Land Registration Bill [HL]

Part of the debate – in the House of Lords at 4:00 pm on 8 November 2001.

Alert me about debates like this

Photo of Baroness Buscombe Baroness Buscombe Shadow Minister (Home, Constitutional and Legal Affairs) 4:00, 8 November 2001

My Lords, in moving this amendment, I shall speak also to Amendment No. 14.

These amendments were debated at some length in Committee and again on Report. Again, after much thought and discussion, we want to urge the Minister to reconsider this point.

A person in actual occupation of land who possesses an interest under a trust of land is entitled by virtue of his occupation to protection in respect of that interest. Paragraph 2 of Schedule 1 and paragraph 2(a) of Schedule 3 withhold that protection if the person in actual occupation is entitled to an interest under a strict settlement. When we moved the amendment in Committee and on Report, we saw no justification for the discriminatory treatment of the beneficiary under the strict settlement, and we see none now.

We accept that under the existing legislation interests under strict settlements do not constitute overriding interests. But, as the Law Commission points out in paragraph 2.69 of its Third Report on Land Registration of 1987, the distinction in the treatment of beneficiaries under strict settlements and beneficiaries under trusts for sale—now trusts of land—was probably unintended and was in principle unjustifiable. In the recent consultative document (at paragraph 5.63) the Law Commission and the Land Registry both "readily accept" that rights under strict settlement should be capable of existing as overriding interests. We agree wholeheartedly with that view.

As I said on Report, there is a further important consideration to which the Law Commission adverts in its 1987 report. The strict settlement was the classical type of landed settlement designed to preserve family estates from generation to generation, and in this context the need to protect the beneficial interest of persons in actual occupation will seldom, if ever, arise.

However, one of the consequences of the 1925 legislation—one that was not appreciated at the time—has been the unintentional and informal creation of strict settlements in circumstances where the machinery of the Settled Land Act 1925 is inappropriate and often not properly implemented. It is in this context that the exclusion of beneficiaries under strict settlements who are in actual occupation of land is capable of operating unjustly.

I make no apology for adopting an example similar to the one that I used on Report. A widow entitled to a life interest in the former matrimonial home under the will of her husband will be entitled to protection if in actual occupation only if the property was subject to a "trust for sale". In the absence of this magic formula—which may well have been omitted in a home-made or informal will—the widow will be entitled to no protection. When she is evicted, it will be cold comfort to her to know that she is one of the "comparatively few people" who will be affected by the abandonment of the Law Commission's recommendation to extend the protection to persons in her position. The fact that a widow under a strict settlement unintentionally created by a home-made will is one of a diminishing band is not a good reason for depriving her of the protection that the law accords to someone with almost identical rights under a trust of land.

At the risk of detaining the House further, perhaps I may offer a second example to amplify the point. A man of modest means whose main asset is an ex-council house bought under the right-to-buy legislation makes a home-made will stating: "I will give my house to my wife for her lifetime and after her death to my son and I appoint my son my executor". He dies before 1997, so there is an accidental strict settlement, and the son, without legal advice, and therefore without the error being spotted, takes a grant of probate and gets himself registered as proprietor without any restriction on his powers of disposition being entered. After the new land registration legislation comes into force, the son, living with his mother following a divorce, mortgages the property for an advance to start up a business. He tells the bank, "My father left me the house, but of course I let my mother stay there", and the bank accepts that—unwisely perhaps, but such things happen.

Let us suppose that the son's business then goes bust, as so often happens, and the bank seeks possession with a view to selling the property. The mother would have been safe if the land had been held on trust for sale/trust of land, but as the Bill stands she has no defence to the possession claim, because her interest is under a Settled Land Act settlement, and her occupation of the property does not suffice to make it binding on the bank. A mortgage is more likely to create a serious problem than a sale, because even if the mother is not actually consulted on a proposal to sell, she will find out about it on completion and be able to do something then; whereas a mortgage may well not come to light until after the money has been lost and/or the son has absconded. I beg to move.