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Viscount Ullswater: My Lords, my noble friend Lord Harrowby spoke ill of the clauses that have now surfaced in the Environment Bill—Clauses 54 to 57. These contaminated land provisions have resulted from an extensive consultation over a period of some two years—consultation with industry, the property side of business, the banks and others. I do not believe that we can accept his criticism that the clauses are half-baked. That may be his opinion. However, I should like to record that we have gone through a very long period of consultation. We believe that we have come up with some very important proposals.

The amendments of the noble Earl, Lord Kintore, seek to address the question of potential liabilities falling on owners as a result of land being identified as contaminated by virtue of substances in substrata or mines.

Before responding to the detail of the amendments, I should state that the Government intend to bring forward their own amendments on the question of water pollution from abandoned mines and how that might be considered under these contaminated land provisions. Certainly we do not intend that those provisions should bypass the defences and exemptions available in respect of such waters under the Water Resources Act. The noble Earl moved similar amendments at Report stage. I repeat what I said in response on that occasion: the definition of "land" in the Interpretation Act 1978, already includes any estate interest, easement, servitude or right in or over land.

Lord Stanley of Alderley: My Lords, perhaps my noble friend will give way for a moment. Did I hear him say that he was going to bring forward amendments over polluted water from abandoned mines?

Viscount Ullswater: My Lords, I did. We do not intend that these provisions should bypass the defences and exemptions available in respect of such waters under the Water Resources Act. Those were the words that I used. It is the overlap between the provisions on contaminated lands and those on abandoned mines that we seek to put straight.

The primary responsibility for remediation of any mines identified as contaminated land would obviously fall on anyone who caused or knowingly permitted the contaminating substances to be there. But any residual responsibility passing to the "owner" of the land would, as a result of the definition of land in the Interpretation Act, fall to the owner of the mine or the mineral rights, and not the owner of the surface land where he is a different person.

My noble friend Lord Pearson brought to the attention of the House the Cambridge water case. That case was brought at common law and therefore has no direct bearing on these statutory provisions. I suggest therefore that the amendments are not needed to achieve the noble Earl's objectives. I go beyond that and say that their inclusion could potentially create other problems. Moving away from the definition of land in the Interpretation Act in this respect could create unintended

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inferences that other differences in meaning should be implied as well. For that reason I ask the noble Earl to withdraw his amendment.

4.30 p.m.

The Earl of Onslow: My Lords, before my noble friend sits down perhaps I can ask him a question because I have been quite slow on this matter. Am I right in saying that if some surface land bubbles through some contaminated mine land—the owner of that land has not caused the contamination; it is accidental—the owner will then be legally and clearly not liable for that contamination? Have I got that right? If not, perhaps my noble friend will kindly explain.

Viscount Ullswater: My Lords, as my noble friend explained it, he has got the interpretation correct.

Lord Harmar-Nicholls: My Lords, I was a little disturbed by my noble friend's reaction to the comments made by my noble friend Lord Harrowby. It is not the first time that we have seen this from the Government Front Bench. The claim that great consultation has taken place with lots of people is supposed to be an answer that is unassailable to anybody who criticises the results as they appear in a clause in a Bill. But who dissected the results of the consultation? Who made the decisions arising out of the consultations?

My protest and my disturbance arises from the fact that consultation does not end until the Bill has passed through this House. That is all part of the consultation. The whole idea of Parliament is that its Members bring their experience and knowledge to bear in order to arrive at the right answer. The record that my noble friend Lord Harrowby gave to the House in relation to his qualifications for stating a view on the matter is quite unassailable. Merely to pass it off because consultation has taken place with lots of other people is not a good way of arriving at what eventually decides whether the Bill is good or bad.

Viscount Ullswater: My Lords, with the leave of the House—if I have the leave of the House to respond to my noble friend—I entirely accept that any legislation going through this House or another place is part of the whole process. I would not in any way indicate that what is put down on the written page in any Bill should not be examined in detail by the two Houses. I was trying to indicate that we arrived at the words in the Bill after extensive consultation. I tried to indicate that there was some reason on my side for saying that those words were not half-baked.

The Earl of Kintore: My Lords, I thank all noble Lords who spoke in this short debate. I thank the Minister for his reply. However, I fear that Clause 54 is still seriously flawed and look forward to seeing the government amendments. Meanwhile, I beg leave to withdraw Amendment No. 13.

Amendment, by leave, withdrawn.

[Amendment No. 14 not moved.]

The Earl of Lindsay moved Amendment No. 15:


Page 48, line 18, at end insert:

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(""creditor" has the same meaning as in the Conveyancing and Feudal Reform (Scotland) Act 1970;").

The noble Earl said: My Lords, I gave an undertaking at Report stage to bring forward an amendment to Clause 54 of the Bill to clarify the position of heritable creditors not in possession of the security subjects. Amendment No. 20 has that effect and Amendments Nos. 15 and 16 are consequential. It has always been our intention that the definitions of "owner" in England and Wales and in Scotland should be similar in effect. The amendments seek to bring that about. I beg to move.

On Question, amendment agreed to.

The Earl of Lindsay moved Amendment No. 16:


Page 48, line 24, at end insert:
(""heritable security" has the same meaning as in the Conveyancing and Feudal Reform (Scotland) Act 1970;").

On Question, amendment agreed to.

The Deputy Speaker (Lord Skelmersdale): My Lords, in calling Amendment No. 17, I should point out to the House that if it is agreed to, I cannot call Amendment No. 18.

The Earl of Kinnoull moved Amendment No. 17:


Page 48, line 40, leave out ("(other than a mortgage not in possession)").

The noble Earl said: My Lords, this is the third discussion on the definition of ownership in this clause, particularly in regard to where it refers to the mortgagees in possession in relation to contaminated land. I raise the matter again because it is clearly a serious issue among those lending mortgages on property.

My noble friend Lord Jenkin of Roding reminded us in Committee of the Government's stated policy under the framework of contaminated land, which was that:


    "the act of lending, whether secured or not, does not of itself open the lender to liability for meeting the costs of remedying any damage caused by the actions or omissions of the borrower".—[Official Report, 31/1/95; col. 1445.]

My noble friend Lord Ullswater gave a conciliatory and encouraging reply. He repeated the argument that it was not the Government's intention to apply a "deep pocket" policy with regard to the lending of money. He said:


    "The Government are committed to the view that banks and others should not be treated as 'deep pockets' to pay for the restoration of environmental damage for which they bear no real responsibility. The Government accept that any attempt to treat financial institutions in that way would serve only to threaten the supply of normal financial services to many sectors of the economy".

My noble friend went on to say that:


    "The Government are willing to consider this question further, and to examine whether changes to the definition of 'owner' are justified to deal with the possibility of mortgagees finding themselves involuntarily in possession of property".—[Cols. 1448-1449.]

That was an encouraging reply but unfortunately my noble friend was not able to come up with any formula. My noble friend Lord Jenkin of Roding, with admirable consistency, moved a further amendment on Report. My noble friend Lord Ullswater stated that he saw no justification for change and offered no protection other than existing remedies open to lenders. He cited other

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liabilities—statutory provisions —concerning mortgagees in possession on highways, public health and building regulations.

My noble friend may not be surprised to know that the Council of Mortgage Lenders still considers this matter to be extremely serious. It feels that there are strong arguments why the justification given so far by my noble friend is unsatisfactory. It cites that the cost of restoration of contamination is often unquantifiable and uninsurable. It causes serious blight in the whole area and could leave properties abandoned. It made a strong general point that it seems wholly unreasonable to inflict such a liability on a modest loan on the security of a property. I must agree because, as the Bill stands, the responsibilities of lenders—banks, building societies and so forth—will, unless they take careful steps, meet the responsibility of mortgagees in possession.

If one looks at the practical side, in 1994 building societies were less lucky in their possessions. Out of those possessions, 35 per cent. were voluntary, where the mortgagee simply handed in the keys or abandoned the property with agreement. If no further changes take place, what should lenders really do in practical terms? Should they just abandon their loans, which is what the Government are suggesting, and leave a host of abandoned properties? They could appoint a receiver who under the Law of Property Act 1925 would have the authority, but I am told that there would be considerable difficulty in persuading the receiver to accept responsibility when there is likely to be no income from which to pay the receiver's fees.

Neither of those choices is satisfactory, particularly in the case of residential loans. I find it very disquieting that no formula has yet been found to meet the Government's original commitment to avoid the very large potential liability for mortgage lenders. If nothing is found to meet such a formula, the consequence will be an obvious worry in that it will interfere with the flow of mortgages to finance property.

The general conclusion is that, if we have to rely on abandoned properties for lenders to avoid the risks of this huge potential liability, it is a disorderly way to proceed. One is somewhat surprised that the Government believe that such a future course of action is in the general good. I have asked my advisers about the definition of taking a property in possession. Perhaps I may quote briefly from a letter which I received just an hour ago. It states:


    "There is no hard and fast rule of what a court would constitute as 'possession' as each case has to be decided on its own merits. Typically, the very act of visiting or inspecting the property, or securing it, would constitute possession. The fact that the lender actually has the keys to the property in his possession could also, in cases, constitute possession. Additionally, in the case of contaminated land, the lender may not know that the land was contaminated and required clean-up and he would, therefore, have no reason to try to refuse to take possession!".

There is very serious concern on that point.

I asked my noble friend to say what would happen if a lender took possession, then decided that he should not have done so and applied to the Land Registry to remove his charge on the property. Would he still be deemed to have taken possession for, say, that month?

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This is a minefield of concern and a very serious issue. I hope that my noble friend will understand that the Government's replies so far have not satisfied the lenders on property and will have some encouraging words for us. I beg to move.


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