COSTS OF LEASES BILL (Hansard, 7 July 1958)

§ LORD MILNER OF LEEDS
My Lords, this Bill has to do with the liability for solicitor's costs as between the lessor and lessee in regard to the drawing and the preparation of a lease. As your Lordships will be aware, there is a general custom throughout most of the country whereby the solicitor to a lessor is entitled to prepare the lease and the counterpart and to charge the lessee with his charges and expenses for so doing, together with the stamp duty on the documents. This Bill, which was introduced in another place by Mr. Granville West, the honourable Member for Pontypool, proposes to do away with that general custom, and, in the absence of a written agreement to the contrary, requires each party to pay his or her own costs and stamp duty.
The reasons for this proposal are very simple. The existing custom, although it has been in force for a long time—indeed, so long "that the memory of man runneth not to the contrary"—appears to have no logical basis in these days and is frequently the cause of great hardship and irritation to a lessee who may be quite unaware of the custom and who, the lease having been prepared and executed by both parties and the document having been stamped, finds himself faced with the burden of two sets of solicitors' costs. This Bill also assimilates the practice or position as between lessor and lessee to that of a vendor and a purchaser, where, as your Lordships know, each party normally pays his own legal costs and expenses. The Bill has the support of the Law Society and I 670 hope that its objects will commend themselves to your Lordships. I beg to move that the Bill be now read a second time.

§ LORD SILKIN
My Lords, my noble friend, Lord Milner of Leeds, in introducing this Bill, referred to the practice of a lessee having to pay the lessor's costs by custom as an anomaly and a hardship, and of course it is. As he explained, in the purchase of the freehold of a house each party pays his own costs. If one takes an assignment of a lease or of a long term, again each party pays his own costs. But if one takes a fresh lease, then the lessee is expected to pay the costs of the lessor. My quarrel with the Bill is that it does not remove the anomaly or the hardship; it merely regularises it, because as soon as this Bill becomes law every lessor will put into his contract a provision that the lessee must pay the costs; and that becomes perfectly lawful.
Having accepted the fact that something has to be done and that this anomaly has to be removed (I hope he will not mind my saying this), my noble friend at once sets about putting the anomaly right by ensuring that it will become a matter of course that every lessor will put in writing, as one of the conditions, that the lessee should pay his costs. It is, of course, a bad thing that a person should pay somebody else's costs for something with which he is not concerned. A man pays his own solicitor for approving the lease, going through it and negotiating, but why he should pay the lessor's costs, I do not know—and my noble friend does not know either. He agrees that it is an anomaly; but this Bill does not remove that anomaly. I believe the Bill is susceptible to amendment and I propose to have a try at amending it in Committee. It is because of that, and because it can be amended, that I shall not object to the Second Reading; but if it were to remain as it is I should strongly object to this Bill going forward.

§ LORD DOUGLAS OF BARLOCH
My Lords, I should like to offer a little support for the Bill as it is drawn. It would he unprofitable now to go into the history 671 of this matter and explain how the custom has arisen. I agree with my noble friend, Lord Silkin, that if this Bill passes into law it will still be possible for a lessor to stipulate as a matter of contract that the lessee shall pay his costs. At the moment it is perfectly possible for a vendor of property to make a similar stipulation, and sometimes that is attempted. The objection to the law as it stands at present is that the general public do not understand that this custom exists and therefore they enter into negotiations on their own without obtaining prior legal advice and then are faced in the end with having to pay the costs of the lessor, which they never expected to have to do.
I know it is a maxim that every citizen of this country is supposed to know the law of this country, but it is still nevertheless the case that they do not; and the sooner this anomaly is removed, the better, because then things will happen as people expect them to happen and not in a way which they do not expect.

§ THE LORD CHANCELLOR
My Lords, I should not have detained your Lordships for more than a moment, which would have been used in giving short but sincere congratulations to the noble Lord, Lord Milner of Leeds, on this Bill, were it not for the troubles which the noble Lord, Lord Silkin, has found. I should like to say a little more, for I feel that the matter deserves some attention. I wish to congratulate the noble Lord, Lord Milner of Leeds, for in all the years that we have known each other I think this is the first Public Bill that I have ever heard him introduce, though I have heard him introduce Private Bills as Chairman in another place. In any case, I want to congratulate the noble Lord on the persuasive language in which he put the Bill before your Lordships.
In another place there was no opportunity for the views of Her Majesty's Government to be given, and therefore I gladly take this opportunity of saying that we welcome the Bill as a useful amendment to the law and custom relating to leases. I believe that the noble Lord, Lord Douglas of Barloch, put the real difficulty of this problem: that tenants, knowing nothing of the custom that exists, get extraordinarily annoyed 672 when they find themselves subjected to it. From time to time I have myself received letters from members of the public expressing their surprise and irritation at finding themselves, without warning, under an obligation to pay the costs of both sides of a lease or tenancy agreement into which they have just entered as tenants. I should think numbers of your Lordships, and not only those, like all of us who have spoken on this Bill to-day, who are engaged in the legal profession, have received similar expressions of annoyance; and I must say that my right honourable friend the Minister of Housing and Local Government, who receives more protests than I do, has sympathy, as I have, with the complainants.
A custom should become part of the law only when it is generally accepted, and when it complies with the essential condition that it should be notorious and known to everyone concerned; and undoubtedly this is not known. I should have thought that it was more natural and right that the parties should be left to reach agreement and to arrange how it is to fall. I am surprised and worried, as I always am when I find that the noble Lord, Lord Silkin, takes a different view on the matter. I am sure that Lord Milner of Leeds will consider anything further that there is to say, but I should have thought that, on any basis at all, this Bill is a help and an advance. I am grateful not only to the noble Lord but also to the honourable Member who put it forward in another place, and to the Law Society for having suggested this improvement. And, most of all, I should like to congratulate Lord Milner of Leeds on the way he put it before us to-day.

§ LORD MILNER OF LEEDS
My Lords, may I express my gratitude to the noble and learned Viscount on the Woolsack. He and I have known each other for a great many years, and he has always shown the same kindness and courtesy. I greatly appreciate the expression of congratulation to which he gave voice. I do not desire to detain your Lordships for any length of time on this matter, but I think I must say just a word or two in reply to my noble friend Lord Silkin. If he will forgive my saying so, I am a little surprised that, not for the first time, he does not appear wholeheartedly to approve the course adopted 673 or the proposals submitted by his own professional Society. Again, if he will forgive my saying so, I do not think he takes any part in the proceedings of that Society. If he did, his views might be put forward before any proposals came to this House.
However that may be, I cannot for a moment accept the view which he puts forward, that this Bill does nothing to remove the present hardship and injustice. So far as I am aware, there never has been a proposal to alter the normal position in regard to the costs of a conveyance whereby the vendor and purchaser each pays his own share. It is very rarely the case, though it does sometimes happen, that the vendor makes it a condition that the purchaser shall pay the vendor's costs. That is, as I say, very rarely the case, and I do not understand why in the future, as soon as the general position becomes known, lessors will necessarily insert in leases the proposal or the condition that the lessee shall pay the lessor's costs.
674 I am grateful to the noble and learned Viscount and to my noble friend Lord Douglas of Barloch for their support. This is a step, at any rate, as the Lord Chancellor said, in the right direction. It still preserves freedom of contract, which I gather my noble friend Lord Silkin, in this instance would like to take away. In my view, the terms of the Bill, if passed by this House, will make the position fair as between the lessor and the lessee, and thus do away with a good deal of hardship and irritation. Therefore I hope your Lordships will approve the Second Reading.