- (ii) Remedying the previous absence of any provision for tax.
- (iii) The amortisation of the short leaseholds disclosed in the affidavits filed by the company as being their assets."
When we approached the Board of Trade to take action for non-compliance with the provisions of the Companies Act, for not showing the registered offices as the office occupied and not making annual returns, and when we notified the Inland Revenue authorities, no action at all was taken. We are at an absolutely dead end in trying to deal with slick operators of this kind. The Minister has all the details. He has a copy of the article which appeared in The Times and he has the details I have given the House. I have sent them to the Milner that and Committee. What else can I do, even at the risk of raising this matter ad nauseam, but urge the Minister that the time has come to make quite sure that this sort of operator is not allowed to carry on?
The only way in which these slum emperors can have their wings clipped, and we can enable local authorities to carry out their duties towards their tenants, is by putting teeth into any housing Bill which the House is asked to accept. We should make it a criminal offence to give false information, to have dummy directors and accommodation addresses. We have tried to trace these directors, but no one is known and their names and addresses are not in the directory. All this is allowed to go on with impunity. I urge the Government to accept what my hon. Friend has said and to take effective action at long last.
§ Sir B. Janner
This is an extremely important matter. Every hon. Member in the House knows by this time what has been going on in regard to the so-called companies set up for the purpose of avoiding any liability in respect of houses they purchase. In most cases the leases have only a short period to run. The company itself is a company of straw which draws out of the tenant whatever it can and does nothing by way of repairing the houses. Eventually, the company sells to another company the directors of which are nominees of the previous company. The tenant then has writs served on him making demands for vast sums of money although he has never been able to find the landlord.
39 In many cases the tenant, after years in which he has not known who the landlord was, is served with a notice demanding hundreds of pounds for rent and he is not in a position to meet the demands made on him. I suggest to the Minister that, in addition to the ordinary criminal penalty to which reference has been made, there should be some penalty in the nature of the company not being able to claim any moneys from a tenant unless throughout the period in respect of which the claim is made it has declared who the directors are, who the company is and who is benefiting. That would immediately have the effect of preventing a large number of these shady customers from carrying on this kind of enterprise. They would then know that they could not claim any moneys from innocent tenants.
Tenants are often left in houses which they themselves have to repair. The houses are in very bad condition, and the council pounces on the tenant because the actual owner cannot be found to provide the funds for essential repairs. In my view, those repairs are not essential to keep the tenant protected. The kind of penalty suggested in the Bill will not be sufficient to cover this position. One company sells its debts to another company by a deed of assignment, sometimes not giving notice to the tenant that the debt has been transferred until the last minute. The tenant does not know where he or she is.
I am definitely of the opinion—probably the House will agree—that if some way were found whereby the courts could not be forced to make orders in cases of that kind for arrears of rent, or so-called arrears, the machinations of large numbers of these people would be destroyed. They would have to declare who the actual owners were, or would at least have to declare who was getting the benefit from the rents which were extracted. I do not think that such a provision could be called unfair. At present, a company puts the debts at a nominal sum and extracts the money from the tenants by means of the court. These companies use the courts to get the full amount, £200 or £300, from a tenant, who may have been in the premises for a large number of years. The tenants have to prove what they 40 or their predecessors have paid for repairs done by the local authority or the deduction of sums by way of rates or for property tax which the landlord has failed to pay.
I hope that the Government will consider my suggestion favourably and will at some stage introduce something of that nature in addition to any other penalty which is imposed.
§ 4.0 p.m.
§ Mr. Frank Allaun (Salford, East)
Lest it be thought that what has been said in this discussion is confined to London, I will quote a case from the provinces. This sort of thing is happening all over the country. The case I shall quote is so similar to the one mentioned by my hon. Friend the Member for Brixton (Mr. Lipton) that I begin to think that the same company is involved. Indeed, it may be operating throughout the country on a tremendous scale, for the details are so similar.
In Manchester and Salford there is a firm of rent collectors called Kershaw and Sons. This firm acts on behalf of a new firm of property owners in Salford which has acquired street after street of rotting old houses. That in itself makes me suspicious. A property company that wants to invest in rotting old slum houses has probably a dirty game in mind to start with, otherwise it would not go in for that kind of property.
The name in the rent book is Zuphon Limited. The case I am quoting is one in which this firm is guilty, in my view, of something illegal. I wrote to Kershaw and Sons to ask the names and addresses of the directors of Zuphon Limited. The answer, very curtly, was that I could only have Kershaw and Sons' address.
I was not satisfied with that and consulted the company registry. I found—just as my hon. Friend the Member for Brixton found in his case—that this firm, owning vast numbers of houses, has a registered capital of £100, with only £2 paid up—again, just as my hon. Friend found.
§ Mr. Allaun
Perhaps that explains the similarity.
41 Again, the company is in the names of people who are men of straw. This firm is indulging in illegal practices and I will give one example. It is the case of a widow who has lived for 30 years in the same house. She received a new rent book in which the word "decont" was typed. This is short for "decontrolled". I may add at this stage that this has nothing to do with the other cases the Minister has examined and has sent to Salford Council with, I hope, a view to prosecution. This is quite a different case. But there are thousands of them.
As one can imagine, this lady is very alarmed. I took the matter up with Kershaw and Sons and instead of admitting that it was wrong—because this is as controlled a tenancy, Mr. Speaker, as your controlled tenancy of this House—what did Kershaw and Sons reply? They did not say that they were sorry for having made a mistake. After a delay of a month they replied asking me to produce proof that this lady is a controlled tenant.
Now this lady does not keep her rent books back to pre-1957 and I repeat that she has been in her house for 30 years. I thereupon wrote again to Kershaw and Sons and got the same reply. Kershaw and Sons know perfectly well that this action by them is a trick, yet this firm had the impertinence to reply to an hon. Member of this House in such a manner, while hiding behind these names. We do not know who is behind all this and, therefore, I support very strongly what has been said by my hon. Friends today in asking the Minister to do something about this situation. We have quoted him a few cases and I am sure that if we knew the whole facts we would find this to be a scandal and a racket on a national scale.
§ Mr. Corfield
Nobody holds any brief whatever for the sort of behaviour of the type of landlord mentioned by hon. Members opposite, but I remind the House that, almost by definition, these mushroom companies make it extremely difficult to find out exactly who is the "beneficial owner"—to use the term in the sense expressed by the hon. Member for Salford, East (Mr. Frank Allaun) and 42 not in the usual one. Even if such investigations are successful they will almost invariably involve some delay, very often considerable. We are concerned hero with quick action by local authorities to alleviate the position in those houses that happen to be multi-occupied.
I would, therefore, remind the House that the Clause, after all, deals only with the offence that is created when somebody wilfully fails to conform to an order ender subsection (1). It is self-evident that it is right—and admittedly this was an omission from the Bill as first drafted—to make the directors who can be ascertained liable for the offence that is being created, even though it may be difficult to find the man who is truly behind the company.
Certainly, I think that we must assume that these companies or the people behind them own these houses for profit, and, there again, we have in the Bill given local authorities power to place charges on such property in order to cover their expenses in rectifying the evils of management, or overcrowding, or lack of amenities, and so on, which give rise to the orders we are discussing. This Clause is, therefore, rather narrower than the matters raised today by hon. Members opposite.
I hope that the House will accept the Amendment. I will certainly read the constructive suggestions put by the hon. Member for Leicester, North-West (Sir B. Janner). Of course, one does not wish to condone these people and one admits that these are the people basically responsible. But sooner or later, even if they have any number of "front" directors, if those "front" directors are fined fairly heavily, profits will be considerably affected.
§ Amendment agreed to.