HL Deb 24 January 1989 vol 503 cc598-611

3.5 p.m.

The Lord Chancellor (Lord Mackay of Clashfern)

My Lords, I beg to move that this Bill he now read a second time. The Bill makes changes of a minor but useful nature to three areas of law; the law relating to deeds, the law relating to formalities for contracts for the sale or other disposition of land, and the rule in Bain v. Fothergill. The three substantive clauses in the Bill derive from recommendations made by the Law Commission in three separate reports: Deeds and Escrows, Formalities for Contracts for the sale or other disposition of land and The Rule in Bain v. Fothergill.

Clause 1 of the Bill makes changes to the law relating to deeds. At present, if an individual needs to execute a deed, he must sign, seal and deliver it. Sealing is, for most people, a meaningless formality. They do not have a seal, and the deed is sealed by sticking a small circle of red paper on it, or simply by drawing a circle. Not only is the requirement meaningless; it has also given rise to argument in the courts as to precisely what it is necessary to do in order to seal a deed. The Law Commission has recommended that for individuals, sealing should no longer be a requirement. Corporate seals are not affected by this change.

The commission considered that signing and delivery alone would not be sufficient formalities to ensure that a person executing a deed was aware of the importance of what he was doing. It therefore recommended, and the clause gives effect to this recommendation, that the signature of the person making the deed should have to be witnessed and attested. This is in fact the usual practice now. Generally, only one witness is to be required; however, where the person making the deed does not sign it himself but, perhaps because of physical incapacity, he asks someone else to sign it at his direction, two witnesses will be required. The second additional formality is that it should be clear on the face of it that the document is intended to be a deed.

The fact that a document is a deed can have important consequences. For example, in English law a promise to make a gift is normally unenforceable, but it becomes enforceable if made by deed. The Bill does not lay down any prescribed manner of making it clear that a document is intended to be a deed but it does suggest various ways of doing this. It is undesirable to lay down just one method because to do so would invalidate what would otherwise be perfectly acceptable deeds merely for failure to include one vital word.

Clause 1 also abolishes the rule that a deed must be written on paper or parchment. The Law Commission considered that this rule was unnecessary and might inhibit the development of new substances. It considered recommending a rule that deeds should be made on a durable substance, but this goes further than the present law since paper is clearly not necessarily durable and, again, such a rule might invalidate what would otherwise be a perfectly acceptable deed.

Delivery is another aspect of the law relating to deeds which has given rise to confusion."Delivery" does not necessarily involve the physical handing over of the deed. Delivery takes place when the person making the deed by his act or word makes it clear that he regards it as binding on him. Although recognising the difficulties caused by delivery, the Law Commission did not recommend any major changes to it, and the clause leaves untouched the law as to what constitutes delivery.

The clause does however make two changes to the law of delivery. It abolishes the rule of law that for a person to deliver a deed on behalf of another he must be given authority by deed. This does not mean that in future the person delivering the deed need not be given proper authority. It simply removes the requirement that the authority be given by deed. This has proved to be an inconvenient rule which serves little purpose. Its effect is that if, at present, a person signs and seals a deed and gives it to his solicitor to await completion of some transaction he has in fact delivered it, at the latest, when he gives it to his solicitor. His solicitor cannot deliver it for him, unless authorised by deed to do so. It, therefore, at that point becomes binding on him, even if it does not take effect until the completion of the transaction.

The removal of the rule will enable the person to sign and seal a deed and hand it to his solicitor for delivery at a later date without having to execute a further deed giving his solicitor authority to deliver. This provision in the clause is complemented by a further provision that, where an instrument is delivered as a deed in the course of, or in connection with, a conveyancing transaction, the solicitor or licensed conveyancer who delivers it shall be conclusively presumed, in favour of the purchaser, to have authority to deliver the instrument.

None of these changes affects instruments delivered as deeds before the section comes into force. It is necessary to consider whether certain forms of deeds prescribed by statute will require alteration before this section comes into force, so the Bill provides that it will not come into force until I make a commencement order. I do not expect a long delay before commencement.

Clause 2 makes changes to the law relating to formalities for contracts for the sale or other disposition of land. At present the requirements are contained in Section 40 of the Law of Property Act 1925. This states that contracts must either be made in writing or, if made orally, must be evidenced in writing. The writing must be signed by the person to be sued. The requirements for writing do not apply if the contract has been partly performed. This provision has given rise to considerable difficulties. Its effect is that oral contracts for the sale of land are binding but unenforceable by action. They may be enforceable by other methods, for example, forfeiture of a deposit. Further, the party who has not signed the necessary writing may be safe from being sued upon the contract while at the same time retaining the option of suing the other person who has signed the writing.

The Law Commission recommended that contracts for the sale or other disposition of land should not be valid unless they are made in writing and that writing is signed by all the parties to the contract. The clause gives effect to that recommendation. It was made after wide-ranging consultation by the commission. It seems right that contracts as important as contracts for the sale or other disposition of land be in writing. The clause removes the possibility of an oral, binding, but unenforceable contract. It ensures that all the parties to a contract must sign it. The clause has been drafted so as not to interfere with the usual practice of exchanging contracts.

Clause 3 abolishes the rule of law known as the rule in Bain v. Fothergill. This rule, which dates from the 19th century, limits the damages that a purchaser can obtain if a vendor is in breach of his contract to give a good title to land either because he has no title or because his title is defective. The rule dates from a time when proving title to land was extremely difficult and it was thought unfair to impose upon a vendor the burden of paying substantial damages when he failed to prove a good title to the land. The rule has been much criticised and the courts have developed many exceptions to it. After the Law Commission published a working paper which suggested its abolition, the Court of Appeal expressly approved the suggestion. Now that registration of title is widespread, and, where title to land is unregistered, the vendor has only to prove title by going back to a good root of title at least 15 years old, there is no good reason why a purchaser should suffer the loss if a vendor enters into a contract to sell land with good title and then cannot prove that he has such a title.

The clause therefore abolishes the rule. It does not prevent the vendor from including express provisions in a contract to limit his liability if he cannot prove his title. It may be that in certain very rare cases a vendor will not be willing or able to contract to sell a good title. However, he will have to make express provision to that effect and the purchaser will thereby be warned and advised about the dangers of entering into such a contract.

Clause 4 deals with repeals of a consequential nature. Clause 5 deals with commencement provisions. The provisions relating to deeds, for reasons I have explained, are subject to a commencement order. The other provisions are to come into force at the end of the period of two months from Royal Assent. Clause 6 as usual, contains the Short Title and extent.

This Bill contains three useful and uncontroversial measures of law reform, all of which I believe, have attracted the support of the legal profession. We are all grateful to the Law Commission for the careful work which went into the preparation of the reports on which the Bill is based. I accordingly ask the House to give the measure a Second Reading.

Moved, That the Bill be now read a second time.—[The Lord Chancellor].

3.15 p.m.

Lord Prys-Davies

My Lords, the House will be grateful to the noble and learned Lord the Lord Chancellor for taking us through the provisions of this short Bill. We hear a great deal about the need to simplify documents relating to the sale of land and houses. Although the Bill, as the Lord Chancellor has explained, is not confined to deeds relating to the sale of land it will help in a small way to achieve the well-supported objective of simplifying such documents.

The noble and learned Lord has explained that the Bill enshrines the recommendations of the Law Commission. We too thank the Law Commission for its excellent work. I believe that the recommendations of the Law Commission have taken into account some of the criticisms of the commission's working papers, but I have not been able to obtain the views of the relevant professional bodies on the contents of the Bill and I do not know whether all of its provisions are wholly to the commission's satisfaction.

The Bill widens the substances on which deeds may be written. That will be a useful provision, particularly if new substances are discovered which may prevent deeds from being damaged or destroyed by fire or floods. That will be useful. Sealing will no longer be necessary. Although that will make no practical difference to the professional world, it may simplify matters if individuals wish to draw up their own deeds.

Delivery will be retained. There are two views about whether it should be retained. On balance I believe it is right that it should be retained; otherwise a document would bind the signing party immediately he signs the document although that was not his intention. I accept that there is another view. I accept also that some charities are concerned that delivery has been retained.

I am sure that your Lordships will be greatly relieved by the Lord Chancellor's assurance that a signature remains a requirement. But as the Bill stands that signature will have to be witnessed as and from the commencement day or the appointment day. That is new. Under existing law, attestation is not strictly necessary. I understand through my noble friend Lord Mishcon that this matter is of some concern to the charities.

I am grateful that the noble and learned Lord has drawn particular attention to the new provision in Clause 1(3) which permits an individual to direct someone else to sign on his behalf provided that two witnesses are present to attest the document. This, in our view, is a change of significance. I have a feeling that there may be an issue here. Should not the witnesses be independent and not related to the individual who is directed to sign the deed? How great is the risk of this method of execution of documents being abused or exploited?

I shall trespass for half a minute and no more to remind the House that the Bill comes here at a time when there is a large and continuing growth in the number of very elderly and frail persons, some of whom may be suffering from memory loss or a degree of dementia but are not wards of the Court of Protection, even though they own their own homes. The question of how that considerable section of the community—and a growing section—is to be protected against exploitation when dealing with their homes raises a significant and worrying issue. The Bill was not addressed to that problem but we believe that it is one which departments must face.

I return to the Bill. The need for a Section 40 memorandum agreement in respect of the sale of land to be signed by the party to be charged has been much criticised. We are glad that the section is to be repealed. Henceforth, there must be a document signed by all the parties to the transaction, thus avoiding the unfair result that where only one party has signed only that party is bound by the agreement.

According to the Bill that document may refer to another document. We wonder whether it may refer to more than one document. It is clear from the Bill that the doctrine of part performance will no longer apply, but we assume that the doctrine of estoppel will still be available where appropriate.

I turn to deal briefly with the rule in Bain v. Fothergill. It was formulated under another name about two centuries ago because of the then difficulty of proving title of land, land being the oldest thing on earth. Although the ancient rule is not without its modern defenders, we believe that its repeal will be widely welcomed. It is out of date.

I must consult my noble friends on the Front Bench in order to consider whether abolishing the rule provides a wholly satisfactory solution where there is a chain of vendor, purchaser and sub-purchaser. If the vendor's title is defective, will he henceforth be liable for damages right down the line? That is a point on which this one-time solicitor would be grateful for guidance.

It is also for consideration whether the Bill should have enshrined in statute the current conveyancing practice of deducing title at the same time as the draft contract is being sent to the purchaser. That would enable the purchaser adequately to investigate the title and raise all inquiries before committing himself. If that were acceptable it would reduce the delays, which is another important objective. However, I must consult my noble friends about whether to press the matter on your Lordships.

We welcome the Bill in general. Plainly the professional bodies must give the fullest publicity to its provisions so that their members should be in no doubt as to the correct advice which they must give when the Bill is enacted. It may also be necessary for charities to consider some of the changes which the Bill will effect.

With those few words, I am pleased to support and welcome the Bill in principle.

3.24 p.m.

Lord Hooson

My Lords, I also welcome the Bill. It is another example of the debt which we owe to the Law Commission. The setting up of the Law Commissions in this country and in Scotland was one of the greatest steps in legal reform in the history of our country. Last evening I read through the three short reports which are the foundation of the Bill. As it is not within my sphere of the law I had forgotten about the rule of Bain v. Fothergill until I revised my recollection last evening.

The arguments are set out in the reports. The footnotes indicate all the consultations that have taken place and the bodies which have been consulted. The whole process of law reform has been radically changed by the method of the Law Commission. For example, the noble Lord, Lord Prys-Davies, referred to a question which might be controversial. It is whether attestation was required for the signature on a deed. At paragraph 2.12 of its report (No. 163) the Law Commission dealt with the matter in this way: Almost all of those who responded to the working paper were in favour of obligatory attestation of deeds. The imposition of this requirement will not in fact be a change in present practice, as deeds are nearly always attested now". The commission goes on to state that it endeavoured to formalise the present practice. In an economical way it dealt in detail with the argument which was advanced today by the noble Lord, Lord Prys-Davies.

It occurred to me that because we set up the Law Commission we should change our procedure in this House, and they could change it in another place, in order to deal particularly with Bills that have been carefully researched and prepared and where soundings have been taken by the Law Commission. They appear to be in a different category from Bills that normally come before your Lordships' House. Perhaps that is a subject for another debate at another time.

The first report is the foundation for Clause 1. It is right—and the arguments have been expressly set out in the report—that delivery should remain one of the essential formalities for the execution of a deed. Often people sign a document and do not intend it to be effective until it is delivered. I believe that the Law Commission was right in coming down in favour of retaining delivery.

It is interesting to note that the drafting of Clause 1 of the Bill follows closely the draft of the Law Commission. Clause 2 is probably in practice the most far-reaching reform in the Bill. All noble Lords have been acquainted with the litigation which has been such a good source of remuneration to the legal profession over the years and which arises from the provisions of Section 40 of the Law of Property Act 1925. For many years there has been pressure for reform and change of the provisions contained in that section.

A simple repeal of Section 40 has been considered. In its report the Law Commission sets out its reasons for rejecting the suggestion of simple abolition, attractive though it may have been on the surface. The reform abolishes the notion with which we have always lived: of a binding contract for the sale of land but unenforceable. I believe that the reform will simplify the law. It is a proper provision that all the terms must be in writing. There ought to be formality in the law so that when somebody is entering into a contract for the sale of land they are entitled to have the terms set out in writing. I believe that to be essential. It is interesting to note that the drafting of Clause 2 is different from the draft in the Law Commission's report.

The last provision of the Bill deals with the abolition of the rule in Bain v. Fothergill. I was not aware of the fact that there was a modern school of thought in favour of the retention of that rule. Perhaps there will be a discussion on the subject. The Law Commission sounded out the professions about the matter and had extensive consultations. When there is a scheme of composite reform, such as that put forward by the Law Commission after proper consultations, it would be wrong for us to interfere by means of a chance amendment which may enjoy favour at a certain stage of the Bill in your Lordships' House.

Again, the draft of the Bill was somewhat different to the Bill which your Lordships' House is considering today. For personal reasons, I prefer the draft Bill because that sets out what is the rule in Bain v. Fothergill. I can imagine in future generations, when Bain v. Fothergill has largely disappeared from the law books, that it would be helpful to have the first clause of the draft Bill which states: There is hereby abolished the rule of law (known as the rule in Bain v. Fothergill) restricting the damages recoverable for breaches of contract occasioned by defects in title to land". It sets out what it was and states that it is to be abolished, which seems to me to be an advantage.

However, these are obviously very desirable reforms and I hope that this Bill ends its journey through your Lordships' House unamended.

3.30 p.m.

Lord Coleraine

My Lords, I wish to say quite a few words about two matters before us this afternoon; namely, the sealing of deeds and the abolition of the rule of law known as the rule in Bain v. Fothergill.

Perhaps I may associate myself with the words of the noble Lord, Lord Hooson, in complimenting the Law Commission on all the work it has done over the years. However, I wonder whether or not the noble Lord, Lord Hooson, recognises that what he has said about the changes in the Bill between the time when they left the Law Commission and today rather suggests that, however worthy the Bill may be, a Bill which comes from the Law Commission should not be treated as though it had arrived as a tablet of stone, but should be given all the scrutiny which your Lordships' House and the other place give to Bills before them.

On the question of the sealing of deeds, I altogether agree that the affixing or non-affixing of a wafer seal to a document which, by legal fiction, represents sealing and is one ingredient of the deed, at present is now so little regarded as to have brought the law into disrepute. It is widely seen as so much legal mummery and has caused great difficulties for judges who have wanted, on the one hand, to give effect to deeds which they considered worthy and to set aside other less worthy unsealed transactions in cases where evidence that a document was ever sealed is lacking.

Nevertheless, I hope that my noble and learned friend will not be so quick as he suggested to bring this Bill into force. The Law Commission has done a good hatchet job—if I may put it that way— on sealing in its report No. 163. However, I draw attention to paragraph 1.2 of the report which states: This report does not consider the need for deeds either generally or for particular transactions. It is confined to the formalities for deeds". It seems to me that that is an unsatisfactory confession. The Law Commission should have considered what deeds do, and then whether the ingredients of deed which will be left when this Bill is brought into effect will provide enougih legal magic to draw attention to the very real distinction which should exist between a deed and a document which is merely signed under hand. The Law Commission should have looked at the question of whether all or any of the distinctions in terms of effect or consequence which distinguish deeds from other documents should be maintained.

There are two particularly significant consequences which follow from the signing of a deed and which distinguish deeds from other documents. My noble and learned friend has drawn attention to the fact that a promise in a deed, unsupported by consideration, that is to say, a gratuitous and voluntary undertaking, may be enforced against the promisor by legal action. Also, under the statutes of limitation, the time to bring proceedings for breach of contract contained in the deed will generally be 12 rather than six years.

If that distinction between deeds and other documents is to continue, there must be some formal dignity attached to the making of a deed, otherwise we shall continue to meet difficult cases, and the need to decide whether a deed has in fact been made, just as now. Although in formal terms under this Bill the deed seems to have gained something in the need for witnessing and lost something by the abolition of sealing, I believe that on balance the loss will far exceed the gain because it has always been the recommended practice that deeds should be witnessed. One will also have to answer the man in the street who will ask, "What! Am I still liable after 10 years just because I put my name to a dirty scrap of paper rather than to another one almost like it?"

I hope that my noble and learned friend will give some thought to the question as to whether or not the substantive law should be reformed before these clauses are brought into operation. If it is decided that no reform or only partial reform is called for, perhaps I might suggest that additional formality for all or some deeds might be provided by the introduction to this country of some witnessing equivalent to notarial witnessing.

Signatures, including witnesses signatures, are sometimes forged, which presents real problems. It will be no bad thing if some deeds have to be witnessed by someone who is obliged to be satisfied as to the identity of the person signing, and there must be clear records to show how and the extent to which he is satisfied. I appreciate that that will create further red tape but, nevertheless, if special consequences are to follow the making of a deed it is surely right that we should consider whether or not special formalities should attend their creation.

The rule in Bain v. Fothergill has bothered me for 35 years. I welcome this chance to renew my acquaintance with it through reading the Law Commission report, and I am glad that it is to be abolished. Mr. Fothergill knew perfectly well that the lessors' consent to assign Miss Walter's royalty was needed and had not been obtained when he contracted to sell the royalty to Mr. Bain. He never bothered to tell Mr. Bain that. It has always seemed to me somewhat shocking that when, subsequently, the lessors' refused consent Mr. Bain could not recover damages for the loss of his bargain. He was merely entitled to the return of his deposit, interest and expenses.

The rule meant that where it was necessary for a vendor to obtain a lessor's consent to an assignment to a purchaser, it was possible for a vendor who had repented his bargain when he realised he could get a better bargain, to persuade his lessor to refuse consent and thus to escape practically unscathed from his agreement.

It always seemed simple to me. A contract to sell land should be treated like any other contract. If the vendor knew that consent to the assignment was required and had not been obtained, he should provide in the contract for what would happen in the event of consent to the assignment never being given. That should be agreed with the purchaser. Then all would be well. There was no reason in those circumstances why a vendor in breach of contract should not pay full damages for the purchaser's loss of bargain, should the point arise.

I say that 35 years ago the rule in Bain v. Fothergill should have been abolished. The rule was born in earlier days, when title had to be shown for at least 60 years to unregistered land, as against the minimum of 15 years in the case of unregistered land today and no time at all in the case of registered land. There were also problems in the proof and examination of title which have gradually been swept away by a long series of land law reforms, culminating in the 1925 Law of Property Act. The rule was originally handed down by the judges in order to deal with conveyancing problems and defecting titles which arose in title deeds which were, in words attributed to Lord Westbury: difficult to read, disgusting to touch and impossible to understand". The rule reflected the need of conveyancers and their clients in those days.

Therefore, as I understand it, conveyancing was altogether a different practice then. The contract was not what it became many years ago. It was a somewhat provisional agreement to sell and to buy, but always subject to what would now seem the curious proviso that the contract would be all right so long as, after contracts were exchanged, it was possible to prove the title.That rule was founded not on absolute principles, but it was a rule of convenience based on conveyancing conditions which have long since passed away.

The statement of noble and learned Lord, Lord Gardiner, on a judicial precedent in the House of Lords was in 1966. The appellate Committee recognised that, too rigid adherence to precedent may lead to injustice in a particular case". Since then the House of Lords has been able, in the exceptional case, to depart from decisions when it appears right to do so". I submit that a case turning on the rule in Bain v. Fothergill should have been before the Appellate Committee years ago to give the Law Lords a chance to overturn the rule. It is very much to be regretted that during the past 21 years no case has been dragged from the courts of first instance to the Appellate Committee for that very purpose.

I have to tell the House that I note that even the rule in Bain v. Fothergill started in the Court of Exchequer. It was then affirmed without argument in the Exchequer Chamber so that the matter might be brought directly to your Lordships' House. However, I have to say that the original judgment in the Exchequer Court was on 15th November 1870 and the speeches of the Lords of Appeal were delivered three and a half years later on 22nd June 1874. 1 might also add that Mr. Fothergill exchanged contracts for the purchase of Miss Walter's Royalty and other properties in August 1863 and that the purchase had not been completed on 17th October 1867, four years later, when Fothergill entered into his contract with Bain.

It is not just that the Appellate Committee, following the statement of the noble and learned Lord, Lord Gardiner, could have disposed of Bain v. Fothergill the sooner. It would have enabled the old monster to be disposed by reasoned speeches within the courts of the common law. That would have laid down precedent to assist in the understanding of the decision and the further development of the law.

To legislate simply in the terms of Clause 3 of the Bill— The rule of law known as the rule in Bain v. Fothergill is abolished"— may be economical in words, and for that we should be grateful, but it may create its own chaos if there is question as to what exactly it is that has been abolished, and there will be no speeches of Law Lords to assist future judges in their interpretation of the bald words of statute.

I know what the rule is which is known as the rule in Bain v. Fothergill. It is a rule which prohibits an award of damages for loss of bargain in contracts for disposals of land. For the future, a court which on general principles awards such damages will not need to withhold them because of the rule. That is clear and I do not wish to cast doubt on the effectiveness of the legislation we are considering. I want merely to draw attention to the fact that difficulty of interpretation may result from this type of legislation. The rule known as the rule in Bain v. Fothergill is not in fact the rule in Bain v. Fothergill; it is a rule derived from the 1776 case of Flureau v. Thornhill and has been subsequently mulled over by academics and pulled about in a number of cases ending with a mauling in the maggot farm case heard by the Court of Appeal two years ago, to which my noble and learned friend referred.

In Bath v. Fothergill itself there are 40 pages of speeches. Paragraph 4.1 of the Law Commission Working Paper says that the rule is uncertain both in its scope and in its application. There has been uncertainty as to the wording of the clause in this Bill, to which the noble Lord, Lord Hooson, referred, because in the draft Bill as appended to the Law Commission report additional words, which are not now before us, described the rule as, restricting the damages recoverable for breaches of contract occasioned by defects in title to land". I wonder whether the draftsman eventually decided that the words were too broad, too restrictive, or both; or simply too dangerous to entrust to the courts to interpret.

It may be that there is an actual rule to be found in the speeches in Bain v. Fothergill. The special circumstances of that case were that the vendor was aware of the defect of title. Can it not be argued that we are now abolishing a limited rule which provides that damages for loss of bargain are not to be awarded where the vendor is aware of the defect of title?

This is not merely a debating point. There is a case for arguing—your Lordships have heard it referred to—that Bain v. Fothergill should not be entirely disregarded and that this is as far as we should go. It can be argued that where some totally unforeseen and unforeseeable defect of title is turned up there should be no damages for loss of bargain but merely a return of the parties, so far as possible, to where they were before contracts were exchanged. After all, the standard printed contracts for the sale of land, which are generally used or adapated for most sales and are designed to strike a fair balance between vendor and purchaser, provide for a vendor to have the right to rescind the contract if the purchaser persists in an objection to the title which the vendor shall be unable or unwilling, on reasonable grounds, to remove; and in the case of such a rescission the vendor is to return the deposit—no more—and the purchaser is to return the papers and the abstract.

It is clear to me that the effect of abolishing the rule must in general in future include the need for lawyers to devote much more time before contract to consideration of title, possible defects of title and what to do about them. I do not suggest that that will be a bad thing—quite the contrary—but it will tend to lengthen the time between agreement in principle for the sale of land and the exchange of contracts. I am sure that we are all agreed that it is in this period that the speeding up of conveyancing practices is required.

In my view this points to the absolute need for house owners to instruct their solicitors immediately they have decided to sell their properties. They should not leave it so that the first a solicitor learns of an impending sale is when he receives a memorandum of the agreed terms from the estate agent.

Purchasers too should learn new disciplines. This is not yet well recognised, but when a purchaser is pleased by a house he should at once instruct his solicitor. He should ask the agents whether a contract would be ready to sign, should price be agreed, whether a copy of the lease can be inspected at once and, indeed, who will be acting for the vendor in a sale: will it be solicitors, licensed conveyancers, the vendor himself, or perhaps in the future some other Tom Noddy?

Incompetence by conveyancing practitioners other than one's own can be extremely damaging. Here I mention the words of the learned Vice-Chancellor, Sir Nicolas Browne-Wilkinson, in the recent case of Hall v. Eade which was reported in The Times only last Thursday. A purchaser had not been represented by a lawyer. Difficulties had arisen and a lawyer had not been consulted in time. The purchaser had become involved in a substantial liability for costs. The Vice-Chancellor is reported as saying that it was important that the public should appreciate that when matters got into the realm of dispute it was not always appropriate to be advised otherwise than by a solicitor. The point I particularly make here in concluding is that undoubtedly not just the purchaser but the vendor also suffered (anyone involved in litigation suffers) because his purchaser was not advised by a lawyer.

3.49 p.m.

The Lord Chancellor

My Lords, I am grateful for the general reception accorded the Bill and for the acknowledgment of the work carried out by the Law Commission including the method by which it works which, I agree, has very much changed this particular approach to law reform. Governments also have learned from the techniques of the Law Commission on how to proceed in such matters.

I wish to refer briefly to one or two topics that have been raised. The noble Lord, Lord Prys-Davies, mentioned the point about elderly and infirm persons executing deeds and asked whether some protection is required. My noble friend Lord Coleraine mentioned the possibility of material execution in this context. In this country so far that system has not been invoked. I believe it is thought that reliance on the law as regards undue influence and fraud is probably sufficient protection.

The next question to be raised was whether the provision that enables reference to be made to another document would allow reference to more than one. I believe that the Interpretation Act would apply to this. Accordingly, it will be possible to have the necessary words in more than one other document.

I believe that there is nothing in the Bill to affect the operation of the doctrine of estoppel. I believe that if one had a succession of contracts all in terms that did not in any way exclude liability for defect in title, then there would be a liability right down the line. It would be a condition of each of these contracts in the line that the title passing should be good. If that was breached by the first vendor then his purchaser would have an action against him and so on down the line. I believe that to be just. If someone down the line was anxious about the matter, perhaps concerning the solvency of someone further up the line, then under the rules now proposed it would be open to make some exception or provision in the contractual arrangements to cover that.

The general view that the Law Commission proposals should receive a speedy passage is an interesting one. I believe that I have heard the noble Lord, Lord Hooson, propose previously that there might be a special parliamentary system for dealing with Law Commission Bills. Having regard to the amount of consultation that goes into these matters, it is a very reasonable suggestion. However, as my noble friend Lord Coleraine said, Parliament likes to scrutinise for itself and not delegate these responsibilities to any other. I fear therefore that it may be some little time before the noble Lord's proposals come into effect.

As regards the clause dealing with the rule in Bain v. Fothergill, if there was real doubt as to what the rule was and one is abolishing it, there is not much harm in not trying to specify it. I believe this to be perhaps the wiser course. There may be matters for further consideration at later stages of the Bill. In the meantime I believe that your Lordships are very strongly of the view that the Bill should be given a Second Reading. Therefore it is with some confidence that I put the question.

On Question, Bill read a second time, and committed to a Committee of the Whole House.