§ 4.32 p.m.
§ THE LORD CHANCELLOR (LORD GARDINER)
My Lords, I beg to move that this Bill be now read a second time. This Bill is very much lawyers' law reform. It makes various amendments to our law of property; and our law of property is itself a somewhat technical subject. I mention this at the outset because the Bill has nothing to do with Party politics. I think it to be largely non-controversial: but at the same time I shall have to ask your Lordships to allow me to make an ordinary Second Reading speech. The reason for that is that it is so uncontroversial that it has been accepted by the Opposition as suitable for a Second Reading Committee in the other place. That means it will not have the Second Reading in the other place, and where that happens they naturally look to this House to see what explanation of the Bill has been given here. It is for that reason that I am 1394 afraid I shall have to make an ordinary Second Reading speech. At the same time, I recognise that one has to have tea at some time or another, and therefore if anybody should wish to leave now and to come back in half an hour, I am quite sure that neither the noble Viscount, Lord Colville of Culross, nor I would take any offence.
My Lords, this is a Bill containing a considerable number of miscellaneous amendments to the law relating to property and land. Its three main parts concern first the law of business tenancies; secondly, the registration of title deeds under a special system operating only in Yorkshire, which is to be brought to an end; and, thirdly, a number of conveyancing matters concerning interests in land generally. With the exception of Part II, which deals with the Yorkshire title deeds, the Bill is based on the recommendations of the Law Commission contained in three Reports published by the Commission in the course of the last two years.
The three Reports are: the Law Commission's 9th Report, entitled Transfer of Land, Interim Report on Root of Title to Freehold Land, which was presented to me at the end of 1966 (the draft clause appended to that Report is reproduced in Clause 20 of the Bill); the Law Commission's 17th Report entitled Landlord and Tenant, Report on the Landlord and Tenant Act 1954 Part II, which deals with business tenancies and which I received in January of this year (this has appended to it a draft Landlord and Tenant Bill which forms the basis of the first 12 clauses of this Bill); and, lastly, the Law Commission's 18th Report Tr6nsler of Land. Report on Land Charges A fleeting Unregistered Land, which reached me only a few weeks ago and was published last week. The drift clauses 'appended to this Report are incorporated in Clauses 21 to 24.
Before I go into the details of the provisions in the Bill I should like to say a few words about the working methods of the Law Commission, because they enable me to put the Bill forward in the confidence that it will be widely welcomed. It is the practice of the Law Commission before arriving it any conclusions to publish working papers which are given a wide circulation and in the legal Press and among 1395 organisations and individuals which are likely to be interested in them. Just how wide this circulation goes your Lordships will be able to see from the long list of bodies who commented on drafts of the Law Commission's recommendations on business tenancies which is set out in Appendix 4 to the Law Commission's Report on this subject. They include The Law Society and the Bar Council, the Society of Public Teachers of the Law, the National Chamber of Trade, a number of local chambers of commerce, the Royal Institute of British Architects, the Building Societies Association, the Church Commissioners, numerous Government Departments and many more organisations of learning and distinction.
Among the individuals who made their contribution is the distinguished lawyer Member of this House, Lord Lloyd of Hampstead. The list of persons and associations whose memoranda assisted the Law Commission in the preparation of its Report on Root of Title is given in paragraph 33 of that Report and, though shorter than that to which I have just referred, again includes many distinguished and representative bodies and persons. The result of these manifold contributions to the reform of our law, for which I should like to express my appreciation to all concerned, is that the proposed changes of the law are supported by a very wide consensus of opinion. Her Majesty's Government have had no hesitation in adopting the recommendations. Apart from the necessary editorial changes when draft clauses are incorporated into a Bill, there are only a few alterations to which I will draw your Lordships attention when I come to discuss individual clauses.
In its two recent Reports the Law Commission has adopted a practice which I think this House will find particularly helpful when it comes to examine the Bill in Committee. The draft clauses recommended by the Law Commission appear in Appendices to the Report accompanied by explanatory notes, the clauses being on the left-hand page and the notes on the right-hand page. They are designed to aid the reader on the background to the proposed enactment, and where, as unhappily must sometimes be the case in view of the legal com- 1396 plexity of the world in which we live, the statutory language does not immediately convey its meaning to the uninitiated reader, the notes are designed to help him understand it.
This is not, of course, an invention of the Law Commission. I have just received a copy of a draft Criminal Code for Canada and I have observed that they have initiated, for the benefit no doubt of their Members of Parliament, the same practice of putting the draft clauses of the Bill itself on the left and then explanatory notes on the right. Moreover the Report on business tenancies contains yet another aid to the legislator and, I think, ultimately the profession. Here the recommendations are all amendments of existing statutory provisions and the second Appendix sets out the relevant sections as they will read when the amendments have been made. It has always been my view that we do not sufficiently help our legislators with explanatory material of Bills.
As the Bill consists of a large number of diverse amendments of the law, I cannot give your Lordships an indication of its contents without commenting on the clauses individually. I cannot group them and merely expound the general scheme. If this means, here and there, going into some degree of technicality, I must ask your Lordships' indulgence in advance. Before I explain the clauses in Part II think I should give you a broad description of the scheme of the 1954 legislation on business tenants which these clauses amend.
Part II of the Landlord and Tenant Act 1954 applies to business tenancies defined in the broadest possible way. It covers any tenancy where the property comprised in it includes premises occupied for business purposes, and "business" is defined as including any trade, profession or employment and any activity carried on by a body of persons whether corporate or unincorporate. Of course, the most common example is the shop, whether it has dwelling accommodation above it or not. If part of it is business premises the whole of that Part of the Act applies to it. Broadly, where a business tenancy comes to an end, whether on the expiration of the term or as a result of notice served by the landlord, it is continued by the Act on the same terms 1397 as before until terminated by a notice given in accordance with the provisions of the Act. When that notice is given the tenant has the right to apply for a new lease.
My Lords, obviously it is something of a hardship on the tenant of a shop if when the lease runs out he has to move to some other premises, acquire other premises, and perhaps lose all the goodwill which his hard work has acquired. The landlord can resist the grant of a new lease only on specific grounds, the most important of which are either that a tenant has been a bad tenant or that the landlord requires the premises either for himself or for redevelopment. If the tenant is denied a new lease on grounds other than his own bad conduct, he is entitled to statutory compensation of an amount equal to once or twice the rateable value of the premises, depending on how long he has been there. If the tenant obtains a new lease, the terms are those which are agreed between the landlord and tenant or, in default of agreement, determined by the court. Where it falls to the court to determine the new rent, the amount is to be that obtainable in the open market, disregarding any good will attaching to the premises as a result of the tenant's business, any personal factors concerning the tenant's occupation and any improvements made by him.
My Lords, this Act has now been in operation for 15 years, and on the whole it has stood the test of time well. The number of tenancies renewed or terminated annually in accordance with its provisions must be very large indeed. In 1967, 4,258 applications for new tenancies were filed in the county courts alone (a few more are dealt with in the High Court) and this, of course, is only the tip of the iceberg, because in most cases there is agreement. It is not perhaps surprising that over the years, with the vast number of cases involved, a number of defects in the operation of the Act have come to light. The Law Commission has examined these and Clauses 1 to 12 are designed to deal with them.
Let me now deal briefly with the individual clauses. Clause 1 concerns the determination of rent payable under a new lease. As I mentioned earlier, improvements which may be made by the 1398 tenant or his predecessor in title should be disregarded so that the rent will not be inflated due to the tenant's own good work; but the courts have held that on the true construction of the relevant sections this covers only improvements made during the current tenancy. This clause will ensure that improvements to be disregarded in fixing the rent include those made during the tenant's earlier tenancies of the same premises so long as they were not made more than 21 years before, and the same applies to improvements made by predecessors of the tenant whose tenancies he acquired.
Clause 2 will enable the court to fix a variable rent. Variable rent clauses are now commonly found in long leases and as the court has power to grant a new lease for periods up to 14 years under the Act, it seems appropriate that in a proper case the court should be able to include a variable rent clause.
Clause 3 contains provisions designed to prevent abuse of the protection afforded by the 1954 Act. Until the tenant's application for a new lease is determined and the terms of the new lease are settled by the court the original lease automatically continues. It does not terminate until three months after the application is disposed of and the time for appeal has expired. Where, as is frequently the case at the end of a long lease at a fixed rent, the rent payable under the original tenancy has dropped much below the market value it therefore pays the tenant to play for time. In one case I noticed in the Report the current rent was £250 and the market rent was £3,000. In such a case the landlord may suffer grave injustices from delay. Clause 3 will in future enable the landlord at any time after the tenant has made a request for a new tenancy to apply to the court to determine a fair rent which will be payable from the date of the application until such time as the tenancy finally come to an end.
Clause 4 enables the landlord in certain circumstances to terminate the tenancies of sub-tenants at the same time as those of his immediate tenants. I do not think I need trouble your Lordships with that, for this reason: that a decision of the court which this clause was intended to rectify was itself disapproved in the Curt of Appeal in a case which was reported in The Times the day before yesterday. 1399 Therefore I think it may turn out that this clause is really codifying the existing law rather than altering it.
Clause 5 is less significant but perhaps useful. It is designed to prevent devices sometimes used to keep business premises out of the operation of the Act of 1954 altogether. On the other hand, there are some cases where it would be in the interests of both parties that the 1954 Act should not apply to a letting but it cannot be excluded. At present the only tenancies excluded from its operation are those initially granted for a fixed term not exceeding three months and then only if the tenant does not remain in occupation for more than six months. This provision inhibits the letting of premises in some cases where both landlord and tenant would welcome a strictly temporary letting; for example, where the landlord has premises standing vacant pending his own occupation or awaiting demolition and reconstruction at a future date.
Two clauses in the Bill will facilitate lettings in such circumstances. Clause 6 enables agreements excluding the operation of the 1954 Act to be validly made with the consent of the court on the joint application of both landlord and tenant. Clause 11 lengthens the short tenancies to which the Act does not apply from three months to six months, and the overall limit of occupation from six months to twelve months. Your Lordships may notice that Clause 6 in the Bill differs from that in the Appendix to the Report. We thought it right to make two small changes; first, to enable the parties, with the consent of the court, to make valid agreements to surrender an existing tenancy as well as valid agreements to enter into a tenancy; and secondly, to provide that in either case the agreement must be endorsed on the appropriate document creating or evidencing the lease.
Clause 7 slightly widens the grounds on which the tenant can resist a landlord's claim for possession at the end of the lease. Under Section 30(1)(f) of the 1954 Act, a landlord is entitled to possession if he intends to demolish or reconstruct the premises or a substantial part of them or to carry out substantial work on the premises and could not reasonably do so without obtaining posession. The courts have held that he is entitled to possession on this ground even where 1400 the tenant would be willing to accept a new tenancy on the condition that he gives the landlord all the necessary access and facilities to do his work and even where the tenant would be content to accept a new tenancy of only part of the premises and the landlord only requires the rest of the premises for his operations. The clause will enable the tenant to obtain a new tenancy in such cases. I do not think that I need trouble your Lordships with the remaining clauses under Part I of the Bill.
Part II of the Bill provides for closure of the Yorkshire Deeds Registries. They were established in the time of Queen Anne and George II apparently in order to avoid fraudulent transactions by moneylenders and others, for the preamble of the Act establishing the Registry in the East Riding recites that:… from the power possessed by ill-disposed persons to commit frauds by secret conveyances, several persons (who through many years' industry in their trades and employments and by great frugality, had been enabled to purchase lands, or to lend monies on land securities) had been undone in their purchases and mortgages by prior and secret conveyances, and fraudulent encumbrances, and not only themselves, but their whole families thereby utterly ruined".This was, of course, before the establishment of a solicitors' profession with high standards of integrity, safeguarded by the Law Society. The registers provide the facilities for a record to be kept of title deeds in the Ridings which is open to inspection by the public. Registration of certain mortgages also has the effect of giving them priority over all subsequent mortgages.
When the system of registration of title to land, introduced under the 1925 Law of Property legislation is extended to Yorkshire, the facilities afforded by these registries will become otiose, since all future transactions in areas of compulsory registration will be governed by the new system. Indeed, the closure of the Yorkshire Registries was already contemplated in the Land Registration Act 1925, which set up the new system. So far as I am aware, this peculiar method, not of registering titles but of registering title deeds, has always been peculiar to Yorkshire and Middlesex, and the 1925 Act always contemplated that when registration of title was applied to those counties the Deeds Registries would be 1401 wound up. This happened about a quarter of a century ago in Middlesex, and now the time is approaching when compulsory registration will be extended to parts of the Ridings, so we must make preparations for this closure.
Huddersfield was made a compulsory registration area in 1961 and other areas are to follow. It is not intended to defer closure of a registry until the whole of the land in the Riding is covered. Indeed, I have learnt in my consultations with the county councils that it may be necessary for reasons of manpower shortages to order the closure of a registry before compulsory registration comes to the Riding. Power to do this is conferred by Clause 13, which provides that a registry shall close either on the day when compulsory registration is next extended to any part of its area or when an order to close it is made by the Lord Chancellor at the request of the county council. These registries, of course, do not belong to the Government, they belong to the local authorities. The effect of the closure will be that from the appropriate date new deeds will cease to be capable of registration. The registries will remain open for another two years for the purpose of registering deeds executed earlier and for searches. At the end of that period, they will close for all purposes. Clauses 14 to 19 deal with consequential matters. Arrangements have been made for the transfer of documents, for the preservation of documents of historic interest and for safeguarding the position of staffs and so forth. I do not think I need trouble your Lordships with them.
I now come to Part III, which concerns dispositions of interests in land and land charges. Clause 20, which reduces the statutory period of title and is based on the Law Commission's 9th Report, makes a change of the law expressly designed to simplify and cheapen conveyancing, although its contribution in this respect must not be over-rated. To make its effect intelligible, I must briefly explain the investigation of title undertaken when land changes hands. Title to land, as your Lordships will know, can be either registered or unregistered. If it is registered, the ownership of the land can be ascertained from Her Majesty's Land Registry, and mortgages and other burdens or charges on the land which are not otherwise apparent appear in the register. 1402 A purchaser therefore, who has obtained the vendor's authority to inspect the register has no difficulty in making sure of what he is buying. On the other hand, where the title to the land is not registered, the purchaser will want to investigate the deeds relating to past transactions in order to be quite certain that the vendor is in fact the owner of the land and that the land is not subject to any unexpected burdens or restrictions. Clause 20 concerns this investigation.
Section 44 of the Law of Properly Act 1925 provides that, subject to any other agreement between the vendor and the purchaser, the buyer is entitled to call for title deeds over a period covering the title to the land during the last 30 years. Clause 20 reduces this period to 15 years. Consultations by the Law Commission showed that the proposal to shorten the period had the general support of practitioners. The work undertaken in successive conveyances of a piece of land is largely repetitive. Moreover, under the law or limitation actions to recover land cannot, with a few rare exceptions, be brought after 12 years. Consequently, an investigation of the title over a period of 15 years, which indicates that the transactions throughout that period were satisfactory, will normally be adequate. The case for the reduction is discussed in detail in the Report and I need not go into it at greater length.
Before 1840, the general practice in regard to land was to ask for title to be proved over a period of 60 years. In practice, it was found that this period was far too long and few purchasers asked for it to be proved for more than 40 years, so that in 1874 by Statute it was amended to 40 years. It was gradually found that this was unnnecessary and that was why in 1925 the 40 years was reduced to 30. One of the consequences of the reduction will be an increase in the risk that some burden on the land or some restriction on its use may be overlooked because it was imposed in a transaction which preceded the period of investigation. But if any losses result from this, Clause 22, as I shall explain shortly, will provide a remedy.
This brings me to the remaining provisions of Part III, which deal with land charges. Land charges impose a burden on a piece of land or restrict the owner's right to use it. Examples are certain 1403 mortgages, options to purchase and restrictive covenants. It is of vital concern to a purchaser to know whether the land he is buying is subject to such burdens. Where the land itself is registered, this presents little difficulty. He can inspect the register of title to the land and find out. The situation is more difficult where the land is not registered, and in order to ensure that a purchaser will become aware of such charges, the law requires that they must be registered. A registered land charge is then deemed to come to the knowledge of all persons. Clauses 21 to 24 relate only to such land charges on unregistered land.
Now land charges affecting such land are registered against the name of the owner of the land at the time when the charge was created. In order to make a search of the land charges register it is therefore necessary to know the names of every person who has owned the relevant land since the register was created on January 1, 1926. All lawyers will continue to be grateful to my noble and learned predecessor Lord Birkenhead for his property legislation of 1925, which was a complete modernising of the whole of our property law. I know of no defect in it except this one. It was unfortunate. Once title has been registered at the Land Registry, anybody can go there and everything to do with the land, including charges, is on the register; and it is a geographical register. You start by wanting to know where the property is that you are interested in, and from the address or from the passage in the register you can trace it. This is all perfectly clear and simple. But for some reason, when it was provided that in the case of unregistered land there should be a land charges register, it was provided that this should be registered under the name of the man who owned the property at the time the charge was granted. Therefore, unless you know the names of the previous owners, going back a considerable distance, it may be impossible for you to find the entry in the register which records the charge. This has now gone on since January 1, 1926.
Forty-three years have now passed since that date, and accordingly even the deeds covering a 30 years' title may not disclose all the relevant names. It is 1404 therefore possible that a purchaser making a full search against the estate owners known to him will nevertheless miss some land charges and the risk will be slightly increased when the 30 year period is reduced to 15. In practice, the risk is not great because these charges are normally mentioned in the documents of title, and those which are not will often be revealed in answer to inquiries between the solicitors acting for the parties. Nevertheless, there is an inherent defect in the system which grows as time passes. The position was reviewed by the Committee on Land Charges under the chairmanship of Mr. Justice Roxburgh which reported in 1956. They came to the conclusion that no practicable cure could be devised, and the Law Commission, who have now re-examined the problem, have confirmed that conclusion. Solutions like the conversion of the land charges register into a register operating by reference to maps of the land concerned are ruled out by the sheer volume of the existing registrations. In the long term, the Commission concludes, the solution will have to be found in the nation-wide extension of the system of registration of land.
As I have said, burdens on land must be registered so that a purchaser will not buy land without notice of them. An unregistered land charge is generally void; on the other hand, every purchaser of land is deemed to have notice of a registered charge. This provision can lead to injustices where, for one reason or another, the purchaser is unable to discover the entry in the register relating to the charge. Clauses 21 and 22 are intended to go a long way to right these injustices. Clause 21 concerns the position as between the vendor and the purchaser of land. It is the normal practice for anyone buying land to make a binding contract at the earliest possible moment subject to a right to rescind if the vendor cannot show a sound title. The vendor's title is not investigated before the contract. However, it was held as long ago as 1927 that, as a purchaser is deemed to have notice of any registered land charge, he cannot rescind the contract if he discovers such a charge after the contract. As the purchaser would not normally know the names of the previous owners of the land against whom he would have to search until, following the contract, he is supplied with 1405 the vendor's abstract of title, this can operate unfairly. In practice, parties normally safeguard themselves by appropriate provisions in the contract. Clause 21 ensures that in future a purchaser will no longer be deemed to have knowledge at the date of his contract of any registered land charge of which he was in fact ignorant. If he discovers a land charge which the vendor had not disclosed to him, he will be able either to rescind the contract or to claim damages.
Clause 22 deals with the position after the purchase has been completed. As I explained in relation to Clause 20, land charges may be registered against the names of former estate owners of the land which are not known to a purchaser because the title deeds do not go back far enough. Theoretically, as time goes on, more and more names will disappear into the mists before the root of the title. Nevertheless, as purchasers are deemed to have notice of all registered land charges, the land will continue to be bound by the registered burden. If this defect in the system of land registration causes loss, that loss should be borne by public funds, as this is a mistake in our system. Clause 22 accordingly provides for the payment of compensation to anyone who completes a purchase after the enactment of the Bill and subsequently suffers loss as a result of the emergence of a land charge which was unknown to him at the time of the purchase and which he could not then discover. The clause sets out the machinery for recovering the compensation in some detail, and your Lordships may have noticed that there are small differences between the clause in the Bill and that appended to the Law Commission's Report.
The real remedy for all this is to extend compulsory registration of title to all the built-up areas of the country as soon as we possibly can, and ultimately, I hope before not many years have gone by, to the country as a whole. Meanwhile, if somebody does suffer damage because of a defect in the legal system, it is only right that (and I am happy to say that the Treasury agree) they should be compensated out of public funds. Subsection (9) excludes mortgagees of certain leases from the persons entitled to claim compensation, and subsection (11) contains a provision defining the date of certain 1406 contracts. I do not propose to trouble your Lordships with explanations of these. Lord Macnaghten, that eminent Lord of Appeal in Ordinary at the turn of the century, once said:No one, I am sure, by the light of nature ever understood an English mortgage of real estate".And that great teacher of the law, Professor Maitland, in the Second Edition of his book on Equity, asserts that:It is the worst of our mortgage decd that owing to the action of equity it is ore long suppressio veri and suggestio falsi".So it would take me a long time to explain the reason for the change in subsection (9).
There is little I need say about the remaining clauses of Part III. They require land charges created by a company for securing money to be in future registered in the register of land charges as well as the Companies' Register, and make minor, but none the less valuable, changes regarding the effect of registration of certain rent-charges for loans advanced for purposes of improving agricultural land.
My Lords, in the course of my speech I have had to cover some difficult branches of the law of property and conveyancing. In a sense, this is mainly a lawyer's Bill, but I hope that I have persuaded the House that the changes which it will make in the law sire of practical importance and real value. Some of them will simplify the law; others will right minor injustices or streamline the administration. I hope that the Bill will be accorded a favourable reception. I beg to move that the Bill may now be read a second time.
§ Moved, That the Bill be now read 2a. —(The Lord Chancellor.)
§ 5.9 p.m.
VISCOUNT COLVILLE OF CULROSS
My Lords, the noble and learned Lord the Lord Chancellor has told such of your Lordships as did not take advantage of his invitation for a temporary period of absence what is in this Bill; and for those who wish to pursue this sterling material yet further, there are the three Law Commission Reports to which reference can be made. There is no doubt that your Lordships will consider this subject to be highly technical, as indeed it is, and, I am afraid, perhaps not 1407 of the scintillating and stimulating nature of the debates which are going to follow. Therefore I will not take up a great deal of time. This is a Bill upon which it is quite impossible to make a Second Reading speech, and I will confine myself to asking a few questions, and perhaps the noble and learned Lord the Lord Chancellor will be good enough to consider them and make one or two general comments at the end. I see in their place two noble and learned Lords who are extremely familiar with much of the subject matter of this Bill, and it may be that they also will have some comments to make.
On Part I of the Bill I have some detailed comments, and the first arises under Clause 6 which is, as the noble and learned Lord said, one of the clauses that allow a contracting out of the restrictions in Part II of the Landlord and Tenant Act 1954. The point which I should like to have clarified, and which is not I think clarified by the Law Commission, is: what is the role of the court upon the joint application that is set out under two paragraphs in the clause as it is here printed? It seems to me that as the application will be joint, by both the landlord and the tenant, the court is liable to become simply a rubber stamp, and no criterion is set out in the clause whereby it may exercise its discretion one way or the other, perhaps on occasion to refuse consent to this contracting out. It seems to me that this position always brings the function of the court into contempt, unless courts are given some indication of what they are to do if for some reason they do not approve of the joint application. There will be no argument about it, so far as I can make out, because both sides at that stage will agree.
Then in Clause 7 a new Section 31A is inserted into the 1954 Act. The noble and learned Lord of course explained about the problem of the landlord who wished to redevelop or carry out structural alterations, and the tenant who was quite prepared to let him do so. even although it would mean some temporary inconvenience. The Law Commission's Report on this explains this matter in paragraphs 36 and 37. Of course, they make it clear that where the tenant is prepared to give facilities for the reconstruction or the redevelopment, then 1408 that may allow him to insist upon the grant of a new tenancy, whereas at the moment the law is that the landlord can get possession.
But in paragraph 37 the Law Commission have rejected a recommendation that where there is a complete redevelopment the tenant should nevertheless be allowed, if he wishes, to have a new tenancy of the new building. It seems to me to be possible under the wording of the clause as it now is that that is what could happen, because there is no limit on the extent of the reconstruction or redevelopment or on the, as it were, permissiveness of the tenant in allowing facilities to the landlord to carry out this work. It seems to me that one could construe this provision so that the tenant says to the landlord, "I am perfectly prepared for you to redevelop this property altogether. I can go away for a certain length of time, and at the end of it, when you have built a completely new office for me, I will come back and continue my protected tenancy". This seems to me exactly what the Law Commission were not recommending. Therefore, it is possible that this clause is drawn too widely.
Then, under Clause 9, I fail to understand the argument that the tenant must be in occupation at the time when the application for the new tenancy is made and at the time when the order for a new tenancy is given (or I suppose, as it may turn out, not given) by the court, but that the period in between is of no concern. This is said by the Law Commission to be a measure which is intended to ease the practical difficulties of tenants who may consider that they will not get their new tenancy and wish to find some alternative premises. But what good it will do the tenant if he is allowed to have some alternative premises for a period but then has to come back again to the premises in question at the moment when the matter is being tried by the court, is altogether beyond my comprehension. I do not understand what practical effect and usefulness to the tenant this particular clause is going to have. It may be that the noble and learned Lord could consider that and tell me, if not to-day then at some other time.
My main criticism about this Bill, so far as Part I is concerned, is that, 1409 although the noble and learned Lord drew attention to the admirable way in which the matter has been explained in the Appendices to the Law Commission's Report, for some reason the draftsman has not done the same. There is a very well established method of dealing with this incredibly complicated legislation by reference, and there can be no doubt that Part II of the Landlord and Tenant Act 1954 is a very widely used provision and is applied all over the country to a large number of people, some of whom may not have legal advisers—they may not need them. What the Law Commission have done has been to set out in the Appendix what is called technically, I think, a "Keeling Schedule". They have reprinted the 1954 Act with the amendments in heavy type. I should have thought it would have been the greatest possible improvement that this Bill, too, should have a Keeling Schedule setting out the provisions of Part I as amending the 1954 Act: not only the sections of the 1954 Act that have been amended, but the whole of Part II, so that one can read the whole thing together in one place. This must be the right way to deal with legislation by reference of this sort. If the noble and learned Lord does not do so, I shall put down an Amendment (and it will take me a long time to write out) in order to have this effect.
Under Part II—Closing of Yorkshire Deeds Registries—I have very few questions to ask, although of course this is the one subject in the Bill which is not covered by the Law Commission Report. The noble and learned Lord said that he had consultation with the three county councils—and that of course is a matter which I should have expected to occur. I do not know whether he has had consultations with the legal profession in Yorkshire. The solicitors will be particularly involved, I imagine, in this; and the local societies of the solicitors' profession would, I imagine, have some very interesting views upon whether or not this measure is going to work properly. I think the House might be glad if the noble and learned Lord could tell us the result of those consultations.
It would also be of interest, in view of the fact that he said, or at any rate implied, that the whole system of the registries seems to be grinding to a halt 1410 in Yorkshire, largely from lack of staff. if he could give us some indication of the timetable that he foresees for the extension of compulsory registration in that county. It cannot be a real inference that can be drawn now from the Preambles to those old Acts that fraudulent-mindedness is any more prevalent in Yorkshire, even if it ever was. But I think we ought to know what is the timetable whereby this existing protection is to be withdrawn if there is going to be a substantial gap between that and the date when compulsory registration comes in. The noble and learned Lord may also be able to assure us that in the rural areas where compulsory registration under the 1925 legislation will not come until later there will be no practical disadvantages from the closure of the Deeds Registries when the compulsory registration first reaches one of the urban areas in that particular Riding of Yorkshire; because the date at which some of the county districts come under the national scheme may be very much later than that when the urban districts are brought under it.
Now I come to Part III, which I suppose is the most technical Part of all. It may be that the point I have in mind is something which is so obvious that, just because of its sheer obviousness, I have missed it. But, as under Part II (the Yorkshire Registries), there is here provided a statutory right to compensation if, as a result of either Part II, the rearrangement of the system, or Part III. the defects of the system, somebody becomes aware too late of a charge which then puts him in the disadvantage per laps of having a restrictive covenant on his land of which he did not know anything, or some other defect or disadvantage in title. I can fully understand, and I am very glad to hear, that the Treasury has agreed that there shall be compensation payable in such an event. But what strikes me as curious is that where this statutory right to compensation is granted, for instance in Clause 22, there does not seem to be any statutory requirement that the person who claims it should first of all have carried out a proper search of the title, not even to the extent of 15 years.
It seems to me that one could read Clause 22 as enabling a person to claim for an undiscovered restrictive covenant 1411 even though he had not carried out a proper search; and this could, I think, be of practical importance under subsection (4), because the compensation that is to be allowed is either the amount that it costs to get rid of the incumbent on the land or, alternatively, the compensation. In the case of a restrictive covenant, you can go to the Lands Tribunal and ask for the covenant to be modified or removed. You may or may not succeed, but if you do not succeed you do not get compensation. Therefore it seems to me that upon discovering the undisclosed restrictive convenant the person who has bought the land could go to the Lands Tribunal; he could fail to get the restrictive covenant removed, because it is still of some value and still enforceable, but he could then claim compensation. This is all very well if it is a very old covenant, and he really did not have the opportunity of finding it. But what if he simply has not looked? It seems to me quite wrong that in such a case he should have compensation. I suspect that there ought to be something rather more specific in the Bill about the duty of the purchaser before he can rely upon this right in the Bill. I have no other detailed comments on this matter, but this seems to be rather an important one, if I am right in having spotted a loophole here.
The other thing I want to say concerns a general matter. I am not sure what has happened to Her Majesty's Government, but we have had now a number of, I am sure, very worthy but very hotch-potch Bills containing a lot of detailed, boring things— probably very necessary—which come from the good work of the Law Commission. Then they get embellished by a title such as the "Law of Property Bill". Now the Law of Property Bill surely, as the noble and learned Lord said, is something which properly graced the legislation in 1925 but it does not grace this Bill. This is a Law Reform (Miscellaneous Provisions) Bill, and I cannot think of any reason to call it a Law of Property Bill —except possibly that of brevity, and also, conceivably, the question of gaining credit for a rather more impressive piece of legislation than in fact it is. My Lords, I hope that it is not the latter, because I do not think it is a particularly impressive piece of legislation, and one 1412 only has to look at the Reports of the Law Commission to see that that is so.
For instance, paragraph 47 of the Interim Report on Root of Title, sets out some of the difficulties which are still unresolved. Sub-paragraph (4) refers to the possible need for changes in the limitation period applicable to actions for recovery of land by the Crown and by spiritual and eleemosynary corporations. This point has still to be explored, and it is bound up with matter in this Bill. It is an unresolved difficulty, and the noble and learned Lord drew attention to it. So we shall in due course have another of these Bills dealing with that. And the same applies to the Landlord and Tenant Act, because in paragraph 4 of the Introduction to the Report on that Act there are two things which, for reasons that wholly escape me, the Law Commission say they do not think they can tackle at this time. One is the definition of a "business". Should it be so wide as to include a famous tennis club? For some reason they do not want to take that one on. Similarly, there is another technical point about when a request is "given "or "made". These are two technical terms which the Commission do not wish to go into now. I suppose that one of these days they will tackle the points, and then we shall have another of these hotch-potch Bills put together from this Report and that. So, my Lords, although this Bill may be a good measure in itself, and one which should be welcomed, I hope that the noble and learned Lord is not trying to attract too much credit for a grandiose title on something which is not so significant as it might at first sight appear.
§ 5.23 p.m.
§ LORD WILBERFORCE
My Lords, this Bill is a small step towards that great simplification of the law of landlord and tenant and of the law of property which we were promised when the Law Commission was first set up. It is true, as the noble Viscount has just pointed out, that this Bill is of a rather piecemeal character, and indeed could fairly be said to represent a step back rather than a step forward, because instead of simplifying the law it adds another fairly complicated Statute to the reading matter with which we are faced in this particular subject. But I think we must be grateful 1413 for it. These prosaic, boring, technical matters are of importance.
The various Parts of the Bill deal with matters which affect a great number of people—business tenancies, landlords, people who buy and sell land and people who have to search the register. I for my part think that on the whole it is worth proceeding with them even though, before long, they may be overtaken by something more general. Here, I should like to pay my own tribute to the care with which the Law Commission have prepared these drafts and to the care which they have taken to consult persons of various interests before framing their proposals.
My Lords, I have a few comments to make on the different Parts of the Bill. The first concerns Part I, the Landlord and Tenant Act section. On the whole that is well conceived, as I understand it. Of course the Law Commission had to start from a comparatively modern Statute—the Act of 1954—which was a well drafted and practical Act and therefore easier to deal with than some of the more medieval aspects of the law of landlord and tenant. But what has been put into Part 1 by way of amendment to that Act is, on the whole, well conceived, and I am glad to see in particular that it does not bear, as so much of this legislation tends to, an anti-landlord bias. It strikes a balance between landlord and tenant; and where it is fair to do so, it rights the present state of the law in the interests of the landlord, and on the whole it is admirably impartial as between the two.
I note—and this links up again with what the noble Viscount has said as to other matters which may require further consideration—that the Law Commission, in paragraphs 5 and 6 of their Report, drew attention to more than one matter which required attention; namely, cases where the business, the tenancy of which was for renewal, was carried on either by a company or a partnership; and they referred to certain cases before the courts which had given rise to difficulty. The reason they give in those paragraphs for not having made a proposal for legislation was that there was a pending appeal to this House in its judicial capacity in relation to one of the matters, and they thought it better to await the decision of this House. But then there is a note put in at the last moment, 1414 saying that that appeal has been withdrawn and further consideration will now be given to those questions. I wondered whether it would not be possible for this matter to be introduced into this Bill at one of its stages, rather than waiting for a fresh piece of legislation which may take some time to arrive. It does not seem to be a matter of great complication and it seems a pity to let this occasion pass. The only other point I wish to make on this Part of the Act is to endorse most heartily the proposal made by the noble Viscount that the Landlord and Tenant Act should be printed with the amendments in it. That seems to be absolutely essential, and I feel sure that the Government will fall in with that suggestion.
I come now to Clause 20 of the Bill, which deals with the particular matter of the root of title, which was the subject of a separate Report from the Law Commission. That is the Report which proposes that the root of title should be reduced from 30 years, as it now stands under the 1925 legislation, to 15 years. For my part I have felt, and still feel, rather doubtful about the merits of so drastic a reduction. The noble and learned Lord the Lord Chancellor pointed out that the period has come down from 60 to 40, to 30, and now we are to come down to 15. It is pointed out in the Report of the Law Commission that it is a fallacy to suppose that the reduction in the work of conveyancing solicitors is achieved proportionately to the reduction in the length of title which has to be deduced. You do not get half as much work in a 15-years root of title as for a 30-years, simply because you may well have to go back beyond 15 years, even if the minimum period is 15.
The argument which seems to have weighed most with the Law Commission in suggesting 15 years as against 20 is not, as I understand it, any longer valid. It is contained in paragraph 28, where they say that a reduction to 15 years would avoid the necessity of looking at a number of difficult transactions which occurred during the war period of 1940 to 1946. That was in 1965 and we are now in 1969, and the same objective would be secured if one were to reduce to 20 years rather than to 15. I appreciate that there has been substantial consultation on this point, though one notice[...] 1415 from the Law Commission's Report that among the experts in Lincoln's Inn some doubt was felt as to the propriety of this reduction; and the adversaries of it were given an opportunity—an interesting technique in law reform—of publishing their views in one of the law publications, to which the Law Commission in their turn sent out their counter-proposals. I have no doubt that these suggestions have been very widely considered.
It does not perhaps matter a very great deal whether one fixes 20 or 15 years unless—and this is a real fear, I think—a reduction to 15 years is going to give rise to a demand, as it may, that the title of vendors of property should be guaranteed. It must be true that a reduction to 15 years will give rise to a small number, but at any rate a number, more of defective titles, cases where either a good title cannot be made or where some charge is discovered. There is already a certain amount of pressure in the profession and outside that a vendor of property should have to warrant and guarantee his title, and if a reduction to 15 years is going to give rise to more defective titles I have some fear that the pressure for guaranteeing titles might increase. That would be a bad thing, I should think, because it would bring us closer to the American system of bonds, insurance companies and so on, all of which would tend to add to the cost of transferring land rather than diminish it. If possible, I should like to hear from the noble and learned Lord that he has considered this point and that he has advised that the proposed reduction to 15 years is well designed from that point of view, that it will not give rise to a demand for guaranteeing title, or that, if it does, he will himself be in a position to resist it.
Lastly, I come to the section dealing with land charges, which have imposed rather a burden on those of us who try hard to follow these matters, since the Law Commission Report No. 18 was only available on March 19. It is a very technical and difficult Report, and though the noble Viscount seems to have found no difficulty in digesting it at short notice, I must say that I did. This deals, as everyone knows, with a most thorny and difficult subject, and there is really no proper solution to it. The Law Com- 1416 mission put this very well in paragraph 74. They say they know that their proposals will not lead to solving the defects in the existing system; that they are inheritors of a defective system from 1925. and it is not possible to put the clock back; that it is not possible, having regard to the huge number of transactions, to amalgamate the register with the land register or start a new register, and they say that all that can now be done is to patch the system and try to alleviate some of its worst consequences. Then they say this, which I think is of importance:We recognise, however, that if the present delay in extending compulsory registration of title… were to be prolonged, it might well be that substantial changes would be required in the system of registering Land Charges.That brings me back to a point which I have raised before in this House and shall continue to raise, and that is the vital necessity of pressing on with the compulsory registration of land. I need not rub it in, because I know that the noble and learned Lord the Lord Chancellor thinks exactly as I do about it. It is the only solution, and is the one matter in the realm of real property which is really going to do good and save some money and simplify the law. The present timetable looks to be this. so far as one can tell, putting it optimistically: that compulsory registration in England and Wales will be established by 1977, but of course after that date it will then take a considerable period of years before transactions, titles and so on are actually put on the register. So we may easily be faced with another period of twenty years under the existing system.
As regards acceleration of the compulsory land registration, I should like to revert to what was said the last time this matter was discussed, when the noble and learned Lord the Lord Chancellor said, in answer to a question of mine, that he wanted very much to get on with it but that the Treasury had imposed a ban on civil servants; he could not get any more civil servants, and until he did it was not possible to accelerate land registration. I would ask the noble and learned Lord whether the Treasury does not realise that land registration is one of the few Departments which makes money; it does not cost money, it makes 1417 money, it brings it in. Therefore, an increase in the staff does not cost anything, it is deflationary rather than inflationary; and it is absolutely absurd for our financial masters to pretend that the general ban on increase in the Civil Service should be applied to this particular field. The contrary is the case, and the extra civil servants ought to be made available if they can be found.
Accepting, as one must, that there is going to be a substantial delay in extending compulsory registration, I want to make one final point which arises out of paragraph 74 which I have just read, that some further step will be necessary. I am convinced that it will. I do not think this patchwork will last very long, and I feel sure that before many years it will be necessary to do seomething else. The occasion for doing something else will surely arise out of the Report of the Maud Commission on Local Government, which, it may be—one can only guess—will suggest the establishment of wider regional areas of local government which will enable the whole system of local land charges, which at present are scattered about over a number of small local authorities, to be reduced and centralised.
It seems to me that if thinking starts on that soon enough it may be possible to make use of whatever reform comes out of the Maud Commission's recommendations to simplify and rationalise both the system of land charges and the system of local land charges, which would be an important step. That, of course, would not be necessary if compulsory land registration extends to the whole country, but assuming that there is to be an interim period it might give us a halfway house with which we can live better than we can under the existing abominable system of land charges. Subject to those remarks, I certainly support the Bill.
§ 5.38 p.m.
§ THE LORD CHANCELLOR
My Lords, I am very grateful to the noble Viscount, Lord Colville of Culross, and the noble and learned Lord, Lord Wilberforce, for the interest they have taken in this Bill. I should very much like to deal with all the questions which have been raised, but perhaps in a sense we have had our fair share of to-day's time. We have the very important Second 1418 Reading of the Immigration Appeals Bill, then an Order and then two Unstarred Questions. As we are adjourning to-day and the Committee stage of this Bill will be taking place after Easter, I should like to consider carefully everything that has been said and I will personally answer all the questions which have been raised. It will give me great satisfaction to see the noble Viscount and discuss with him the interesting question of what titles to Bills ought to be. It may be that by the Committee stage we shall be able to implement a further recommendation of the Law Commission in relation to restrictive covenants. With regard to the other questions that have been raised by the noble Viscount and the noble and learned Lord, I will, if I may, answer them either orally, or in writing, or both.
§ On Question Bill read 2a, and committed to a Committee of the Whole House.