LAW OF PROPERTY (MISCELLANEOUS PROVISIONS) BILL [HOUSE OF LORDS]

Public Bill Committee [HOUSE OF LORDS]

LAW OF PROPERTY (MISCELLANEOUS PROVISIONS) BILL [HOUSE OF LORDS]

7th June 1994

PARLIAMENTARY DEBATES

HOUSE OF LORDS

OFFICIAL REPORT

Public Bill Committee

LAW OF PROPERTY (MISCELLANEOUS PROVISIONS) BILL [H.L.]

Tuesday 7 June 1994

LONDON: HMSO

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1

The Lords following, with the Deputy Chairman of Committees (Lord Murton of Lindisfarne), were named of the Committee:

L. Brightman

L. Coleraine

B. Flather

L. Lucas

L. Mackay of Clashfern (L. Chancellor)

B. Mallalieu

L. Mishcon

B. Robson of Kiddington

L. Wilberforce

2
3 Official Report of the Committee on the
LAW OF PROPERTY (MISCELLANEOUS PROVISIONS) BILL [H.L.] Tuesday, 7th June, 1994

The Committee met at a quarter before five of the clock.

[The Deputy Chairman of Committees (Lord Murton of Lindisfarne) in the Chair.]

The Deputy Chairman of Committees: I think that it will be for the convenience of the Committee if I remind Members of the procedure to be followed in Public Bill Committees. The procedure to be followed in this Committee is, so far as possible, that followed in a Committee of the Whole House. Noble Lords speak standing, and, so far as practicable, observe the same degree of formality as in a Committee of the Whole House. When there is a Division in the House, it is for the Committee to decide whether to adjourn for a fixed time or until the result of the Division is announced in the House. In the past it has been found that 10 minutes is a convenient time for which to adjourn, and I therefore suggest that that is the course for the Committee to follow. Does the Committee agree with that proposal?

Members of the Committee: Agreed.

The Deputy Chairman of Committees: The procedure for a Division in this Committee is as follows: six minutes after the Question has been put, or when all the Members of the Committee are present, the Chairman will say, "Lock the doors". No tellers are appointed and as soon as the doors are locked, the Chairman puts the Question for the second time, and, if it is still challenged, the Clerk will read out the names of Members of the Committee. Each Member, when his name is called, replies, "Content", "Not Content" or "Abstain". The Clerk then hands the Chairman a paper showing the numbers who have voted and the result is announced in the usual way. The doors are unlocked and the Committee continues its consideration of the Bill. A Division in this Committee will be broadcast on the annunciators. Strangers are not required to leave the room when a Division is called. That concludes my opening remarks. I should add that if proceedings are not concluded this evening the Committee will sit again tomorrow at 4.30 p.m. The Question is, that the Title be postponed. As many as are of that opinion will say "Content", to the contrary, "Not-Content".

Members of the Committee: Content.

The Deputy Chairman of Committees: The "Contents" have it.

Title postponed.

4

Clause 1 [Covenants to be implied on a disposition of property]

The Lord Chancellor (Lord Mackay of Clashfern) moved Amendment No. 1: Page 1, line 14, after ("3(1)") insert ("and (1A)"). The noble and learned Lord said: In speaking to Amendment No. 1, I shall, with the leave of the Committee, speak also to Amendments Nos. 11 and 12. This group of amendments is tabled in response to concerns expressed during the course of the evidence taken by the Committee that the implied covenant for freedom from encumbrances in Clause 3(1), which forms part of the full guarantee, is too wide as it is presently drafted, and that it should be restricted in two ways. The first restriction proposed is that the covenant should not cover any matters which the covenantor did not know about and could not reasonably be expected to know about. The second is that it should not cover general statutory rights and liabilities which are not specific to the property in question, or those which are merely potential, since those are not such as to constitute defects in title, which is what the covenant is properly concerned with. Amendment No. 11 gives effect to the first restriction by inserting the necessary words at the end of Clause 3(1). The wording used is designed to mirror generally the position under the contract prior to the disposition and was formulated against a background of Section 199 of the Law of Property Act 1925 and the decision of the Court of Appeal in Becker v. Partridge [1966] 2 Queen's Bench 155. Amendment No. 12 gives effect to the second restriction by inserting a new subsection (1A) after Clause 3(1). That arrangement required the insertion in Clause 1(2)(a) of a reference to the new subsection which is effected by Amendment No. 1. Some concern was expressed in earlier discussions about the position in respect of inchoate rights, and in particular rights in the nature of prescriptive easements. I am advised that such rights are not excluded from the ambit of the covenant by Amendment No. 12 since they are indubitably such as to constitute defects in title. I beg to move.

Lord Coleraine: I should like to deal first with Amendment No. 11 and then Amendment No. 12. I most warmly welcome my noble and learned friend's most important Amendment No. 11, for myself and for the Law Society which pressed most strongly for it. It seemed to me that there was always the danger that the Bill would shoot itself in the foot by providing a form of guarantee which vendors would refuse to accept. The Committee will know of my opinion that where a latent encumbrance or third party right is discovered, both parties having been ignorant of its existence, there is an argument that if there were to be loss that loss should be sustained by the vendor. I have never felt that the Bill was the right place to bring that about by a backdoor route. I am glad therefore that the Law Society's views on the matter found favour. It is difficult always to forecast, without the inestimable benefit of hindsight, but I should like to 5 think that my noble and learned friend has now found the right balance, and that the title guarantees in the Bill will find considerably more general acceptance than might otherwise have been the case. I welcome Amendment No. 11 which gives effect to concerns which arose out of discussion following the question asked of Mr. Aldridge by my noble friend Lord Lucas when we were taking evidence. I am also pleased to hear what my noble and learned friend has to say about inchoate rights arising under the Prescription Act.

Lord Lucas: I should like to ask my noble and learned friend about the meaning of two words in Amendment No. 12. The first is "potential". It seems to me that some of the rights about which we are talking are actual rights in that they could be exercised at any time, rather than being potential rights; that is, rights where something has to be done before those rights can be exercised. I hope that my noble and learned friend can put my mind at rest on that. The second point relates to the use of the word "generally" in paragraph (b) of Amendment No. 12. I am not quite sure of the meaning of the word "generally". I can illustrate that. I feel that it lies somewhere between "often" and "universally". We might have said, for instance, that women universally do the housework. Perhaps we would now say, "Women generally do the housework", and at some time in the future we may say, "Women often do the housework". I do not know which of those meanings is implied by saying, "Housework is an activity undertaken by women generally". Will my noble and learned friend tell me where in that spectrum lies the word "generally", as it is used in the amendment? If it means "universal", as I fear that it might, will he explain how local rights, such as those which would apply in a national park or to oil exploration licences or others which do not cover the whole country, will be dealt with under the amendment?

The Lord Chancellor: My understanding of the word "potential" as used in paragraph (a) of Amendment No. 12 is that those are not liabilities which have crystallised in such a way that they create an actual liability at the time in respect of the property. The same goes in respect of rights. The crux of the test will be that something further has to be done in order to make them liabilities or rights. That is the situation with regard to general petroleum licences, for example. Before they had a specific effect on a particular piece of property something further would be done than just having the generality of a licence. The next question relates to property generally. I would prefer to use an example other than the one which my noble friend used. The clause is designed to deal with obligations or liabilities created by a statute; for example, a right of entry to a local authority in respect of property. That would occur only in respect of particular circumstance and perhaps in relation to particular types of property. So we have used the phrase "to property generally" to distinguish something that applies to a particular property. It applies to property generally, not necessarily every property, but possibly property of a type. It is property more generally than just 6 the specific property. I have been advised that it is the best way to describe, and therefore to leave out, any kind of right that for example, the HSE, a local authority, or a number of other inspectorates, or as many as Bernard Levin might have suggested today, have in respect of the property. The phrase in paragraph (b) is a good one for excepting that type of right as regards third parties which, without any exception at all, might have been thought to have been covered by the general words used in the Bill as originally presented.

Lord Wilberforce: Perhaps I might suggest, as a supplement to the answer that the noble and learned Lord has just given, that the analogy of the housewife used by the noble Lord, Lord Lucas, might be apposite if paragraph (b) said: "imposed or generally conferred in relation to property". Then the analogy with generally doing the housework would be relevant. It is used in a different way here. It is used, as the noble and learned Lord said, in relation to property, with the intention of meaning all property, not any individual property, and particularly not the property which is the property of the covenantee. Subsection (1A) is unnecessary because a defect in title, by its definition, must be something which affects the title to a particular property. If it affects a property in a wide sense only, it is not a defect in title. I think that subsection (1A) probably reflects the law anyway, whether or not one has the clause. It is good to have it spelled out. I support it being spelled out. For the reasons given, I accept what has been said about the words "potential" and "generally". Having said that, I agree with the noble Lord, Lord Coleraine, that Amendment No. 11 is necessary, and a fruitful result of our discussions with the Law Commissions.

Lord Mishcon: If the noble and learned Lord the Lord Chancellor wanted to follow completely the example given by the noble Lord, Lord Lucas, no doubt he would say, "Women are mothers generally. Fathers are not".

On Question, amendment agreed to.

Lord Coleraine moved Amendment No. 2: Page 1, line 15, after ("full") insert ("title"). The noble Lord said: With the leave of the Committee I shall speak also to Amendments No. 3, 5, 6, 10, 13, 20, 21, 25, 26, 30, 31, 32, and 33. There is a drafting point of some importance in the amendments. The Law Society advised me, and I very much agree with its advice, that it would be of considerable benefit to the profession and to the public generally if throughout the Bill the guarantees are described as "full and limited title guarantees" and not just as "full and limited guarantees". There is reasonable precedent for the use of the word "title". Under the existing law covenants for title are always referred to as such and the side note to Section 76 of the Law of Property Act 1925 reads "Covenants for title". When questioned at an earlier stage (Question No. 14 by the noble and learned Lord, Lord Brightman) Mr. Aldridge felt that the amendments were 7 unnecessary because the wording of the Bill would not mislead, and that therefore the slight textual lengthening of the Bill was also unnecessary. A person conveying as beneficial owner today unknowingly triggers off covenants for title. That is legal mystique. I believe it to be right in this day and age that property transfers should be as informative and as lacking in mystique as is reasonably possible, to the benefit of the layman and the professional lawyer. I hope that the Committee will agree that it will be useful to add the five-letter word "title" in some 14 places throughout the Bill, but will do so only once in future property transfers. I beg to move.

The Lord Chancellor: I am happy to accept this amendment. As the Law Society, representing practitioners, felt that it would clarify the subject matter of these full and limited guarantees, it is right to insert it. Therefore I have no difficulty with the amendments moved by my noble friend Lord Coleraine. However, I should say that Parliamentary Counsel kindly identified for me a need to add in a number of other places the word "title". I had thought of perhaps trying to do that this afternoon, but on consideration it is perhaps best to leave it for the Report stage of the Bill. There are quite a number of places, and one of the most important I should mention is that in Clause 8 it will be necessary to make sure that the Welsh equivalent is properly supplied. I understand that it spells T-E-I-T-L. I hope that it is pronounced "title", but I have not yet had the chance to take expert opinion upon that. I hope that the Committee will accept this amendment and the others moved by my noble friend on the understanding that in due course, with the help of Parliamentary Counsel, I shall bring forward a number of further amendments to the same effect.

On Question, amendment agreed to.

5 p.m.

Lord Coleraine moved Amendment No. 3: Page 1, line 17, after ("limited") insert ("title").

On Question, amendment agreed to.

The Deputy Chairman of Committees: I should point out to the Committee at this point that there is a printer's error. That amendment ends Clause 1, and subsequent amendments that were shown in Clause 1 are in fact in Clause 2. Therefore the Question is that Clause 1, as amended, stand part of the Bill.

Clause 1, as amended, agreed to.

Clause 2 [Right to dispose and further assurance]:

Lord Coleraine moved Amendment No. 4: Page 1, line 23, at beginning insert ("Subject to section 6 below,"). The noble Lord said: In moving Amendment No. 4, with the leave of the Committee I shall speak also to Amendments Nos. 9 and 19. Before doing so I should mention an error in my drafting which was drawn to my attention. Amendment No. 19 is placed at the head of Clause 4 in the Bill. It should in fact be there, but it is badly drafted. It should not be, as has been suggested, at 8 the beginning of Clause 3(2). But I shall not be considering pressing these amendments today so I shall merely speak to Amendment No. 4. These are purely drafting amendments. Clauses 2, 3 and 4 of the Bill set out the various covenants which are given in various situations if appropriate guarantees are incorporated in a transfer of property. The covenants to be given are not in any way qualified within the clauses of the Bill. Clause 6 derogates from the covenants, in substance if not in form, by providing for circumstances in which a covenant may not be enforced. In short, there are circumstances in which a covenantor is not to be liable for breach of covenant. That seems to me to create conflict within the Bill, again in substance if not in form, and I suggest that the conflict should be resolved in favour of Clause 6 by providing that the earlier three clauses are to be read as subject to the later clause. The amendment would make enactment more easily accessible and would avoid the need for the legal publishers to provide footnotes to Clauses 2, 3 and 4, drawing attention to Clause 6. While I am on this point, I suggest that the heading to Clauses 6, 7, 8 and 9, which reads, "Supplementary provisions as to effect of covenants", is not really appropriate to Clause 6, whether or not the Committee accepts my amendments. Clause 6 limits rather than supplements the effect of covenants and should therefore not be described as "supplementary". I beg to move.

Baroness Mallalieu: I particularly welcome the noble Lord's Amendment No. 4 and the others which are to follow along those lines. It is helpful not only to lawyers who are unfamiliar with this legislation but also to laymen—who may on occasions be tempted to pick up the legislation—to have flagged for them so clearly the later section which affects the earlier ones they may look at. I am grateful to the noble Lord for spotting that point.

The Lord Chancellor: I too agree with the principle of these amendments and have no difficulty with them. As my noble friend may expect, Parliamentary Counsel looked at my noble friend's draft and suggested that it might be possible to impove on it even further. The amendment has been drafted but I shall table it formally for Report. However, in order to make the subject matter clear I should perhaps say a little bit about it now. The proposal is to insert a new subsection in Clause 1 of the Bill which would say something along these lines: "Section 2 to 4"—that would be 2, 3, and 4—"have effect to Section 6, and Sections 2 to 5 have effect subject to Section 8(1)". That would carry out the principle of my noble friend's amendment, and it expressly refers to Section 5 as well as the others and links Sections 2 to 5 with Section 8, which has the same effect. I am seeking to take the principle a little further and express it in slightly different words. But if my noble friend is content with that, I propose to table the amendments at Report stage.

Lord Mishcon: Perhaps I may venture, most respectfully, to differ from the Parliamentary Draftsman in saying that, quite frankly, I prefer the amendment 9 moved by the noble Lord, Lord Coleraine. I see that there may have to be something included to protect Clause 5 as well, but I should have thought that, where we have the spelling out in Clause 2 of exactly what is meant by the implied covenants of full or limited guarantee, that is the place where, to use the phrase of my noble friend Lady Mallalieu (with which I agree), we want the flagging to be clearly expresed, certainly for the lay reader, whereas we have to find it in a rather complicated way in Clause 1, as I understand it. I should have thought that that was not the clearest way of doing it. Perhaps the noble and learned Lord will give consideration to that point before deciding on what to do at Report stage.

The Lord Chancellor: I am certainly prepared to consider that. I feel that I should go by the best advice available to me on drafting matters. Obviously my advisers will have a chance of considering, in the light of what has been said, what is the best form for what I ought to table. Your Lordships will have an opportunity to consider it and improve upon it. I thought it right to say what my advice has been. I am perfectly content to accept the amendments in principle because I entirely agree with the principle.

Lord Coleraine: I am grateful to my noble and learned friend for accepting the amendments in principle, and particularly to the noble Baroness, Lady Mallalieu, for adding her support when I move the amendment. As between the arrangements suggested by my noble and learned friend and those suggested by the noble Lord, Lord Mishcon, I would not wish to express an opinion at this moment. It will therefore be sufficient for me to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Coleraine moved Amendments Nos. 5 and 6: Page 1, line 23, after ("full") insert ("title"). Page 1, line 24, after ("limited") insert ("title").

On Question, amendments agreed to.

Lord Coleraine moved Amendment No. 7: Page 1, line 24 after ("covenants") insert ("to which section 78 of the Law of Property Act 1925 (benefit of covenants relating to land) shall apply"). The noble Lord said: Amendment No. 7 is an amendment of some substance and I hope that the Committee will bear with me while I explain it in a little detail. In general, if a vendor, on selling land, gives his purchaser covenants which touch and concern the land being transferred, those covenants may be enforced by successors in title of the purchaser. They may also be enforced against successors in title of the vendor. The law is now set out in Section 76 of the Law of Property Act 1925, and that legislation also extended, in this section, the previous law by allowing the owners of derivative title—for example, tenants of the freehold successor in title to the original purchaser—also to claim the benefit of such covenants. In the case of covenants of title, the benefit ran with the land at common law so as to be enforceable by successors in title to the legal estate transferred. It may be that the benefit of covenants of title implied by guarantees under 10 this Bill would, in me absence of contrary provision, also run with the land at common law. But we have a contrary provision in this Bill. Clause 7 provides that the covenants given under the Bill may be assigned but shall not run automatically with the land. There is a logic behind this. Under the old covenants for title, each successive vendor covenanted, in effect, that the title was in order, but only to the limited extent that he had done nothing personally to adversely affect the title. The purchaser discovering something wrong then had to identify who had caused the trouble and looked to that person to make recompense. That was possible because the benefit of that person's covenants for title ran with the land. Under the Bill the need to identify and sue the right predecessor in title will no longer exist because each successive owner will covenant not just for his period of ownership but absolutely. If sued on the covenants for title, he will then be able to sue his immediate predecessor, who will be able to sue his predecessor in turn, and so on, back along the chain of owners until finally the buck stops. In those circumstances the Law Commission decided that to preclude covenants for title running with the land could cause no harm and would usefully simplify conveyancing. I find it difficult to agree with the proposition that Clause 7 will do no harm. In taking Mr. Aldridge's evidence at an earlier stage, the point was clearly made that a guarantee given by a vendor who then became insolvent would be useless. Under the existing law, in such a case a purchaser may find a remedy in his right to look to his vendor's predecessor directly. It may equally be that the vendor was not insolvent but was a mere £100 company with no apparent assets. A purchaser would not be advised to pay lawyers to litigate against such a company. As for simplifying conveyancing—a point dwelt on also at the earlier stages—the Committee should consider for a moment the case of a purchaser buying property from a shelf company. It will be necessary, if covenants for title do not run with the land, for that purchaser to be advised at some length regarding the risk of taking his transfer from that company. It may well be, for instance, that he will be advised to think carefully before buying property from someone who happens to be a Lloyd's underwriter. Those considerations would apply only in a limited way under the present law. However, more important to me is what arises from the fact that Clause 7 does not preclude the specific assignment of title guarantees. That would likely result in guarantees being assigned in all cases, and there would be a whole new world of paper for lawyers to cope with at unnecessary expense to someone. Purchasers will clearly wish for assignments to take place; assignments will be in the interests of vendors also, because assignments may in appropriate cases enable purchasers to leapfrog vendors and directly proceed against the predecessor in title for recompense. Conscientious conveyancers acting for purchasers, for their part, will feel that their professional duty of care will require them to ensure that wherever possible there 11 is in place a chain of satisfactory assignments and, if there is not, they will need to advise their clients as to the possible consequences of that. Far from simplifying conveyances, Clause 7 will, in my view, greatly complicate matters. The amendment will allow title guarantees to run with the land. I hope the Committee will support it. I beg to move.

Lord Brightman: I support the amendment. It seems to me that it is preferable to remove Clause 7 from the Bill to enable covenants for title to run with the land. As the noble Lord, Lord Coleraine, said, if the Bill remains as drawn, every careful purchaser will stipulate with the vendor that the vendor shall make an assignment of the covenant which he holds from the man who sold to him. Inevitably, there will be a proliferation of paperwork and more costs. I cannot see any real advantage in Clause 7. It cannot be for the benefit of a purchaser not to take an assignment. As the Bill stands, there can be no incentive for a vendor to decline to give an assignment of the covenant, the benefit of which he holds, because the assignment will be at the cost of the purchaser. Inevitably, we shall have a situation where in all conveyances there will be an additional document—namely, an assignment of the old covenant—and the costs that that will involve. It must save costs and paperwork if Clause 7 goes. I would like to see it sent on its way. Conveyancing will benefit and I see no disadvantages on the horizon of any kind or description. It may be helpful if any Members of the Committee who take the same view as the noble Lord, Lord Coleraine, and myself feel inclined to express that view at this Committee stage so that we can see how strong the feeling may be in favour of the disappearance of Clause 7 and the old system of covenants running with the land continuing.

5.15 pm

Lord Mishcon: I use a well-worn expression which will be known to most Members of the Committee: I agree and have nothing to add.

Lord Wilberforce: I support the amendment. Clause 7 substitutes for the old system of covenants running with the land a different system of express covenants which are assigned and reassigned from purchaser to purchaser. However, the noble Lord's amendment achieves the same result much more neatly and completely. How that is so can be seen if one looks at the text of Section 78 of the Law of Property Act. Perhaps I may summarise it. It states that a covenant relating to any land of the covenantee shall be deemed to be made with the covenantee and his successors in title and shall have effect as if such successors were expressed. There is no mystique about running with the land. It simply states that a covenant is deemed to be made with the successors. It gets rid of all the necessity of express assignments and reassignments. It does the trick for you by law automatically. If there were any doubt whether the section applied to this situation, that is covered by Amendment No. 7, which states that Section 78 shall 12 apply to the benefit of covenants relating to land—shall apply to covenants relating to title. That covers any possible ambiguity. Therefore, the solution of Amendment No. 7, with the removal of Clause 7, is better and simpler. Perhaps I may add that I have a suspicion, which was borne out by the evidence of the Law Commission, that Clause 7 was included as it is in order to produce some assimilation of the law of real property with that of personal property. Personal property cannot run with the property. In the case of personal property there must be a succession of covenants. That is a false objective. It is not good or possible. If that were one of the reasons underlying the Law Commission's proposal, it weakens the case for maintaining Clause 7. I strongly support both amendments tabled by the noble Lord, Lord Coleraine.

Baroness Mallalieu: I too support the noble Lord's amendment and his objection to Clause 7. I do so on the basis that, unless there are very compelling reasons, it seems to me to be wrong to deprive a purchaser of a line of remedy. The compelling reason that we were given, which was the need for simplicity, is better met by the amendment of the noble Lord. I support it.

The Lord Chancellor: Having regard to the invitation of my noble and learned friend Lord Brightman that those who support the amendment should speak, I propose to comment. Having considered carefully the situation in the evidence, I have reached the conclusion that it would be wise to continue the provision that these new covenants in respect of title should run with the land. It is true that, as the conveyancing system develops with registration of title, it may not be easy to make much use of that provision, in particular when the vendee does not know the particulars of the ancestor of or vendor to the vendor. Therefore, there may be only limited utility in this particular type of assignment, whereas if there is an express assignment, one would be able to get the necessary information from the vendor—the other side to the covenant. However, having considered the matter carefully, I have reached the view that we should provide that the covenant should run with the land. There is some question about the appropriate form of amendment for that purpose, as my noble friend Lord Coleraine will readily appreciate. For example, it is not clear to me that Amendment No. 7 carries any of the other guarantees but only the Clause 2 guarantee. There is also the question of whether it would be wise to spell out on the face of the legislation precisely what the provision is, rather like the provision of Section 76(6) of the Law of Property Act. The amendment refers to Section 78 and there is some question of which section of that Act it is best to refer to. Certainly, if we are hoping that this will be an open book to members of the public who want to consider conveyancing, it may be wise to express on the face of the Bill the effect of these covenants. Therefore, with the advice of parliamentary counsel, I would be proposing a slightly different form for Amendment No. 7, making sure that it applied to other covenants too. Instead of taking Clause 7 out, I would be proposing to 13 write into that clause a provision which has the opposite effect from the present Clause 7 and makes clear that the title of covenants will run with the land. Therefore, in principle, I would go along with the amendment proposed. If my noble friend will allow me, I should like to have the opportunity of bringing forward my own amendments on Report to deal with that. There is also the question of side effects—it is always wise to look carefully at that. There may be implications for the transitional provisions which have been drafted on the basis of this change. We have not had time properly to look at these to see whether there may be consequential amendments. I hope that that explains my position sufficiently. I believe that this whole discussion has shown the importance of this type of procedure in making sure that matters of this kind are examined in an atmosphere where those who can help particularly are available to do so.

Lord Coleraine: I am grateful to Members of the Committee who supported my amendment. I am also grateful for what my noble and learned friend said. I agree that this kind of question goes a long way to explain why we are here today and why we are using this new procedure. I shall look forward to considering the amendments which my noble and learned friend is to propose. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 8: Page 2, line 13, leave out ("registrar") and insert ("Chief Land Registrar"). The noble and learned Lord said: In moving Amendment No. 8, I shall speak also to Amendments Nos. 24, 35, 36 and 37. These are drafting amendments based on points suggested in evidence, many of them by Professor Battersby. Amendment No. 8 simply substitutes "Chief Land Registrar" for "registrar" in Clause 2(2)(b), which explains what obligations are included in the implied convenant for further assurance in relation to land the title to which is not yet registered but is to become registered as a result of the disposition. Amendment No. 24 replaces subsection (2) of Clause 4, which explains the meaning of references in the preceding subsection to "the lease", with a new subsection. The new subsection gives a single explanation covering the only case in which there might be confusion, namely where the disposition is an underlease. Amendments No. 35, 36 and 37 use shorter and simpler wording in the new provisions of the Land Charges Act 1972 inserted by subsections (3) and (4) of Clause 15. I beg to move.

On Question, amendment agreed to.

Clause 2, as amended, agreed to.

Clause 3 [Charges, incumbrances and third party rights]:

[Amendment No. 9 not moved.]

Lord Coleraine moved Amendment No. 10: Page 2, line 28, after ("full") insert ("title").

On Question, amendment agreed to.

14

The Lord Chancellor moved Amendments Nos. 11 and 12: Page 2, line 31, at end insert (", other than any charges, incumbrances or rights which that person does not and could not reasonably be expected to know about."). Page 2, line 31, at end insert:

  • ("(1A) In its application to charges, incumbrances and other third party rights subsection (1) extends to liabilities imposed and rights conferred by or under any enactment, except to the extent that such liabilities and rights are, by reason of—
  • being at the time of the disposition only potential liabilities and rights in relation to the property, or
  • being liabilities and rights imposed or conferred in relation to property generally,
  • not such as to constitute defects in title.").

    The noble and learned Lord said: I have already spoken to Amendments Nos. 11 and 12. I beg to move. On Question, amendments agreed to.

    Lord Coleraine moved Amendment No. 13: Page 2, line 32, after ("limited") insert ("title").

    On Question, amendment agreed to.

    The Lord Chancellor moved Amendment No. 14: Page 2, line 34, leave out ("the date of'). The noble and learned Lord said: In moving Amendment No. 14, I should like to speak to Amendments Nos. 15, 16, 17 and 18. This interlinked group of amendments is tabled in response to anxieties expressed in evidence, in particular by the Law Society, to the effect that the limited freedon from incumbrances covenant in Clause 3(2) is presently drafted in such a way as to amount to a covenant that the covenantor has never since the date of the last disposition for value charged or incumbered the property. What is in fact important to the covenantee is that there are no such matters subsisting when he takes the disposition, and he is not interested in, for example, a mortgage which has been fully cleared. Amendments Nos. 15, 16 and 17 ensure that the covenant is concerned only with matters still subsisting at the time of the disposition. Amendments Nos. 15 and 16 make the necessary change to the first limb of the covenant dealing with things that the covenantor has done himself, and Amendment No. 17 does likewise for the second limb, which deals with things he has suffered to be done. Amendment No. 15 makes a further change, substituting for the existing reference to the date of the disposition a reference to the time when the disposition is made. This is to avoid the possibility of arguments over matters which are still subsisting on the date of the disposition but which have been cleared by the time it is actually made, which is not an uncommon event. Amendments Nos. 14 and 18 are consequential on this change and remove references to the date of the disposition which would otherwise be misleading. I beg to move.

    On Question, amendment agreed to.

    The Lord Chancellor moved Amendments Nos. 15 to 18: Page 2, line 35, after ("property") insert ("by means of any charge or incumbrance which subsists at the time when the disposition is made"). Page 2, line 36, leave out ("it") and insert ("the property which so subsist"). 15 Page 2, line 37, leave out ("charged") and insert ("so charged or"). Page 2, line 39, leave out ("that date") and insert ("the last disposition for value").

    On Question, amendments agreed to.

    Clause 3, as amended, agreed to.

    Clause 4 [Validity of lease]

    [Amendment No. 19 not moved.]

    Lord Coleraine moved Amendments Nos. 20 and 21: Page 2, line 41, after ("full") insert ("title"). Page 2, line 41, after ("limited") insert ("title").

    On Question, amendments agreed to.

    5.30 p.m.

    The Lord Chancellor moved Amendment No. 22: Page 2, line 43, leave out ("date") and insert ("time"). The noble and learned Lord said: In moving Amendment No. 22, I should like to speak also to Amendment No. 23. These two amendments ensure that references in Clause 4 to the date of the disposition become instead references to the time of the disposition. I have already explained the change to the Committee; namely, that it follows through the similar change in Clause 3 for the same reasons. I beg to move.

    On Question, amendment agreed to.

    The Lord Chancellor moved Amendment No. 23: Page 2, line 45, leave out ("the date of the disposition") and insert ("that time").

    On Question, amendment agreed to.

    The Lord Chancellor moved Amendment No. 24: Page 3, line 1, leave out subsection (2) and insert: ("(2) If the disposition is the grant of an underlease, the references to "the lease" in subsection (1) are references to the lease out of which the underlease is created.").

    On Question, amendment agreed to.

    Clause 4, as amended, agreed to.

    Clause 5, [Discharge of obligations where property subject to rentcharge or leasehold land]:

    Lord Coleraine moved Amendments Nos. 25 and 26: Page 3, line 8, after ("full") insert ("title"). Page 3, line 9, after ("limited") insert ("title").

    On Question, amendments agreed to.

    The Lord Chancellor moved Amendment No. 27: Page 3, line 19, leave out ("the tenant") and insert ("him in his capacity as tenant"). The noble and learned Lord said: This amendment did not arise directly out of the evidence but rather out of the process of reconsideration necessitated by the preparation of other amendments which did arise from the evidence. It effects a refinement of Clause 5(3) in order to reduce the number of cases in which it might be necessary to vary the covenant set out in that subsection. Clause 5(3) sets out the additional covenant covering cases where the disposition is a mortgage of leasehold land, which is to the effect that the mortgagor will perform the various obligations under the lease in question. The mortgagee is concerned only with those matters which may affect his security and therefore not with obligations which may be imposed under the lease as a whole but do not apply in respect of the particular 16 property in question. This distinction may be of importance in cases where there has, for example, been partial assignment of leasehold property. While it is not possible to cover every case, the existing wording of this subsection aims to cover such cases so that it is not necessary for the covenantor to seek to vary the covenant. The amendment is aimed at extending that to cover, as far as possible, the case where the mortgagor has been released under any of the lease covenants. I beg to move.

    On Question, amendment agreed to.

    Clause 5, as amended, agreed to.

    Clause 6 [Matters within knowledge of person to whom disposition is made]

    The Lord Chancellor moved Amendment No. 28: Page 3, leave out lines 28 and 29 and insert: ("in respect of any matter to which the disposition is expressly made subject. (1A) Furthermore that person is not liable under any of those convenants for anything (not falling within subsection (1))—

  • which, at the time of the disposition, is within the actual knowledge, or
  • which is a necessary consequence of facts that are then within the actual knowledge,
  • of the person to whom the disposition is made."). The noble and learned Lord said: In moving Amendment No. 28, I should like to speak also to Amendment No. 29, which is consequential on it. Amendment No. 28 responds to two areas of concern expressed in the evidence. The first part makes it clear that there is no liability under certain implied covenants for matters to which the disposition is expressly made subject, doubts having been expressed as to whether the existing wording of Clause 6(1) does that effectively. I should add that I am advised that that does not leave open the possibility of vendors inserting a blanket provision in dispositions, making them subject to all incumbrances which may exist, since the wording follows the existing provision in the Law of Property Act 1925, and it is well established against that background that a vendor cannot thus exclude liability for anything of which he knew or ought to have known. Amendment No. 29 is consequential on this first part, since Clause 8 was originally intended to enable the covenants to be impliedly varied if it was clear from the terms of the instrument that it was subject to certain matters. Such matters would now fall within Clause 6(1) as amended, and the change to Clause 8 introduced by Amendment No. 29 is intended to remove the possibility of argument that the covenant was impliedly varied by something which was not so clear on the face of the instrument. The second part of Amendment No. 28 responds to criticisms of the existing formulation, which excludes liability for anything which is the result of facts actually known to the covenantee at the date of the disposition. It makes clear what is actually meant by that in terms which mirror the position under the contract before completion in respect of "patent defects". There is a further change, following through similar changes in Clauses 3 and 4; namely, the inclusion of a reference to the time of the disposition rather than to the date thereof. 17 I believe that my noble friend Lord Coleraine asked whether that formulation could be tightened. I have asked about that. It may be that an additional word such as "particular" or "any particular matter to which the disposition is expressly made subject" might be thought to be tighter. I shall consider that before Report stage, but I have explained why we have adopted the formulation which is here. I beg to move.

    Lord Coleraine: These appear to be extremely desirable amendments. Subsection (1A) does appear to clarify Clause 6 in a desirable way. I am extremely grateful to my noble and learned friend for suggesting that it may be possible to tighten the drafting with regard to the point that concerns me. I understand that, in fact, no vendor could get away with throwing all sorts of incumbrances into a contract or conveyance in a very general, blanket way and I am very pleased to hear that that is the case. I wish to raise a question on the drafting of the amendments. It appears to me that Parliamentary Counsel has patched up the existing clause when he might have done better to start afresh. I wonder whether my noble and learned friend will consider whether or not the new subsection (1) is otiose, because any matter to which the disposition is expressly made subject should, I would have thought, in the normal way already be comprised in the words of paragraph (a), which refers to anything, "which, at the time of the disposition, is within the actual knowledge … of the person to whom the disposition is made".

    Lord Wilberforce: I should like to raise one small point with regard to paragraph (b), which refers to: "a necessary consequence of facts that are then within the actual knowledge". I am not very happy about the use of the words "facts". Paragraph (a) relates to anything, "which, at the time of the disposition, is within the actual knowledge". That relates to an incumbrance, easement, a defect of title perhaps or something of that sort. The word "facts" seems to take the provision wider and does not necessarily comprise what is included in paragraph (a). Perhaps the draftsman could consider whether paragraph (b) should be aligned with paragraph (a) and use the same kind of language so as to include anything within the actual knowledge or defect within the actual knowledge. However, I believe that the use of the word "facts" takes it too wide.

    Lord Brightman: I am not certain whether I understood the noble Lord, Lord Coleraine correctly. I am not sure whether he is suggesting that the words in brackets, "in respect of any matter to which the disposition is expressly made subject". should be deleted. I believe that they should be retained. I believe that they are essential, but I may not have understood correctly the point made by the noble Lord, Lord Coleraine.

    Lord Coleraine: Perhaps I may explain to the noble and learned Lord what I was endeavouring to get at. I know that the first part of the amendment was drafted to deal specifically with an earlier point raised by the noble 18 and learned Lord. It seems to me that that is unnecessary because the points that are dealt with in subsection (1) would be amply covered by subsection (1A). The draftsman has dealt with the matter in two ways. It would be sufficient if it were dealt with only in the second part of the amendment.

    Lord Brightman: If I may respectfully say so, I should be very pleased if the draftsman saw fit to stick to his guns.

    The Lord Chancellor: I believe that the first branch of Amendment No. 28 deals with a different type of subject matter from that which is dealt with in subsection (1A). The exclusion in the first part deals with what the disposition actually says. Subsection (1A) deals with other exclusions not expressly made in the disposition. The mere fact that you may know about something does not necessarily mean that you would wish expressly to exclude it. That might or might not be so. With regard to the point made by my noble and learned friend Lord Wilberforce, the idea is that the state of facts may give rise to a consequence in law. If you know the facts, you cannot be heard to deny the consequence in law; for example, if you knew that somebody was exercising a right to take some form of material across your land, you might say that you did not know that there was an easement, but if the inevitable consequence of the exercise that you knew was taking place was that it must have been in respect of an easement, then that would be enough to deal with the matter. However, I am happy to take advice from Parliamentary Counsel on the points which have been raised. If he advises me that changes are required, obviously I shall be happy to make them. I understand my own limitations in that regard, but as yet I have not felt the force of the point made by my noble friend Lord Coleraine. But that will be examined in the quietness of the time between now and Report stage.

    Lord Wilberforce: Perhaps I may say that to impose upon the purchaser the necessity of deducing legal consequences from facts of which he has actual knowledge may be a heavy burden. For example, there may be an overhanging tree or all sorts of circumstances may exist from which, according to the amendment, the purchaser must deduce a legal consequence. I think that that may be rather too heavy a burden to impose, but I am content to leave it to the draftsmen to examine.

    On Question, amendment agreed to.

    On Question, Whether Clause 6, as amended, shall stand part of the Bill?

    Lord Wilberforce: With regard to the point made by the noble Lord, Lord Coleraine, about the heading, we cannot amend it, but can we ask the draftsmen to take the noble Lord's point about "supplementary"?

    The Lord Chancellor: Certainly, and I believe that the draftsmen have it in mind to amend some of the headings in any event.

    Clause 6, as amended, agreed to.

    Clause 7 agreed to.

    19

    Clause 8 [Other supplementary provisions]:

    The Lord Chancellor moved Amendment No. 29: Page 4, line 8, after ("by") insert ("a term or').

    On Question, amendment agreed to.

    Lord Coleraine moved Amendments Nos. 30 and 31: Page 4, line 17, after ("full") insert ("title"). Page 4, line 19, after ("limited") insert ("title").

    On Question, amendments agreed to.

    Clause 8, as amended, agreed to.

    Clause 9 [Modifications of statutory forms]:

    Lord Coleraine moved Amendments Nos. 32 and 33: Page 4, line 26, after ("full") insert ("title"). Page 4, line 26, after ("limited") insert ("title").

    On Question, amendments agreed to.

    Clause 9, as amended, agreed to.

    Clauses 10 to 13 agreed to.

    Clause 14 [Vesting of estate in case of intestacy or lack of executors]

    The Lord Chancellor moved Amendment No. 34: Page 7, leave out line 19. The noble and learned Lord said: This is a simple amendment. It arises out of consideration of other amendments. It removes an unnecessary definition of "will" which is a hangover from an earlier draft of the Bill. I beg to move.

    On Question, amendment agreed to.

    Clause 14, as amended, agreed to.

    Clause 15 [Registration of land charges after death]

    The Lord Chancellor moved Amendments Nos. 35 to 37: Page 7, line 28, leave out from ("and") to end of line 30 and insert ("a pending land action would apart from his death have been registered in his name, it shall be so registered"). Page 7, line 35, leave out ("an entry in the register in respect of"). Page 7, line 37, leave out from ("been") to ("notwithstanding") in line 38 and insert ("registered in his name, it shall be so registered").

    20

    On Question, amendments agreed to.

    Clause 15, as amended, agreed to.

    Clauses 16 to 20 agreed to.

    Clause 21 [Consequential amendments and repeals]:

    The Lord Chancellor moved Amendment No. 38: Page 10, line 9, at end insert: ("(4) The amendments consequential on Part I of this Act (namely those in paragraphs 1, 2, 3, 5,7, 9 and 12 of Schedule 1) shall not have effect in relation to any disposition of property to which, by virtue of section 10(1) or 11 above (transitional provisions), section 76 of the Law of Property Act 1925 or section 24(1)(a) of the Land Registration Act 1925 continues to apply."). The noble and learned Lord said: Once again, this amendment arises out of the consideration necessary in respect of other amendments. It ensures that the amendments to other legislation consequential on Part I, which are listed in Schedule 1 to the Bill, are aligned properly with the relevant appeals, so that they do not affect those transitional cases in which the old law continues to apply. As I said earlier, it is necessary to examine in some detail the transitional provisions in respect of the change of policy from the policy upon which the Bill was drafted in respect of the title guarantees running with the land. I beg to move.

    On Question, amendment agreed to.

    Clause 21, as amended, agreed to.

    Remaining clauses and schedules agreed to.

    The Deputy Chairman of Committees: The Question is, That this be the Title of the Bill. As many as are of that opinion will say "Content".

    Members of the Committee: Content.

    The Deputy Chairman of Committees: To the contrary, "Not-Content". The Contents have it. The Question is, That I report the Bill to the House with amendments. As many as are of that opinion will say "Content".

    Members of the Committee: Content.

    The Deputy Chairman of Committees: To the contrary "Not-Content". The Contents have it. That concludes the Committee's proceedings on the Bill.

    The Committee adjourned at twelve minutes before six o'clock.