I beg to move amendment No. 73, in page 61, line 23, at end insert ', or
( ) the exercise by the court of its powers under section 46'.
The object of the amendment is to ensure that priority is maintained in all but the most extreme circumstances, and that circumstances in which priority is lost be indemnified. Questions of indemnification are important and I would be grateful for the Minister's explanation of why he opposes that; if, indeed, he does.
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.
I am intrigued by that answer. The fact that the court may, under clause 46(5), make
the exercise of its power under subsection (3)—subject to such terms and conditions as it thinks fit—does not include the power to be able to impose what would effectively be the indemnity that is referred to in the arrangement that we are proposing, which is an entitlement to an indemnity for someone who suffers loss by reason of the exercise by the court of its powers under clause 46.
I am glad to say that another note is being passed to the Minister, and I hope that it comes to his rescue on this occasion. Where the court finds that it has to make an entry, it does not take that decision for a frivolous reason; it takes it because, having listened to the arguments, it has come to the conclusion that that is necessary. If that is necessary, and loss is incurred by someone under schedule 8(1), and if the power to impose conditions is not enough to provide an indemnity but the court thought that the matter was important enough to do that in any case, why should not the person be able to obtain the indemnity that he would, otherwise, have been able to get? That is illustrated by a glance at the other entitlement provisions, such as a mistake in the cautions register, a mistake whose correction would involve rectification of the register, and a mistake in an official search. My point is that there is a category within which clause 46 falls that is not dissimilar to those that are set out in the indemnity provisions relating to entitlement.
I am open to further persuasion, and I suspect that another note is making its way to the Minister that might help me to understand the matter better. However, I will not withdraw the amendment until the Minister has had a chance to read the note in front of him.
It will not take long to read.
I am advised, by people who are in a far better position than I am to know the facts of the matter, that the court will require an undertaking in damages from the applicant, and that, if there is a mistake, an indemnity is payable. I hope that the hon. Gentleman can add that to the reassurances that I have already given him, and that he will withdraw the amendment.
That just goes to prove the beauty of our democratic system. As a result of pursuing the matter a little further as we reach the dying moments of the Committee, the Minister has said something that provides me with enough reassurance to be able to withdraw the amendment, although I had told my troops—or, rather, troop—that we would press the matter to a Division. However, we might return to it on Report, because I shall seek further advice on the question. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 8 agreed to.
Schedule 9 agreed to.