LAW OF PROPERTY (JOINT TENANTS) BILL (Hansard, 9 July 1964)

§ VISCOUNT BRENTFORD

My Lords, I beg to move that this Bill be read a second time. I do not disguise from your Lordships that this is an exceedingly technical and rather complicated little measure. The object of it is to fulfil a lacuna which was left by Section 36(1) of the Law of Property Act, 1925. That section introduced a new principle in so far as it provided that all joint tenants holding property would, in future, hold that property as trustees. That was all right so far as it went. But the diffi- 1166 culty arose when one of the joint tenants died and the property passed solely to the surviving joint tenant.

Your Lordships may consider that this is not a usual custom, but in fact those of us who are practising solicitors can assure your Lordships that it is quite a common thing for a husband and wife to buy particularly the smaller properties themselves for their own residence, and to take them as joint tenants in their joint names, so that when one of them dies, automatically the property will pass to the other one. But early on after the passing of the Law of Property Act, 1925, it was realised that the provision led to considerable difficulties, and an amending Act was passed the following year which sought to overcome that difficulty; but in fact it did not do so. It provided that nothing in the 1925 Act should affect the right of a survivor of joint tenants who is solely and beneficially interested to deal with his legal estate as if it was not held on trust for sale. The problem is that any property which is sold by trustees for sale requires to be sold by at least two people, because it needs two people to convey a property in trust, and it requires two people to give a good quittance to trust monies to a purchaser who pays for a property which he is buying out of trust.

The reason why the amending Act did not make adequate provision to overcome the difficulty is the impossibility of a vendor who is a surviving joint tenant being able to establish the fact that he does, in fact, sell as beneficial owner, that he has an absolute right to dispose of the property. The reason for that is, as we all know, because it is almost impossible to prove a negative; and what he would have to prove, in order to establish the fact that he was beneficially entitled to the property, is that there has been no severance of the estate in the property during the lifetime of the joint tenants.

The severance can take place either voluntarily or involuntarily. For instance, if one of the joint tenants were to go bankrupt or a receiving order was made against him, then automatically there would be a severance of the estate; and once there has been a severance, in the event of one of the joint tenants dying his share of the estate remains in trust and is held by 1167 the surviving joint tenant in trust for the deceased's estate. Your Lordships will see, therefore, that it was most difficult for the surviving joint tenants to be able to make good title to the property when it came to be sold.

The profession was seriously exercised about this difficulty, and in 1955 the Law Society issued a general advice to the profession, the gist of which was that the only safe and proper way for overcoming this problem was for the vendor of the property to appoint another person as his co-trustee, in order that there should be these necessary two people to grant the conveyance and to receive the purchase monies. That, of itself, was not a particularly satisfactory arrangement. For one thing, vendors might quite easily have considerable difficulty in finding someone who is prepared to act as a co-trustee for this purpose. It was a difficult thing to be able to explain to another individual that it was necessary for him to assume the responsibilities of a trustee, and, in addition, it added to the delays of the conveyance, and it further added to the expenses involved.

Therefore, the Law Society considered that it was their duty to make representations for a change in the law to take place, and in 1955 the Society approached the predecessor of my noble and learned friend the Lord Chancellor with the request that the law might be changed. They received a most sympathetic answer, and an assurance that in due course, when opportunity arose the matter would be favourably considered. Unfortunately, the opportunity never seems to have arisen, and so last year a Private Member's Bill was introduced into another place by a distinguished member of my branch of the profession, Sir Barnett Janner, and it has duly found its way up to your Lordships' House. It was fully debated in another place and, after a full Committee stage, it occupied the other place for nearly two hours on the Report stage, during the course of which Her Majesty's Solicitor-General was of great assistance in moving a considerable number of Amendments which greatly improved the Bill. I think, therefore, we may assume that the Bill is not without the friendly good will of Her Majesty's Government; 1168 and we certainly know that it is not without the full support of the Opposition, as Sir Barnett Janner is a Member of the Opposition in another place.

What the Bill does is simple and most ingenious. By Clause 1 it provides that if the conveyance by a surviving joint tenant contains a statement that the survivor is solely and beneficially interested in the land, or that he conveys as the beneficial owner, he shall be deemed to be solely and beneficially entitled, and therefore in a position to grant a good conveyance and in a position to grant a satisfactory receipt for the purchase monies.

There are two exceptions to this general assumption. The first is, if a memorandum of severance has been endorsed upon the vendor's own conveyance, and if there has been a severance of the legal estate, then it is open to any of the parties concerned to require that a memorandum be endorsed upon the conveyance. The second exception is, if there has been registered a petition or receiving order in bankruptcy against any of the joint tenants, if that has been registered as a last charge. The object of those two exceptions is that they provide evidence forthwith of the severance of the estate, and therefore would make a nonsense of any provision which stated the effect that the vendor could dispose of the property as the beneficial owner because there had been no severance.

Clause 1(2) applies the clause to the personal representatives of the sole surviving joint tenant, for it quite often happens that if the wife dies the husband lives on in the house, but when the husband dies his personal representatives desire to sell the house. Therefore, similar protection is passed on to the personal representatives of the surviving joint tenant.

Clause 2 provides something which may at first glimpse rather horrify your Lordships: that the Bill should be deemed to have come into operation as from January 1, 1926. The reason is that it makes it coincident with the coming into operation of the original Law of Property Act, 1925. But it is not, strictly speaking, retrospective legislation, because it will "bite" only on future occasions; and although it may apply to some past conveyances, substantially it will apply 1169 only to future conveyances when future surviving joint tenants seek to dispose of their property.

Clause 3 provides that the Bill is not to extend to registered land. The reason is that the problem does not arise with regard to registered land, so that it is not necessary for registered land to have these fresh arrangements made. Clause 4 provides that this Bill shall be construed as one with the Law of Property Act, 1925. That brings the two measures together and makes the Act of 1925 the governing part of 1this Bill; and therefore the interpretation clauses and similar matters in the Law of Property Act, 1925, apply equally to this measure. Finally, the Act extends to England and Wales only.

There is one other matter to which I would refer. Your Lordships will have seen that the noble Lord, Lord Silkin, had put down his name to speak on this Motion. He has told me that I may quote him as expressing his apologies to the House, but he was unable to stay as he has a committee meeting to preside over. He has told me to say that I can assure your Lordships that he is in full sympathy with the Bill. He is an exceedingly distinguished member of our branch of the profession and is considerably in favour of this Bill. Therefore, I hope your Lordships will give it a fair wind.