LANDLORD AND TENANT (No. 2) BILL.

HL Deb 16 December 1927 vol 69 cc1064-123

Amendments reported (according to Order).

Clause 1:

Tenant's right to compensation for improvements.

1.—(1) Subject to the provisions of this Part of this Act, a tenant of a holding to which this Part of this Act applies shall, if a claim for the purpose is made in the prescribed manner—

(2) In determining the value attributable to such net addition as aforesaid, regard shall be had to the purposes for which it is intended that the premises shall be used after the termination of the tenancy, and if it is shown that it is intended to demolish or to make structural alterations in the premises or any part thereof or to use the premises for a different purpose, regard shall be had to the effect of such demolition, alteration or change of user on the additional value attributable to the improvement and to the length of time likely to elapse between the termination of the tenancy and the demolition, alteration or change of user.

LORD DYNEVOR moved, in subsection (1), after "this Part of this Act applies," to insert "being a holding which is not subject to the provisions of the Rent and Mortgage Interest (Restrictions) Acts, 1920 to 1925". The noble Lord said: My Lords, I dare say you will remember that I moved this Amendment in Committee, only in a different place in the Bill, and I went to a Division and was beaten by eight votes. I think the Government must have been grateful to the Liberal and Labour Benches for their support on that occasion. It is not clear whether business premises controlled by the Rent Restrictions Acts come under this Bill or not. If they do a serious position arises. A tenant under the Rent Restrictions Acts might be in occupation of his premises, although on an annual tenancy, for a term of five years and thus be entitled to make a claim for goodwill under Clause 4. On the other hand a similar tenant occupying premises not controlled by the Rent Restrictions Acts and on an annual tenancy, might lose his claim through the landlord determining the tenancy before a five years period had elapsed. This is unfair between individual tenants, as a tenant of premises controlled by the Rent Restrictions Acts has the benefit of occupying the premises at a low rental, the landlord being unable to raise the rent. He would have a claim for goodwill whereas the other tenant, occupying premises probably at their full market value, for reasons already stated could build up no claim for goodwill.

If premises controlled by the Rent Restrictions Acts are under the Bill it is difficult to see how such tenants could strictly come under Clauses 1 and 4, where tenancies are terminated by notices given by the landlord, because the Rent Restrictions Acts place restrictions on the giving of those notices. In order to avoid the expense of litigation to discover what is intended by the present Bill with reference to these premises, it is essential that it should be definitely stated either that these business premises do come under the Bill or are excluded from its operations. They should preferably be excluded. Thousands of business premises are still controlled by the Rent Retrictions Acts. It is to be remembered that it is not the rental value which determines whether premises come within those Acts, it is rental or rateable value. All houses or parts of a house let as a separate dwelling where the rateable value does not exceed £105 in London—I need not refer to Scotland—and £78 in other parts of the country come within these Acts. In many cases one might almost double these values to arrive at the rental value of premises subject to the Acts. It will be seen that a very large number of properties are affected. As I have pointed out before, premises occupied for professional purposes have been brought within the scope of this Bill and many professional men such as doctors and surveyors—one could enumerate a very long list—live in houses which are under the Rent Restrictions Acts and can claim for improvement and be offered a new lease in lieu thereof. If the rent under the new lease is increased, which measure is to apply — the Rent Restrictions Act or the present Bill? I beg to move my Amendment and I sincerely hope that it will be included in the Bill because I think it is a most important one.

Amendment moved— Page 1, line 12, after ("applies") insert ("being a holding which is not subject to the provisions of the Rent and Mortgage Interests (Restrictions) Acts, 1920 to 1925").—(Lord Dynevor.)

THE LORD CHANCELLOR (VISCOUNT CAVE)

My Lords, I have never doubted the sincerity with which this Amendment has been moved, or its importance. Indeed I admitted it on a previous occasion. But on that occasion the Committee of this House rejected it, and, although I shall be able to make a proposal in a moment, I think the House was wise in not accepting the Amendment in this form. The House will observe that the Amendment would exclude from this compensation clause all holdings which are subject to the provisions of the Rent Restrictions Acts. That means, of course, all houses which have a rental or rateable value of not less than £105 in Greater London and £78 in the rest of the country. In other words, it would exclude from the clause all small holdings to which improvements may be made. I am sure that in that general form it would be quite wrong. The importance of compensation for improvement may be just as great, or indeed greater, to a tenant of a holding not of great value, because he is more heavily burdened by the cost of improvements than in the case of a valuable shop. I do not think the House would be willing to exclude all the smaller holdings. It does not seem to be fair or just. Having listened to what my noble friend has said to-day I think that his object is not that which would be effected by the Amendment in this form, but is rather to exclude from the clause those holdings where the tenant is in possession only by virtue of the Rent Restrictions Acts, that is, holding's where, but for the Acts, he would have to leave, but where, because of the Act, he has become a statutory tenant who is holding against the will of the landlord.

Of course, there are many cases where the landlord would wish him to go on, but there are others where that is not so. I recognise some force in the Amendment if it is so limited. I appreciate the feelings of a landlord whose tenant is in possession against his will, and is authorised by the Court to execute improvements to which the landlord objects but which, if sanctioned by the tribunal, will impose a liability upon the landlord at the end of the tenancy. With my friends I have very carefully considered whether we could not meet that objection. What I would suggest, if the House will agree to it, is that we should insert at a later stage of the Bill a provision that— The tribunal shall not entertain an application under this section if at the time of the application the applicant is a person in possession of the premises by virtue of the Rent and Mortgage Interest (Restrictions) Acts, 1920 to 1925. An Amendment in that form would affect all those who are statutory tenants under those Acts and who continue in possession by virtue of those Acts. I believe that an Amendment in that form would fulfil the intentions of noble Lords, and I think it would fairly meet the point which arises.

So far, I have dealt only with improvements, because improvements are in question in this Amendment. I do not know whether the noble Lord proposes to press his point with regard to goodwill, which arises at a later stage. If so, I shall certainly have to consider that point, and to see whether I cannot meet it by an Amendment applicable to it. I hope the House will think that I have met the noble Lord's arguments fairly, and that I have met the substance of the criticism that he has made. I hope that the noble Lord will withdraw his Amendment now, and allow me to propose the Amendment that I suggest at a later stage.

VISCOUNT SUMNER

My Lords, I hope that my noble friend and those who are associated with him will adopt the suggestion which the Lord Chancellor has made. We must be practical. If the effect of the Amendment is to exclude from this Act a very large number of small premises simpliciter, we should be inclined not to stand by the Amendment and the Bill would then pass in its present form. If on the other hand, the Lord Chancellor on Third Reading introduces the qualification that he has outlined, it appears to me that an advantage will be gained which is in substance that to which the Amendment was directed and which will greatly improve the Bill.

THE EARL OF MIDLETON

My Lords, I wonder if the Lord Chancellor would kindly tell us, for the benefit of lay members of the House, whether, in order that a tenant under the Rent Restrictions Acts may become a statutory tenant, it is necessary that the landlord should take proceedings against him. I think that the Lord Chancellor was, in Committee, unduly sanguine as to there not being a great number of tenancies of mixed business and residential premises under those Acts at a rent of less than £78 a year. If I may say so, I think that this is hardly a correct view, but that the great mass of the smaller of such premises are at rentals under that figure. While recognising the desire of the Lord Chancellor to meet my noble friend's Amendment, it seems to me that it would hardly be fair that because the landlord had taken no action and consequently it could not be said that the tenant was still in possession against his will, the landlord, when it came to a question of improvements, should be put in a position of having a yearly or monthly tenant who was in occupation at a very much smaller rental than he ought to have paid.

THE LORD CHANCELLOR

If I may speak again by leave of the House, in my view it would not be necessary for the landlord to take proceedings. He would only have to give notice to quit, and then, if the tenant refuses to quit on notice, he becomes a statutory tenant and would come under this provision.

LORD DYNEVOR

Do I understand that the noble and learned Viscount, the Lord Chancellor, is going to put his Amendment down after the Third Reading, or will he move it to-day? I should like to know this before I go any further.

THE LORD CHANCELLOR

I am willing to do whatever the noble Lord wishes, but before I put the Amendment down I should like to know whether he presses his point about goodwill as well as about improvements, because that would affect the form of my Amendment.

LORD DYNEVOR

I should like the Lord Chancellor to deal with both points after the Third Reading. Let us not deal with it to-day. We shall then see the Amendment in print and have an opportunity of studying it. In those circumstances, I beg leave to withdraw my Amendment.

Amendment, by leave, withdrawn.

THE LORD CHANCELLOR moved, in subsection (2), to leave out "value attributable to" and to insert "amount of". The noble and learned Viscount said: My Lords, this Amendment is purely verbal. I beg to move.

Amendment moved— Page 2, line 23, leave out ("value attributable to") and insert ("amount of").—(The Lord Chancellor.)

LORD DYNEVOR

My Lords, the Lord Chancellor says that this is only a drafting Amendment, but I am afraid that I cannot quite agree with him. I should like to point out to your Lordships that the Government seem to have had some difficulty in making up their minds about these words. I should like to remind your Lordships that when the Bill came from another place the proviso to subsection (1) ran:— Provided that the sum to be paid as compensation for any improvement shall not exceed— (a) the capitalised value of the net addition to the letting value of the holding…. Then we came to the Committee stage, and the Lord Chancellor, although I opposed the charge, altered the wording to:— the net addition to the value of the holding. I pointed out that the original words were preferable to the new ones, but to no avail. Now, on Report, the Lord Chancellor proposes to include words in subsection (2) which will make it read:— in determining the amount of such net addition— and so on. It looks to me as if the Home Secretary wished to chastise the owners of business premises with whips, and the Lord Chancellor wishes to chastise them with scorpions.

The difficulty really arises from the word "improvement." What is an improvement? The word should never have been used in the Bill. It should have been "structural alteration." At the end of subsection (1) of Clause 3, just before the proviso, we find that the tribunal may certify in the prescribed manner that the improvement is a proper improvement. I want to know what is the difference between an "improvement" and a "proper improvement." If it is an improvement, what is the use of speaking of a proper improvement? When is an improvement not an improvement? The answer is that you must ask the tribunal. When we get to subsection (2) of Clause 3 we have the ludicrous position of the tribunal saying that an improvement may injure the amenity or convenience of the neighbourhood. How could that be if it is an improvement? The Lloyd George Land Policy showed that you could have a minus site value. Now we have this Bill telling us that an improvement need not be an improvement, and, although it is an improvement, it may injure the neighbourhood. Really I think this is farcical legislation, and I really hope that the Lord Chancellor will not press his Amendment.

THE LORD CHANCELLOR

My Lords, the noble Lord has indulged in minutiæ, and I think that he really does not understand the meaning of the Amendment. An improvement may be an improvement to the house, but having regard to the character of the other houses in the neighbourhood it may be one of which the tribunal does not approve as in all respects proper. These words "value attributable to" are a residue from the Bill as it existed before we made an Amendment in proviso (a), but having regard to that Amendment these words no longer make sense. You do not want to determine the value attributable to a sum of money. The value of £10 is £10. All you want is to determine the amount, and in determining it regard shall be had to certain things. It is purely an Amendment to make one line of the Bill agree with another.

On Question, Amendment agreed to.

Clause 2:

Limitation on tenant's right to compensation in certain cases.

2.—(1) A tenant shall not be entitled to compensation under this Part of this Act— (a) in respect of any improvement made before the commencement of this Act; or (d) if within two months after the making of the claim under section one, subsection (1), of this Act the landlord serves on the tenant notice that he is willing and able to grant to the tenant or obtain the grant to him of a renewal of the tenancy at such rent and for such term as, failing agreement, the tribunal may consider reasonable, and if the tenant does not within one month from the service of the notice send to the landlord an acceptance in writing of the offer the tenant shall be deemed to have declined the offer.

LORD JESSEL moved, in subsection (1), after paragraph (a), to insert as a new subsection:— (b) in respect of any improvement which is intended or calculated to facilitate the carrying on of a trade or business other than a trade or business of the kind for which the premises were expressly let by the terms of the contract of tenancy; or

The noble Lord said: My Lords, as regards the Amendment which I desire to make the Lord Chancellor said in Committee that he would carefully consider the first part of the Amendment which I then moved. It may be within the recollection of your Lordships that my Amendment as originally moved had two other paragraphs, but I do not pro- pose to refer to them. The Lord Chancellor first of all said I had forgotten that if the tenant wished to change the nature of his business he had got to obtain the landlord's consent to the improvement, and also the consent of the tribunal. The objection to that is that it involves going to the tribunal, and there is no guidance or direction to the tribunal on the subject. It does seem to me rather absurd that if a man has rented a business, say for a fruit shop, and he afterwards turns it into a fish shop, that the landlord should have to go to the tribunal. I think this is a reasonable Amendment, and I hope the Lord Chancellor will be prepared now to accept it.

Amendment moved— Page 3, line 7, at the end, to insert the said new paragraph (b).—(Lord Jessel.)

THE FIRST COMMISSIONER OF WORKS (VISCOUNT PEEL)

My Lords, the Amendment put down by Lord Jessel has been very carefully considered since this Bill was in Committee and we still hold the view that the Amendment is really not required. Noble Lords will see by looking at the Bill that this Clause 2 applies to improvements. Improvements, of course, are bound to be structural improvements, and they are therefore cases where there is a change of user involving a structural alteration. This cannot be done without the consent of the landlord under Clause 19 (3), which deals with the consent of the landlord:— … such covenant condition or agreement shall, if the alteration does not involve any structural alteration of the premises, be deemed, notwithstanding any express provision to the contrary, to be subject to a proviso that no fine or sum of money in the nature of a fine, whether by way of increase of rent or otherwise, shall be payable for or in respect of such licence or consent. Therefore, it is clear that the consent of the landlord is required. Alternatively, suppose the consent of the landlord is given. In that case there does not seem any particular reason why the tenant should not receive compensation for an improvement which increases the letting value of the premises. Therefore, apparently, both cases are provided for, more particularly the first, on which my noble friend laid stress, that the improvement should not be made without the consent of the landlord.

LORD BUCKMASTER

My Lords, the principle of this Bill, which the House accepted and from which I imagine it will not be prepared to depart on Report, is that there should be compensation for improvements effected in business premises by the tenant. The real idea, I imagine, underlying it is twofold. Firstly, it is that there should be removed a sense of injustice which undoubtedly has been bitterly felt by people who have spent a great deal of money in building up a business, the value of which at the end of the lease has been transferred wholly to the landlord. I imagine that the second idea is to encourage men to extend their trade activities, reassuring them that they will not lose their business if they do so. This Amendment would provide that if a man began with one business, and finding that it failed changed to another, which is the essence of all trade activity, he is to get no compensation at the end of the term. The Amendment refers to the fact that premises have been let expressly for the purpose of carrying on a particular business. That involves one of two things. It means either that in the lease it was contemplated that the premises should be used for that particular purpose, and so permitted, or it must mean that there is a restrictive covenant preventing him from carrying on any such business. If it is the first case there is nothing to prevent changing if it be desired. If the second, the change in the business could by no means be effected without the assent of the landlord to the relaxation of the covenant. In either case there seems to be no reason for excluding a man from benefit, merely because he has changed his original purpose for which the premises were used.

LORD CARSON

My Lords, I spoke on this Amendment when the Bill was in Committee, and it seems to me to be a very reasonable one. It supposes the case of a landlord granting a lease to a tenant with an undertaking by the tenant to carry on a particular kind of business for which the premises may be presumed to be suitable. They may be premises that he took up from some other tenant, and there may have been compensation to that other tenant because the structure has been adapted for another kind of business. Then the landlord, having the premises in his own hands, lets them to somebody else, and arranges the rent and all the conditions of the lease on the assumption that the tenant is going to carry on with the premises in the structural condition in which they have been put and for which the landlord has paid. Then this Bill comes in, and apparently, if this Amendment is not made in the Bill, the tenant can claim for turning the premises into an entirely different class of premises for an entirely different class of business, and the landlord, who has paid one tenant for making the premises suitable structurally for one class of business, then has to pay the next tenant for adapting them for another class of business.

This is exactly like the cases we used to have in the Land Courts in Ireland, where a tenant was paid for improvements, and I have heard hundreds of cases in which a tenant claimed for an improvement made by taking down a fence in a particular field, and his successor in title claimed for another improvement for having put back the fence which, according to him, was the better way of carrying on an agricultural operation. That was a very common case in Ireland, and it will be a very common case here. Now, not only are you going to break the contract to enable the tenant to do this, but you are going to make the landlord pay for it. My noble and learned friend who has just spoken says that the landlord can refuse permission. That is quite true, but then he is brought to the tribunal. What is to guide the tribunal? I tried to picture myself as a counsel in the county court, where I used to practise very largely many years ago, and I tried to imagine what I could say to the court to guide them in the matter. All I could tell the Judge would be that the premises were let in a structural state suitable for one business, and that they had been changed for another business, "and therefore," I would add, "I submit, your Honour, I should get compensation." What other guidance is there in the Bill? Under what circumstances is compensation to be paid, and under what circumstances is it not to be paid? This Amendment merely says that where the trade or business is different from that for which the premises were let the landlord is not to pay, and I cannot imagine any reason why the whole thing should be turned upside down, the contract practically put an end to, and the landlord mulcted by each tenant who wished to change the premises for a different business.

THE LORD CHANCELLOR

My Lords, my noble and learned friend has been gravely misled by his experience of a totally different Act which was in force in Ireland, and also, if I may say so, by a failure to read the plain terms of this Bill. No doubt, like myself, he has other things to do, but he has failed to notice the point which my noble friend Lord Peel took, and which was conclusive on this point. Lord Carson supposes the case of a tenant changing the use of his business premises, and coming for permission to make an improvement in the premises only suitable for the new business. That he cannot do under this Bill. He cannot change the use of the premises against the covenants unless the landlord actually consents, and, if the landlord refuses to assent, the tenant cannot, as my noble and learned friend supposes, act in defiance of him. He must accept the refusal, and not make the change. Will my noble and learned friend, who is accustomed to read Acts of Parlaiment, be good enough to turn to the clause to which my noble friend Lord Peel referred, Clause 19 (3)? He will find that the subsection only applies "if the alteration does not involve any structural alteration of the premises." So that, if a tenant wants to change the user of the demised premises contrary to the covenants of the lease, and the alteration of user involves an alteration of the structure, that is an improvement he cannot make without the consent of the landlord. That, I think, is conclusive. And so this Amendment really has no meaning. If the landlord says "No," there is an end of it. If the landlord does consent to the change in the use of the premises, and an improvement is desirable for the purpose of the business, then there is surely no reason why the tenant's expenditure should not carry a right to compensation.

LORD CARSON

As the noble and learned Viscount has referred to my ignorance of the Bill, which I admit is considerable, because we have not been given proper time to consider it, with all the other business we have had to do, may I say that Clause 19, as I read it, only refers to a lease which contains a covenant or agreement against an alteration. This Amendment has nothing to do with that.

LORD LAMINGTON

May I ask whether the Lord Chancellor's remarks are not inconsistent with the approval given by the noble and learned Lord, Lord Buckmaster, to the provisions of the Bill in reference to carrying out improvements against the wish of the landlord? I understand that Lord Buckmaster approved of a provision of that kind.

On Question, Amendment negatived.

THE LORD CHANCELLOR moved, in subsection (d), to leave out "if" and insert "where such a notice is so served and". The noble and learned Viscount said: My Lords, in consequence of the argument of my noble friend Lord Dynevor when he moved an Amendment in Committee, my attention was called to the wording of the clause at this part and I concluded it was not quite satisfactory. I think the change which I now propose will make the meaning more clear and may possibly meet the noble Lord's wishes. I beg to move.

Amendment moved— Page 3, line 25, leave out ("if") and insert ("where such a notice is so served and").—(The Lord Chancellor.)

On Question, Amendment agreed to.

LORD DYNEVOR moved, after "offer", in subsection (1) (d), to insert "to refer the consideration of the rent and term to the tribunal." The noble Lord said: My Lords, this Amendment is an explanatory one. I want to make it quite clear that the word "offer" means to refer the consideration of the rent and term to the tribunal and not, as might be inferred from the wording in the Bill, the acceptance of the landlord's rent and length of term of the tenancy. The offer is not a specified rent but an offer to have it adjudicated upon. I beg to move.

Amendment moved— Page 3, line 28, after ("offer") insert ("to refer the consideration of the rent and term to the tribunal").—(Lord Dynevor).

THE LORD CHANCELLOR

My Lords, I did consider these words and I do not think they are the right words. The offer is not an offer to refer the consideration of the rent and term to the tribunal. It is really an offer to grant a new lease on terms which, in case of difference, the tribunal will settle. I think that is the plain meaning of the clause and that these words are not necessary. I hope therefore the noble Lord will not press the Amendment. It is really only a matter of drafting.

LORD DYNEVOR

I do not want to press the Amendment if the Lord Chancellor tells me the wording of the clause is quite clear. I was not certain on the point and I am glad he tells me again that it is.

Amendment, by leave, withdrawn.

Clause 3:

Landlord's right to object.

3.—(1) Where a tenant of a holding to which this Part of this Act applies proposes to make an improvement on his holding he … may, in the prescribed manner, apply to the tribunal, and the tribunal may … certify in the prescribed manner that the improvement is a proper improvement:

Provided that if the landlord proves that he has offered to execute the improvement himself in consideration of a reasonable increase of rent, or of such increase of rent as the tribunal may determine, the tribunal shall not give a certificate under this section unless it is subsequently shown to the satisfaction of the tribunal that the landlord has failed to carry out his undertaking.

THE LORD CHANCELLOR

My Lords, the Amendment in my name to this clause is drafting.

Amendment moved— Page 4, line 10, leave out ("receipt") and insert ("service").—(The Lord Chancellor.)

On Question, Amendment agreed to.

LORD JESSEL moved, in subsection (1), immediately before the proviso, to insert "and any work so certified shall be carried out by the tenant to the reasonable satisfaction of the landlord's surveyor whose fees shall be paid by the tenant." The noble Lord said: My Lords, the noble and learned Viscount the Lord Chancellor, when we were in Committee, said he would consider at a later stage this, as I venture to call it, reasonable Amendment. It is hardly necessary for me to explain the meaning of this Amendment. It simply means that we guard against the landlord having a tenant who has agreed before the tribunal to do certain work and has not done it. In such a case we should safeguard the interest of the landlord by seeing that the work the tenant has promised to do is done. I beg to move.

Amendment moved— Page 4, line 27, at end insert the said words.—(Lord Jessel.)

VISCOUNT PEEL

My Lords, I would suggest to my noble friend that the words as they stand would leave the tenant in rather a difficult position. It says "to the reasonable satisfaction of the landlord's surveyor whose fee should be paid by the tenant." That really leaves the matter entirely in the hands of the surveyor of the landlord, and it states "whose fee shall be paid by the tenant." Therefore there does not appear to be any limitation, as the words stand, on the fees that should be paid. So much for the form of the Amendment to which I think some objection should be taken. I may say that very careful consideration, as promised, was given to my noble friend's Amendment. Take the different alternatives and I think your Lordships will find that this Amendment is not really necessary. First of all take the case of an agreement between the two. If the two agree I have no doubt the landlord would require certain fees to be paid, but in that case no question really arises. Then, if the matter goes before the tribunal, the tribunal can make it a condition that fees should be paid for the carrying out of the improvement according to the specifications and to the satisfaction of the landlord. But, in a further case, my noble friend will see that under subsection (6), if the tenant has to go to the landlord for a certificate, in that case when the landlord furnishes such certificate the tenant shall be liable to pay any reasonable expense incurred for that purpose by the landlord, and if any question arises as to the reasonableness of the expense it has to be determined by the tribunal. Therefore it seems to me that in all the different cases which may be contemplated the position suggested by my noble friend is provided for. I hope he will not press his Amendment. As drawn I think it would not be fair and would work hardship in practice.

LORD JESSEL

After the explanation of my noble friend I do not press the Amendment.

Amendment, by leave, withdrawn.

VISCOUNT BERTIE OF THAME moved, near the end of the proviso in subsection (1), before "failed," to insert "unreasonably." The noble Viscount said: My Lords, this is the usual wording to have in this class of provision, because the landlord may not be able to carry out his undertaking owing to a protracted strike or some other unforseen circumstance. I beg to move.

Amendment moved— Page 4, line 34, after ("has"), insert ("unreasonably").—(Viscount Bertie of Thame.)

VISCOUNT PEEL

My Lords, I really do not think this Amendment is necessary. The noble Viscount has taken a case where in consequence of a strike the landlord has not been able to carry out the improvement. In that case, of course, if he was brought before the tribunal by an unreasonable tenant, he could very easily show that it was owing to the strike that he had not carried out the improvement. In such a case no tribunal in the world would penalise him. So I really do not think the word "unreasonably" is necessary to meet such a case as the noble Viscount has suggested.

VISCOUNT BERTIE OF THAME

My Lords, if the noble Viscount does not think the Amendment necessary I will not press it.

Amendment, by leave, withdrawn.

Clause 4:

Compensation for goodwill.

4.—(1) The tenant of a holding to which this Part of this Act applies shall, if a claim for the purpose is made in the prescribed manner—

be entitled at the termination of the tenancy on quitting the holding to be paid by his landlord compensation for goodwill ….

Provided that—

LORD DYNEVOR had given Notice to move, in subsection (1), after "applies," to insert "being a holding which is not subject to the provisions of the Rent and Mortgage Interest (Restrictions) Acts, 1920 to 1925." The noble Lord said: My Lords, this Amendment would have been more or less, I will not say quite, consequential had my first Amendment on Clause 1 been put into the Bill. As the noble and learned Viscount, the Lord Chancellor, has kindly consented to put another clause down on Third Reading I will put my Amendment down for Third Reading also, and then your Lordships will decide which Amendment you approve. In the circumstances I do not move this Amendment at this stage.

THE EARL OF HALSBURY moved, after proviso (d) in subsection (1), to insert the following new paragraph:— (e) where the landlord proves that the value or the goodwill has been created or increased owing to restrictions imposed by the landlord, whether by agreement with the tenant or not, upon the letting for a competitive trade or business of other premises in the neighbourhood owned by or under the control of the landlord, the tribunal shall have regard thereto and may refuse the application for compensation or may award a reduced amount of compensation.

The noble Earl said: My Lords, I moved this Amendment on the Committee stage and my noble friend Lord Peel was good enough to say that he would consider the matter between that stage and this. I gathered from him that he was inclined at that time to give me some concession in the matter, but not to go as far as I desired. I beg to move.

Amendment moved— Page 7, line 33, at end insert the said new proviso.—(The Earl of Halsbury.)

THE LORD CHANCELLOR

My Lords, I am prepared to accept this Amendment.

On Question, Amendment agreed to.

THE LORD CHANCELLOR moved, after subsection (1), to insert as a new subsection:— (2) For the purposes of this section, premises shall be deemed to be used for a more profitable purpose if, but not unless, the rent which the landlord could obtain for the premises if used for that purpose would be greater than the rent which could be obtained if they were used for the purpose of the trade or business carried on by the tenant.

The noble and learned Viscount said: My Lords, some comment was made on the words "more profitable" in Committee, and I undertook then to consider the matter and to make it quite clear. I propose, therefore, to insert this sub- section which shows what "more profitable" means, and which gives effect, I think, to what was desired.

Amendment moved— Page 8, line 11, at end insert the said new subsection.—(The Lord Chancellor.)

LORD DYNEVOR

My Lords, may I say that I am quite content with the Amendment moved by the Lord Chancellor.

On Question, Amendment agreed to.

Clause 5:

Right to new lease in certain cases.

(3) Where the tenant is the applicant, the grant of a new lease under this section shall not be deemed to be reasonable— (a) unless the tenant proves that he is a suitable tenant and that he would be entitled to compensation under the last foregoing section, but that the sum which could be awarded to him under that section would not compensate him for the loss he would suffer if he removed to and carried on his trade or business in other premises; or

(7) The tribunal shall not order the grant of a new lease under this section if the landlord offers as an alternative thereto to sell to the tenant the landlord's interest in the premises for such consideration as, failing agreement, the tribunal may determine, and the duration of the landlord's interest is in the opinion of the tribunal adequate, and the consideration may as to the whole or any part thereof if the tribunal so determines be in the form of a terminable rent charge for such amount and of such duration not exceeding the duration of the landlord's interest as the tribunal may fix.

(12) A new lease under this section shall if the landlord so requires contain a covenant prohibiting the carrying on of any trade or business and the doing of any act prohibited by the original lease.

THE EARL OF HALSBURY moved, in subsection (3) after paragraph (a), to insert the following new paragraph:— (b) where the landlord proves that the value of the goodwill has been created or increased owing to restrictions imposed by the landlord, whether by agreement with the tenant or not, upon the letting for a competitive trade or business of other premises in the neighbourhood owned by or under the control of the landlord; or

The noble Earl said: My Lords, I think this Amendment is purely consequential on the one I have just moved. The Lord Chancellor dissents from that. I should have thought it was. I think I said so in Committee, and rather expected it to be treated in the same way as my earlier Amendment has been. I beg to move.

Amendment moved— Page 9, line 30, at end insert the said new paragraph.—(The Earl of Halsbury.)

VISCOUNT PEEL

My Lords, I think that my noble friend has rather hastily assumed that this paragraph is consequential upon the other. I do not think it is. If no compensation is payable for goodwill by reason of the new paragraph in Clause 4 then no new lease can be claimed under Clause 5. If the compensation for goodwill is merely reduced and not abolished altogether there seems no reason why the tenant should not claim for a new lease. You might say that the fact that the compensation for the goodwill is reduced is rather an additional reason than otherwise for the granting of a new lease. I suggest, therefore, to my noble friend that the case is not on all fours with the other one, that the Amendment is not consequential, and that it is not really necessary.

THE EARL OF HALSBURY

My Lords, I do not press the Amendment.

Amendment, by leave, withdrawn.

VISCOUNT BERTIE OF THAME moved, at the end of subsection (7), to insert "Any such rentcharge shall have priority over any mortgage which the tenant may thereafter create." The noble Viscount said: I put this Amendment on the Paper, my Lords, to make certain that the rentcharge should have priority. I beg to move.

Amendment moved— Page 11, line 19, at end insert the said new words.—(Viscount Bertie of Thame.)

THE LORD CHANCELLOR

My Lords, I think the proposed addition is quite unnecessary. We all know that a tenant can only mortgage such interest as he possesses, and if his interest is subject to a rentcharge he can only mortgage his interest subject to that rentcharge. I hope my noble friend will not think it necessary to add a further Amendment to our long list of Amendments which have to be considered elsewhere unless there is some good reason for it.

VISCOUNT BERTIE OF THAME

My Lords, after what the Lord Chancellor has said, I will not press my Amendment.

Amendment, by leave, withdrawn.

THE LORD CHANCELLOR moved to add to subsection (12) the words "unless the landlord has by licence or otherwise consented to a variation of the original terms of the lease in this respect." The noble and learned Viscount said: My Lords, this Amendment was considered by and agreed upon between the Ministry of Agriculture and the Surveyors' Institution, both of whom desired that it should be made. Somehow it was not put down for the Committee stage. Many cases exist where landlords have by licence, or in some other way, permitted trades prohibited under the original lease to be carried on. Where such a licence has been granted, it should not be made obligatory on the tribunal to import into the new lease the prohibition contained in the original lease which may have become obsolete. I beg to move.

Amendment moved— Page 12, line 33, after ("lease") insert the said new words.—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 7 [Provision when claim is both for improvement and goodwill]:

THE LORD CHANCELLOR

My Lords, I have a note to the statement I made in Committee that I moved to include in the clause the words "if both such claims are valid," but by some error they have not found their way into the Bill. They are plainly necessary, and in the interests of everybody, especially of the landlord, I move that they be inserted.

Amendment moved— Page 13, line 17, after ("shall") insert ("if both such claims are valid").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

The next Amendment is purely verbal. I beg to move.

Amendment moved— Page 13, line 18, leave out ("either") and insert ("whether").—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 8:

Rights of mesne landlords.

8.—(1) Where, in the case of any holding, there are several persons standing in the relation to each other of lessor and lessee, the following provisions shall apply:— Any mesne landlord who has paid or is liable to pay compensation under this Part of this Act shall, at the end of his term, be entitled to compensation from his immediate landlord in like manner and on the same conditions as if he had himself made the improvement or created the goodwill in question, except that it shall be sufficient if the claim for compensation is made at least two months before the expiration of his term.

VISCOUNT BERTIE OF THAME moved, in subsection (1), after the paragraph beginning "Any mesme landlord", to insert: Provided that the amount to which a mesne landlord is entitled in respect of an improvement shall not exceed the total sum paid by him in respect of that improvement.

The noble Viscount said: My Lords, I have purposely limited this Amendment to the case of improvements and have not included goodwill because the goodwill might increase owing to the industry of successive mesne landlords; whereas an improvement can only increase owing to unforeseen circumstances, such as an increase in the cost of production. I beg to move.

Amendment moved— Page 13, line 33, at end insert the said new proviso.—(Viscount Bertie of Thame.)

VISCOUNT PEEL

My Lords, under the provisions of Clause 8, where a mesne landlord has paid compensation to his tenant for an improvement, he is entitled at the end of the term to recover from his landlord the value of the improvement as if he himself had executed it. The Amendment of my noble friend proposes to limit the amount which such mesne landlord may recover to the amount which he paid to the tenant for the improvement. It is rather difficult to see what would be the class of case to which the Amendment would apply. After all, the payment is for the unexhausted value of the improvement, and I do not think that, as a rule, with the lapse of time the value of an improvement tends to increase. It is very difficult to think of cases to which such an Amendment would be really applicable. Therefore the Amendment hardly seems a practicable matter. There is another difficulty about the Amendment, and that is, that my noble friend uses rather a vague expression. The Amendment refers to "the total sum paid by him in respect of that improvement". It is not quite clear from that whether the sum to be paid is to include the costs of the mesne landlord. It is rather a pity, I think, to leave that in doubt. Certain costs may have been incurred in discussions before the tribunal and so on, and it would be a pity to leave the matter of payment of them in any doubt. Surely it is fair that he should be covered for costs so incurred. As, however, the Amendment is of rather doubtful value on the score of practicability, I hope my noble friend will not press it.

VISCOUNT BERTIE OF THAME

My Lords, in reply to the noble Viscount, I would say that building before the War was fairly cheap. I saw a house the other day, and asked a building contractor what it would cost. He said: "You could not even get it done." This particular house had increased in value enormously. It does not seem to me that the landlord should get the benefit of unforeseen circumstances.

THE LORD CHANCELLOR

I do not think the noble Viscount has quite dealt with the important objection to this. Take this case. A lease has been granted to A. who grants a sub-lease to B., of course for a shorter term, it may be for a substantially shorter term. At the end of the lease to B. his landlord A. has to pay compensation for an improvement. Suppose the compensation which he has to pay is cut down because of proviso (b) of Clause 1, which limits compensation to the cost of carrying out the improvement subject to certain deductions. He has to pay a sum limited by that. Then A.'s lease comes to an end perhaps ten or twenty years afterwards. By that time the cost of carrying out the improvement has grown and the reason for cutting down, so to speak, no longer operates. In that case—there may be others, but that is the only one I can think of at the moment—the superior landlord may have to pay for an improvement which has gained in value since its execution. The Amendment of my noble friend would cut out that case, and I think it might do an injustice.

On Question, Amendment negatived.

Prohibition of contracting out.

9. Any contract (other than a contract to make an improvement) made whether before or after the commencement of this Act, by virtue of which a tenant would be, directly or indirectly, deprived of his right to obtain compensation or the grant of a new lease under this Part of this Act, shall be void unless the tribunal, having regard to all the circumstances of the case, is of opinion that the contract was reasonable and, in the case of a contract made after the commencement of this Act, that the consideration for the deprivation of the right was adequate."

LORD CARSON moved to omit Clause 9. The noble and learned Lord said: My Lords, I do not propose to move the first Amendment which stands on the Paper in my name to leave out, "having regard to all the circumstances of the case," because I shall be able to deal with it in my second Amendment to leave out Clause 9. Of all the clauses in the Bill it seems to me that this is the most extraordinary clause for any Party having the slightest regard for a contract to put in a Bill. I cannot help wondering what we should all be saying on the Conservative Benches if the Labour Party had brought in a clause such as this. It upsets every principle of the sanctity of contract. I am not saying there might not be wanted some protection in the nature of a clause dealing with the case of small holdings where people did not contract upon equal terms, but a clause of this kind is to my mind the most unfortunate precedent that could be put in an Act of Parliament.

Let me read the clause:— Any contract (other than a contract to make an improvement) made whether before or after the commencement of this Act, by virtue of which a tenant would be, directly or indirectly"— whatever that means— deprived of his right to obtain compensation or the grant of a new lease under this Part of this Act, shall be void unless the tribunal, having regard to all the circumstances of the case, is of opinion that the contract was reasonable and, in the case of a contract made after the commencement of this Act, that the consideration for the deprivation of the right was adequate. Just look at what that does. There may be contracts that have been running for years, which may, directly or indirectly, prevent a tenant obtaining compensation. Every one of those contracts the moment this Bill passes are made void. That is a rather sweeping thing for a Conservative Government to do.

All these contracts made before the Bill becomes law are made void no matter in what circumstances or for what consideration they were entered into. They are all void, but when the Bill passes a landlord can go to the tribunal and ask to have it declared that they are not void—a very peculiar kind of legislation. The landlord can go to the tribunal and say: "Please declare this not to be void." Just look at the vista of litigation. In every single case where there is anything in the contract that directly or indirectly deprives a tenant of his right to compensation, although the contract may have been made at a time when no such legislation as this could possibly have been contemplated the landlord has to go and prove his case. I do pray your Lordships to look at the direction given to the tribunal. The clause says: … unless the tribunal, having regard to all the circumstances of the case, is of opinion that the contract was reasonable … and so on. What are the circumstances that can make a contract that was entered into, say twenty years ago, reasonable. The clause gives no indication. We have plenty of law for protecting contracts which are brought about through the contracting parties not being on equal terms, or through a contract being brought about by fraud or coercion, or through parties being unconscionable in certain cases. That is the existing law, but what is a poor Judge to do when he is set to decide what kind of circumstances ten, twenty or thirty years ago make a contract now a reasonable or an unreasonable one? I do not think that such a provision would be found in many Acts of Parliament.

That is the objection to rendering void these past contracts. What does the Bill say in regard to future contracts? It says that any contract which deprives a tenant of his right, directly or indirectly, is void. Here again you may have entered solemnly into a contract and the day after you may have to get a declaration that it is reasonable. Just see what that means. Take two perfectly solvent, able men entering into a contract. Suppose it is Harrod's Stores and the Duke of Westminster, each of them advised by their own surveyors and solicitors and each perfectly in a position to say that they will or will not enter into a contract. They come together and Harrod's Stores, the party that is to be protected, say: "If you will let us have these premises we are willing to pay such and such a rent and to relieve you from all obligation as regards improvements under this Act. Let us not have any litigation over it." But they cannot do it. At least they can do it on the chance, as a gamble. They can do it on the understanding that they will go into Court the next day and will ask the Court to say whether the contract is reasonable or unreasonable.

I did really think that, when people contracted on terms which they fully understood, without any coercion on one-side or the other and with nothing unconscionable in the contract, it was possible for them to regulate contracts for the transfer or letting or purchase of property in such a way that the contract should be valid. Apparently the Conservative Government think otherwise. They want to break all the past contracts and to prevent from being valid any future contracts, no matter what is the position or the power of the contracting parties, and to add to the existing protection in cases where a contract or lease is unfair the provision that it is to be void unless the parties go before these gentlemen, whose only direction is to have regard to all the circumstances of the case. I know of no worse kind of legislation than to enact that a Judge is to get no directions, that it is to be left to his own sweet will to say what the circumstances of the case are. That is really allowing the Judge or the tribunal to legislate, instead of taking upon ourselves, as we should do if this were a serious method of considering a Bill, to frame some instances which would be some kind of direction to the Judge.

Of course, there is no time to make proper legislation of that kind. I am not an owner of property, except to a very small extent where I happen to live, and, thank heaven, I have no tenants, and I hope that I never shall have any, for I would rather give them the land for nothing. But I submit that this is a very serious precedent and nobody can tell how it will work out. It will make people chary of letting their property. They will hold out and try to sell, and many men who cannot get capital to buy will thereby be debarred from renting such premises. The moment you begin to interfere with the free exercise of rights between perfectly competent contracting parties there is no end to the mischief that you may do.

Amendment moved— Leave out clause 9.—(Lord Carson.)

VISCOUNT HALDANE

My Lords, if the real question were whether people who are quite competent should be prevented from contracting with one another, I should agree that there was much to say for the arguments to which we have just listened. But that is not the real question that we are considering in this Bill. Public opinion has said that it is desirable to promote the building and quality of houses by introducing the principle of this Bill, which contains restrictions on what people are to be allowed to do. That is no new principle. It is nothing revolutionary. It is what your Lordships have been doing in this House and in the other House for some time past in regard to agricultural holdings. It is a principle that is familiar to the Common Law of this country. There are restrictions regarding the right of a man to redeem his mortgage, and there are restrictions scattered right through our law which illustrate that, whenever there is a sufficient public interest in restricting freedom of contract, Parliament has always reserved to itself the right to do so, and the Common Law has also contained such restrictions. Accordingly, I feel that we cannot attach any great weight to the proposition that has been made to us.

VISCOUNT SUMNER

My Lords, nothing is so deceptive as to appeal to great principles which underlie Bills when you come to discuss their details in Committee or at a later stage. I say that nothing is more deceptive, but perhaps there is one thing that is more deceptive, and that is to find another principle introduced at this late stage of the Bill, a principle different from that of which we have heard hitherto. I did not know that this Bill was supposed to promote the improvement of houses. I understood that its principle was to prevent the landlord from taking to himself something that he ought not to have, whether it consisted of improvements or the goodwill attaching to a business. I prefer to confine myself to the principle of which we have heard a good deal in the earlier stages of the Bill. I am loath to criticise closely another clause, because the way in which we have to do it is a very unsatisfactory one and it is brought about, as usual, by the way in which this very complicated Bill, after passing through two or three new incarnations in another place, eventually reaches this House at a time when, not your Lordships only, but the members of the Government are overwhelmed with work and engagements. What we have to do is to present our criticisms, with or without our proposed Amendments, to the Lord Chancellor who, with some occasional and not always audible assistance from the First Commissioner of Works, has to take on his shoulders the burden of dealing with these matters himself and, with whatever assistance he can obtain elsewhere, must pass the whole thing through his mind at a time when he is deeply involved in other duties in this House and elsewhere. Accordingly I always feel compunction in pressing upon him one more set of considerations, especially when, as I am afraid must be the case to-day, one cannot present to the Government what one thinks would be a suitable Amendment, since the criticism is directed to the whole of the clause.

At this stage I have not the least desire to be intransigent about a Bill of this kind. It has introduced a certain scheme of compensation and, so far as I am concerned, I am desirous of seeing legislation finally arrived at which will give a useful character to the scheme. I am further quite prepared to recognise that when the ordinary law of contract between landlord and tenant is subjected on this extensive scale to a series of new rights in the interest of the tenant, one must expect to have some kind of clause against contracting out inserted. It may be usual, or not, but it is unlikely in modern times that such a clause would not be introduced. I do submit, however, that this clause has nearly all the disadvantages that a single clause on such a subject could contain. My noble and learned friend below me dwelt upon the point that it applies to contracts made before the commencement of the Act, as well as after. I do not know whether such contracts are very common, because I suppose most landlords did not anticipate it would be very likely that such an Act would be introduced, but there are, no doubt, some. I would like to point out the manner in which the clause proposes to deal with these.

If you claim an improvement—if you have a right to claim and have not contracted yourself out—you are nevertheless very carefully hedged round in all directions in Clause 2 as to the conditions under which, and the extent to which, you can claim, and there is a right of appeal, and questions of law can be discussed, and so forth. If you have had the prescience to make a contract that there are not to be any improvements, or, if there are, the tenant is to pay for them himself and not ask for compensation, then what is to happen? Without any hedging about at all, without any restrictions or limitations other than those contained in the words which I drew attention to, you have to go to the tribunal. The presumption is that the contract is void, and if the landlord tries to insist upon it he must go to the tribunal, and the question before the tribunal will be, having regard to all the circumstances of the case, whether the contract was reasonable.

I pause there. Reasonableness is preeminently a question of fact. That is why we are told that reasonableness should always be tried by a jury, because it is thought that they are the best judges of fact. There are no juries in this procedure, and therefore I presume the question of reasonableness would be referred, for report, to a surveyor, and his report would then come before the Judge, whoever he is. The surveyor is not placed under any restrictions at all as to his view of what may be reasonable, nor do I quite see how, when the matter is discussed before the Judge, you can find materials to show it was unreasonable, unless you invite the Judge to have regard to all the circumstances all over again and go into an inquiry on a very considerable scale. I should have thought that the fact that there was a contract made between the parties was the best proof of its reasonableness. At any rate, it was generally considered, in the business with which I am best acquainted, that if the parties made a contract it was not for the Court to criticise. It was considered that as they had made it, presumably they knew what they were about, and that it was a reasonable contract. It is plain that that is not the light in which this question would go before the tribunal.

Now take the other side of it. In the case of a contract made after the commencement of the Act you have not only to show that the contract was reasonable but that the consideration for deprivation of the right to obtain compensation was adequate. Again, I should have thought that the question of the sufficiency of the consideration was one of the last things that a Court would inquire into. The parties must be deemed to know better than anybody else whether the consideration was adequate; but in this case not only is the adequacy of the consideration to be inquired into, but it is to be in addition to and on the top of an inquiry as to reasonableness. Surely if the consideration is adequate that makes the contract itself reasonable. If a man be paid enough to give up his right to compensation what more does he want? What more could reasonably be required?

What I suspect with regard to the framing of the clause is that it is a monument of good intentions, that it has been framed, no doubt, with a sincere desire to protect the landlord, but that really it does prepare the way for a general inquiry, not merely of an expensive and dilatory kind, but an inquiry which would leave the meaning of what is the contract between the parties to be determined by the particular referee who happened to report on the case. That, I think, in practice would be the natural result, and if it would be, I can hardly suppose that on fuller consideration the Government would wish to keep the clause precisely in its present form. I do not think it would be useful, or perhaps very seemly, for me to try to dictate how the general objections on the whole clause ought to be met, but I do hope that even at this eleventh hour, or perhaps it is a little later than that, there may still be time for something to be done.

VISCOUNT NOVAR

The noble and learned Lord who moved the Amendment raised what occurred to my mind as a very concrete example of the danger of interfering unnecessarily with freedom of contract. A noble Lord opposite has referred to the Agricultural Holdings Act as a precedent for such legislation as this. What has been the result of the Agricultural Holdings Act, combined with the Small Landholders Act, in Scotland. The result has been to make the business of estate management unworkable. Coupled, I admit, with the burdens upon land, it has been the main incentive to landlords to oblige their tenants to buy their holdings, and that has led to the withdrawal of scores of millions of capital from agriculture, with the result of depreciating the equipment of land, and the further result that the industry of agriculture has been impoverished by the withdrawal of so much capital. I give that example because it entirely supports the fear of the noble Lord, that similar legislation in regard to urban property will render it necessary for the landlord to get quit of his share of the undertaking, and consequently so much less capital will be left for the development of urban property.

THE LORD CHANCELLOR

My noble and learned friend Lord Sumner has spoken with great consideration for myself, and I am indebted to him for what he has said. It is true I am not without other duties; but there are 24 hours in the day, and I have been able to give to this Bill and to the Amendments careful thought, so as to be able to deal in this House with points which may arise, with the help, which I greatly value, of my noble friend the First Commissioner of Works. This is a Motion to omit the whole of Clause 9—not to amend it, but to omit it altogether. It is not surprising that the discussion has covered a somewhat wide area, as in the case of the noble Viscount who has just spoken, because it is plain that if this Amendment were adopted the whole of the Bill would practically fall to the ground. This is a Motion to omit what is commonly called the contracting-out clause, and it has been approached from two different points of view. First, it is pointed out that the clause applies to leases, or contracts for leases, made before the commencement of the Act. Up to a point it is plain that must be so. The measure will not take effect for some three months or more, indeed it has been in Parliament for many months now, and by the time that it commences to operate it will have been before the public for about a year. During that interval it may well be that leases granted have contained a clause excluding the operation of any Statute that may provide for compensation. Is the House prepared to say that that kind of clause shall stand, notwithstanding the provisions of this Bill—that people shall have been at liberty during that interval to nullify any Statute that Parliament might pass? Yet that would be the effect of the omission of this clause.

Apart from that, of course, leases may contain provisions which are contrary to some of the provisions of the earlier clauses of this Bill. If they contain a contract to make an improvement the clause, of course, has no effect, because there is an exception at the very beginning of Clause 9 excepting contracts to make an improvement, and you carefully provide that where a lease contains a contract to make an improvement then the provisions of this clause shall not operate. But, apart from that, there may be other clauses in the lease which, it may be, are contrary to what this Act provides as to compensation or the grant of a new lease. In those cases what we propose to say is that they shall not prevent the operation of this measure unless, when compensation is claimed, the tribunal, whatever it may be, the High Court or the county court, comes to the conclusion that the provision of the contract is a reasonable one, or, in the case of a future contract, there is adequate consideration for the deprivation of the right. That does not mean in every case, as Lord Carson seems to think, that you must go to the tribunal beforehand.

LORD CARSON

No, I did not say so, I said you had to go afterwards.

THE LORD CHANCELLOR

I misunderstood my noble and learned friend. But the point would only arise on the claim for compensation or for a new lease; then the tribunal would say: "It is true there is something in the lease which is inconsistent with the claim which has arisen, but we think it quite reasonable, and therefore we disallow any claim for compensation." That is not without precedent at all. Take an instance familiar to many of your Lordships, the Workmen's Compensation Acts. Those Acts provide that persons shall not be able to make any contract which would deprive the workmen of the benefit of the Acts. But there is in those Acts a provision that where an employer has a scheme for the compensation of his workmen in case of accident, then, if that scheme is reasonable, it shall take the place of the Workmen's Compensation Acts. It is rather a similar case in this respect, that it enables private contracts, if reasonable, to be substituted for statutory provisions. That in itself would be a precedent far that part of the clause to which objection has been taken, and, as I venture to think, not reasonably taken. I think I have said enough to show that even as regards tenancies granted before the passing of this Bill this provision is proper and right.

As regards the leases to be hereafter granted, I do not see how anybody can maintain that this clause ought not to operate. If you strike out this clause all that landlords have to do in future is to put at the end of leases: "It is hereby declared that the Landlord and Tenant Act, 1927, shall not apply to this tenancy," so that the whole thing would fall to the ground. Really, if Parliament is going to permit that, it is no use to legislate at all. I do not believe that anybody here believes that that would be a reasonable thing to allow. The view of Parliament is that in those cases where the landlord is getting the benefit of his tenant's expenditure or his tenant's energy compensation shall be paid. To allow people to contract out of that would be wholly to nullify the Bill. If your Lordships think, after this explanation, I am right in opposing the Amendment—and, indeed, I am quite certain that if this Amendment were carried it would be quite useless to proceed with the Bill—I hope that the House will not assent to it.

LORD ERNLE

My Lords, there is one point in the remarks of the noble and learned Viscount on the Woolsack which I do not quite understand. If this clause were limited to all contracts made since the introduction of the Bill, all contracts, that is to say, which could have been made with reference to this coming piece of legislation, I should entirely agree with him, and be prepared to support him. But what I am afraid of is that under this clause you can rip up contracts made ten or twenty years ago, and, if that is so, then I must say that, with great reluctance, if the noble and learned Lord presses the matter to a Division I shall have to support him.

LORD CARSON

My Lords, I think the Lord Chancellor did not understand what I said in relation to this Amendment. What I said was that under the Bill all these contracts, which "directly or indirectly"—whatever that phrase means—affect the compensation were void—not that you have to go to the Court before the contract, but after the contract. I put the case of Harrod's Stores and the Duke of Westminster being thoroughly advised by surveyors and solicitors, and, if they agreed to contract out of the Act in relation to the improvements, their agreement is void unless they take it into the Court. That has not been controverted. The truth of the matter is that this raises in its most naked form the question of whether free contracts between people, contracting on absolutely equal terms, are to be allowed or not. That is a principle of such vital importance to the whole question of the holding of property in this country that I feel it my duty to press the matter to a Division.

THE EARL OF MIDLETON

My Lords, may I suggest something that might be acceptable to the Lord Chancellor? The noble and learned Viscount on the Woolsack has told your Lordships that the deletion of this clause will have the effect of nullifying the Bill. I venture to suggest, however, that no adequate answer has been given to the contentions of the noble and learned Lords, Lord Sumner and Lord Carson. To rip up old agreements made between perfectly competent persons long before this measure was in contemplation is a very novel procedure and, I would venture to say, a very undesirable one. I would suggest an Amendment to meet the case which perhaps the noble and learned Lord Chancellor would accept. I would suggest, in regard to the words "whether before or after the commencement of this Act" that, if the Lord Chancellor agrees, we should leave out the words "whether before or" and substitute the word "introduction" for the word "commencement". The clause would then read:— Any contract (other than a contract to make an improvement) made after the introduction of this Act. The arguments put forward have been very strong, and the contention of noble and learned Lords ought to be supported by your Lordships. These very old agree- ments should not be torn up simply because an advantage is being given to tenants. If my noble and learned friend will accept that and the Lord Chancellor agrees, I would move an Amendment to the effect which I have suggested.

THE LORD CHANCELLOR

I am surprised no response is made to that. The only proposal is to delete Clause 9. I must take the opinion of the House upon that proposal. If the noble Earl makes some proposal at a later stage of the Bill it can be considered, but I must find out whether the House approves or not of the Amendment to delete Clause 9.

THE EARL OF MIDLETON

Do I understand that the ruling of the Lord

Resolved in the negative, and Amendment agreed to accordingly.

THE EARL OF HALSBURY moved, after Clause 9, to insert the following new clause:—

Mortgages of holdings not to be affected.

" . It is hereby declared that nothing in this Part of this Act shall affect the security of any mortgage of a holding to which this Part of this Act applies."

The noble Earl said: My Lords, there is one proposition with which I am sure my noble friend, the Lord Chancellor, will agree—that is, that in legislation you

Chancellor is that it would be out of order for me at this stage to move the Amendment that I am suggesting, supposing that my noble friends were willing to withdraw the Amendment to delete Clause 9? Would the Lord Chancellor rule me out of order in moving that Amendment?

THE LORD CHANCELLOR

I think it is the practice to give Notice of Amendments on Report.

On Question, Whether Clause 9 shall stand part of the Bill?—

Their Lordships divided: Contents, 29, Not-Contents, 35.

CONTENTS.
Cave, V. (L. Chancellor.)	Howe, E.	Ullswater, V.
	Iddesleigh, E.
Salisbury, M. (L. Privy Seal.)	Iveagh, E.	Buckmaster, L.
	Lucan, E. [Teller.]	Cushendun, L.
Argyll, D.	Onslow, E.	Daryngton, L.
Sutherland, D.	Plymouth, E. [Teller.]	Ernle, L.
	Stanhope, E.	Gage, L. (V. Gage.)
Bath, M.		Lovat, L.
	Allendale, V.	Meldrum, L. (M. Huntly.)
Ancaster, E.	Falmouth, V.	Southwark, L.
Beauchamp, E.	Haldane, V.	Thomson, L.
Birkenhead, E.	Peel, V.

NOT-CONTENTS.
Northumberland, D.	Westmeath, E.	Hampton, L.
		Harris, L.
Exeter, M.	Bertie of Thame, V.	Hindlip, L.
	Falkland, V.	Jessel, L.
Denbigh, E.	FitzAlan of Derwent, V.	Kintore, L. (E. Kintore.)
Doncaster, E. (D. Buccleuch and Queensberry.)	Novar, V.	Lamington, L.
	Sumner, V.	Lawrence, L.
Eldon, E.		Leconfield, L.
Halsbury, E. [Teller.]	Askwith, L.	Leigh, L.
Midleton, E.	Carson, L. [Teller.]	Ormonde, L. (M. Ormonde.)
Morton, E.	Fairfax of Cameron, L.	Redesdale, L.
Northbrook, E.	Fairlie, L. (E. Glasgow.)	Sydenham of Combe, L.
Selborne, E.	Faringdon, L.	Wavertree, L.
		Wittenham, L.

ought to be quite clear what an Act of Parliament means. The object of my Amendment is to make it clear that a mortgagee not in possession does not bear any of the burdens of the tenant's improvements. I can see a strong argument that the Bill as it is drawn would probably be construed to exclude a mortgagee not in possession; but it is most desirable that there should be no doubt one way or the other. In another place the Home Secretary said in terms that this Bill was not intended to apply to a mortgagee not in possession. It is a very uncertain way of making certain what the law is to have merely the declaration of an intention. It is better, surely, to have a declaration one way or the other as to whether or not a mortgagee not in possession is to bear the burden of the tenant's improvements. I beg to move.

Amendment moved— Page 14, line 29, at end insert the said new clause.—(The Earl of Halsbury.)

LORD DYNEVOR

My Lords, I have an Amendment, after Clause 24, which also deals with mortgages, and as the question has now been raised I might say at once what I intended to say on that Amendment. I do not know whether your Lordships will prefer this Amendment of my noble friend, or my Amendment, but I think they are the same. I placed my Amendment on the Paper to ascertain whether mortgages take priority over charges imposed by this Bill. This Bill applies to leases already in existence and liabilities are imposed. There may already be a mortgage. Does the compensation payable have priority over the mortgage? If so, the security is lessened and all mortgages may be called in or the interest raised. It is doubtful if a mortgage in future could be obtained unless it takes priority over future charges.

My Amendment would not put a new mortgage over past tribunal charges, if it was registered. I am aware that the Lord Chancellor in winding up the debate on the Motion to refer the Bill to a Select Committee, said this: Again, the same noble Lord suggested that the compensation charged would take priority over a mortgage. There, too, I think he was mistaken. There is no suggestion that any charge for compensation can come before anything of the sort. I quite agree that there is no suggestion of this in this Bill; but the Bill makes no reference to the question, and so it would be best to make it quite clear, so that solicitors, especially in acting for small owners of small shops, should be able to tell their clients and the mortgagees the exact position at once. I should like the Lord Chancellor to make his statement larger and wider so that there may in future be no possible doubt as to where we stand. I beg to support the Amendment moved by my noble friend Lord Halsbury.

VISCOUNT PEEL

My Lords, my noble friends have raised a very important point—the question as to whether mortgages are affected or the security of mortgages is affected by any of the provisions of this Bill. As my noble friend Lord Dynevor said, there is nothing in the Bill to suggest that they are affected, but he wants it made clear that they are not. May I examine the question of the security of these mortgages from two points of view? The object of the two Amendments taken together—because I think I can deal with them together as my noble friend Lord Dynevor has spoken in support of my noble friend Lord Halsbury—is, of course, to prevent the security of a mortgagee being affected by two things. The first is by the creation of a charge in favour of the landlord after he has paid compensation; and the second is the liability of the landlord to pay compensation.

Taking first of all the case where a landlord has paid compensation, he can, under the First Schedule, obtain a charging order from the Minister of Agriculture, but there is nothing in the Schedule which gives such a charge priority over any mortgage existing at the time, and I am advised that he could not, without express provision, obtain any such priority. Where it is intended that a statutory charge shall take priority over existing incumbrances, a special provision to that effect is invariably inserted. May I refer my noble friends to Section 59 of the Improvement of Land Act, 1854, Section 6, subsection (2) of the Tithe Act, 1918, and Section 32, subsection (1) of the Agricultural Holdings Act, 1925? The First Schedule is merely an adaptation of Section 20 of the Agricultural Holdings Act, 1925, and it never has been suggested, I understand, that the charges under the Agricultural Holdings Act, 1925, take priority over existing incumbrances.

Secondly, as to the liability to pay compensation, that is a personal liability of the landlord and is not in any sense a charge on the land and so, of course, cannot affect the mortgage, unless the mortgagee becomes a landlord by reason of becoming mortgagee in possession or of foreclosure. The only means by which a tenant could obtain a charge on the land would be by getting a judgment for compensation against the landlord and enforcing that judgment by means of a writ of elegit or an equitable execution against the land; but in that case his rights under the writ of elegit or equitable execution takes effect subject to any mortgage existing at the time when the writ or order affecting the land is registered under the Land Charges Act, 1925. That is, the position of the mortgagee is not affected or prejudiced by the Bill. First of all, if an improvement is executed or goodwill created after the mortgage the value of the mortgaged property is ex hypothesi increased by the amount of the compensation payable. But, in the second place, if the mortgage is made after the improvement is executed or the goodwill created then the mortgagee advances the money with knowledge of the existence of the liability. I have taken the two cases and I think I have shown that in neither case is the position of the mortgagee affected by the provisions of the Bill or the charges which might operate under the provisions of the Bill. I submit, therefore, that neither of the Amendments of my noble friends is necessary.

LORD CARSON

My Lords, each stage of this Bill shows the impossibility of considering it properly in this hurried way. As I understand the legal argument of the noble Viscount who has just sat down he says that if we look through seven or eight Statutes we shall find that mortgagees are not affected by this Bill. The House has no time to look to see whether that is so or not. That comes from the way we are conducting our business. Let me put this question to the noble Viscount on the Woolsack. Is there not a provision in this Bill that enables a landlord, instead of paying compensation, to create a tenancy which will compensate for the improvements? That is to be settled by the tribunal. If that is so, surely if the new tenancy is to be of any use to the tenant it must affect the nature of the security. Does not that interfere with the mortgagee? Supposing it became necessary afterwards to put a receiver in, it would inevitably lead to a lower rent in a case where there might be a very narrow margin. Taking the argument of the noble Viscount, that if you go into the various Acts which regulate this matter you will find that nothing in this Bill affects the security of a mortgage on a holding, I cannot for the life of me understand why you do not say so plainly on the face of the Bill.

What is the objection to it? I do not say that the noble Viscount may not be right. I do not know whether he is right or not. This I do know, that very often things which have been said in the Houses of Parliament as to the meaning of a clause in a Bill have been found when the matter comes before the Courts to be quite wrong. Therefore I cannot understand, if it is true that the security of mortgages is not to be affected by anything in the Bill, why on earth the Government should oppose the Amendment. The matter is a very serious one for mortgagees. The Auctioneers' Institute are very much concerned about what will happen when the Bill passes if mortgagees have a fear of their security being endangered in any way, and they are concerned also about the difficulty of getting people, particularly trustees, to invest money in mortgages on land. Therefore I would respectfully submit to the Government that if the statement of the noble Viscount represents the policy of the Government and the security of mortgages is not to be affected the Amendment might be accepted.

THE LORD CHANCELLOR

My Lords, I think that my noble friend and I have endeavoured to meet all reasonable criticisms of the Bill, but I do not think this Amendment can reasonably be accepted. It says that— … nothing in this Part of this Act shall affect the security of any mortgage of a holding to which this part of this Act applies. Take the case of a freehold being mortgaged and the mortgagee afterwards foreclosing and taking possession. If this Amendment passes he will hold the land altogether free from this measure. Therefore the tenant runs this chance, that if he has as landlord somebody who does not mortgage he is all right, but if his landlord mortgages he may be all wrong and will not be able to get any compensation at all. It is not treating the tenant at all fairly to make his right to compensation depend on the chance of what his landlord may or may not do. It really is not reasonable to expect us to accept the Amendment and I hope the House will not adopt it. I quite agree with what my noble friend the First Commissioner of Works has said.

THE EARL OF HALSBURY

My Lords, if the noble Viscount on the Woolsack would give me any hope of favourably considering an Amendment in another form I should be willing to withdraw now and move an Amendment at a later stage.

THE LORD CHANCELLOR

If my noble friend will put down an Amendment to be moved on Third Reading I will certainly give it consideration.

Amendment, by leave, withdrawn.

Clause 14 [Power to sell or grant leases notwithstanding restrictions]:

Amendments moved—

Page 16, line 11, leave out ("and to convey such reversion or grant any such") and insert ("any such reversion or")

Page 16, line 13, after ("thereunder") insert ("and to convey and grant the same")

Page 16, line 14, leave out ("conveyance or")

Page 16, line 15, leave out ("make or")—(The Lord Chancellor.)

On Question, Amendments agreed to.

Clause 17:

Holdings to which Part I. applies.

(2) This Part of this Act shall not apply to any holding let to the tenant during his continuance in any office, appointment or employment, or for the temporary convenience or to meet a temporary necessity of either the landlord or the tenant, provided that any such contract of tenancy made after the commencement of this Act shall be in writing signed by the parties thereto, and shall express the purpose for which the tenancy is created.

(3) For the purposes of this section premises shall not be deemed to be premises used for carrying on thereat a trade or business—

1. (a) by reason of their being used for the purpose of carrying on thereat any profession;
2. (b) by reason that the tenant thereof carries on the business of subletting the premises as residential flats, whether or not the provision of meals or any other service for the occupants of the flats is undertaken by the tenant:

Provided that so far as this Part of this Act relates to improvements premises used for carrying on a profession shall be deemed to be premises used for carrying on a trade or business.

THE LORD CHANCELLOR moved, in subsection (2), to omit all words after "This Part of this Act shall not apply to any holding let to" down to and including "express", and to insert "a tenant as the holder of any office, appointment or employment, from the landlord, and continuing so long as the tenant holds such office, appointment or employment, but in the case of a tenancy created after the commencement of this Act, only if the contract is in writing and expresses". The noble and learned Viscount said: My Lords, subsection (2) of Clause 17 was inserted as an Amendment moved by the Earl of Midleton to Clause 16, and I said at the time I accepted the Amendment that it would have to be subject to reconsideration. I think the words I propose now will give effect to the intention of the noble Earl. We have omitted some words which seem to us very difficult to construe, and we have put in some more definite words.

Amendment moved— Page 17, line 36, leave out from ("to") to the first ("the") in line 42 and insert the said new words.—(The Lord Chancellor.)

THE EARL OF MIDLETON

I quite accept the words proposed by the noble and learned Viscount.

On Question, Amendment agreed to.

THE DUKE OF NORTHUMBERLAND moved, at the end of subsection (3), to insert: "A profession for the purpose of this section means the habitual and regular practice of a learned or skilled profession as the chief means of livelihood." The noble Duke said: My Lords, the object of this Amendment is, I think, sufficiently clear. It is intended to provide some sort of definition of the word "profession". I have no legal knowledge, and for all I know there may be a perfectly definite meaning attaching in law to the word "profession". I am told that is not the case, but in that matter I speak under correction. If there is no such definite meaning it is evident that owners of house property cannot possibly know where they stand under this Bill or what obligations or commitments they may incur, because they cannot know whether a tenant is conducting a profession or not. We have to fall back upon the dictionary definition of the word "profession". According to the New English Dictionary, which is the greatest authority on the English language, a profession is thus defined:— Any calling or occupation by which a person habitually earns his living. Now usually applied to an occupation considered to be socially superior to a trade or handicraft. It is evident that almost any occupation in the world would come under that heading.

The man who earns his living, let us say, by writing detective novels would be carrying on a profession. Perhaps I shall be told that this is reducing the matter to an absurdity and that such a livelihood cannot possibly be regarded as a profession under this Bill. But let us consider all sorts of callings which would apparently be professions for the purpose of the clause. Let us suppose that somebody had leased premises for the purpose of giving instruction in music, singing, dancing or acting. He is earning a livelihood by his occupation and he is therefore carrying on a profession. Take the case of an artist who is earning his livelihood by painting pictures. He also is carrying on a profession. The lady who has a manicuring establishment is carrying on a profession. The retired Army officer who, in order to supplement his income, takes in candidates for Woolwich or Sandhurst would also be earning his livelihood by his occupation and would be entitled to be considered as carrying on a profession. Those whom I have mentioned are carrying on perfectly genuine and reputable occupations, but there are all sorts of occupations that are more or less quack callings, and those who carry them on would have a perfect right to say that they were carrying on a profession.

Surely the object of adding professions to businesses and trades was that the Bill should apply to those learned and scientific professions which are absolutely essential to any civilised society—to lawyers, solicitors, doctors, dentists, surveyors and so forth. I submit that this definition will at any rate enable all those who are conducting what they would call artistic professions or occupations other than learned or scientific to be excluded from the Bill. I am not necessarily wedded to this particular definition. On the contrary, I am quite prepared to admit that a much better definition might be provided, and I would only say that if the Lord Chancellor is prepared to consider the possibility of a better definition than that which I have suggested I shall be very happy to accept it.

Amendment moved— Page 18, line 14, at end insert ("A profession for the purpose of this section means the habitual and regular practice of a learned or skilled profession as the chief means of livelihood").—(The Duke of Northumberland.)

VISCOUNT SUMNER

My Lords, I wish to support the noble Duke's Amendment, and the more so because, having made an endeavour to add to, I will not say to improve, the Bill in Committee, and having been defeated, I confess my error and withdraw it in that form. I recognise that in that form it was unacceptable, but I think it is essential that there should be some attempt at definition, and that the difficulties of definition, which are not inconsiderable, ought not to satisfy us that it is not necessary. The real difficulty is to know why these words were originally put in. If one could be sure what the policy was, it would be very much easier to say what a profession within the scope of that scheme was meant to be. As the matter stands it appears to me that it will in every case be a question of fact whether or not premises are used for carrying on a profession. It will not depend on what the claimant chooses to call himself or to refrain from calling himself. It will be a question of the user of the premises, and then it will be necessary to determine whether the premises are premises used for carrying on a trade or for carrying on a profession or for carrying on neither.

If it had been intended that everything that is not a trade or business should be a profession, it would then be intelligible enough, but I do not think that it is so framed. I do not think that the words in paragraph (a) and the words in the proviso would ever have been chosen if the intention had been that all premises other than those used purely for pernoctation and bringing up your family were to be entitled to the benefit of claims for compensation. It is quite true that a profession is something which is not a trade or business, but I do not think that, on the wording of the clause, a profession is everything that is not a trade or business, and it is in that gap that a very considerable number of cases would be found which would be the subject of contention.

It is all very well to say, as was said of the General Strike, that you cannot define it, but that you would know it when you saw it; that a professional man is a man who is called a professional. This will not do. The clause surely does not apply to a professional cricketer. Actors always speak of "the profession" as if—and perhaps rightly—there were no other profession that very greatly mattered. But it is not in relation to these colloquial terms that the word is used, and I do not think that, in a clause which is intended to distinguish between those who do and those who do not get the benefit of the first Part of the Act, you should have to rely upon something that is used colloquially, perhaps in several colloquial senses. I refrain from touching upon the special cases that might arise. I think they largely belong to that particular class which the noble Duke mentioned—namely, artists and persons who practice the subordinate arts of healing. I think the person who X-rays you and produces an ambiguous and unattractive picture of what is supposed to be the state of your abdomen is a very good instance. He is a person whom no one, I think, would regard as a tradesman, and I do not think you would call him a business man. But if he belongs to a profession, what profession does he belong to? There are other cases that could be suggested without difficulty, and they amount to quite a considerable number, particularly in large cities.

Accordingly, I feel that, in default of a better, the Amendment of the noble Duke is one that I should cordially support. I recognise, as I gather that he recognises, that it is open to the objection that it is like defining an archdeacon as "an ecclesiastical personage who is charged with archidiaconal functions." But it is not at all uncommon in legal definition to introduce the word defined into the definition, and somehow it is made to work. Until I see something better, I certainly think it would be an improvement to the clause as it stands, upon the plain and simple ground that it would tend to reduce the number of disputes. If your real policy is to allow everybody to claim for improvements and it was thought that the terms "trade," "business" and "profession," were exhaustive of all occupations, that is a totally different matter; but in that case it should have been said that nobody should be disentitled to the benefit of this Part of the Act by reason of the fact that he did not carry on any trade or business.

THE LORD CHANCELLOR

My Lords, I should have thought that the intention of the words which are under discussion was fairly evident. The Bill prima facie applies to premises used for trade. It was pointed out that the same difficulty might occur in regard to premises used for professions. Instances will occur to all of us. Take the case of a doctor who wants to add a surgery to the house. Take the case of a schoolmaster who wants to add an extra classroom. Take the case of an artist who wants to add a studio. These are three instances, but they all provide cases where surely it is reasonable that, if it is desired to make an improvement of that kind, and if at the end of the term some value remains to the landlord, the tenant should have compensation for the unexhausted value of the improvement. That is the kind of case for which I apprehend the framers of this clause wish to provide. The professional man has no right in respect of goodwill, for reasons which we all know. The goodwill of a profession is personal goodwill, and is in no sense attaching to the property. That is the general meaning of the clause.

The noble Duke wants to go through the perilous process of defining "profession." He defines it as a profession which must be "learned or skilled." What profession is not learned or skilled? If you have an artist carrying on his profession as an artist, does anyone suggest that he is not skilled. He surely requires a good deal of skill. I do not think the words "learned or skilled" add anything to the word "profession," and I believe that they will raise rather difficult points for determination. Then the noble Duke proposes to provide that the profession must be carried on as the chief means of livelihood. Why is that? Are you to inquire whether the schoolmaster, or the artist, or the doctor has means of his own, on which he partly or perhaps mainly subsists? At the begin- ning it may be that he gets very little profit from his profession, and he may have to resort to his private income. Are you for that reason to cut him off from compensation if, having found the money for the classroom or the surgery, he leaves it? What sort of inquiry are you to conduct if you look into a man's private means, in order to see which is his chief means of livelihood? It seems to me that that would be not only dangerous, but unfair. The other qualification is that it must be "habitual and regular practice." There I have some sympathy with the noble Duke. I do not think that a studio or a house in which somebody paints a picture now and again ought to come within this clause. I would like to meet the noble Duke there, and if he agrees, and is prepared to withdraw his Amendment, I would move to insert in the proviso in subsection (3) the word "regularly."

THE DUKE OF NORTHUMBERLAND

I am obliged to the noble and learned Viscount, and in view of that concession I shall be prepared to withdraw my Amendment.

Amendment, by leave, withdrawn.

THE LORD CHANCELLOR

By leave of the House I will now move, in subsection (3), after the first "premises," to insert the word "regularly."

Amendment moved— Page 18, line 12, after ("premises") insert ("regularly".)—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 19:

Provisions as to covenants not to assign, &c., without licence or consent.

19.—(1) In all leases whether made before or after the commencement of this Act containing a covenant condition or agreement against assigning, underletting, charging or parting with the possession of demised premises or any part thereof without licence or consent, such covenant condition or agreement shall, notwithstanding any express provision to the contrary, be deemed to be subject—

1. (a) to a proviso to the effect that such licence or consent is not to be unreasonably withheld;
2. (b) and if the lease is for more than forty years, and is made in consideration wholly or partially of the erection, or the substantial improvement, addition or alteration of buildings, and the lessor is 1110 not a Government department or local or public authority, or a statutory or public utility company, to a proviso to the effect that in the case of any assignment, underletting, charging or parting with the possession (whether by the holders of the lease or any under-tenant whether immediate or not) effected more than seven years before the end of the term no consent or licence shall be required, but notice in writing of the transaction shall be given to the lessor within six months after the transaction is effected.

(2) In all leases other than mining leases whether made before or after the commencement of this Act containing a covenant condition or agreement against the making of improvements without licence or consent, such covenant condition or agreement shall be deemed, notwithstanding any express provision to the contrary, to be subject to a proviso that such licence or consent is not to be unreasonably withheld; but this proviso does not preclude the right to require as a condition of such licence or consent the payment of a reasonable sum in respect of any damage to or diminution in the value of the premises or any neighbouring premises belonging to the landlord, and of any legal or other expenses properly incurred in connection with such licence or consent nor, in the case of an improvement which does not add to the letting value of the holding, does it preclude the right to require as a condition of such licence or consent, where such a requirement would be reasonable, an undertaking on the part of the tenant to reinstate the premises in the condition in which they were before the improvement was executed.

(3) In all leases other than mining leases whether made before or after the commencement of this Act containing a covenant condition or agreement against the alteration of the user of the demised premises, without licence or consent, such covenant condition or agreement shall, if the alteration does not involve any structural alteration of the premises, be deemed, notwithstanding any express provision to the contrary, to be subject to a proviso that no fine or sum of money in the nature of a fine, whether by way of increase of rent or otherwise, shall be payable for or in respect of such licence or consent; but this proviso does not preclude the right of the landlord to require payment of a reasonable sum in respect of any damage to or diminution in the value of the premises or any neighbouring premises belonging to him and of any legal or other expenses incurred in connection with such licence or consent.

Where a dispute as to the reasonableness of any such sum has been determined by a court of competent jurisdiction, the landlord shall be bound to grant the licence or consent on such terms as the court considers reasonable.

(4) This section shall not apply to leases of agricultural holdings within the meaning of the Agricultural Holdings Act, 1923, and paragraph (b) of subsection (1) of this section shall not apply to mining leases.

THE LORD CHANCELLOR moved, in subsection (1) to add to proviso (a), "but this proviso does not preclude the right of the landlord to require payment of a reasonable sum in respect of any legal or other expenses incurred in connection with such licence or consent". The noble and learned Viscount said: My Lords, I have put down this Amendment, which was moved by Lord Harris in Committee, and which I promised to consider.

Amendment moved— Page 19, line 40, after ("withheld") insert the said new words.—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

The next two Amendment are intended to give effect to a promise given to Lord Phillimore who in the Committee stage moved an Amendment, and emphasised the view that there was no penalty for failure to give notice of an assignment. The effect of the Amendments will be that a covenant not to assign without consent will be subject to a proviso to the effect that in the case of an assignment effected more than seven years before the end of the term no consent is to be required if notice in writing of the transaction is given to the lessor within six months after the transaction is effected. If therefore there was an assignment and proper notice was not given, there would be a breach of the covenant, and the lessor would be entitled to all the remedies which are open to him for a breach of covenant. I have considered the possibility of a money penalty, and I do not think that that would meet the case, and therefore I propose to make these changes in the Bill.

Amendments moved—

Page 20, line 11, leave out ("but") and insert ("if").

Page 20, line 12, leave out ("shall be") and insert ("is").—(The Lord Chancellor.)

LORD PHILLIMORE

I am very grateful to the noble and learned Viscount. His Amendments are in a very much neater form than mine, and I think they will effect what is required.

On Question, Amendments agreed to.

THE LORD CHANCELLOR

The next Amendments to this clause alter the form of some Amendments made at the request of Lord Sumner. They are only drafting Amendments.

Amendments moved—

Page 20, line 15, leave out ("other than mining leases")

Page 20, line 36, leave out ("other than mining leases")

Page 21, line 13, leave out ("such terms as the court considers") and insert ("payment of the sum so determined to be")

Page 21, line 17, after ("subsection (1)") insert ("subsection (2) and subsection (3)")—(The Lord Chancellor.)

On Question, Amendments agreed to.

Clause 20 [Apportionment of rents]:

THE LORD CHANCELLOR

My Lords, there is a verbal Amendment here.

Amendment moved— Page 21, line 30, after ("payment") insert ("or any part thereof.")—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 21:

Provisions as to tribunal.

21.—(1) The tribunal for the purposes of Part I of this Act shall be the county court within the district of which the premises or any part thereof are situated acting under and in accordance with this section:

Provided that—

1. (a) if before commencing proceedings in the county court the claimant or applicant and all persons affected agree that the claim or application should be heard by the High Court; or
2. (b) if on an application being made to the High Court within the prescribed time the matter is transferred to the High Court in accordance with and subject to the provisions of section one hundred and twenty-six of the County Courts Act, 1888;

a judge of the High Court without a jury shall, in respect of the matter, be the tribunal for the purposes of Part I of this Act.

(2) Where proceedings are commenced in the county court in respect of any claim or application under Part I of this Act, the matter shall, unless the parties otherwise agree, or it is otherwise prescribed, stand referred for inquiry and report to such one of the panel of referees appointed by the Reference Committee hereinafter mentioned as may be selected by the county court, as if with the consent of the parties the matter had been so referred to him in pursuance of section six of the County Courts Act, 1919.

(5) County court rules may be made for regulating proceedings under this section, and those rules may fix the remuneration of referees and may provide for applying, subject to the necessary adaptations and exceptions, to costs of proceedings in county courts under this section, the provisions of subsections (1), (2) and (3) of section five of the Acquisition of Land (Assessment of Compensation) Act, 1919, relating to costs of proceedings under that Act.

THE EARL OF MIDLETON moved, in subsection (1), after "The tribunal for the purposes of Part I of the Act shall," to insert "in cases where the total amount claimed is less than five hundred pounds, or where the annual value of the holding the subject of the application or claim, does not exceed one hundred pounds." The noble Earl said: My Lords, you will recollect that in Committee the noble and learned Viscount, Lord Sumner, put up a very strong argument to the effect that, if the smaller cases went into the county court, there should be a limitation, and that the access direct to the High Court should be given for the larger cases. I think that the noble and learned Viscount on the Woolsack has to some extent admitted the force of this argument. He was very much afraid in Committee that the Court might be overladen with the cases which are to be brought up. To some extent, I think, that difficulty has been met by the concession which was made to Lord Dynevor an hour or two ago. But the Lord Chancellor has on the Paper a proposal which will no doubt be accepted, that, as in the county court so in the High Court, it shall be in the power of the Judge by rules to refer to the panel of referees in the first instance the investigation of these subjects, in order to avoid a trial before all the facts have been ascertained. That, I hope, would very greatly relieve both the High Court and the county court.

That having cleared away to some extent one of the main difficulties, I would really appeal to the noble and learned Viscount to consider whether the security of access to the High Court for the larger cases in the first instance, without the necessity either of agreement or of a motion made in the High Court, should not be given as a question of right. What I think is felt on this subject—and I am afraid that no argument will really shake that feeling—is that the county courts are in these matters of property and compensation extremely diverse in their rulings. It is well known in respect of the Rent Restrictions Acts, which bring in many cases which are very much akin to these cases, that the county court in one district gives always one class of decision, and the county court in another district gives another totally different class of decision; and really, however necessary it is that the smaller cases (if we accept the Lord Chancellor's view, in which he overruled us in the Committee) should go the county court it is very desirable that these larger cases, or cases which may develop in the course of hearing, should have access to the Supreme Court. They ought not until they actually come to trial to overload the Courts, because the whole of the preliminary work will be done, under the Judge, by the court of referees. The Amendment I am moving, I should add, is substantially that moved by Lord Sumner in Committee.

Amendment moved— Page 22, line 4, after ("shall") insert ("in cases where the total amount claimed is less than five hundred pounds, or where the annual value of the holding the subject of the application or claim, does not exceed one hundred pounds").—(The Earl of Midleton.)

LORD PHILLIMORE

My Lords, I should like to support the noble Earl. It really simply is this: Are we primarily to put large cases in the High Court, or are we primarily to put them into the county court? I submit that primarily they should go into the High Court, and only exceptionally in the county court, except where they are willing to go into the county court. I also submit that in all probability in every large case, if there is any consent under paragraph (a), there will be an application under paragraph (b), and that is one extra piece of expense.

VISCOUNT SUMNER

My Lords, I beg to support my noble friend's Amendment. The fear is natural that the High Court may be overloaded with cases, the fear is natural also that the parties may be overloaded with costs, but I would like it to be borne in mind very carefully that there is also a very great danger of overloading the county courts, at any rate the county courts in the populous districts, especially where trade and manufactures are carried on. One ought to recollect that primarily county courts are instituted to be the poor man's courts. There is a constant flow of business, of the ordinary debt-collecting or small dispute character, which takes time, and often, if it is properly tried, takes a good deal of time, small as the amount is that is in dispute. If the County Court Judges are called upon, as they are called upon almost every Session, to undertake some fresh branch of jurisdiction, there is always a tendency to push on one side this small case work and refer it as much as possible to the registrar, and so make way for what appears to be a larger case which would take more time. It would be a very great pity if the county courts were choked. It would, of course, be possible to appoint more County Court Judges and build more county court buildings, but that is the sort of thing which was suggested as a reason for not sending the matter to the High Court. But if the local tribunals were not able to find time to give full attention to both, and if they were tempted or pressed to give the major part of their attention to this particular work it would have a lamentable result.

No one can tell how many cases there will be; no statistics appear to exist for guidance. The only thing that you can be quite confident about is, I think, that for some considerable time, until all the questions of law that can arise upon this quite complex subject have been authoritatively ruled on, solicitors will in selfdefence—and quite properly, too—recommend the clients who can afford it to endeavour to get questions of law carried as far as may be. I am perfectly certain that the result will be a large number of county court appeals to the Divisional Courts, with, of course, the possibility of a further appeal; whereas, if a case is tried by a Judge of the High Court in the first instance you get direct to the Court of Appeal, and you get the cases coming before the same Lords Justices, whereas, if they only go to Divisional Courts, their composition, with the Court going round the whole bench of Judges, may vary considerably. Time is saved, as the experience of the Workmen's Compensation Acts shows, if the appeals go direct to a tribunal which always has in its mind the exact state to which the different questions have been brought by legal decision.

I think therefore—but I agree it is a matter of speculation—that the balance is in favour of dividing the two classes of case by some line other than that of discretion in each particular case and endeavouring to foster rather than discourage the determination of them by the High Court in the first instance. When questions of law have been thoroughly settled only questions of fact will remain and there will be less likelihood not merely of appeals but even of any prolonged hearing by the County Court Judge, because if the law has been settled the referee, an intelligent man who follows these things, will say: "Those are the facts; I apply the law; the conclusion is so-and-so and I so report." I therefore hope the Lord Chancellor may be able to see his way—though I recognise the difficulties, because I know the matter has been considered already—to accept the noble Earl's Amendment.

THE LORD CHANCELLOR

My Lords, this Amendment has been supported, as was to be expected, in very cogent and persuasive language, but I am afraid I am not in a position to agree to it. I wall give the House my reasons. It is of very great importance that if possible we should not increase the expense of these applications. We want to make them as inexpensive as possible so long, of course, as justice can be obtained. Consequently I think it is of importance to make the hearing where possible a local hearing, a hearing at or near the place where the question for decision arises, so that the parties can easily attend the court and not have to make the journey to London or incur the further expense of bringing their witnesses with them to London. There are many reasons why in cases of this kind, a local hearing is both more desirable and less expensive. If there is a big sum involved or a big question for decision either party can, under the Bill as it stands, apply for the case to be transferred to the High Court but in many cases, even where a sum exceeding £500 is involved, the parties may not wish to have the transfer made to the High Court.

They may have confidence in the County Court Judge. Many County Court Judges have very great experience and are trusted by all those who come within their jurisdiction. We have a County Court Judge who may be sitting in a great City like Liverpool, or Leeds, or Bristol. Are you to say the case shall not come before him in that county court, even although both the parties agree that it shall do so? That is the effect of this proposal. On the whole we greatly prefer to leave the Bill as it stands, and that unless the parties agree that they wish to go to the High Court, in which case they will go there, they should commence proceedings in the county court. Then either party may apply to the High Court to transfer the matter from the county court to that Court. My noble friend has spoken about overloading the High Court. There is also, he says, the risk of overloading the county court. The truth is that some county courts have plenty of time for this work; others are more hard pressed and I am often engaged in rearranging circuits so as, if possible, to distribute the work as evenly as may be. In cases where there is less time available we may have to consider this question and, if necessary, do something to grant relief. If much work is thrown upon the county court under this Bill then we shall have to consider the matter.

I have given my best thought to it and I really think the best and wisest course to pursue and the one which I am sure would be most popular with the great bulk of those interested, would be to leave the matter where it is and, in the absence of agreement, make the county court the prima facie tribunal, reserving power in the High Court to do what I am sure it will do in any proper case. I do not know if I have been able to persuade noble Lords, but I feel the best course will be not to press this Amendment.

THE EARL OF HALSBURY

My Lords, there is one point the noble Earl who moved this Amendment brought out, and I am afraid this particular Bill will emphasise it very much indeed. He said, which is unfortunately quite true, that a County Court Judge in one district will take a very different view from a County Court Judge in another district. Obviously and humanly it is likely that that would be so. County Court Judges keep in their own circuits; they do not meet each other with the frequency that the High Court Judges meet together, and there will always be a tendency for one man to take a particular view. After the first few appeals which will settle the law upon the matter, the rest of the decisions will be, as Lord Sumner said, decisions of fact, and for that reason there will be no real appeal to the Divisional Court because the Divisional Court will not review the opinion of the County Court Judge on pure questions of fact unless he has made some mistake in law. The result is you will have a tendency in one district to decide in one way and perhaps, in the next door district, to decide in another way. That surely must be far from satisfactory and, for the reasons that have been given and for that additional reason, I shall support this Amendment.

On Question, Whether the proposed words shall be there inserted?—

Their Lordships divided:—Contents, 18; Not-Contents, 18.

CONTENTS.
Northumberland, D.	Bertie of Thame, V.	Lawrence, L.
	FitzAlan of Derwent, V.	Leconfield, L.
Doncaster, E. (D. Buccleuch and Queensberry.)	Novar, V.	Leigh, L.
	Sumner, V.	O'Hagan, L.
Halsbury, E. [Teller.]		Phillimore, L.
Midleton, E.[Teller.]	Askwith, L.	Redesdale, L.
Morton, E.	Dynevor, L.	Wavertree, L.

NOT-CONTENTS.
Cave, V. (L. Chancellor.)	Exeter, M.	Stanhope, E.
Salisbury, M. (L. Privy Seal.)	Beauchamp, E.	Haldane, V.
	Cranbrook, E.	Peel, V.
	Iddesleigh, E.
Sutherland, D.	Lucan, E. [Teller.]	Cushendun, L.
	Onslow, E.	Gage, L. (V. Gage.)
Bath, M.	Plymouth, E. [Teller.]	Lovat, L.
		Southwark, L.

THE LORD CHANCELLOR

My Lords, in accordance with the Standing Orders, I declare—semper praesumitur pro negante—the Amendment not carried.

Amendment (according to ancient rule) negatived.

THE LORD CHANCELLOR

My Lords, I beg to move the drafting Amendments which stand in my name.

Amendments moved—

Page 22, line 19, leave out ("a judge of")

Page 22, line 19, leave out ("without a jury")

Page 22, line 24, after ("Act") insert ("and are not transferred to the High Court").—(The Lord Chancellor.)

On Question, Amendments agreed to.

VISCOUNT BERTIE OF THAME moved, in subsection (2), to leave out "otherwise." The noble Viscount said: My Lords, it will be noticed that it is stated in the Definition Clause on page 26, that the expression "prescribed" means prescribed by county court rules. The words in Clause 21 are "otherwise prescribed." There are hundreds of ways of prescribing things. It can be done, for instance, by Order in Council. It seems to me that the word "otherwise" is unnecessary. We have heard a great deal about unnecessary additions to the Bill, and, therefore, I hope that the Lord Chancellor will accept my Amendment and delete this unnecessary word. I beg to move.

Amendment moved— Page 22, line 25, leave out ("otherwise").—(Viscount Bertie of Thame.)

VISCOUNT PEEL

My Lords, my noble friend will see from subsection (2) what the meaning of the subsection is; that is to say, when proceedings are commenced in the county court the matter will stand referred for inquiry and report to one of the panel of referees, and so on. There are only two cases in which it does not so stand. One is when the parties otherwise agree. If they agree it does not happen. The other is when it is otherwise prescribed. As the definition says, it is prescribed by the rules of the county court; that is, in order to exclude from automatic reference to the referees certain minor matters, such, for instance, as the question of the extension of time, and so on. In that case it would really be rather waste of time to send it to the referee, and it is much better dealt with by the County Court Judge. If the word "otherwise" is left out of the subsection I am afraid the words will not mean anything. It would simply read "or it is prescribed," and I do not quite know what those words would mean. With "otherwise" in there the words mean quite clearly what they are intended to mean, and, surely, it is for the convenience of all parties that in this case the matter should be dealt with at once by the County Court Judge. The word is not superfluous, as my noble friend has suggested it is, and I hope he will agree for the sake of security, lucidity and despatch to leave the word in the subsection.

VISCOUNT BERTIE OF THAME

It still remains a fact that it could be done under Order in Council. If the noble Viscount will put in some limiting words on Third Reading I should be much obliged.

VISCOUNT PEEL

I think it is already quite clear that it must be done under the rules of the county court.

VISCOUNT BERTIE OF THAME

Does the noble Viscount deny that "otherwise prescribed" could mean that it could be done under Order in Council?

VISCOUNT PEEL

It means otherwise than going before the referees.

VISCOUNT BERTIE OF THAME

Then it might say so.

VISCOUNT PEEL

I think it does say so.

THE LORD CHANCELLOR

"Prescribed" means prescribed by rules of the court and not by Order in Council.

VISCOUNT BERTIE OF THAME

The words are "otherwise prescribed", and "otherwise" could mean that it could be done under Order in Council, clearly.

THE LORD CHANCELLOR

Does the noble Viscount press his Amendment?

VISCOUNT BERTIE OF THAME

No.

Amendment, by leave, withdrawn.

THE LORD CHANCELLOR moved, in subsection (5), after the first "section", to insert "and for enabling any party to apply to the county court for directions as to the conduct of a reference under this section". The noble and learned Viscount said: This Amendment is designed to meet a point raised by my noble and learned friend Lord Phillimore in Committee. I beg to move.

Amendment moved— Page 22, line 41, after ("section") insert the said new words.—(The Lord Chancellor.)

LORD PHILLIMORE

My Lords, I had intended to say that I was grateful to the noble and learned Viscount, but I think there are other people who will be still more grateful to your Lordships' House—namely, future landlords and tenants, who by this provision are saved from that almost uncontrolled passion for referees which seems to possess His Majesty's Government. This Amendment puts some check on that inordinate desire. I am quite satisfied in regard to the county court, but I am not quite satisfied with regard to the High Court. I do not altogether like the next Amendment on the Paper, the new subsection, and I may as well say what I think about it. I am not quite sure that it makes sufficient provision for direction, and I would submit to the noble and learned Viscount that he might still consider the possibility of inserting after the words "a judge thereof", which appear at the top of page 8 of the Marshalled List, the words "with any direction which may be deemed necessary" or "may be deemed to be expedient". If that were done, I think, both the High Court and the county court would be covered. As far as I can see that is the proper place to put in the words "any direction that may be deemed expedient". Perhaps an Amendment might be moved on Third Reading.

On Question, Amendment agreed to.

THE LORD CHANCELLOR moved, after subsection (6), to insert as a new subsection:— (7) Rules of the Supreme Court may be made regulating proceedings under this Act commenced in or transferred to the High Court and those rules may provide that on the hearing of a summons for directions, the court or a judge thereof may, without any application for the purpose being made by any party, order the matter to be referred for inquiry and report to such one of the said panel of referees as may be selected by the court or a judge thereof; and in any such case the referee so selected shall be deemed to be a special referee within the meaning of section eighty-eight of the Supreme Court of Judicature ("Consolidation) Act, 1925.

The noble and learned Viscount said: My Lords, this Amendment says that "rules may provide that on the hearing of a summons for directions"—which is always issued—the Judge may without any application order a reference. Then it says that in such cases the referee selected shall be deemed to be a special referee. As at present advised I do not feel disposed to accept the words proposed by the noble and learned Lord, because the only effect would be that after every hearing there would be a discussion before the Judge before the reference was made. I would rather make the reference so far as possible automatic. When once the case is before the special referee application may be made for special directions. Perhaps the noble and learned Lord will consider that. At present I prefer this method.

Amendment moved— Page 23, line 16, at end insert the said new subsection.—(The Lord Chancellor.)

LORD PHILLIMORE

My Lords, I am afraid that is exactly what I object to I object to the reference being made automatic. I thought that was the very thing we had intimated we desired should not be done. I want it to be considered, as the noble and learned Lord, Lord Buckmaster, said on a previous occasion, that the Judge should settle the issues. I do not mean to say in every case. For myself I think that on the summons for directions the Judge or the Master who gives directions ought to be able in those directions not merely blankly to refer the matter to the referee but to give the referee some directions as to what he wants considered. Otherwise we get the referee let loose on landlords and tenants very much as before. As the noble and learned Viscount knows, I have been extremely engrossed in public duties and I have not had time to refer to the section of the Supreme Court of Judicature (Consolidation) Act, 1925, to which the Amendment refers. What I do want is that on every occasion somebody should think about something more than simply saying: "Which is the referee on the panel? Mr. Smith, let it go to him." I want the Master, if it be a Master, or the Judge, to have in his mind that he may have to give directions in the first instance, not directions later, after the referee has made up his mind, but directions to the referee in the first instance.

On Question, Amendment agreed to.

LORD DYNEVOR had given Notice to move, after Clause 24, the following new clause:—

Mortgages.

" . No amount payable for compensation under this Act, whether secured by charge or not, shall rank in priority as against any sums or interest secured by a mortgage or other charge on any premises subject to the provisions of this Act, whether such mortgage or charge were created either before or subsequent to the date of the passing of this Act, unless at the date when the mortgage charge were entered into the charge for compensation had been registered."

The noble Lord said: My Lords, after the arrangement come to between the Lord Chancellor and the Earl of Halsbury on the question of mortgages, I will not move this Amendment now, but I will put it down again on Third Reading.

Second Schedule [Part I—Application to Crown and Duchy Land]:

THE LORD CHANCELLOR

My Lords, I beg to move.

Amendments moved—

Page 28, line 22, leave out ("one") and insert ("fifteen")

Page 28, line 23, leave out ("1866") and insert ("1927")

—(The Lord Chancellor.)

On Question, Amendments agreed to.