Clause 14. — (General effect of vesting of undertakings.)

Orders of the Day — Transport Bill – in the House of Commons at 12:00 am on 30th April 1947.

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5.30 p.m.

Photo of Sir Frank Soskice Sir Frank Soskice , Birkenhead East

I beg to move, in page 14, line 20, at the end, to insert: (d) any reference (however worded and whether express or implied) to the directors or any director of the body were, as respects anything falling to be done on or after the date of transfer, a reference to such person as the Commission may appoint; and(e) any reference (however worded and whether express or implied) to any officer or any servant of the body were, as respects anything falling to be done on or after the date of transfer, a reference to such person as the Commission may appoint or, in default of appointment, to the officer or servant of the Commission who corresponds as nearly as may he to the first mentioned officer or servant; and. This Clause provides that the property of the body shall vest in the Commission, and that contracts made by a body which is taken over shall, equally, vest in the Commission. Therefore, you have to read in the name of the Commission, instead of the body in the contract which is transferred. The Amendment seeks to remedy two omissions in the Clause as it stands at present. It seeks to deal with the case where there is a reference, in the contract which is taken over, to directors and, similarly, where there is a reference to a servant of the body whose undertaking is taken over. It provides that when a contract is transferred to the Commission the word "director" has to be read as if it referred to somebody appointed by the Commission, and the word "servant" is to be deemed to refer to some equivalent employee of the Commission.

May I give an example of what I have in mind? You may have an agreement that certain works should be done to the satisfaction of the chief clerk of the railway company. That contract is taken over, so you have to read into it the name of the Commission instead of the name of the railway company, and read something instead of the chief clerk. The Amendment provides that you have to read the equivalent servant of the Commission instead of the chief clerk of the railway company.

Amendment agreed to.

Further Amendment made: In page 14, line 27, leave out "two," and insert "four."—[The Solicitor-General.]

Photo of Sir Frank Soskice Sir Frank Soskice , Birkenhead East

I beg to move, in page 14, line 33, at the end, to insert: Provided that any agreement to which the body were a party which cannot have effect as modified in the manner provided by this Subsection by reason only that, if it were so modified, no person other than the Commission would have rights or liabilities thereunder shall cease to have effect as respects anything falling to be done on or after the date of transfer This Amendment remedies an omission of a rather technical character in the Clause. It provides that certain contracts, instead of being taken over, shall cease. The contracts with regard to which the proviso operates are those made, for example, between a railway company and a haulage contractor. Supposing that a contract is taken over by the Commission when they take over the undertaking of the railway company and the haulage contractor, the result would be that the contract would be one between the Commission and itself. That, of course, would be meaningless, and could not be enforced. Proper drafting requires that contracts of that sort shall be made to come to an end on transfer.

Photo of Mr Selwyn Lloyd Mr Selwyn Lloyd , Wirral

What would be the position if a third party had rights under such a contract?

Photo of Sir Frank Soskice Sir Frank Soskice , Birkenhead East

The hon. Member will see that the Amendment applies only to contracts in respect of which can be said that no person other than the Commission shall have rights or liabilities. If a third party had rights the contract would not be within the ambit of the Amendment.

Amendment agreed to.

Further Amendments made: In page 14, line 35, leave out "(d)", and insert (f)."

In line 41, after "references," insert: in paragraphs (b), (c), (d), (e) and (g) of that Subsection.

In line 42, after first "body," insert: to any directors, officers or servants of the body.

In line 43, leave out from beginning, to "include," in line 44.—[The SolicitorGeneral.]

Photo of Mr William Hall Mr William Hall , Colne Valley

I beg to move, in page 15, line 26, at the end, to insert: (b) there shall not, by reason of the vesting, be transferred to the Commission any liability of the body in respect of any security of the body created, in pursuance of any enactment, as collateral security for a loan to the body or to another person. This Amendment runs with two other Amendments which are consequential to it—in page 15, line 43, and in page 17, line 34. The general object of this Clause is to put the Commission in possession of all rights, and subject it to all the obligations, covered by several thousands of private Acts and a number of public Acts dealing with these undertakings. The object of Subsection (6, a), to which this Amendment relates, is to stipulate that when vesting does take place, and rights and obligations are assumed by the Commission, the Commission, when assuming liability for certain loans, shall not be obliged to do what an undertaking has had to do in the past when those loans were raised—give collateral security. 'There will be no hardship resulting from this, because the security of the loan will be quite as good as, possibly better than, it is now. It will have the credit of the British Transport Commission behind it and, as the House knows, the stock of that Commission will have the Treasury guarantee to support it.

The circumstances in which collateral security was given by the railways arose when the four main line companies secured Statutory powers to create debenture stocks equal to the total of the borrowings which they were allowed to undertake from the Railway Finance Corporation. The obligation of the London Passenger Transport Board was to raise debenture stocks, Class A, B, and C, but such stock was never, in fact, raised. So, this Clause is confined to the four main line railway companies, and to the 4 per cent. debenture stock which they had to raise as collateral security.

Amendment agreed to.

Further Amendment made: In page 15, line 43, at end, insert: (7) Without prejudice to any other liability of the Commission in respect of a loan to the body or to any other person—

  1. (a) any security of the body which has been created in pursuance of any enactment as collateral security for the loan shall be cancelled as from the date of transfer;
  2. (b) any provision of any enactment or agreement requiring any security of the body to be created as collateral security for the loan shall cease to have effect as from the date of transfer; and
  3. (c) any provision of any enactment or agreement with respect to the redemption of any security of the body outstanding at the date of transfer which was created in pursuance of any enactment as collateral security for the loan shall cease to have effect as from the date of transfer."—[Mr. Glenvil Hall.]