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Clause 34—(Prohibition Of Sale Of Medical Practices)

Volume 436: debated on Monday 21 April 1947

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I beg to move, in page 29, line 33, at the end, to insert:

"For the avoidance of doubt it is hereby declared that if premises previously used by a medical practitioner are sold at a public auction by that medical practitioner or by his personal representative such sale shall not be deemed to be a sale of the goodwill or part of the goodwill of the practice of that practitioner."
There was a long discussion in Committee on the steps which were necessary to prevent what the Lord Advocate described as the black marketing of medical practices, and I think that all sides of the Committee agreed that safeguards should be inserted on the lines of those laid down in Clause 34 (3) in order to make it impossible for a medical practitioner or his executors to get something for the goodwill by charging more than the proper price for premises, a car, or anything like that. At the end of a rather long discussion the Secretary of State said:
The purpose of the Subsection is to make it as difficult as possible—if not impossible—by some means or other, in the sale of something that is not associated with the practice, to cover up the sale of that practice, and get behind what is the intention of the Government. That is the position briefly, and I have not the slightest intention of resiling from that intention."
He went on to say:
"If the Opposition can give me any means whereby I could tighten it up, even to the inclusion of sales by auction, even to acquiring not only the practice, but the property and the choice of who is to use it, I am ready to consider them between now and the Report stage."—[OFFICIAL REPORT, Standing Committee on Scottish Bills; 5th March. 1947: c. 521.]
It was clear from the discussion that the Committee were not at all sure what would be the effect of an auction sale. Indeed, the Lord Advocate himself when asked the question had to admit that he did not know the answer. The purpose of this Amendment is to eliminate at least one doubt from a field which is likely in any case to give rise to considerable dispute and even the possibility of litigation. In order to see the effect of this Amendment, I invite the House to consider the position which would arise if it were not accepted. Let us assume that there is still a doubt about the case of the auction sale. Let us assume that there are two parties to the transaction, either the practitioner who is going to sell a particular private practice or the executors or personal representatives of a practitioner. Both those parties and the would-be purchaser are conscientious people, who are most anxious not to infringe the law. They are most anxious not to incur these very severe penalties which might or might not amount to £500, and in addition the repayment of any amount which may have been got in such an underhand way, as well as a term of imprisonment not exceeding three years. Let us assume that they are genuinely anxious not to leave themselves liable to these penalties, and genuinely anxious, as I am sure they would be, to do what is right.

The vendor instructs the agent to put up his premises for sale at a public auction. Supposing in the course of that auction which he attends, he observes that there is a doctor who is bidding for his property. What is the position? He does not want to run the risk of infringing the law or making himself liable to a heavy penalty or to imprisonment. Is he to stop the sale? There is the other man bidding for the property and the seller will not know until the hammer falls, whether the doctor is going to buy, or whether it is the other man, because they are both bidding one against the other. When the hammer falls, is he to repudiate the sale? The Lord Advocate is here and he will be able to tell us whether that would be a legal repudiation. I understand that once the hammer falls, a contract has been made, and, therefore, it would be quite impossible for that man to say he would not sell to the doctor—But there are two parties to this transaction. What about the would-be purchaser, the doctor who is anxious to buy the house which is offered for sale on the public market? If he is a prudent man, he will go to a firm of experts and before the sale takes place ask their advice as to what he ought to give. He will inquire what is the value of this property on the open market, and he may be advised that it is £2,500 or even £3,000. He goes to that auction in the knowledge that the expert view is that the property is not worth more than £2,500. Bidding starts at say £2,000 and rises to 2,300 and then to £2,500. Is he then to stop? It may go up to 3,000 or 3,500 It is astonishing how much properties are fetching now in the open market, whether they are sold by private treaty or by public auction.

What is the position of this gentleman? Has he to stop because he knows he is getting above the amount he is advised by expert advisers is the true value of the property? It is a most difficult question. I have thought a lot about this since the Committee Stage. I did not receive advice from any outside body to put down this Amendment. It is the fruit of my own thought upon the matter for what it is worth, and I think it is in accordance with the request which was made by the Secretary of State on the Committee Stage in the words which I have quoted. I genuinely believe that this will do a great deal to remove at least one doubt from a field which is already full of doubts and difficulties. In all sincerity I commend this Amendment to the House.

8.30 p.m.

I beg to second the Amendment.

I would recall to the House the position in which this matter stands. Clause 34, with which we are dealing, lays down in Subsection (2) that
"anyone who sells or buys the goodwill of a medical practice shall be liable on conviction"
to a fine which will deprive him of any profit, a further amount of £500 or three months in jail. We are today in a period of inflation; prices are going up all the time. It is therefore very difficult to lay down, by any rule of thumb, what shall be the value of a house, a motor car, a consulting room, or whatever else it may be. I suggest that this Amendment represents one of the fairest methods of allowing any doctor or his representatives—because they are included too—with a medical practice to sell to conduct the sale and carry it to a conclusion with the certainty that this is being done in a legal manner. This matter was raised in Committee, and there is no guarantee, even if the sale is carried out privately, that an excessive price is not being asked. The actual wording is:
"the sale, letting or other disposition is substantially in excess of the consideration which might reasonably have been expected to be paid by a medical practitioner for the premises as such irrespective of goodwill. …"
I do suggest that in the present circumstances of the country that is a very difficult figure to assess. Further, I suggest that this Amendment which is simple and clear, and which allows a doctor or his representative to sell what they have to sell at a public auction, is the fairest manner of dealing with the matter.

I am sure the House is much indebted to the two hon. Gentlemen who have moved and seconded this Amendment for the great care and consideration they have given to it. Since the matter was raised in Committee I have looked carefully at it myself, and I think I may be able to satisfy the hon. Gentlemen as to the position. My view is that this Amendment is not necessary. It seems to me that where a doctor's house is sold at a genuine auction sale there could be no danger of prosecution. The fact that a sum was paid at such a genuine auction by a purchaser who had no prior agreement with the seller, would negative any suggestion that the price contained an element of goodwill. I cannot conceive of a genuine auction where the parties had no kind of prior agreement, in connection with which there could be any suggestion of prosecution.

On the contrary, this further trouble arises from the form of the Amendment. If it were accepted, I should be anxious because it might well afford an opportunity of evading the prohibition on the sale of goodwill, since if a purchaser and a seller put their heads together and agreed on what might be considered to be an absurd price, which would really keep out any ordinary non-medical person, they would thus be able to evade the statute and it would be very difficult, if not impossible, to get at them. There is that danger—that if the Amendment were allowed, it would open the door to that kind of thing. There is always that danger when one tries to legislate for a particular case of this kind, and it seems to me much better to leave it to the ordinary law. If we attempt to make this Amendment, I gravely fear that we should be asking for trouble. As I have said, I am perfectly confident that if the auction is genuinely carried through without any kind of prior agreement, there could be no question at all of prosecution.

The right hon. and learned Gentleman said that this is an exceptional circumstance and that it is not in our interest to deal with it because of that fact, but I wish to point out that the Clause itself deals with a special circumstance. It is a unique and a special circumstance and I venture to say is one which will rapi pass. In five or ten years there will be no such occurrence of this kind and there will be no sales of property of this description. I think the Amendment has the justification that it does rough justice to the doctor in allowing him to get what he is reasonably entitled to as the value of his property. The Government have tried to fix a ceiling upon ordinary residential property; they have failed, although, quite rightly, they turned their best intelligence to this very difficult matter.

While that is true of property generally, the unfortunate doctor is not to be permitted to have the true value of his property, because it may well be that the so-called enhanced prices received may be attributed, in the opinion of some, to be partly in the nature of goodwill. The Lord Advocate speaks of a genuine auction sale. I can inform the House that I was a licensed auctioneer for some years in Western Australia, and I recollect very clearly a circumstance of a relevant character. There were some 40 or 50 persons present at a sale and I was selling a harmonium. Only one person wanted it. To all intents and purposes this was to be a genuine sale, but I knew that only one person wanted the harmonium while the other 39 or so were there for the purpose of buying other things such as hens, poultry-coops and so on. How can one say what is a genuine auction sale? What are the standards of identification? How does the Under-Secretary or the Secretary of State discover when a sale is genuine or not genuine? How does he know when there is only one person who is interested and prepared to buy the property at a particular price?

Do we want this Clause at all? If the Minister insists on it then I think he should, by accepting the Amendment proposed by my hon. Friend, protect the medical practitioner seeking to sell his house against a grave injustice placing him at a disadvantage compared with any other person seeking to sell a house. There is a tendency to look at this Bill in a very uneven way. Certain things are being built which will, I hope, last long after our lifetime; but other things are most transitional, and I think the right hon. Gentleman will see that this Clause deals with something of a most transitory character. It deals with something which, I think, will certainly not occur in five or six years from now. The sale of practices and buildings associated with them will disappear, and as the national health service becomes part of our statutory institutions this set of circumstances will be obliterated. But here we are embodying in the Bill for all the time that it lasts this particular prohibition.

I venture to say that at no very distant date this House and the public will be astonished to read in Subsection (2) of Clause 34 the offences, and the punishments for those offences, to which persons who, hitherto, have been believed to be engaged in the honourable and noble calling of healing the sick and succouring the suffering, are liable for selling what is really their own property. I hope the Amendment will be accepted; I do not think it betters the position to any great degree but it certainly reduces the grave abuse and peril—abuse so far as the public is concerned and peril so far as concerns the medical practitioner. I hope that the Secretary of State for Scotland and his advisers will see their way to accept this Amendment, which has been given a great deal of thought, and is put forward sincerely in the hope that it will be useful to the Minister, and will be fair and just to the medical practitioners.

I speak again by leave of the House. It appears to me that this Amendment would be acceptable to the Lord Advocate if, for the word "public," were substituted the word "genuine." His difficulty appears to be that he contemplates what is called a "rigged" sale. He is a lawyer, and he knows very well that the law gives ample protection against rigged sales. I have no doubt that to rig an auction sale is an offence in Western Australia as well as in Scotland. The House never ceases to be amazed and delighted at the versatility of my hon. Friend the Member for South Edinburgh (Sir W. Darling), who has instanced a sale at which there was only one purchaser. I am sure that the Lord Advocate will appreciate that if he does not accept this Amendment, or an Amendment with the alteration I suggest, he will drive Scotland back on the uncertainty of the present position. If he will only read again the Debate in Committee on this Clause, he will see that there is uncertainty, not only on this side, but among some of his hon. Friends. The hon. Member for Central Edinburgh (Mr. Gilzean) expressed in Committee the strong opinion that auction sales ought to be allowed, as is proposed here, to obviate the possibility of the prosecution of the vendor or purchaser. He said:

"There is another aspect, a very simple one. What is to hinder a doctor from going to a firm of auctioneers, and asking them to sell the property under the hammer."
He intervened once or twice later on and made his point absolutely clear. He said:
"If a person puts a house, or any other commodity, up for sale, then it appears to me that there could be no prosecution no matter what the price may be."—[OFFICIAL REPORT, 5th March, 1947; Standing Committee on Scottish Bills, c. 510 and 517.]
That is exactly what we on this side of the House want to establish. In so far as this Amendment does establish that, we feel that we must stand by it and

Division No. 128.]

AYES.

[8.45 p.m.

Agnew, Cmdr. P. G.Gomme-Duncan, Col. APeto, Brig, C. H. M.
Beamish, Maj. T V. H.Grant, LadyPoole, O. B. S. (Oswestry)
Birch, NigelHeadlam, Lieut,-Col. Rt. Hon. Sir C.Prior-Palmer, Brig. O.
Bower, N.Hogg, Hon. Q.Renton, D.
Boyd-Carpenter, J. AHollis, M. CRopner, Col. L.
Carson, E.Hutchison, Lt.-Cm. Clark (E'b'rgh, W.)Scott, Lord W.
Clarke, Col. R. S.Shepherd, W. S. (Bucklow)
Conant, Maj. R. J. E.Kerr, Sir J. GrahamSnadden, W. M.
Corbett, Lieut.-Col. U. (Ludlow)Langford-Holt, J.Spearman, A. C. M
Crosthwaite-Eyre, Col. O E.Linstead, H. N.Spence, H. R.
Cuthbert, W. N.Lipson, D. L.Stewart, J. Henderson (Fife, E.)
Darling, Sir W. YLucas-Tooth, Sir HStuart, Rt. Hon. J. (Moray)
Digby, S. W.McCallum, Maj. DSutcliffe, H.
Dodds-Parker, A. D.Macdonald, Sir P. (I. of Wight)
Dower, Lt.-Col. A. V. G. (Penrith)Maclay, Hon. J. S.Thorneycroft, G. E. P. (Monmouth)
Drayson, G. B.Macpherson, Maj. N. (Dumfries)Thornton-Kemsley, C. N.
Drewe, C.Maitland, Comdr. J. W.Thorp, Lt.-Col. R. A. F.
Duthie, W. S.Manningham-Buller, R. EWalker-Smith, D
Eccles, D. M.Marlowe, A. A. H.Ward, Hon. G. R.
Elliot, Rt. Hon. WalterMarshall, D. (Bodmin)Wheatley, Colonel M. J.
Fletcher, W. (Bury)Mellor, Sir J.Williams, Gerald (Tonbridge)
Foster, J. G. (Northwich)Moore, Lt.-Col. Sir T.Willoughby de Eresby, Lord
Gage, CMorrison, Maj. J. G. (Salisbury)
Galbraith, Cmdr. T. D.Neven-Spence, Sir B.

TELLERS FOR THE AYES

Gates, Maj. E. E.Nield, B. (Chester)Mr. Studholme and
Major Ramsay.

NOES

Adams, Richard (Balham)Blackburn, A. RCorbet, Mrs. F. K. (Camb'well, N.W.)
Adams, W. T. (Hammersmith, South)Blenkinsop, ACorlett, Dr. J.
Allen, A. C. (Bosworth)Boardman, H.Corvedale, Viscount
Alpass, J. H.Bowen, R.Cove, W. G.
Anderson, F. (Whitehaven)Bowles, F. G. (Nuneaton)Crawley, A.
Attewell, H. C.Braddock, Mrs. E. M. (L'pl, Exch'ge)Grossman, R. H. S
Austin, H. LewisBrooks, T. J. (Bothwell)Daggar, G.
Awbery, S. S.Brown, George (Belper)Davies, Edward (Burslem)
Ayles, W. H.Buchanan, G.Davies, Harold (Leek)
Ayrton Gould, Mrs. BBurden, T. W.Deer, G.
Bacon, Miss AButler, H. W. (Hackney, S.)Diamond, J.
Baird. J.Champion, A. J.Dobbie, W.
Balfour, A.Choler, D.Dodds, N. N.
Barstow, P. G.Cobb, F. A.Donovan, T.
Barton, C.Cocks, F. S.Driberg, T. E. N.
Battley, J. R.Coldrick, W.Edwards, N. (Caerphilly)
Bechervaise, A ECollindridge, F.Edwards, W. J. (Whitechapel)
Benson, G.Collins, V. JEvans, E. (Lowestoft)
Berry, H.Colman, Miss G. MEwart, R.
Bevan, Rt. Hon. A. (Ebbw Vale)Comyns, D. L.Fairhurst, F.
Bing, G. H. CCook, T. F.Farthing, W. J.
Binns, J.Cooper, Wing-Comdr. GFletcher. E. G M (Islington, E.)

vote for it, because we consider that unless we can have something like this, we are driven back on the uncertainty and unfairness of the present position.

Question put, "That those words be there inserted in the Bill."

The House proceeded to a Division.

(seated and covered): On a point of Order. May we have your guidance, Mr. Deputy-Speaker, on the question of whether an hon. Member, having said "Aye," should now move to the "No" Lobby.

It is open for the right hon. Gentleman to correct himself at the second call.

The House divided; Ayes, 70; Noes, 226.

Follick, M.Mackay, R. W. C. (Hull, N.W.)Smith, C. (Colchester)
Foot, M. M.McLeavy, F.Smith, Ellis (Stoke)
Gaitskell, H. T. N.MacMillan, M. K. (Western Isles)Smith H. N. (Nottingham, S.)
Gallacher, W.Macpherson, T. (Romford)Smith, S. H (Hull, S.W.)
George, Lady M. Lloyd (Anglesey)Mallalieu, J. P. W.Soskice, Maj. Sir F.
Gibson, C. W.Manning, Mrs. L. (Epping)Sparks, J. A.
Grenfell, D. R.Marquand, H. A.Stamford, W.
Grierson, E.Messer, F.Steele, T.
Griffiths, D. (Rother Valley)Middleton, Mrs. L.Stephen, C.
Griffiths, Rt. Hon. J. (Llanelly)Mikardo, IanStewart, Michael (Fulham, E.)
Guest, Dr. L. HadenMillington, Wing-Comdr. E. R.Strauss, G. R. (Lambeth, N.)
Gunter, R. JMitchison, G. R.Stress, Dr. B.
Guy, W. H.Moody, A S.Swingler, S.
Hale, LeslieMorgan, Dr. H. B.Sylvester, G. O.
Hall, W. G.Morris, P. (Swansea W.)Taylor, H. B. (Mansfield)
Hamilton, Lieut.-Col. R.Moyle, A.Taylor, R. J. (Morpeth)
Hannan, W. (Maryhill)Nally, W.Taylor, Dr. S. (Barnet)
Hardy, E. A.Naylor, T. E.Thomas, D. E. (Aberdare)
Harrison, J.Neal, H. (Claycross)Thomas, I. O. (Wrekin)
Hastings, Dr. SomervilleNichol, Mrs, M. E. (Bradford, N.)Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)
Henderson, Joseph (Ardwick)Nicholls, H. R. (Stratford)Thorneycroft, Harry (Clayton)
Herbison, Miss M.Paget, R. T.Thurtle, E.
Holman, P.Palmer, A. M. FTiffany, S.
Holmes, H. E. (Hemsworth)Pargiter, G. ATitterington, M. F.
House, GParker, J.Tolley, L.
Hoy, J.Parkin, B. T.Turner-Samuels, M.
Hubbard, T.Paton, Mrs F. (Rushcliffe)Ungoed-Thomas, L.
Hughes, Hector (Aberdeen, N.)Paton, J. (Norwich)Usborne, Henry
Hutchinson, H. L. (Rusholme)Pearson, A.Vernon, Maj. W. F.
Hynd, H. (Hackney, C.)Peart, Capt T. F.Viant, S. P.
Hynd, J B. (Attercliffe)Porter, G. (Leeds)Walkden, E.
Irving, W. J.Proctor, W. T.Wallace, G. D. (Chistehurst)
Isaacs, Rt. Hon. G. APursey, Cmdr. H.Wallace, H W. (Walthamstow, E.)
Janner, B.Randall, H. EWeitzman, D.
Jay, D. P. T.Ranger, J.Wells, P. L. (Faversham)
Jeger, C. (Winchester)Rankin, J.Wells, W. T. (Walsall)
Jones, D. T. (Hartlepools)Reeves, J.Westwood, Rt. Hon. J
Jones, Elwyn (Plaistow)Reid, T. (Swindon)White, C. F. (Derbyshire, W.)
Jones, P. Asterley (Hitchin)Richards, R.White, H. (Derbyshire, N.E.)
Keenan, W.Roberts, Goronwy (Caernarvonshire)Whiteley, Rt. Hon. W
Kenyon, C.Rogers, G. H. R.Wigg, Col, G. E
King, E. M.Ross, William (Kilmarnock)Wilkes, L.
Kinley, J.Sargood, R.Wilkins, W. A.
Lee, F. (Hulme)Scollan, T.Willey, F. T. (Sunderland)
Lee, Miss J (Cannock)Scott-Elliot, W.Williams, J. L. (Kelvingrove)
Leslie, J. R.Shackleton, E. A. A.Williams, W. R. (Heston)
Levy, B. W.Shawcross, C. N. (Widnes)Williamson, T.
Lewis, A. W. J. (Upton)Shawcross, Rt. Hn. Sir H. (St. Helens)Willis, E.
Lipton, Lt.-Col. M.Shurmer, P.Wills, Mrs. E. A
Longden, F.Silverman, J. (Erdington)Wyatt, W
McAdam, W.Simmons, C. J.Yates, V. F.
McAllister, G.Skeffington, A. M.Younger, Hon. Kenneth
McGhee, H. G.Skeffington-Lodge, T. C
Mack, J. D.Skinnard, F. W.

TELLERS FOR THE NOES

Mr. Snow and Mr. Daine