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Clause I—("Legal Estates" And "Equitable Interests," And Repeal Of The Statute Of Uses)

Volume 155: debated on Wednesday 14 June 1922

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(4) A. legal estate shall not be capable of subsisting or of being created in an undivided share in land, and in this Part of this Act "land" does not include an undivided share therein unless the context so requires.

I beg to move, to leave out Sub-section (4).

Perhaps I may be allowed to explain shortly the situation with regard to undivided shares in land. There are two kinds of shares in freehold land. One is what is called a "tenancy in common," and the other a "joint tenancy." The meaning of the words "tenancy in common" is that each owner possesses the entirety of the whole land, and if any one of them dies, that share of the land passes to his executors or trustees. Each owner, as it were, is entitled to the whole of the freehold land. The meaning of "joint tenancy" is altogether different..Each is entitled to the whole land, but upon the death of one it passes to the survivors. It is proposed to do away with the whole of the tenancy in common, that is, the undivided shares in land, and' that, I suggest, is a mistake. I see no reason why this old law, which, I venture to say, works so satisfactorily, should be done away with by this Bill. There is an impression abroad that you will be able to transfer land on the same principle that you transfer stocks and shares, but that, I think, has been proved to he a fallacy. So great an authority as Lord Haldane has said that it cannot be placed on the same footing, and as that, except for the point I will mention in a moment, is the only sound argument for doing away with these undivided shares in land, I think I am right in the view I hold that these undivided shares, shared in common, should be allowed to remain part of our law.

Let me give the reasons. If more than two persons purchase land, and it is conveyed to them, each becomes legally possessed of the whole, and no legal dealings can take place with the land without the consent of all the persons if one dies, his share passes to the executors or trustees, and it is a powerful security. Each person can mortgage his share in the land, and transfer the legal ownership to the mortgagee, and it forms a splendid security. Now if this tenancy in common be done away with, and it is turned into a joint tenancy, then trustees will be set up, if you wish to have separate ownership, and here is my first very strong point. It is a great mistake and disadvantage, that instead of having one simple deed, you have in the one case to have a deed conveying absolute ownership, which will pass under joint tenancy, instead of having that firm security which the other will give. In cases of partnership this is very important. Of course, in a well-drawn partnership deed, you set out trusts in the partnership, but lots of enterprising people, and young people in a small way, start business and become successful. They buy land, and have it conveyed to two or three of them, and it is conveyed as tenants in common. They, perhaps, have no partnership deed at all. The matter is too small, or, if they have a partnership deed, it is an imperfect one.

4.0 P.M.

What happens? These young persons prosper. They buy land, and for a long time—perhaps altogether through their career, until they get fairly well advanced in age—there is no deed of trust set up. That tenancy in common, the method of transferring the land by that principle, is the finest security these young people could have. Instead of that, you now convert these undivided shares into a joint tenancy, and the trust, as I say, will have to be created, and, if at the time of the passing of this Act, there are a number of cases in which there are these tenancies in existence, they become ipso facto converted into joint tenancies, and they pass over to the survivors. And so you alter this whole system which has proved so satisfactory for a long time. Under the Bill, all these undivided shares will no longer become legal. They will become equitable. They will automatically become transferred to trustees, and, if more than four persons are owners of the estate of the tenancy in common the legal estate passes over to the Public Trustee. I do not want to make my points too technical, nor my speech too long, but I do suggest that in connection with this matter the Public Trustee is brought in unnecessarily. I know what my hon. and learned Friend will say. He will say that in the majority of cases it will be only a nominal arrangement, but I think he will find that it will be an arrangement which will not be appreciated if automatically these cases which are set out in detail in this particularly complicated Bill and especially in the Third Schedule pass over to the Public Trustee as trustee. What is the objection? I know what my hon. and learned Friend will say. He will say that the objection to this is that sometimes people who own these undivided shares go to the Court because they cannot agree. They agree all very well when things are prosperous and when there is no necessity to interfere with the arrangement, but, when there is trouble, when perhaps there is a death, or when there are cantankerous people, sometimes they have to go to the Court with a partition action. May I say that the number of partition actions has been very much exaggerated? I have been in practice as a solicitor for 44 years, and I suppose that it will hardly be credited when I say that during the whole of that time I have never had occasion to go to the Court with a partition action. I do not think that my experience is singular. I think it will be found that there are a large number of practitioners who have been as long in practice as I have and who have not had a partition action. If things go wrongly, people get litigious and go to the Court. Different rights are represented in the action, and a great deal of expense is incurred. That expense is unwarranted, and I think the Judges of the High Court ought to do what they can to stop the waste of money in costs which are incurred unnecessarily and without any justification in these partition actions. How is that to be done? Either by a, sale of the land, which is often ordered to get over the difficulty, or by taking other measures to settle the questions which arise in connection with these partition actions Many persons are represented in these partition actions who ought not to be represented. If it were desired to meet this system, which is a very efficient system and has worked so satisfactorily and so long for the benefit of people who go and speculatively buy a piece of land jointly, it would not be a difficult job for the draftsmen of this Bill to make arrangements by which the difficulties could be got over and the matter settled.

There is one other point in connection with partition actions. I put down a question as to the number of partition actions which had been entered during specified years, mentioning the three years before the War and the last three years. The answer was that it was impossible to get the information because it would involve such an amount of trouble that they could not undertake it. Why is it that there is an impression among certain people that there are a large number of partition actions? It arises in this way. The matter comes up for the consideration of the Court again and again, and, too often, it is shelved and put aside. People think that there have been a dozen actions when all the while there has been only one. There cannot be any doubt in my mind as an old practitioner that, where these is a desire on the part of the legislature to do away with burdensome expense it is our duty to do so, hut, on the other hand, where it is desired, as I think it is desired here, that a system of conveyancing, and of ownership and of transfer, which is so beneficial and works so satisfactorily as does this system of tenancy in common, should continue to exist, I think it is a pity that, it should be done away with.

I beg to second the Amendment.

Only a word is needed from me to support the Amendment moved by my hon. Friend. I would call the attention of the Solicitor-General to the fact that this proposal was not contained in the Real Property and Conveyancing Bills introduced from time to time by Lord Haldane. In none of those earlier Bills was this proposal. It first appeared in the Bill of 1920, so that it is not an essential part of the scheme for the alteration of the real property law. It is a later suggestion, and I submit that is not a wise suggestion. The holding of property in common is quite a usual form of procedure. It has been adopted in hundreds and thousands of cases throughout this country, and the fact that it has been adopted in so many cases is, surely, a very strong argument for its continuance. All over the country partners have acquired property in this way, and it will come to them with very great surprise when this Bill comes into operation on 1st January, 1925, to find that they have been deprived of the legal estate in their property; and it will come with even greater amazement to the mortgagees concerned when they learn that, although they have mortgages upon partnership property which is held by tenants in common, their legal estate as mortgagees has passed entirely out of their hands and that their interest is restricted simply to a claim upon the purchase money on sale. Generally, property that is purchased by partners and held by them in undivided shares is not purchased for speculative purposes but for business or family purposes, and the difficulty, as my hon. Friend says, is that this is an attempt to do the impossible. It is an attempt to assimilate real and personal property and to make the dealing in real property similar to the dealing in stocks and shares. Of course, if stocks and shares are held by half-a-dozen individuals they can be easily divided, but that does not apply to land. Under the Third Schedule the property will become vested in the Public Trustee in a large number of eases. This will apply if there are more than four co-owners, if an owner of any share is not of full age, if an owner is not beneficially entitled, or if there is any undivided share which is not free from encumbrances. A great many properties held as tenancies in common at present will come within one of those four categories; it will bring about an immense change.

I suggest that the Amendment does not strike at any vital part of the Bill. If undivided shares are allowed to continue the Bill will remain in all its essential features undisturbed. The only effect will be to shorten the Bill and simplify its terms, but, if the Solicitor-General be obliged to insist upon the retention of this Sub-section, it will mean an unnecessary disturbance as coon as the Bill passes into law. I hope, having regard to the fact that it was only a later suggestion and was not contained in the earlier Bill, he may at any rate be able to see his way to drop this Sub-section, carrying with it certain consequential amendments. It will, at any rate, make the Bill so much shorter, and I assure him that the Amendment is not proposed in any obstructive spirit or with any desire to strike at any real, vital part of the Bill, but is genuinely put forward as being a simplifying proposals.

Let me be frank with the House. This Amendment raises one of the first principles of the Bill, and it is an Amendment to which I could not possibly accede. One of the main principles of the Bill, as I explained to the House on Second Reading, is to get rid of different legal estates, as, for instance, life estates, and a common principle is to get rid of the division of one estate, so to speak, by a series of vertical divisions into a number of shares one by the side of the other. It is undoubtedly the fact that the system we have in our law to-day of having undivided shares, that is to say, an aliquot part of an undivided whole, is one that leads to very great complication in conveyancing work. You have to get all the parties interested and all the owners of the shares to concur in dealings in the land or you have to go to the Court with a partition action. The Mover and Seconder of the Amendment say that they have not come across partition actions in practice. The Seconder said that there were not as many partition actions as is supposed, because one partition action goes on for a long time.

I think the hon. and learned Gentleman is attributing to me words which I did not utter.

Let me render tribute where tribute is due. There was one well-known action in the course of our English history which lasted a very long time, and it was not beyond criticism. It was the case of Jarndyce, v. Jarndyce.

I did not say that it was, but T do say that one action may last a long time, and may involve a great deal of legal costs. The mere fact that the actions are few in number may easily be compensated for if each action lasts a long time. The conveyancing counsel whom I have consulted in the matter say that undoubtedly in many cases within their knowledge an estate has been used up in a partition action, so that there has been nothing left for the ultimate beneficiaries. That is the type of thing that one wants to prevent happening, because, when it does happen, even if it happens only very rarely, it is a grave scandal, and the proposal to get rid of undivided shares was for the purpose, inter alia, of getting rid of that particular scandal. Another object in getting rid of undivided shares is to shorten conveyances. One of the reasons why the transfer of land to-day is so costly is that so many documents have to be drawn up, and the purpose running all through this Bill, through every page of it, is to do everything possible to shorten the documents that lawyers have to draw up for people who want to deal in land. The shorter the documents, the less the lawyers will be needed, and the less they will be able to charge. That is a fundamental object of this Bill. There is not the shadow of doubt that the getting rid of legal undivided shares will, in the end, substantially help in shortening conveyancing documents.

It is true that this particular proposal had not been made before in Parliament before the Bill of 1920—and let me say at once that it was the Committee over which I had the honour to preside which invented the reform. The Seconder of the Amendment pointed out that it was not contained in Lord Haldane's Bills of 1913 and 1914. I agree, but when it was put forward it was one of the proposals of the Bill which emanated originally from my Committee, and it was welcomed by many specially concerned. This proposal, which is essentially a technical legal question affecting the law of real property and the system of conveyancing, was discussed very closely and very fully by all the leading lawyers in the other House—Lords Haldane, Buckmaster and Cave—and they all approved of this proposal. The Law Society has approved of it. I believe that practically speaking 99 per cent. of the legal opinion in this country considers this a sound reform.

It was one of the points I made on the Second Reading, a point of principle which was discussed very fully in Committee upstairs, and it has been discussed several times in the House of Lords. My submission is that the House ought not now to make the Amendment proposed, which will eliminate one of the important reforms of the Bill, introduce a great deal of complication, involve a great many consequential alterations in different places through the Bill, and will not do the good which the Mover and the Seconder suggest it will do. The hon. Member who seconded said it would affect cases of partnership. I very respectfully suggest to him that he is under a misapprehension. Partners, as a rule, are in law joint tenants, and in equity tenants in common. They will remain, in regard to their beneficiaire interests after this Bill is passed, in exactly the same legal position as they are to-day.

As regards the question of trustees, if in any cases the land devolves upon the Public Trustee as the result of the passing of this Bill he will hold it as a mere automatom, and it will pass from him to the Trustees appointed under the powers of a settlement. As a result the land will be held beneficially for those interested. A question was raised about the mortgagee. I venture to say that as security for money advanced a share in the proceeds of the sale of the whole is a better security than the security of the proceeds of the sale of a share.

Amendment negatived.