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Application For Apportionment

Volume 932: debated on Friday 20 May 1977

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I beg to move Amendment No. 7, in page 3, line 41, at end insert

'until the expiration of six weeks from the date of completion of the service upon all other owners of the land affected by that rentcharge of an advance copy or advance copies of the application conforming with the provisions of subsections (5) and (6) below.'

I understand that it is convenient to discuss at the same time the following amendments:

No. 8, in page 4, line 3, leave out 'equitably', and insert 'proposed to be'.

No. 9, in Clause 5, page 4, line 33, at end insert
'and upon all owners of the land affected by the rent charge if there has been no equitable apportionment'.
No. 10, in Clause 5, page 5, line 34, after 'applicant', insert
'and all other owners of the land affected by the rentcharge (if there has been no equitable apportionment)'.

Clause 4 deals with the apportionment of rentcharges which may apply or may originally have applied to a number of properties. By agreement between the rent owner and the rent payer, the rentcharge may already have been legally apportioned, but that can be done only if there is agreement between the two parties or between one party, the rent owner, and all the rent payers. Or it may have been legally apportioned by an order of the court. Otherwise, the rentcharge remains unapportioned. One payer may be responsible for the whole rentcharge, even though there is a great number of properties on which it is imposed. It is necessary before one redeems a rentcharge on one's own dwelling house, if it originally applied to several others as well, to have it apportioned and to find out what the amount is on that one property.

However, when one considers the machinery under Clause 4 as to how to go about apportionment, some complications arise, particularly under subsection (4):
"No application for apportionment may be made…in respect of any rentcharge which has not been equitably apportioned as between the land to which the application relates and other land affected by the rentcharge."
"Equitably apportioned" means that it has not been legally apportioned and there must be some arrangement among the several payers of the rentcharge before one may apply for apportionment.

This must put 99 per cent. of the payers of rentcharges in some difficulty. It is very seldom that one can point to an agreement between all the rent payers to share out the rent payment in certain amounts. They do pay them in certain amounts, but it may be difficult to point to any agreement. It is called "equitable" apportionment because the rent owner himself has not agreed with it. One must therefore consider an agreement among all rent payers before any one of them makes an application for an apportionment for his mount to be fixed.

I wanted to deal with cases where one cannot point to an agreement between the payers of the rentcharge to apportion it among themselves. However, I do not want to obstruct the application by the one who wants to redeem his rentcharge and therefore goes for an apportionment to start with.

Therefore, in Amendment No. 9, I have merely provided for a period of six weeks during which that rent payer who wishes to have an apportionment of the rentcharge, so that he knows exactly what is payable in respect of his land, must give notice to the others of his intention to make that application. If those others do not take some step to object to or to modify his proposed application, then the application shall be allowed to go forward. It puts the rent payer in great difficulty if he cannot ask for an apportionment when he cannot point to agreement among all the other rentcharge payers.

12.15 p.m.

It follows, in regard to subsection (5)—
"Every application…shall specify the amount equitably apportioned to the applicant's land "—
that he would not be able to comply with that if the amendment were accepted, but he would be able to propose in his application some amount which should be apportioned to his land. Therefore, in Amendment No. 8, I have suggested the replacement of the word "equitably" by the phrase "proposed to be"—that is to say, that the application should state the amount proposed to be apportioned to the applicant's land.

When the application comes before the Secretary of State under the procedure set out in Clause 5, he may decide that the equitable apportionment, or the proposed apportionment if the amendments are made, is not the right figure. If he so decides, he may be affecting other rentcharge payers, so it would be necessary, if the Secretary of State drew up a different apportionment to that required by the application, to give notice to the other owners of land affected by that same rentcharge. That is the purpose of Amendment No. 9, which adds to the subsection which already obliges the Secretary of State to send a copy of the draft order to the rent owner. It would oblige him also to send it to the other persons liable for the same rentcharge.

When the apportionment is finally made as provided under Clause 5(7) and the Secretary of State is obliged to send copies to the applicant and the rent owner, he would under Amendment No. 10 be obliged to send copies to the other persons affected by that rentcharge.

The whole procedure is an effort to simplify the existing procedure. There should not be an obligation on the person who applies for apportionment to search out the other people liable for the same rentcharge. The present procedure is precluding a rent payer from making the application at all. It is all very well to say, "We shall simplify the procedure. If you show that there has been an equitable apportionment and that all your neighbours agree on who should pay what, you need not notify your neighbours." Of course not, but he is precluded from making the application at all if he cannot show that he has already got the agreement of all his neighbours.

I am trying to provide not too complicated a procedure under which the rentcharge payer, who sometimes remains, both in law and in equity, liable for the whole of that rentcharge even though it is imposed on other property, will have a chance to ask the Secretary of State to apportion it although he has not gained agreement.

This, after all, is the purpose of the Bill. There are so many cases in practice in which, most unfairly, the whole rentcharge has been imposed on the owner of one property in a terrace, who has to collect it from the others. It is not easy for him, although he collects a certain amount from the others, to show that there is any agreement about their paying it. This is the case which would be greatly assisted by the amendments.

One of the special features of the apportionment scheme provided by the Bill, as most of us involved in the discussions on it so far have said, is that it is aimed specifically at simplifying and making the procedure less expensive. Towards that end, we have said that the applicant's co-rentpayers will no longer be made parties to the application. This is made possible by providing that legal apportionment, unless there are compell- ing reasons to the contrary, made under the statute, shall correspond with the existing equitable apportionment, where there is one. On this footing, the applicant's co-rentpayers are in no way affected.

The right hon. Gentleman said that this did not affect 99 per cent. of rent-payers, who are paying simple rentcharges or equitably apportioned rentcharges. If—and the right hon. Gentleman admits, therefore, that it would be an exceptional case—there is no existing equitable apportionment, this provision would not work.

The Department could not fix the applicant's scheme without consulting his co-rentpayers, and it would be wrong for the Secretary of State to be given the function of interfering in the arrangements, or potential arrangements, which exist between the rentpayers, some of whom, in any event, will not have asked the Secretary of State for a legal apportionment. It must, therefore, be up to the applicant to reach agreement with his neighbours as to what his share shall be before he asks the Department to make an order imposing that agreement on the rent owner. I recognise that the agreement of the rentpayers is not binding on the rent owner.

Amendment No. 8 would undermine the procedures. It would be possible for an applicant who had an equitable apportionment to apply for a legal apportionment and to propose a smaller amount, and he could do so without having to notify his co-rentpayers. For these reasons, I advise the House not to accept the amendment.

I am disappointed that the Under-Secretary of State has turned down the amendment, and that he did so very briefly without going in any depth into the very important position which is left in the air by the Bill. We are giving the public to understand that rentcharges are to be redeemed, that they will be extinguished after 60 years, so that all parties concerned had better get down to redeeming them now and clearing them off the title of the property. But we are putting this obstacle in the way of any rentcharge payer applying to the Secretary of State for his rent to be apportioned so that he may know exactly what is imposed on his property and then proceed to redeem it from his property.

I am disappointed that procedure has not been included in the Bill for the case where the person liable for the rentcharge may be unable to obtain the agreement of all those other persons who are liable for the same original charge, and therefore cannot get his apportionment. The hon. Gentleman says that the Secretary of State should not interfere between all the parties to this matter, both the rent owner and the rentcharge payers. But the whole procedure of apportionment and redemption is an interference between the rentcharge payer or payers and the rent owner. The Secretary of State will have in the Bill power to refuse the figure in the equitable opportionment and to put his own figure there. Therefore, he is already given the right to interfere as between the rent owner and the rent-charge payer. If the Secretary of State does interfere to that extent, and refuses to accept the figure in the equitable apportionment which appears in the application for apportionment, he is imposing a different figure on rentcharge payers who are not party to the proceedings at all. Let us take as an example a terrace of 10 houses, each occupier paying a rent-charge of £5 a year, the charges having been equitably opportioned among themselves. They all agree that they shall each pay £5 a year. But one of them wishes to have this legally apportioned. Thereby, having it set down legally that he is to pay £5 a year between the rent owner and himself, he can have it redeemed.

It goes before the Secretary of State, who, for example, says "Your house is a corner house. It is bigger than the others and much better, and you should pay a little more than the £5 that your neighbours are each paying." It may go the other way round. The Secretary of State may say "Your £5 is too much because you are in a corner house and are liable to road charges on either side. Therefore, you should pay a little less." If the Secretary of State does that, he is imposing something on the other rent-charge payers greater than the equitable apportionment.

It is no good using the argument that, under this procedure, the Secretary of State cannot and should not interfere in arrangements between rentcharge payers and the rent owner, because he is already doing so under the procedure. All I am asking is that he shall interfere to the extent of helping the rentcharge payer who cannot produce a firm agreement between himself and his neighbours as to who shall pay what. Without that, some people are suffering extreme hardship from being liable for the whole of the rentcharge when it should be legally apportioned between them and their neighbours.

I give an example from the point of view of the money involved. Again, let us take the case of the terrace of 10 houses. Looking at the legal documents, one finds that the man in the corner house is legally responsible for the whole lot. He wants to get a mortgage on his house. Every building society is prepared to give him a mortgage but wants some indemnity against his having to pay the whole of the rentcharge, or, if he fails to pay, or his neighbours fail to pay, the right of the rent owner to enter that property and to realise the rentcharge.

I do not know what the premiums are now for that. A few years ago, when—if I may declare an interest—I was a director of a building society, we used to provide through insurance companies for an indemnity against failure to pay rentcharges by the neighbours when there was not a legal apportionment. For a rentcharge of about £2, there was a once-for-all premium of about £30. Not a large sum is involved, but it may well be an encumbrance when an owner wishes to sell his property and a purchaser wants to get a mortgage.

The purchaser will go to the building society, whose solicitors find that there is this rentcharge on the property and say "You must have an insurance policy to indemnify us against having to pay that charge". So the circumstances in which an application for apportionment could be made should be extended to those cases where the applicant cannot prove that there is an equitable apportionment. He should be able to go to the Secretary of State by some form of procedure and say "Please apportion it for me". The formal procedure should be to give notice to the others concerned, and that is all my amendment would do.

12.30 p.m.

I wish to support the right hon. Member for Crosby (Mr. Page). It seems to me that, in this specific set of circumstances, we are probably dealing with the most needy among those cases affected by the Bill. Those who have had the greatest difficulty in persuading their neighbours to join in an agreement of this kind are most in need of this type of provision.

I can envisage a situation where, as the right hon. Member for Crosby has indicated, an elderly or infirm person who is responsible for collecting rentcharges in a terrace is afraid and unhappy about visiting his neighbours and asking them for money. For example, in my constituency there is a blind woman who would be afraid or worried about having to go to her neighbours to ask for an agreement of the kind described by the right hon. Member for Crosby. I hope that my right hon. and hon. Friends will reconsider the circumstances outlined in the amendment before the Bill completes its final stages.

I am sure that my hon. Friend the Member for Rossendale (Mr. Noble) and the right hon. Member for Crosby (Mr. Page) know that I want to have as few exceptions as possible in the Bill. I have great sympathy with what the right hon. Member for Crosby said about finding some form of procedure for dealing with this problem. One of the problems arises with terraced houses in industrial districts where the rentcharges are not equally apportioned. If there are examples where rentcharges are not equitably apportioned, they must be few in number. I should be grateful if my hon. Friend the Member for Rossendale could find an example where the charges have not been equitably apportioned. I know that in some terraces there are all kinds of different charges—for example, charges of £2, £7 or £10.

I assure my hon. Friend and the right hon. Gentleman that I shall look at this matter again to see whether some way round the obvious disadvantage can be found. If so, perhaps this matter can be dealt with when the Bill goes to another place.

I am sure that my hon. Friend the Undersecretary is only too well aware, after his consultations with me, as the promoter of the Bill, of the situation outlined by the right hon. Member for Crosby (Mr. Page).

In Committee I began to cite an example that I found in London, but I was interrupted by the lunch hour. The example concerned a lady who, as part of her family property, had inherited the receipt of rentcharges in Cheshire. She wrote to all the rentcharge payers to absolve them from any further payments because she was bitterly resentful of the system. That was because, having been north to look at that part of her inheritance, she found that the onus for collecting rentcharges on a sizeable group of houses had been placed on an old-age pensioner who was partially blind and suffered from other disabilities. Her sense of indignation was such that she took unilateral action and decided that she must get rid of the system, which she did.

I have talked about such cases with my fellow sponsors of the Bill and with the two Ministers who are here today, and I know where their sympathy lies. I am sure that if anything can be done on the lines of the right hon. Gentleman's amendment, my hon. Friends will look at it sympathetically and not dismiss it in a cavalier way. I pledge myself, as promoter of the Bill, to see that this particular matter is not dismissed in a cavalier fashion.

Finally, I accept that it is always the dramatic, headline-making issues that dominate the Press, and in our own localities this kind of issue becomes the focus of community attention. Emotive and evocative cases of real suffering, such as the one that I mentioned, would be talked about by everyone in the locality. I do not know how many such cases occur. The Department of Environment, as in the case of variable rentcharges, admitted that it has been almost impossible to obtain a global picture of what is entailed. The Department is perhaps in more difficulty when it comes to the highly personalised cases mentioned by the right hon. Member for Crosby.

I am grateful for the Minister's assurances. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.