HL Deb 21 July 1942 vol 123 cc910-27

Amendments reported (according to Order).

LORD BARNBY moved, after Clause 1, to insert the following new clause:

Construction of principal Act.

.—The principal Act shall have effect, and shall be deemed always to have effect as if: (a) After Section twenty-five there were inserted the following section:

Rights over against mortgages in cases to which Section 25 of principal Act does not apply.

'25A.—(1) This section applies in any case where at the relevant date in any year in which an instalment of contribution is payable the interest of a direct or indirect contributor in respect of a contributory property is subject to a mortgage or mortgages, such case not being one in which Section 25 of this Act applies. (2) In any case in which this section applies, the contributor shall in respect of his net liability for the instalment of contribution payable in the year in question be entitled to be indemnified by the mortgagee or mortgagees under the mortgage or mortgages in question to the extent of a rate in the pound upon the amount of the annual interest payable by the contributor to such mortgagee or mortgagees for that year, which rate in the pound shall be the instalment rate for the year in question unless that rate when applied to the amount of such interest, would yield a sum exceeding one-half of the net liability of the contributor for the instalment of contribution payable in that year, in which case the rate in the pound shall be a rate which, when applied to the amount of such interest, would yield a sum not exceeding one-half of such net liability. Provided that if there shall be more than one mortgagee entitled to receive interest for that year under any such mortgage the share of the indemnity to be borne by any one of such mortgagees in respect of that year shall bear the same proportion to the total amount of the indemnity in respect of that year as the amount of the interest payable to that mortgagee for that year bears to the total amount of the interest payable under the mortgage or mortgages for that year: (3) In this section: The expression "mortgage" means any charge, lien, floating charge, debenture, debenture stock, or like security on any property (including in that expression floating assets) for securing money or money's worth other than a security which can be discharged upon less than three months' notice; The expression "mortgagee" has a meaning corresponding to the meaning of the expression "mortgage"; and the expression "the instalment rate" means the rate in the pound at which in the year with respect to which the expression is used the instalment of contribution is levied in pursuance of the provisions of Sections twenty and twenty-two of this Act.' (b) In paragraph (ii) of Section twenty-seven and subsection (2) of Section thirty-three and subsection (15) of Section ninety-six after the words "Section twenty-five" there were inserted the words "or Section 25 A"; and (c) In subsection (2) of Section ninety-eight for the words "Section twenty-five of this Act shall in its application" there were substituted the words "Section twenty-five and Section 25A of this Act shall in the application of each of them", and in paragraph (c) of that subsection after the words "subsection (8)" there were inserted the words "of Section twenty-five.

The noble Lord said: My Lords, after the Committee stage of this Bill I read carefully the replies of the Lord Chancellor, particularly those dealing with the Amendments put forward by the noble and learned Viscount, Lord Maugham, and the noble Lord, Lord Balfour of Burleigh. I have further consulted authoritative legal opinion. As a result I have felt compelled to raise the matter at this stage—particularly the position of the mortgagor—and, therefore this Amendment stands in my name to-day. I do this first because it is clear from the Official Report that the main opposition to the Amendment of the noble and learned Viscount was on the ground that only a portion of the field involved was covered by the Amendment, and that of itself was held to condemn the suggestion irrespective of the merits of the principle. The Amendment I offer to-day is designed to remedy this position. It does not involve any sacrifice by the State. It in no way reduces the amount of money which the State will receive. It merely facilitates the collection of the contribution which the State requires. There are already many instances where contributors have been unable to pay, and it is understood that prosecutions have had to take place. All this increases the amount of work to be done under the Bill.

My Amendment aims at correcting an injustice as between two classes of people affected by the Bill; and I repeat that, were it to involve any sacrifice by the State, I should hesitate to ask for the indulgence of your Lordships in moving it to-day. It is clear to those who have taken the trouble to study the problem, however, that something which appears complicated is really very simple, and that what should be the guiding principle in this matter has been impinged upon by exceptions. The noble and learned Lord Chancellor was able to object to the Amendment proposed by the noble and learned Viscount, Lord Maugham, by pointing out that that Amendment would apply only to a portion of those affected by the Bill. It is for that reason that I venture to bring forward this Amendment to-day, and to emphasize that its aim is to apply to all cases which arise in this way.

The noble and learned Lord Chancellor explained that the aim of the draftsman of the Bill was to achieve "rough justice," and that suggests that equity, more than law, is involved. Indeed, on the question of law, I submit that the fact that a former Lord Chancellor has asked that relief should be afforded on grounds of justice to some of those affected by the Bill, removes any ground for opposition based on law. I therefore base myself on an appeal to equity and to reason, and I shall attempt to deal primarily with what was said by the noble and learned Lord Chancellor in Committee. It is urged that the mortgagor, having all the privileges, could justifiably be asked to pay all the charges. The mortgagor pays the fire insurance, for example, and therefore it is said that he should pay the War Damage Contribution, or any other contribution which circumstances may require, regardless of the fact that it has been repeatedly urged by the Chancellor of the Exchequer, as a fundamental principle of the Bill, that war damage insurance should fall proportionately on all classes of the community. Legislation arising out of the war has imposed this charge, which was unforeseen by those who drew up the mortgage. It may be argued that the lawyers should have foreseen and provided for it.

Let me take the instance of marine cover; the insurer there would never be prepared, subsequent to the writing of the cover, to include items which were not specified in the policy and which were in expansion of it, and any expansion of it to cover such risks subsequently would not be permitted. On the other hand, increased costs, requisitioning of properties at lower rents, losses from empty buildings, war damage, and so on, may very well remove the whole of the income of the mortgagor, but at the same time there is no diminution of the charge which he has to pay by way of interest on his mortgage. He is prevented from rebuilding during the war, and will have to face increased costs in that respect after the war; and yet the Rent Restrictions Acts prevent him from recouping himself. He has to find the whole of the money for War Damage Contributions. If he has not spare capital available, he will have to find that money out of income; and, by reason of taxation, for every pound or contribution that he pays he has to have at least two pounds of income.

That brings me to the argument based on the sanctity of contracts. This was emphasized during all the previous stages of this measure as good reason why the suggestion to broaden the basis of contribution should not be countenanced. Surely the Rent Restrictions Acts have already demolished that argument. Next, it was suggested that to do what is here proposed would imperil lending on mortgage. I would gladly see the State becoming the lender rather than that the State alone should become the source of all building enterprise. In the Committee stage the case of the banks was raised. The noble and learned Lord Chancellor laid considerable emphasis on the position of the banks and the difficulty which their case would raise, but this is provided for in my Amendment, which excludes a security which can be discharged upon less than three months' notice. Apart from that, it is the custom of the banks, as is well known, to lend on short-term, and not to lend on long-term mortgages. It is not the business of the banks to make long-term mortgages; they do not want to lock their depositors' money up in that way, and to do so would be bad banking practice. The question is also raised where an advance is made upon a mixed bag of collateral. It is customary for the banks to value the collateral which they receive against any advance, and that would include the valuation of any property of a real estate character, so that the cover in that case could easily be determined.

Because the position of the banks has been so much emphasized, I cannot refrain from turning to the speech of my noble friend Lord Wardington on the last occasion, when he shed tears of anxiety over the injustice of suggesting any contribution by the poor mortgagee, who is getting the pittance of a meagre rate of interest. The noble Lord should not forget the widespread feeling among many classes of the community with regard to the past policy of the banks. The banks have allowed a very thin and meagre rate of interest on their deposits, while they have not hesitated to charge handsome rates of interest for their advances. Commercial records will show that in the past the rate has been as high as 7 per cent. That feeling may easily explain the widespread idea that the nationalization of the Bank of England is desirable. If there had been no war damage insurance, I suggest that the mortgagees would have been the first to protest. Not only so, but they would have had the sturdy and powerful support of the banks, and it is suggested that they would readily have accepted the requirement of contributions to relieve their otherwise exposed position. There is a natural tendency on the part of the Chancellor of the Exchequer—there has been from the start—to listen to the siren voices of the banks, but there is no reason why favours should all go to them. I could elaborate this at length, but I will ask your Lordships' permission to return to this point of the banks in a few minutes.

I cannot at this stage refrain from expressing my surprise that on a question like this, particularly on points like that raised by my noble friends Lord Balfour of Burleigh and Lord Maugham, dealing with the provision of housing accommodation for the working classes, the Labour Party should have departed from their customary practice of supporting the position of the small man against the privileged financial institutions, and that they should have gone into the Division Lobby against the Amendments which were moved in Committee. This matter affects a vast number of people and involves a cruel hardship on many. There are probably more cases of poor property owners receiving loans on mortgage than there are of poor widows whose savings may be invested in mortgages. This problem is very definitely a difficult one to explain, and the fact was very evident in another place. The Division there on the point which I am discussing resulted in a majority of only 33, which is an indication that those who supported it were members who had taken the trouble really to study the matter.

The banks and big financial institutions are well organized, and, I repeat, they were early in the field to emphasize their point—it is natural that they should have done so—but those who understand the scientific management of property are relatively few. That must be well known to members of your Lordships' House, who are often directly or indirectly associated with property, and who will realize that matters of this kind are different from the problems with which the land agents of big estates normally have to do. It is for that reason that I ask the indulgence of the House in explaining that in the Committee stage, when I put this Amendment down and did not move it, I was in a difficult position owing to the fact that a former Lord Chancellor was dealing with a matter affecting law and was to be replied to by the present Lord Chancellor. In a cross-fire between legal authorities of such eminence it was not for a layman to interpose an Amendment such as I have interposed to-day. The Lord Chancellor on the Committee stage referred to the Second Schedule, paragraph 4, in reply to my suggestion that a mortgagor of a house with contributory value not exceeding £150 and otherwise within the provisions of Section 25 of the original Act is indemnified in part by the mortgagee, whereas the mortgagor of a large block of flats could not be so indemnified, and the Amendment provided by the Second Schedule, paragraph 4, appears to create an even greater anomaly.

I am going to try to save the time of the House and relieve a little the monotony of the subject by asking your Lordships to look at a pictorial description of the matter that I am trying to explain. Here on the drawing I hold in my hand is a block of flats of which the annual rental value does not exceed £35. On the other side is one where the individual values may exceed £35. The contributory value of the flats on this second side may be £36 because they are a little more decorative owing to having window boxes. The buildings are identical, their owners are the same, and they are both mortgaged. In one case where the value does not exceed £35, the mortgagee contributes, but if the value is more than £35, owing to the artistic embellishment of window boxes, there is no contribution by the mortgagee. If that same builder has built the same number of houses, but side by side, horizontally instead of vertically, he does not receive any contribution from the mortgagee. The buildings are just the same, in the same locality, but the flats are horizontal instead of vertical. I could point out other anomalies, but I will spare the House, although the figures have a definite bearing upon the situation. I would, however, emphasize the point that in the case of a block of buildings where the rental value is not more than £35 the mortgagee contributes. The point is that if the payment of indirect contribution is limited to certain mortgages there must be border-line cases. That may well create hardship and dissatisfaction. If this could not be obviated without difficulty it would be understandable, but it appears to be true that the Government's advisers have apparently not effectively understood the practical side of this question, and in presuming to say that I feel sure that the illustrations which, by the kind permission of the House, I have just given will convince noble Lords that there are illogicalities in the measure as it stands at present.

The Amendment moved in the House of Commons providing for contribution by all mortgagees other than in respect of mortgages for short terms, such as those to which I have already referred by bankers, was proposed by those who have specialized in this question of the management of property. It is for that reason that I again refer to the question of the banks. It does not appear to overcome all the difficulties that the Lord Chancellor has been advised would make such a provision impracticable, and also to provide an equitable distribution of the property-owners' portion of the War Damage Contribution among all those with a real interest in the property. I emphasize that the interest of the mortgagee is a very real one. This proposal would avoid anomalies, difficulties, inequalities, or hardships. No valuation would at any time in any case be required, and no question could arise as to the amount of the contribution to be collected by the mortgagor from the mortgagee. The proposal simply is that every mortgagor would be entitled to collect from his mortgagee 2s. in each pound of loan interest paid to him, but not exceeding in any case 50 per cent. of the net contribution of the mortgagor. Of course, if in any year the instalment of the contribution payable by the mortgagor is varied from 2s. in the pound, then the amount due from the mortgagee would be similarly varied.

The reason for that calculation is that the mortgagors contribution is paid on the amount of Schedule A net annual value. This is a theoretical annual income, or net annual income if the rent is an inclusive one. The reason for the limitation of the mortgagee's contribution to 50 per cent. of the mortgagor's contribution is to prevent any anomaly arising in cases where Schedule A net annual value may be low in relation to the capital value and so, possibly, in relation to the mortgage. Mortgages of all kinds are included, whether legal, equitable or debenture charge, because in each the mortgagee has a direct interest in the preservation of the property. There can be no question about that. The mortgagee is equally interested, and at times more interested than the mortgagor in regard to his holding. Mortgages which can be redeemed at three months' notice, as in the case of bank loans, are already provided for.

Let me cite a typical case. A freehold property, or a parcel of freehold properties, with a capital value of £10,000 having a net annual value of £650, may be mortgaged for £7,000 at 5 per cent. interest. In that case the mortgagor's income would be £650. The mortgagee's income would be £350 and the mortgagor's net income would be £300. The War Damage Contribution would be £65 per annum and the mortgagee's contribution, limited to 50 per cent., as well as the mortgagor's contribution, would be £32 10s. If the properties are leasehold with fifty years or more unexpired, the ground rent being £130 per annum, the mortgagor will recover 10 per cent. of the contribution from the freeholder—namely £6 10s. per annum, thus reducing his contribution to £58 10s., and in consequence the mortgagee's and the mortgagor's contributions will each be £29 5s. If the freeholder has mortgaged his ground rent for £2,000 at 5 per cent., his mortgagee's contribution, recoverable by him, will be 2s. in the pound on the amount of his interest, but again limited to 50 per cent.—namely, £3 5s. Thus the burden is spread over all interests without valuations, but by the simplest of mathematical calculations and without interfering in any way with the one collection of the total contribution by the Inland Revenue from the direct contributor.

I ask the patience of the House while I quote figures in the case of a small shopkeeper. Under the Bill a small shopkeeper who wants to place a mortgage on his house is not included in the provisions of Section 25. He wants to impose a mortgage, we will say, on a capital value of £3,000—net annual value £200 and a mortgage of £2,000 at 4 per cent. The War Damage Contribution is £20 per annum and he would collect £8 of it from the £80 interest he pays to the mortgagee. If he has had to raise a second mortgage or £300 at 6½ per cent., he would also collect £1 19s. from the second mortgagee. If the total mortgage interest in such a case exceeded 50 per cent. of the annual value, then 50 per cent. of the total contribution would be collectable from the mortgagees in proportion to the amount of interest payable to each. Again I seek the indulgence of the House while I cite the case of debenture stock. Take the case of a company owning £100,000 of freehold property with a net annual value of £6,000—a company with an ordinary capital of £50,000, a debenture stock of £50,000 at 4 per cent. The War Damage Contribution is £600 per annum of which £200 is recoverable from the debenture interest. In consequence each holder would suffer a deduction of 2s. from each pound of interest paid to him. Similar calculations to those mentioned would be made in the case of ground rents, second mortgages, or where the total interest on mortgages exceeds 50 per cent. of the net annual value.

In this Amendment provision is not made for contribution by preference stock holders. That point was raised by Lord Wardington on the last stage, and he advanced grounds for avoiding the proposals which had been put forward by Lord Maugham, but if the general opinion is that they should contribute, the additional words can be added to provide for the deduction of 2s. in the pound of preference dividend with precisely the same limitations and conditions as those applying to mortgage interest. In the case of an industrial company with substantial mortgagees on the company's assets including only a small amount of property, no difficulties would arise in the application of precisely similar calculations. I say this because it was emphasized again in the case of the banks. I instance this particular case so that this aspect of it should not be overlooked. This matter was referred to by Lord Balfour of Burleigh, and the Lord Chancellor, with his usual consideration, was kind enough to admit that there had been some reason in the case presented.

Take an industrial company with £1,000,000 capital divided into £500,000 ordinary and £500,000 mortgaged debentures at 5 per cent., secured as a floating charge on assets of the company with a contributory value of property of £10,000. The War Damage Contribution would be £1,000 per annum. Fifty per cent.— namely, £500, deductible from mortgage interest of £25,000 per annum, amounts to 4.8d. in each pound of interest. In some cases the amount might be negligible and would not be collected. In others it might be considerable, but in no case could it be an unfair or inequitable charge, because it cannot exceed 50 per cent. of the contribution on the property that is actually held as security, and if the loan interest is less than 50 per cent. of the contributory value of the property, then the contribution is calculated on the amount of the interest.

The Lord Chancellor said that the Amendment moved by Lord Maugham did not apply a principle. One of the main grounds, I would remind the House, on which I bring forward this Amendment, is that it is different from that which was moved by Lord Maugham. This Amendment cannot be criticized on the same grounds as was Lord Maugham's. I bring it forward because it applies a definite principle. In his reply on the noble and learned Viscount's Amendment, the Lord Chancellor said that the authorities who were trying to work this scheme in order to find out how much the contribution should be from the mortgagee will have to value all these items. That difficulty would not apply in this case as no valuation would be required. Again, later, the Lord Chancellor said: … you would get into a terrible confusion between equitable mortgages, floating charges, debentures and the rest of it. The reason why I move this Amendment is that you could not get into those difficulties under this Amendment, which embraces cases distinct from those dealt with in the Amendment moved in the Committee stage of the Bill.

My Amendment would spread the burden of contribution among those who benefit by the protection afforded by the original Act. At present the burden falls solely upon the mortgagor. The annual instalment of 2s. in the pound of the hypothetical interest is calculated for Schedule A tax, and it is not generally realized that the mortgagor is paying this tax on his hypothetical income before any allowance is made in respect of losses from empties or other causes. Generally speaking, in areas where there has been enemy action—and I need not remind your Lordships how widespread that has been—there is no comparison between the hypothetical income of Schedule A assessment on which the War Damage Contribution is levied and the actual income. I regret that I have had to trench so long on the indulgence of the House, but I hope I have made it clear that the Amendment which is being discussed now is quite different from what was put forward in the Committee stage. Because it affects so wide a body of people, because it does not involve any sacrifice by the State, I bring it forward now. I would remind the House that the mortgagor recovers Income Tax from the mortgage interest, and, therefore, I contend he should recover a portion of the War Damage Contribution also. I beg to move.

Amendment moved— After Clause 1, page 2, line 3, at end insert the said new clause.—(Lord Barnby.)


My Lords, with all possible respect to Lord Barnby I do not think that on this subject he is personally open to persuasion or conviction, and therefore, in the very few remarks which I shall make, I shall not hope to persuade him, but I must out of courtesy to him make one or two observations on his proposal. In the first place his Amendment, moved on Report, is precisely the Amendment which he put down for the Committee stage. He did not move it then. He has told us in the course of his speech that he deliberately did not move it then. It is not for me to suggest what is the ordinary practice of the House, but as a matter of convenience I should hope that when members have Amendments to make to a Bill, and they really wish to make them, they should propose to make them at the Committee stage.

But leaving that apart, the proposal which the noble Lord now makes is very close to the proposal which he made last year and the House rejected it. It is also very close to the Amendment that was moved in the House of Commons on this Bill and rejected. The noble Lord was good enough to explain that the reason for the Commons doing that is that the members of the House of Commons who supported the Amendment understood it, but that the Government and all who voted against it did not understand it at all. Now I do not delay to explain the noble Lord's Amendment, and I do not in fact ask for any further explanation of it. He himself has said it is very simple, and the great advantage of simple things is that they do not need to be repeated. Let me, therefore, in very few words, explain to noble Lords of this House why it is that this Amendment is quite impossible. It is impossible for two reasons. The first reason is a reason of principle. The view which has been taken by Parliament last year, and again, as far as past action is concerned, by this House, is that in the matter of this contribution for war damage the mortgagee, generally speaking, should not have to take a share. That is not because mortgagees or bankers or any other body of people have any particular influence in this House. Your Lordships are as independent and right minded a body as can be found in the country. The reason for it is this. When a man lends money to a borrower on the security of property, the man who lends the money does not get any advantage from that transaction except the agreed rate of interest.

If the borrower, pledging his property to the lender, acquires a sum of money by which he buys a valuable patent and thereby becomes a millionaire, the mortgagee is not entitled to come along and say: "Oh, the money I have lent you has caused you to become a millionaire, therefore I must have a portion of it." The whole principle of lending money on the security of property is that both the benefits and the disadvantages associated with the ownership of the property by the borrower continue as they were. That is one of the reasons why the rate of interest when you borrow money giving reasonable security is comparatively low. If you were to adopt the principle that unforeseen or unmeasured burdens never recognized between the parties were to be shared between the lender and the borrower, then you have upset the whole principle on which the borrower borrows from the lender. What we have done—the noble Lord, I know, will remember this—in order to assist the borrower from what no doubt was an unexpected misfortune if his house is destroyed by enemy action, is this. We have relieved him from the obligation which he otherwise would be under to build up his house again, which is the usual covenant in a mortgage based on property. That is the principle which is being applied, and it has commended itself not only to the Treasury and the Government, but to the House of Commons on two occasions and to the House of Lords last year, and to a Committee of this House as recently as last week, for the vote which was given after the very persuasive remarks of Lord Maugham resulted in an overwhelming decision against his proposal; indeed only five members of your Lordships' House voted in favour of the proposal, one of whom was Lord Barnby.

That is the principle. Even more conclusive are the considerations of practicability and fairness. The noble Lord makes no distinction between a first mortgage and a subsequent mortgage. He makes no distinction between the measure of contribution which is adopted under Section 25 and the wholly different measure which he proposes in this Bill. If I may take one instance which will not need pictorial illustration, it will be quite sufficient to show what a very grotesque proposal this is. He desires that this plan, that the mortgagee should contribute, should apply to debentures of all sorts and kinds. There are many cases in business where the debentures which have been issued by the company, though they may no doubt be charged on all the property of the company, are in substance secured on property quite different from the building which is exposed to the risk of being bombed by the enemy. Supposing you take a very large mining corporation owning valuable mines in South Africa which has amongst other things an office in the City of London, as most of them I am glad to think have. Of course, if that mining corporation issues debentures for £1,000,000 or £5,000,000 they will no doubt be secured on the whole of the property, but the important security will be the gold mines or the copper mines in South Africa, and the office which is being occupied by the company in London is a very small part of the security. What does this Amendment propose? It solemnly provides that there must be a sharing of the War Damage Contribution which will cast upon the debentures as much as 50 per cent. of the contribution that has to be made for purposes of war damage, and if you assume widely distributed debentures, it involves calculating how many pennies you are to get out of each debenture holder in order to build up the necessary amount.

This matter has been debated a good many times and the Government have done their best to make it plain. I hope my noble friend Lord Barnby will not take it amiss if I say that I recall an observation of Macbeth after Banquo had been killed, and he was faced with his ghost. Macbeth said: … the time has been, That, when the brains were out, the man would die, And there an end; but now they arise again … I hope that this particular ghost has now been laid for the last time and that in view of the reiterated decision of the majority of both Houses of Parliament it may be said that in this respect the Bill is about right.

On Question, Amendment negatived.

Clause 7 [Short title, construction, citation and extent]:


My Lords, there are a few Amendments on the Paper which I have to move, but I am glad to say they will not require any lengthy explanation from me. The first Amendment is a purely drafting Amendment. I can explain it if any of your Lordships so desire, but I do not think you will wish me to do so.

Amendment moved— Page 4, line 44, after ("and") insert ("references in this Act and in that Act to Part I of that Act shall include references to provisions of this Act which relate to payments in respect of war damage to land or to the recovery or the ultimate incidence of instalments of contributions, and this Act").—(The Lord Chancellor.)

On Question, Amendment agreed to.

First Schedule [Amendments relating to the principal Act generally]:

THE LORD CHANCELLOR moved to insert, after sub-paragraph (5) of paragraph 5 [payments to owners of rent-charges]: (6) As regards cases in which the title to a rentcharge, or to land subject thereto, is registered under the Land Registration Act, 1925, such provision may, without prejudice to the generality of Section one hundred and forty-four of that Act, be made by rules under that section as may be expedient in consequence of the provisions of this paragraph, and in particular for securing (by the imposition of conditions as to the exercise of the said right or otherwise) that the extinguishment of any of a rentcharge by virtue of this paragraph shall not take effect without notice thereof being entered on the register.

The noble and learned Viscount said: My Lords, this Amendment is necessary in order to secure that the title of a rentcharge is registered under the Land Registration Act and the amount by which it is reduced in consequence of the owner exercising his right of compensation is notified on the register. I think the importance of that speaks for itself.

Amendment moved— Page 9, line 17, at end insert the said new sub-paragraph.—(The Lord Chancellor.)

On Question, Amendment agreed to.


My Lords, I regret that this Amendment is only in manuscript form. It is to add to paragraph 5 these words: And as regards cases in which land in Northern Ireland is subject to a rentcharge, the Lord Chief Justice of Northern Ireland may by rules make such provision as may be expedient for securing (by the imposition of conditions as to the exercise of the said right or otherwise) that the extinguishment of any of the rentcharge by virtue of this paragraph shall not take effect without notice thereof being registered in the proper office for the registration of deeds or titles as the case may require. It relates to Northern Ireland, and your Lordships will see that it merely trims the Bill so as to make the same provision for Northern Ireland. It secures that if the holder of the rentcharge takes advantage of our new provision it shall be recorded so that nobody shall be misled. I beg to move.

Amendment moved— Page 11, line 7, at end insert the said words.—(The Lord Chancellor.)

On Question, Amendment agreed to.


My Lords, the next Amendment is a drafting Amendment consequential on what we have already done. I beg to move.

Amendment moved— Page 18, line 41, leave out from ("use") to ("Act"), in line 43.—(The Lord Chancellor.)

On Question, Amendment agreed to.


My Lords, the next Amendment is also drafting and consequential. I beg to move.

Amendment moved— Page 22, line 12, leave out from ("Commissioners") to the end of line 15.—(The Lord Chancellor.)

On Question, Amendment agreed to.

Second Schedule [Amendments as to ultimate incidence of contributions under Part I of the principal Act]:

THE LORD CHANCELLOR moved to add to paragraph 4: In relation to a dwelling house comprised in such a tenement as aforesaid and forming part only of a contributory property, the reference in this subsection to the contributory value of the dwelling house shall be construed—

  1. (a) where the dwelling house is separately entered in the valuation roll, as a reference to an amount which bears to the contributory value of the contributory property of which 926 the dwelling house forms part the same proportion as the rateable value of the dwelling house bears to the aggregate of the rateable values of all the parts of the contributory property;
  2. (b) in any other case, as a reference to an amount which bears to the contributory value of the contributory property the same proportion as the annual value of the dwelling house bears to the annual value of the contributory property."

The noble and learned Viscount said: My Lords, This Amendment deals with a defect which has shown itself in regard to Scotland. We have made a provision, as my noble friend Lord Barnby said in his speech, by which in certain cases where a tenement contains several small residences which added together would exceed the maximum under Section 25, none the less, the separate residences may be treated each separately so that Section 25 may apply to it.


May I ask is there any limit at which that may apply?


Yes, my noble friend knows it very well. He mentioned it in his speech. This provision, however, is necessary for this reason, that a dwelling house in Scotland has no separate contributory value of its own and the unit for valuation purposes is the tenement. We must, therefore, make a provision by which you can distribute the proper value attached to the tenement among the portions into which the tenement may be divided. It is always subject to the limitation of value to which my noble friend called attention in his speech.

Amendment moved— Page 27, line 37, at end insert the said words.—(The Lord Chancellor.)


Is it clear that that is confined only to a limited number of houses which may be of the same value horizontally?


If the House will allow me to speak again, I think it is quite plain that in order that the provision may avail to get a contribution from the mortgagee, the mortgage must be created on the occasion of the acquisition of the mortgagee's interest, or the execution of works of improvement on the property. Another condition is that the property in which the mortgage subsists must be either a residential property of a contributory value of not more than £150 or, if a farm, of the value of not more than £500. A third condition is that the mortgage must not have been created in respect of any interest in more than the existing property. The whole point of this present Amendment is simply to secure that there shall be machinery for giving proper valuation to the appropriate sub-divisions of the title.


My Lords, I beg to thank the Lord Chancellor most sincerely for the very clear and helpful explanation which he has given. I hope that your Lordships will realize, after listening to what he has said, the extreme intricacy of the matter. This provides for impingement on the principle of the Bill. It was on this ground, and on grounds which did not involve any sacrifice to the State, that I ventured to ask for the indulgence of the House which has been so patiently granted to me.

On Question, Amendment agreed to.

Fourth Schedule [Consequential Amendments]:


My Lords, this last Amendment embodies a drafting change.

Amendment moved— Page 37, line 4, after ("immediately") insert ("where it first occurs").—(The Lord Chancellor.)

On Question, Amendment agreed to.