§ 7.20 p.m.
§ The Lord Chancellor (Lord Mackay of Clashfern)
My Lords, I rise to move that this Bill be now read a Second time.
I am particularly pleased to be able to bring this Bill before your Lordships, for two reasons. First, it gives effect to two reports of the Law Commission, which I know will be very welcome to many noble Lords who have spoken in support of the work of the commission and more widespread implementation of its recommendations.
Secondly, the Bill has a value and importance beyond the implementation of the two Law Commission reports, valuable and important though that is. It also carries with it the prospect of easier implementation of many more such reports and other measures of law reform. I have for some time been concerned about the difficulty of accommodating law reform in the usual legislative process, and welcomed the recommendation of the Select Committee on the Committee Work of the House, chaired by my noble friend Lord Jellicoe, that 1270 use should be made of special Standing Committee procedure for such Bills a; are on the technical side and devoid of party political controversy. Committees off the Floor of the House will be able to take a limited amount of evidence on a Bill from interested parties over a specified period before considering it clause by clause.
Taking such committees off the Floor will reduce the amount of time required in the House and enable often complex matters to be considered with the benefit of evidence. Thereafter, assuming that a consensus has been established, the remaining stages might be taken quite speedily. This will facilitate the inclusion in the legislative programme of measures such as Law Commission Bills which might otherwise not find a place.
If your Lordships give this Bill a Second Reading, I shall move that it be committed to such a special Standing Committee. It is a useful, largely technical and uncontentious measure which is eminently suitable for consideration by such a committee, and I hope sincerely that it will blaze a trail for many others to follow.
In view of the technical nature of the Bill, I intend, with your Lordships' leave, to explain its provisions in fairly broad terms to avoid the House becoming bogged down in the kind of minutiae which a special Standing Committee is so well equipped to consider. Full Notes on Clauses are at present available in the Printed Paper Office for any noble Lords who may wish to examine the Bill in closer detail.
Fuller explanation of the current law and the proposed changes is contained in the two Law Commission reports from which the Bill derives, on: Transfer of Land: Implied Covenants for Title (Law Commission Report No. 199), and Property Law: Title on Death (Law Commission Report No. 184). Both reports were preceded by full consultation based on a working paper, and they epitomise the thorough and careful work which one has come to expect of the. Law Commission.
The Bill comprises 24 clauses, divided into three parts. Part I implements the recommendations in the report on Implied Covenants for Title and derives from the draft Bill appended to that report; Part II similarly implements the recommendations in the report on Title on Death and derives from the commission's draft Bill; and Part III sets out general and ancillary provisions covering the whole Bill.
Part I effects changes in relation to certain obligations, known as covenants for title, which arise when the owner of land or other property disposes of it. In this situation the bargain commonly includes the owner giving undertakings that the title which he is vesting in the other party is as he represented it to be, and offering assistance if further proof is needed in the future. These covenants were originally drafted anew for every disposition; they eventually became standardised, but were still laboriously set out in full on the face of the disposition documents. They do not now normally so appear, and have not done so for a long time, but are instead implied into the documents by statute when certain "key words" appear on the face of the documents.
1271 Clauses 1 to 5 define the nature and effect of statutory covenants for title and when they will be implied. Clause 1 sets out basic concepts and definitions, and Clauses 2 to 5 set out the covenants themselves and specify the circumstances in which each will be implied. All the covenants have been redrafted to put the guarantees in terms of what the grantee might reasonably be entitled to expect, rather than in terms of other persons' acts or omissions as at present. They also offer an absolute guarantee, given by and enforceable against the person disposing of the property, rather than the present qualified guarantees. While these changes of themselves greatly reduce the length and complexity of the covenants, they have also been redrafted in a simpler and clearer form, with obsolete and unnecessary wording removed. The "key words" by means of which the covenants are implied are also changed, so that there are only two simple sets of key words, namely, "with full guarantee", and "with limited guarantee", replacing the present wide range of key words which depend on the grantor's capacity.
Where a disposition is made "with full guarantee", the covenants in Clauses 2 and 3(1) will in all cases be implied: these replace and improve upon the covenants which are at present implied when a person makes a disposition "as beneficial owner". In all dispositions made "with limited guarantee", the covenants in Clause 2 and the limited covenant in Clause 3(2) will be implied. This provides significantly better protection than the covenants currently implied when property is conveyed in any limited or fiduciary capacity; for example "as trustee".
The additional covenants in Clauses 4 and 5 are implied whether the guarantee is full or limited. They provide additional protection in cases where the grantee's position is inherently more insecure. The covenant in Clause 4 is implied where the property being disposed of is leasehold land, and is to the effect that the lease is still subsisting and that it is not liable to forfeiture. The covenants in Clause 5 are implied on a mortgage of leasehold land or of property subject to a rentcharge, and are in each case to the effect that the mortgagor will perform certain obligations imposed by the instrument creating the lease or the rentcharge.
Clauses 6 to 9 set out supplementary provisions covering such matters as the passing of the benefit of the covenants and the availability of Welsh language alternatives to the new key words. I hope that this is an aspect of the Bill which at least some noble Lords may wish particularly to welcome.
Clauses 10 to 13 set out the transitional provisions. The effect of the actual agreement between the parties is generally preserved. Thus, the existing statutory provisions will apply to dispositions completed before commencement of Part I, and in nearly all cases where the disposition takes place after commencement but in pursuance of a contract entered into before commencement. In certain exceptional circumstances where there has been an intervening disposition of the property with full guarantee, the new provisions will apply.
Part II of the Bill implements the Law Commission's recommendations concerning some of the technical 1272 legal problems of dealing with land following the death of the owner, which cover four separate areas. The first area concerns the vesting of intestate estates prior to a grant of representation. Such estates at present vest in the president of the Family on, which presents the potential for problems with succession between holders of the office, since the president is not a corporation sole. Clause 14 provides for such estates to vest instead in the Public Trustee, who is a corporation sole.
The second area concerns land charges, which must presently be registered in the name of the estate owner at the time of registration, causing problems where the estate owner dies between creation and registration of the charge. Clause 15 deals with the difficulty by providing that registration in the name of an estate owner who has died between creation and registration will still be valid notwithstanding his death.
The third area concerns the protective requirement that all personal representatives should concur in a conveyance of land after the death of the owner. Quite anomalously, this requirement does not extend to the contract for the sale of the land or to interests under a trust for sale (which are increasingly common as a result of the increase in joint ownership, particularly of residential property). Clause 16 accordingly extends the requirement to all these matters.
The final area concerns the difficulty of performing satisfactory service of notices affecting land, such as notices to quit, where the owner of the land in question has died. Clause 17 provides a saving for service in good faith on a person who has in fact died. Clause 18 provides a new procedure for service where the person wishing to serve the notice has reason to believe that the intended recipient has died. This involves service of separate copies at the deceased's last known place of residence or business in the United Kingdom and on the Public Trustee.
Clause 19 makes provision as to the functions of the Public Trustee in relation to notices served upon him as a result of the changes effected by Clauses 14 and 18. It enables him to charge fees so that he may cover the cost of the extra work without recourse to public funds and also provides a power to make regulations covering such matters as the form in which records may be kept.
Part III of the Bill deals with Crown application, consequential amendments and repeals, extent, commencement and short Title.
The Bill represents a useful and uncontroversial measure of law reform which has attracted the support of the legal profession. We are all grateful to the Law Commission for the careful work which it put into the preparation of the reports on which the Bill is based. Accordingly, with a good deal of confidence, I invite noble Lords to give the Bill a Second Reading.
Moved, That the Bill be now read a second time. —(The Lord Chancellor.)
§ 7.30 p.m.
§ Lord Mishcon
My Lords, how pleasant it is that this House is discussing a completely non-partisan measure, where lawyers glory in their technical phrases and the 1273 layman wonders whether the president of the Family on is being praised or insulted when it is announced to the House that he is not a corporation sole.
It is also pleasant to be able to speak after the noble and learned Lord the Lord Chancellor has with such clarity explained the provisions of the Bill. Therefore, I who succeed him need not bore noble Lords with a summary that would not be so clear and so efficient. Suffice it to say that lawyers have been almost plagued with traditions in regard to implied covenants that go back over the years—indeed, to the days of unregistered title; before the Law of Property Act 1925; and indeed when old abstracts of title were described, so it is said, by Lord Westbury, as,difficult to read, disgusting to touch and impossible to understand".It is about time, as the noble and learned Lord pointed out, that we had implied covenants of title that deal with a modern age where land registration is compulsory throughout the kingdom, substantially carried out to date and where words are used which, as the Law Commission pointed out, should be "modern, clear and straightforward". 'This is a welcome part of the Bill. I do not need to say any more about that.
Turning to the second part of the Bill, again, how right it is that the matter should be transferred. On the question of administration of intestacies, it is right, where executors do not want to act, or for some other reason do not act, that instead of the administration being effected in the name of the probate judge, as he is called, it should go to the public trustee.
One thing worries me about that. It is only a slight worry but it is important to many people. The sort of estates about which we are talking here would be largely small estates. We are dealing therefore with poor families. I noticed, as I am sure your Lordships did, when looking at this Bill that the estimated cost of carrying out its provisions will be in the region of £30,000, and that that will be met,by a structure of fees for service, search of register and provision of copies".I do not know whether the noble and learned Lord could help us by saying that the fees that will be charged have already been thought about and that the amount of those fees will be nominal. I looked at the figure of £30,000 and I had in my imagination some of the people who will be applying for the copies, the searches and the service. I trust that those charges will be nominal.
At the outset of his remarks, the noble and learned Lord referred to the Law Commission reports and his joy at the fact that at least two of them were now being brought into effect by a Bill of this kind. He also called attention to the Jellicoe Report. Perhaps I may quote from page 55 of that report, where the recommendation to which the noble and learned Lord referred was summarised. I shall read paragraphs 183 and 184:We recommend the experimental use of special standing committee procedure—whereby committees off the floor would be able to take a limited amount of evidence on a bill from interested parties over a specified period before considering it clause by clause. Such committees would initially consider only bills introduced in the Lords, largely devoid of party-political controversy … This procedure would be well suited to the proposals put forward by the Lord Chancellor to facilitate the introduction of certain legal and technical Bills, for example 1274 certain bills proposed by the two Law Commissions or those concerning company law, which might not otherwise find a place in the legislative programmeNobody has suffered disappointment alt the slow way in which the Law Commission reports find their way to the statute book more than the noble and learned Lord the Lord Chancellor. A number of your Lordships—and I humbly include myself—have pleaded that those worthy reports (as they are) dealing with law reform too often sleep upon the shelf and gather dust.
It was, I believe, only last September when the chairman of the Law Commission, Mr. Justice Brooke, wrote in a legal journal, after describing the procedures that the commissions go through:What happens then? The present position is well described; in our latest Annual Report, which can be found in all the Inn libraries. Increasingly often, nothing at all, at any rate for a very long time. The wheel has turned full circle since 1965. There are now thirty Law Commission reports, incorporating law reform recommendations of high quality, which are waiting for parliamentary time. All of them are in areas of law where the law was known to be thoroughly bad or out of date when the Commission originally embarked on its work, and everything we do is, of course, paid for by the taxpayer".We have pleaded for parliamentary time. It is not the fault of this House that these reports have not found their way into the legislative programme. And in another place they are not given the priority that they deserve. Perhaps it is because of the parliamentary time that would be taken if these matters were discussed on the Floor of the House. As the noble and learned Lord rightly said, the Jellicoe Report recommendation, which has been carried out in respect of this Bill, may well enable these 28 reports (if I may subtract the two from the 30) to be considered and to find their place in our legislative programme. I believe that that is the wish of the noble and learned Lord. I can only say that in that he is warmly supported by those who sit on this side of the House, and I believe by those sitting elsewhere. I commend this Bill to the House for its Second Reading.
§ 7.39 p.m.
§ Lord Wilberforce
My Lords, I am very happy indeed to follow the noble Lord, Lord Mishcon, in what he said about the introduction of the Bill. As noble Lords know, on many occasions I have advocated and pressed upon the Government and upon the noble and learned Lord on the Woolsack the greater and quicker implementation of Law Commission reports. It is therefore very gratifying to see a success in that direction—a success attributable to the efforts of the noble and learned Lord in having this Bill put into the parliamentary process.
One's satisfaction must, however, be tempered by a little anxiety. The latest report, its 28th report, makes clear that the Law Commission had hoped that there would be speedy implementation, using the Jellicoe Report procedure, not only of this Bill relating to two matters concerning the law of property but also of three other, totally non-controversial Bills in the area of private international law. The noble and learned Lord has succeeded in getting the two property measures into the programme but not, unhappily, the other three.
The noble Lord, Lord Mishcon, has testified that it involves a very great effort on the pad of the noble and 1275 learned Lord to persuade those in charge of the programme to let into it the Law Commission Bills. Noble Lords should not be deceived by the easy presentation of the noble and learned Lord and fail to appreciate the very great efforts he has made over the past year—I understand that it has taken about a year —to persuade those in another place and in this House also to allow the programme to include these measures.
Therefore, I congratulate the noble and learned Lord on having got the Bill into the programme. But we must most respectfully urge him to continue his efforts in the same direction so as to get, first, the three completely technical and non-controversial private international law Bills into the programme and, as the noble Lord, Lord Mishcon, said, the 28, or 25, other Bills to which the Law Commission report refers. Your Lordships will find in the report a very trenchant and, if I may say so, effective review of the whole matter and a case, which is quite unanswerable, for requiring Parliament to give time for future reports.
As for the two areas covered by the Bill, I have very little to say. The first part deals with implied covenants; it is an entirely desirable simplification. I have no doubt about that. I have only one anxiety about it; perhaps the noble Lord, Lord Coleraine, will be able to say something about the matter. Nowadays, particularly with the spread of registration, conveyancing is becoming very largely a DIY matter. More and more people go into shops and buy the right form, or excellent books can be bought. One book is published by the Consumers' Association. I know many people who, instead of consulting one of my learned friends in the professions, prefer to do things themselves. I wonder how the Bill will accommodate the very large amount of resources at present available to those wishing to carry out their conveyancing themselves.
The Bill provides for adaptation of existing statutory forms in Clause 9 and provides for them to be read as adapted to the provisions of the Bill. But as regards commercial forms, which can be obtained from a stationers' office, I suppose that there has to be time before they can be adapted to the new terminology. The noble and learned Lord may well think fit to delay or adapt the coming into force of this part of the Bill in order to enable private industry and private enterprise to adapt existing forms to the new simpler requirements of the Bill. That is my only thought on Part I of the Bill.
As regards Part II, I too had noticed the existence of fees and the reference to £30,000. One knows that, under Parkinson's law, if a sum of money is provided, one can be quite certain that it will be spent. There is a provision in the Bill which states that the Public Trustee, simply by virtue of the fact that he takes over from the probate judge, does not have any duties or responsibilities. That way, as he does not have any duties, presumably he cannot charge anything. Nevertheless, there are provisions about notices which may have to be given and for which fees can apparently be charged. Again, very respectfully, I endorse what the noble Lord, Lord Mishcon, said. One has to keep a watch on the matter because, as he said, the estates in question in the Bill may be quite small.
1276 I make just one other general point. In the drafting of the Bill one notices a very skilled hand. To me, it is very refreshing and satisfactory to find simple language, even in a very technical context, used in the drafting of the Bill. It is easily understood and easily applied by lay persons. Would that many other pieces of legislation were as simple. I feel that the Law Commission is greatly to be commended for the style in which the Bill has been drafted. I should like to hold it up as a model for legislation in other areas. I join in commending the passage of Bill.
§ 7.45 p.m.
§ Lord Coleraine
My Lords, I welcome the Bill. It contains two useful measures based on Law Commission reports. I also welcome the Motion to commit the Bill to a Special Standing Committee. I suspect that if the Bill were to go into Committee of the Whole House its credentials would be taken as an open and shut matter and we should probably have no further debate. Neither part of the Bill is in any way contentious. I have no reason to suppose that the Special Standing Committee will wish to make amendments. But if there is anything which can improve the Bill, I feel that it is more likely to happen under the new procedure than it would if the Committee were taken on the Floor of the House.
With Law Commission Bills in particular, I feel that it is useful to have the opportunity to hear from a Law Commissioner and from outside interests before the Committee proceeds to examine the Bill in detail, clause by clause. I personally have no experience of the work of Public or Private Bill committees off the Floor of the House. I imagine that the evidence taken in the first stage would include the opinions of witnesses as to whether or not a particular phrase or clause should be included in the Bill or omitted from it. That would seem to me to be of inestimable value and would save a great deal of time when it comes to the Committee stage itself.
More important perhaps, I feel sure that in a Bill of this nature the Committee would wish to avail itself of the experience of the Law Society. The Bill touches aspects not only of the law but also of the practice—that seems to me an important point - of conveyancing and the transfer of property. In response to a point made by the noble and learned Lord, Lord Wilberforce, I believe that the Bill—certainly the first part of it—so far as conveyancers go, is a rather sophisticated measure. I do not believe that it will make it any easier for people who are buying or selling their houses to do it for themselves.
We currently hear from the Law Society, and properly so, on such matters as the right to silence. We are not accustomed to hearing as much on matters such as those in the Bill, which are rather dusty and which affect most of us in our lives from time to time, whether or not we appreciate it.
I should like to say just a few words about the first part of the Bill. The Explanatory and Financial Memorandum begins with the words:This Bill introduces reforms to simplify and clarify the law of property".1277 With respect, so far as statutory covenants for title are concerned, in my opinion the Bill will fail in its best intentions if it merely simplifies and clarifies. It ought to alter practice. As I read its report, the Law Commission expects much the same.
I have looked particularly at the proposed new full guarantee of freedom from incumbrances in Clause 3(1), which seems to me to be a most important provision. It would seem to impose on a vendor a much greater liability than exists under the present law to disclose incumbrances, including incumbrances of which the vendor may not be aware and incumbrances of which in fact the purchaser may be aware. Let me give an example. As I read the Bill, a public right of way across property would be an incumbrance to which the full guarantee would apply. A purchaser only has to look at the appropriate ordnance survey map and he will see whether or not there is a right of way. Nevertheless, the vendor cannot be sure that the purchaser will do that, so the vendor will have to specifically disclose that there is a right of way.
To take another example, a private right of way between two points may have come into existence because of a hideous legal fiction known as the doctrine of lost modern grant. That requires, among other things, at least 20 years usage of the claimed right. There are those who say that prescribing for easements amounts to legalised trespass and should form no part of our law. The Law Reform Committee recommended as much nearly 30 years ago.
There may be a right of way which has been acquired by prescription and the vendor may know nothing at all about it. He may only have owned the land himself for a few years. If he fails to disclose the right he will be liable under the full guarantee whereas at present he will escape liability because he did not create the right.
As I understand it, the intention of the Law Commission seems to involve a slight loosening of the principle of caveat emptor. I am inclined to feel that that is reasonable and that in cases of difficulty such as I described, if there is to be loss it should fall on the vendor rather than the purchaser. But we must remember that the full guarantee is optional. The Bill allows the parties to vary it. Generally speaking, my experience is that vendors will be in a better position to water down the full guarantee than purchasers will be to insist on its inclusion in a conveyance in its full, unadulterated form.
Therefore, there seems to me to be a danger that the full guarantee may become the exception rather than the rule in conveyancing wherever there is a hint of difficulty. If that happens, it will be unfortunate. That is why I referred to the importance of evidence from the Law Society arising from the profession's experience of practice as well as of the law of property. Having struck that sombre note, I conclude on an upbeat and wish the Bill every success.
§ 7.52 p.m.
§ Lord Prys-Davies
My Lords, I am grateful to be allowed to make a brief intervention. I support Part I of the Bill and in particular I welcome Clauses 8(4) and 9. 1278 Having been involved for some years in the preparation of legal documents in the Welsh language I am sure that there will be a special welcome for those two clauses.
When the lawyer is drawing up the legal document in Welsh and wishes to create those well-known covenants which are implied in certain statutory words, he has been in considerable difficulty. I believe that the two clauses propose a satisfactory solution which will be widely accepted. They close the gap and the Welsh terminology, gwarant llawn and gwarant cyfyngedig convey the meaning with precision.
§ 7.53 p.m.
§ The Lord Chancellor
My Lords, I thank all noble Lords who have participated in the debate for the warm welcome given to the Bill and for the kind remarks that accompanied that welcome. In particular, I greatly appreciate my noble and learned friend Lord Wilberforce coming to the House this evening. I know that he has done so at considerable personal sacrifice.
I am anxious that Law Commission reports whose policy has been generally accepted should be legislated. It is true that there are a number awaiting legislation. The great advantage of this procedure, if it works well —as I hope it will —is that it will open up a new method for dealing with these Bills. I hope that we can count on co-operation from all parts of both this House and the other place in that regard in due course. My noble and learned friend Lord Wilberforce referred to the other three reports awaiting implementation. I felt it right to try to progress one group through by the new procedures and experiment in the hope that that works so well that it will be easy to progress the others. I hope that that will be so.
My noble friend Lord Coleraine pointed out that it is one thing to simplify the law and another to implement improvements in practice. He pointed out that the full guarantee will be optional, according to the Bill. I certainly hope that simplification of the law will lead to improvements in practice and that the Law Society and practitioners will be able to use these clear options to give their clients—both vendor and purchaser—what is agreed. The options will clarify the distinction between the two. If a vendor is not prepared to give a full guarantee, attention may be focused on why and thus bring out the sort of question referred to by my noble friend.
I appreciate the remarks made about the form of the legislation. One of the benefits of a Law Commissioner is that he is often not subject to quite the same timetabled constraints in the drafting of legislation as are other proponents of legislation. The polish is sometimes evident as a result of that. In relation to fees —a matter raised by the noble Lord, Lord Mishcon, my noble and learned friend Lord Wilberforce and to some extent by my noble friend Lord Coleraine—the Public Trustee gave thought to the sort of fees that would be required. The view of the Public Trustee is that fees in most cases will be relatively modest and there will be no profit element. They will simply cover the cost of doing the work.
In relation to outstanding Law Commission reports, some of them are not suitable for this procedure. For 1279 example, one of the 28 is the Law Commission's report on the grounds for divorce. Your Lordships will understand that I am doing my best to carry that forward. However, I do not think it is likely to come by the Jellicoe procedure. Therefore, we need to be a little selective, and judgment about which are properly subject to this procedure is probably necessary. Otherwise we may damage this channel for dealing with the cases for which it is suitable. I hope that the Special Standing Committee procedure will prove useful in the way mentioned by my noble friend Lord Coleraine in obtaining practical evidence about how the changes might work.
In relation to the introduction of new forms, your Lordships will see that the commencement provisions are by order, and I should certainly like to take account of the need to change current forms before the Bill comes into force after some notice that that was my intention. That may help to cope with the problem.
I am grateful to all noble Lords. It may help us if proceedings are not too extended. I do not believe that they have been, due to the co-operation of your Lordships. I commend the Bill to the House.
§ On Question, Bill read a second time, and committed to a Special Standing Committee.
§ The Earl of Strathmore and Kinghorne
My Lords, I beg to move that the House do now adjourn during pleasure until five minutes past eight o'clock.
Moved accordingly, and, on Question, Motion agreed to.
§ [The Sitting was suspended from 8 to 8.5 p.m.]