Land Registration Bill [Lords]

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Mr. Cash: I beg to move amendment No. 22, in page 11, line 9, at end insert—

    '( ) A charge by way of legal mortgage created by an owner gives the mortgagee the protection, powers and remedies provided by section 87 of the Law of Property Act 1925 (c. 20), despite the fact that an owner does not have power to create a mortgage by demise or sub-demise.'.

The Chairman: With this it will be convenient to take amendment No. 23, in page 11, line 19, leave out paragraph (c).

Mr. Cash: The Bill removes the power to create a mortgage by demise. That is a helpful and welcome modernisation, assuming that the man in the street knows what a mortgage by demise means. As a solicitor who has held a certificate to practise since 1967, I am well aware of the complexities of the law. However, although I have done quite a lot of conveyancing, it is not one of my specialties. Despite the Government's intention to improve the quality of the legislation, which I appreciate, it is obvious as we proceed that we are dealing with matters of enormous complexity and that much of the language is, by definition, more than the average person can be expected to understand. Speaking as a lawyer, I am happy to acknowledge—I can see St. Thomas's hospital across the river—that the same applies in the medical and other professions.

Complications develop by accretion and we must simplify the legislation and the language that is used. It is quite a bold task, but Justinian managed to do it in the 3rd or 4th century, if I have my dates right—I probably have not. He went off to Byzantium, took one look at the statute book and saw that it was an incredible mess, employed 2,000 lawyers and told them that they had about 18 months in which to sort it all out. Believe it or not, they achieved that.

My point is an example of the question marks that arise in drafting. How does one define what a legal charge is when what it is said to be equivalent to can no longer be created? The purpose of the amendment is to overcome that. The matter was first raised in the House of Lords and there is an intellectual battle between the draftsmen. We believe that our amendment is preferable because it resolves the problem more directly and simply, and that the Government's formulation in the Bill is unnecessarily complicated and might even be technically defective. The difficulty that I am predicating comes not from the change to section 87 of the Law of Property Act 1925 made by clause 23 (1)(a), which is the basis on which the Government's formulation proceeds. Clause 23 does not affect the meaning of section 87 of the 1925 Act but provides that a registered proprietor cannot make a disposition of a kind to which section 87 refers. I am happy to acknowledge that those words, which may sound erudite, have their basis in the intellectual battle between the draftsmen on both sides of the equation. I want to put the issue on the record because drafting amendments can ultimately become a matter of contention in the courts. I look forward to hearing the Minister's response.

Mr. Wills: I am sure that the hon. Gentleman will join me in recognising the fantastic achievement of the Bill team and those in the Land Registry and the Law Commission, who are fewer in number than Justinian's 2,000 lawyers but have achieved something almost as remarkable, which will go down in history for almost as long as Justinian's great reforms.

Amendment No. 22 is a response to concern about the fact that the Bill prohibits the use of charges by demise or sub-demise by an owner of a registered estate. It is by reference to such charges that the powers are described. The Government share that concern, and the Bill was amended by a Government amendment in another place. It adds a further subsection to section 87 of the Law of Property Act 1925, confirming that there is no intention to alter the effect of section 87(1) through the Bill's provisions. There was some debate about whether that was the best way to achieve the desired result, but no doubt was cast on the amendment's effect. There seems little remaining need for concern, therefore, and I hope that the hon. Gentleman can see his way clear to withdrawing the amendment.

One of the Bill's aims is to simplify the law, and it achieves that incrementally in many of its provisions. For instance, once it is enacted it will no longer be possible for an owner of a registered estate in land to create a mortgage by demise or sub-demise. Instead, the Bill permits the use of only simple methods for an owner of a registered estate in land to create charges over registered land. In that vein, the Bill also requires that the owner of the charge use only one of the existing methods to charge his interest with the payment of money.

Amendment No. 23 would restore an alternative method by creating a sub-charge, even though the rights and remedies of the person with the sub-charge are not affected in any way by the manner in which that sub-charge is created. That constitutes an unnecessary complexity, and it is far easier to have a single, widely accepted and easy method of achieving the required legal effect. I therefore ask the hon. Gentleman not to press the amendment and to resist the temptation to introduce complexity for complexity's sake, thereby undermining one aim—an aim that he shares—of this well-drafted legislation.

Mr. Cash: On the principle of ne nos inducas in tentationem, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 23 ordered to stand part of the Bill.

Clause 24 ordered to stand part of the Bill.

Clause 25

Mode of exercise

Mr. Cash: I beg to move amendment No. 24, in page 11, line 27, leave out 'and content'.

The Chairman: With this it will be convenient to take amendment No. 76, in schedule 10, page 66, line 35, leave out 'and content'.

Mr. Cash: The object of the amendment, which relates to proceedings in the other place, through which we appear not to have made the desired impression on the contenders on this battleground, is that the content of registrable dispositions should be determined not by rules but by the particular terms of individual transactions. Although the Land Registry wishes to control the form of documents submitted to it to ensure that they can be admitted to the register in the most efficient way, there seems absolutely no reason why the content should be prescribed by general rules, given that such content varies widely depending on the individual terms of each transaction. I hope that the Minister will also take account of the important point that freedom of contract makes the United Kingdom an attractive place to do business. In that regard, there should be no unnecessary constraints, and I should be interested to hear his comments on those points.

Mr. Wills: Both amendments would reduce the scope of the Bill's rule-making powers. In recent years, the Land Registry has altered its requirements in respect of the forms of disposition used for registered land. Those forms now have an easily recognisable appearance and must contain certain information about the transaction in designated places. Although it has taken time for internal staff and external customers to get used to the forms, I understand that they are generally regarded as much easier to navigate and to extract key information from. However, the requirements have to stipulate certain essential details that the document must contain for the legal attention to be achieved. Otherwise, they would allow the parties to agree their own additional terms and conditions, provided that they are located in the appropriate place.

12.15 pm

It is difficult to imagine the exact form that documents used in the electronic conveyancing system will take. That form will be novel, but the rules introducing the documents will be constructed after wide consultation, and after scrutiny in the Rule Committee. The rules must inevitably provide for formally structured information containing at least certain basic and essential details. There is no present or future intention to restrict the parties' ability to agree their own terms. Rather, the aim is to make the extraction of information about those terms—whether by human beings or by an automated land registration system—as easy as possible. It seems more likely that, in the electronic world, the content rather than the form of the documentation will be controlled. In the light of the reassurance given in another place, that by ''content'' the Bill means the generic context rather than specific details, I hope that the hon. Gentleman feels able to withdraw the amendment.

I turn now to amendment No. 76. Schedule 10(3), which fulfils an important function in the conveyancing process, relates to implied covenants. An obligation to deduce title to land in accordance with a contract of sale comes to an end on completion of the sale. Establishing that a breach of implied covenants for title has occurred is the only way in which a transferee can seek a remedy for defects in title that emerge after completion. Rule 77A(2) of the Land Registration Rules 1925 currently provides that a person will not be liable for a breach of most implied covenants in respect of matters set out in the register of title. The Bill addresses that issue by inserting a new subsection in section 6 of the Law of Property (Miscellaneous Provisions) Act 1994. That insertion does not replicate existing law exactly, but the differences are not material and the law is made clearer, more coherent and accessible as a result.

The rule-making powers in schedule 10 are fairly limited in scope, but they are nevertheless important. They are designed purely to ensure that everybody knows when implied covenants have been given in relation to a transaction, and whether the statutory form of covenant has been modified in any way. There is no intention, as the hon. Member for Stone may fear, to tinker with the precise wording of implied covenants, which has been developed and refined over centuries. In the light of that reassurance, I hope that he feels able to withdraw the amendment.

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