HC Deb 18 August 1909 vol 9 cc1483-9

(1) Where any land or interest in land in respect of which any duty under this Part of this Act is charged is settled land within the meaning of the Settled Land Act, 1882, and the tenant for life is the person who is liable to pay any sums on account of the duty, he shall be entitled to charge by deed upon the settled land any amount paid by him or which he may become liable to pay in respect of the duty, and the benefit of any such charge may be transferred in like manner as a mortgage.

(2) A deed executed for the purposes of this section shall not take effect until notice thereof has been given to the trustees of the settlement for the purposes of the Settled Land Act, 1882.

(3) Sections sixty and sixty-two of the Settled Land Act, 1882 (which relate to the exercise of powers on behalf of infants and lunatics), shall apply to the exercise of the power under this section in the same manner as they apply to the exercise of the powers of a tenant for life under that Act.

(4) In Scotland, where any person having a limited interest in the land or interest in land in respect of which any duty under this Part of this Act is charged is the person who is liable to pay any sums on account of the duty, he shall be entitled to the like charge as if the sums paid in respect of that land or interest in land had been raised by means of a mortgage to him.


I beg to move to insert after the first word "land" the words "or minerals" in the first line of the clause. I submit this Amendment for the purpose of getting the view of the Chancellor of the Exchequer with respect to the mineral clauses.


The hon. Member wants a declaration from the Government as to whether the word "land" in this connection includes "minerals." The insertion of the words "or minerals" is not at all essential to the object of this clause.


If that is so I do not wish to press the Amendment. On other occasions we have been told that land does not include minerals. It is very doubtful from the discussions which have taken place whether land does include minerals. When we moved Amendments with respect to that question we were told that the matter would be discussed later on under the mineral clauses. I beg to withdraw the Amendment.

Amendment, by leave, withdrawn.

Further Amendment made: In Section (1), to leave out the words "charged is settled land within the meaning of the Settled Land Act, 1882," and to insert instead thereof the words "Increment Value Duty or Reversion Duty. "—[Mr. Pretyman.]

Mr. LANE-FOX moved, in Section (1), after the word "life" ["tenant for life"] to insert the words "or any person having the powers of a tenant for life within the meaning of said Act." This is a purely drafting Amendment which has been suggested to me as being necessary.


We are about to put down an Amendment ourselves to exactly the same effect, which will give an intimation to mortgagees, minors and others that they shall have power to add any duty that they might be obliged to pay, or in the case of trustees, that they should have power to charge the land with any duty that they might be called on to pay.

Amendment, by leave, withdrawn.

Mr. PRETYMAN moved, as a consequential Amendment, in Section (1), to leave out the word "duty" ["on account of the duty"] and to insert the words "either of these duties."

Question, "That the word proposed to be left out stand part of the Clause," put, and negatived.

Mr. WATSON RUTHERFORD moved, in Section (1), after the word "deed" ["charge by deed"] to insert the words "or deed poll under his hand and seal." I think that the effect of this Amendment would be carried out if the Government would leave out the word "deed." It is obvious that in a great many cases persons would simply want to create a statutory charge, that would be done by deed poll, and not by deed.


A deed poll is a deed, and there is no doubt a deed poll would be the instrument, because there are no other parties.


A deed poll must be a deed, but a deed is not a deed poll, curiously enough. It is the same sort of argument as the dog and the animal; every dog is an animal, but every animal is not a dog.

Question, "That those words be there inserted," put, and negatived.

Further Amendments made:—In Section (1), after "may" ["which he may become liable "], to insert the words "then be or may thereafter become."—[Mr. Lane-Fox.]

In Section (1), to leave out the words "the duty" ["sums on account of the duty"], and to insert the words "either of these duties."—[Mr. Pretyman.]

Mr. PRETYMAN moved, after the word "duties" ["sums on account of either of these duties"], to insert the words, "and the amount of any expenditure which he may have reasonably incurred in connection with the valuation." The amount spent on valuation is clearly capital expenditure in order to ascertain the value of the property, and the tenant for life certainly ought to be allowed to charge that on the settled estate.


I think it is perhaps desirable that this Amendment should be allowed.

Mr. J. A. CLYDE moved, in Section (4), to leave out the words, "to the like charge as if the sums paid in respect of that land or interest in land had been raised by means of a mortgage to him," and to insert the words, "to charge such land or such interest therein by means of a bond or disposition or assignation in security in his own favour which he is duly authorised to grant."

As it stands that section is modelled, I think, on a somewhat similar Clause in the Act of 1894, which there applies to Scotland a really different principle from that which the present Bill proposes to apply to England in Section (1) of Clause 26. Under that section the plan is that if a tenant for life has had to pay duties he may himself charge the duties on the estate by an appropriate deed for the purpose. The object of my Amendment is to apply exactly the same procedure to the same cases which occur in Scotland, and to avoid what the Bill as it now stands would involve, namely, the incurring automatically of a charge on the land by the mere circumstance of the payment of the duty. Difficulties have arisen under a similar Clause in the Act of 1894 in Scotland, with the result that in one case in particular it turned out that a man's representative had to pay the duty on the instalment Death Duty paid by the deceased which he never intended to charge, but which the law told him otherwise, and which the law never told him how he could have discharged during his own lifetime. I think it is worth while to avoid risks of that kind, and so I move the Amendment.

Question, "That the words proposed to be left out stand part of the Clause," put, and negatived.

Question proposed, "That the Clause, as amended, stand part of the Bill."


What will be the powers of a tenant for life under this Clause as regards selling part of the land to pay the duty? We know, for instance, that a tenant for life can sell part of the property in order to pay the Death Duties out of the proceeds; he can also sell part of the property and invest the capital sum. What we want to know is whether he will be able to use that capital sum for the discharge of these duties? I cannot see anything which enables him to do so. Another point is whether under this section the tenant for life who reaps advantage from increment accruing when either Increment Duty or Reversion Duty is due can take the increment so accruing to him and yet charge the estate with the duty? That does not seem to be at all a fair proceeding. If he gets the increment, it ought certainly to be deducted from the amount he can charge on the estate.


A charge upon the estate will, of course, give a right of sale to the mortgagee, so that any person who is to have the benefit of the charge will by reason of the charge be entitled to make the sale necessary to get the charge paid.


Supposing a tenant for life pays Undeveloped Land Duty and at the same time gets an income from the land, ought he to keep the whole income in his own pocket and yet charge the capital of the estate with the amount which he has paid for Undeveloped Land Duty? It appears to me that he ought to deduct from the Undeveloped Land Duty the income actually received before the charge on the capital of the estate. May I also ask: Would a charge given by a life tenant under this clause rank before or after existing charges?


As to the second point the charge takes its place with the others. With regard to the point relating to the Undeveloped Land Duty under the clause, the Government having accepted the Amendment of the hon. and gallant Gentleman the Member for Chelmsford, the Undeveloped Land Duty falls solely upon the existing tenant.


We are rushing through this at such a rate that we are very likely to omit matters of considerable importance, and so make the Bill unworkable. The point raised with reference to the charge on the tenant for life seems to be well worthy of the attention of the Attorney-General and of the Government. I understood the Attorney-General to reply to my Noble Friend (Viscount Helmsley), "Oh, well, if you create a charge you can then enforce your charge, and in that way sell." That is a very cumbersome and ridiculous way. What you would have to do is to go to the expense of executing a deed poll, or mortgage, or whatever it might be, and put it into the charge on the land. You would then after that have to take some proceedings in the Court of Chancery for the purpose of carrying out the sale and realising sufficient on the land to pay that charge. I do not think that that is really a businesslike way to carry out this matter. I put it to the Attorney-General that the suggestion of the Noble Lord is well worth consideration as to whether you cannot devise just what machinery is needed for realising sufficient land for the purpose of paying off these charges instead of creating, and so making it more easy for the tenant for life to carry out his obligations.

11.0 p.m.


The tenant for life possesses power to sell by statute already, and there is nothing in the world to limit his power to sell. It is his absolute right, and having sold the money becomes capital money under the statute. He sells by virtue of the powers which the Settled Lands Acts confer.


I do not dispute that—


Then the whole-point vanishes.


I quite agree the tenant for life has power to sell, and I quite agree that under this Bill the tenant for life has power to mortgage. What we want to get at is, when this Act passes does that affect the question of priority of any mortgage executed for the purpose of providing the money. Would it come behind existing mortgages on the land? What we want to know is whether the limited owner as entitled to sell or mortgage the land in order to provide his duty in advance of the existing encumbrances? I am dealing with a legal point on which the Attorney-General seemed rather to differ from the hon. and learned Gentleman (Mr. Buckmaster) behind him—that is whether the power to sell or raise money is to be in priority of all existing charges on the land. I rather gathered that was the opinion of the hon. and learned Member (Mr. Buckmaster), but that the opinion of the Attorney-General was to the contrary, and that any power of raising money did not affect the question of priority of existing mortgages. I think we are entitled to have an explicit statement whether in fact this duty is charged upon the land in front of existing encumbrances, and whether the money raised by sale or mortgage to pay this duty to the revenue is to go in front of existing encumbrances.


The hon. Member has entirely misunderstood what I said, or has not taken the pains to follow my observations because the power to sell under the Settled Land Acts has nothing whatever to do with encumbrances. It is a power entirely independent of it, and whether an encumbrance created under this statute is to come in front or is to be subsequent to other encumbrances cannot affect the right of the tenant for life to sell. The question of the Noble Lord was, Is there power in the tenant for life to sell and by means of sale pay encumbrances according to their priority? Of course, the Noble Lord's comment has nothing whatever to do with the order of the encumbrances, but with the capital money, which is entirely independent. Therefore the suggestion made by the hon. Member who has just sat down that there is some difference between myself and the Attorney-General must be due to an entire misconception of what I said.


I am sorry that I was not able to follow the hon. and learned Gentleman's argument, but at this moment I do not quite see, when the land has been sold under the provisions of the Settled Lands Act and the capital money has been received, whether that money is to be devoted first to paying existing charges on the existing encumbrances of the land or in paying this duty. I want to know whether the proceeds of the sale of the land are to be devoted to the payment of this duty in priority of existing charges or encumbrances of the land, or whether existing mortgages come first and then the duty is payable?


When the Attorney-General was answering the hon. and learned Member for Kingston he said that Clause 26 would not affect priorities. As I refrained from moving my Amendment on this point, I should very much like to know whether that is so, and whether existing priorities can be prejudiced? I understood that priorities were not affected.


That is my view.

Viscount HELMS LEY

I should like it made quite clear whether this tax comes under the same footing as the Death Duties under the Finance Act of 1904?


I think we use precisely the same language. I can only say that a tenant for life has the power given to him by this Bill. I have not compared the exact phraseology with the Act mentioned by the hon. Member, and an expression of opinion upon that point would require a considerable amount of minute investigation.