HL Deb 06 April 1989 vol 505 cc1195-7

3.26 p.m.

Lord Strathclyde

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(Lord Strathclyde.)

On Question, Motion agreed to.

Clause 80 [Charges requiring registration]:

Lord Strathclyde moved Amendment No. 139A:

Page 73, line 23, leave out ("Chapter") and insert ("Part").

The noble Lord said: My Lords, this amendment deletes an incorrect reference to "this Chapter" and replaces it with a reference to "this Part". There is no change to the application of the definition of the term "charge" in new Section 395(2). The amendment is necessary simply because there will be no separate chapters in the new Part XII and therefore the reference to "this Chapter" would be meaningless.

We have taken the opportunity of the changes to Part XII of the 1985 Act to combine the existing separate chapters for England and Wales and for Scotland. Many of the existing differences between the chapters for the different jurisdictions are no longer appropriate under the system which the Bill will introduce. Special provisions continue to be made for Scots law where appropriate in the new part, but they are not so numerous as to require separate chapters. We believe that there is considerable advantage in making the law on registration of charges for each jurisdiction as similar as possible.

I should like to take this opportunity to welcome the noble Lord, Lord Carter, who I understand is to take this part of the Bill on behalf of the Opposition. I am grateful that he has given notice of some of the questions which he will raise in the course of the debate. I beg to move.

Lord Williams of Elvel

My Lords, the House will be grateful to the noble Lord both for his introduction to the amendment and his welcome of my noble friend Lord Carter to our Front Bench.

I note the noble Lord's point about the reconstruction of the part to make it more sensible and more logical in sequence. Is he implying that Clause 100, which is entitled "Floating charges (Scotland)", will now be included in Part IV?

Lord Strathclyde

No, my Lords. That will not be the case. I am not sure why, but it does not appear that that is something that needs to be changed at the moment.

On Question, amendment agreed to.

Lord Strathclyde moved Amendment No. 139B:

Page 75, leave out lines 14 to 16 and insert— ("(3) In this part "charge"—

  1. (a) in England and Wales, includes a mortgage, and
  2. (b) in Scotland means any form of security, including a heritable security;
but does not include a charge arising by operation of law.").

The noble Lord said: My Lords, the amendment clarifies the application of new Section 396(3) in Scotland. Although the existing Chapter II of Part XII of the 1985 Act uses the term "charge" to refer to any form of security, it has been drawn to our attention that the term ordinarily applies only to floating charges in Scotland. The amendment is designed therefore to avoid any doubt that might exist under the new part that the term "charge" includes not only heritable securities but also other forms of security. The clarification was not necessary in the 1985 Act, since Chapter II of Part XII contains no precise equivalent to new Section 396(3).

Lord Williams of Elvel

My Lords, perhaps the noble Lord will qualify a small point for me. Is there in any sense a separate registry for Scotland rather than for England and Wales, which includes Scottish terms such as heritable securities, whereas the registry for England and Wales does not; or are we talking about a registry for the whole of the United Kingdom which includes any security which, in Scotland, is deemed to be a heritable security?

Lord Strathclyde

My Lords, perhaps I may take this opportunity to answer that question. Subsection (3) is necessary for three reasons. First, it makes clear that the term "charge" includes, in England, a mortgage. Secondly, it makes clear that the term, in Scotland, includes not only a heritable security (which is the equivalent of a mortgage on land) but also any form of security. Thirdly, it excludes charges that arise by operation of law, for reasons explained in Committee. The subsection derives from Sections 396(4) and 410(4) of the 1985 Act. As drafted in the Bill at present, it leaves some slight doubt as to whether, in Scotland, fixed charges other than heritable securities are to be included in the term "charge". The amendment avoids that doubt.

Furthermore, as I have already said, security rather than charge is the indigenous term in Scotland. In England and Wales, security is often said to mean rights by way of security which are not a security in the strict sense. In the strict sense, security is used to mean a mortgage, an equitable charge, a charge by way of legal mortgage (in the case of land), a lien or a pledge.

The looser usage of the expression "security rights" is often used with reference to rights of reservation by the owner of the property, such as certain clauses reserving title to the seller in a contract for the sale of goods or a bank's retention clause over a customer's bank balance. To define charge as including any security in relation to England and Wales might therefore give rise to ambiguity as to whether certain contractual provisions, which are not at present registrable because they do not constitute a mortgage, lien, pledge or (in the strict sense) a charge, have thereby been made registrable. Of course, there is a separate registry for Scotland.

I am sorry that I have answered that question at some length, but it is relevant and I hope that the noble Lord will approve.

On Question, amendment agreed to.

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