HL Deb 23 May 1974 vol 351 cc1541-65

11.20 a.m.

THE MINISTER OF STATE, SCOTTISH OFFICE (LORD HUGHES)

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

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

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clauses 1 to 3 agreed to.

Clause 4 [Right to redeem feuduty, ground annual, etc. on a term day]:

LORD HUGHES moved Amendment No. 1: Page 3, line 2, leave out from ("shall") to ("pay") in line 9 and insert (", not later than the term of redemption,

  1. (a) give to the superior or his agent a notice of redemption in or as nearly as may be in the form contained in Form 1 of Schedule 1 to this Act, and
  2. (b)")

The noble Lord said: I must apologise to the Committee for the fact that there are so many Amendments put down to this Bill. But at least I have the satisfaction to be able to say that most of these are of a minor nature, almost a drafting nature, and are intended to simplify the proceedings. The first of these Amendments, and there are a number but at the moment I do not have a note of the ones which are consequential to it, is quite simple. The Bill as it stands says that the notice for redemption of a feuduty is, I think, a period of one month before. The effect of the Amendment is to permit the notice to take effect from the actual date rather than a month before. As your Lordships know, the intention is that redemption may take place only at two periods in the year: Whitsuntide or Martinmas. It may be that the owner of a feu will be reminded he wishes to do so only when he gets the notice to pay his feuduty again for the current period. In many cases that notice will come out only three weeks before the date upon which the payment is due, and if it has slipped the mind of the man that he wants to exercise his right this time he will in fact have missed the opportunity for a period of six months. The change in the law to give the opportunity for redemption is one which is generally agreed and it has been felt, on consideration, that it is desirable it should be made as simple as possible for this to be done. The Amendment therefore, and Amendment No. 19 which goes with it, makes it possible for it to be done. I beg to move.

On Question, Amendment agreed to.

LORD HUGHES moved Amendment No. 2: Page 3, line 17, at end insert (", and any interest or other payment exigible in respect of the feuduty last mentioned.")

The noble Lord said: With Amendment No. 2 I would wish to associate Amendments Nos. 7, 8, 9 and 10, and thus save speaking time later. As at present drafted, Clause 4 provides that the proprietor of a feu who chooses at his option to redeem his feuduty at Whit-sun or Martinmas must pay to his superior the appropriate amount of redemption money that is calculated according to the formula in subsection (4), and also any amount of feuduty unpaid in respect of the feu liability which has accrued. The purpose of the Amendment is to make it clear that he must also pay any interest or any other payment exigible in respect of the feuduty. This is clearly an equitable provision. If the proprietor has been in arrears with his feuduty payments, he should obviously remain liable not only for the arrears, but for any interest which might have accrued on those arrears. The interest payable on arrears of feuduties is usually laid down in the feudal itself, and it is commonly of the order of 5 per cent. Under existing circumstances that is a very modest rate of interest. Occasionally however, a feudal writ, instead of providing for payment of interest on any arrears of feuduty, provides for some other form of additional payments. The words "or other payment" are included to cover this type of case.

The Amendment at Clause 5, page 5, line 21, makes a corresponding addition to subsection (6) of the clause which deals with the effect of giving to the superior a note of compulsory redemption of feuduty on a sale of property. After such notice has been given, the land in question is to cease to be burdened, inter alia, by any unpaid feuduty, and, if this Amendment is accepted, by any interest or other payment exigible in respect of the feuduty. The remaining Amendments are purely consequential. I beg to move.

On Question, Amendment agreed to.

LORD HUGHES moved Amendment No. 3: Page 3, leave out from beginning of line 28 to ("shall") in line 30 and insert— ("(7) The redemption of feuduty in terms of this section")

The noble Lord said: As at present drafted, subsection (7) of Clause 4 provides that on the granting by the superior of the prescribed receipt for redemption money paid by a proprietor who exercises his right to redeem his feuduty, the redemption will be binding on all persons having an interest—for example, the superior and any over-superior. The purpose of the Amendment is to ensure that the redemption of feuduty is binding irrespective of whether or not the receipt has been granted. Although subsection (6) states there is an absolute requirement on the superior to grant the prescribed redemption receipt, it may happen that the receipt is not given, perhaps through an oversight.

It would however be clearly inequitable if this failure on the part of the superior were to jeopardise the proprietor by preventing the redemption from being binding. In any event, subsection (5) provides that the pre-requisites of redemption are simply the giving of notice of redemption and the payment of the redemption money. The Amendment, by moving the reference to the granting of a receipt follows on logically from this by making it clear that without further ado the redemption becomes automatically binding on third parties with an interest in the land. I beg to move.

On Question, Amendment agreed to.

Clause 4, as amended, agreed to.

Clause 5 [Redemption by law of feuduty, ground annual, etc. on transfer of land for valuable consideration]:

LORD HUGHES moved Amendment No. 4: Page 4, line 17, leave out ("one month before the date")

The noble Lord said: In moving Amendment No. 4, I would also advise your Lordships that Amendments Nos. 20 and 21 are associated with it. As at present drafted, Clause 5 provides for the compulsory redemption when a transfer of land takes place for valuable consideration of the feuduty as exigible at the date one month before the date of redemption. The purpose of the Amendment is to simplify the provision by leaving out the words, "one month before the date". The effect would be that the feuduty to be redeemed would be the feuduty exigible as at the date of the redemption. I beg to move.

On Question, Amendment agreed to.

11.30 a.m.

LORD HUGHES moved Amendment No. 5: Page 4, line 22, leave out subsection (2) and insert— (2) Where the date (whether before or after the commencement of this Act) when entry is taken, as specified in subsection (1) above, is earlier than the date of the obligation there specified or (where there was no such obligation) the execution of the deed there specified, the date of redemption shall he the date of the said obligation or execution as the case may be.

The noble Lord said: I beg to move Amendment No. 5. The purpose of this Amendment is to clarify the meaning of subsection (2) of Clause 5. Subsection (1) of that clause provides that, in the normal case, the date of redemption for purposes of the compulsory redemption of feuduty on the sale of property is to be the date when entry is taken to that property, either under an obligation to grant a conveyance of the feu, or under the actual date containing the conveyance. This is appropriate because under existing law and practice the date of entry is the date on which the new proprietor becomes liable to relieve the former proprietor of liability for current feuduty.

Subsection (2), however, deals with two variations of the normal procedure in a land transaction. One is a case where a conveyance has been granted but entry took place before the date of that conveyance. The other is the case where the parties have agreed to a back-dated date of entry which is earlier than the date of the obligation to grant a conveyance; for example, where the relationship has started as one of landlord and tenant, after a period during which the tenant was in possession as such, the relationship has been changed to that of seller and purchaser.

In these types of case subsection (2) provides that the date of redemption is not to be the date when entry is taken, but is to be the date of the obligation to grant a conveyance, or the date of the execution of the deed containing the conveyance, as the case may be. The only people who will have any knowledge of whether or not back-dating of the date of entry is genuine will be the parties themselves. Such back-dating could, however, provide a method whereby unscrupulous parties might combine to defraud the superior by quoting a date of entry unfavourable to him as the date by reference to which the redemption money is to be calculated. It is in order to prevent the risk of this happening, and to avoid problems about the liability for feuduty already demanded or paid after the back-dated date of entry, that subsection (2) provides that where the date of entry precedes the date of obligation of a conveyance to which it relates the date of the obligation or the conveyance, as the case may be, is to be the date of redemption of feuduty. I beg to move.

On Question, Amendment agreed to.

LORD HUGHES moved Amendment No. 6: Page 5, leave out from the beginning of line 16 to second ("the") in line 17 and insert ("after the date of redemption, whichever is later,").

The noble Lord said: In moving Amendment No. 6, I should advise your Lordships that Amendments Nos. 11 and 13 are consequential. Under subsection (6) of Clause 5 in the Bill as drafted if the proprietor of a feu gives the superior a notice of compulsory redemption of a feuduty by law on a sale, the land subject to a feu will cease to be burdened by the redemption money, any interest thereon, and any unpaid feuduty two months after giving of the notice or one month after the redemption date, whichever is later. The purpose of the Amendment at Clause 5, page 5, line 15, is to provide that the feu will continue to be security for these monies for two months after the notice or two months after the redemption date, whichever is the later. This slight adjustment will mean that in every case the superior has a minimum of two months in which to obtain payment of the redemption money from the seller instead of, in some cases, having two months and in other cases only having one month. This is a slight alteration in favour of the superior. I beg to move.

On Question, Amendment agreed to.

LORD HUGHES

This Amendment is consequential. I beg to move.

Amendment moved— Page 5, line 21, after ("redemption") insert (", and any interest or other payment exigible in respect of that feuduty,").—(Lord Hughes.)

On Question, Amendment agreed to.

LORD HUGHES

I have already spoken to this Amendment. I beg to move.

Amendment moved— Page 5, line 23, leave out ("such money, interest or feuduty") and insert ("any sum specified in this subsection,").—(Lord Hughes.)

On Question, Amendment agreed to.

LORD HUGHES

I beg to move Amendment No. 9.

Amendment moved— Page 5, line 25, leave out ("and the said interest") and insert ("or interest thereon").—(Lord Hughes.)

On Question, Amendment agreed to.

LORD HUGHES

I beg to move Amendment No. 10.

Amendment moved— Page 5, line 30, after ("feuduty") insert ("or interest or other payment relative thereto,").—(Lord Hughes.)

On Question, Amendment agreed to.

LORD HUGHES

I have already spoken to this Amendment, No. 11. I beg to move.

Amendment moved— Page 5, line 33, leave out from second ("the") to ("specified") in line 34 and insert ("relevant period of two months").—(Lord Hughes.)

On Question, Amendment agreed to.

LORD HUGHES moved Amendment No. 12: Page 6, line 10, leave out ("Inhibitions and Adjudications") and insert ("Sasines").

The noble Lord said: This is a technical Amendment. The Bill as drafted provides that a court order obtained under subsection (7) of Clause 5 for the continuation of security for the redemption money over the land from which the feuduty was exigible will be effective only if an extract of the order has been duly recorded in the Register of Inhibitions and Adjudications. The purpose of the Amendment is to substitute, for the reference to that Register, a reference to the Register of Sasines. I think the simplest way of referring to this is to point out that the difference in the two Registers is generally referred to by lawyers in the case of the Register of Inhibitions and Adjudications as the personal register, and the Register of Sasines as the property register. In this case it has been felt that it is more appropriate that the entry should be in the property register. This is brought about by the Amendment which I now beg to move.

On Question, Amendment agreed to.

LORD HUGHES

I have spoken to Amendment No. 13 already. I beg to move.

Amendment moved— Page 6, line 10, leave out from second ("the") to ("referred") in line 11 and insert ("relevant period of two months").—(Lord Hughes.)

On Question, Amendment agreed to.

11.39 a.m.

LORD HUGHES moved Amendment No. 14: Page 6, line 31, at end insert ("; but in this section "feu" does not include any part of a feu which is subject to a cumulo feuduty, no portion of which has been allocated on that part.")

The noble Lord said: Amendment No. 14 refers to the system where there may be a number of feuduties which have not been allocated. It very often happens that one person with an unallocated feuduty is responsible for payment and collects from the other people who are liable for payment of feuduty. If there is agreement among all of those in the cumulo feuduty that they want to redeem, then, of course, it is perfectly appropriate that one person might act on behalf of all of them because he knows perfectly well that he will be collecting the money from the others because they are willing. What this Amendment safeguards against is the case of a compulsory redemption or the sale of one house in a tenement property. If the compulsory provisions were to take effect that tenant might in fact be required to redeem for the whole property, and then find that the others were unwilling to put up the money. So it is necessary to safeguard against this position arising, and that is the purpose of this Amendment. I beg to move.

On Question, Amendment agreed to.

Clause 5, as amended, agreed to.

Clause 6 agreed to.

Clause 7 [Property let under future long lease etc. not to be used as private dwelling-house]:

On Question, Whether Clause 7 shall stand part of the Bill?

11.41 a.m.

LORD STRATHCLYDE

I must apologise for the width of my Amendment—" leave out Clause 7". Had I had at my disposal a skilled Parliamentary draftsman he might well have been able to deal with my objections with a few short and simple Amendments, but without such help it appeared to be necessary to cover the entire field. My trouble principally arises from this Part of the Bill dealing with what appears to me to be two quite separate matters, two different types of property—or should I say land? "Residential property" to most people means a dwelling-house. In the Bill it also means land to be used for the purpose of building dwelling-houses.

The noble Lord, Lord Hughes, in his Second Reading speech I thought pointed out that difference, for while he started almost immediately by speaking of long residential leases, he then quoted from the Labour Government White Paper of July, 1969, which was known by the title of Land Tenure in Scotland: A Plan for Reform. He quoted words which he said were included as one of his Government's cardinal points. The quotation was: The leasing of land for purposes of building dwelling-houses will only be allowed in special circumstances and subject to the most stringent safeguards. It would have been simpler, at least to the layman, to have had a lease of building land being described as a "building lease" and to use the words "residential lease" as relating to a dwelling-house. Be that as it may, my contention is that they are markedly dissimilar and that legislation dealing with the one may not be appropriate for the other.

I am not going to argue against the need for the most stringent safeguards being necessary in relation to leases of land for the purpose of building dwelling-houses. In that connection, both Governments are at one and are on common ground. But stringent safeguards seem to be uncalled for and unnecessary where leases of dwelling-houses are concerned. In that connection I find the case put up in the Green Paper, and also in the Second Reading speeches of the Ministers on both occasions, to be somewhat unconvincing. In this House, for instance, we have not been given any facts in support of the contention in the Green Paper that a long lease of a dwelling-house is socially objectionable. But in another place and in this House we have had related to us the possibility that a tenant under a long lease may come to believe that he owns the house, and of his dismay when he finds that he does not. I am indeed grateful to the noble Lord that he did not repeat that suggestion to us in his Second Reading speech.

I wonder whether the noble Lord would tell us when he comes to reply whether he sees any real social objection to a long lease of a dwelling-house. For myself, I cannot see that it causes hardship, or that it is offensive to the public, or is harmful to the State. That apart, there must be many cases where the limitation of 20 years in regard to the long lease of a dwelling-house will not apply. Where, for instance, the rateable value of the leased house is under £200 a year, and the rent is in excess of two-thirds of the rateable value, then it seems that at the termination of the lease the tenant becomes a statutory tenant and has security of tenure under the Rent Acts, and consequently of course he can remain there for as long as he likes.

Then the noble Lord also told us in his Second Reading speech that ordinary local authority letting would not be in any way affected; and there of course, subject to good behaviour, it seems that the tenant is there for life or, again, for as long as he wishes. Perhaps the noble Lord will be able to confirm that the great majority of tenants in privately owned dwelling-houses will not be in any way affected, either. It therefore seems to me that it comes down to this, that the only case where the 20 years' limitation will really bite is that of the dwelling-house where the rateable value is in excess of £200 a year. There are possibly not very many cases so far as Scotland is concerned.

That brings me to the object of Part II of this Bill—to present leaseholds being used as a substitute for the feudal system. Why it should be used, I do not know. What advantages are gained by using it we have not been told. The similarity between the two systems occurs of course where the lease is granted in respect of a capital payment and also an annual rent. That, I agree, produces a situation not very different from that of the lease of a feu, except of course that the feuduty continues for the whole length of the life of the house, or other building, while the payment of rent under a lease ceases normally when the lease comes to an end. If that similarity between the two systems is the main reason and justification for the restriction on leases of dwelling-houses imposed by this Bill, where is the difficulty of ending it? There is not a provision in this Bill prohibiting any capital payment in relation to such a lease. End the similarity—and thus avoid the complications which will arise, some of which are dealt with in the two following clauses. I have always thought that the noble Lord's Party sought by every means to secure for tenants security of tenure. Under this Bill there is no such security except for those who may come under the protection of the Rent Acts. As I feel sure the noble Lord well knows, there must be cases where such security makes all the difference in the closing years of many people's lives.

In relation to leasehold, there have been references to the disadvantages of the long leasehold system existing in England. An example was given of a district where all the property was under one ownership and all the leases were for the same duration. With the approach of the end of the lease repairs were neglected, and that resulted in a large area being in a state of acute dilapidation when the lease came to an end; and it was claimed that in other circumstances that would not have occurred. There is, however, another side to that situation. I remember having heard something many years ago, probably in the early years of the present century. It was when there was a large redevelopment in the West End of London—it may indeed have been connected with Regent Street. The area was under one control. All the leases were for 99 years and they all fell out together, and this enabled the redevelopment to be carried out as a single operation. The comment on that at that time was: "What a splendid system the English leasehold system is."

To rid ourselves of the feudal system and to deal at this stage effectively with feuduties does not, in my opinion, necessarily call for the limitation of the duration of leases as is proposed in the Bill, and no arguments, satisfactory and supported by facts, have been advanced which prove that it is absolutely necessary. The limit of course is to be 20 years. But many people to-day in all walks of life retire at 60 and many live to well over 80. I would stress again that it is in the closing years of people's lives that security of tenure means so much. As the noble Duke, the Duke of Atholl, pointed out, where a house requires to be modernised a lease of 20 years is not sufficient to warrant the great expenditure involved to-day. In that connection he quoted his own case. He also quoted others, particularly in the Highlands, where, because the house needed modernisation, or because of the time required to build up the potentialities of an estate, 20 years was too short. And we still want people in the Highlands. Aspects of this Part of the Bill, in my opinion, call for reconsideration. Accordingly I wish to move the Amendment to which I have spoken.

Before I conclude, I wish to say to the noble Lord that I appreciate the trouble he took to answer what I had to say on Second Reading at great length and in great detail. I am much obliged to him but I do not think that these answers really cover the points I have made today. I beg to move.

LORD HUGHES

If the Motion of the noble Lord, Lord Strathclyde, were agreed to—and it would follow that the succeeding two clauses, Clauses 8 and 9, would also be taken out of the Bill—it would have the effect of wrecking the primary purpose of the Bill because it would enable the long leasehold to be substituted in land transactions for the present feudal system. All that this Bill is dealing with at the present time is not land conditions as such, but the payment of feuduty and the circumstances under which it can be brought to an end. The reason, therefore, for having Part II and for limiting the leases to 20 years is, in fact, to make certain that the primary purpose of the Bill cannot be frustrated. There are two main reasons for limiting long residential leases in the manner proposed. First, the long residential lease could easily be used as a way round the prohibition of the feuduties contained in Part I of the Bill. Secondly, a long residential lease may in itself give rise to certain undesirable social features.

If I may deal first with the first of these points, if long leases were possible it is very likely that a builder would grant a 60- or a 99-year lease on terms very similar to those he would have granted if he could have given a feu with payment of feuduty. The amounts which might be payable under a long lease might not vary from the amount which would be payable under a feu charter; but at least with a feu charter, which is the present system, the owner knows that so long as he pays his feuduty he and his successors remain in permanent possession of the land and it cannot, under any circumstances, be taken from him by the superior or by his successor as the superior.

If we substitute this system, we might find ourselves in the position that in a particular area the only builder or group of builders available get together and might decide that they were not going to build any houses for sale and that they were only going to build houses on long lease, which would mean that at some time in the future the land would cease to be in the possession of the person who had leased both the land and the house. This is not a fanciful position because it has been the experience this side of the Border. It is because of these objectionable features that we do not wish to take away the feudal system and its payment of feuduty and substitute for it something which would be infinitely worse. On the second point—

LORD STRATHCLYDE

I am sorry to interrupt my noble friend in the course of his speech, but what is the advantage which is gained by the builder in following this course? I do not quite understand what the advantage is.

LORD HUGHES

Because the experience over many years is that land continues to grow in value year by year, and there would be a decided advantage in ensuring that at some time in the future the land would come back into the possession of the builder. Many builders who are making considerable sums of money at the present time out of land transactions are doing so because they bought the land a long time ago in anticipation of future needs, and it could be reasonable for a builder also to ensure that he would have back the land that he is presently disposing of in 40, 50, or 60 years' time. It is not, therefore, a fanciful prediction by any means. It could mean that the builder, or his son or grandson, could take the profit all over again in due course.

On the second point, the noble Lord, Lord Strathclyde, thanked me for not repeating the argument about people not knowing that they do not own the house and, as they reach the end of their lease, being astonished to find that it is not their house. I did not omit to do it because I thought that it was unrealistic. It was simply because it had been said so often that I did not think it was necessary to say it again. The fact, however, is that it was demonstrated quite clearly in England and Wales that many people were under the impression that they owned their house. They had gone into it and had lived in it. It would be wrong to say that they did not know, but it was not a fact with which they were living, day in and day out, that in 10, 15 or 20 years' time the house would cease to be theirs and that they could only continue in occupation of it by making some arrangement for a new lease. In fact, this did take place and it could take place. If somebody takes a piece of land on a 60- or 99-years' lease and a house is built upon it, the sons and the grandsons may be living in it when the father or grandfather dies. The first thing that they do is not to say, "Let us look at the Title of the house and find out whether we own or lease this house". The first indication that they may have is towards the end of the lease. It is not, therefore, a fanciful proposition.

LORD STRATHCLYDE

Again may I apologise to the noble Lord, but is he not referring to a situation which arose in South Wales in regard to miners' houses? The conditions under which they occupied them were extraordinary and quite uncommon. In that case, it is true that they did not realise that that was due to conditions which probably would not occur again. Other than that one case, surely it is not a general feature that appears in England.

LORD HUGHES

I do not think that the noble Lord is right. Certainly that was a bad case, but there were many other cases the length and breadth of England where the leasehold system gave rise to very serious private problems for families and caused great hardship and, in some cases, tragedy. The long leasehold system is not at present common in Scotland. It seems to the Government, and it seemed to the previous Govern- ment also, that it was desirable to avoid its proliferation in Scotland, with its attendant problems, and as I have said this applied not only to Wales but to England also. Against this background, therefore, it seems to us clearly right to take steps in this Bill to prevent, once and for all, future long residential leases on lines, as the noble Lord has indicated, which were not only foreshadowed previously in the Government's White Paper but which are, in fact, identical with those proposed by the present Opposition in the last Parliament. I think the noble Lord has accepted that what I said during the Second Reading debate relating to the family case has been taken care of, and that that particular aspect will not be struck at by what is in Part II of the Bill. For these reasons, therefore, I cannot advise your Lordships that it would be desirable to take these clauses out of the Bill, and I hope you will agree that the Bill should stand as printed.

LORD STRATHCLYDE

I wonder whether the noble Lord will comment on the suggestion which I made, that we should entirely alter the situation and do away with the necessity for limiting the length of long leases merely by removing the payment of a capital sum when the lease was negotiated. That would take away the similarity between the long leases and the feudal system.

LORD OGMORE

As the noble Lord, Lord Strathclyde, mentioned the Welsh experience, may I say that I support the Minister in this matter. We had an awful job to get rid of this long leasehold system in Wales, which was a wonderful money-maker for the great landlords who benefited from it, and eventually of course the matter came to a head when it was found that large numbers of the miners' cottages in the mining valleys were going away from the occupiers into the hands of the great landlords. When the great landlords found that things were not so good they sold these leaseholds to property companies, so that in the final result the people who did not have any great benefit from them were the occupiers. I quite understand the wish in Scotland to get away from the feudal system, but I suggest that if they go back to the system we had in Wales they will only be going from the frying pan into the fire.

Clause 7 agreed to.

Clause 8 agreed to.

Clause 9 [Modification of s.8 where lease subject to sub-lease or heritable security]:

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

LORD STRATHCLYDE

I wonder whether the noble Lord can reply to the point I put to him on an earlier clause?

LORD HUGHES

I am sorry, but I do not think anything along those lines would be helpful. The difficulty of this situation is that if we open the door to this element in any way, we cannot make certain that it opens only a chink. It can, in fact, be wide open. We were speaking about long leases and the misunderstanding that would arise, whereby people would not know that a house was not theirs. I referred generally to the situation in England and Wales, and I am grateful to the noble Lord, Lord Ogmore, for his statement about the Welsh position. But, in fact, I am informed that we had a case even earlier this year in Perthshire, when an elderly lady discovered that the home which she thought she owned was on a lease with only five years to run; and there was correspondence between the Member of Parliament for the constituency and the Lord Advocate during this year on that very point. So it is not a far-fetched situation; it is the length of time which makes it so likely that this situation can arise.

Clause 9 agreed to.

Clauses 10 to 12 agreed to.

12.5 p.m.

LORD HUGHES moved Amendment No. 15: After Clause 12 insert the following new clause:

Amendment of section 17 of Crofters (Scotland) Act 1955

. In section 17 of the Crofters (Scotland) Act 1955 (absentee crofters) (as amended by the Crofters (Scotland) Act 1961) the following amendments shall be made—

  1. (a) in subsection (4) (right of absentee crofter, after order terminating his tenancy, to conveyance in feu of dwelling-house), for the word "feuduty", in both places where it occurs, there shall be substituted the words "the consideration";
    2. 1557
  2. (b) in subsection (7) (rights of creditor in heritable security over house), for the words from "in addition" to "following subsection" there shall be substituted the words "as consideration under this section";
  3. (c) in subsection (8) (consideration for assistance given by landlord in respect of house), for the words "be, in addition to any feuduty thereby exigible," there shall be substituted the word "include"."

The noble Lord said: This Amendment would insert a new clause into the Bill. The purpose of the proposed new clause is to effect certain consequential adjustments in Section 17 of the Crofters (Scotland) Act 1955 to take account of the fact that under Clause 1 of the Bill it will no longer be lawful to impose feuduty. Section 17 of the 1955 Act, as amended by the Crofters (Scotland) Act 1961, provides that in the case of an absentee crofter the Crofters Commission may make an order terminating the tenancy of the crofter and under subsection (4) of Section 17 where such an order has been made the crofter is, in certain circumstances, entitled to obtain a conveyance in feu of the dwelling-house on such terms as to feuduty as may be agreed by the crofter and the landlord; or, failing agreement, as may be determined to be reasonable in the case of feuduty by the land court.

After the Bill becomes law, it will no longer be possible for the conveyance of the croft to provide for a feuduty. It is arguable, therefore, that if no amendment were made to subsection (4) of Section 17 of the 1955 Act, no consideration at all could be charged to the conveyance of the croft. This would clearly be inequitable and the purpose of paragraph (a) in the proposed new clause is to substitute, for references to "feuduty", references to the "consideration". The effect will be that in the circumstances described the crofter will be entitled to a feu of the dwellinghouse on such terms as to the consideration as may be agreed, or as may be determined to be reasonable in the case of the consideration by the land court. Thus this part of the Amendment makes no change of substance in the procedure under Section 17 of the 1955 Act; and, in particular, it preserves the role of the land court in a disputed case. All that is in point is the necessary replacement of the references to "feuduty", which will become inept on the coming into operation of this Bill.

Subsection (7) of Section 17 of the 1955 Act provides for a case where the subjects conveyed under the section are burdened by a heritable security for payment by the landlord to the creditors of any sum paid to them in addition to feuduty as a consideration. The purpose of paragraph (b) of the proposed new clause is to substitute a reference to any sum paid to him as consideration. This, again, is purely consequential on the prohibition of new feuduties. Subsection (8) of Section 17 of the 1955 Act deals with the consideration to be paid by the crofter in respect of the conveyance to him of the dwellinghouse, in the exceptional case where the landlord had contributed towards its provision. That consideration is to be in addition to any feuduty thereby exigible, such sum as may be agreed or determined by the land court to be the value of any assistance or consideration given by the landlord in respect of the dwellinghouse. Here, again, the reference to feuduty will become inept and the purpose of paragraph (c) in the proposed new clause is simply to remove this reference.

Boiled down, it simply means that the conditions are applicable to the landlord and the crofters and remain unchanged. The only thing that is changed is the wording of the law. I beg to move.

On Question, Amendment agreed to.

Clause 13 [Limitation of right of irritancy for non-payment of feuduty]:

LORD HUGHES

This is a drafting Amendment, again to remove some unnecessary words. I beg to move Amendment No. 16.

Amendment moved— Page 13, line 43, leave out from ("superior") to ("for") in line 44.—(Lord Hughes.)

On Question, Amendment agreed to.

Clause 13, as amended, agreed.

Clauses 14, 15 and 16 agreed to.

LORD STRATHCLYDE moved Amendment No. 17: After Clause 16 insert the following new clause:

Variation and discharge of land obligations . Section 1 of the Conveyancing and Feudal Reform (Scotland) Act 1970 shall be read and have effect as if in place of subsection (4) thereof there were substituted the following subsection—

  1. "(4)(a) An order varying or discharging a land obligation under this section may direct the applicant to pay, to any person who in relation to that obligation is a benefited proprietor, such sums as the Lands Tribunal may think it just to award but the Tribunal may refuse to vary or discharge a land obligation on the ground specified in subsection (3)(c) of this section if they are of the opinion that, due to exceptional circumstances related to amenity or otherwise, money would not be an adequate compensation for any loss or disadvantage which a benefited proprietor would suffer from the variation or discharge.
  2. (b) In assessing the sum to be paid to a benefited proprietor under this subsection the Lands Tribunal shall award such sum as a willing burden proprietor would pay to a willing benefited proprietor for the acquisition of the interest in land that the burdened proprietor will acquire as a consequence of the variation or discharge of the land obligation."."

The noble Lord said: In the unavoidable absence of the noble Earl, Lord Selkirk, I have been asked to move these two Amendments which are in his name. These two are alternative Amendments. Both would amend Section 1(4) of the 1970 Act and would substitute (4)(a) and (4)(b). The purpose of the Amendments is to correct the present inequality of compensation to the superior when a land condition to a feu is varied or discharged by the Lands Tribunal. In practice, what has happened since the 1970 Act is that under Section 1(4)(a) payment of compensation has been based on the estimated difference at the time the condition was imposed. The Amendments seek for compensation to be based on current market values, as is the basis of all land compensation Acts. I beg to move.

LORD HUGHES

As the noble Lord, Lord Strathclyde, has said, Amendments Nos. 17 and 18 are alternative ways of dealing with this business, so I think it would be the wish of your Lordships that I should speak to the effect of both Amendments, and as briefly as possible give the House the reasons why the Government want neither.

The first of the Amendments seeks to substitute for the existing two heads of compensation such sum as a willing burdened proprietor would pay to a willing benefited proprietor for the acquisition of the interest in land that the burdened proprietor will acquire as a consequence of the variation or discharge of the land obligation. The second of the proposed new clauses would alternately substitute such sum as, in the opinion of the Lands Tribunal, represents the increase in the value of the interest in land of which the applicant is the proprietor in consequence of the variation or discharge. Both new clauses retain the provision whereby the Tribunal may refuse to vary or discharge a land obligation.

Subsection (4) of Section 1 of the 1970 Act was carefully drafted to ensure that compensation is granted only where real loss is suffered as a result of the order of the Tribunal for the variation or discharge of a land obligation. Under Head 1 only loss as a benefited proprietor, for example, the superior, is to be compensated. This is intended to eliminate compensation awarded on the basis of some commercial loss, for example to a superior running a rival enterprise to the type of enterprise which the burdened proprietor wants to set up.

The kind of standard case to which one refers is the position in a small Highland community where the superior owns and operates the only public house in the area. He wants to ensure that all the benefits from the ownership and operation of this public house remain with him. Therefore, he imposes a condition in the fens which he has granted, that they will only be used for residential purposes, the primary reason being perhaps to ensure that a second pub is not opened. But, of course, it hits at everything else other than the residential purposes. It is the benefited proprietor's loss and not the burdened proprietor's gain which is relevant. This strikes at the argument, for example, that a superior should receive compensation simply because in some way a right to what superiors sometimes call reserve development value has been given to the proprietor. The provision also ensures that a superior cannot base his estimates of loss on the sums he has been able to exact in the past in similar circumstances for minutes of waiver. This would not be a loss in consequence of the variation of discharge.

Under Head 2, the fact that the amount of compensation is to be related to the effect which the obligation produced at the time when it was imposed prevents superiors, for example, from claiming compensation based on current market price for the land, which would take account of developments in the area for which the superior is in no way responsible. In brief, under the existing subsection (4), compensation is to be awarded only where the benefited proprietor can prove actual loss of disadvantage as a result of a condition being varied or discharged, or where the benefited proprietor proves that he or his predecessor could have received more for the land at the time when the condition was imposed if it had not been imposed.

Let me try to simplify this matter. A feu has been granted, say in 1890, and the only purpose for which the land can be used was for residential purposes, and a feuduty was fixed at £2 a year, and the application is to depart from that condition so that the house may be used as an office; if the Tribunal decides the application should be granted, all that they can take into account is not the difference between the value of the land for residential purposes to-day and the value of the land for office purposes to-day, but what the feu might have been if it had been for office purposes originally. It might have been that instead of getting a feuduty of £2 a year, he might have got £5, £6 or £10 a year if he had been feuing it for office purposes. Therefore, the compensation payable, if the court decided to waive the land condition, would be the capital value of the difference between what the two original feuduties might have been. In terms of the 1970 Act, one cannot relate to the difference between what the residential value was in 1890 and what the commercial value was in 1970. The whole provision is that people are to be compensated for loss, not that they are in fact to get a share in the feuer's potential gain. The effect of either of these Amendments is to change completely the basis of compensation. For these reasons I cannot advise your Lordships to accept either this Amendment or the alternative one. I think I ought also to simplify what I have said about the effect of the two alternative new clauses.

On the first clause, which is the wider one, it would in fact mean that the basis of compensation would be what might be agreed between the two parties. One could have circumstances in which the feuer might be prepared to pay a sum which was considerably in excess of the market value, because the value of his development was much greater than any alternative competitor for the land. The second clause, and therefore the less harmful to the user of the land, means that it would be related to market value and not to any special interest he might have in it, and which might be greater than any other Tom, Dick or Harry who might be persuaded to bid for the land. But either way—the first going the whole hog or the second one going part of the way—it is such a fundamental departure from the position that presently exists that I could not advise your Lordships to accept it, and I hope therefore that the noble Lord, Lord Strathclyde, will not feel obliged to pursue the matter on behalf of his absent friend.

LORD STRATHCLYDE

If I may interrupt for just a moment, I may say I have been pushed into this position at about two minutes' notice. It happened that I did know something about it—indeed, exactly what the noble Lord, Lord Hughes, has said—that if the superior, when he granted the feu charter, had known that the purpose was as it is now altered to be, he would have endeavoured to get a good deal more money.

The other point that was brought to my notice was that the vassal who obtained the feu charter and who now wishes to change the purpose for which the feu was to be used only does that because he knows he personally is going to make a good deal more money out of it. So in fairness it is felt that there should be compensation paid to the original superior, to the actual superior at the moment, because if he had known he would have charged more. The noble Lord said that himself. The point is that it is felt to be unjust. I understand that a good many cases have been before the Lands Tribunal and in every single one of them they have had to refuse compensation to the landlord. It is, I understand, said that the drafting of the 1970 Act makes it impossible for them to grant compensation, and indeed after the last case, which was that of Kenny, Miller, Devlin and Another v. Guthrie and Another, reported fully in the Scottish Law Times, the Tribunal, in refusing compensation, said that it might be that they would in practice consider it unjust and decline to make awards under Section 1(4)(ii) of the Act of 1970 unless the original seller still remained as the beneficial proprietor.

I make these remarks because I am perfectly certain that no one wants to be unjust to people. If in fact it is some slip-up in the drafting of the section to which I have referred, then it would be unfortunate if that were to create injustice which no one wants. I make these remarks accordingly. If the noble Lord wishes to say a word or two on that I will sit down, but if he does not I will continue for one moment to make my remarks.

LORD HUGHES

I have nothing to add.

LORD STRATHCLYDE

The only further remark I would make is to beg leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

Clauses 17 to 21 agreed to.

Schedule 1 [Forms prescribed under Section 4]:

12.24 p.m.

LORD HUGHES

I have spoken to Amendment No. 19 already. I beg to move.

Amendment moved— Page 17, line 12, leave out ("intend") and insert ("wish").—(Lord Hughes.)

On Question, Amendment agreed to.

Schedule 1, as amended, agreed to.

Schedule 2 [Form prescribed under Section 5]:

LORD HUGHES

I beg to move Amendment No. 20.

Amendment moved— Page 18, line 13, leave out ("date one month before").—(Lord Hughes.)

On Question, Amendment agreed to.

LORD HUGHES

I beg to move Amendment No. 21.

Amendment moved— Page18, line 15, leave out ("[give date of redemption]") and insert ("that date").—(Lord Hughes.)

On Question, Amendment agreed to.

LORD HUGHES moved Amendment No. 22: Page 18, line 19, leave out ("obligor(s)") and insert ("obligant(s)").

The noble Lord said: This is a drafting Amendment, and I must confess that I did not find out how to pronounce these words. It is a very simple Amendment. It leaves out the word "o-b-l-i-g-o-r", whichever way you wish to say it, and inserts the word "o-b-l-i-g-a-n-t", whichever way you wish to say that. This is simply because the first one is open to misconstruction, and the second one is the term normally used in Scots Law. I beg to move.

On Question, Amendment agreed to.

Schedule 2, as amended, agreed to.

Schedule 3 agreed to.

Schedule 4 [Form of notice prescribed under Section 8]:

LORD HUGHES moved Amendment No. 23: Page 19, line 14, leave out ("[Give a sufficient description") and insert ("[give sufficient identification").

The noble Lord said: Amendment No. 23 and Amendment No. 24 deal with the same subject. I beg to move Amendment No. 23. As at present drafted, the form of notice requires the landlord to "give a sufficient description" of the property. The word, "description", however, is a conveyor's term of art which implies something more than a simple reference to the name or address of a property. In a conveyance the description specifies the area of the property conveyed, and frequently it details the boundaries of the property minutely by reference to measurements, compass points and adjoining properties. Such details will not, of course, normally be needed in notices under Clause 8. In order, therefore, to avoid any risk that a notice which does not contain the full conveyancing description might be held to be invalid, the Amendment to Schedule 4, at page 19, line 14, replaces the reference to giving a "sufficient description" by a reference to giving "sufficient identification". This will make it clear that the notice need do no more than indicate satisfactorily the property to which it relates, for example by reference to its postal address. The following Amendment is consequential. I beg to move.

On Question, Amendment agreed to.

LORD HUGHES

I beg to move Amendment No. 24. Page19, line 17, leave out first ("description") and insert ("identification").—(Lord Hughes.)

Amendment moved—

On Question, Amendment agreed to.

Schedule 4, as amended, agreed to.

Remaining Schedules agreed to.

House resumed: Bill reported with the Amendments.