§ Payments on account.
§ 19.—(1) At any time before the vesting date, or after that date but before the relevant certificates have become conclusive under paragraph 17 of this Schedule, the Commission, if they are satisfied that the compensation for any holding, or the aggregate of the compensation for a number of holdings to which the same person is entitled, will be not less than a particular amount, may make payment of such sum not exceeding that amount as they may think fit on account of the compensation for the holding or holdings: Provided …
§ (3) A payment on account made under this paragraph before the vesting date, together with interest thereon for the period between the date on which the payment is made and the vesting date at the rate of three pounds per cent. per annum less Income Tax at the standard rate, shall be treated in account as a payment on account of the capital of the compensation made on the vesting date, and the said interest shall be deemed for all purposes, including the purposes of the Income Tax Acts, to be paid on each anniversary of the date of the payment on account that occurs before the vesting date and on the vesting date.
§ Disposal of compensation as between beneficial interests.
§ 20.—(1) Subject to the provisions of this paragraph the compensation paid in respect of a holding and the income thereof shall be held and disposed of for the benefit of the persons whose interests are comprised in the holding and their successors in title respectively, in such manner as to confer on them the like benefits, so far as may be, as they would have had from the premises in which the holding subsisted and the income thereof if they had not been acquired by the Commission.
§
(2) In the case of a holding that could have been sold as mentioned in sub-paragraph (a) of paragraph eighteen of this Schedule under powers conferred by the Ecclesiastical Leasing Acts, the compensation paid in respect thereof and the income thereof shall be held and disposed of, and the said Acts shall have effect, in like manner as if the compensation had been money paid to the Ecclesiastical Commissioners upon a sale under the said Acts of the premises in which the holding subsisted:
Provided that if the holding was a reversion and the rent reserved by the lease was subject,
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by virtue of a scheme in force under the said Acts, to a direction for the payment thereof to the Ecclesiastical Commissioners for the benefit of their common fund, the direction shall have effect in relation to the income of the compensation as it had effect in relation to the rent.
§ 21. Where a payment on account under paragraph 19 of this Schedule is made on a date before the vesting date, then, as between the persons interested in the capital and income respectively of the compensation, the income accruing before the vesting date from the investment of the sum paid shall be set aside as capital.
§ LORD MIDDLETON moved to insert the following new paragraph:
§ 11.—(1) In the case of any holding in respect of which an apportionment of rent is prescribed under Section ten of this Act the regional Valuation Board shall make the apportionment as soon as may be after notice of registration in relation to the holding has been given to them under the last preceding paragraph and shall give notice thereof in the prescribed form to the claimant, to any persons intervening, and to the lessee (which expression for the purposes of this paragraph means the person who at the valuation date was liable to pay the rent to be apportioned).
§ (2) Within the prescribed period after service upon him of the notice of apportionment the claimant or any person intervening or the lessee may give notice in the prescribed manner to the Board of Trade that he claims to have the apportionment referred to and determined by the High Court and if any such notice be given the apportionment shall be so referred and determined in accordance with rules to be prescribed.
§ The noble Lord said: Certain Amendments to Clause 10 were accepted by the Committee last time we met, and the two Amendments that now stand in my name appear to be necessary to supplement the provisions of the new Clause 10 as it stands at present. I do not know how far it will be accurate to say that the Amendments are consequential on the altered condition of Clause 10, but they would appear to be corollary to the clause in its new form. Perhaps it would serve a useful purpose if, quite briefly, I were to go into the procedure in regard to claims and valuations that will take place. Within the prescribed time an owner must give notice that he intends to make a claim. In due course he is provided with a certificate of the registered particulars of the coal in question. The claimant must then take in an estimate of the valuation of his holding. The Regional Valuation Board arrive at a draft valuation, which is served upon the claimant, who, if he differs from the Board, has a 718 right to be heard by them. The Regional Valuation Board then arrive at their final decision, and if the claimant still has points of difference, then he has a right of appeal to the referee.
§ Unless the Schedule is amended, it would appear that the claimant, in taking in his estimate of valuation, would not know what apportionment of rent had been made by the Regional Valuation Board in accordance with Clause 10. The estimate of value by the claimant therefore might be on one basis and the valuation of the Board might be on a totally different basis. The result, it is easy to see, might be an immense number of appeals to the referee. This Amendment is intended to obviate that possibility, and its object is to throw upon the Valuation Board the obligation of making the apportionment required by Clause 10 immediately after the receipt of the notice of registration, and to serve it not only on the claimant but also on any person intervening, and on the lessee. I would stress this service on the lessee, because the lessee under a mineral lease is also entitled to receive notice of the apportionment, as the apportionment of his obligation under the lease under which he holds the minerals would appear to be a matter in which he is vitally interested, and his comments would undoubtedly be of value to the Regional Board.
§ The next part of the Amendment deals with the right of claimants, the intervening parties or the lessees to appeal to the High Court. As Clause 10 stands at present it would appear that any matters of difference in regard to valuation are referred to the referee, but any questions in regard to apportionment are dealt with by the High Court. My next Amendment, on page 65, line 38, to add certain words to sub-paragraph (2) of paragraph 11, seeks to provide that the time limit within which an estimate of value must be delivered by the claimant shall run from the date of the service of the notice requiring delivery or the date when the apportionment has been finally settled, whichever is the later. I have tried to be as brief as I can, and I hope that I have made the intention of the Amendments clear. I think they improve the machinery, and I hope they will serve to reduce the number of appeals to referees and save time and considerable expenditure. I beg to move.
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§
Amendment moved—
Page 65, line 21, at end insert the said new paragraph.—(Lord Middleton.)
§ THE LORD CHANCELLOR (LORD MAUGHAM)This Amendment raises, as I understand it, two very different questions. The first, to which I am afraid I must make a somewhat uncompromising opposition, raises the question whether the lessee shall be a party to a proceeding in which an apportionment of rent is made as between two people who are entitled as landlords—for instance, the Commission, who are going to be landlords of the mines, and the landowner who is going to be landlord of the surface. It does not seem to me to be right or expedient, or likely to save cost to have the lessee there. It is only necessary that he should know that, instead of paying x pounds a year to A, he has now to pay a smaller sum to A and the balance of the total sum, whatever it may be, to B. So long as he knows what he has to pay to the two, and the total amount payable does not exceed what he had to pay before, it does not seem to us in the least relevant to consider precisely how that sum is apportioned. It is an apportionment of a sum which he owes to one or the other, and the sum of the two must amount to not a penny more than he had to pay before. Accordingly, as regards the presence of the lessee, the view taken on behalf of the Government is that the lessee is not properly a party to the valuation.
LORD MIDDLETONI wonder if I have not made myself clear. I did not suggest that he should be present, but that he should receive a notification at the beginning of the proceedings. I did not suggest that he should be present anywhere.
§ THE LORD CHANCELLORI am afraid then we have misunderstood the object of the Amendment in that respect—that the notice of the claim to all persons intervening is intended to be a notice which entitles them to appear—but if all the noble Lord wishes is that the lessee shall have notice of the result of the apportionment, which is a thing with which he is concerned, I think it ought to be provided for. I think it has been rather assumed that he would get such a notice, but I see no reason why it should not be made perfectly clear. 720 In that case it is notice of the result of the proceedings, and that he certainly should have, because he has to know what he has to pay to A and B, A being the Commission and B the owner of the surface. There is no difficulty in that, and I am prepared to meet the noble Lord.
The other point is this, that as the matter stands the apportionment made by the Valuation Board has the degree of finality proposed by the new Clause 10, which the House has already approved, and as to that there is a question whether some Amendment of that course might not be proposed. It is undesirable, I think, in such a case as an apportionment of rent, that there should be any large expense involved. The noble Lord is probably aware that in a large number of existing leases, where there is a lease of the surface and of the minerals, the lease itself contains a separate rent for the minerals and for the surface. Therefore in those cases there is no difficulty; but I agree that there may be cases of difficulty, and there may be cases in which the persons concerned, the owner of the surface and the person who is going to become the owner of the surface, might wish some other tribunal than the Valuation Board to settle the matter.
The best suggestion I can make, without at the moment pledging the Government to it, is that it might be proper to introduce at the appropriate place a provision that the owner should have an option to go before the Commission for the purposes of the apportionment, or should have a right to go to arbitration. But it should be observed that the position suggested, that there may be both a proceeding before the Commission and, as I understand it, an apportionment subsequently by the High Court, is a cumbrous proceeding, which will involve the landowner in a good deal of costs. It would be, I think, much more satisfactory, in a case which is not a very complicated one, to have a decision once for all.
If the noble Lord cared to move on another stage that the landowner ought to have the option which I have mentioned—when I say "landowner" that is intended to be a short way of stating the claimant or any other person intervening—the Government would be very 721 glad to consider it, and as at present advised I do not think it would be an unreasonable course. The Coal Commission will probably have enough to do, and will be quite glad to have a certain amount of relief in respect of apportionment in difficult cases, but in the vast majority of cases it would be perfectly easy, partly because the apportionment is already done in the lease and partly because in numerous cases there can be no doubt of the rent payable in respect of the surface, being something which can be readily ascertained. That is the proposal which I make. The Amendment in its present form I am unable to accept.
LORD MIDDLETONMay I ask one question? If I understood the Lord Chancellor aright he is saying that in these difficult cases the matter should be referred to arbitration rather than to the Court.
§ THE LORD CHANCELLORI was suggesting to the noble Lord that the landowner, or persons intervening, if agreed, should have the option either to go before the Coal Commission, and if they do to accept their finding, or to the arbitrator, and in that case accept the arbitrator's finding. I do not want two bites at this very small cherry. That is all I suggested.
LORD MIDDLETONI am prepared to accept that. I will withdraw my Amendment, and reconsider the matter before the Report stage.
§ Amendment, by leave, withdrawn.
§ THE PRESIDENT OF THE BOARD OF EDUCATION (EARL STANHOPE) moved, in sub-paragraph (4) of paragraph n, after "Act," to insert "or to coal or a mine of which a person is entitled to require a lease to be granted to him under Section twelve of this Act." The noble Earl said: This is really, in a sense, consequential on the last Amendment on the Paper, which stands in my name. Your Lordships will see that there it is proposed that the freeholders of coal should be left in the same position after the passing of this Bill as they are in to-day. The result of that is that they have no incentive to see that the valuation is properly made and need not take trouble about putting in all the full particulars. Therefore, to safeguard the 722 situation, it is proposed that these words should be inserted to say that the Coal Commission shall have the right of appearing before the Regional Valuation Board if they have reason to think that me of the particulars perhaps have not been put in which ought to have been put in. I think the Amendment only gives to the Coal Commission the opportunity to do what we believe to be necessary.
§
Amendment moved—
Page 66, line 10, after ("Act") insert the said words.—(Earl Stanhope.)
§ LORD HASTINGSIn this sub-paragraph the words are:
When the Regional Valuation Board have settled a draft of their valuation of a holding they shall give notice thereof in the prescribed form to the claimant, and, if the valuation relates to subsidiary coal hereditaments within the meaning of Section six of this Act, to the Commission, and, if the claimant, or, in the case aforesaid, the Commission. …Should it not be "to the Commission also"? There are certain ambiguities, it appears to me, in the words that follow after that. I would suppose that the claimant would be given particulars of his valuation of subsidiary coal hereditaments just as he would of his valuation of principal coal heraditaments, but it does not say so.
§ EARL STANHOPEI think my noble friend is right, though I am not quite sure. Perhaps he will leave it over till Report.
§ LORD HASTINGSI will with the greatest pleasure. I will put it down on Report.
§ EARL STANHOPEAnother slight Amendment would be necessary in the next line; it would now be necessary to say "cases aforesaid," and not "case aforesaid."
§ VISCOUNT HORNE OF SLAMANNANI am very glad to acquiesce in the proposal now made on the ground that we have now arrived at agreement in principle upon what ought to be said in Clause 12. I take it that the words which the noble Earl is proposing on Clause 12 are subject to such Amendments as we may think necessary to propose upon the Report stage, if there is any variation of words which would better satisfy the meaning at which I think we have both arrived?
§ EARL STANHOPEIt will certainly be open to the noble Viscount to propose Amendments on the Report stage, either of substance or verbal Amendments.
§ On Question, Amendment agreed to.
§ EARL STANHOPE moved, in subparagraph (6) of paragraph 12, after "Act," to insert "or to coal or a mine of which a person is entitled to require a lease to be granted to him under Section twelve of this Act". The noble Earl said: This is a similar Amendment to the last and allows the Coal Commission to appear before a referee if a case should be put to the referee.
§
Amendment moved—
Page 67, line 35 after ("Act") insert the said words.—(Earl Stanhope.)
§ On Question, Amendment agreed to.
§ LORD BALFOUR OF BURLEIGH moved, in sub-paragraph (1) of paragraph 19, to leave out "before the vesting date, or after that date but before the relevant certificates have become conclusive under paragraph 17 of this Schedule" and insert "before or after the vesting date." The noble Lord said: Paragraph 19 of this Schedule has to do with payments on account. As the Bill stands it gives discretion to the Commission to make payments on account at any time before the vesting date, or after that date but before the relevant certificates have become conclusive under paragraph 17 of this Schedule. It seems to me there is no reason why the discretion of the Commission to make payments on account should be limited in that way. After the relevant certificates have become conclusive an interval will elapse before payment must be made, and what I desire to secure by this Amendment is that the discretion of the Commission to make a payment on account during that period shall not be limited.
§ I imagine that as the Bill stands it is clear there can be no payment on account after a certificate is conclusive. It may be very important for the royalty owner to receive a payment on account, possibly in order to satisfy demands under mortgages. I think in any case an interval must elapse after the relevant certificates have become conclusive, even if there is no dispute. But I imagine that the whole matter might be held up by a dispute. For those two reasons—the fact that in any case there is an interval, and 724 that in certain circumstances of litigation there might be a long interval—it seems only reasonable that the Commission's discretion to make payments on account should be unfettered. There is nothing mandatory about it; it simply gives the Commission the discretion, which I think your Lordships will agree they ought to have. This point was raised in another place, and on the assurance of the Minister in charge of the Bill that the point would be looked into, the Amendment was withdrawn. I have no doubt that since then the Government have had the opportunity of examining the point, and if the noble and learned Lord cannot give way I shall be glad to know the reason why the words cannot be put in.
§
Amendment moved—
Page 72, leave out from ("time") in line 26 to ("the") in line 28 and insert ("before or after the vesting date").—(Lord Balfour of Burleigh.)
§ THE EARL OF MUNSTERThis paragraph is required only to enable the Coal Commission to make payment on account before the payment of compensation is due; that is to say, after the vesting date and before the certificate of valuation has become conclusive. As soon as the payment becomes due the Commission can of course pay either part or whole, and I am advised that it really does not need the insertion of a special paragraph.
§ THE EARL OF DUDLEYThat does not quite answer my noble friend's question, because he pointed out that under paragraph 17 (1) (a), in the case of dispute the High Court may by interim order direct the Commission to suspend the payment of compensation on the basis of the certificates sent. That dispute may take some time, and meanwhile why should not the payments on account continue over that period? It may mean that the claimant will go without his conclusive certificate or payment on account for a very considerable period, and I cannot see the reason why it should not be extended beyond the period in doubt.
LORD BALFOUR OF BURLEIGHThe noble Earl the Leader of the House told us a day or two ago that the inclusion of half a dozen extra words was a matter of real importance so far as printing and stationery are concerned. This Amendment is much simpler and clearer and saves at least a line and a half. I hope that argument will please the noble Earl.
§ THE LORD CHANCELLORI am not sure that the noble Lord has quite appreciated the first two lines of paragraph 19. The risk is not that there may be a period after the vesting date and before the relevant certificate has become conclusive, because this paragraph authorises payments on account at any time before the vesting date, or after that date but before the relevant certificates have become conclusive. So that, supposing there is an appeal or something of that nature, with the result that the relevant certificate has not become conclusive, the clause will apply and the Commission can pay sums on account. But after that moment when the certificate is conclusive and the vesting date has come, there is a debt due from the Commission to the owner of the coal. The Commission can be sued for it, and they are bound to pay. There may be a moment of time, so to speak, before they actually do pay, but you may be quite sure that not only will they want to pay, but if they cannot pay the whole debt when it is due, they will be most anxious to pay as much as they can. But you do not want an Act of Parliament to say that a man who owes a debt should pay half of it if he can. Here we are dealing with a debt due, and you do not want to say they may pay half, three-quarters, or all of it; they are bound to pay the whole of it. Therefore you do not want the Amendment.
LORD BALFOUR OF BURLEIGHIs it not the fact that the Commission have to give three months' notice in writing? I was under the impression there was a three months' gap. If there is no gap after the relevant certificate has become conclusive, then of course I at once agree with the noble and learned Lord, but if there is a gap they ought to have discretion.
§ THE LORD CHANCELLORI agree with the noble Lord, but the gap has only reference to payments on account before the vesting date, except by consent. It was thought that if you are asking a person to take payment on account before the vesting date has arrived, you ought to give him three months' notice. He might say, "I would rather have the money now," in which case he takes money on account. But the gap does not apply after the vesting date. The Commission owe the money, and there is no 726 doubt they ought to pay at once if they can.
LORD BALFOUR OF BURLEIGHI thank the noble and learned Lord for his explanation, and I beg leave to withdraw.
§ Amendment, by leave, withdrawn.
§ EARL STANHOPE moved, in sub-paragraph (3) of paragraph 19, to leave out "all purposes, including." The noble Earl said: These words were put in in another place but they went too far. What is intended here is that the interest shall be treated as capital for purposes of Income Tax and Surtax so that tax has not to be paid on that interest. The words "for all purposes" go too far, and might put the person who received the payment in a difficulty in regard to other claims made upon him, possibly by those who have settlement claims and so on. Therefore it is thought, in the interests of the person who receives the payment, that these words "all purposes, including" should be left out and that the provision should apply only to Income Tax and Surtax.
§
Amendment moved—
Page 73, line 10, leave out ("all purposes, including").—(Earl Stanhope.)
§ On Question, Amendment agreed to.
§ LORD DARCY (DE KNAYTH) moved, at the end of sub-paragraph (3) of paragraph 19, to insert "and shall be treated for the purposes of Income Tax and Surtax as a charge upon and a proper deduction from income." The noble Lord said: The noble and learned Lord has very kindly explained to me the position in regard to this matter. As regards the words "substantial justice requires," we are in complete agreement. There is, however, some scope for argument as to the effect of the actual words in the Bill, and I think the noble and learned Lord agrees with me in regard to that. There is a further matter. The noble and learned Lord also considers there is scope for some improvement in the words of my Amendment, and I am in complete agreement with him in that. I beg to move.
§
Amendment moved—
Page 73, line 13, at end insert the said words.—(Lord Darcy (de Knayth).)
§ THE LORD CHANCELLORThese paragraphs are, as every one will agree, not easy to understand. The view of the Government is that sub-paragraph (3) on 727 page 73 carries out the intention and precludes the sum which is to be treated as capital being a sum in respect of which the recipient is to be liable for the purposes of the Income Tax Acts. But, as I am all in favour of clarity, I should be willing if the noble Lord will substitute for the words he wants to add at the end of line 13, these words which I will now read out:
and accordingly shall be treated as a proper deduction from income.If he will substitute these words for the words which he has in his Amendment, we shall be ready to accept the Amendment, and that will finish off Schedule 3. Then we can get rid of that, and to some extent relieve the Report stage.
LORD DARCY (DE KNAYTH)In these circumstances I beg leave to withdraw my Amendment and thereafter to move in the form suggested by the noble and learned Lord.
§ Amendment, by leave, withdrawn.
§
Amendment moved—
Page 73, line 13, at end insert ("and accordingly shall be treated as a proper deduction from income").—(Lord Darcy (de Knayth).)
§ On Question, Amendment agreed to.
§ LORD HASTINGS had given Notice of an Amendment to leave out sub-paragraph (1) of paragraph 20. The noble Lord said: I put this Amendment on the Paper before the noble and learned Lord put down his Amendment completely altering the character of paragraphs 20 and 21. My purpose in putting the Amendment down was to enable me to discuss the difficult situation which will arise in such cases as will happen when the compensation payments made are only sufficient to meet the mortgage charges and the capital required to be set aside for the amount of annuity and so forth. As the noble and learned Lord has put down an Amendment to deal with the whole paragraph, I would prefer, if the Committee will allow me, to await his explanation of the new paragraph, which is exceedingly difficult to follow. Therefore I will not move my Amendment, but take leave to debate the question on the noble and learned Lord's Amendment. 728 That would be the more convenient course, and, in point of fact, if I were to speak to my own Amendment and press it to a Division, it would not really help me in achieving what I desire. It was only put down as a means of asking questions and raising debate.
THE LORD CHAIRMANPerhaps I ought to explain, in regard to the next Amendment standing in the name of the noble and learned Lord, the Lord Chancellor, that the Question I will put will be to leave out paragraph 20 only in the first place, because the noble Lord, Lord Cromwell, has an Amendment on the Paper at the end of paragraph 20, and in addition to that the noble Earl, Lord Dudley, has three Amendments as follows, as Amendments to the Amendment by the Lord Chancellor:
In sub-paragraph (5), line 8, after "shares" to insert "or the ordinary, preferred, or deferred or other stock or shares";in sub-paragraph (5), line 11, after "United Kingdom" to insert "or the Legislature of any British Dominion, Colony, State or Dependency";in sub-paragraph (5), line 14, leave out "five" and insert "three.
§
THE LORD CHANCELLOR moved to leave out paragraphs 20 and 21, and insert:
20.—(1) The compensation for a holding when paid by the Commission to the person entitled to receive it from them, including any sum paid on account thereof under the last preceding paragraph, and the income thereof, shall, in order to its being applied as compensation to the persons whose interests are comprised in the holding, be held and disposed of for the benefit of those persons, or their personal representatives or assigns, in accordance with the succeeding provisions of this paragraph.
§
(2) In the case of a holding that consists of or comprises an estate or other interest subject to a settlement within the meaning of the Settled Land Act, 1925, or to a trust for sale the proceeds whereof are subject to a settlement by way of succession, the trustees of the settlement or the Court, and in the case of the Court on the application of any beneficiary under the settlement, may require and cause the compensation, or the part thereof attributable to that estate or other interest, as the case may be, to be laid out, invested, accumulated, and paid in such manner as, in the judgment of the trustees or of the Court, as the case may be, will give to the beneficiaries under the settlement the like benefit therefrom as they might lawfully have had from that estate or other interest, or as near thereto as may be, regard being had, when the circumstances so require, to the fact that that estate or other interest was property of a wasting character:
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Provided that—
§ (3) In the case of a holding that comprises an estate or other interest subject to a mortgage, the compensation (other than any part thereof that is attributable to an estate or other interest not subject to the mortgage) shall be held and disposed of in like manner as if it had been money arising under a power of sale conferred by the mortgage.
§
(4) In the case of a holding that could have been sold as mentioned in sub-paragraph (a) of paragraph eighteen of this Schedule under powers conferred by the Ecclesiastical Leasing Acts, the compensation paid in respect thereof and the income thereof shall be held and disposed of, and the said Acts shall have effect, in like manner as if the compensation had been money paid to the Ecclesiastical Commissioners upon a sale under the said Acts of the premises in which the holding subsisted:—
Provided that—
§
(5) Money representing compensation attributable to an estate 01 other interest subject to such a settlement as is mentioned in sub-paragraph (2) of this paragraph, or vested in trustees on or for charitable, ecclesiastical or public trusts or purposes, may, notwithstanding anything in the relevant trust instrument, be invested not only as authorised by law or by the trust instrument but also in or on the debentures or debenture stock or the preference or wholly or partially guaranteed stock or shares of any company incorporated by a special Act of, or provisional order confirmed by, or by or under a Public General Act of, the Parliament of the United Kingdom, or incorporated by Royal Charter, being a company which has paid dividends upon its ordinary capital at the rate of at least three per cent. per annum for at least the five years next before the time of investment (of which fact a letter purporting to be signed
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by the secretary of the company or by a banker or member of a firm of bankers or by the secretary or manager of a joint stock bank or of any branch thereof shall be sufficient evidence):
Provided that the power conferred by this sub-paragraph—
§ (6) Subject as aforesaid the compensation for a holding and the income thereof shall be held and disposed of in such manner as to confer on the existing owners whose interests are comprised in the holding, their personal representatives or assigns, the like benefits so far as may be, as they would have had from their respective interests in the premises in which the holding subsisted if those premises had not been acquired by the Commission."
§ The noble and learned Lord said: As Lord Hastings has pointed out, this Amendment is of an elaborate character and to some extent, at any rate, may be thought to alter the provisions of paragraph 20 as it stands in the Bill; but the substance of it is really the same, only the circumstances which may arise when compensation has to be divided up as between diverse beneficial interests are so complex that it is very desirable, not perhaps so much when the case goes before the Court, but when the case is settled without application to the Court, to state with the greatest possible care the principles on which that compensation should be disposed of. I hope I am not saying anything I ought not to say when I add that I have taken the greatest care, with the advice of people who are eminent in their particular spheres, in connection with the draft of the Amendment so as to state all the various circumstances, as far as I could, which have to be taken into account in making this division. Perhaps your Lordships will allow me to say this at this stage. The noble Lord, Lord Cromwell, has a somewhat elaborate provision, the subject of the next Amendment, where, apparently as the result of very considerable care, he has put down the species of Amendment which he thought was proper, but I think in reference to the old paragraph and not the new one. Without desiring to anticipate anything which Lord Cromwell may say, I was interested to see that his Amendment to a very large extent was identical in substance with the Amendment which stands on the Paper in my name and the 731 name of the noble Earl, Lord Stanhope. I was proposing to take one or two passages from his Amendment and, on the Report stage, to put them in this present elaborate Amendment standing in my name and that of the noble Earl, Lord Stanhope, in order, as far as humanly possible, to get a perfect clause stating the circumstances that have to be taken into account on the division of compensation in these circumstances.
§ What we have done is this. In subparagraph (1) we state the general principles on which the compensation is to be divided. It may, of course, be paid to a person absolutely entitled to receive it or it may be paid to persons entitled other than the original person; for instance, there may be a person who has a charge, or there may be, unfortunately, a death, and some of the compensation may go to personal representatives. That is all general and there is no difficulty. That has been separated from sub-paragraph (2), because (1) does not relate to settlements and sub-paragraph (2) does relate to settlements, and here we get a very complex state of things in certain circumstances. There may be a settlement within the meaning of the Settled Land Act, 1925, in the ordinary way, or there may be, after the legislation of 1925, a settlement by way of a trust for sale, because there is a statutory trust for sale, or there may be a statutory or other trust for sale and a provision with regard to the proceeds of the sale which go by way of succession to various people. Then the trustees of the settlement or the Court—and, in the case of the Court, on the application of any beneficiary under the settlement—may require the compensation to be laid out, invested, accumulated and paid in such manner as in the judgment of the trustees or the Court, as the case may be, will give to the beneficiaries under the settlement just the same benefit and interest, or as near thereto as may be, as they might have had before the operation of this Bill.
§
Then there are provisos that where a payment on account is made—I should mention this because, inferentially, it deals with another Amendment that stands on the Paper—before the vesting date (I am not sure that that ought not to be before the vesting date or before the relevant certificates have become conclusive).
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the net income accruing to the trustees before the date from the investment of the sum paid, up to an amount sufficient to make good to the capital of the settlement the interest on that sum brought into account under the last preceding paragraph against the capital of the compensation, shall be set aside as capital of the settlement.
That carries out almost, I think, exactly the Amendment which your Lordships are going to have read to you in due course. Then, subject to that, no part of the income of the compensation shall be required or caused by virtue of the sub-paragraph to be set aside as capital of the settlement. Sub-paragraph (3) says that in the case of a holding that comprises an estate or other interest subject to a mortgage, or charge, the compensation is to be disposed of as if it had been money arising under a power of sale conferred by the mortgage. Then I must state quite frankly to my noble friend Lord Hastings, that the Government take the view that if there is a mortgage on the property the mortgagee must be paid. There is, unfortunately, no possible method known to legislation or the law under which a mortgagee who has a debt secured on property shall not be paid from the property in priority to the mortgagor.
§ There follow, in sub-paragraph (4), provisions which relate to the Ecclesiastical Leasing Acts with which I think I need not trouble your Lordships because they have been agreed, as I understand, with the Ecclesiastical Commissioners. Then (5) relates to investment. We have thought it right to authorise investments on terms substantially wider than those permitted to trustees under the Settled Land Act, 1925, or under other General Acts of that character, and substantially wider than is usual in regard to persons who hold money substantially as trustees and who have a Special Act. What we propose to add to the ordinary law in this respect is that we propose that investment should be authorised in debentures or debenture stock, or the preference or wholly or partially guaranteed stock or shares of any company incorporated by a special Act of, or provisional order confirmed by, or by or under a Public General Act of Parliament, or incorporated by Royal Charter, being a company that has paid dividends upon its ordinary capital at the rate of at least 3 per cent, per annum for at least the five years next before the time of investment.
733§ There is a provision with regard to evidence of that, and then we exclude, as everybody would wish to exclude, the stocks to bearer which occasionally lead to disastrous consequences when they are held by trustees, and stocks which are subject to liability for calls. We are also dealing with the question of consent, because in many investment clauses there is provision for the consent of the tenant for life or somebody of that character—that the power shall be exercisable only with his consent—and we make that apply also to investments made under sub-paragraph (5), subject to the compensation for a holding, and the income is to be held and disposed of as far as possible so as to confer on the existing owners the like benefits as they would have had if the premises had not been acquired by the Commission. There are some things in the Amendment of the noble Lord, Lord Cromwell, which in my view make the matter clearer. Therefore I propose on behalf of the Government to assent to those parts of his Amendment which I think are not included in the Amendment which stands in my name. It will be for him to say whether he would like on the Report stage these things to be included or not. I would not want in the least to bind him at the present moment.
§ That is the general effect of the proposed new paragraph 20 on page 73. It is more elaborate and it will occasion a little bit more in printing. The comment by my noble friend Lord Balfour of Burleigh must therefore be considered as affecting my conscience. I cannot help it. I have thought it absolutely essential to provide for a paragraph which will really make the matter reasonably clear to any person or any Judge who has to fulfil the task of dividing up the compensation. It will be for the noble Earl, Lord Dudley, to move his Amendments and I shall have some difficulty in assenting to them because I think they go too far. However, it would be premature to deal with that now. I hope that the explanation I have given is a sufficient one for the purpose of my noble friend Lord Hastings, and if there is any other question which he wishes to ask on this elaborate Amendment I can only say that I will do my best to answer him.
§
Amendment moved—
734
Page 73, line 21, leave out paragraphs 20 and 21 and insert the said new paragraph.—(The Lord Chancellor.)
THE LORD CHAIRMANI will put the Question that paragraph 20 stand part of the Bill, leaving aside paragraph 21 in order to save the Amendments of the noble Lord, Lord Cromwell. The noble Earl, Lord Dudley, has handed in three Amendments to the proposed Amendment.
§ THE EARL OF DUDLEYIs it time for me to move them?
THE LORD CHAIRMANThat is the usual course. If the Amendment to the Amendment is negatived then we can take the Amendment.
§ THE EARL OF DUDLEYI beg to move the manuscript Amendments which have been read by the Lord Chairman. As the noble and learned Lord, the Lord Chancellor has told your Lordships, they make the provisions of sub-paragraph (5) in his Amendment rather wider. There was an Amendment standing in my name after Clause 7 which referred to the investment by trustees of compensation moneys. I thought at first that it was covered by the Amendment of the noble and learned Lord, but I find that my Amendment was a good deal wider in that I proposed that the investment should apply to ordinary shares and stocks of companies and not limited, as it is in the Amendment of the noble and learned Lord, to
debentures or debenture stock or the preference or wholly or partially guaranteed stock or shares of any company incorporated by a special Act of, or provisional order confirmed by, or by or under a Public General Act of, the Parliament of the United Kingdom, or incorporated by Royal Charter,and so on. I do feel that it is only fair and right that compensated royalty owners should be given the opportunity of making up the loss in income which they will have to suffer by investing these moneys in the ordinary shares and stock of companies.The royalties have been assessed at a 7 per cent. risk. The Greene Committee, as we know, applied the 7 per cent, table to them and regarded them as a 7 per cent. risk. We have been told frequently during the course of these debates that royalties are a wasting asset and can by no means be regarded in the same category 735 as a gilt-edged investment. Therefore it does seem rather illogical to narrow down the investment range of the trustees of the compensation money to debentures and stocks which cannot possibly give anything like the yield of 7 per cent. on which the valuation was made. I feel that they ought to be allowed to invest in ordinary stocks or shares. As the Bill at present stands the royalty owners would be precluded, for instance, from investing compensation money in the ordinary shares of the colliery company engaged in working the coal which was lately their property. They could not, either, purchase a partnership in a well-established business, which I maintain they ought to be allowed to do. I hope that the noble and learned Lord will see his way to give the matter further consideration. I make a very earnest appeal to him to consider the matter further and see whether he could not possibly widen the power to the same extent as I propose in the second part of my Amendment—that is, to widen the power of investment from the United Kingdom to Colonial and Dominion stock as well.
The third part of my Amendment is to provide that the investment should be limited to a company which has paid a dividend upon ordinary capital at the rate of at least 3 per cent. per annum for at least the three years next before the time of investment, instead of five years as in the Amendment of the noble and learned Lord. I think three years is the usual time in these cases and five years is a little too long. I hope I shall have your Lordships with me, because I think that you will agree that it is only right that compensated royalty owners who are suffering a great loss of income should be able to make up that loss in this way and turn the compensation money to better account than they are likely to do under the noble and learned Lord Chancellor's Amendment.
§
Amendment to the proposed Amendment moved—
In sub-paragraph (5), line 8, after ("shares") insert ("or the ordinary, preferred, or deferred or other stock or shares").—(The Earl of Dudley.)
§ THE LORD CHANCELLORI confess that I wish I could consent to this, but it would be contrary to all proper dealing with trustee stocks. The Amend- 736 ment which the noble Earl wishes to make would include shares in all sorts of companies which are really by no means satisfactory investments. There are many companies at the present time which have paid over 3 per cent, interest for over three years, and which pay at the present time a far greater dividend than 7 per cent. There are many, against which so far as I know nothing can be said, which pay over 10 per cent. On the Stock Exchange they are not considered to be investments that can safely be relied upon to go on making that payment. In other words, they are considerably worse than any ordinary investment in coal and would provide for the tenant for life a far larger rate of interest.
When dealing with trustee stocks it is necessary for the legislator, so far as he can, to permit only investments which, if not absolutely gilt-edged investments, are such that there is a reasonable probability of their being regarded as permanent investments, which will not result in any very large loss of capital at any time. In those circumstances, much as I should like to increase the scope of the investments mentioned in sub-paragraph (5) of this paragraph, I cannot see how we are to do it without letting in investments which are wholly unsuitable for trustees. If I could, I would, and if between now and Report stage the noble Earl will think of something which is almost certain, an investment such as trustees might use for trust moneys and yet will not include in its scope something that might normally be described as a wild-cat investment, I should be very happy to accept it. The present Amendment, however, I am unable to accept.
§ THE EARL OF DUDLEYI would not of course dream of arguing with the noble and learned Lord in regard to the law and what is fit and proper for trustees to do. But I should like to point out that under the provisions of both Amendments the trustees in the name of the tenant for life are prevented from making a wild-cat investment. They are not, for instance, allowed to invest in a Russian oilfield, or anything of that sort, because the provisions do not permit them to do so. Of course I am not going to press this Amendment, but I hope that the noble and learned Lord will consider, between now and Report stage, whether there is not any possibility of widening the 737 powers of trustees in this respect. It would save to a great extent the hardship which the royalty owners feel in having to suffer this loss of income. With regard to loss of capital, of course almost any investment runs, that risk, particularly gilt-edged, in these days. I hope the noble and learned Lord will look into the matter, because I feel that it is necessary to do justice to the royalty owners.
§ THE LORD CHANCELLORI shall be only too glad to look into the matter, and I hope the noble Earl himself will look into the matter and perhaps produce some Amendment which can be accepted.
§ THE EARL OF DUDLEYI am very grateful to the noble Lord, and I beg leave to withdraw the Amendment.
§ Amendment to the proposed Amendment, by leave, withdrawn.
§ LORD HASTINGSI was very glad to refrain from speaking to my own Amendment until after the noble and learned Lord had spoken to his, because the explanation of the very complicated provisions which that Amendment contains has been helpful, not only to myself, but also to the Committee in general. It is quite evident that the Amendment standing in the noble and learned Lord's name deals with, or deliberately omits to deal with, three specific points. It deals with the case of the trustees, of a tenant for life who, in the interests of the tenant for life, would desire to seek a wider range of investments than is now permitted. It deals also to some extent with the case of the trustees for an annuitant or other person with a charge upon the estate, and it deliberately omits to deal with the third case, which is that of the mortgage, when a corporation, individual or firm has a mortgage charged, in the main, not upon income but upon the minerals themselves. I think I am right in saying that it is the intention of the Amendment to deal with these three points, or to omit to deal with one of them.
§ THE LORD CHANCELLORNot to omit to deal with one. Paragraph 20 (3), at the top of page 4 of the Order Paper, deals with the case of mortgages. Is anything more wanted?
§ LORD HASTINGSIt does in a sense, but as I read it, it says that nothing can be done in the matter.
§ THE LORD CHANCELLORThat is true.
§ LORD HASTINGSIt deals with it in that sense. That, of course, is strictly accurate. In the case of an annuity or other form of charge upon mineral income, it appears that the Amendment intends that either the trustee of the settlement or a beneficiary can move the Court into determining a proper division of the compensation moneys. That meets what appears to me to be a very grave risk, not fully but to a reasonable extent. A number of cases have come to my personal notice in which the trustees for the tenant for life in some cases, the absolute owner himself in other cases, are fearful that when their compensation moneys are paid over to them—taking the average basis of fifteen years' purchase, of course, because no man can tell at the moment actually how many years' purchase he will receive—the charges upon the estate of which they are trustees, or absolute owners, as the case may be, may absorb the whole of the compensation money. There are certain cases in which that will inevitably and unquestionably occur. In how many cases it will occur, it is impossible for me or for any one else, I think, to say. It would be very useful if we could say. But quite clearly the Mineral Owners' Association has no means of ascertaining the facts, and I doubt whether there is any organisation or authority who has any means of ascertaining the facts. The only persons who might conceivably be able to do so would be the Special Commissioners for Surtax, but I doubt whether they would ever do it, because so many of these cases come below the Surtax-paying level and therefore outside the purview of the Special Commissioners.
It is not the larger owner but the relatively smaller owner who is endangered by the provisions of this Bill. The public have been brought up to believe that all royalty owners are persons of great wealth, which is absurd. Although it is granted that some few are, there are a very large number of persons deriving a few hundred pounds a year from mineral income who are almost entirely dependent upon that income, and it is those persons who have been agitating to find out how their case can be met. If you have compensation money paid over on the basis of fifteen years' purchase, which will mean about half the capital sum when related to present income, and you have a mortgage combined 739 with charges which will absorb the whole of it, then of course the nominal owner of the minerals who is receiving the compensation will be left penurious. It is a very serious situation. It is a social question, of course, and one which requires the greatest thought by the Government. The noble and learned Lord has told us that neither he nor the Government see any way of meeting the case in this Bill. I am sure the noble and learned Lord would not have said that unless it were strictly in accordance with fact. Of course I clearly do not suspect anything of the kind. But, acknowledging that it is impossible to put it into this Bill, that does not mean that the Government are really immune or, shall we say, free from some responsibility for what must result in a certain number of cases. What will happen in three and a half years' time, when the vesting date comes along and a substantial number of persons are driven into the Bankruptcy Court who say: "I am not bankrupt through any fault of mine; I have been deprived of half my resources by the action of His Majesty's Government; I am a bankrupt, and the people who have made me a bankrupt are His Majesty's Government"? What is to be done about it?
No noble Lord on that side of the House would like to hear that sort of thing said. Think of the consequences to the country. Here, this unhappy Bill has made enough enemies for the Government already, in all conscience. How many more will it make if cases of this kind develop in any number? There may be relatively few mineral owners, relatively few persons up and down the country affected by the Bill at all, but they are, in the majority of cases, people of some influence, people upon whom this Government are dependent for good will in the constituencies, and they are very essential from a practical point of view. You cannot deliberately, with your eyes open, go and drive your own supporters into the Bankruptcy Court. Surely it ought to be possible, in consultation with the Treasury, to provide that there shall be a sum set aside for meeting all hard cases, so that persons placed as I have envisaged they will be placed will be able to go to the Court and apply for additional aid—that is what it will come to. I do not think you can allow this Bill to pass out of this House 740 and pretend, ostrich-like, that those cases are not going to occur. It is a matter which has got to be dealt with, and I have not been able to devise, of my own drafting, an Amendment which I could apply to this Bill. The noble and learned Lord told us that it is impossible, and I accept it as a fact; but of course it is not impossible to provide some sum, supplemental, let us say, to the subsidiary hereditaments sum, for which these persons shall have leave to apply when their case is of a kind which definitely requires relief, to prevent them from sliding into the condition of penury which this Bill will otherwise push them into.
With regard to the matter of annuities, and so on, although it is difficult to understand, I think probably I have an obligation to be satisfied with the endeavour which the Government have made to see to it that the whole of the compensation money, or an unfair share of the compensation money, is not taken away by the trustees for a settlement, leaving the nominal owner of the minerals destitute. That, I am sure, is the intention of the Government in the paragraph, and I could not myself devise a better method than has been adopted. With regard to the point on which Lord Dudley was not entirely satisfied, but on which the Government gave us clearly to understand that they were not able to give way, tenants for life will be anxious that there shall be a wider scope for trustees' investments. Others, the remaindermen, may take a different view of the matter. I am not disposed to intervene in that. The Government have a certain responsibility which they cannot give away. They are responsible for this particular thing, and cannot afford to extend the scope of trustee investments further. That is reasonable, and I am not disposed to contest what the noble and learned Lord has said.
To revert once more to the question of mortages, I say that the Bill cannot leave this House until some sort of provision is made for the cases of hardship which are bound to result, to the immense disadvantage of the good name of this Government, and also in contravention of ordinary equity, in itself an extremely important matter. I therefore make an appeal to the Government that they should endeavour on the Report stage to think out some means by which these hard 741 cases may be provided for. Really I should be disposed to treat the matter so seriously that, if nothing finds its way into the Bill, I shall move the rejection of the Bill on its Third Reading. I do not propose to disagree with the Amendment on the Paper. I am grateful for it, but it does not go far enough.
§ EARL STANHOPEMay I say that we have looked into the cases which the noble Lord quotes, and we have done our best to meet them as far as possible. I think he recognises that to deal with the question of mortgages means the raising of additional public money, and that, as the noble Lord knows, is not within the purview of this House, but would have to be done in another place.
§ LORD HASTINGSThe noble Earl, the Leader of the House, and the noble and learned Lord are in a far better position than I am to approach the powers that be, who control affairs in another place, to see whether something can be done with their consent.
§ LORD CROMWELLMay I ask a ruling from the Lord Chairman as to when I shall have an opportunity of speaking on my Amendment?
THE LORD CHAIRMANI am entirely in the hands of your Lordships, but the procedure I suggested was that we should leave out paragraph 20 and then, if your Lordships agree, put in the Amendment of the noble and learned Lord. Then come the two Amendments of Lord Cromwell which will be taken in the ordinary course. After that the noble and learned Lord can move the omission of paragraph 21, as consequential on his Amendment.
§ On Question, Amendment to leave out paragraph 20 and insert the proposed new paragraph agreed to.
§
LORD CROMWELL moved to insert the following new sub-paragraphs in paragraph 20:
(3) For giving effect to the provisions of sub-paragraph (1) of this paragraph—
require the compensation to be laid out, invested, accumulated and paid in such manner as, in the judgment of the trustees, the personal representative, or the Court, as the case may be, may be, proper regard being had
§ (4) All applications to the Court under this paragraph shall be made, in accordance with Rules of Court, to the Chancery Division of the High Court of Justice.
§ Provided that the powers of the Court may, as regards compensation payable in respect of an acquired interest comprised in a holding situate in the County Palatine of Lancaster or the County Palatine of Durham be exercised also by the respective Courts of Chancery of those Counties Palatine, and, where the amount of the compensation does not exceed the sum of £500, the powers of the Court may be exercised by any County Court within the district whereof is situate any part of the holding.
§ Provided also that any application in respect of compensation paid into Court shall be made to the Court into which the same is paid."
§ The noble Lord said: I am very much obliged to the noble and learned Lord for the compliment he has paid me in saying there was something of substance in my Amendment. I would particularly like to thank him for the very generous way in which he has treated me over this matter. I do not know quite whether I should at this stage inform your Lordships that I am prepared to withdraw my Amendment, or whether I may be allowed to say a few words and ask the noble and learned Lord to say a few words in reply. Then I shall be very happy to withdraw my Amendment. If I may be allowed, I want to put three points. The first is whether the noble and learned Lord is satisfied that his 743 Amendment, with the addition of some of what appears in my Amendment, inserted on the Report stage, will cover this point, whether sufficient pressure will be put upon the trustees to make an apportionment. Of course it is not intended that the jurisdiction of the Court should be taken away. But I should like to be satisfied that in his clause as it will appear on Report there will be sufficient pressure placed on the trustees to make an apportionment if they can, because I think the trustees will, from the very nature of things, fall back on the Court to make a decision if they possibly can.
§ I presume that the principle of the apportionment is based on a section of the Lands Clauses Act, 1845, and with the utmost respect I would say that some of the decisions given by His Majesty's Judges have not proved very satisfactory to those concerned. There was a case in which a tenant for life was given in addition to his income an amount arrived at by dividing the compensation by the number of years required for working out the coal. In the very short term which was left for the coal to be worked out it will work out very well in that case for the tenant for life, but in the case of some who have coal for, we will say, three or four hundred years, and who are only getting fifteen years' purchase, it will work out very much in the opposite direction. There is just one final point. Does the noble and learned Lord think that some clause should be inserted whereby tenants for life receiving such apportionment in addition to their income should not be absolved from paying Income Tax and Surtax on those amounts as, in the nature of things, they are capital?
§
Amendment moved—
Page 73, line 42, at end insert the said new sub-paragraphs.—(Lord Cromwell.)
§ THE LORD CHANCELLORThe position of the trustees in such a case as the noble Lord refers to must depend upon the particular circumstances of the case. There may be a good many cases in which the trustees, either with or without an opinion of counsel, can readily determine how the compensation money is to be distributed, and I think it is almost impossible to put in this paragraph any definition of the cases in which the trustees can act with or without the 744 opinion of counsel, and where the opinion of the Court may be desired. So that while I cannot say that there is anything in the clause which stands in my name and I think there is nothing in the noble Lord's Amendment which really brings pressure to bear upon the trustees in such a matter, they have to act reasonably, having regard to the circumstances of the case. That is all I can say with reference to that. In the other respects I am not quite sure that I understand the noble Lord's question. The provision with regard to tax is dealt with in the new paragraph 20, sub-paragraph (2) (a), and that seems to me to go as far as can properly be done. Anything more drastic than that might receive much opposition from the Chancellor of the Exchequer. What we have done here, I venture to think, is a fair compromise in regard to settling what income shall be set aside as capital, if paid on account before the date of vesting. Regarding the noble Lord's other question I am afraid I was not quite able to follow exactly what was needed, but perhaps the noble Lord, if he has any query to make on which I can satisfy him, would be so good as to make it after these proceedings are over, and I shall be very glad to help him as far as I can.
§ LORD CROMWELLI am very much obliged, and I beg leave to withdraw. My only wish is to ensure as far as possible that litigation shall not be entered into except in very exceptional circumstances.
§ THE LORD CHANCELLORMay I add that I presume, if Lord Cromwell approves of the suggestions I have made, he will move on the Report stage certain Amendments to the new paragraph 20 which I venture to think to some extent improve that paragraph, and make it clear as to what the Court or the trustees have to consider.
§ Amendment, by leave, withdrawn.
§
Amendment moved—
Page 74, lines 1 to 6, leave out paragraph 21.—(The Lord Chancellor.)
§ LORD DARCY (DE KNAYTH) had on the Paper an Amendment in paragraph 21, to leave out "shall be set aside as capital" and insert "up to an amount equal to any sum set off against compensation in respect of interest on such payment on account in pursuance of subparagraph (2) of paragraph 19 of this 745 Schedule shall be set aside as capital and as regards any balance thereof shall be treated as income." The noble Lord said: I would take the opportunity of thanking the noble and learned Lord for meeting us in this matter. He has incorporated the point we had in mind in that long Amendment which he has just moved, and therefore I do not move.
§ On Question, Amendment agreed to.
§ LORD BALFOUR OF BURLEIGH moved to insert at the end of Part IV of the Schedule:
§ "Expenses of Surface Damage Claims.
§ 23. The Commission shall pay the costs and expenses reasonably incurred by any person after the vesting date in connection with a claim for compensation in respect of damage arising from the working of coal to the land buildings or other property of such person and to which he may be entitled under the provisions of paragraphs 5 and 6 of the Second Schedule to this Act."
§ The noble Lord said: This Amendment is one to which I attach very great importance indeed. It is designed to remove one of the minor blemishes from this unhappy Bill, as the noble Lord, Lord Hastings, described it. I must confess I have searched my vocabulary for another epithet which would be more appropriate to the Bill than "unhappy," but I have failed to find anything which would fall within the limits of ordinary Parliamentary usage. This blemish to which I refer is in fact one of the minor blemishes on the escutcheon of this Bill. In any other Bill it would be something very much more than a minor blemish, because it infringes every possible principle of fair play and there are circumstances which I think the Government must admit require attention. I have in mind the very normal position of the royalty owner who is also at the present time the owner of the surface. He is to receive a sum in compensation based upon an elaborate series of calculations, one of which is the deduction from the globular sum of the capitalised amount of expenses. The annual expenses of the royalty owner in management of his minerals is capitalised, and that is deducted as an expense from the global total.
§ In the case to which I have referred—the royalty owner who is also the owner of the surface—a proportion of those expenses will be continuing. We will take the case of the royalty owner who 746 has let his minerals under a lease which provides for compensation by the lessee in respect of surface subsidence. Nothing will be changed in that respect by the passage of this Bill. The lessee will still be responsible for damages, and the surface owner will still be entitled to that compensation by the lessee. He will still have to take steps to cover it, he will still have to employ a solicitor, very likely a surveyor, and possibly a mining engineer. All these expenses will continue, and yet in respect of them a sum has been capitalised and deducted from the compensation which he is to receive. It is to meet that situation that I beg to move this Amendment. Without developing the matter further, I would just express the hope that the noble and learned Lord will accept it or, if not, that he will tell us in what way he proposes to meet this obvious and glaring injustice.
§
Amendment moved—
Page 74, line 41, at end insert the said new paragraph.—(Lord Balfour of Burleigh.)
§ THE LORD CHANCELLORThe suggestion I have to make to the noble Lord is that this Amendment is so bound up with the consideration of paragraphs 5 and 6, or only one of them, in the Second Schedule, which are to be found on Page 53 and 54 of the Bill, that it would almost be better to postpone consideration of it until we come to deal with these paragraphs on Report. Your Lordships will perhaps remember that I agreed there was something to be carefully considered by the Government in reference to the claim that the Commission should either pay the compensation payable to a surface owner whose land was let down, or should at any rate stand behind the lessee in regard to any such claim. That is the same thing in effect. The question arose of whether that liability, whether it be a liability of the lessee alone or of the lessee and the Commission, was to be determined by action in the Courts or by arbitration. One or the other must be the case, and the consideration which I have to put before the noble Lord is this.
Supposing there is a man who says he has suffered damage to the extent of £100 in respect of cracks that have been occasioned, let us say, to the wall of his house. What happens in real life is this. The person who is liable to pay, and who does not want to have an expensive 747 litigation about nothing at all, when he hears there is £100 claimed, sends his surveyor to look at the damage. He is advised in all probability that £50 would cover it, and he either pays £50 into Court, if it is an action in the County Court or the High Court, or, if it is a matter sent to an arbitrator, he makes an unconditional offer to the claimant to pay him £50 and tenders that amount to the claimant. He offers also to pay the costs up to date, whatever they may be. If he has paid money into the County Court it automatically covers costs up to date if the offer is accepted. That is a normal case, and I am quite sure the noble Lord, though it is true he uses the words "reasonably incurred," does not wish that the Commission should pay costs incurred by a person after the vesting date in connection with a claim for compensation where he has received an offer which turns out to be ample to satisfy his proper claim.
Something in the drafting of this paragraph will depend upon the course which the Commission think fit to take in reference to paragraph 5 on Page 53 of the Bill. It will be perhaps in a different form if it is an arbitration to that which it will follow if the matter has got to go to the Court. If the House imposes upon the Coal Commission an obligation to pay damages or compensation in respect of any injuries done by a lessee who gets his lease from the Coal Commission, it will necessarily follow that all reasonable costs incurred, except in regard to such cases as I have mentioned, will have naturally to be paid by the Coal Commission. If you make a man a debtor and he does not pay what is lawfully due, and proceedings, whether in the nature of an action or an arbitration follow, the prudent plaintiff or claimant gets his costs unless he has acted in such a way as to deprive himself of them by not accepting a proper offer or not accepting a proper payment into Court. That I think must follow. In other words that rather long sentence is simply meant to say that if the House imposes upon the Coal Commission an obligation to pay compensation, the provision as to costs follows, except it may be as regards some verbal phrase which will depend rather on the nature of the case. In these circumstances I suggest to the noble 748 Lord that, though this is a matter that is likely to be dealt with, it is dependent so much on the obligation placed on the Commision that at the moment it is impossible to deal with it effectively.
§ LORD HASTINGSIt occurs to me that the Lord Chancellor has carried his mind rather further ahead than the date which was in the mind of my noble friend Lord Balfour of Burleigh. He referred on more than one occasion to where the Commission have given a lease to a lessee. What was in Lord Balfour's mind, and certainly in mine, is the case of a lessee of the present lessor who, of course, if still bound by the terms of that lease to the surface owner. The surface owner is not going to be unfair. These leases are not going to be brought to an end. Royalty rent is going to be paid to the Commission in future and not to the owner of the surface who was, up to the vesting date, the owner of the minerals; but if there is any compensation payable it will be under the lease which the mineral owner has given to the existing lessee. If that existing lessee is contumacious and not found to be agreeable to the payment of reasonable compensation, it is not a question of inducing the Commission to pay the compensation or inducing the Commission to compel the lessee to pay the compensation. The surface owner is the person who is bound to force the lessee to pay the compensation, and it will cost him money.
As Lord Balfour has pointed put, hitherto these expenses have come out of his normal expenses of management which have been capitalised and deducted, and therefore there is nothing out of which he can meet these managerial expenses which are normal to the management of mineral estates. Lord Balfour's Amendment suggests, not that the Commission shall be in any way responsible for the payment of compensation, not that there should be any interference between the Commission and their lessees when they have lessees, but that the Commission shall be responsible for paying the costs of the surface owner in recovering damages from the lessee who, up to the vesting date, was his own lessee and continues under that lease to be responsible to him for letting down his surface. I think the situation is one which is more narrow than that visualised by the noble and learned Lord, and I beg to support my noble friend Lord Balfour.
LORD BALFOUR OF BURLEIGHBefore the Lord Chairman puts the Question I think the noble and learned Lord was going to say something.
§ THE LORD CHANCELLORIf your Lordships will allow me, I was going to say that as I understand the Amendment it applies not only to paragraph 5 on page 53 but also to paragraph 6 on page 54. I must admit I did not fully appreciate what the noble Lord, Lord Hastings, says with regard to the cost as it applies to paragraph 5 alone, but as it stands it does apply to both cases. Now with regard to paragraph 6 it is plain that we have not yet finally determined what the position of the Coal Commission is to be, but if we take it only as applying to paragraph 5—that is to say, as applying to existing leases—I must state frankly that at present I cannot agree that the Commission shall in all cases pay the costs which have been occasioned by the improper conduct of a lessee to whom the Coal Commission have not granted a lease, and with regard to whom they have no right of telling the lessee what he has to do.
As Lord Hastings has pointed out, the Commission cannot affect an existing lease. The lessee can snap his fingers at the Commission, providing he complies with the clauses in his lease and pays the rent thereby reserved. Would it be just or equitable to impose upon the Commission an obligation to pay costs incurred by a lessee who, contrary to the wishes of the Commission, chooses not to comply with the terms of his lease, and not therefore to make the compensation which the terms of his lease require him to make? That would be wholly wrong and unjust. It is for that reason that if this Amendment as it stands is confined to paragraph 5, so to speak, or a claim for compensation to which he may be entitled under the provision of paragraph 5, I confess that I am unable to consent to it. It must be wrong in that form not only because the Commission have nothing in the world to do with it, but also for the reason that I have mentioned, that the refusal of the surface owner may be an unreasonable refusal, and it may involve payments by the Commission for costs although, in fact, the surface owner has brought an action under which he has recovered less than he has been offered or in which, for all I know, it may be that he has recovered nothing at all. I 750 have known cases of claims for subsidence where the whole action has been dismissed with costs.
Your Lordships will remember that in an action for subsidence you have to prove that the defendant has occasioned the damage. In this House quite a short time ago we had an action in which a claim was made for subsidence and it was dismissed. It came from the Court of Session in Scotland, and they had dismissed it because there was nothing really due to subsidence in the case at all. But whether because the claim fails—and as drafted the Amendment means any claim for compensation—or because it is a claim which ought not to entitle the surface owner to costs because he has refused an offer which was made to him, or because—which is more important still as regards paragraph 5—the Commission have had nothing whatever to do with the liability of the surface owner, and nothing whatever to do with the refusal of the tenant to pay what he ought to have paid—for all those reasons together the Amendment is one which cannot, as I submit, be accepted, though when we have decided what the liability of the Commission may be at a later date it may then be that some such paragraph will be of use.
VISCOUNT RIDLEYThis paragraph seems to me to refer to the normal expenses of management which recur every year, and is not necessarily connected with misbehaviour on the part of the lessee in any shape or form. This is a normal thing under a lease and occurs almost every year. A farm tenant will apply to the lessee for surface damage, and he will always have a reasonable claim adjusted by the machinery which at present exists. There is not in a case of that sort any necessity for arbitration or for any of the two methods suggested as a part of the machinery proposed. The management expenses in this connection consist, not of expenses of going to law to enforce a claim, but of the normal process of having the damage surveyed by an expert, who will state to what extent the damage could be said to be caused by the particular form of working which is going on underneath the property, and the expenses of a surveyor who has to estimate the cost that would be necessary to put the land back to its proper agricultural condition.
751 I may be reading this Amendment quite wrongly, but it seems to me what is suggested is this. Expenses of management include the sort of things I have suggested and also another kind of expense which is more a question of the letting of leases and negotiations with coalowners. That class of expense of management will cease, but expense which entails a day-to-day adjustment of matters as between the surface owner and the lessee will continue; yet a deduction has been made from the amount to be paid to the royalty owners of over 4 per cent., which was said to represent, and I think did represent, the total expenditure on all accounts for management expenses. It therefore remains that that part of the management expenses continues, although a deduction of payment is being made in respect of it. It seems to me in that case, if I have read this Amendment aright, it is nothing but reasonable. If in fact the expenses continue and a deduction has been made for them, it is surely only reasonable that an adjustment should be made. The Coal Commission have taken on the responsibility of paying this sum for the royalties, less deductions for management expenses, and it seems to me, therefore, that they should have some liability on account of those expenses. I think the Amendment is an eminently reasonable one.
§ LORD CROMWELLI think the words that have fallen from the learned Lord Chancellor have only accentuated the grave trouble that will arise through the severance of the coal from the surface. I was very surprised to learn, although no doubt it is true, that the Commission are in no way responsible. They have taken over the rents, they have taken over the money which was spent in managing the property, and they in their turn, having taken over all the assets, are not prepared to take over any of the liabilities. It seems to me also strange that, having taken away all the money by capitalising managerial expenses from the original owner of the coal, he should be left to carry on, with a reduced staff perhaps, but with a staff of some sort, to keep in touch with what is going on underneath. There was a very outstanding statement made earlier in the debate, that in fact the surface owner would not be in a position to know, and was not now 752 in a position to know, what was going on underneath. Anybody with any knowledge of the coal industry would know that that is absurd. He obviously at the moment knows to the very inch on the map where the coal face is reached, and to know that he employs an expert surveyor. He will still have to go on employing some staff to keep himself in touch with whatever damage occurs. He must be in a position to know how that damage was likely to have been caused. I think that this Amendment is very reasonable and that it should be pressed to a Division.
§ THE LORD CHANCELLORI think I have been misunderstood. It may be my fault, and that I have not said something sufficiently clearly. In order that I should not be further misunderstood let me say that the Coal Commission are going to stand after the vesting date in the position that is now occupied by the coalowners, the landlords of the existing leases. I have not said, I hope—at any rate, if I did I did not intend to say—that they would not be liable to everything to which the present owners are liable in respect of leases. As landlords they must perform all their obligations as landlords. But this Amendment seeks to put upon the Commission as landlords an obligation which at present rests with the tenants—the existing tenants I am speaking of. These tenants are entitled to do what they think fit under a lease so long as they adhere to the terms of it.
LORD BALFOUR OF BURLEIGHNo doubt owing to my failure to explain the point the noble and learned Lord still does not appreciate what I am trying to do. This Amendment does apply to existing leases. The noble and learned Lord says that after the vesting date the Coal Commission are going to stand in the shoes of the royalty owners. They are not going to do so in this case, and I am trying to explain why. They are not going to own the surface. They are going to own the coal. The royalty owner is still going to own the surface. The noble and learned Lord said it was unjust to put any expense in this matter on the Commission because they would not have had anything to do with the lease. It is not unjust; it is the essence of fairness. The expense has been deducted from the global compensation and the Coal Commission are therefore paying less than 753 they would have paid had that deduction not been made.
The former royalty owner—in future the surface owner—is going to have a continuing expense. A deduction has been made from what the Coal Commission are to pay. Therefore the surface owner is going to have to pay twice. He must have his agent, solicitor, surveyor and mining engineer to pay, although he has already paid to the Coal Commission—by deduction from the sum he received—for this very expense. I submit that the logic of that is unanswerable. I think it a great pity that the Government cannot say at once that there is a case and that they will meet it. The noble and learned Lord talks about new leases. This deals with existing leases. The case is clear. I appeal to your Lordships to show that sense of fairness which you have hitherto shown, and in the absence of getting satisfaction I must press this Amendment to a Division.
§ VISCOUNT HORNE OF SLAMANNANMay I venture to say one word? I think that the noble Lord has put forward an irresistible argument for making the Coal Commission liable for damage done by a lessee of the coal if the Coal Commission had been in the position of a person to whom the coal had been transferred, say by purchase, where he naturally took the liabilities of the person who previously owned the coal. But the Commission are to take over the coal in totally other circumstances, in circumstances in which a certain amount is being paid to the person who previously owned the coal under deduction of expenses which he in the ordinary course incurred. These expenses were kept alive, so that the result is that the amount he received by way of compensation is less by the amount of the expenses which it was assumed were coming to an end. That was the assumption. But the expenses do not come to an end. The fact is that if you make him pay these expenses which the noble Lord's Amendment seeks to get rid of, he is really paying those expenses twice over. Whoever ought to pay these expenses it cannot be right that this unfortunate royalty owner, who has already paid them in capitalised form, should be compelled to pay them again. I think the Government must find some way of meeting that obligation, whether it is by the Coal Commission paying or by some other body paying.
754 May I add this consideration? Under paragraph 5 it seems to me the argument which I have ventured to urge is applicable, but under paragraph 6, where my noble and learned friend the Lord Chancellor has suggested that the obligation for payment of expenses would fall in case of dispute upon the Coal Commission automatically, I think it is possible that there are some expenses which would fall outside what would be awarded by a Court or an arbitrator—for example, the kind of expenses to which the noble Viscount, Lord Ridley, referred—namely, the expenses of a surveyor who goes into the matter. There may never be any dispute at all, but this expense of the surveyor will have been incurred. Again, as I am sure my noble and learned friend the Lord Chancellor knows very well, in a great many cases of dispute, the complainant is compelled to meet expenses which are not allowed in the end by the arbitrator, or perhaps he only gets a portion of them. These are expenses which are ordinarily incurred, and which I am certain went into the figure of deduction by which the global sum was lessened. I hope the Government will take some means of putting the matter right, because it does seem that it would be an act of great injustice to impose these expenses upon a person who has in fact, by their deduction from the global sum, already paid them.
§ THE LORD CHANCELLORI must express my regret that in the remarks I made on this Amendment I appear not fully to have understood the object of the Amendment. I confess that I thought it was mainly to do with the costs of litigation or of an arbitration which was undertaken by, for instance, a surface owner as against the lessee, being a lessee over whom the Coal Commission have no control. It was not until the noble Lord, Lord Balfour of Burleigh, made his last observations that it became apparent to me that there was something else which was involved which I had not fully understood. I had not appreciated that this question referred to expenses reasonably incurred by a person after the vesting date in connection with a claim to compensation. What I thought was being dealt with was the cost of an actual proceeding in the nature of litigation, as regards which I had a somewhat different view from that of Lord Balfour, as I understand it, and one which I have 755 already endeavoured to express. But with regard to the question of these expenses, as the noble Lord has said and as the noble Viscount, Lord Horne, has repeated, I think there is something to be considered by the Government, and as our object is to be perfectly fair, and as it cannot be right to let anybody pay anything twice over, I should be very glad on behalf of the Government to consider that. But I ought frankly to say that it does not mean that the whole of this Amendment as it stands will probably be accepted by the Government. I think the matter will require some further Amendment. All I can say is that the point that Lord Balfour and Lord Horn have mentioned in regard to the expenses, which have already been included, in a sense, in the global sum, or rather, have been reflected in the global sum, will be very carefully dealt with by the advisers of the Government, and we shall endeavour to meet that point on the Report stage.
LORD BALFOUR OF BURLEIGHam much obliged to the noble and learned Lord, and I think, in view of what he has been so kind as to say, that the most convenient course to your Lordships will be to put the Amendment into the Bill now, and then the onus will be on the Government to find their Amendment and not on me. It has been admitted, after considerable argument, that there is something in our case, which they would not admit for a very long time. So I suggest that the Committee should agree with the Amendment, and that then the Government should introduce their Amendment on the Report stage.
§ EARL STANHOPEThe Government are quite unable to accept my noble friend's suggestion. The normal arrangement, commonly made, is that the Government make an offer to reconsider before Report and then, if the mover does not accept that suggestion, he presses the Amendment. If he wins, he takes the chance of its remaining in the Bill. If he loses, the Government's offer drops.
LORD BALFOUR OF BURLEIGHDoes the noble Earl mean to say that, if these precise words were not accepted now, he would be a party to enshrining in the Bill what is admitted to be a patent injustice?
§ On Question, Amendment negatived.
§ Third Schedule, as amended, agreed to.
§ Fourth Schedule: