§ 7.7 p.m.
§ Lord Browne-Wilkinson
My Lords, I beg to move that this Bill be now read a second time.
This is a short but very technical Bill. It has two aims. The first is to increase the rate at which land in England and Wales with unregistered title is brought on to the register of title kept by Her Majesty's Land Registry. As I shall explain, the Bill seeks to achieve that by a mixture of carrot and stick. The second aim is to make fairer provision for those who suffer loss by reason of some error or omission in the register.
Ever since Mr. Robert Wilson, a solicitor, first proposed a system of registration of title to land in 1846, it has been the aim of those who wished to reform conveyancing law to make the buying and selling of land as simple as dealings with other forms of property, such as stocks and shares. Now, 150 years later, that aspiration is close to fulfilment. Nearly 16 million of the estimated 21 million titles to land in England and Wales are now registered and more than 86 per cent. of all registered titles are computerised to the great advantage of the public.
The way in which unregistered land has been brought on to the register has been through a system of compulsory registration. There are two elements in this. The first—that the land must be in an area of compulsory registration—will always be satisfied now, because the whole of England and Wales has been subject to compulsory registration since December 1990. Secondly, the transaction must be of a type which is required to be registered. At present, these types are limited. The only dispositions of unregistered land that must be registered are conveyances of freehold land on sale; leases which are granted for more than 21 years; assignments of existing leases where the lease has more than 21 years still to run; and certain leases granted for 21 years or less under the right-to-buy legislation.
It is of course intended that all the remaining unregistered land in England and Wales should in time be brought on to the register. The existing triggers for compulsory registration will never achieve that objective because there is land that may never be bought or sold. In November 1992, Her Majesty's Land Registry issued a discussion and consultation paper, Completing The Land Register in England and Wales, in which a possible strategy was set out for completing the register. A number of options were put forward to achieve this. Two of the five clauses contained in this Bill are derived from the responses to that consultation paper.
A joint working group was set up in 1994 which consisted of representatives from the Land Registry, the Law Commission and the Lord Chancellor's Department. One of its objectives was to see whether parts of the Law Commission's third and fourth reports which had proved too ambitious for early implementation could be implemented at once. That objective has been fulfilled and the results are found in the First Report of the Joint Working Group which was published by the Law Commission as Law 1160 Commission Report No. 235. That report also makes recommendations to give effect to the responses to the Land Registry's discussion and consultation paper that I have already mentioned. The Bill at present before the House is based on the draft Bill attached to that report with a handful of minor changes.
I have mentioned that the first aim of the Bill is to speed up the rate at which land with unregistered title is brought on to the register and the Bill attempted to do that by a mixture of carrot and stick. I shall begin with the stick. The stick consists of the extension of the triggers for compulsory registration. Clause 1 replaces the existing Section 123 of the Land Registration Act 1925 with two new sections. The present Section 123 is not well drafted and has been criticised. The opportunity has therefore been taken not only to extend the triggers for compulsory registration but also to remedy the flaws in the present legislation.
The first of the new sections, Section 123, lists triggers for the compulsory registration of unregistered land that will apply when the provision is brought into force. First, all transfers of freeholds, all grants of leases for more than 21 years and all assignments of leases with more than 21 years to run will have to be registered if they are made for valuable or other consideration by way of gift, by way of an assent (including a gift of such land in a will) or to give effect to an order of the court. This is the effect of the new subsections 123(1) and (6).
Secondly, the new Section 123(2) provides that where an owner of an unregistered freehold or an unregistered lease having more than 21 years to run creates a first legal mortgage on that property which is protected by the deposit of documents of title, the title to the freehold or to the leasehold must be registered.
Those provisions will make two changes in the law. First, gifts of land, whether made in the donor's lifetime or by his or her will, are not at present registrable. In future they will be. Secondly, where an owner of an unregistered freehold or of a lease with more than 21 years to run either executes a first legal mortgage of it when it is unencumbered, or remortgages it, discharging any existing legal mortgages, he or she will have to register the title to that land. The two new proposed triggers were favourably received when the Land Registry consulted upon them in 1992.
It seems likely that in the course of time it may be desirable to add new triggers for compulsory registration. The new subsections 123(4) and 123(5) which the Bill inserts make provision for that to be done by the Lord Chancellor by way of statutory instrument. I understand from the Land Registry that it would not make any recommendations to the Lord Chancellor to extend the range of triggering dispositions without prior public consultation. The noble Baroness, Lady Trumpington, will be able to tell your Lordships whether my understanding is correct.
The new Section 123A, which is also inserted by Clause 1, makes provision for the compulsory registration of dispositions falling within the new triggers and explains what happens if registration does not take place. This new section simply makes explicit 1161 and clarifies what is thought to be the present law and meets certain technical difficulties that could arise under the present Section 123. In practice it is unlikely to be much used because there is usually compliance with the requirements for compulsory registration. It is, I am afraid, lawyers' law of the driest kind—as, I interpose, is the rest of the Bill. As the new section is not intended to make any substantial changes to the existing law, I need not expand on this.
I now turn to the provisions of the Bill that use the carrot rather than the stick. The Lord Chancellor is empowered to make fee orders. There is, however, only a very limited power to authorise what the Act calls "specially reduced fees". It is not possible under the present power to charge lower fees in order to encourage voluntary registration. It is clear to the Land Registry, both from responses to its 1992 consultation and from correspondence from practitioners, that voluntary registration would be much more popular if there were reduced fees.
Clause 3 of the Bill replaces the existing Section 145(3) of the Land Registration Act 1925 with the two new subsections. The new Section 145(3) will enable reduced fees to be charged in cases of voluntary first registration of title.
The Land Registry has estimated that if the new triggers and the new proposed reduced fees were introduced, the number of first registrations would increase by about a third. This would be a very significant step towards completing the register. It would mean that over a period of three years more than 1 million new titles would come on to the register, a quarter of a million more than would be the case with the existing triggers.
The second aim of the Bill is to make fairer provision for those who suffer loss by reason of some error or omission in the register. Those proposals have their origins in the Law Commission's third and fourth reports on land registration. Section 83 of the 1925 Act makes provision for the payment of indemnity where loss is suffered as a result of rectification and in cases where there has been some error or omission but the register is not rectified.
Clause 2 of the Bill is intended to improve the provision for the payment of such indemnity and to strengthen the Land Registry's rights of recourse against those who have actually caused the mistakes that led to the payment of indemnity. Clause 2 substitutes a new Section 83 in place of the existing section. Much of the substance of the section is the same as at present, though in places the wording has been improved. I shall confine my comments to the changes.
The first change is in Section 83(1)(b) which deals with a problem that first came to light in a case decided at the end of 1975. It became clear that even where a landowner succeeded in obtaining rectification of the register in his favour, he might still suffer loss, and that is because the rectification did not affect the rights of a third party that had already vested when the register was rectified. As Section 83 is at present worded, the registrar has no power to pay indemnity in such a case. The new Section 83(1)(b) will give him that power.
1162 The second change is concerned with the effect of the claimant's fault on his or her claim for indemnity. At present, where a claimant for rectification has caused or substantially contributed to the loss by his fraud or lack of proper care, his or her claim to indemnity is wholly barred. The new Section 83 subsections (5)(a) and (6) makes a number of changes to that rule. First, Section 83(5)(a) makes it clear that a person who has caused the loss by fraud, whether wholly or partly, is barred from claiming indemnity. Secondly, the same bar applies where the loss has been caused wholly by a claimant's lack of proper care. Thirdly, the new Section 83(6) introduces a principle akin to that of contributory negligence. If the claimant has partly contributed to the loss as a result of his lack of proper care, he or she is no longer totally barred from indemnity, as up until now. Instead, any indemnity is to be reduced to such extent as is just and equitable having regard to his share in the responsibility for the loss.
The third change contained in the new Section 83(5)(c) is to extend the requirements for the prior consent of the registrar to cover not only legal proceedings but also negotiations if the person claiming the indemnity is to be subsequently provided with an indemnity against such costs.
The fourth change is to extend the Land Registry's rights of recourse against third parties in cases where it has had to pay an indemnity. The registry already has rights of recourse in cases of fraud and can enforce against third parties the rights of the person indemnified. Under the Bill those rights of indemnity are to be extended so that the registry can enforce any right of action which the person in whose favour the register has been rectified would have had if there had been no rectification. I understand that the Land Registry exercises such rights of recourse sparingly; in practice, only in such cases where there has been fraud or negligence. I further understand that it is not intended to change that practice.
The Bill contains provisions for consequential appeals in Clause 4 and for commencement in Clause 5, which do not call for any particular comment.
My Lords, any land registration Bill is unlikely to be particularly exciting and this one certainly is not. However, the Bill contains concrete proposals which will be of enormous practical advantage to many people. It will make conveyancing quicker and cheaper. It contains a number of useful measures that will still further improve conveyancing in England and Wales. I accordingly commend the Bill to this House and ask that it be given a Second Reading.
Moved, that the Bill be now read a second time.—(Lord Browne-Wilkinson.)
§ 7.20 p.m.
§ Lord Clinton-Davis
My Lords, the noble and learned Lord, Lord Browne-Wilkinson, said that this is not an exciting Bill. It is the most exciting thing that has happened to me today. When, in days of yore, I was an articled clerk to my noble friend Lord Mishcon, I never imagined in my wildest dreams, based upon my capacity as a conveyancer, that I would ever be entrusted with a 1163 land registration Bill. But there it is; things move on and here I stand at the Dispatch Box simply because my noble friend Lord Irvine is not able to be present.
I am sure that the House is grateful to the noble and learned Lord for the clarity of exposition which he has portrayed for what is undoubtedly a complex measure, complex but necessary in the continuing process of simplification of conveyancing law. It started in 1925 and more recently, through computerisation, it has been radically reformed and become far less expensive. That is incredibly important for people who are dealing in title. Today, a solicitor or a licensed conveyancer is able to examine title within seconds. That constitutes a revolutionary change from the days when solicitors were to be found in dingy offices poring over title deeds.
The process of simplification has proceeded apace. The noble and learned Lord more than amply described how that has occurred, and he outlined the purposes of the Bill, explaining in particular the amalgam of carrot and stick to ensure the speed with which unregistered title is brought on to the register. The House will be relieved to know that therefore requires no further elaboration on my part.
Sensibly, the Bill replaces those mechanisms which do not work satisfactorily under the present law. It introduces important changes for the future, particularly in the way in which further compulsory registration will be triggered by statutory instrument rather than by primary legislation, thereby avoiding a good deal of unnecessary delay and complexity.
I very much like the idea of introducing reduced fees, as one of those carrots to which the noble and learned Lord referred. That should speed up voluntary registration. Different fees for different cases and in certain instances no fees at all can be a much valued instrument in that regard.
The noble and learned Lord referred to indemnity for those suffering loss through errors or omissions on the register. Those are cases which usually involve fraud. It is important that the provision for indemnity should be strengthened and I very much welcome that.
Another very important change is dealt with in the new Section 83(12). It will have the effect of enabling a claimant to claim certainly for six years after the date on which he becomes aware or ought to have become aware of the claim to indemnity which he would have. That is an important change and one which is certainly overdue.
The Bill merits rapid progress and I am sure it is unlikely to run into any great difficulties in this House—unless the noble Baroness has any severe criticisms, which I am reliably informed she has not—nor indeed in another place. Therefore, we thank the noble and learned Lord for having introduced the Bill so ably this evening.
§ 7.25 p.m.
§ Lord Coleraine
My Lords, I warmly welcome the second reading of this dusty piece of legislation, so clearly introduced by the noble and learned Lord. I particularly welcome the carrot and stick aspect of the changes to registered conveyancing which are proposed.
1164 It seems to me that the sooner there is completion of the registration of all property in this country, the better it will be. I hope that the carrot and stick will be effective and, if not, that consideration will be given to creating a cut-off date, after which all land becomes compulsorily registrable. I can see that some land will remain unregistered for many years and there will be two systems of conveyancing existing side by side: the up-to-date registered conveyancing and the dying, old style unregistered conveyancing consisting of the examination and preparation of abstracts of title and deeds. We shall find, as the old style system dies out, that conveyancing becomes more sloppy and more difficulties arise, because fewer people will know how to do it or have experience of carrying it out.
There is also the fact that unregistered land carries an anomalous privilege of privacy in that, after many hundreds of years, under the Land Registration Act 1988 the ownership of land and title became public knowledge. But that does not apply to unregistered land. The 1988 Act did not extend to making public leases of flats and I should like to spend a moment discussing that matter because the Bill before us tonight, according to its Long Title, is a Bill to amend the Land Registration Act 1925. That gives us an opportunity to look at Section 112 of that Act, which is the section that now deals with the right of public access to information held by the Land Registry.
During the passage through Parliament of the 1988 Act, I moved an amendment to try to make the copies of leases of registered land held in the Land Registry available to the public, but to no avail. Among the reasons given for its not being then practical was that there was no need in practice for leases to be made available.
This evening I wish to press again that point and say that there is a need in practice for people who are buying flats to have access to the leases of the other flats in what may be a converted house, because it is only by having that access that they, their lawyers or conveyancers can find out whether the leases in the house are sensible and add up to a coherent whole as regards the management, service charges and the like, or whether in fact to buy into that house will amount to buying into a law suit.
Also, since 1988 there has been enacted the Leasehold Reform, Housing and Urban Development Act 1993. As a result, it becomes necessary for lawyers and others dealing with collective enfranchisements of blocks of flats to have access to all the flats in the building, to find out exactly what is there. It is not always easy to achieve that by asking around in the building because one lessee will have his documents, another will not and yet another will not know where they are. If they are available from the Land Registry, it would be a very simple matter to get hold of all the copy leases and for whoever was advising in connection with the enfranchisement to advise promptly, speedily and probably in the long run more cheaply than would otherwise be the case.
The Leasehold Enfranchisement Advisory Service (LEAS) is experienced, after three years, in giving leaseholders and freeholders advice as to leasehold 1165 matters generally. It was introduced in the wake of collective enfranchises in relation to flats and now offers advice on all matters connected with leasehold tenure both to freeholders and to the lessees and to those who advise both. It seemed to me that it would know whether there was a need for the change in the law that I hope we can achieve out of the Bill. I therefore wrote to Peter Haler, the chief executive of LEAS, and asked him about it, particularly as to whether there was a need. He replied:It is in the interests of lessees and conveyancing generally that a prospective party, intending to acquire an interest in a property is able to reassure himself that his lease and the others in the property, which are likely to affect him, do not make the proposed acquisition a non-starter. Too often a lessee finds himself, once he has acquired his flat subject to matters either misrepresented or undisclosed in other leases. The recourse may, technically, be to pursue his surveyor/solicitor/vendor, but for practical purposes the law being what it is may make this impossible. Hence if the complete register and documents filed with it was open to them it would be for a purchaser to satisfy himself that the proposed purchase has no unforeseen, or misrepresented, problems. One imagines that such a search may raise the cost of conveyancing, but with this would come certainty".Mr. Haler says that he does not accept the view that there is no need for information. He says,There was a need when you raised the issue in 1988 and the reasons then still apply now. We would certainly concur that this need has greatly increased as a direct consequence of the 1993 Act … We agree that there is a major case for public access to the copy leases and would strongly support your proposal".That is a proposal which in due course I may put before your Lordships in Committee. In the meantime, I strongly welcome the introduction of this Law Commission Bill and strongly support the Motion for a Second Reading.
§ 7.32 p.m.
§ Baroness Trumpington
My Lords, I am not sure how I would describe my day, but certainly not as the noble Lord, Lord Clinton-Davis, did. Equally certainly, I am honoured to stand in for my noble and learned friend the Lord Chancellor and deeply grateful to the mover of the Bill for the kindness he has shown me.
I am also grateful to the noble and learned Lord, Lord Browne-Wilkinson, for bringing this useful if technical Bill before the House. I am grateful to him both for outlining the clear advantages that registration of title brings with it in terms of expediting and simplifying conveyancing, and for explaining with such clarity the necessarily intricate provisions of this Bill. It is obvious that, if it is enacted, the Bill will do much to hasten the day when all the land in England and Wales is registered. I should like to remind your Lordships that the Government are committed to the objective of total registration as soon as is reasonably possible.
I would like to express my noble and learned friend's gratitude to the Law Commission and HM Land Registry for their continuing work to improve the legal framework of land registration, of which this Bill is merely the first fruit. As the noble and learned Lord, Lord Browne-Wilkinson, reminded the House, the Land Registration Act 1925 is not happily drafted. Given its central importance to conveyancing today, it is clearly 1166 desirable that the legislation should be improved. My noble and learned friend the Lord Chancellor looks forward to the second report of the Joint Working Group and to its proposals for redrafting and simplifying the present legislation.
I must refer to two specific aspects of the Bill, where the noble and learned Lord sought my assurance as to his understanding of what is intended. First, I can confirm that the power to extend the triggers for compulsory registration by statutory instrument conferred by the new Sections 123(4) and 123(5) will be exercised only after prior public consultation.
Secondly, I can also confirm that HM Registry would use sparingly its extended rights of recourse under the new Section 83(10) in cases where it had paid an indemnity. The extension proposed is both a logical and a modest one. I am aware that some concern was expressed by the Law Society when the first report of the Joint Working Group was published, that the registry's rights of recourse might be employed in situations where professionals such as solicitors had quite innocently caused the situation which led to the payment of indemnity. That concern was prompted by a recent decision, Penn v. Bristol and West Building Society, in which a firm of solicitors was held liable under a technical legal doctrine called warranty of authority. In principle, that doctrine could be applied to make a solicitor liable even in a situation where he or she was blameless. However, it is neither the practice nor the intention of HM Land Registry to resort to its rights of recourse against those who are neither fraudulent nor negligent. It is a power that will continue to be used only in bad cases.
My noble friend Lord Coleraine raised an interesting point in relation to making available for inspection by tenants involved in collective enfranchisement more information than can presently be had in regard to leases held by the Land Registry. I am grateful to my noble friend for having given notice of the points he raised. Time did not permit an answer to be prepared in time for this debate, but I hope he will be satisfied if I undertake to ask my noble and learned friend the Lord Chancellor to write to him shortly with a substantive reply.
I warmly welcome the Bill proposed by the noble and learned Lord, Lord Browne-Wilkinson. I agree with him in commending the Bill to the House.
§ 7.37 p.m.
§ Lord Browne-Wilkinson
My Lords, I am grateful for the welcome given from both sides of the House to this Bill. I demur at the modesty shown by spokesmen on both sides in their professed knowledge of the law. On one side I know it to be wrong and, on the other, the noble Baroness demonstrated a superb command of the technicalities.
I thank my noble friend Lord Coleraine for his great courtesy in informing me of the fact that he was going to take up the point that he did. The suggestion by the noble Baroness, Lady Trumpington, that the Lord Chancellor should deal with the matter in writing after consideration is a sensible way of dealing with it. 1167 Perhaps I should say that I have no proprietorial feeling about the Bill. It is a Law Commission Bill; not mine. For myself, at first sight, I am not enthusiastic about going into that interesting point in this Bill.
The Bill gives effect to Law Commission Land Registry reports which have been the subject matter of great consultation between those who understand these matters—I am afraid that I do not count myself among their number. It would be a mistake if we sought to insert into the Bill something which has not been the subject matter of the same research and consultation. Again, I commend the Bill to the House as being something which will produce some dull, but worthwhile improvement for the public.
On Question, Bill read a second time, and committed to a Committee of the Whole House.