New Clause No. 2.—(BETTERMENT LEVY NOT CHARGEABLE IN RESPECT OF RIGHTS OF OCCUPATION.) (Hansard, 21 July 1967)

§ Mr. Graham Page (Crosby)
I beg to move, That the Clause be read a Second time.
The Clause deals with betterment levy chargeable, or possibly chargeable, on the rights of occupation granted under the Bill. As I shall have to refer to the rights of occupation in connection with other Amendments, it might be as well if I referred to them in some little detail as an introduction to this Clause.
What we are considering here is the right of a spouse who is not the owner of property to occupy the property, and the right is defined in the Bill only as a right of occupation and may depend for its extent upon an order of the court. The court may declare the extent of the rightful occupation of the dwelling-house both physically and in a period of time and so on, and may make such order as the circumstances justify. That order may provide for periodical payments, for obligations as to repair and maintenance and, indeed, it may last longer than the marriage itself, because the court can order that the right to occupy shall not cease with the termination of the marriage. So that there is here something in the nature of a tenancy for the spouse in whose favour the order is made. It seems to me that it has all the elements of a tenancy—the possibility of periodical payments and obligations such as one would find in a tenancy—and the term may be longer than a week, a year, or even a fixed period of years, because it certainly is for the length of time that the marriage subsists and it may well be for some period after that.
2708 So it is the right in the property that we are considering and rights in property are subject to a levy under the Land Commission Act when certain events occur. Under the Act, there are some six chargeable acts or events on which betterment levy is chargeable, and chargeable by reference to the development value of the property on the occasion of these events. These six events are labelled in Section 27 of the Act as Cases A to F. I do not think that we are concerned here with Case A—the case of a sale of property, which is not likely to occur in the transactions contemplated by the Bill—but we may well be concerned with Case B.
If these rights of occupation are to be considered as being in the nature of a tenancy, then they may well come within Case B, which is a disposition granting a tenancy either for seven years, when it has to be reported to the Land Commission, or for less, when there is an option to report. The right to occupy under this Bill is not really defined and so it may well be that the courts would hold it to be a tenancy of the property.
If it does not come under Case B, it might well come under Case E, which deals with the granting of an easement or the releasing or modifying of an easement or a restrictive right. It is that phrase "restrictive right" which might catch the transactions contemplated by the Bill. Supposing the property has become subject to a spouse's right to occupy. Let us take the example which we argued all through the Committee stage of the Act as being probably the most frequent example.
The husband has left his wife, who has remained in the matrimonial home. She has registered her charge against that in the proper way and has a right to occupy. Then the husband wishes to sell the house or perhaps to acquire the occupation of it back from her, and by arrangement between the two he purchases her right of occupation—he buys her out so that she has to find another home. Such a transaction certainly is the release of a restrictive right, a right over the property which restricts the use of that property. What is meant by "restrictive right" is defined in Section 85(1) of the Act as …a covenant or agreement restrictive of the use or development of land, not being 2709 a covenant or agreement made between a lessor and a lessee or, except as respects Schedule 4 to this Act, an obligation on a vassal imposed by a superior or mid-superior; The latter part of that provision I understand refers to Scotland and, as the Bill does not apply to Scotland, is perhaps irrelevant here.
If, contrary to what I have been saying previously, this right of occupation is not a. tenancy, then it may well be something in the nature of a restrictive right and if it is released then that may be a chargeable act or event under Case D, giving rise to betterment levy.
As a third alternative, it may be a chargeable act or event under Case F, which is what one might call the "dustbin" into which all other chargeable acts or events are swept by Regulations made by the Minister. He is restricted in the Regulations he can make creating chargeable acts or events by Section 35(1) and (2) of the Act. He can make Regulations creating chargeable acts or events out of the dispositions there described. But they must be dispositions which renew or extend a tenancy or which vary the terms and conditions of a tenancy by releasing or making a covenant or agreement whereby the development of any land comprised in that tenancy is restricted.
Again, if, as I have suggested, the wife's right of occupation can be considered to be a tenancy, then it would be possible for Regulations to be made by the Minister, under Case F, bringing the release of the wife's right of occupation into Case F as a chargeable actual event. So there is a strong possibility that the creation of the wife's right of occupation as being the creation of some interest of value in the property might be a chargeable act or event under the Act. Certainly, the occasion of the release of the wife's right of occupation might be a chargeable act or event.
My Amendment is intended to prevent that happening. It would be quite unjustifiable for the Government to step in in the course of these domestic transactions which the Bill contemplates and take their cut. It would be wrong to tax or levy a capital charge upon one of the spouses whose property this was 2710 on the occasion of the arrangement between husband and wife, who have become estranged and are obliged to arrange their domestic affairs in terms of this Bill.
It is merely to make certain by a statement in the Bill that this will not happen, that no levy shall fall upon either party to these transactions, which are domestic transactions even by the terms of the Bill as it stands, that I hope that the right hon. and learned Gentleman will see fit to accept this declaratory provision. We must ensure that there will be no imposition of levy on these occasions.

§ Mr. Peter Archer (Rowley Regis and Tipton)
It is no bad thing that the provisions of a Bill such as this should be examined closely. The careful attention which the hon. Member for Crosby (Mr. Graham Page) has already given the Bill had the effect of improving it in Committee.
The point the hon. Gentleman raises in the Clause has exercised the minds of the sponsors of the Bill considerably. We are at one with the hon. Gentleman that it would be a great pity if rights arising from matrimonial difficulties were to attract betterment levy. That is not the intention. Possibly we are also in agreement that, unless a further Clause is required to achieve the object, it is much better that it should not be included, particularly at a time when the public is rightly insisting that legislation should be no more complicated and no longer than circumstances require.
The question at issue is whether, if the Clause were not added, there would be any danger of betterment levy being attracted under the Bill as it stands. The sponsors of the Bill have given their attention to this question. I can set the hon. Gentleman's mind at rest at once by saying that it is the overwhelming opinion of those concerned that the rights of a wife arising under the Bill could not be construed as a tenancy. A tenancy arises by voluntary agreement. On that score, it appears that there is no reason for fear.

§ Mr. Graham Page
A tenancy is defined—for example, in the Landlord and Tenant Act, 1954—as being one created 2711 by agreement or by enactment. A tenancy can be created by law and not only by agreement.

§ Mr. Archer
There may be situations where legislation specifically sets out to create a tenancy. We could not envisage a court holding that the House had unknowingly created a tenancy by virtue of the provisions of the Bill. There would appear to be little danger that a court could hold that the rights of a wife arising under the Bill amounted to a tenancy.
Another possibility envisaged by the hon. Gentleman arises under Case E and from the use of the term "restrictive right". It may have escaped the hon. Gentleman's attention that that term is defined in Section 85 of the Land Commission Act: restrictive right' means a covenant or agreement restrictive of the use … of land, not being a covenant or agreement made between a lessor and a lessee". The right of a wife arising under the Bill could not be a covenant or agreement, which again must import a voluntary agreement between the parties.
The possibility which has considerably exercised the minds of the sponsors of the Bill is Case F. This is dealt with in Section 35 of the Land Commission Act, under which a possibile chargeable act would be a disposition made for a valuable consideration. My first reaction in Committee was that there could not be a situation in which any act arising under the Bill would be for valuable consideration but it was pointed out in Committee that there might be a situation in which a wife released her right in consideration of a more generous allowance of maintenance. In those circumstances, I was convinced that there might be something which was done for valuable consideration.
What remains is whether it fulfils the other conditions which it would have to fulfil before betterment levy would be attracted—in other words, whether it is a disposition. We have taken the best advice we can obtain. Our advice is unanimous that it would not be held to be a disposition within Section 35 of the Land Commission Act. Clearly, it is not the kind of situation which was contemplated when that Act was passed.
2712 The only danger was whether incidentally the term "disposition" might have been found to cover the kind of situation which the hon. Gentleman has in mind. The best advice we have received is to the effect that there is no danger of that happening. In these circumstances, I hope that the hon. Gentleman will take the view that the danger which he has in mind is one which upon investigation has been found not to exist and that the Clause is not necessary.

§ Mr. Graham Page
May I exercise my right of reply? I accept that the hon. Member for Rowley Regis and Tipton (Mr. Archer) has taken very good advice. However, I am not convinced that this could not be a disposition under Section 35 of the Land Commission Act—that is, Case F. It could well be brought within Case F by the wording of Section 35 referring to extensions or releasing of tenancies.
I still say that a tenancy can be created not necessarily by agreement between the parties. We know only too well that a rent-controlled tenancy has no agreement whatever between the parties and depends entirely upon Statute. It may have originated in an agreement, as indeed the marriage has in this case, but it soon drifts into an enforced tenancy as between landlord and tenant. The tenancy created from the right of occupation created by the Bill might well be such a tenancy. I should have been much happier if an assurance had come from the Government Front Bench that no levy would be charged upon these transactions. Perhaps the Solicitor-General would like to intervene, or nod or shake his head to give some indication whether the Chancellor of the Exchequer thinks that he may be able to collect levy out of these transactions.
Whatever may be said in the House, and whatever assurances may be given about the best advice having been taken, when cases come before the courts what is said in the House is irrelevant. It is the wording of Statutes with which judges have to be concerned. There is a grave danger to the parties that the courts may decide that a dealing with the rights of occupation of the wife is a chargeable act or event or can be made such under Case F in Section 35 of the Act. I wish the sponsors of the Bill could have 2713 accepted the Clause. I do not feel inclined to withdraw it.