Lords Sitting of 25 May 1932

Preamble
Reassembling after the Whitsuntide Recess, the House met at a quarter before four of the clock, The LORD CHANCELLOR on the Woolsack.
BOURNEMOUTH, POOLE, AND CHRISTCHURCH ELECTRICITY BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
WOLVERHAMPTON CORPORATION BILL. [H.L.]
Read 3a, and passed, and sent to the Commons.
PUBLIC HEALTH (CLEANSING OF SHELL-FISH) BILL.
Brought from the Commons; read 1a, and to be printed.
CHURCH OF SCOTLAND TRUST ORDER CONFIRMATION BILL.
Brought from the Commons; read 1a, to be printed, and (pursuant to the Private Legislation Procedure (Scotland) Act, 1899) deemed to have been read 2a, and reported from the Committee.
ST. ANDREWS LINKS ORDER CON- FIRMATION BILL.
Brought from the Commons; read 1a, to be printed, and (pursuant to the Private Legislation Procedure (Scotland) Act, 1899) deemed to have been read 2a, and reported from the Committee.
SEA FISHERIES PROVISIONAL ORDERS (No. 2) BILL.
Brought from the Commons; read 1a, to be printed and referred to the Examiners.
NOTTINGHAM CORPORATION BILL.
Brought from the Commons; read 1a, and referred to the Examiners.
BLACKPOOL IMPROVEMENT [H.L.]
Returned from the Commons, agreed to, with Amendments.
SOUTH STAFFORDSHIRE WATER BILL.
Returned from the Commons with the Amendments agreed to.
MARRIAGE (NAVAL, MILITARY AND AIR FORCE CHAPELS) BILL. [H.L.]
House in Committee (according to Order): Bill reported without amendment.

AGRICULTURAL CREDITS (MORT- GAGES) BILL. [H.L.]
Order of the Day for the Second Beading read.
THE LORD CHANCELLOR (VISCOUNT SANKEY): My Lords, I beg to move that this Bill be now read a second time. I think it is an entirely uncontroversial measure. Its object is to supplement the provisions of the Agricultural Credits Act, 1928. The matter is a rather technical legal one, but capable of very brief explanation. The object of the 1928 Act is stated in the Preamble to be as follows:
"An Act to secure, by means of the formation of a company and the assistance thereof out of public funds, the making of loans for agricultural purposes on favourable terms, and to facilitate the borrowing of money on the security of farming stock and other agricultural assets, and for purposes connected therewith."
Your Lordships consented to the passing of the Act, which is a great help to agriculture in this country.
The manner in which the object of the Act was to be secured was this. It was to enable long-term credits to be granted, and it states in Section 1 that:
"With a view to the incorporation of a company having for its principal objects—
(a) the making of loans on mortgages of agricultural land."
certain public assistance should be given to the company, and it is provided by Section 2 (3) (c) that the memorandum of the company shall make provision for
440
regulating the loans to be made by the company on mortgage, so that a loan shall in no case exceed two-thirds of the estimated value of the mortgaged property at the time of the loan, and that the loans shall be repayable by equal yearly or half-yearly instalments of capital and interest spread over a period not exceeding sixty years.
That being the Act, the company was duly formed, but there is a small legal difficulty in its way. Your Lordships are perfectly aware that a mortgagor is always entitled to redeem his property, and though redemption may be postponed for a number of years, there is a rule in equity which makes inoperative any covenant or agreement or arrangement whereby, in effect, a mortgagor is restrained for an unreasonable time from redeeming the property mortgaged. You will readily recognise that it would be unreasonable that he should not be able to redeem for a hundred years, and it has become a sort of working rule in the Courts now that anything more than seven or ten years may be an unreasonable time. The object of the present Bill is to make it clear that this rule of equity is not to apply to mortgages made under Section I (1) (a) of Part I of the principal Act, and that notwithstanding the rule such mortgages may not be redeemed, apart from agreement, before expiry of the period over which the repayment instalments are spread.
That being the object of the Bill, your Lordships will permit me now to go rapidly through the clauses. Clause 1 of the Bill simply validates any orders which have been made by the Courts under the principal Act. Clause 2 is the important clause of the Bill, and says that notwithstanding any rule of equity to the contrary a provision in a mortgage requiring the loan secured thereby to be repaid by such instalments of capital and interest as are specified in paragraph (c) of subsection (3) of Section 2 of the principal Act, shall not be treated as being invalid by reason only that the mortgage is thereby rendered irredeemable for the period during which the instalments are payable. The whole object is to enable these mortgages to last rather longer than the ordinary time provided for in equity.
There is only one other clause to which I need call your Lordships' attention, and

441
that is Clause 3, which makes provision as to mortgages where land is held in trust. That is rather a technical matter with which I need not trouble your Lordships at any length. It chiefly refers to mortgages authorised to be made by tenants for life, and the effect of the clause is as follows: Subsection (1) empowers persons who hold land in a fiduciary capacity (that is, who have the powers of a tenant for life under the Settled Land Act, 1925) to borrow from the corporation or company on mortgage, on the terms of repaying by instalments without the right to redeem the mortgage in any other way. Some provision has to be made as to the incidence of the instalments as between capital and income, because the question of that incidence will necessarily arise in the great majority of cases of mortgages by fiduciary owners on the special terms, and it would be possible to provide that such part of the instalments as represents interest should be borne by income and such part as represents repayments of principal by capital.
The reasons for adopting the principle of imposing the whole liability on income are these:(a)in a case where the trust property consists solely of the land mortgaged, or in any other case where there are no liquid assets subject to the same trusts, it would as a practical matter be difficult or impossible to pay any part of the instalments out of capital;(b)the general principle of equity is that income must keep down all periodical payments extending over a considerable period; and (c)in the case which is in purpose and effect, though not in legal form, closely analogous to these instalments, of instalments of charges under the Land Improvement Act, 1864, that Act imposes by Section 66 the whole liability on income. Since that time there have been numerous decisions, and we have a body of law that is certain and which will be of great assistance if any dispute should arise.
The only other subsection is subsection (3) which deals with two matters, of which I need only refer to one—namely, the redemption out of capital of a mortgage normally repayable by instalments, which under subsection (2) must be borne by income. It is always open to the corporation to consent to a loan
442
being paid off by way of anticipation of the instalments, but where the improvements are of a kind authorised by the Settled Land Act, 1925, the position is precisely analogous to that of a charge made under the Land Improvement Act, and such a charge as that may be redeemed out of capital. It would not be reasonable that an owner should be able to redeem one liability out of capital but not the other. The whole object of the subsection, therefore, is to enable a mortgage normally repayable by instalments out of income to be redeemed out of capital, in circumstances similar to those in which an improvement rent-charge could be redeemed out of capital. It is a technical matter, but it only enables the bank or company in question to carry out the terms which have been stipulated. The last clause, Clause 4, deals with the title only. I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2a.— (The Lord Chancellor.)
On Question, Bill read 2a, and committed to a Committee of the Whole House.

UNIVERSITIES (SCOTLAND) BILL. [H.L.]
Order of the Day read for the consideration of Commons Amendments.
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I beg to move that the Commons Amendments be now considered.
Moved accordingly, and, on Question, Motion agreed to.

COMMONS AMENDMENT.
[The references are to Bill No. 25.]
Clause 2, page 4, line 13, at end insert ("Nothing in the foregoing provisions of this section, or of any ordinance made there-under, shall prejudice any rights reserved to the Free Church of Scotland by the Order entitled 'Assembly Records, Libraries, &c.,' and dated the twenty-ninth day of November, nineteen hundred and nine, made by the Commissioners under the Churches (Scotland) Act, 1905.")
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I beg to move that we agree with the Commons in this Amendment. These words are inserted merely to protect the rights of the Free

443
Church under the Order referred to. It was not intended that anything done under the clause should affect any rights of the Free Church under the Order of the Commissioners under the Act of 1905, with regard to access to the library, &c. The Amendment does no more than provide so specifically.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Strathcona and Mount Royal.)
On Question, Motion agreed to.

COMMONS AMENDMENT.
Clause 3, page 4, line 18, after under the Educational Endowments (Scotland) Act, 1882, or in any order under the Churches (Scotland) Act, 1905.")
Clause 3, page 4, line 21, after ("scheme,") insert ("or order")
Clause 3, page 4, line 29, after ("scheme,") insert ("or order")
Clause 3, page 4, line 31, after ("scheme,") insert ("or order")
Clause 3, page 4, line 39, at end insert:
("Provided also that, where any bursary or scholarship which, in pursuance of a deed of declaration under this section is tenable at a Scottish University, is awarded to a student of theology preparing for the ministry of the United Free Church of Scotland (Continuing), any period not exceeding one year during such student's tenure of the bursary or scholarship which he may spend as a student in the College of the United Free Church of Scotland (Continuing) shall, for the purposes of the said deed of declaration, be deemed to be spent at the University.")
LORD STRATHCONA AND MOUNT ROYAL: My Lords, I beg to move that this House agree with the Commons in these Amendments, which are purely drafting. They are designed to make it clear that deeds of declaration (under the clause making bursaries connected with the former United Free Church colleges tenable at the University) are
444
to be effective notwithstanding anything which may be contained in any scheme under the Educational Endowments (Scotland) Act, 1882, or in any order under the Churches (Scotland) Act, 1905, affecting any such bursary. The clause in the form in which it was sent to the Commons dealt in this way with deeds of foundation and schemes made by the Court, and it is now desirable to put schemes or orders under the Acts of 1882 and 1905 on the same footing. I hope, therefore, that your Lordships will see your way to agree with the Amendments.
Moved, That this House doth agree with the Commons in the said Amendments.—(Lord Strathcona and Mount Royal.)
On Question, Motion agreed to.

COMMONS AMENDMENT.
Clause 4, page 4, line 42, after ("any") insert ("Christian")
LORD STRATHCONA AND MOUNT ROYAL: My Lords, this is purely a drafting Amendment, and I move that we agree with it.
Moved, That this House doth agree with the Commons in the said Amendment.—(Lord Strathcona and Mount Royal.)
On Question, Motion agreed to.

RATING AND VALUATION (No. 2) BILL. [H.L.]
Read 3a(according to Order), and passed, and sent to the Commons.

BRITISH MUSEUM BILL. [H.L.]
House in Committee (according to Order): Bill reported without amendment.
House adjourned at a quarter past four o'clock.