Taken before the Joint Committee on Statutory Instruments on Tuesday 18 November 2003
Brougham and Vaux, L. Mr David Tredinnick, in the Chair
Memorandum submitted by the Department for Constitutional Affairs
Examination of Witnesses
Witnesses: MR JOE TIMOTHY, Director, Legal Services, MR MIKE WESTCOTT-RUDD, Corporate Services Lawyer, MR FRANCIS TWAMBLEY, Land Registrar, Land Registry, examined.
Q1 Chairman: Good afternoon and welcome. I am David Tredinnick. I am chairman of this Joint Committee on Statutory Instruments. We are very pleased to see you here this afternoon to clear up one or two matters that are troubling us. The procedure is that I will ask one or two questions and then my colleagues will also ask various questions covering procedure, vires and sub-delegation and Parliament's intentions in passing the 2002 Act. The Department of Constitutional Affairs memorandum acknowledges that the change in legislative procedure under the 2002 Act from that under the Land Registration Act 1925 was overlooked. Why were those involved in the preparation of this Order not aware of the change?
Mr Timothy: It was a complete oversight. Why they were not aware was because they did not read the relevant section of the 2002 Act. It is inexcusable and we apologise for failing to lay the Order.
Q2 Chairman: Can you tell the Committee what action has been taken to ensure that errors like this will not be repeated? Have you a procedure in place? How could this have happened and how are you going to make sure that it does not happen again?
Mr Timothy: I think it is safe to say that for the next 40 or 50 years, however long lawyers in the Land Registry are producing this legislation, it will not happen again.
Q3 Chairman: I am in error myself. I should have asked you formally to introduce yourselves.
Mr Timothy: Joe Timothy, director of legal services at the Land Registry.
Mr Twambley: Francis Twambley. I am the land registrar at the Land Registry.
Mr Westcott-Rudd: Mike Westcott-Rudd. I am a lawyer at the Land Registry in corporate services.
Q4 Lord Lea of Crondall: I am turning to a question on vires and it is in three parts. In the memorandum, the department concedes that articles 11(1) and (2) providing for refunds are of doubtful vires because section 128 of the Finance Act 1990 does not apply to orders under the 2002 Act. Three questions arise from that. One, why was it not realised that the authority for making refunds provided for in section 128 of the Finance Act 1990 could not apply to orders made under the 2002 Act? Secondly, is it not the case that this difference in vires was overlooked and that the department prepared this Order on the assumption that the powers for it had not changed? Thirdly, how otherwise do you explain the inclusion in the Order of articles 11(1) and (2) which the department's memorandum concedes is of doubtful vires?
Mr Twambley: The starting point is that originally it was thought from the Law Commission report and also from the explanatory note on the Act that what was happening was that the powers under the Land Registration Act 2002 were at least as wide as those under the 1925 Act. Sufficient account was not taken of the Finance Act 1990 and we proceeded on the basis that there was sufficient power. It was reflected in the memorandum that we realised the gravity of our mistake, for which of course we sincerely apologise. Initially, we thought we had power because we thought section 102 was sufficient. Then we realised that section 145 of the Land Registration Act 1925 relies upon the Finance Act 1990 which of course does not apply to an Act which is passed after it.
Q5 Brian White: If we move on to section 102, I am curious as to why you changed the 1925 wording to the 2002 wording. Do you accept that the power with respect to the amount of fees payable as in the 1925 Act is materially broader than the 2002 Act which says you have a power to prescribe fees?
Mr Twambley: We accept that, in so far as we cannot rely upon the Finance Act 1990, our general view is that, subject to that point, the powers under section 102 are at least as great as the power under section 145 of the Land Registration Act 1925.
Q6 Brian White: Is not a power to prescribe fees only a power to specify the amount and not necessarily the means by which it is determined?
Mr Twambley: I do not think so. I think it is sufficiently wide. The Law Commission commented specifically it simplifies the equivalent provisions and the explanatory note to the Act says "replicates the existing system".
Q7 Brian White: You do not agree that the powers you now have do not go as far as granting a discretion to determine a fee?
Mr Twambley: No, I do not.
Q8 Andrew Bennett: Were any of you responsible for any of the drafting of the 2002 Act or for giving instructions for its drafting?
Mr Twambley: I was a member of the Bill team but my function there was to advise as to Land Registry practice.
Q9 Andrew Bennett: Why was the 2002 Act framed in a different way to the 1925 Act?
Mr Twambley: The Bill team, unlike many Bill teams, did not instruct counsel, other than those amendments which came through. The Law Commission produces a draft Bill which is annexed to the Law Report as Law Com 271. The Bill team had an up and running Bill. I believe the approach of the draftsman throughout was to simplify the matter as much as possible. He was very firmly of the view that general words would be sufficient and there was no need, for example, to have a list of things which one could do.
Q10 Andrew Bennett: It was an attempt to simplify the 1925 Act?
Mr Twambley: Indeed, yes. I think it is quite clear that the intention was to replicate the system. It was not to reduce the fee making power, subject to the point about the Finance Act.
Q11 Andrew Bennett: You accept basically he got it wrong?
Mr Twambley: I do not accept he got it wrong as regards section 145.
Q12 Andrew Bennett: You think he got it right. You accept all the blame as far as drafting the Order is concerned?
Mr Twambley: I take the blame as regards articles 11(1) and (2), yes.
Q13 Huw Irranca-Davies: Can I turn to sub-delegation and whether or not the 2002 Act gives clarity in the powers of sub-delegation, because these powers to make fee orders conferred by the 1945 Act and the 2002 Act at least appear to be substantively different. How can you argue that in this case Parliament must have intended their effect to be the same?
Mr Twambley: Parliament has had the advantage of the Law Commission's report to which the Bill was annexed. That Bill in particular had notes to it and one of the explanatory notes read: "Clause 101 makes provision for the power to charge fees. It simplifies the equivalent provisions found in section 145 of the Land Registration Act 1925 and section 7 of the Land Registration Act 1936. Under the general provision of the Bill the power to make a fee order under clause 101 includes the power to make different provisions for different cases. The Bill does not prescribe the method of assessing fees as section 145 of the Land Registration Act 1925 presently does. It is in fact likely the method assessment will change from the present basis to one based on the work involved in the particular transaction." The explanatory note to the 2002 Act says, "Section 102. Fee Orders. Replicating the existing system, section 102 provides that the Lord Chancellor may prescribe fees for dealing with the Land Registry but that the order must be made with the advice and assistance of the Rule Committee and with the consent of the Treasury." Then it deals with the exceptions which are referred to in the section.
Q14 Chris Mole: Do you recognise that the power which is being exercised here is a form of sub-delegation?
Mr Twambley: Could you be a little more precise as to which particular power you have in mind?
Q15 Chris Mole: In the context of the powers to make fee orders.
Mr Twambley: The fee order provides certain discretions for the registrar. That is a common factor of fee orders generally, which have general words. Clearly, in any piece of subordinate legislation the danger is that there will be unlawful sub-delegation but in so far as there may be elements of sub-delegation I do not think it necessarily follows they are unlawful. Also, when you are dealing with discretions, that is trying to produce sufficient flexibility to make a fee system practical.
Q16 Chris Mole: In principle, does not the power to sub-delegate require clear authority in the enabling Act in the first place?
Mr Twambley: Or necessary implication, yes.
Q17 Chris Mole: You argue in your memorandum that section 128 of the 2002 Act allows the Lord Chancellor the power by order to make different provisions for different cases. Is this not simply a power to prescribe in the Order itself different fees for different circumstances and not a power to sub-delegate or confer discretions on the registrar?
Mr Twambley: I think it is a matter of extent. Within boundaries -- and there are boundaries here which are lawful -- a registrar can have that discretion. While hardly conclusive, it is noted that for many years there have been similar discretions and there has been other legislation on powers which seem to be very similar to this.
Q18 Chris Mole: You argue in your memorandum that section 102 of the 2002 Act allows the Lord Chancellor the power by order to make provision about the payment of prescribed fees. Is this not a power to deal with matters such as the time and manner of payment of fees which the Order prescribes, rather than the amount which may actually be prescribed as a fee?
Mr Twambley: I would concede that arguments about the significance are weak.
Q19 Chairman: I would like to ask a question relating to whether or not the discretion allowed to the registrar in varying fees is fettered. If the Act does not authorise the conferring of any power on the registrar to determine some fees, does it not follow that the argument in the department's memorandum that the discretions are fettered by the maximum amounts which can be set is immaterial, as there can be no discretion?
Mr Twambley: It is an argument about the premise which we do not necessarily agree with, which is that there is not any power to have a discretion. Clearly, if there is no power to have a discretion, one cannot speak about fettering the discretion. I accept that.
Q20 Chairman: There is a disagreement here?
Mr Twambley: I fear so, with the greatest of respect.
Q21 Brian White: You accept that article 11 is of doubtful vires?
Mr Twambley: (1) and (2), yes.
Q22 Brian White: What are you doing about rectifying it and in what timescale? What would be the consequence of a successful challenge in the interim?
Mr Twambley: Immediately we sent you this memorandum, we did what we promised to do, which was to stop it. I personally sent out an e-mail to our offices to say that all sums should be repaid. As regards substantive applications -- for example, an application to be registered as the owner of land -- if the overpayment exceeded £10 then we repaid the whole sum. If it were £10 or less, we retained the sum to meet administrative costs. As regards services, for example, applying for an official copy of the register or something, it is the equivalent of £3. Now everybody is getting everything back. As regards those payments, it is really just the period from 13 October to 3 November where there will have been some retention by us. We are not sure of the full scale but we did a sampling exercise last week of new applications. It appears to be about 30 applications per week.
Mr Timothy: Based on the last financial year, each working day we dealt with 18,000 registration applications and 45,000 of the services applications for office copy searches. That is, every day, 63,000 applications and of those 30 in the course of a week have fallen within 11(1) and (2).
Q23 Brian White: Fewer than 100 per week?
Mr Twambley: It is 30 a week.
Q24 Brian White: It is a very small percentage of people who could do it, but if one of them was awkward and chose to do it, what would be the consequence?
Mr Timothy: We have placed a notice in the Law Society's Gazette, which is the paper that the conveyancers will read. We have put a notice on our website and we have said that if people have reason to think they have made such an overpayment, if they contact us, we will look into it.
Q25 Chairman: What sums have been involved in repayments?
Mr Timothy: In the course of last week, there were 30 cases where we made a refund of £10 or less. Under our previous practice, those are the only cases where we would have retained the £10 under article 11.
Q26 Chairman: Did I hear you say you were going to advertise that on the internet?
Mr Timothy: We have placed a notice on the internet and in this week's Law Society Gazette drawing attention to the fact that we may have, if it was four weeks, roughly between £1,000 and £2,000 on the basis of that sample that people may feel they are entitled to. We would pay the whole amount back. In the course of those four weeks, we have probably dealt with several hundred thousand of the applications.
Q27 Andrew Bennett: What are you going to do for the future? Are you going to just remember this or try and amend the law?
Mr Timothy: For the future, the law is now as it is and when we have a fees order again that provision will be left out of it.
Q28 Andrew Bennett: You will not attempt to amend the law to put it into line with what you hope the position is?
Mr Timothy: It would need primary legislation to do that.
Q29 Chairman: You answered Mr White's question in respect of the action you have taken on the refunds of sums collected in error under sections 11(1) and (2), when the department concedes it is at fault. What would be the consequences of a successful challenge to the other powers at issue here?
Mr Twambley: It is difficult to quantify. If the Committee would like, we could ponder that question.
Chairman: That would be helpful. On behalf of the Committee, thank you very much for attending.