Mr. Wills: The hon. Gentleman is rendering me valuable assistance. I have never fired a shot at anything in my life, and he obviously has much greater knowledge of such things than I do. In those circumstances, I think that it would be a reasonable assumption that those people were occupying the land as a result of some sort of right. I will return to the point about rights of way very shortly.
A legal easement, such as I was discussing, might occur if at the time of a registered transfer there were a private right of way, the existence of which was patent to the eye. The words ''patent to the eye'' and ''inspection'' cover a multitude of terms here. Someone could be sent to look at the land to see whether paths were clear and maintained. One might see posses of ramblers rambling over it, presumably in pursuit of some existing right of way, or people shooting, as we have already discussed. There are ways in which one might reasonably assume that a right of way existed. If that were patent to the eye, the buyer would be bound by it, even if they did not know details of the particular right under which the way was used, or who the users were.
I hope that that addresses, to some extent, the hon. Gentleman's point and that, in the light of that, he will consider withdrawing the amendment.
Mr. Cash: I am not convinced by that argument, and I was getting slightly worried about whether the Minister could read the handwriting on the piece of paper that came across, which was patent, obvious and disclosed. I think that we might need to come back to this issue on Report, so I will give the matter some careful consideration. In the meantime, with the proviso that I intend to consider tabling further amendments on Report, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 3 agreed to.
Schedules 4 and 5 agreed to.
Registration of adverse possessor
Mr. Cash: I beg to move amendment No. 72, in page 58, line 14, after ''5'', insert ''(2) and (3)''.
The amendment seeks to limit the applicable conditions to exclude the conditions set out in paragraph 5(4). I do not know whether all hon. Members have looked at the amendment, but it arises under the general heading of the effects of registration.
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Paragraph 9(3) states that where a squatterfor a moment I thought that I might get a glimmer of interest from the other side of the Committeeis registered as proprietor, he takes the property free from any mortgage that is registered against it. Paragraph 9(4) goes on to specify certain exceptions; in other words, cases where the squatter will take the property subject to any existing mortgage. Such situations could crop up quite easily; a lot of squatting goes on in relation to land, so I hope that we will get a coherent response, of the sort to which we are used, from the Minister. The question is whether a squatter should take subject to a mortgage when paragraph 5(4) applies.
One of the requirements is that the squatter reasonably believes that the land is already his. With the greatest respect to squatters, I have to say that they often believe that the land is already theirs, for reasons that, I suspect, have much to do with the arguments that we heard during debates on new clauses 2 and 3. Irrespective of whether or not land is actually owned by someone, a belief is prevalent in certain parts of the world that it should belong to everyone. Squatters fall into that category. They are sometimes driven to illegal occupation of land in circumstances in which many people are sympathetic to their plight. However, I suggest that, in most cases, they have a reckless disregard for the land that they are invading.
In this case, a requirement is that the squatter reasonably believes that the land is already his. That requirement exists to cope with genuine boundary confusions. I shall give an illustration of what is likely to happen. It sounds a little like the questions put to me in my Law Society final examinations, so the Committee must forgive me if I read it with some nostalgia. A takes out a mortgage on his house and large garden. Unknown to him, the deeds include, and therefore the mortgage covers, a strip of land at the edge of the garden actually occupied by his neighbour, B. B thinks that that land is his. When he discovers that it is not, he successfully applies the registration of his title acquired by adverse possession. That only confirms the position that has existed for at least 10 years.
In such circumstances, why, asks the examinerand the official Oppositionshould B be saddled with a slice of A's mortgage? I see that the student Minister is passing a note to his tutor to ensure that we get the right answer. I do not say that with any disrespect, because I am sure that we need, and will get, the right answer. The amendment would exempt B. Will the Minister please comment?
Mr. Wills: The amendment is interesting and relates to situations that could arise frequently. Undoubtedly there will be applications where a squatter has gained title to a large proportion of the estate. Sometimes, the sums of money involved will be large, whether the proportion of the estate is small or large. In such circumstances, were the amendment adopted, former registered owners could find not only that they had lost a proportionperhaps a valuable oneof their land,
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but that they still remained subject to any charge on the land that had been lost. Additionally, a lender could lose a significant part of its security. It seems to me that that would be an injustice for both the former owner and the lender.
We face a choice. The Bill as it stands imposes the inconvenience of an additional stage in working out what should happen when a squatter is successful. That often involves comparatively small sums of money, but undoubtedly fairly apportions the remaining financial liabilities and any charge on the land. The amendment would remove that stage for many, but would be unfair for the few cases in which there was a large charge. The existence of the apportionment rule could discourage some from making unmeritorious applications. There is a possible argumentit may not carry much weight with the hon. Member for Stonethat, were the amendment made, it would place the Bill at the risk of being challenged under the Human Rights Act 1998. The general arguments are in favour of the Bill as it stands.
Mr. Cash: The Minister has just walked into some curious territory. Human rights for whom; the squatter or the owner of land?
Mr. Wills: That is an interesting philosophical point.
Mr. Cash: It is a legal one.
Mr. Wills: It is, and, if the amendment were made, the Bill might fall foul of article 1 of the European convention on human rights as it relates to the Human Rights Act.
Mr. Cash: At the dying stages of the Committee, I do not want to enter into an arid discussion. However, with whom do the legal rights lie? If the rights lay, by adverse possession, with the ownership of the squatter, he would be able to sustain human rights vis-a-vis the owner of the land. That would be a perfect example of the nonsense that is thrown up by some parts of the Bill.
Mr. Wills: Quite simply, the human rights would be those of the chargee. The amendment throws up certain problems in that respect. After taking in the other arguments for a balance of fairness, I hope that the hon. Gentleman will withdraw the amendment. I recognise his point, but a balance of fairness must be struck and we think that the Bill strikes it.
Mr. Cash: Would the Minister be good enough to consider my point before the Bill is considered on Report? If he does so, we may be able to come to an agreement over wording; if he does not, we may table an amendment on Report.
Mr. Wills: I am always happy to consider anything that the hon. Gentleman says, but can give no guarantee as to the outcome of that consideration. I hope the fact that I will give consideration will enable him to withdraw the amendment.
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Mr. Cash: In those circumstances, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Schedule 6 agreed to.
Schedule 7 agreed to.
Mr. Cash: 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.
Mr. Wills: 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 courtsnot a registryto 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.