HL Deb 19 March 1964 vol 256 cc973-84

4.10 p.m.

Order of the Day for the House to be put into Committee read.

Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD DOUGLAS OF BARLOCH in the Chair.]

Clauses 1 and 2 agreed to.

Clause 3 [Uncertainty as to remoteness of vesting]:

On Question, Whether Clause 3 shall stand part of the Bill?

LORD SILKIN

I should like to raise a point on Clause 3. I am not sure whether it properly comes within Clause 3: it might suitably be raised on any clause of this Bill, at least so far as I am concerned, because they are all almost equally unintelligible. This is a matter which has been suggested to me by the Law Society, and it relates to a case which was decided in 1961—namely, Dunn v. Blackdown Properties Limited. I do not know whether the noble and learned Lord the Lord Chancellor knows about that case—I imagine he does. It was a case where a decision was given by Mr. Justice Cross that a grant of an easement to use sewers and drains, then passing, or thereafter to pass, under certain roads or any parts thereof, was void as infringing the rules against perpetuities, the offending words being "thereafter to pass". The grant was held not to be an immediate grant, because the easement was to arise at an uncertain time in the future, and it was therefore declared void. So far as I know, there has been no appeal against that decision, but it has caused a good deal of inconvenience and uncertainty. For one thing, a good many similar dispositions have been made, and it has been assumed for many years that they are perfectly in order. This decision has now thrown doubts upon the validity of a great many similar dispositions and easements which have been granted.

Then again, perhaps less important, but still quite important, the standard form of granting these easements is contained in Butterworth's Encyclopœdia for Forms and Precedents, Third Edition, and the form is set out on the assumption that such easements are perfectly valid. If the law is as it is stated to be by Mr. Justice Cross, these forms will have to be altered. The Law Society are extremely anxious that the matter should be settled one way or the other. This Bill does not make it clear. While it may well be that the noble and learned Lord the Lord Chancellor is not in a position to give a definitive reply on this point to-day, I would ask him whether he would kindly look into this matter and at least make it clear in the Bill, as it is not already clear, that either such easements are valid or they are not valid. At the moment, we are still in a state of uncertainty, because, so far as can be judged, the Bill throws no light on the matter at all. As I say, I have been asked to raise the matter, and I hope that we may be given some satisfaction on the point before the Bill is finally disposed of.

THE LORD CHANCELLOR (LORD DILHORNE)

I am aware of the decision of Mr. Justice Cross in Dunn v. Black-down Properties Limited. I know that it gave rise to a good deal of comment in the legal Press, but I think I am right in saying that only one commentator suggested that the decision might be wrong. I know, too, that the Law Society were at first most concerned about the effect which that decision might have on grants of this kind, as most of the common form precedents, in fact not having statutory authority like the ones that the noble Lord quoted, do not impose any limit on the period within which the easement may be exercised.

First of all, I would say that this Bill bites only on instruments which come into existence after the Bill is enacted, and there can be no question of making any change with retrospective effect with regard to existing instruments. They must—and I hope to carry the noble Lord with me—stand or fall as to whether they are valid, under the existing law. One could not interfere with such instruments without affecting the rights of parties which have in fact been acquired or vested. The decision in Dunn v. Blackdown Properties Limited applies only where the parties to the original grant have each assigned their respective interests before any attempt is made to construct, or to connect up with, the sewers and drains. I think in the Blackdown Properties Limited case there were in fact no sewers or drains in existence.

We have considered this matter most carefully, and discussed it with the Law Society, and I think I am right in saying that we have now allayed the doubts which the Law Society felt. It is our view that there is no need for legislation on this point. We have been asked for an assurance that Clause 3(1) of the Bill will apply to any future grants of an easement such as fell to be considered in that case. I am able to give that assurance. The Bill refers throughout to "dispositions", and these are defined, in Clause (14)(2), as including any … disposition of an interest in or right over property". And a little later I propose to move an Amendment to make it clear that it does so. As I have said, I do not think that we can do anything to validate existing grants, because there is really no reason, as I see it, for altering the law here with retrospective effect—no better reason for doing so than for doing the same in the case of a will or settlement which had been drawn in such a way as to offend against the rule. I hope that in saying that I carry the noble Lord with me. I do not know that I need say any more with regard to this, except that I think that in relation to grants made in future it is right, particularly in relation to grants of easements, that the ordinary law in relation to perpetuities should apply. I am grateful to the noble Lord for raising this point, because it may help to draw to the attention of practitioners, and also of the editors of these publications which produce books showing common forms, the need to make a minor revision.

LORD SILKIN

If the Law Society's fears have been allayed then a fortiori, mine also have been allayed. I was merely putting forward the fears that they had. May I take it, therefore, that in fact there will be no need to alter these forms at all, because in future the present Bill, if it becomes law, will operate, and such dispositions, easements and so on, will be valid? Is my understanding correct?

THE LORD CHANCELLOR

I feel rather hesitant about expressing a view upon a common form with which I cannot claim to have the slightest familiarity. I think the position is perfectly clear. If I may summarise it, the Bill, in our view (I think this is now accepted, but if not we will certainly reconsider the matter) gives all necessary protection to future grants of easements, including rights of drainage. I am not prepared to say whether or not it may not mean some minor alteration in the common forms in these books. I mention that because I think it is for those who publish such books to have regard to this question. I say that deliberately, so that they may look at it.

Clause 3 agreed to.

Clauses 4 to 8 agreed to.

Clause 9 [Options relating to land]:

4.21 p.m.

THE LORD CHANCELLOR moved to leave out subsection (2) and to insert instead: (2) In the case of a disposition consisting of the conferring of an option to acquire for valuable consideration any interest in land, the perpetuity period under the rule against perpetuities shall be twenty-one years, and section 1 of this Act shall not apply. The noble and learned Lord said: I think it would be convenient to the Committee to take this Amendment with the next Amendment, which proposes the insertion of a new clause after Clause 9, because they are subjects which are linked. The purpose of these Amendments is to put it beyond doubt that an option in gross to purchase land which remains unexercised for more than 21 years is thereafter to be void as between the original parties to the grant of the option as well as between their successors in title. This is intended to be the effect of Clause 9(2) as it stands, but it has been suggested that it is doubtful whether it achieves its object, because the subsection is expressed to operate where the rule against perpetuities applies and the rule does not at present apply to contracts, even those granting proprietary interests in land, so far as the contracting parties are concerned.

Under the present law, a contract granting an option to purchase land, the exercise of which is not expressly limited to the perpetuity period, can always be specifically enforced against the original grantor of the option (as long as he has the land), whether by the original grantee or by his successors in title, because of the grantor's personal obligation to perform his contract. But there is no personal obligation on the grantor's assignees, and as against them the option cannot be enforced because it is void for remoteness. However, if the option becomes unenforceable in this way, damages for breach of contract may be obtained from the grantor personally or his estate.

The first Amendment provides merely that the perpetuity period applicable to options to acquire an interest in land is to be 21 years and no other period. The contractual obligation of the grantor of the option is now left to be dealt with by the proposed new clause. This provides, in effect, that a disposition inter vivos which would be void for remoteness as against an assignee of the person making the disposition is also to be void in all respects as against the disponor himself, and is not to be enforceable by any remedy, contractual or otherwise. Thus, where there is a contract for the grant of an option, and the option remains unexercised for more than 21 years, there will be no remedy against the original grantor, whether by way of specific performance (if he still has the land) or by way of damages (if he has parted with it).

The new clause assumes, first, that the rights and duties created by the disposition are capable of assignment; and, secondly, that they have been so assigned. The first of these assumptions is necessary because the option may in fact be framed so as to be personal only to the actual grantor and grantee, and so be unassignable. The court must therefore be expressly permitted to say that if it was assignable, and if it was in fact assigned, it would have become void for remoteness; therefore it is void as between the parties to it. The expression "no remedy shall lie in contract or otherwise" is intended to cover the case of a disposition made by covenant under seal where there is no consideration.

The new clause is framed in general terms, and is not specifically limited to options to purchase land, because there may be cases of contractual rights which ought to be treated as void for remoteness, but which do not answer to the description of options to acquire an interest in land. For example, instead of granting an option, the owner of land may agree to convey on the happening of some uncertain event. There seems no reason why the principle of the new clause should not apply to these cases and also to contracts relating to personal property as well as to land. I beg to move this Amendment, which I think not inappropriately follows on our discussion of the Fireworks Bill.

Amendment moved— Page 5, line 42, leave out from beginning to end of line 3 on page 6 and insert the said new subsection.—(The Lord Chancellor.)

LORD SILKIN

I should like to express my gratitude to the noble and learned Lord the Lord Chancellor for the explanation. I must admit that I followed the explanation quite well, which is more than I can say for the two Amendments as drawn. It is a great pity that these explanations cannot be incorporated in the Bill for the assistance of people who have to interpret them later on.

LORD CONESFORD

I think my noble and learned friend took these two Amendments together. My point arises simply on the second Amendment, the proposed new clause. I wonder whether possibly, as printed, it contains a misprint. In the fourth line ought not the word "had" to be "has"? I draw that to the attention of my noble and learned friend only because I am not quite clear about it.

THE LORD CHANCELLOR

I should like to look at that. It has been carefully drawn, but there may have been an error in printing which has escaped my attention. Perhaps I could have an opportunity, if in fact there is an error, of correcting it at a later stage.

On Question, Amendment agreed to.

4.27 p.m.

On Question, Whether Clause 9, as amended, shall stand part of the Bill?

LORD SILSOE

Before the Committee agrees that Clause 9, as amended, shall stand part of the Bill, I wish to ask the Government to give some consideration to a problem which affects the provision of churches in areas of comprehensive development. I speak to support the views of the Churches Main Committee, a Committee which represents all religious denominations, Christian and others, and is accepted as the authoritative body recognised by the Government to discuss secular matters relating to the churches as a whole. I should mention that I am myself a member of the Committee.

When an area to be developed or redeveloped is owned by a local authority or public authority, such as a New Town corporation, there is need to see to the proper siting of the churches of the various denominations. In regard to the housing and commercial development, it would be the normal practice for the local authority (except of course where they carry out the development themselves) to grant leases for approved sites to chosen developers. In the case of churches, however, it has for a long time past been the practice to build only on a freehold site. Indeed, where a church is to be consecrated, the site must be freehold. Accordingly, the Association of Municipal Corporations came to a very satisfactory arrangement with the church authorities, through the Churches Main Committee, ten years ago. The date is not unimportant, because ten of the twenty-one years have gone. In short, the Association recommended to its members, the local authorities, that they should sell church sites on a freehold basis in all cases where the church authority was prepared to grant to the selling authority a right of pre-emption if and when the church was no longer required for religious worship. There is a standard agreed clause between the churches and the municipal corporations, and in this the period for the option for the local authority to buy back is for what I believe is called, in the terms of this Bill, "royal lives plus 20 years".

THE LORD CHANCELLOR

Twenty-one.

LORD SILSOE

Twenty-one. Actually, in this particular contract, for some reason which I do not know, it is 20. Should Clause 9(2) be passed in its present form, this option of pre-emption would be exercisable only for 21 years for all future cases. Also, in Clause 14(5), which is the clause which prevents retrospection, the option is in relation to the taking effect of the instrument. It seems at least possible, therefore, that the date relevant would be that of the exercise of the option rather than that of the creation of the document, and for that reason it might well bring in existing and past cases. Also, unfortunately, the standard clause refers not only to royal lives but also to any future changes in the law of perpetuities. All this makes it possible (I do not want to say that I have yet obtained legal advice, but it seems at least possible, and some people say probable) that this new clause would affect all existing documents.

May I, for a moment, quote a few of the words used by the noble and learned Lord the Lord Chancellor in moving the Second Reading of this Bill, which explain the reason for Clause 9(2)? He said [OFFICIAL REPORT, Vol. 256 (No. 46), col. 240]: Other options, such as the ordinary option to purchase, are in a different category. For, as the Law Reform Committee pointed out, they tend to discourage rather than foster the maintenance and development of the land, because a landowner will be unwilling to spend money on his land if he is at risk of having the fruits of such expenditure taken from him by the exercise of the option. In the case of church development, it is desired, both by the selling authority and the buying authority, that once the church has been built the option for preemption should remain open for the longest possible period allowed by law. The longer the period, the greater is the public interest served. The Churches Main Committee hope, therefore, that they can show a strong case, not put before the Law Reform Committee, for special treatment. The Churches Main Committee are sorry that they did not draw this point to the attention of the Law Reform Committee, or to the Government, at an earlier stage. It is quite clear from the discussion on Second Reading and at this stage of the Bill that this Bill is very technical. I can only say that the Churches Main Committee did not see this point until late last week. I hope, therefore, that the Government will give sympathetic consideration to this problem, small in compass but extremely important to all Churches, and that possibly a solution can be reached at a later stage of this Bill.

THE LORD CHANCELLOR

One of the objects of the Committee stage of a Bill is that it enables Members of your Lordships' Committee to raise points such as that which my noble and learned friend Lord Silsoe has brought to our attention to-day. I do not wish to qualify or withdraw any of the words I said about this particular provision in the course of my Second Reading speech. I think that, as a general policy, those words were right. At the same time, I feel that my noble and learned friend has brought to our notice a case for which special provision does, in fact, require to be made. It is obviously a convenient practice that it should be possible for bargains of this sort to be made between local authorities and the churches, ensuring that the land is used for church purposes and that, if it ceases to be so used, the local authorities have the right of repurchase. I make no complaint that the operations of the Law Reform Committee escaped the notice of the Churches. I am only glad that, before it was too late, the Churches observed this point and took steps to bring it to your Lordships' attention. I think I carry your Lordships with me—at least, I hope I shall carry your Lordships with me—when I say that I am prepared to put down an Amendment at a later stage to give effect, and I hope satisfactory effect, to the point raised by my noble and learned friend.

LORD SILSOE

May I express great satisfaction with that answer? I came here with hope. I hope that I am going away with a promise.

Clause 9, as amended, agreed to.

THE LORD CHANCELLOR

I beg to move the Amendment in my name to insert the new clause after Clause 9.

Amendment moved— After Clause 9, insert the following new clause:

Avoidance of contractual and other rights in cases of remoteness

("—Where a disposition inter vivos would fall to be treated as void for remoteness if the rights and duties thereunder were capable of transmission to persons other than the original parties and had been so transmitted, it shall be treated as void as between the person by whom it was made and the person to whom or in whose favour it was made or any successor of his, and no remedy shall lie in contract or otherwise for giving effect to it or making restitution for its lack of effect.")—(The Lord Chancellor.)

On Question, Amendment agreed to.

Clauses 10 to 13 agreed to.

Clause 14 [Short title, interpretation and extent]:

THE LORD CHANCELLOR

This Amendment makes it clear that the Bill is to apply to interests created by way of exception or reservation from a grant, as well as in other ways. A disposition of property can, of course, be made by way of exception or reservation, as is commonly done in the case of easements, and it is as well to make it explicit that the expression "disposition" includes exceptions and reservations. I beg to move.

Amendment moved— Page 7, line 40, at end insert ("and shall apply to the exception or reservation of any interest or right as it applies to a disposition").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

I think it will be convenient to speak to this Amendment together with the next, which is to page 7, line 42, and is consequential. These Amendments are necessary to enable the Parliament of Northern Ireland to enact similar legislation binding the Crown if it so desires. It can, under its general powers granted by the Government of Ireland Act, 1920, independently enact legislation similar to this Bill, save for the provision that the Act shall bind the Crown. This is because the 1920 Act does not allow the Parliament of Northern Ireland to make laws in respect of the Crown. Express authorisation is therefore necessary. I beg to move.

Amentment moved— Page 7, line 41, at end insert— ("(8) Except in so far as the contrary intention appears, any enactment of the Parliament of Northern Ireland passed for purposes similar to the purposes of this Act shall bind the Crown.").—(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

I beg to move the last Amendment.

Amendment moved— Page 7, line 42, after ("or") insert ("(apart from subsection (8) above to").—(The Lord Chancellor.)

On Question, Amendment agreed to.

On Question, Whether Clause 14, as amended, shall stand part of the Bill?

LORD CONESFORD

May I put one point to my noble and learned friend an the drafting of subsection (5)? It may be in order as it stands, but this afternoon the point was put to me by a solicitor and I think I ought to pass it to my noble and learned friend for consideration. I am sure that the intention behind subsection (5) is right, but the point that has been put to me is this: is it clear that an instrument takes effect once only?—because if one turns to Clause 5 of the Bill it is clear that a disposition may take effect at various times. If it were possible for an instrument to take effect more than once, the subsection as drafted might lead to some confusion; and it has been suggested to me that possibly what is wanted is that the word "first" should be inserted so that the wording would run, in relation to instruments first taking effect after the commencement of this Act". The addition of this word may not be required, but I should be grateful if my noble and learned friend would look into it.

THE LORD CHANCELLOR

I will gladly look into it, but I should be most reluctant to give any expression of opinion on these particular points without careful consideration. I should like to apologise to the Committee. I ought to have said when I was moving the last Amendment that there was a printing error on the Order Paper. There ought to be a closing of brackets after the word "above" and before the word "to". I hope that can be dealt with.

LORD SILSOE

Would the noble and learned Lord the Lord Chancellor also look at the words "taking effect"? We are not very clear. Does an agreement such as the one I spoke of earlier take effect when it is signed, or take effect when the option is exercised, or both, or either? I am not asking for an answer at once, unless the noble and learned Lord has one ready.

THE LORD CHANCELLOR

The agreement takes effect from the moment it is made. I will certainly look at it.

LORD SILSOE

And the option can go on any time?

Clause 14, as amended, agreed to.

House resumed.

Bill reported with Amendments: Report received.