LAW OF PROPERTY (ENTAILED INTERESTS) (No. 2) BILL. [H.L.] (Hansard, 26 April 1932)

§ LORD BLANESBURGH
My Lords, I do not think if I tried I should find it possible to discover for your Lordships' House a subject so entirely different from that which the House has been debating as the one that I have now to bring to your notice. Your Lordships have been discussing a contemporary question of great solemnity and importance. I am going to bring to your notice a subject which, as will appear from the title of the Bill, is redolent of conveyancing and technicality and forbidding in almost every word and syllable. Nevertheless it will be found in the few observations I have to make that in truth this Bill is designed to remedy an injustice which inadvertently has been done to a very considerable section of the community, for the most part of slender means and done by a judicial view of a conveyancing Statute which, right or wrong, was contrary to its intention.
Your Lordships will recall the Law of Property Act. You will remember that that Act was one of a series of Statutes for which Lord Birkenhead made himself responsible seven or eight years ago. The Act had two quite separate objects. It had as one object the getting rid of inconvenient anomalies which had crept into the law, tenures which had become obsolete and processes and systems which had become burdensome. Thus there were achieved great alterations in the law. But there was another purpose of the Act equally important and that was to simplify conveyancing, to make land more readily saleable; to secure to purchasers safe titles without undue inquiry and to enable vendors to dispose of their property by sale without having to produce unnecessarily elaborate abstracts of title. So far as it was a conveyancing Statute, one cardinal feature of the Act was that there was to be no change in the beneficial interests of the owners of the properties dealt with by the Act, and that principle is enshrined in one passage from the Act which I will read, namely: All estates, interests and charges in or over land. … which immediately before the commencement of this Act were estates, interests or charges, subsisting at law, or 189 capable of taking effect as such, but which by virtue of Part I of this Act are not capable of taking effect as legal estates, shall as from the commencement of this Act be converted into equitable interests, and shall not fail by reason of being so converted into equitable interests either in the land or in the proceeds of sale thereof …. That being the keynote of the Act one of the great problems with which the Statute had to deal was that of undivided interests in real estate. Those undivided interests are very numerous throughout the country and in very many instances are interests in small parcels of property possessed by people of slender means. The complications of title in relation to them before Lord Birkenhead's Act became law were really heartbreaking. You would find a small parcel, say, of fourteen acres of agricultural land held by five people as tenants in common. You would find that one of those persons was entitled to his undivided interest in fee simple. Another was entitled to a tenancy in tail. A third might be an infant and still another a lunatic. In such circumstances it was practically impossible to sell the entirety of the property, however much to the interests of everybody that was desirable, because it was impossible to give a good title otherwise than by means of a partition action, and than such an action no more expensive form of procedure was known to the Court of Chancery. It involved an inquiry as to title, reference to a conveyancing counsel and one difficulty after another. The result was that these partition actions were, on the score of cost, impossible in cases of small properties, and therefore the persons interested in these undivided estates had simply to enjoy the misfortune of being unable to dispose of their property at all.
That was one of the things which Lord Birkenhead's Act set itself to remedy, and it sought to remedy it by a very simple procedure which has been very effective. It decreed that the property subject to these undivided interests should be made the subject of what is called a, statutory trust, and the trustees thereof were by virtue of the Statute appointed trustees of the whole property and were enabled to sell and make a title to the entirety of it and receive the purchase price, and after 190 paying prior charges hold the residue of the money subject to such powers and provisions as might be necessary for giving effect to the rights of the persons interested in the land.
Now about three years ago a case came before Mr. Justice Clauson, the case of in re Price. It was assumed that those words were effective to carry out the purpose of the Act. The interest of Mr. Price in the land had been an estate in tail and it was assumed that his interest in his share of the proceeds of sale remained the same as had been his interest in the land. He had died. Who was entitled to that share? The answer was not so clear as had been supposed. All the ghosts which had been laid by the Act were parties to the summons: his customary heir and another who claimed as heir-at-law. These were all brought before the Court and the ease was elaborately argued as to who was entitled to Mr. Price's interest in the property. The learned Judge decided that none of those who were before him were entitled, but that the person entitled was the legal personal representative of Mr. Price, because the effect of the Act was to give an interest in tail in a fund of personalty and that was an absolute interest and no less passing to his executors. I think it is agreed that, whether or not the decision was called for by the words of the Act, the result is entirely contrary to its intention and I think it will meet with the approval of the profession that the intention should now be given effect to, as it is by this Bill.
The only objection that I can conceive to that course is that it might be said that this after all, although the decision of a very learned Judge, is the decision of a Judge of First Instance only and that it may not be correct: that the Act may really express the intention of the Legislature and that Mr. Justice Clauson may have been mistaken in that respect. It may be said why not bring the matter before the Court of Appeal or even before your Lordships' House as a court of final appeal before again approaching the Legislature. I agree that in many cases that would be very strong criticism against the proposal which I now make, but in the present instance I think it is not of very great force and for the reason that, as I have said, these interests are 191 interests possessed most frequently by people of small means. Approach by them to the Court of Appeal would be entirely out of the question, especially when you find that if they do go there and establish their position there would be no fund out of which their costs could come except the property which was the subject of litigation. The position therefore is that this ought to be set right by the Legislature at the earliest moment because a great deal of injustice may be done, as things are, which cannot be redressed. It is a case for doing it sooner rather than later because purchases are being effected and interests are intervening which may prevent complete justice being done.
Accordingly I ask your Lordships to approve of this Bill and particularly of this part of it which is dealt with in Clause 1 which simply means this: that after the Section I have referred to in which trusts are declared for those who are entitled to the undivided interests, these words should be inserted: and the right of a person who, if the land, had not been made subject to a trust for sale by virtue of this Act, would have been entitled to an entailed interest in an undivided share in the land, shall be deemed to be a right to a corresponding entailed interest in the net proceeds of sale attributable to that share. Clause 2 deals with another matter arising under that Act of a totally different character. It relates to the question with regard to rentcharges which are described as "rentcharges in possession." One of the results of the Act is that there are only two forms of legal estates which remain. The one is an estate in fee simple and the other is a "rentcharge in possession." The "rentcharge in possession" was by the framers of the Act, I am quite satisfied, intended to mean a rentcharge not in reversion: one which had not to wait to come into operation until the termination of some other estate or interest. But a difficulty has arisen from the fact that it has always been a very common practice in developing building estates that when an estate is conveyed by its original owner to a builder in order that he may complete his building scheme, the arrangement very frequently has been that instead of receiving from the builder the price in purchase money the estate is charged with a rentcharge, it might be in per- 192 petuity or it might be over a term of years, which would be the consideration received by the owner for the property which was handed over to the builder. Your Lordships will realise that in those cases it is very nearly always necessary that the first payment of the rentcharge shall not be due for a term of months or a year because the builder, having no revenue during that period from the land which he is developing, might find it difficult to make payments at once. So accordingly it has been a very common practice that the rentcharge shall not for the first time be payable for, it may be, six months or it may be a year from the date when it is created, and the question has arisen whether, when you have a rentcharge of that kind, it is within the meaning of the Act a "rentcharge in possession."
Particularly, I believe, in Bristol the old custom has continued and these rentcharges have since the Act been created in connection with building estates with this interval of time elapsing before the first payment becomes due, and they have all been dealt with on the footing that they are "rentcharges in possession" with the advantage that under the terms of the Act they are legal interests. Now if it were to be held that these rentcharges were not "rentcharges in possession" the effect would be that they would become equitable interests requiring registration under the Land Charges Act and void as against a subsequent purchaser if not so registered. Accordingly unless this matter is made quite plain titles which ought not to be in any way in doubt may be jeopardised. It is desirable the doubt should be removed by a declaration of the real meaning of the Act by your Lordships now. I have satisfied myself that this alteration would make no difference of any kind to the principle which is embodied in the Act, and indeed I think I am entitled to say it has met with the approval and support of those who understand these things and who have considered the proposals which I make. It may be that the actual phraseology of this clause can be improved in Committee but the effect, I think, is plain. It is simply to say that such a rentcharge as I have indicated is a rentcharge in possession within the meaning of the Act so that any doubt on that subject is removed. I commend the Bill as one which 193 is required by fairness and justice and one which is in accordance with the intention of the Legislature when these Acts were passed. I beg to move.

§ LORD BANBURY OF SOUTHAM
, who had given Notice that on the Motion for the Second Reading he would move, That this Bill be read 2^a this day four months, said: My Lords, the noble and learned Lord last week put down a Bill which I as a layman could not understand, and I put down a Motion to reject it, because my experience, extending now over forty years in one or other House of Parliament, shows me that very many bad Bills are passed simply because nobody understands them. And I think that what took place in this House yesterday shows the necessity of carefully looking into all these Bills. If the Bill which we sat yesterday to pass through all its stages had been carefully considered in 1909 by the learned members of the House at that time there would not have been all the trouble which took place at the end of last week and yesterday.
Now, the first part of the Bill which the noble and learned Lord introduced he withdrew, and he has brought in a second Bill, which reproduces the clauses of the first Bill, and adds another clause. As I understand, what really takes place is this. A learned Judge makes a mistake, though I thought that learned Judges never did make mistakes. But in this case a learned Judge makes a mistake, and I should have thought that the proper course was then to go to the Court of Appeal and, if the Judges in the Court of Appeal thought that the learned Judge was wrong, to get that decision overruled. It is not an unusual thing, I believe, to find that learned Judges are wrong, because we had a proof of it this evening, when one noble and learned Lord got up to advocate something and another noble and learned Lord said practically "He it talking nonsense and what his Bill is supposed to enact will not take place." Therefore I thought that, whether or not the clause was right, it was an extremely dangerous precedent to introduce in this House to say that, where a learned Judge makes a mistake, the ordinary course of procedure in law should not be followed, but that somebody should go to Par- 194 liament and move a Bill which sets aside the decision of that Judge. I think that there have been occasions during the last five or ten years when decisions have been given by a Court of Law against the Government of the day—I make no distinction, because I think all Governments have been to blame in that way. What do the Government Departments do? They come and do exactly what the noble and learned Lord wants us to do now. They introduce a Bill to over-ride the decision of the Judge. I do not think they go so far as to make it retrospective. I am not sure. The noble and learned Lord makes it retrospective, which is a thing I have always been taught is utterly wrong, and should never be done except on very rare occasions.
That was the first Bill. The second Bill is the same with regard to Clause 1, but it enacts another clause about rent-charge, which the noble and learned Lord has just explained. I must confess I do not understand that clause, and I have had a little talk with a learned friend of mine, who thinks it is all right, but is not quite sure he understands it. But that clause does not in any way interfere with the legal decision given. As I understand it, this last clause is merely a clause amending Lord Birkenhead's Act

§ LORD BLANESBURGH
Removing doubt with reference to its meaning.

§ LORD BANBURY OF SOUTHAM
I dare say that is right, and I have no objection to that, but where a learned Judge gives a decision, that decision, if wrong, should be overruled in a Court of Law, and a Bill should not be brought in to make that decision wrong and to make it retrospective. I do not know what is the view of the noble and learned Viscount who sits on the Woolsack, but I presume that if he is in favour of the Bill it is no use my saying anything. I thought it right, however, to bring this matter forward for this reason. I think it is a very serious thing, and I do not know whether the noble and learned Lord when he introduced this Bill remembered that it is a very serious thing, if Governments (it is only the Governments of the last few years) are to be encouraged, when they have been defeated in a Court of Law, in the practice of bringing in an Act of Parliament to put themselves right. I beg to move formally.

§ THE LORD CHANCELLOR
My Lords, I should not have troubled the House at this late hour had it not been for the invitation of the noble Lord, Lord Banbury. Let me say that I entirely agree with him in his first remarks that the usual way of setting right the mistake of a learned Judge, if it is a mistake, is to go to the Court of Appeal. The noble Lord is perfectly right. But this is an exceptional case. The object of Clause 1 certainly is to meet the decision in re Price, reported in 1928 Chancery, at page 579. No doubt in Price's case the individual interest of the tenant in tail was not made to fail by conversion into an absolute interest; but what was made to fail were the interests of the heirs to the entail. I should not venture to say a word against anything said by such a great master of real property law, if he will allow me so to describe him, as the noble and learned Lord, Lord Blanesburgh, but having regard to what has been said by the noble Lord, Lord Banbury, I believe that what has happened is that since that decision attempts have been made to take the point to the Court of Appeal. These have failed for want of sufficient funds and for this reason: though the collective value of the property affected by the decision is large, the value of each share is too small to warrant any application involving an appeal.
Really this clause may be properly described as intended to do justice to relatively poor persons, and I hope I have satisfied the noble Lord, Lord Banbury, with regard to that. With regard to the other point a doubt has arisen whether, if the rentcharge is made to commence at a future date, the rent in question is a legal interest. This depends on whether such a rent can be properly said to be "in possession." The object of Clause 2 is to remove this doubt so as to prevent another learned Judge from making a mistake in the future.

§ LORD BANBURY OF SOUTHAM
My Lords, I am very much obliged to the noble and learned Viscount on the Woolsack for what he has said. I have no doubt that in this particular case it may 196 be the best thing to do, but I hope it will not be taken as a precedent. I am so much afraid of these things being taken as precedents, and I hope that if another learned Judge makes a mistake we shall not be asked to overrule that mistake by an alteration in the law. I beg leave to withdraw my Amendment.