First Schedule.

– in the House of Commons on 30th July 1942.

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Lords Amendment: In page 7, line 32, at the end, insert:

5. Payments to owners of rentcharges.

(1) Where a value payment is to be made in respect of war damage to a hereditament and at the date by reference to which the disposal of the payment is to be regulated (in this paragraph referred to as "the material date") there was subsisting a rentcharge created out of a proprietary interest (being either the fee simple or a tenancy granted for a term of a hundred years or more) in any land in the hereditament, or in any such land together with other land, a right to receive a share of the value payment shall vest in the person who was the owner of the rentcharge at that date, if he shows that the following conditions are satisfied, namely—

  1. (a) that the amount of the rentcharge so far as attributable to land in the hereditament then subject thereto (in this paragraph referred to as "the charged land in the hereditament") exceeded the available annual value of that land as depreciated by the war damage; and
  2. (b) that at the time when the question whether this condition is satisfied falls to be determined no building sufficient to make good the excess has been carried out, or, having regard to all the circumstances (including any undertaking required under paragraph (a) of Sub-section (3) of Section seven), is likely to be carried out within a reasonable period after the time when the discharge of the value payment becomes permissible.

(2) If the said right is exercised—

  1. (a) the amount of the share of the owner of the rentcharge shall be an amount equal to the capital equivalent of the excess mentioned in the preceding sub-paragraph, so however that if the amount of the rent-charge so far as attributable to the charged land in the hereditament was greater by any sum than the available annual value of that land apart from any war damage the amount of the share shall be computed as if the said excess had been reduced by that sum; and
  2. (b) so much of the rentcharge as is equal to the said excess shall be extinguished on the date on which the share is paid, and, as between the persons interested in the charged land in the hereditament on the one hand and in any other land subject to the rentcharge on the other hand, the proper share of the persons interested in the charged land in the hereditament of the liability for the residue of the rentcharge in respect of any period after the extinguishment shall be treated as being an amount per annum equal to the available annual value of the charged land in the hereditament as depreciated by the war damage.

(3) Any question as to whether the conditions mentioned in sub-paragraph (1) of this paragraph are satisfied, or as to the amount of the said excess pr of the share of the owner of a rentcharge, shall be determined by agreement between the owner thereof and of the proprietary interest out of which the rent-charge was created in the charged land in the hereditament, together with any mortgagee of either of those interests, or, in default of agreement, by reference to a referee as provided by Sub-section (5) of Section nine.

(4) Where the said right is exercised effect shall be given thereto out of so much of the value payment as is payable in respect of the proprietary interest out of which the rent-charge was created in the charged land in the hereditament, and—

  1. (a) if apart from this provision any of the value payment would be payable under Sub-section (4) of Section nine to a mortgagee of that proprietary interest, then, if the mortgage had priority to the rent-charge, it shall be payable to him and effect shall be given to the said right out of any sums to which the owner of that proprietary interest would otherwise have been entitled under the provisions of that Sub-section as to mortgagees accounting, or, if the rentcharge had priority to the mortgage the sum payable to the mortgagee shall be reduced by the amount required for giving effect to the said right;
  2. (b) if the rentcharge was itself subject to a mortgage at the material date, Sub-section (4) of Section nine shall have effect in relation to the disposal of the share to be paid in respect of the rentcharge as it has effect in relation to so much of a value payment as is payable in respect of a mortgaged proprietary interest, with the substitution for references therein to such an interest of references to the rentcharge;
  3. (c) Sub-sections (2) and (4) of Section nine, and sub-paragraph (2) of paragraph 6 of this Schedule, shall have effect subject to the provisions of this paragraph.

(5) Regulations may be made under Section ten (which confers power to make regulations as to claims for payments) as to the exercise of the said right and the manner in which effect is to be given to the said right where exercised, and in particular, but without prejudice to the generality of the power conferred by this sub-paragraph, regulations so made may make provision as to the matters aforesaid in cases in which the charged land in a hereditament is a part only thereof, or was in divided ownership at the material date, or in which a proprietary interest or rentcharge was subject to a mortgage at that date.

(6) As regards cases in which the title to a rentcharge, or to land subject thereto, is registered under the Land Registration Act, 1925, such provision may, without prejudice to the generality of Section one hundred and forty-four of that Act, be made by rules under that Section as may be expedient in cones- quence of the provisions of this paragraph, and in particular for securing (by the imposition of conditions as to the exercise of 1316 said right or otherwise) that the extinguishment of any of a rentcharge by virtue of this paragraph shall not take effect without notice thereof being entered on the register.

(7) In this Act the expression "rentcharge" means a rentcharge (including a fee farm rent) subsisting at law or capable of subsisting at law, and not being an interest or charge arising under a settlement within the meaning of the Settled Land Act, 1925, and means, where an apportionment of a rentcharge binding on the owner thereof has been made, each of the apportioned parts and not the entire rentcharge.

(8) For the purposes of this paragraph the "capital equivalent" of the excess referred to in head (a) of sub-paragraph (1) shall be taken to be that excess multiplied by the number of years purchase which the rent-charge might have been expected to realise on a sale thereof in the open market on the thirty-first day of March nineteen hundred and thirty-nine, if it had been subsisting on that day with the like incidents in all respects as it had at the material date, and the hereditament had been in the state in which it was immediately before the occurrence of the damage thereto, and the annual value of any land outside the hereditament subject to the rentcharge had been its annual value apart from any war damage.

(9) For the purposes of this paragraph the "annual value of the charged land in the hereditament as depreciated by the war damage" shall—

  1. (a) if that land is coterminous with the hereditament, be taken to be five per cent. of the value of the hereditament after the occurrence of the damage as acertained for the purpose of determining the amount of the value payment;
  2. (b) if that land is a part only of the hereditament, be determined by apportioning an appropriate part of the said percentage of the said value to that land.

(10) For the purposes of this paragraph the "annual value apart from any war damage" of any land shall, if that land was coterminous with land which constituted a contributory property or two or more contributory properties for the purposes of the instalments of contribution for the year in which the war damage to the hereditament occurred (or, if it occurred before the beginning of the year nineteen hundred and forty-one, for that year), be taken to be the contributory value or the sum of the contributory values of the property or properties for that year, and, if it was not, shall be determined by valuation made by reference—

  1. (a) primarily to the contributory value for that year of any such contributory property or properties as aforesaid which that land comprised or of which it formed part; and
  2. (b) subject as aforesaid, to the rent at which that land or any part thereof might have been expected to let from year to year on the thirty-first day of March, nineteen hundred and thirty-nine, if it had been on that day in the state in which it was immediately before the occurrence of the damage to the hereditament, or, in the case of land outside the hereditament which had then also sustained war damage, immediately before the occurrence of that damage, and the tenant undertook to pay the usual tenant's rates and taxes and the landlord undertook to bear the costs of the repairs and insurance and other expenses, if any, necessary to maintain the land in a state to command that rent.

(11) For the purposes of this paragraph the "available annual value" of the charged land in the hereditament as depreciated by the war damage, or apart from any war damage, shall be taken to be the annual value thereof as so depreciated, or apart from any war damage, as the case may be, less the amount, so far as attributable to any of the charged land in the hereditament, of—

  1. (a) any rentcharge having priority to the rentcharge in question to which the fee simple in that land was subject at the material date, or, where that rentcharge was created out of a tenancy of that land, to which either the fee simple therein or that tenancy or any superior tenancy thereof was subject at that date; and
  2. (b) where that rentcharge was created out of a tenancy of that land, the rent reserved by the lease for the year in which that date fell.

(12) For the purposes of this paragraph the "amount attributable" to any land of a rent- charge, or of rent reserved by a lease, shall, where at the material date that land was the only land subject to the rentcharge, or out of which the rent issued, be taken to be the whole amount of the rentcharge payable, or of the rent reserved, for the year in which that date fell, and, where it was not, shall be determined by apportioning or allocating to that land so much (if any) of that whole amount as may be appropriate, having regard—

  1. (a) primarily, to any apportionment or allocation of that rentcharge or rent which may have been made otherwise than so as to be binding on the owner of that rent-charge or on the landlord, as the case may be, before the occurrence of any war damage to any of the land subject to that rentcharge or rent; and
  2. (b) subject as aforesaid, to the proportion borne by the annual value apart from any war damage of that land to the annual value apart from any war damage of the other land subject to that rentcharge or rent.

(13) In the application of this paragraph to Northern Ireland there shall be substituted for the reference to the Settled Land Act, 1925, a reference to the Settled Land Acts, 1882 to 1890, and, as regards cases in which land in Northern Ireland is subject to a rentcharge, the Lord Chief Justice of Northern Ireland may by rules make such provision as may be expedient for securing (by the imposition of condtions as to the exercise of the said right or otherwise) that the extinguishment of any of a rentcharge by virtue of this paragraph shall not take effect without notice thereof being registered in the proper office for the registration of deeds or titles, as the case may require.

6. Payments to superiors and creditors in ground annuals.

(1) The last preceding paragraph shall extend to Scotland subject to the modifications specified in the following provisions of this paragraph.

(2) For any reference to a rentcharge created out of the fee simple in any land there shall be substituted a reference to a feuduty or ground annual payable by the owner of the fee simple in such land; references to the owner of a rentcharge shall be construed accordingly, and references to a rentcharge created out of a tenancy shall not apply.

(3) The right conferred by sub-paragraph (1) on a superior or the creditor in a ground annual to receive a share of a value payment shall not be exercisable until—

  1. (a) in the case where the feuduty or ground annual is payable in respect of the charged land in the hereditament and also of other land, the part of such feuduty or ground annual attributable to the charged land in the hereditament has been allocated thereon; and
  2. (b) the feuduty or ground annual or the part thereof so allocated, as the case may be, in so far as it exceeds the annual value of the charged land in the hereditament as depreciated by the war damage, has been discharged.

(4) Where for the purposes of this paragraph a feuduty or a ground annual is required to be allocated or a feuduty or a ground annual or a part thereof so allocated is required to be discharged, the superior or the creditor in the ground annual shall execute and record in the appropriate register of sasines—

  1. (a) a memorandum specifying the sum to be allocated and describing particularly or by reference the land on which it is to be allocated; or, as the case may be,
  2. (b) a discharge of the feuduty or ground annual or part specifying the extent to which the same is discharged and describing particularly or by reference the land so disburdened;
and any such allocation or discharge shall be binding on all having interest.

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

I beg to move, "That this House doth agree with the Lords in the said Amendment."

This long Amendment carries out a decision of this House during the Committee stage that the Bill should be amended by enabling owners of rent-charges in certain circumstances to claim a share of a value payment. When the Bill was drafted and passed by this House, it was thought that the rentcharge was normally covered by the site value, but evidence was brought to our notice by several hon. Members interested in this subject that there were many cases, particularly in Lancashire and Northern Ireland, where the rentcharge was, in effect, secured on the building, and if the building was destroyed and not rebuilt, the owner of the rentcharge had a very great claim to be considered in the distribution of the value payment. That principle was accepted in the Committee stage. It was a rather complicated matter to work out in detail, and the Amendment which I now move sets out the machinery.

Briefly, the rentcharge owner is entitled to come in and claim, if the annual value of the damaged property is below the value of the rentcharge secured upon it.' He has also to show that rebuilding is unlikely, because, if rebuilding takes place, he will be back where he was before. If he gets a share of the value payment, that reduces the rentcharge pro tanto. There are very great complexities and I will indicate some of them. A rentcharge may cover several properties, only one of which may be damaged, and you have to arrange for a proportional allocation. There may be different owners of property covered by a single rentcharge. There may be different owners of rentcharge on a single property. The area covered by the rent-charge may not coincide with the Schedule A contributory areas. There may be a mortgage in front of the rent-charge or a mortgage behind it, or the rentcharge itself may be mortgaged. After that brief indication of the complexities, I am sure that the House will realise that this has been a complicated matter.

Photo of Sir Noel Goldie Sir Noel Goldie , Warrington

I do not process to be an expert on rentcharge, and I cannot therefore express an opinion as to how the Amendment will meet those very great difficulties. This matter was brought to my notice by the Law Society, with which I am very closely associated in Manchester, and I cannot allow this Amendment to pass without asking permission to express to the Chancellor and to the Law Officers our deep appreciation of the kindness they have shown us in considering a matter which is of very great importance.

Question, "That this House doth agree with the Lords in the said Amendment," put, and agreed to.

Mr. Speaker:

I understand that many of the remaining Amendments are consequential.

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

Most of them are consequential or drafting in character. One or two might require a little explanation, but none raises a point of principle and if the House is content to treat them as consequential they could be taken together.

Mr. Speaker:

I will take them en bloc.

Photo of Mr Donald Somervell Mr Donald Somervell , Crewe

I do not think any of those with which I am dealing and which apply to Part I require explanation unless explanation be asked for. Others affect the Board of Trade, and I do not know whether my hon. and gallant Friend can say the same as I have said.

Photo of Mr Charles Waterhouse Mr Charles Waterhouse , Leicester South

There is nothing very revolutionary in those which affect Part II and they can be dealt with in the same way.

Remaining Lords Amendments agreed to.