Schedule 8 - Indemnities

Part of Land Registration Bill [Lords] – in a Public Bill Committee at 3:00 pm on 13 December 2001.

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Photo of Michael Wills Michael Wills Parliamentary Secretary, Lord Chancellor's Department, Parliamentary Secretary (Lord Chancellor's Department) 3:00, 13 December 2001

The hon. Gentleman is quite correct in saying that we will oppose the amendment, and I am happy to give him our reasons. The schedule, which refers to clause 102, deals with the question of indemnity, embodies the principles on which the state guarantee of titles is based and gives confidence to the conveyancing process. It is important that the provisions are comprehensive. The structure of the arrangements was reviewed in detail quite recently and amendments were introduced by the Land Registration Act 1997. Those provisions have been in operation for several years and I understand that they are working well.

Although the Bill is couched in a different style, it does not change the legal position in any material way. Schedule 8(1) lists all the circumstances in which the registrar must indemnify a person for loss; it is a no-fault system. The amendment would add a new circumstance to the list of those in which indemnity will be payable. It seeks to make the registrar liable to compensate a person who suffers loss because the court has exercised its power to enter a restriction and it has chosen to give that restriction priority over existing entries or applications that are protected by the priority searching mechanism.

I understand why the amendment has been tabled, but it is not appropriate. In deciding whether an order should be made to enter a restriction, the court will consider the rights and other matters affecting the title, especially if it had signed to give the restriction overriding priority. Under clause 46(5), the court may exercise its power to direct that a restriction is the overriding priority, subject to such terms and conditions as it thinks fit. It is, therefore, appropriate for the courts—not a registry—to consider the issue of compensation to be paid to persons adversely affected by the order. The amendment is unnecessary, because the rights of third parties must be addressed within the court proceedings that give rise to the order.