CLAUSE 4.—(Property and rights with which, and matters subject to which, coal is to be acquired.) (Hansard, 13 December 1937)

§ Mr. Tinker
rose—

§ The Chairman
Does the hon. Member rise to move the Amendment in the names of the hon. and learned Member for East Bristol (Sir S. Cripps) and himself—in page 4, line 19, leave out Subsection (4)? I feel a doubt whether I ought to select that Amendment: I do not quite understand its object. If the hon. Member will give me an explanation, I shall be able to say whether I select it or not, but perhaps he will bear in mind, in giving that explanation the question whether, if the Sub-section were left out, it would so upset the whole of the Clause as to amount really to a negative of the Clause.

§ Mr. Tinker
I beg to move, in page 4, line 19, to leave out Sub-section (4).
I can well understand your feelings, Sir Dennis, because I am in a similar position myself. I wish to move the deletion of the Sub-section because of its doubtful character and of the fact that I have not been able to grasp its meaning, so that I may obtain an explanation of what the Sub-section means. Clause 4 deals with the change over of property rights and that kind of thing, and Subsection (4) goes on to say: The vesting of any coal, mine of coal, property or rights in the Commission shall take effect,"— subject to certain conditions. I have spent some considerable time in trying to get the whole thing together by referring to Part I and Part II of the Second Schedule, and as yet I have not been able to do it. Therefore, as I am in a difficulty, I am obliged to turn to the promoters of the Bill and ask them to give an explanation to the Committee and to state their understanding of what it means. It. is for that purpose that I beg to move, in page 4, line 19, to leave out Sub-section (4).

§ The Attorney-General (Sir Donald Somervell)
I have sympathy with the hon. Member for Leigh (Mr. Tinker) in not being completely clear at the first reading of the purpose of this Sub-section. If the Committee will look at Clause 3 (1) they will see that this machinery of transfer starts with a general vesting of the fee simple in the Commission subject to matters thereinafter mentioned. Clause 4 adopts the machinery of the imaginary conveyance. The advantage of that is that under the Law of Property Act it is laid down what normally passes with a conveyance, and in Clause 4 (3) the Committee will see that property and rights, which would normally pass with a conveyance shall pass to the Commission subject to certain exceptions which do not matter at the moment. The purpose of Sub-section (4) is really directed not so much to the property which would pass, that is to say, the benefit of any rights which may adhere or be annexed to the coal, but to the possible burdens which may be annexed to that coal in relation to other land. For instance—I take an imaginary case which may, or may not occur in practice, of land adjoining a mine which might have a legal easement of a right to drain water into the mine. This Subsection has made it quite clear that the rights of non-conveying parties are unaffected; that is to say, if there are any rights as against the coal in adjoining landowners, they remain and are unaffected.
On coming to the Second Schedule, it will be found—I cannot deal with it except by reference now, but I mention it in case the hon. Gentleman wants to raise a point upon it when we come to the Schedule—that the matters dealt with in paragraph (3) of Part I of the Second Schedule are the sort of right which would be covered by this Sub-section. The present Sub-section really makes completely clear what otherwise might be implied. The whole machinery being complicated, we thought it right to insert the express provision that the vesting of the coal should take effect subject to all matters or all rights outstanding in third parties. Otherwise someone might have sought to base an argument on the general words vesting of the fee simple in Clause 3. It is really a technical point, and that is the reason why it is inserted.

§ Mr. Silverman
I think that the Committee will thank the hon. and learned Gentleman for his explanation. If I continue the Debate it is to clear up one point that might possibly lead to misunderstanding later. Like the hon. and learned Member I can only refer to the Schedule by reference. He, no doubt, will have noticed that there appears on the Order Paper, page 444, an Amendment in my name and the names of my hon. Friends to leave out sub-paragraphs (2) and (3) of the Second Schedule. I have no knowledge of and no right to anticipate what the Chairman's decision will be as to the calling of that Amendment. In case it were called I should like it to be clear now that the effect of not passing the present Amendment and deleting this Sub-section will not be to preclude myself and my hon. Friends from moving the Amendment which stands in our names should it be called. The Second Schedule does refer to these quasi-easements, and so on, and the effect of our Amendment would be to cut down a good deal the effect of the Sub-section as it stands. I quite appreciate that the Sub-section is necessary in order to implement, on the basis of an imaginary conveyance, the other part of the Clause, but I should not like to allow the Subsection to stand unchallenged if the effect were to preclude us from moving our Amendment.

§ Mr. Shinwell
I am obliged, as my hon. Friend was, to the hon. and learned Gentleman for clearing this matter up. This Amendment was put down for the purpose of elucidating the point at issue. I am not satisfied about the reference to the Second Schedule.

§ The Attorney-General
I should have said paragraph 2, sub-paragraph (3).

§ Mr. Shinwell
I am obliged to the hon. and learned Gentleman, but it is very difficult for the Committee to consider the Clause to which the Amendment relates without reference to the Second Schedule. I agree that we cannot discuss the Second Schedule at this stage, but may I ask whether, as this Clause relates primarily to the withdrawal of support in certain circumstances, in such circumstances additional compensation requires to be paid? I gather from the reference in the 840 Second Schedule that there are contingencies in which compensation is provided for. The question I desire to put is, whether in these circumstances the compensation which has to be paid is included in the global figure?

§ The Attorney-General
It is not for me to say whether any particular Amendment will be in order, but I think that I can say this. As a matter of the drafting of this Clause, these words would have been inserted even if there had not been the reservations in the Schedule.

§ Mr. Silverman
Would they be just as relevant and necessary suppose the Amendment I propose were to be accepted by the Committee?

§ The Attorney-General
I would rather leave that, because I am ashamed to say that I have got a certain way with the Amendments, but not as far as having studied the Amendment to which the hon. Member refers. These words would be appropriate here even without the reservation in the Schedule. As far as the right to support is concerned, that is outside this Sub-section. For drafting reasons, which will be appreciated when we come to the Second Schedule, the right to support is dealt with in Part II of the Second Schedule. I think that it will be found, certainly so far as the discussion of Amendments is concerned, subject to the Chair, the code is to be found in Part II of the Second Schedule. The passage by the Committee of these general words could not have any limitation on the fullest discussion as to the right of support which will be dealt with when we come to the Second Schedule. I hope that that satisfies hon. Gentlemen.

§ Mr. Harold Mitchell
While we are on this Amendment there is one question I would like to put. In some cases water is being extracted from old shafts for commercial purposes. I have studied the Bill rather carefully, but I am not quite clear whether rights of that kind would be vested in the Commission, and, as far as I understand it, the Commission would not be empowered to dispose of water. I would very much like to ask the Attorney-General whether that point is covered or not.

§ The Chairman
I think that the hon. Member's point will, come better on the 841 Schedule. It is quite obvious that if there is anything he wants to alter, he could not do it by an alteration of this Clause. He would have to do it on the Schedule.

§ Mr. Mitchell
I will raise it later.

§ Mr. Tinker
I beg to ask leave to withdraw the Amendment.

§ Mr. Spens
I beg to move, in page 4, line 23, at the end, to add: (5) Where a person who is deemed to be a conveying party to such a conveyance, as is referred to in Sub-section (1) of this Section, though being interested in any coal or mine of coal, has in respect of such coal or mine, or his interest therein, entered into or undertaken to observe or perform any covenant, agreement, or obligation (restrictive or otherwise) which is subsisting at the vesting date, and the benefit of which is not vested in the Commission by this Act, the Commission shall indemnify him and his estate and effects against all actions, proceedings, costs, damages, claims, and demands on account of any breach of such covenant, agreement, or obligation. This Amendment follows very conveniently on the explanation which the Attorney-General has just given to the Committee. When the coal or coal mines are transferred from their present owners to the Commission they will, in some cases, carry with them certain obligations which their previous owners have entered into with third parties. Some of these obligations may arise as a result of law. The third party may have had a right which has existed for a sufficiently long time for him to be able to claim it by virtue of law. But in most cases in connection with coal mines, third-party obligations are generally originally created by deeds between the coalowners and third parties. Last week the case of the Wedgwood factory having been erected on a piece of surface with coal underneath was quoted, and it was pointed out that the owners had to buy a stratum of coal to keep the factory up. Instead of buying the coal they could have bought the surface and entered into a covenant or obligation with the owner that thereafter the coal should not be worked so as not to let down that factory. Similarly you can have a number of obligations. When the coal is vested in the Commission, the Commission will take over the coal and the coal mines subject to these obligations so far as they know 842 of them, but there is no right for these third parties to register their rights against the coal at the present time. It is left to the coalowners to disclose to what obligations they hold the coal subject, but there will be a large number of existing rights.
If the Commission or their agents commit a breach of these obligations, undoubtedly the third party will have the right of action against the Commission, but they will also have a right—and a much easier right—against the original owners because of the covenant they had entered into with them. It will be an action which, as the lawyers say, will lie in covenant, and it will be a nice, simple one, merely a case of proving that the covenant has been broken, and asking for damages. If it were not an imaginary conveyance—if it were a real conveyance drafted by competent lawyers, in every case in which there was such an obligation to a third party the conveyance would undoubtedly contain an obligation to indemnify the owners against any breaches subsequently committed by them or their successors in total once the coal was made over to the Commission. Therefore, we think that there should be put into the Bill a provision that the Commission should be liable if a breach is committed, and to indemnify the previous owners. It would enable them to protect themselves by bringing in the Commission if an action were brought as the third party have a right to bring it. I hope that the President of the Board of Trade will be able to agree either to this provision or some analogous provision being inserted here or elsewhere in the Bill.

§ Mr. MacLaren
I rise to support this Amendment in view of the fact that later on I have on the Order Paper an Amendment dealing with subsidence. Because of that I am anxious that something of this character should go into the Bill.

§ Mr. Mainwaring
I do not know whether I shall be in order, but I should like to inquire from the Attorney-General or the hon. and learned Member who moved the Amendment, what precisely is meant by the Amendment. Not being a legal man I am not quite clear on the point. In every mining district there are coal mines 843 which have been operated for a number of years and coal seams have become either partially or completely exhausted. There are covenants by which the owners of property on the surface are entitled to compensation, due to subsidence. If the coal has already been worked, partially or wholly, under the tenements on the surface, from whom are the owners of those tenements, or whatever they may be, to seek compensation in the future. The benefits of royalties on the coal worked have already been enjoyed by royalty owners in the past. Is it proposed by this Amendment that the Commission shall carry an obligation which should have been met by the royalties already paid. As I understand the Amendment, it may mean that the Commission may be charged with a potential liability already incurred by the existing royalty owners.

§ Mr. Spens
This provision relates only to the future. As regards the past, obligations which have been incurred by the royalty owners, have, or should have, been paid for. The first part of the hon. Member's question as to what will be the position as regards a surface which is now subsiding on account of past excavations, does not arise, but there may be future mining in the same mine, and it may be that the mining of a lower shaft may cost further subsidence. That, I think we are all agreed, is dealt with in the second part of the First Schedule, and it can be more fully discussed there. This Amendment has not much to do with subsidence. It has to do rather with other rights to which the owner of the coal has made the coal subject for the benefit of adjoining owners of one sort or another. It may relate to drainage in regard to some other mine, not a coal mine, and he may have put himself under a legal obligation that nothing shall be done in the future to interfere with those rights. If he has done that, he is liable to be shot at at law by his next door neighbour if those rights are thereafter interfered with. Therefore, if the Commission or the Commission's lessees after they have taken possession commit any breach of those obligations the particular covenanting party ought to be fully protected from the result of any such action and should be indemnified by the Commission.

§ Mr. Mainwaring
I thank the hon. and learned Member, but I was concerned with the other point, that the subsidences will continue in these areas for years to 844 come on account of coal already worked. How are you to divide the responsibility of the past royalty owners or the existing royalty owners as regards coal already exploited and the continued exploitation of coal in the same area by the Commission? How is the tenement owner on the surface to secure his damages on account of surface subsidence in the future? The whole thing is terribly involved, and I want to know under what Clause this matter may be adequately discussed.

§ The Chairman
The hon. Member's question really does not arise here. I think it is quite clear that this proposed Amendment is only to provide what would be an ordinary piece of machinery in the course of an ordinary conveyance from the existing royalty owners to somebody purchasing from them. Therefore, it is only a question of machinery which can be discussed now, and not any principle as to the form in which a lease is to be granted.

§ Mr. Shinwell
On a point of Order. As this Amendment provides for indemnification, surely it is proper to inquire as to the amount involved?

§ The Chairman
I still do not think that the question of the amount arises. This Amendment would put on the Commission after the purchase of the royalties a liability which would be on the royalty owner if the present royalty owner had continued to be responsible.

§ Mr. Silverman
Further to that point of Order. As I read the Amendment, if it were passed would not the effect be to put upon the Commission a liability which would not lie upon them if the Amendment were not passed?

§ The Chairman
I think the hon. Member is now putting as a point of Order something that is not a point of Order. It is not my business to explain an Amendment beyond a certain point. I have to form my own view as to the meaning of an Amendment in order to decide whether a particular point is or is not in order, but I cannot be responsible for explaining Amendments beyond what is the duty of the Chair—beyond pointing out what is in order and what is not in order.

§ Mr. Silverman
What I am asking is whether in your view the passing of this Amendment would lead to an increased charge upon the Commission?

§ The Chairman
No. There would be no increased charge making the Amendment out of order.

§ Mr. Shinwell
May I raise this point with the hon. and learned Member? This matter is highly complicated and not easy for hon. Members to understand. In the Amendment is there not a potential liability put on to the Commission. If so, what is the charge likely to be imposed on the revenues of the Commission? In so far as there is a charge imposed on the revenues of the Commission, how far will that affect subsequent clauses which relate to the utilisation of revenues for the purpose of reducing rents? I think that is a proper point, on which the hon. and learned Member might enlighten us.

§ Mr. James Griffiths
I understand that the object of the Amendment is to make perfectly sure that in certain eventualities obligations which now rest upon the royalty owner shall be undertaken by the Commission.

§ Mr. Spens
Yes.

§ Mr. Griffiths
A Registration Act has already been passed under which every royalty owner is invited, and I suppose at some stage will be compelled or instructed, to register particulars of the royalties he holds. Any particulars given by a coalowner in respect of property he owns from a royalty owner will surely not be given without the approval and consent of the royalty owner. Therefore, the royalty owner will know of it already. If that be so, is it not his business to register it in the particulars that he will place in the hands of the Commission when the Commission take over the property? In view of the fact that he will have registered his claims and agreements, what is the need for this Amendment to make the matter further sure? If there is any obligation which the Commission can get out of afterwards it will be because the royalty owner has not taken trouble to register the particulars. I do not think it is the business of this Committee to protect the royalty owners any more than they are already being protected.

§ Mr. Silverman
If it be as laid down by the Chair, and we must accept that 846 Ruling, namely, that the effect of passing the Amendment would not increase the charge allowed by the Bill, then I am afraid that I fail to understand what purpose the Amendment can serve. I think I put the point right when I say that the hon. and learned Member is anxious to protect, in the first place, people with interests, which interests they are not permitted by the Registration Act to register—the interests of people who would have a claim against the royalty owner on a covenant, which covenant would remain valid even after the royalty owner had conveyed his property, by statutory or imaginary covenant, to the Commission. What is being proposed in the Amendment is that there shall be added to the imaginary conveyance a new clause of indemnity, whereby the Commission will indemnify the royalty owner against claims made upon the royalty owner arising out of covenants which ought to have been provided for by the royalty owner himself. I understand that it is not in reference to anything which has taken place before the date of the statutory conveyance, or the imaginary conveyance, but things which the Commission itself may do thereafter. If that be so, and if the effect of passing this Amendment is to make the Commission indemnify the royalty owner against claims made by a third party, and if without this Amendment the Commission would not have to indemnify the royalty owner, then I find myself completely at a loss to understand the machinery proposed by the hon. and learned Member, if the effect of passing the Amendment cannot increase the charge for which the Commission is made responsible under the Bill. In that case the passing of the Amendment would be completely nugatory, because then the Commission would be made liable to indemnify somebody out of funds which do not exist.

§ The Chairman
The hon. Member asked me whether the Amendment was out of order because it would increase the charge as defined in the Financial Resolution. The question of what amount of money might be paid does not arise on this Amendment.

§ Mr. Silverman
I am grateful for your explanation, but it seems to me that the position is not affected in that way. Something is contemplated the result of which may be to involve the Commission 847 in the making of payments of money further than the payments provided for by the Clause as it stands. The Amendment makes no provision for the raising of further and other funds out of which the further and other charge could be met. If that be so, and if there is no way in which this Amendment can increase the charge on the Treasury, then I find myself completely at a loss to understand what is the machinery which the hon. and learned Member proposes in order to discharge what he invites the Committee to accept as something which the Commission ought to shoulder. I quite understand what the hon. and learned Member says, that if there was a formal conveyance, not a statutory, imaginary conveyance, he would expect the conveyance to include a clause of indemnity. But he is suggesting in his Amendment that it should be added to the imaginary conveyance, which without the Amendment would not contain any such indemnity. I shall be interested to hear how he proposes to equip the Commission with the necessary funds to discharge such a duty.

§ The Secretary for Mines (Captain Crookshank)
I understand that the position of the hon. and learned Member for Ashford (Mr. Spens) is that in the case that he has put forward it would be reasonable to insert a provision which would indemnify the conveying party in case a claim is made against them when responsibility has passed to the Commission. The Commission will take over the property and the rights attaching to the property, and in some cases it is conceivable that there may still be some responsibilities remaining on the conveying party. It would be manifestly unfair if the damage arose through some breach of these rights by the Commission; it is a different matter if it is a breach by the conveying parties. The obligation has passed to the Commission, and it is right that the liability should fall on them. I think the case which the hon. and learned Member made out is right. The liability should fall on the Commission in cases like that. I do not think this is the point on which to raise the question as to where the money is to come from, but in point of fact the Commission, of course, would do their best not to commit breaches of that kind. It 848 would only arise in cases where a breach of contract was committed inadvertently through the Commission not knowing of the rights.
I think some such words as those of the Amendment should be inserted in the Bill, but I must say that the Amendment itself is far too wide. The only kind of breach which might arise as the Bill is drafted are breaches of obligations which run with the coal, but as the Amendment is drafted it might cover breaches of contracts of all sorts on the land, breaches connected with the working for coal, breaches of contract about selling coal; and all sorts of things. The Amendment is far too wide. To restrict it to rights merely concerned with coal and indemnify the conveying parties would be the right thing to do. I think the real point of the Amendment is desirable, and I think we must try to find some new form of words which will carry out that purpose.

§ Sir Stafford Cripps
The Secretary for Mines has said that this would probably only arise in cases where the Commission have not noticed inadvertently, what the rights are. Surely it must be made absolutely apparent when any such liabilities as these are to be taken over that the Commission must be given notice, that they can only take over liabilities where they are given notice of them under the registration. We cannot be left in a position where an owner shall not inform the Commission of a covenant and then the Commission have the responsibility for carrying out a covenant of which they have had no notice. The whole basis of this must be notice of a covenant to the Commission. Can the Secretary for Mines say that this was taken into account in arriving at the £66,000,000? It is quite fair that there should be some sort of indemnity of this kind, but the vital matter is, Was it taken into account in fixing the amount of £66,000,000? We want to be sure that it was not taken into account in arriving at that sum, and that no such obligation will be cast on the Commission except in such cases where they have had proper notice of the existence of a particular contract.

§ Mr. J. Griffiths
I understand that royalty owners will be compelled to register all these particulars. We have 849 had a famous case in South Wales where there was an agreement, not between the royalty owners and a colliery company, but between the royalty owners and the Swansea Corporation, where there was an undertaking not to work the coal under a reservoir. The case went to court and cost tens of thousands of pounds. I assume that in two or three years' time the State will own that coal, and, therefore, in the case of a dispute arising between the Merthyr Tydfil Coal Company and the Swansea Corporation it would be a dispute in which three parties—

§ The Chairman
I do not think the case of a third or fourth party comes under this Amendment. It deals with the first party, the royalty owners, and the second party, the Commission.

§ Mr. Griffiths
Yes, but what the Secretary for Mines has just said rather frightens some of us. It might mean that the Commission, having taken over an obligation, might find out in two or three years' time that they had committed a breach of some agreement about which they knew nothing. Will it not be an obligation on the royalty owners to register the full details and particulars of every undertaking and agreement in connection with their property? Unless the Commission know all the particulars of an undertaking, how can they be held responsible for any breach? Will not the whole point of the Amendment be covered if registration is carried out completely?

§ Captain Crookshank
I think the answer to that question is that it is, but in view of what has been said in the Debate, I think we had better look into the matter again.

§ Mr. Mainwaring
The Amendment says that the Commission shall indemnify against all actions, proceedings, costs, damages, claims, and demands on account of any breach of such covenant, agreement, or obligation. That must surely include the possibility that actions and claims can be taken against the estate of any existing royalty owner on account of any working that has been going on for the last 25 years.

§ Captain Crookshank
I have already said that, as drawn, the Amendment is far too wide.

§ Mr. Mainwaring
But even in the modified form which the Secretary for Mines is prepared to accept, does not the Amendment mean that liabilities which rightly should fall on past royalty owners are to be handed over to the Commission?

§ Mr. Spens
I thought I had made the matter perfectly clear. It is not suggested that royalty owners should be relieved of any liability except liabilities of future breaches of obligations by the Commission, of which I agree they will have had notice under registration. In view of what has been said by the Secretary for Mines, I beg leave to withdraw the Amendment.