As amended ( in the Standing Committee), considered.
In view of a communication I have received from the Solicitor-General, I do not propose to move the new Clause standing in my name on the Order Paper (Amendment of 27 & 28 Vie., c. 114, is. 25 & 26).
New Clause—(Alimentary Trusts)
Brought up, and read the First time.
T beg to move, "That the Clause be read a Second time."The object of this very long Clause is to be able to express in simple words what are alimentary trusts, and to be enabled to include in a document, by means of the simple words "alimentary trusts," certain provisions usual in our practice at the present time which are set out in the proposed new Clause. It is a Clause to deal with money which is settled for the benefit of some persons who, in ordinary language, are not to be trusted with money, and the only way to do that at present is to give discretionary powers to the trustees, under which they, in effect, allow money to the beneficiary from week to week or month to month, as the case may be. I am sure some of my Scottish Friends in the House will be gratified that we have been able to find at least something in Scottish law that is worthy of being copied in this country. This simply brings into English law what. I believe, is commonly known in Scotland as an alimentary trust.
I beg to second the Motion.
I have carefully considered this proposed new Clause in consultation with those who understand the subject a great deal better than I do, and I am satisfied, from what I have been told, that this is a Clause which I ought to recommend the House to accept. It is purely permissive. It follows what is a. common form in English documents today, and, as the hon. Member who moved it said, it is well recognised in Scottish Law. If the cautious folk across the Border think the Clause is safe, and, after experience, have adhered to it as part of their law, I do not think we shall he very rash in accepting it.
Question put, and agreed to.
Clause read a Second time, and added to the Bill.
Clause I—("Legal Estates" And "Equitable Interests," And Repeal Of The Statute Of Uses)
(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.
I said it.
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.
That was not a partition action.
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.
Clause 64—(Application Of Capital Money)
(2) In addition to the aforesaid modes capital money may, after the commencement of this Act, be applied in financing any person who may have agreed to take a lease or grant for building purposes of the settled land, or any part thereof, by making advances to him in the usual manner on the security of an equitable mortgage of his building agreement.
(3) This Section applies to settlements coming into operation either before or after the commencement of this Act.
I beg to move to leave out Sub-section (2).The Clause deals with the application of capital moneys, that is to say, with the proceeds of sale of settled land which ought to be preserved, not merely for the tenant for life who has a life interest, but for the remainder man who will get the capital after his death. That is the essential of every settlement. Starting from that, therefore, think everyone will agree that any mode of application of these moneys should be safe, not only in: the interest of the tenant for life, but of the remainder man; and anything likely to affect prejudicially the remainder man, in the way of insecure investment, and so on, ought not to be allowed. Under the original settled Act of 1882 great care was taken to ensure that that result should be attained. Now we have a new method of applying these capital moneys laid down in this Bill, and the mode authorised in Sub-section (2) of the Clause, I think is a very dangerous one. For that reason I propose to leave it out. It reads as follows:
In other words, capital moneys arising out of the sale of the estate, or any part of it, may be applied in financing builders. That is a most dangerous thing to do. May I remind the House that it is not as if we bad to take to Court any application of the sort. In these cases the money can be applied in accordance with the Act—if this Bill becomes an Act—by the tenant for life with the concurrence of the trustees, so that if you have a tenant for life who is of, say, a speculative nature, or possibly ambitious, and thinks he can develop a great building estate, and if he gets easy-going trustees or trustees simple-minded enough to allow him to do so, then these persons, acting together, can sink the whole or a large portion of the capital money of the estate in financing builders. May I point out what will happen? It happens every dry, or used so to do when building was more favourable for the use of capital moneys than it is now. it might very well be that a builder may build a quarter of the houses arranged for, and for some reason or another not go forward, the result being that those concerned would find themselves in this position: they would either have to get a new builder to take a new contract in order to complete the old one, or find the money themselves in order to make the houses habitable. That is a very great danger. May I point out to the learned Solicitor-General that this is entirely a new mode of application, and I think an application of capital moneys which goes far beyond anything ever sanctioned in the original Act. If such a power is desirable—and it may be, and I think is desirable in many cases—well and good. You will find it in the larger cases of the settlement of property. Therefore, in the case of large properties where building schemes of this sort are necessary, you invariably find it provided for in the terms of the settlement. That is quite right. A man who prepares a settlement can do what he likes providing he does not go beyond the law, and he can put any provision he likes into a settlement. But it is a very different thing when a settlement does not contain such a clause for the Legislature to say: We give the power to the tenant for life and the trustees to risk these moneys by financing builders. Perhaps the Solicitor-General would meet me as far as this. I should be prepared, in deference to what the House might consider in the matter, to withdraw my Amendment, if the hon. and learned Gentleman can say- that he would, in Sub-section (2), after the word "Act" ["commencement of this Act."], insert the words "with the leave of the Court." That would get over a greater part of my objection, if not the whole, because then we will have this security, that where it is desirable to lend money to a builder to build on an estate the parties would go to the Court and get the sanction of the Court, which would only be given in a proper case. The scheme would then go through. Let me add this. People talk about an application to the Court as though it was desperately expensive. Applications to the Courtunder the Settled Land Act, 1882, are exceedingly cheap. The hon. and learned Gentleman opposite will bear me out when I say that under the Settled Land Act you can get the sanction of the Court to proposals of this sort, and get the whole thing through for about £35 to £40. If you are going to finance a builder, that is a very small sum of money in view of the probable expenditure in order to have a safe and secure mode of application. I would suggest to the hon. Gentleman that he can meet me in this matter of what I venture to think is a serious objection to the Clause as it stands by saying that this power shall not be exercised without the leave of the Court.(2) In addition to the aforesaid modes, capital money may, after the commencement of this Act, be applied in financing any person who may have agreed to take a lease or grant for building purposes of the settled land…
I beg to second the Amendment.I would point out to the learned Solicitor-General that the application of moneys of this kind is bound to be a speculative undertaking. If the builder is a substantial builder and a man of good credit he can raise the money otherwise. We do not want to authorise people to enter upon risky speculations of trust moneys. One can emphasise this matter if one has any acquaintance with conveyancing, and we could get further evidence bearing upon this point. But I think the matter is clear to everyone who understands the general position. The development of an estate is by no means a safe form of speculation. Again, hon. Members may remember the very well-known and very scandalous cases of the failure of solicitors about 20 years ago. These caused great consternation. A great deal of trust money disappeared. I think I am right in saying that almost every one of these failures was caused by the solicitor having made advances out of trust funds to builders for the purposes of opening up estates. I would beg the Solicitor-General to attempt to meet my hon. and learned Friend who has moved this Amendment. One cannot help feeling that this is a power which ought not to be given in this way. Trustees sometimes take their duties rather lightly, and they are sometimes overborne by stronger minded men, and I think further protection is needed.
I supported the Second Reading of this Bill on the understanding that there was to be no danger to trust money. I think this Clause seriously endangers trust money. It has just been pointed out that you could not have a more speculative investment than that of advancing money to builders to develop estates. Two or three cases of startling failures are recorded in this respect. What is the main object of a trust? It is to ensure that the capital amount of the trust shall not be diminished. By a Clause of this kind, however, you are inviting trustees to enter into a speculative business with the almost certain knowledge that very serious pecuniary capital losses may arise. Sub-section (3) of this Clause says:
The effect of this proposal is that Subsection (2) of this Clause will come into operation with regard to settlements made before the commencement of this Act. I am very much concerned about this proposal, because there is a considerable number of people who never would have thought of putting such a provision in the trust. Surely the Government are not going to bring in a Bill of this sort and insert a Clause of this kind, which interferes with and actually destroys the very intentions of the trust. I have not opposed this Bill, and I promise not to oppose it, but nevertheless that this is a most dangerous Clause, and I hope the Solicitor-General will, at ally rate, if he cannot leave this Clause out, leave out Sub-section (3). With regard to what has been said about a substantial builder, if you have got such a builder you do not want this Clause. This Clause is only required in the case of a speculative builder who is desirous of embarking for unknown reasons upon a scheme of this sort, and the only way he can get the money is by persuading the tenant for life that he can make a considerable increase in his income by lending money for this purpose. For these reasons I make a very earnest appeal to the Solicitor-General to pot in some sort of Amendment which will preserve the right of the tenant for life to say whether or not he wishes to his money invested in this way."This Section applies to settlements coming into operation either before or after the commencement of this Act."
If the epithets which have been applied to this Clause were deserved, I should certainly accept the Amendment, but I want those who have addressed the House on this Clause to consider one or two aspects which appear to have escaped their attention to some extent. In the first place, the tenant for life, in seeking to apply capital money to building purposes, is in a fundamentally different position to the man who is financing a builder for building on somebody else's land. In this ease the building is being done on his own land, thus increasing the value of his land, and if the builder goes bankrupt he will forfeit any unpaid instalments that have not accrued due, and any advance in the value of the land will go to the benefit of the estate. In the case where failures have occurred they have been financing builders who have been building on land belonging to somebody else.The second point is that before the tenant for life can get the money from the trustees he has to satisfy them that they can lend the money in accordance with the provision's of the Trustee Act, 1893. Section 8 of that Act provides that a trustee cannot with safety lend money to be expended upon such investments as building unless before lending it he has a report from a qualified surveyor and valuer in the first place as to the value of the property. Then the valuer must he a person whom he reasonably believes to be an able and practical surveyor or valuer, not instructed or employed by any owner of the property. Secondly, he must be satisfied that he is making a loan in accordance with the advice of the surveyor or valuer. Thirdly, he is not allowed to advance more than two-thirds of the value put upon the land by the valuer. Those are the provisions of Section 8 of the Trustee Act, and all these preliminary safeguards have to be satisfied before the trustee can advance any money at all.
Does the Solicitor-General really mean that there is no danger of loss because the building is taking place on his own land? Suppose I am the tenant for life, and I advance to a builder, say, £500 to erect a house, it being understood that certain walls have to be put up before I pass on the money, and that I only advance the balance when the roof has been placed on? Suppose the builder finds that he has made a mistake, and he fails, what has happened? I find myself in possession of part of a house with no roof on it. What am I to do? The result would be I should have to find more money to finish the building.
I quite appreciate the right hon. Baronet's point. I know that is the kind of thing that does happen from time to time, but it is not usual, and when it does happen it invariably happens that you have in hand, out of the moneys that would have been paid to the builder who fails, sufficient to pay any extra cost in getting another builder to complete the work. As a rule, the loss is a very small one, and a long way less than the one-third which you do not advance. So much as to the safety or unsafety of doing this.Let me add this: Ever since 1909, for a reason which some people say was not unconnected with the Finance Act of that year, there have been difficulties in getting buildings erected in this country, and arm result of this has been that a Clause on these lines, ever since 1909, has very often been inserted into wills and settlements in order to give the tenant for life power to go to the trustees and get money advanced for the purpose of building on his estate. This Clause has now become very common. Here I am not acting only on the small amount of knowledge that I personally possess on this subject, but I am advised, and those responsible for this Bill have been advised, by a very large body of opinion competent to judge upon these matters, including Chancery Judges, and particularly the late Mr. Justice Petersen, that these powers, which are now being habitually inserted, may properly be incorporated in the Bill as dart of the act of a tenant for life.
I would like to ask if the late Mr. Justice Petersen ever expressed an opinion as to the powers of this Clause being exercised without the consent of the Court?
I am afraid that I cannot answer that question. I do not mean that the late Mr. Justice Petersen was dealing with this particular Clause, but what I say is that, on the broad question of principle of provision for the express purpose of facilitating by law what is the experience of everyday life during the last decade and what is considered desirable, that has been approved by a very large body of competent opinion in the profession. For that reason I cannot help thinking that the fears that have been expressed about this Clause are unfounded. As regard the suggestion made by the Mover, that this power should be subject to the leave of the Court, if it were only one application costing £35 or £40, of course, it would be a reasonable suggestion that we should put it in, but, as I understand the Clause, there would have to be not one application, but an application many times over each time an advance had to be made for any specific building. I do not see any other way in which the words suggested by my hon. and learned Friend can be read. As I understand those words, they mean that whenever an advance is to be made of this kind the person making the advance must go to the Court and get leave for so doing.
May I suggest a reason for my action? The landowner who enters into an agreement with the builder to grant a lease of 10 or 20 acres of land would go to the Court and say, "I propose to give the builder this lease and to make him certain advances accordingly as houses are built on the land." Surely that would only involve one application to the Court?
That would mean preparing a scheme under Section 26 of the Settled Land Act, 1882, and it would be a very elaborate business indeed, involving the employment of an architect and of quantity surveyors and the preparation of plans at an expense far exceeding the £35 which would be the cost of applying to the Court. It is to get rid of the necessity for that kind of extravagance which, in 999 cases out of 1,000, is not really required, having regard to the overriding protection of the Trustee Act, 1893. Since my hon. Friend spoke just now, I have ascertained that this particular Clause was before the late Mr. Justice Petersen, who went through the whole Bill, line by line, during many weeks, and who raised no objection whatever to this Clause. I ask the House to reject this Amendment.
I hope that the House will support the Solicitor-General in the position he has taken up. I can say, in addition to the authorities he has quoted, that this part of the Bill received very special attention at the hands of the Council of the Law Society. If caution be enshrined in its extremist form in any consultative body of people, it will be found in this Council of the Law Society. The members of the Law Society who took special charge of this part of the Bill were some of the ablest conveyancing authorities in the solicitors' branch of the profession in the whole kingdom, and we can therefore be quite sure that this proposal has been most carefully examined by men who are extremely cautious in their outlook, and who, in addition, have had an immense amount of practical experience, and certainly in the case of two or three of them forty or fifty years' actual practice in matters of this kind. I can therefore assure hon. Members, who may feel that this is going too far, that the proposal is supported, not only by the authorities whom my learned Friend has quoted, but also by the authority of men who have been in daily practical contact with this kind of work and who hold the very highest status in this branch of the profession. Certainly this Bill does not err on the side of rash experiment. If it errs at all it is on the side of caution.
I would like to ask the Solicitor-General one question. Are we right in understanding, in view of the wording of Sub-section (2), that this particular Sub-section which we are now discussing would have the effect of overriding a settlement which contained a definite prohibition of the use of the money of the estate for this purpose? Would it override a definite prohibition in a settlement drawn up years before the passing of this Bill?
The whole principle of law reform embodied in the Settled Land Acts has been to forbid wills and settlements preventing the utilisation of the land in a way which Parliament has thought desirable, and necessarily the effect of a provision enabling an individual to contract himself out of the Act would be to stultify the provision itself.
May I point out that what we are desirous of doing is not to prevent land being used for building purposes—for there can be no objection to that—if a builder comes forward with sufficient money for the purpose, but what we do object to is that the money for the actual building should be taken out of the corpus of the estate and used for that purpose.
I hope my hon. and right hon. Friends will not continue their opposition to this Sob-section. I cannot help thinking it is a valuable Subsection. Take the case of a landowner who desires to build cottages on his estate. Nothing is more common than the difficulties he is put into in finding capital for such a purpose.
If my Noble Friend will look at the next Clause, Sub-section (1), he will see that it gives power to build houses and cottages for persons employed on the estate.
But that does not meet the case. It may well be desirable to build cottages for the general benefit of the neighbourhood without necessarily confining the occupation of those cottages to people employed on the estate. It is the duty of landowners at the present time to provide cottages on their estates especially in districts near large towns. This Sub-section, as I read it, will greatly facilitate operations of that kind, and they ought not to be retarded by a possible chance of some injury being done, in very unlikely circumstances, to people having an interest in the estate. Such a chance ought not to override a provision which will make it easier to utilise and develop the land. It is really in the interest even of the land-owning class that this provision should be carried. They want to increase the value of their land, they want to make it more saleable and more easily developed. I very much wish that this Bill had gone a great deal further, and had touched mare nearly the root of the matter. Personally, I would have been glad to support a Measure which dealt with land under settlements generally in a much more drastic way than this Bill does. I am satisfied that the Bill is in the interests of everyone concerned in the land. With regard to the point raised by the Noble Lord the Member for Hastings (Lord E. Percy), I agree there is considerable substance in it. Where the terms of a settlement actually forbid any such advance of money, it might be desirable, if possible, to safeguard that particular case, but such cases would be very rare—indeed, I doubt if one could be found. Still if the Noble Lord has any particular case in his mind, where there is a settlement which forbids the use of the money of the estate for this purpose, the Solicitor-General might very well think it a proper case to be dealt with specifically, but as such cases are rare, it can scarcely be 'worth while providing for them in a. public Act. In cases where settlements are silent on this point I am satisfied that the change proposed would be an advantage.
May I ask the Noble.Lord the Member for Hastings (Lord E. Percy) whether he has in mind any particular case of a settlement forbidding this advance?
I have not.
The Noble Lord the Member of Hitchin (Lord R. Cecil) has spoken as a philanthropist rather than as an owner of land. I think there is a great deal too much philanthrophy at other persons' expense preached in these days, and I could wish that more land was developed at the expense of philanthropists themselves. What the Noble Lord suggests is that money belonging to the remainder man should be spent by the tenant for life in doing philanthropic work. That is a theory which has never entered into our jurisprudence or legislation. It may be desirable from some points of view to socialise the land and to say that men must use it for public purposes utterly disregarding the interests of the remainder man, but that is an entirely new and unheard of theory for dealing with settled land. Therefore, for the moment, I at any rate must disregard the very wide schemes which the Noble Lord appears to have in his mind. The Noble Lord the Member for Hastings (Lord E. Percy) has raised what I venture to think is an extremely important point, namely, whether supposing after the passing of this Act, a man, realising the danger of the ill-judged financing of builders, puts into a settlement a condition that the money of t he estate shall not be spent in financing builders, this Clause would override that settlement. The Solicitor-General has told us that the Bill as it stands, no matter how much the settlor may desire that the money of the estate shall not be dissipated in unwise building, speculations, would override that expression of his intention. In that case you would have this startling result: A mall settles his property. He says, "I do not want it to be dissipated on unwise building." But a builder comes along, and the tenant for life, who possibly may be a philanthropist like my Noble Friend, says, "Oh, but I want to spend money in speculative building for the benefit of the surrounding neighbourhood"; he goes to his trustees and converts them, by eloquence or otherwise, to that point of view, and the whole intention of the settler is set aside and the money is spent in this way. My right hon. Friend the Member for Peebles (Sir D. Maclean) assumes that those worthy gentlemen, and I have no doubt there are many, who have examined this Bill and who have not expressly spoken of the dangers of this particular Clause—perhaps they have never had it brought to their attention at all—must necessarily approve of it; but really, with a Bill of 300 pages, when some unfortunate person has to read it through and give, his opinion, are we to take it, because he has not seen the dangers of and the objections to a particular Clause, and has not condemned it, that therefore he approves of it I think my right hon. Friend is expecting too much of human nature, even in lawyers. I do not believe that any lawyer lives, or ever will live, who could read a Bill of this sort from end to end and see all the dangers that lurk in it. Therefore, I put aside that suggestion.The Solicitor-General, apparently, thought that the idea of getting the consent of the Court was not such a bad idea after all, but that it would be too costly. Let me put to him these two points. I say that for a very small cost, namely, that of going to the Court, you turn a dangerous Clause into a safe Clause and, when the Solicitor-General says that you have to go to the Court time after time for the purpose of getting leave to finance a builder, I venture to think be is not right. You enter into an agreement with the builder—and this is a very common form of agreement, such as is made every day—to grant a loan and make advances as the house proceeds, according to the architect's or surveyor's certificate. All that is necessary, in order to get the consent of the Court, is to take this agreement to the Court and ask the Court to sanction it. Only one application is necessary. The thing could be done in a Chancery Judge's Chambers in the course of half an hour, and would only involve one application, certainly not costing more than £35 or £40. Therefore, really the only objection that the Solicitor-General has put forward against getting the leave of the Court, that is to say, that it would require repeated applications and in- volve great cost, falls to the ground. I do ask him whether he cannot see his way to put in the words that I have suggested, and thus get over what is undoubtedly a danger to the remainder man.
The hon. and learned Member who has just sat down speaks as though an estate is developed by one builder alone, but, having had some little experience of developing estates round London, I can tell him that that is not the case. In a great many cases 20, or even 30, builders have the property between them, and in practice the land is dealt with in small plots by small builders. I always say that the speculative builder is one of the greatest philanthropists we have ever known, and we miss him very greatly now. If we have to have an application every time a builder applies to a landlord for four or five plots for building small houses, the expense will be something tremendous, and therefore I suggest that we do not oppose this Subsection.
The arguments of the hon. and learned Member for York (Sir J. Butcher) are arguments from the past. They would have been perfectly good against the Settled Land Act, 1882, but, in spite of such arguments, that. Act. was passed by eminent Conservative lawyers of that day; and this Clause is merely a logical development, in the interests of the public, of the principle included in that Act. What are the precautions with which it is surrounded? Both the tenant for life and the trustees will have to agree in deciding whether this is to be done or not, and surely in the national interest, where it is difficult to get money for development in this particular way, the capital money which can only be invested in the land should be invested in houses on the land and made available in this way. The whole development of estates at the present time largely demands some such power, and, with the ordinary precautions which every tenant for life and trustee would exercise, the House will surely consider that we are not running any risk of danger to estates by passing a Clause of this sort.
I should like to join in supporting this Sub-section. The Mover of the Amendment, in his reply, insisted on making the same assumption that he made in his original speech, namely, that there is a great danger to the beneficiaries under a settlement through this Sub-section. He spoke about waste and about the danger to the reversioners, but I venture to think he ignored the point to which the Solicitor-General directed the attention of the House, namely, the great and complete protection afforded to the beneficiary under the Trustee Act, 1893. That is a very real protection. It means that there will be a valuation by an independent valuer, and that not more than two-thirds of the figure at which the property is valued is to be advanced out of the trust estate. As to the point made by the Noble Lord the Member for Hastings (Lord E. Percy) with regard to h prohibition in the settlement of advances of this sort, I think, bearing in mind that the law, as it at present stands, does not contemplate the making of advances of this sort by trustees, that it is contrary to all probability, and, indeed, is almost impossible, that any settlement would have prohibited trustees from committing a specific breach of trust, which could not have been within the contemplation of the testator at a time when the law never regarded such an investment as possible. Of course, there may lie more in the point that settlements are silent on the question of investment, and the objection has been raised that it is wrong of Parliament to override the intentions of a settlor or testator. But that has been done again and again in the history of law. A testator or settlor may make a settlement which breaks the rule against perpetuities, or which is in restraint of marriage, and in other ways he may make dispositions which the law overrides at the present time. Those dispositions are regarded as void, as being contrary to public policy, and the Courts or Parliament there override the intention of the testator.This Sub-section simply gives effect to the provision which comes later on in Section 65, as to the development of settled land or any part thereof. It provides a means by which cottages or other buildings can be laid out upon the settled land, which otherwise would not be in existence, and, moreover, these improvements are to take effect upon the actual site of the settled land. That being so, it seems to me that public policy is an element in this question, and the whole public policy for the last half-century or more has been to increase the power of dealing with, developing, and managing land. This is a step in the right direction; it makes persons who have to deal with land infinitely more free than they otherwise would be It helps to relieve the great housing congestion at the present time. It not only applies, as one hon. Member has said, to cottages on great landed estates, but has just as useful an application in the undeveloped districts on the outskirts of great towns, and is equally welcome in that respect. Public policy supports it the interests of beneficiaries are safeguarded and, therefore, it eminently deserves the support of the House.
The hon. Member has exhausted his right to speak.
I only want to ask the learned Solicitor-General one question: How does the Trustee Act apply to advances of this kind? I cannot possibly see how it can.
That is an argument.
I beg to move, in Sub-section (3), after the word "applies" [''This Section applies"], to insert the word "only."My object is to amend this Sub-section so that it may read as follows:
In my view we should not, under any circumstances whatever, indulge in retrospective legislation. It may be right that the tenant for life should enter into speculative building operations, although personally I do not think that that is the way to promote building or to encourage sales, which, after all, is what we want in this country; but at any rate we ought not to make these alterations in the law retrospective. A large number of people have made their settlements without any idea of a Clause of this sort being nut into an Act of Parliament. It is true that if this Clause is in, people who are going to make settlements in the future must make what arrangements they can and will know where they are; but to say that if a man has made a settlement in the past, with the understanding that his money shall be invested in such-and. such a way, it shall now be possible, at the will of a foolish or incompetent trustee or of a foolish tenant for life, to advance that money to a builder, who cannot get money anywhere else, for the purpose of building houses as a speculative investment, in these days when houses cost a great deal more to build than they will probably ever realise, seems to me to be absolutely wrong from every point of view."This Section applies only to settlements coining into operation after the commencement of this Act."
There are two reasons why I cannot ask the House to assent to this Amendment. Firstly, it is contrary to the whole principle of the Settled Land Acts from the start. Let me read the words of Section 51 of the Settled Land Act, 1882, which has been acted upon ever since and which every lawyer in the country has ever since regarded as a great reform. Sub-section (1) of that Section says:
and there are a dozen more lines to the same purport—"If in a settlement, will, assurance, or other instrument executed or made before or after or partly before and partly after the commencement of this Act, a provision is inserted purporting or attempting, by way of direction, declaration, or otherwise, to forbid a tenant for life to exercise any powers under this Act—"
That is the principle of these Acts. To accept this Amendment would be to go contrary in one specific power to the whole scheme of Settled Land Acts administration. As to immediate merits, the effect of the Amendment would be to prevent this power attaching under any settlement coming into effect, or which has already come into effect or which comes into effect before the Act comes into operation three years hence. We have a great shortage of houses to-day which will not be made up for years to come. We want to get this building development and we want everything which will facilitate it. To hamper the process of development by striking this power out from settlements which have already been made and only allowing it for those settlements which are made in the future would be a mistake in existing circumstances."that provision, as far as it purports or attempts or tends or is intended to have or would or might have the operation aforesaid, shall be deemed to be void."
I understand then the reason this Clause is put in, arid the reason my hon. and learned Friend will not accept my Amendment, is that he wants to build houses at the expense of a certain class.
I must protest against what is a ridiculous imputation, if my right hon. Friend will forgive the epithet. This expenditure will be made on the settled estate for the development of the settled estate for the benefit of all parties interested in the settled estate.
My hon. and learned Friend says there is a shortage of houses which everyone desires to abolish. However, I will not quarrel with him over that point, but it is extremely hard to bring in retrospective legislation in what is, after all, a very serious matter. He has read a Section from the Settled Land Act. My learned Friend below says that does not apply. If you are a lawyer you only have to say one thing and immediately another hon. and learned Gentleman, who is also a lawyer, says he disagrees with his learned brother. That I have found to arise in nearly every case I have had anything to do with, either on a Committee, in the House, or in any other place where I have the pleasure and the privilege of meeting gentlemen learned in the law. You get one hon. and learned Gentleman who says black is white and another hon. and learned Gentleman says politely it is nothing of the sort. Where are we unfortunate laymen who, after all, are the people who are making the trusts and whose property is being dealt with, to come in? I do not believe the Trustee Act comes into operation but we will presume that it really does. The Trustee Act says that if a trustee receives a report from a competent surveyor that certain things might be done he is to do them. We are all men of business. We know how an expert has been described. We know you can get a report from any expert to suit you, and therefore this is no protection whatever. I did not expect this from the Solicitor-General. I really-thought when I moved a reasonable Amendment like this he would certainly accept it. It. is a great shock to me.
Clause 65—(Amendment Of Section, 25 And Repeal Of Section 26 Of The Act Of 1882; And Power To Raise Money For Improvements And For The Court, Or The Trustees To Impose Conditions For Repayment Of Money Applied For Improvements)
I beg to move to leave out the Clause.I suppose I shall not have much more success, but I put the. Amendment down in order to obtain a discussion upon the Clause. I quite agree there are parts of it which are good, for instance the first two Sub-sections, to which I have no objection, but the provisions of Subsection (3) are absolutely indefensible. It allows the tenant for life to spend money on all these things. It is turning him into a gigantic speculator and encouraging him and the trustees to enter into all sorts of speculation which any ordinary sensible person who has acquired a little stake in the country would he extremely loth to do. If the tenant for life wants this, why does he not do it out, of the income? Why should he have the income and spend it, perhaps in a foolish kind of way, and then go to some great contractor and ask him to send in an estimate for doing all these enormous things out of the capital? He ought to do it out of the income. My hon. and learned Friend says you want, to encourage building. But you also Want to encourage thrift. You will get many more houses built if you encourage thrift. You are not in this Clause encouraging thrift at all, but you are encouraging the tenant for life to surround himself with all kinds of luxuries at someone else's expense. I sincerely trust my hon. and learned Friend will meet me by omitting some of these Sub-sections.
I am sure the House will have appreciated the serious spirit, as they were charmed by the serious voice, in which my right hon. Friend gave the House the benefit of his comments on this Clause. Assuming for the moment that behind his gaiety there is a serious object, I should like to say this. This Clause represents, as a whole, deficiencies which have been found in practice for the last forty years in the Settled Land Act, 1882. It represents really what are the ordinary provisions inserted in well-considered wills and settlements enabling tenants for life to deal with capital moneys for capital purposes on rational lines. The difficulty of legislation of the kind is that in the first Acts which are passed you nearly always find two phenomena: first, overcaution, resulting in the Act not going far enough, and, secondly, the omission of things which would have been dealt with had they been thought of. This Clause, as a whole, fills up gaps and gives powers which the experience of the last 40 years shows are desirable. As regards paragraphs (vii) and (viii), the objects mentioned are not capital expenditure in the full sense of the word, because it is wasting expenditure, and with regard to these I should welcome the Amendment in the name of the right hon. Baronet the Member for the City of London (Sir F. Banbury) and also in the name of the hon. and learned Member for York (Sir J. Butcher) to insert at the beginning of the paragraphs the words which we find in paragraph (ix):
That is, for the repayment in instalments of the capital expenditure out of income. That is a. reasonable suggestion. In regard to the works mentioned in paragraphs (i) to (vi), they are capital improvements in the ordinary sense of the word, and the expenditure is capital expenditure in the ordinary sense of the expression, and ought to be treated as capital expenditure. Seeing the Amendments on the Paper, I have taken the precaution of consulting some of the leading conveyancers—"Subject to provision for the repayment of the capital money expended being made in the manner hereinafter provided."
I think it would be better to deal with this point when the hon. and learned Member for York moves his Amendment, rather than on the Amendment of the right hon. Baronet.
I understand that the Solicitor-General is prepared to accept some Amendments, and I thought he was prepared to accept the omission of paragraph (iii).
No, I cannot agree to that.
Perhaps it would be more convenient if I withdrew my Amendment in order that my hon. and learned Friend the Member for York may move the omission of paragraph (iii).
I felt that the Amendments on individual paragraphs of this Clause as a whole had a certain connection one with the other, and I therefore have obtained for the information of the House the views of one or two eminent conveyancers on the Clause as a whole, and I thought it was convenient that I should give that information to the House, in view of the way in which the right hon. Baronet introduced the Debate. If it meets with the approval of the Chair I propose to do that. The first opinion is from Mr. Underhill, senior conveyancing counsel to the Court, who has had very great experience. He writes:
that is, the omission of paragraph(iii)—"As to Clause 65, I am decidedly of opinion that the proposed Amendments"—
Mr. Benn, a brother of a Member of this House, also one of the conveyancers to the Court, and a very distinguished conveyancer, writes:"would be a misfortune. It seems to me that one of the great objects of this great Bill, and surely a very commendable object is to give tenants for life and trustees, ail such powers as would be inserted in a settlement drafted by an experienced and skilful conveyancer, but which are only too frequently left out by practitioners who are neither one nor the other. I do not hesitate to state, that in all well-drafted settlements of real estate, whether the settlement be by deed or by will, a Clause similar to paragraph (iii) of Sub-clause (1) of Clause 65, is now invariably inserted, unless the contrary is desired by the parties. It has got into the books of precedents, and is, I think, universally recognised as an ordinary power. Only yesterday I had to advise a tenant for life and trustees under an old will that they had no power to develop the estate as a building estate except by granting long building leases which in the locality were not acceptable to builders. Such a position is neither good for the owners of the estate (whether tenants for life or remainder men) or for the public. With regard to paragraphs (vii) and (viii) of Clause 65, Sub-clause (1) I am inclined to agree with the proposed Amendment. These works are not of a permanent nature and should, I think, like the new roof or the like, be gradually paid out of income by the person for the time being in possession."
Mr. Edmund Beaumont, who was President of the Institute of Conveyancers, when they were considering this Bill, writes in a similar strain. This Clause represents the modern, up-to-date practice in view of the needs of the day."I understand that objection is being taken in sonic quarters to the provisions of Clause 65, so far as they relate to the expenditure of capital moneys (1) in the development of the settled land as a building estate, (2) in providing heating, hydraulic, and electric power apparatus far buildings, and (3) in providing electric and other lighting installations. I sincerely trust that these objections will not be 'allowed to prevail. The existing Statutory provisions are in ninny respects arbitrary and unreasonable. For example, you can provide a water supply to a mansion, but you cannot supply a lighting installation. Yon can build a golf club house in connection with a building estate, but you cannot build new stables for the mansion. In many other respects the existing provisions are uncertain in their meaning, and constantly give rise to useless legal costs involved in taking opinions of counsel, and ultimately seeking the advice of the Court. All the proposed new provisions are within the general scheme of the existing Acts, namely, to authorise improvements which increase the value of the settled land. They are usually inserted in well-drawn settlements, thus adding to the expense in their preparation. We are all familiar with very numerous cases where the absence of power to provide electric lighting installations out of capital moneys has been found very detrimental to the interests of the settled estates."
Amendment, by leave, withdrawn.
I beg to move in Sub-section (1), to leave out paragraph (iii).My reason for moving this Amendment is that I think the House, as competent business men, will agree that the powers proposed in this Clause are really extravagantly great. This Clause proposes to permit capital moneys, that is, moneys which are intended for the benefit of the tenant for life, and the successors afterwards, to be spent in improvements of the sort referred to in this paragraph. It is quite right that capital money should be spent for reasonable improvements, which really increase the value of the settled land, and are for the convenience of the persons who are going to occupy the house. Let me remind the House that this is not a lawyer's question, this is not a question for the conveyancers of Lincoln's Inn, but a question for ordinary laymen, who are competent persons of commonsense, to decide. Is it a reasonable thing to spend capital money on the building of museums, libraries, churches, chapels, cinema picture palaces, and other places of recreation? If one were a millionaire many times over one would probably do many things. In that case I am not sure I should build cinema halls, but I should like to provide cricket grounds, football grounds, tennis grounds, and to provide a model village, and all the rest of it. But that is not the sort of case which we are contemplating here. We are contemplating the spending of money which belongs to people in succession. When you give the power to spend this capital money upon cinema picture palaces, museums, churches and chapels, it is really going beyond anything that is reasonable. The Solicitor-General has justified this Clause by reading letters from eminent conveyancers. I am not in the least degree desirous of minimising the value of the opinion of eminent conveyancers, but I say that this is not a question for lawyers at all. This is a question for business men, for the owner of an estate, for the ordinary layman, and I ask, is it reasonable to give power to spend money in that way? The Solicitor-General says that you find this sort of Clause in all well-drawn settlements. I do not draw settlements now, but I did in former days, and I never put in any such Clause as this. Perhaps I was not enlightened enough. Certainly, the, people who instructed me never dreamed of asking me to insert a Clause in the settlement, which might dissipate the whole of the estate, and enable an ambitious or large-minded tenant for life to improve the property out of existence. That is not the object for which you put in these conditions in Acts of Parliament. In connection with very large estates, with an income of £50,000 or £100,000 a year, perhaps it would be desirable to have a Clause of this kind inserted in the settlement: but we are legislating not for properties worth £100,000 a year, but for the average settled properties in the country. How many settled properties in this country do we know where the tenant for life ought to have the power to build all the things I have referred to, at a cost of perhaps tens of thousands of pounds? The solicitors of Lincoln's Inn who have to deal with large properties may insert very wide powers in the settlement, but this is not the sort of power that ought to be inserted in the settlement of property of the normal kind. It is not the sort of power which an Act of Parliament ought to give to a tenant for life in regard to normal or average settled property. This provision goes beyond the limits of reason. If you put this Clause into the Bill a tenant for life, if he is a man of large ideas, acting with trustees may, if they are men of perhaps easily influenced minds, be able to put these wide powers into operation without any check by the Court, or any check from the remainder man, who may be out of the country and may not know anything of what is going on. Therefore, you leave it in the power of the tenant for life, with the assistance of his trustees, to really squander the whole estate. It is perfectly easy to put this Clause into settlements of a proper kind, and that is where it ought to find itself, and not in an Act of Parliament. The Solicitor-General says that it is necessary to have electric light and gas. Granted; but in paragraphs (vii) and (viii) we find powers to set up electric light and gas. Why do you want the power twice over? Learned and eminent conveyancers from Lincoln's Inn would not put these things in twice over, and yet we are told that they are in every settlement. In paragraph (iii) you have provision for "gas works, electric light and power works," and you have the same thing over again in paragraphs (vii) and (viii). There is danger in that. In regard to paragraphs (vii) and (viii) the Solicitor-Genera] says that the money ought to be spent in providing gas and electric light and things of that sort, and he admits that the money so spent ought to be repaid by instalments. There is no such provision in paragraph (iii). Therefore you have the ridiculous result in the Bill as drawn that if you provide electric light and gas works under paragraph (iii) you can apply the capital without any provision for repayment, but if they were put up under paragraphs (vii) and (viii) then, according to the Amendment which the Solicitor-General has indicated he will accept, you would have to provide for the repayment of the capital. If the Solicitor-General will not cut out the whole of paragraph (iii) he will have to have some Amendment to make it read in consonance with paragraphs (vii) and (viii). This paragraph reads like an advertisement for Port Sunlight. It is probably a very accurate description of the improvements down there. Everyone is not Lever. Everyone has not £20,000,000.
A great deal more.
Let us say £20,000,000 to begin with. Everyone has not £20,000,000 at his back to indulge in this sort of expense.
They are all peers.
These multi-millionaires can indulge in this most desirable thing. They can get it put into their settlement. In the case of a comparatively poor man, owner of a country estate, it is a most reprehensible thing to invite him and his trustees, without any check, to indulge in expenditure which he cannot afford and which may have the effect of ruining the family estate.
I am pleased to second the Amendment. I agree with a great deal of what the hon. and learned Member for York (Sir J. Butcher) has said. It has been pointed out to me that all these powers only apply where any particular scheme has been instituted, and these particular powers are necessary to that scheme. No doubt that to a certain extent does minimise some, of the objections which have been raised by the hon. and learned Member for York. Under this paragraph practically two-thirds of the value of the estate may be borrowed to invest in building operations. If these buildings operations turn out unsuccessful the whole estate is gone. Surely that is not what is intended. I understand that there may be one or two eases where a town has developed, and an estate is surrounded by buildings, and it may be necessary to allow that particular part to be converted to other uses. Surely that can be done without this Clause. The tenant for life, I understand, has now the power to sell. Therefore, if I am right, and I think I am, I do not see any reason for this particular paragraph. My hon. and learned Friend says that it may be necessary for very large estates. I think that he is right. Why should we legislate entirely for large estates? We have got to legislate here for a vast number of people who by thrift, hard work, or any other legitimate means, have secured a certain sum of money or estate which they desire to preserve to their descendants. Why should they run risks of this kind?? It is true that the Solicitor-General has read out certain letters from eminent people, members of the Bar, who say that in their opinion this sort of thing is right.
They have used this in practice.
Yes in the settlement which they have drawn. No one has a greater respect for the Bar than I have in their own sphere, and that is not investing money. I have had some experience of investing money, and I have had some experience of very eminent people, barristers, who have come to me and have asked my opinions about investing their money. On more than one occasion they have said to me, "We lawyers do not know anything about the investment of money. Though I have made a very large sum at the Bar, I have invested it so badly that I have lost a great part of it, and I would like to know what you would recommend." In those circumstances I do not see any use in the Solicitor-General reading out opinions from barristers about investments. They do not know anything about them. They are, I think, very bad advisers on that particular point. Therefore I do not think that the letters from these gentlemen have anything to do with the question whether or not we should give these enormous powers to the tenant for life. As I understand, under the Clause which has just been passed, the tenant for life can advance money to builders for the purpose of building. If that is so, why do you want this also? It is said that he can only advance two-thirds, and in all probability there will be a great deal of that two-thirds left if the speculative builder fails, but this paragraph enables him to run the whole of the risk himself. Surely, he ought to be content with the Clause, just passed. I hope that my hon. and learned Friend will go to a Division, and he will have at least one man in the Lobby, because it is not right for the Government to refuse to accept all these Amendments on a complicated Bill of this sort. This Amendment is a reasonable one and should be accepted.
The right hon. Baronet has been good enough to express his views as to the competence of barristers to advise on matters of investment and I do not propose to dissent. I would merely observe that the barristers who have written these very interesting letters, which I have read to the House, were not advising the House or anybody else as to what they should invest in. They were merely informing the House that those who, like my right hon. Friend the Member for the City of London, are extremely competent to advise others how to invest their money, should be given power, if they think right, to invest their money in settled estates, as indicated in this Clause.
Not their money.
The money of the settled estates. And we are entitled to assume that a man of business, exercising these powers, will act as a man of business. The Mover of this Amendment spoke as if the Clause put on the tenant for life the obligation to do these things. All this Clause does is to give power to a sane man to do these things if he thinks it right for the development of the estate, under all the safeguards that the law provides. I only read those letters for this specific reason. During the last ten or fiffteen years it has become customary and usual and proper for men of business in settling their estate, either by will or settlement, to insert these very powers contained in paragraph (iii), not because they desire to exercise the powers themselves, but because they think that the man coming after them ought to have those powers. All the Bill does is to give those powers to be used in precisely the way that competent men of business have been constantly using them during the last ten or fifteen years. These letters may have convinced the House or they may not, but I did not read these letters in order that I might quote these men as guides in business investments. I agree with my right hon. Friend that that is not their job. In those circumstances there is a primâ facie case for this paragraph. Add to that this. There are undoubtedly more settled estates in the ownership of the Members of the other House than is the case in this. The other House have considered this particular Clause with extreme care, with the advantage of a great body of expert opinion advising them about it, and the Law Saciety and various other advisers who have considered this Clause have all agreed that it is a. desirable Clause.
6.0 P. M.
I am not terrified by what the learned Solicitor-General says about the views of the House of Lords. We are legislating here for ordinary men, among others owners of small settled estates, and he must not throw the House of Lords at my head. We are here considering questions and deciding them according to our qualifications and capacity, and I cannot allow the opinion of anyone who sits at the other side of the Lobby, upon a subject upon which I am competent in my own way, to overrule the opinion which my reasoned convictions lead me to adopt, and I am sure that no other Member of the House would accept the views which are thrown out from some other quarters on a subject upon which he is capable of forming an opinion himself. So let us get rid of these extraneous arguments and consider the thing on its merits. The Solicitor-General tells us that these things are generally put into the settlement. That is the very reason why we do not want them here. When there is a case for them they ought to be put into a settlement, but when they are totally inappropriate to the character of the property they ought not to be put into a settlement. The learned Solicitor-General says that because these provisions are suitable for large estates, they ought to be made applicable to all estates by Act of Parliament.
I did not say that.
I understand that that was the argument by which it was sought to support this Clause. My argument is that when they are appropriate to the estate they are in the settlement, and when not appropriate they are not in the settlement. These powers to build churches and chapels, cinemas, museums and libraries, and so on, are not suitable to be put into the settlement of every estate by Act of Parliament.
May I ask my hon. and learned Friend a question? If he had the power to build such a cinema would he exercise that power?
If I were in that position, I think I would be able to exercise the powers given me by Act of Parliament in a reasonable way; but I am not at all sure that every tenant for life is fully competent to do what this Act of Parliament enables him to do. Some tenants for life are persons of much larger views than I am, and attach more importance to cinemas and museums, and there may be many tenants for life who would think that that was a very appropriate way of spending money which is not their own. I say they ought not to be allowed to do it except with their own money. I would prevent people who are not wholly wise from using the powers. I would urge the Solicitor-General not to put temptation in the way of those who might not be very competent to resist it—powers which it would be most dangerous for them to exercise.
I beg to move, in Sub-section (1, iii), to leave out the words "gasworks, electric light or power works."There is already a provision in Subsections (1, vii) and (1, viii) for electric power. In the former it is specifically mentioned. We do not want electric power mentioned twice. Then there is gas lighting. You have it in Sub-section (1, viii), which says that improvements are to include
"engine houses, engines, gasometers,…plant, and other works required for the instalment of electric, gas, or other artificial light…"
I beg to second the Amendment.
I think the point of my hon. and learned Friend is founded upon a misapprehension of the precise effect of the wording of these paragraphs. Paragraph (iii) of Sub-section (1) deals with a development of a building estate. Paragraph (viii) deals with engine houses and gasometers and electric lighting apparatus. There are the words
The draftsman of the Clause thought it desirable to separate what were regarded as works in paragraph (iii) from ancillary engines and plant and apparatus for a building or a house. That is why they are repeated. In line 34 you have the words"in connexion with any principal mansion house or other house or buildings."
In the other paragraph it is engine houses and accumulators and other works required"Gasworks, electric light or power works or any other works."
"in connexion with any principal mansion house."
The point is too subtle for me to understand. If the learned Solicitor-General is satisfied that he is right, I shall not, press the Amendment.
Amendment, by leave, withdrawn.
Amendment made: At the beginning of Sub-section (1, vii) insert the words
"Subject to provision for the repayment of the capital money expended being made in manner hereinafter provided."—[Sir J. Butcher.]
At the beginning of Sub-section (1, viii) insert the words
"Subject to provisions for the repayment of the capital money expended being made in manner hereinafter provided."—[Sir J. Butcher.]
I beg to move to leave out Sub-section (3).By the Settled Land Act, 1882, it is provided that when certain improvements were proposed for the expenditure of capital money the tenant for life had to produce a scheme, showing in general detail what he proposed to do, and he submitted that scheme to the trustees or the Court, and if the trustees or the Court approved the scheme, the capital moneys could be expended on it. The words in the Act of 1882 were very carefully thought out at the time. Section 26 provides that where the tenant for life was desirous that capital money arising under the Act should he applied for improvements authorised by the Act, he might submit for the approval of the trustees of the settlement or to the Court, as the case might require, a scheme for the execution of the improvements. When the scheme was approved by the trustee or the Court the money could be spent. That is a very valuable provision, because it enabled the trustees or the Court to know at what the tenant for life was driving. He had to state in general terms what he wanted to do. He had to get an estimate of the expenditure, and then the trustees or the Court were in a position to judge whether or not it was wise expenditure. Sub-section (3) of this Bill dispenses with the scheme altogether. If ever there was a case where it was important that the scheme authorised by the Act of 1882 should be adhered to, it is the present case, because you have already sanctioned a large number of very novel and dangerous means of expenditure. I urge that it would be extremely unwise to dispense with what was thought in 1882 to he an absolutely necessary provision for the protection of the estate.
I beg to second the Amendment.It seems to me necessary that we should not abandon every chance of preserving the body of the estate. Speaking as a layman it seems to me that this Clause does away with all the safeguards which my hon. and learned Friend the Solicitor-General only a few moments ago told me existed. He endeavoured to allay my apprehensions by saying, "You need not be nervous about money being advanced for building houses, and so on, because the trustees cannot do it except in certain circumstances." I am not sure I was at all re-assured by what the Solicitor-General said, but now we come to this provision, which, as I understand it, takes away the whole of the safeguards said by my hon. and learned Friend to exist. I do not know whether or not he will say that this does not apply to the estate as a whole but only to a portion of it, where portion is sold and the money which comes in from that sale has to he re, invested. Even if that be so, it does away with the safeguards which formerly existed against foolish investments. If it does away with the safeguards against the investment of the money without the trustee being able to investigate the circumstances, then what safeguards are left? I sincerely trust, unless there is a really sound explanation for this proposal, that it will not be accepted.
The word "Acts" is constantly referred to in this and other portions of the Bill. I should like the Solicitor-General to tell ca what. Acts are meant.
The Settled Land Acts.
It does not say so.
In Clause 71, Subsection (2), it is stated that
With regard to the Amendment which has been moved, the Sub-section in question has been introduced into this Bill because the system of schemes under Section 26 of the Settled Land Act of 1882 has been found, in practice, to cause such very great expense as to be practically prohibitive. The result is that the schemes have not been a real safeguard, and, as a matter of fact, in every well-drawn settlement to-day there is a Clause saying that the submission of a scheme to the trustees, as mentioned in Section 26 of the Act of 1882, shall not be required. It is simply following the lesson of experience that this Sub-section has been inserted. In the Settled Land Act of 1890 a temporary provision was inserted dealing with the subject and providing for sanction by the Court in connection with money which had been expended without a scheme. But in practice it has been found better to dispense with the scheme altogether."The Settled Land Acts, 1882 to 1922, are referred to as 'the Acts'."
Because of the expense involved, which in practice has been found to be unnecessary. The Seconder of the Amendment asked what safeguards are left. If the House will turn to Subsection (4) of Clause 65, it will be found that it is there provided:
"Where the capital money to be expended is in the hands of the trustees of the settlement they may apply that money in or towards payment for the whole or any part of any work or operation comprised in the improvement, on—
The right hon. Baronet the Member for the City of London (Sir F. Banbury) will see that according to the proviso at the end of that Sub-section it is competent for the trustees, if they think fit, to require repayment over a period of 25 years. There is first the proviso in regard to the certificate by an engineer or surveyor, then the proviso with regard to an order of the Court, and finally the proviso in regard to improvements authorised by either this Act or any Act subsequent to it, that they may require repayment in the way I have mentioned."Provided that in the case of improvements not authorised by the Settled Land Acts, 1882 and 1890, or by the settlement, the trustees shall be entitled, if they shall think fit, before they make any such application of capital money to require that that money, or any part thereof, shall be repaid to them, out of the income of the settled land by not more than fifty half-yearly instalments."
I am not sure that Sub-section (4) does not contradict Subsection (3) which says, that "capital money arising under the Act" may be applied in certain ways. Sub-section (4) on the other hand says "where the capital money to be expended is in the hands of the trustees." Is not all capital money in the hands of the trustees?
In most cases.
Then what is the use of Sub-section (3)?
Sub-section (3) in terms provides for getting rid of the necessity of submitting schemes to the trustees. The provisions of Section 26 of the Act of 1882 require that a great number of elaborate provisions shall be complied with. That Section provides that where the tenant for life is desirous that capital money shall be applied in or towards payment for improvements, he may submit for approval to the trustees of the settlement or the Court, as the case may require, a scheme for the execution of the improvements showing the proposed expenditure thereon. Where the capital money is in the hands of the trustees, then, if the scheme is approved by them, the trustees may apply that money in or towards the payment of the whole or part on, first, a certificate from the Land Commissioners—that is, now, the Ministry of Agriculture—or a certificate that the work or alteration has been properly executed and that the amount is properly payable; secondly, the certificate of a competent engineer or surveyor; or, thirdly, an order of the Court, and so on. There are a number of elaborate provisions, compliance with which means the spending of a great deal of money on architects, quantity surveyors, consulting engineers and so forth, an expense which in practice is found to be unnecessary. The right hon. Baronet will not expect me to answer questions as if I myself were a tenant for life exercising all these various powers every day in the week. I have no personal experience in the matter; I merely speak from consultation with those who do know, and I give the House to the best of my ability the information I have been able to collect. The result of it is that in practice it is found that the system of schemes under the Act of 1882 is cumbrous and is not a real safeguard, and if we pass Sub-section (3), this, with the safeguards of Sub-clause 4, provides substantial protection as far as is necessary and at the same time gives an opportunity for reasonable development.
Let us suppose that I am a tenant for life and that my hon. and learned Friend is the trustee. I go to him with a proposal to invest certain capital money which is lying uninvested, and I do not submit a. scheme. I simply ask him to let me have the money to be invested in the improvement of the estate. He, as trustee, says to me, "Very well, I will do that provided you give me a certificate from a competent engineer or surveyor." Is that as far as this provision goes?
Or an order of the Court.
Are we to understand that the word "may" in Subsection (4)—"the trustees of the settlement may apply that money"—means "may," or does it mean "shall"? My point is this: Supposing the trustee says, "No, I know what you are going to do. I do not ask you to submit a, scheme, but I do not think it advisable in the interest of the estate to do it, and I shall not give my consent." What happens then?
There are, as I have pointed out, the conditions as to the certificate or the order of the Court. Then there is the proviso in regard to improvements not covered by the earlier Settled Land Acts. Furthermore, the trustees have the ordinary power to go to the Court if a. difference arises between the tenant for life and the trustees of the settlement respecting the exercise of any of the powers of the Act or any matter relating thereto, and on that the Court may give such direction as it thinks fit.
That is quite true, but that is not a real safeguard. The real danger arises where the trustees are more or less under the influence of the tenant for life. As I have pointed out on previous occasions, where that is so there is really no protection unless you preserve the scheme laid clown by the Act of 1882 or something like it. The right hon. Baronet the Member for the City of London asked what safeguards are left if we abolish this scheme? That is a very clear question, and, in reply to it the Solicitor-General, in the first place, pointed to the provision with regard to the certificate by a surveyor. May I ask the attention of the House to this fact? This would be a certificate that the work has been done. It would not be a certificate that the work was necessary or that it was for the advantage of the estate or conducive to the development of the estate. The tenant for life may spend money on the exceedingly wide series of improvements which are now permitted, and, when we ask what safeguard there is and what guarantee there is that these are really for the benefit of the estate, the answer is that there will be a certificate from the surveyor that the work has been properly done. What is the other safeguard to which the learned Solicitor-General referred? It is a hypothetical one. He referred to the provision that the trustees might, if they thought fit, demand that the capital money spent on these improvements should be repaid by instalments, but I submit that that is no safeguard whatever, because the case which we are supposing, and the case where you do want a safeguard, is where the tenant for life and the trustees are acting together. The tenant for life naturally does not want capital money repaid by instalments. He wants to get as much out of the estate as he can, and he goes to the trustees and says, "Look here, let me point out what an excellent improvement this is There is no occasion to repay by instalments." The trustees assent, as they can do Where is the safeguard? It has gone, so that the only other alleged safeguard which the Solicitor-General pointed to is non-existent. Therefore, we come back to this, that the only real safeguard as to the improvement being a reasonable and proper one is that contained in the Act of 1882, which you are now abolishing by this Sub-section (3).
That is not the only or the real protection.
The hon. and learned Member was asked what were the protections, and he gave two illustrations of protection, both of which I have examined, and both of which, I venture to say, turn out to be nugatory. If there be any other protection, I shall be glad to know of it.
The tenant for life cannot spend any capital money without arranging beforehand with the trustees. If he does not, they will refuse to pay and tell him to go to the Court.
That is exactly my point. The dangers we have to meet are where the tenant for life has got the trustees more or less under his influence, and it is in order to provide for dangers of that sort that the Act of 1882 originally said there must be a scheme. Inasmuch as this scheme, which this Bill proposes to abolish, is one of the only protections left, I think the Solicitor-General ought to agree to eliminate Sub-section (3).
Clause 78—(Relief Against Forfeiture Of Leases On Assignment, Etc, And As To Powers To Distrain)
(1) The words, "To a covenant or condition against assigning, underletting, parting with the possession, or disposing of the land leased; or" in Sub-clause (i) of Subsection (6) of Section fourteen of the Conveyancing Act, 1881, are hereby repealed. This Sub-section only applies where the breach occurs after the commencement of this Act.
I beg to move, at the end of Sub-section (1), to insert the words
This is a provision which it is necessary to add as a safeguard. Under the Conveyancing Act of 1881, before re-entering or forfeiting a lease for breach of covenant, the lessor has to serve a notice, and so on, but the Section of the Act of 1881 does not extend to a covenant or condition against assignment. The Clause was put in this Bill to get over that difficulty, but, as drafted, I think it has gone a little too far. A lessee may assign to a company, and the company may at once go smash, and in that case I think the lessor would be in danger of losing his effective rights. Hence my Amendment. I am told in practice that it is a necessary qualification to put in the Bill as drafted."and the foregoing repeal shall not apply where the land leased has been assigned, underlet, parted with, or disposed of, to a limited company."
I think this is a most extraordinary Amendment. Clause 78 purports to repeal amongst other things, Section 14 of the Conveyancing Act of 1881, and then we are to have added at the end of the repeal Clause that the repeal is not to operate in certain conditions. I think, if it had been intrended—and it probably is intended—that where there has been a transfer of a leasehold to a limited company the original Sections of the Act should still apply, that ought to have been clearly and properly stated, but to repeal a Section, and then to say that for certain purposes it is not repealed, is to create a confusion in the law of the most difficult and objectionable character. I was given to understand that, this Bill was one to clear up the law and to reduce it, on a great many of these points, to a code that could be easily looked at, so that the law could be ascertained with reasonable facility, but the method adopted here is most confusing. As this is the Report stage, and it would appear to be almost impossible to suggest that the intention should be inserted in intelligible language at a later stage, I venture to think this Amendment ought not to be adopted, because of the confusion that would inevitably arise in forming a conclusion as to whether these particular Sections were still law or not.
I hope my hon. Friend will not press his opposition to this Amendment. If it is really put in short words, it is one of the simplest possible things to understand. This Clause does not repeal Section 14 of the Conveyancing Act, 1881; it repeals only a very few words in that very long Section. The effect of the Clause in the amended form now proposed may be stated in a few of the simplest words possible. As my hon. Friend knows very well, Section 14 of the Conveyancing Act, 1881, provides that relief against the forfeiture provisions in a lease may be given by the Court. There are certain cases where that relief may not be given, and one of those cases is the breach of a covenant against assigning, underletting, or parting with possession of the premises without licence. It has been held in the past that it would be reasonable—and I think my hon. Friend will agree—that the Court should be able to give relief against a forfeiture on that ground, and that was therefore the intention, to bring the Conveyancing Act up to date in the Bill; but attention has been drawn since to the fact that, if I may put it in simple, plain language, it is not an unusual form of swindle for people holding very valuable premises on lease occasionally to transfer them to a one-man company, or a rotten company of some kind, with no assets, for the express purpose of being able to get out of their liabilities for rent, and so on, under the lease. I therefore hope my hon. Friend will not press his opposition, for when the Clause gets into the text books it will be the simplest matter possible.
I was not arguing against the meaning and effect of what was clearly intended to be done, but against the very confusing way in which this Amendment was expressed.
This Bill, when it is an Act, will subsequently, as I said on Second Reading, be consolidated with other Acts, and we shall get all questions of drafting of this kind quite clear in the consolidating Act long before this Act comes into operation.
Amendment agreed to.
Clause 88—(Power To Apply Income For Maintenance And To Accumulate Surplus Income During A Minority)
(1) Where any property is held by trustees in trust for any person for any interest whatsoever, whether vested or contingent, then subject to any prior interests or charges affecting that property—
I beg to move, in Sub-section (1, i), after the word "benefit," to insert the words
This Amendment goes with two Amendments following in my name, and also with an Amendment in the name of the Solicitor-General. The Clause, as originally drawn, is to the effect that the trustees may at their sole discretion pay to the parent or guardian of an infant, or otherwise apply towards his maintenance, education, or benefit, the income of the property or any part thereof; and the object of slightly altering the wording as I propose is in order to be able to introduce lower down certain provisions as to what is reasonable and what considerations the trustees should have regard to. In view of the Amendment standing on the Paper in the name of the Solicitor-General, I imagine he will accept this Amendment of mine and the following one in my name, but I do not know what course he will take with regard to my further Amendment after that, which, if I may use the expression, swallows his up."the whole or such part (if any) as may under all the circumstances be reasonable of."
I beg to second the Amendment. I will swallow that of my hon. Friend.
Amendment agreed to.
Further Amendments made:
In Sub-section (l, i), leave out the words "or any part thereof."—[ Mr. D. Herbert.]
At the end of Sub-section (1), insert the words
"(iii) Provided that in deciding whether the whole or any part of the income of the property is during a minority to be paid or applied for the purposes aforesaid, the trustees shall have regard to the age of the infant and his requirements and generally to the circumstances of the case, and in particular to what other income (if any) is applicable for the same purposes; and where trustees have notice that the income of more than one fund is applicable for those purposes then, so far as practicable, unless the entire income of the funds is paid or applied as aforesaid or the Court otherwise directs, a proportionate part only of the income of each fund shall be so paid or applied."—[Mr. D. Herbert.]
Clause 90—(Power To Discharge Or Modify Restrictive Covenants Affecting Land)
(11) Where a term of more than one hundred years is created in land (whether before or after the commencement of this Act) this Section shall, after the expiration of fifty years of the term, apply to restrictions affecting such leasehold land in like manner as it would have applied had the land been freehold.
I beg to move, in Sub-section (11), to leave out the words "one hundred," and to insert instead thereof the word "ninety."This Clause deals entirely with the question of restrictive covenants. I think it will be admitted by most people that in the great majority of cases restrictive covenants are as much in the interests of the community as in the interests of the landlord, and that refers more especially to covenants which have to do with the question of nuisances or insanitary surroundings. Indeed, I think it may well be said that in such cases the interests of the tenant and of the landlord are identical. However beneficial restrictive covenants may have been when they were originally proposed, it is quite possible that, by the lapse of time, or by the altered conditions of a locality, the need for those restrictive covenants has gone by, and, instead of being a benefit, they are actually against the interest of a locality's development. There are many people who, welcoming this Bill as a whole, noticed almost with dismay that the word "freehold" had been inserted in the Bill, therefore cutting "leasehold" out of this Clause. Therefore, we welcome the Amendment which the learned Solicitor-General moved in Committee by inserting Subsection (11). We thank him for it. We who have been for a long time in this House with him know how interested he has always been in these matters, and how sympathetic he has been to those who wish to remove anomalies and real injustices in this leasehold system. But the Amendment he moved in Committee only touches a fringe of the problem. In my own constituency of Southport the vast majority of leases are under 100 years, being 99-year leases, and that applies also to Liverpool and many other towns. I should like it to be understood that my Amendment is intended to operate only in cases where covenants have become obsolete or injurious. I think the interests of the landowner will be amply safeguarded under the Clause, and I hope my hon. and learned Friend may see his way to accept the Amendment. I am sure that by doing so he—and, I may say, incidentally, the Government—will receive the gratitude, not only of a very large number of municipal authorities, but, I think I may say also, of millions of leaseholders throughout the country.
I beg to second the Amendment.If the learned Solicitor-General accepts this Amendment, it will be of enormous value in towns where, in many oases, restrictive covenants have become obsolete. Restrictive covenants made in the years from 1860 to 1870 not to carry on a particular business, or not to erect a house over or under a certain rental, may have been perfectly fitting then, but circumstances and conditions may have entirely changed, and these covenants may have become obsolete and a burden upon the community. Therefore, I feel sure that, by accepting this Amendment, not only will tenants be enormously benefited, but the development of whole areas in the neighbourhood of towns will be greatly facilitated.
I shall be very glad to recommend to the House the acceptance of this Amendment, subject to conditions I will mention of a minor character. I agree with every word that has fallen from the lips of the hon. and gallant Member for Southport (Lieut.-Colonel D. White) as to the extreme importance of the Amendment. I, personally, would have been glad to accept it when he suggested it in Committee, but there were certain technical difficulties with regard to mining leases that I did not want to go into at that time, and need not go into now. Mining leases and mining questions generally are kept out of this Bill, ac it is the intention of the Government to introduce legislation on mining questions at as early a date as possible. Therefore, what I would ask the hon. and gallant Member to agree to is that, instead of his next Amendment on the Paper, which reads as follows:
he should agree to the phraseology being:"Provided that in the case of mining leases the term shall be more than one hundred years."
"Provided that this Sub-section shall not apply to mining leases or leases for mining purposes."
I shall be perfectly willing to agree to that suggestion.
On the understanding that the hon. and gallant Member's next Amendment will be moved in that form, I shall be glad to accept this, and to thank him, on behalf of the community to which he has referred, for his pertinacity in regard to this Amendment.
I understand that this will be the effect. Where a person has leased a house for 90 years, and 50 years of that lease have expired, then, even if there are any restrictive covenants in the lease, the leaseholder can use the house in any way he likes, It that so?
The right hon. Baronet has not, I think, appreciated that under Sub-section (11) the power to deal with restrictive covenants in a lease of freehold land is dealt with on the same lines as the power to deal with restrictive covenants in regard to freehold land which you find in the earlier part of the Clause. It is there hedged round with elaborate precautions, and it is there provided that, if a restrictive covenant be got rid of by the tribunal, compensation must be given to the person in whose favour the restrictive covenant has been made, if the covenantee suffers any loss by the removal of the covenant. It is for the purpose of getting rid of restrictive covenants that impede development in a neighbourhood, subject always to the greatest precautions and to compensation.
May I, as a layman, ask this question? Suppose I live in a square in which all the houses have been let for 99 years as dwelling-houses, but, owing to some railway coming near, it is impossible for me to live in that square, will this Clause allow me to let my houses for offices, without being penalised?
If the hon. Member will look at Sub-section (1 a) of this Clause the powers are these:
"The Authority…shall have power from time to time, an the application of any person interested in any freehold land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon, by Order wholly or partially to discharge or modify any such restriction (subject or not to the payment by the applicant of compensation to any person suffering loss in consequence of the Order) upon being satisfied
And so on.(a) That by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Authority may deem material, the restriction ought to he deemed obsolete, or that the continued existence thereof would impede the reasonable user of the land for public or private purposes."
I think it is a very good thing.
I do not think my right hon. Friend the Member for the City of London (Sir F. Banbury) need have any fear of the operation of this Clause. In fact, I am sorry to say he will not have any reason to fear it, because, in my view, it is a pity that we have this much more limited form of application of the Clause than that originally intended, and I would advise the right hon. Baronet to be thankful, from his point of view, that things are not worse. I wish, from my point of view, things were very much better. I regret very much the original proposal has been cut down to the extent it has been. Nobody who knows anything about the tenure of land in urban areas, and, indeed, outside urban areas, both freehold and leasehold—and particularly leasehold—can come to any other conclusion than that many of the restrictive covenants are obsolete, and most disadvantageous, not only to those who own the land, but to the community at large, and it is for the first time that we get in a Statute the application of something approaching commonsense in dealing with these questions. I am not, of course, making any reference to my right hon. Friend in that regard. I welcome this insertion, though it is hedged round with such safeguards that I doubt whether the benefits will be very large. I hope, at some later time, I shall be in this House to give effect to much wider and more sweeping and drastic powers than are contained in this very limited Clause now before the House.
My only objection is that the Clause and the Amendment restrict the application of common sense. The Clause says:
That, by the Amendment, is going to be altered to"Where a term of more than one hundred years is created in land."
Therefore, people who have a 99 years' lease to start with, will be able to avail themselves of this provision, and if there be some onerous, obsolete, and stupid restrictions applied to their property, they will now have, if we pass this Clause in this shape, some mean;. of going to an authority and getting rid of them under reasonable terms, and if anyone be damnified he will have compensation; but the Clause will leave anyone who has got a. lease of less than 90 years without any remedy whatever, and we in Liverpool have got a vast number of leases of 75 years. I am very sorry to find that, while a reasonable thing is being clone in respect to restrictions of an obsolete character in regard to long leases, my own locality, at all events, is not to get any benefit from this Clause. I shall support this Amendment to make 100 into 90 years, but if anyone would suggest making it 50 or 51 years, so as to cover the period of 50 years, I should be even more glad."Where a term of more than ninety years is created in land."
On a point of Order. Would it be possible for me to move as an Amendment to the Amendment, that the period should be sixty years?
It could be done in this way: We must first of all remove "one hundred" from the Bill. Then I shall have to put the Question, "That the word 'ninety' be there inserted." If that be negatived, it will be open to the hon. Member to move the insertion of "sixty" instead of "ninety."Question, "That the words 'one hundred' stand part of the Bill," put, and negatived. Question proposed, "That the word 'ninety' be there inserted in the Bill."
I wish to move as a further Amendment, "That the word 'sixty' be there inserted." I have no objection, of course, to the principle involved in the ninety years, but I agree with my hon. Friend the Member for Edgehill (Sir W. Rutherford) that we should prefer to see the term sixty years. For that reason, I move that instead of "ninety" the word should be "sixty."
I beg to second that Amendment.
The House will have to negative the word "ninety." Then a second Amendment will be necessary to insert "sixty." I must first put the Question, "That the word 'ninety' be there inserted."
I have every sympathy with the proposal for a further reduction from ninety years, but one must draw the line somewhere, and I want to say why. We do not want to interfere with a contract freely made within the length of time for which the contracting parties may reasonably have anticipated that the contract as a contract would continue to be effected. Leasehold property, after the lapse of a certain length of time, ceases to have any really contractual character, and it becomes a type of tenure rather than the result of a mere contract or undertaking between parties freely made. We want to draw a reasonable line be- tween the anomaly we see at the present time of leasehold estates, long after the, leases have been created, becoming encumbered by obsolete covenants, and, on, the other hand, freedom of contract.
How can the Solicitor-General reconcile that argument with the limitation of fifty years, on page 74 of the Bill?
Will you make it seventy years?
I am told that the concession I have already made, down to ninety years, is as far as it is safe to go, for reasons that are known to those who, are concerned with conveyancing matters. I am afraid I must resist a reduction beyond the figure of ninety, though I have a good deal of sympathy with the hon. Member's proposal.
How do you reconcile that with the fifty years?
I am sorry the Solicitor-General has stated that he is rather unfavourable to this Amendment. I assure him—if I am right, I may, of course, be wrong—that I do not think there is anything in conveyancing which is objectionable at all. Every possible argument—and I say this with some knowledge of the matter—which can be brought to bear for bringing the operation of this Clause down to the ninety-nine years' lease, is applicable in the fullest sense to the seventy years' lease. The same kind of thing arises in seventy or seventy-five years' lease as in the ninety-nine years' lease. The only thing is, that in those parts of the country where it has-become the custom to grant a seventy-live years' lease instead of a ninety-nine years' lease, when those leases are granted it really does not make much difference to the grantor or the grantee at the time whether it is ninety-nine years or seventy-five years. It is a difference of about twenty years, which is a very, very long time off.Seventy-five years is a very long time off, when a man grants or takes a lease. The House, therefore, may assume with safety that identical conditions obtain when a seventy-five years' lease is granted as when a ninety-nine years' lease is granted. It is a long lease, applied with that difference of years, in different parts of the country. I assure the Solicitor General that very grave injustice will arise, as between one district and another in the country, if the concession is not given to the seventy-five years' lease as to the ninety-years' lease. You have a district like Cardiff and, as we have been told, like Southport, where the ninety-nine years' lease obtains. You may go to other places within 100 miles or so, and there you find that a seventy-five years' lease obtains.
I have made further inquiries, and I am happy to say that if my hon. Friend (Mr. A. M. Samuel) will make it "seventy" instead of "sixty," I will accept it.
Have I your permission, Mr. Speaker, to withdraw "sixty" and substitute "seventy"?
We are still on the Question, "That the word 'ninety' be there inserted." If the House negative the "ninety," I will take the "seventy."Question, "That the word 'ninety' be there inserted in the Bill," put, and negatived.
I beg to move, "That the word 'seventy' be there inserted in the Bill."With your leave, Sir, I will move the insertion of the seventy years in place of the ninety which we have negatived.
I beg to second the Amendment.
Question, "That the word 'seventy' be there inserted in the Bill," put, and agreed to.
Further Amendment made: At the end of Sub-section (11) insert the words
"Provided that this Sub-section shall not apply to mining leases or leases for mining purposee."—[Lieut.-Colonel D, White.]
Clause 107—(Construction Of Deeds And Other Instruments And Presumption Of Survivorship)
(2) The Lord Chancellor may from time to time prescribe and publish forms of contracts and conditions of sale of land, and the forms so prescribed and for the time being in force shall, subject to any stipulation, modification, or intention expressed to the contrary, apply to contracts by correspondence, and may, but only by express reference thereto, be made to apply to any other cases for which the forms are made available; and may also prescribe and publish forms to which a testator may refer in his will, but unless so referred to, such forms shall not be deemed to be incorporated in a will.
I beg to move, in Subsection (2), after the word "land" ["conditions of sale of land"], to insert the words
That relates to the interpretation of an open contract, and it may be of some interest if I refer the House to the first copy of the Bill which was issued, and which had a preparatory Memorandum. On page ix of the original Memorandum an explanation was given of this Clause, and its amendment. It was Clause 105 in the old Bill, and it is Clause 107 in the Bill as it left the Committee. It states that Sub-section (2)"to which reference may be made in any such contract or conditions."
I am altogether in favour of anything that will make contracts easier, which will lighten the cost of printing in relation to contracts, and lessen the work which is needed in carrying the contract through. I think, however, that Clause 107, as it now stands, will give rise to a good deal of difficulty. It certainly will put into the hands of the Lord Chancellor for the time being power greater than one ought to possess. Hon. Members will know that an open contract is entered into every day of the week. It is a very customary thing. One man writes from his house to another man, and says: "I offer you £500 for your house." The man to whom he writes replies: "I accept your offer." That is an open contract. If that contract is entered into under the present conditions the law imports into it all sorts of conditions, and very important conditions. The conditions which are now imported into an open contract have been sanctioned by a great deal of usage, and they are pretty well known. The proposal contained in this Clause is, that wherever there is an open contract by correspondence you shall import into that contract, not the rules and conditions which have grown up and have been sanctioned by the law—some sanctioned by Statute Law and some by Case Law—lout the Lord Chancellor for the time being shall have the power to draw up a list of the conditions that shall be imported into the open contract by correspondence. That gives to the Lord Chancellor too great power altogether. Not merely would he have the power to draw up a list of conditions to be imported into an open contract, but- he would have the power to change it from time to time. In dealing with ordinary business affairs, we should never quite know from time to time what rules and regulations the Lord Chancellor for the time being had established. The latter part of this Sub-section gives very considerable power to a testator making his will. In making a will, he may refer to some form which the Lord Chancellor has drawn up, and say, "I will adopt that in my will." That is a very convenient proposal, and is one that will be very generally adopted. There will be no objection whatever to the Lord Chancellor drawing up a certain number of Regulations which can be imported by reference into these contracts. Therefore, when I write, accepting an offer that someone else has made to me, I can say, "I adopt the general Regulations of the Lord Chancellor." If it is made permissive, it is a -convenient thing, a cheap thing, and a proper thing; but if it is imported into every open contract, whether we like it or not, it will be a mischief rather than otherwise. It will lead to a very great deal of difficulty, and it will give the Lord Chancellor a greater power in this matter than any Lord Chancellor has previously possessed. One does not refer to any occupant of the Lord Chancellor's office. This Act may last for very many years, and may apply to any Lord Chancellor. We have had some Lord Chancellors who were very wise men and others who were very foolish men. Some have been distinguished lawyers and others have been rogues. It is well known, of course, that when one Lord Chancellor died and the information was brought to the then monarch, King George III, informing him that the Keeper of his Conscience had died, the remark made by the King was this: "He has not left a greater knave behind him in my dominions." There have been loose men as Lord Chancellors, and there have been those distinguished because of their absence of any knowledge of law. Was there not one Lord Chancellor of whom it was said that if he knew a little law he would have known something of everything? Why should you leave, in the hands of one official, who is sometimes appointed for political purposes, so great a power as this, that may affect hundreds of contracts made from day to day and week to week? If the House will take into consideration a further argument, it is this. Supposing the Lord Chancellor should devise a list of conditions to be imported into an open contract, and we have any objection to it. Suppose objection was taken, generally, throughout the legal profession. Suppose objection was taken by a number of important societies, what redress or remedy would they have? How could they put this thing right? If these things were done by Act of Parliament, obviously, they could come here and the matter could be dealt with here; but if they are simply declared from time to time by the Lord Chancellor there is no power of redress or remedy whatever. It may be that the Solicitor-General will be able to meet this Amendment in some way. I only want to ensure that we shall not have to rest upon a, simple decision of one man making the law of this country. It ought to be decided in this House as conditions have been decided in earlier years. The matter was raised in Committee, and I think the Solicitor-General then said that, probably, the work would not be done by the Lord Chancellor at all, but settled by some eminent conveyancing counsel in chambers. That gives added point to any criticism we have to make, because we might be able to criticise the Lord Chancellor, but we do not know whom to criticise when the thing is actually drawn up by someone behind the Lord Chancellor. I should like the House to know that this is not simply a party Amendment, or one brought forward simply to achieve some small alteration in the Bill. It is an Amendment which deals with what is happening in this country every day of the week. The law of open contract is a very important law, and I ask, therefore, that we should have some control in this House or some control outside that given to the Lord Chancellor over the conditions that determine the meaning of an open contract."has been added in order to save the costs of printing, etc., which are incurred when contracts and conditions of sale are prepared. The new Sub-section will also enable the case of contracts by correspondence, which under the existing law are in a very unsatisfactory condition, to be dealt with to the satisfaction of both vendor and purchaser."
I beg to second the Amendment. I will not follow my Ion. Friend in his historical retrospect, but I do hope the Solicitor-General will be able to do something to meet this really important point. This House is jealous of its power in regard to legislation, and we do not want to delegate it. If there had been in this Bill a form of contract as there are other forms of contract, we should have known what we were about.
If any of the terrible disasters that the Mover and Seconder imagine are going to follow the application of this Clause were likely to follow, I should probably accept the Amendment, but, in my view, none of them will happen. Let us understand what the Clause is about. Parties who buy, sell, or lease land very often do it in a very casual way, by correspondence, and sometimes even by word of mouth. They do not put into their bargains the various conditions and stipulations which are necessary in order that they should really know what bargain it is that they are making. Not having done so, one thinks that something was meant which was not expressed, and the other thinks differently, and so they get to loggerheads. That is how a great proportion, a great majority, of disputes arise about dealings in land. I am sure that solicitors in the House will bear me out when I say that that is the most fruitful cause of the trouble which leads to expenditure upon those undeserving persons, the lawyers.In order to try and remedy that state of things, this Clause has been drafted. Business men in the House will know that most business men in the various markets in the country make their contracts on recognised standard forms, issued by the association of which they are members—corn, wool, or whatever the trade may be. There are different forms; but when they make a bargain they know the details of the bargain, and all the various conditions, and so on, because they do it by reference to the standard form of their trade. That is the principle underlying this Clause. Somebody has to draw up the form. The Lord Chancellor is merely put in, so to speak, as the association who has to give the usual form to be incorporated in the contract which has been made, say, by correspondence. The Clause provides that the forms so drawn up apply to sales that in everyday life are ordinarily meant. These forms shall from time to time be drawn by the Lord Chancellor. If the form, after being published, is found from any point of view not to be quite as good a form as it might be, it can be withdrawn and an amended one can be published in its place. The Lord Chancellor is put in simply because we must have some Department responsible, somebody who can be hauled over the coals for not publishing the right form What will in effect be done—and I say this deliberately so that the House can have a record—will be that the Lord Chancellor will not draw all these forms himself. He will employ a competent draughtsman to draw them for him, and those forms, when provided by conveyancing counsel, or whoever it is that is employed to do the work, will, of course, be submitted to the persons primarily concerned in the adjusting of contracts. Forms will be submitted in due course before publication to the Law Society for their consideration. The forms are the usual forms, adapted for the purpose, just as the Law Societies to-day have drawn conditions of sale which are incorporated by reference in contracts made by correspondence. That is the whole object of this Clause. It is to enable parties making open contracts by correspondence to make a contract which is clear in its terms. The Lord Chancellor is not going to make the laws by himself in drafting these forms, for the Clause provides that these forms shall not be employed in a contract except in so far as the provisions in the correspondence differ from the forms. If there is anything in the correspondence which is not consistent with the incorporated form, then the written word, according to the ordinary principles of the law, will prevail over the printed word, and the printed word will be modified so far. My submission to the House is that this is not only a good but almost a necessary provision in order to get over what to-day is a fruitful source of unnecessary litigation.
One can agree with practically every word the Solicitor-General has said in respect to this Amendment, but I think the hon. and learned Gentleman has overlooked what is the real effect of the Amendment itself. The real effect, read in conjunction with the next Amendment standing in the same names is this, that by the Clause as it stands it is sought to make these common forms that are to be prepared applicable in all cases whether there is any reference to them or not in the correspondence, whereas the effect of the Amendment is that they are only to be deemed to be included and part of the contract if they are referred to in the correspondence, which is exactly opposite to the Clause as it stands. The difficulty at the present moment is this: a contract is made for the sale of a house for a certain sum of money it is made by a certain exchange of letters. One man says to another, "I will give you £1,000 for your house, No, so and so, in a certain street." The seller accepts the amount. I should like to know from the Solicitor-General whether it is intended in these forms to alter or vary the Statute of Frauds. For instance, in the correspondence there may be no reference to the date for completion of the purchase—a very important matter. I do not know whether the forms that the Lord Chancellor or some other learned gentleman is going to prepare are going to say that a contract that is arranged by correspondence that has not the date of completion is going to be deemed completed at the end of three months or six months. This would be a complete alteration of the Statute of Frauds as we know it to-day—a Statute distinctly made for the purpose of preventing humbug or fraud in connection with the sale of property.At the present moment there are in existence in this country, I should think, at least a dozen different complete sets of printed forms similar, I suppose, to the one suggested. There is one prepared by the Liverpool Law Society, another which operates in London. There is a different one for Birmingham, and I think various other towns have got different sets of printed conditions. I presume the real meaning of this Clause is this: that when a man sells property to another without saying anything about the different conditions which are part of the sale, that some of the Clauses which the Lord Chancellor or some other person has drawn up are to be considered as incorporated in the form as part of the contract and are to be carried out. Perhaps the Purchaser has never heard of them, and the vendor does not intend to impose them. According to the Amendment before the House, in order to bring this new printed form of contract into existence, there would have to be a word or two in the correspondence to say that the Lord Chancellor's form is to be applicable, whereas the Clause as it stands says that the Lord Chancellor's form is to be applicable unless it is expressly excluded. For my part, I have always been in favour of the simplest possible form of contract between two people dealing in property. I have had, I am sorry to say, over 50 years' practical experience of contracts with property. It has been my business all my life to act both for vendors and for purchasers, and, therefore, I know something about the subject. I think that neither the Law Society conditions in Liverpool, nor those in London, nor Birmingham, nor the Lord Chancellors' ought to be imported into any contract whatever unless the parties desire it to be so. For that reason I am in favour of the Amendment. Is it intended to save space, time, or trouble, by adopting this printed contract as a whole? It reminds me of the story of the American who had a printed prayer hung up over his bed-head, and when he went to bed simply looked at it and said, "Them's my sentiments," so, as he supposed, saving a good deal of time. It would appear to be the same here. I do not think it is right in any contract for the sale of property in the future to incorporate into that sale 20 or 30 printed rules of which neither vendor nor purchaser has ever heard, and do not intend to be made applicable to the transaction. The Amendment is a good one. This Clause Only ought to be deemed to be incorporated if in the correspondence that has taken place either party says, "Subject to the Lord Chancellor's," or any other Clause, in whatever way it may be described. The simpler a contract the better; therefore I am in favour of the Amendment.
It is with some trepidation that I follow my hon. Friend who has just spoken, because I have only had about half the number of years' experience that he claims. I should like to support this Clause as it is drawn. The various conditions which have been drawn up and prepared by various law societies all over the country are rather dangerous documents. What particular document we are going to have I cannot say, but this Clause as drawn, and as it stands now, I am inclined to think, will leave open the possibility of using such a form as I think would be very useful. It need only be a very short form setting forth that where A agrees to buy and B agrees to sell so-and-so for so much, that then a number of other questions will be settled for the parties. Other conditions can be adopted by those who wish to carry out special provisions which may be embodied in the contract. In a simple case where someone says, "I will buy so-and-so for so much," and the other party says, "I will sell so-and-so for so much," surely certain other stipulations which are perfectly reasonable can very reasonably be embodied in a form which would be of great assistance to the ordinary individual doing business of this kind.
I hope the Solicitor-General will not accept this Amendment. I think hon. Members will agree with me when I say that one of the greatest curses that can come upon us is the adoption of any words affording a loophole for a misunderstanding in a contract. If you have a contract which may contain the provisions or exclusions embodied in this Amendment, then you do provide a loophole for a misunderstanding. If this Amendment is pressed to a Division I shall vote against it.
If the Solicitor-General will assure me that there is to be no alteration in the Statute of Frauds, it is possible that we might agree.
I do say so.
I do not think any business men entering into an arrangement with other business men would like to think that something is incorporated into an open contract of which they have no knowledge. Business men to whom reference has been made carrying out trade transactions in a large city may incorporate the conditions of the association to which they belong. That is quite a different thing because it saves them money and trouble, but what objection is taken to is two parties having thrust upon their contracts something about which they know nothing and did not intend. I know that the Solicitor-General made a reference to a responsible body who would decide upon these forms, and in that case I should have more confidence in the list drawn up. Nevertheless this is a considerable power to be given in such a case as that of a letter written by a man offering £500 for a house and the answer comes back, "I will give you £500 for the house." What is imported into that contract, and who is going to decide the conditions? Does the Lord Chancellor decide the length of the title? Supposing upon the publication of the list and the conditions which it is sought to incorporate into an open contract, the parties object to certain conditions, what remedy have they got?
I exclude those conditions, and I say when I make my bargain that I sell you this property on such and such terms excluding those conditions.
I am speaking of what may happen between two ordinary purchasers and sellers who have no knowledge of the Lord Chancellor's list. I will take the usual form. If a working man is selling his house, a letter may pass between the parties. It may be a simple document stating, "I intend to sell this house to you at a certain price." I am sure it will come as a surprise to them to know that the Lord Chancellor's conditions have been incorporated into such a contract. Supposing the parties consider that the conditions are wrong and should be amended or amplified. After all the Lord Chancellor has no particular knowledge of such conditions. If we complain of the list and the conditions, what remedy have we got? How can we amplify such contracts? How can we have the list altered if we think it is not bearing fairly and properly upon the transactions which have arisen? I hope we shall have some assurance on this point, and then perhaps it will not be necessary to take a division upon this Amendment. It has been suggested that there will be a consultation with the Law Society. I shall be quite satisfied if the consultation takes place with those who have daily knowledge of these transactions.
I did not say that the Law Society would be consulted on the contents of the forms. I meant that those members would be consulted who were best qualified to consider the drafting of such forms. The point of difference between the Clause and the Amendment is that under the Clause, as it is drafted, ignorant laymen may think they are making a good contract when they are not doing anything of the kind, and under the Clause they will be protected against the danger into which they may unwittingly fall. If they do not know of the existence of the Lord Chancellor s form, if they make a bad contract they will be protected. If we have the contract made in the form contained in the Clause, then the proper form will be automatically incorporated in the contract.
After the explanation which has been given by the Solicitor-General, I ask leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 114—(Vesting Orders In Relation To Lunatics And Defectives Who Are Trustees Or Mortgagees)
I beg to move to leave out the Clause.This is a purely formal Amendment, because the Clause is already in the Lunacy Bill.
Amendment agreed to.
Clause 120—(Various Powers Of Trustees)
(7) Trustees may, in their absolute discretion, from time to time cause the accounts of the trust property to be audited by an independent accountant, and shall for that purpose produce such vouchers, and give such information to him as he shall require; and the costs of such audit (including the fee of the auditor) shall be paid out of the capital or income of the trust property, or partly in one way and partly in the other, as the trustees shall in their absolute discretion think fit, but in default of any direction (in any special case) by the trustees to the contrary costs attributable to capital shall be borne by capital and those attributable to income by income.
I beg to move, in Sub-section (7), after the word "time" ["to time cause"], to insert the words
This Amendment is merely intended to prevent trustees acting unreasonably."(but not more than once in every three years unless the nature of the trust, or any special dealings with the trust property, make it reasonable)."
I beg to second the Amendment.
I accept this Amendment.
Amendment agreed to.
Clause 121—(Power Of Advancement)
I beg to move to leave out the Clause.As it is drawn, it is a very drastic proposal. Supposing I leave a sum of money to someone upon attaining a certain age and conditional and contingent upon attaining that age; or supposing I leave a sum of money to a woman conditional upon her marriage. Although this money is left conditionally, by this Clause the trustee may divest the person who would ultimately benefit of half the property. Let us consider how it works out. Supposing I leave £1,000 to A.B. upon his attaining the age of 25 and I further provide that if he does not attain the age of 25 it goes to C.D. Notwithstanding the fact that I have definitely laid down that he should only receive this money on attaining the ago of 25, this Clause says that the trustee may give A.B. half the legacy before he attains that age. Therefore, it gives the trustee the right to take away from C.D. half of the money and hand it to A.B. I can quite understand a Clause of this kind being put into a settlement. A man may leave money to his children on attaining the age of 25, and it may be necessary to give power to his trustees to use part of the money in order to advance their prospects. It is, however, quite improper that such a power should be given in a Clause of this kind in an Act of Parliament. Supposing a man deliberately omits putting a Clause into the settlement which will permit advancement; yet the Bill permits such advancement unless it is expressly in terms excluded. I venture to think it would be much better to leave the law as it stands at present so that when a testator says that A.B. is only to receive £1,000 when he attains the age of 21 or marries, that shall operate, while if he desires to give power of advancement he is perfectly free to do that, and in that case his wish will he carried out. On the other hand, if this Clause is retained, his wish may be rendered entirely nugatory.
I beg to second the Amendment.
This is a very valuable Clause, and it is one that experience has proved to be most necessary. I cannot help feeling a little disinclined to again quote the conveyancer of Lincoln's Inn, whose experience in this matter is so invaluable, because it necessarily involves the inference that the hon. and learned Member who has moved the Amendment is not familiar with the existing practice. We in this House all appreciate the immense amount of time and trouble the hon. Member has given to his public duties, but the truth of the matter is that those public duties have taken him away from the daily practice of conveyancing for a great number of years, and I hope he will not think I am reflecting on his once great knowledge of conveyancing when I say it is there no longer. The present-day practice shows what present-day experience wants. May I just read a few sentences from a couple of letters in reference to this Clause Mr. Underhill, a learned conveyancer, writes:
That has become the ordinary practice. As regards the comment of the Mover of the Amendment that it is inconvenient that capital which is only left contingently should be used for the advancement of persons contingently interested, I venture to think the hon. and learned Member has omitted to take into consideration a fact which we all know to be the case. The property is left contingently on attaining the age of 21 years or marrying because the settlor wants to avoid the risk of the death duties being paid in the event of the person dying unmarried before the age of 21. It is really consistent with the intentions of the settlor that the advance should be made. The proof of that is that in settlements and wills now made the power of advancement is habitually given. Then Mr. Edward Beaumont, who was President of the Institute of Conveyancers when this particular Bill was considered, has written as follows in regard to this Clause:"Clause 121 ought, I think, to stand. No one with experience would deny that for many years before 1881 it was always usual in well-drafted settlements and wills to provide (1) for the maintenance of infants even where only contingently entitled on attaining 21, and (2) for the) advancement to infants out of vested or contingent capital. In 1881 Parliament, in the 42nd and 43rd Sections of the Conveyancing Act, provided for the maintenance of infants but left the question of advancement to he dealt with by the settlors and testators expressly. In my opinion the time has now come for giving statutory force to a provision which we find in every well-drafted settlement or will."
These are the facts of the case. The Clause can be negatived or excluded by any settlor if he chooses, and it does not apply to any trust constituted or created before the commencement of the Act. Under these circumstances, I ask the House to reject the Amendment."My answer to the proposal to leave it out is that some such Clause is inserted in almost every settlement or will. I should think it is not omitted in more than one case in twenty. If I were instructed to put all 'usual and proper Clauses,' I should as a matter of course, insert this Clause, and so I take it would all conveyancers. The causes for which advancements may be required are endless. It may be a matter of the utmost importance to be able to advance money for some urgent need, and if you have no ad- vancement Clause it would be necessary to go to the Court and have some scheme for charging the child's contingent interest and insuring the child's life, and to waste money simply for want of a 'common form' provision. Advancement is generally wanted when a child is starting in life, and that is not much under 21, and it would be a very rare thing for the child who is advanced not to become ultimately entitled to the settled fund. Even in the rare case of his dying, before becoming absolutely entitled to the whole fund, the money advanced will have been well spent for the benefit of one of the objects of the settlement."
The Solicitor-General may have done me unwittingly a benefit by suggesting I am or was an eminent conveyancer. I think he is mistaken. But this is not merely a question of conveyancing. It is a question of common sense. If a man leaves money contingently at the age of 21, and wishes to empower the trustee to advance half the money before that age is attained, he can provide that that be done. But if he does not put such a provision into the settlement, why should the money which belongs to one person be given to another person? It really passes my understanding that such a thing should be proposed. If a man says that A.B. shall receive a certain sum only when he attains the age of 21, and that if he does riot attain that age, C.D. shall get it, why should an Act of Parliament override such a provision?
The object of this Bill very largely is to save costs. This Clause is a Clause which it to be found in every well drawn will and settlement, and if it is not there, the beneficiaries under that will or settlement are at a very great disadvantage. If this Clause is retained, it will lessen costs and it will also supply a defect from which many beneficiaries may suffer. If a testator leaves a sum of money to a child, who is to receive it on attaining the age of 21 or 25, that child is primarily intended to be benefited, although it is not to have complete control of the money until the age definitely fixed is reached. Power is generally given to the trustee to apply a part of the money not exceeding one-half for the benefit of the child, and that is all that this Clause does.
Clause 138—(Extinguishment Of Manorial Incidents)
(1) The manorial incidents affecting enfranchised land saved by Part V of this Act, and all manorial incidents of a like nature affecting any other land shall by virtue of this Act be extinguished in respect of the land thereby affected, but subject to the payment of such compensation (if any) in respect of any manorial incidents referred to in Part H of the Thirteenth Schedule to this Act, whether the incidents are saved by Part V of this Act or not, as is payable under the provisions of this Part of this Act, upon the happening of any of the following events:
( b) where a notice requiring the ascertainment of such compensation is served by the lord on the tenant or by the tenant on the lord within ten years after the commencement of this Act, then upon service of the notice.
I beg to move, at the end of Sub-section (1, b), to insert the words
This is a part of the Bill dealing with compensation for the extinguishment of manorial incidents. The Amendment I move is only likely to be wanted on very rare occasions. A good many copyholders think some lords of the manor might be a little arbitrary or capricious and this Clause is put in for their protection in such cases. This is to all intents and purposes a formal Amendment."but the lord shall not be entitled to serve such notice till after the expiration of five years from such commencement."
Amendment agreed to.
Clause 140—(Provisions Where Manorial Incidents Are Extinguished On Expiration Of Ten Years After The Commencement Of Act>)
Where in respect of any enfranchised land or in respect of any other land liable to any heriot, quit rent, chief rent, free rent, or other manorial incident, the manorial incidents affecting the land are by virtue of this Act extinguished upon the expiration of ten years from the commencement of this Act by reason of no compensation agreement having been made or notice given to ascertain the compensation before the expiration of that period, the following provisions shall have effect:
( d) The costs and expenses of determining the compensation in any case to which this Section applies shall, notwithstanding anything contained in this Part of this Act, and in default of agreement, be borne by the lord and the tenant or either of them or by both in such proportions as the Minister may determine to be just according, as nearly as may be, to the advantages derived from the extinguishment by the lord and tenant respectively or by either of them.
Amendment made: In paragraph ( d) leave out the words
"lord and the tenant or either of them or by both in such proportions as the Minister may determine to be just according, as nearly as may be, to the advantages derived from the extinguishment by the lord and tenant respectively or by either of them."
and insert instead thereof the words
"tenant, unless the Minister considers that the conduct of the lord has been unreasonable or that special considerations apply, in either of which cases the Minister may determine by whom and in what proportions, if any, the costs and expenses are to be borne, and in so determining he shall have regard to what would be just, accordingly as nearly as may be to the advantages derived from the extinguishment by the lord and tenant, respectively, or by either of them."—[Lieut.-Colonel Royds.]
Clause 150—(Succession To Real And Personal Estate On Intestacy)
(1) The residuary estate of every person who dies intestate after the commencement of this Act shall be distributed in the manner or be held on the trusts mentioned in this Section, namely:—
( b) If the intestate leaves issue, upon trust, as to one moiety or the property appropriated in respect of the same, for the surviving husband or wife during his or her life, and, subject to such life interest, on the statutory trusts for the issue of the intestate; and as to the other moiety or the property appropriated in respect of the same, on the statutory trusts for the issue of the intestate; but if those trusts fail or determine in the lifetime of a surviving husband or wife of the intestate, then upon trust for the surviving husband or wife during the residue of his or her life.
(vi) Sixthly, for the great grandparents of the intestate, and if more than one survive the intestate, in equal shares; but if no member of this class takes an absolute interest; then
(vii) Subject to the interests of a surviving husband or wife of the intestate, and in default of any other person taking an absolute interest under the foregoing provisions, the residuary estate of the intestate shall belong to the Crown or to the Duchy of Lancaster or to the Duke of Cornwall.
(6) If there is only one personal representative (not being a trust corporation) then, during any minority or the subsistence of a life interest, any person interested or the guardian, committee or receiver of any such person may apply to the Court under the Trustee Act, 1893 (as amended by any subsequent enactment) for the appointment of new trustees either in addition to or in place of the personal representative.
I beg to move, in Subsection (1, b), to leave out the word "moiety" ["upon trust as to one moiety"], and to insert instead thereof the word "half."I may explain that the Member for Bodmin (Mr. Foot) suggested in Committee that the word "half" was known and understood by more people than the word "moiety" and he asked me to substitute "half" for "moiety." I am now proposing to do so.
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I hope that the Solicitor-General, inasmuch as he has frequently spoken of the necessity of cheapening and simplifying and improving the law, will recognise that the lawyer members of the Committee on several occasions have brought forward suggestions with that intent. It was, he will remember, on the suggestion of the. Member for Central Portsmouth (Sir T. Brarnsdon) that the provision with regard to attaching the seal was taken out. He will also remember that on one occasion I asked that the Stamp Duty on a reconveyance might be removed, so that the procedure might be cheapened and made easier, and in view of the fact that the word "half" is well known to all, whereas the word "moiety" is known only to a few, it may perhaps be counted for righteousness on the part of the solicitors that we are anxious to have the law thus simplified.
May I say that I am very greatly indebted to the legal members of the Committee upstairs for their assistance then and on the Report stage as well.
Amendment agreed to.
Further Amendment made: In Subsection (1, i, b) leave out the word "moiety" ["and as to the other moiety"], and insert instead thereof the word "half".—[ Mr. Foot.]
I beg to move, in Sub-section (1, vi), to leave out the words
and to insert instead thereof the words"Sixthly, for the great-grandparents of the intestate, and if more than one survive the intestate, in equal shares; but if no member of this class takes an absolute interest; then—"
This Bill lays down an entirely new scheme for the distribution of the estate of an intestate, and makes it applicable —a very important alteration—not only to personal property but to real property. We all know that under the present law, if a man owning real property dies intestate, the whole of the property goes to his eldest son or his heir-at-law. Now the property, whether real or personal, is made, on intestacy, to go in the same way in each case. I do not in the least quarrel with the method of disposition up to a certain point. It is perfectly reasonable, and I do not need to refer to its details, but the object of this Amendment is to prevent the necessity, if there are no children, uncles, aunts first cousins or parents, of looking for second cousins. As the Bill stands, if there is no person of the degree of first cousin or nearer, it says one must go to the great grandfathers, of whom there are eight, and trace down all their descendants to the second cousins, to find out who is entitled. One objection to that is that it would probably exhaust the estate. I have known cases myself where a man has had, say, £1,000 to leave, and has left it to his second cousins. The Court has ordered inquiries as to who they were, and, after a great deal of trouble, it has been found that there were 200 or 300 of them. That did not exhaust the stock, but it exhausted the money, and they could go no further. Inasmuch as, in cases of intestacy, the sum involved is usually small, to look for second cousins would, in nine cases out of 10, exhaust the whole estate, and no one who was intended to benefit would get anything out of it at all. That, however, is not the only reason. I think that when you have looked into the relatives of the intestate as far as first cousins, that is to say, when you have inquired whether there is father, mother, children, brothers, sisters, or children of uncles or aunts, and when you have found that there are no persons of that degree of relationship alive, I think one might fairly say one will not go any further in distributing the property, but leave it to the surviving husband or wife, as the case may be. Let me say, moreover, that the Treasury is very liberal in cases of intestacy. If there is no one who, according to law, is strictly entitled to receive the property, it falls, strictly speaking, to the Treasury, but if the Treasury find that there is some dependant or person connected with the intestate, they give him the money, although by law he is not strictly entitled to it. For these reasons, I think we need not go beyond first cousins, and if there are no first cousins we might give it to the husband or wife or, if there be neither, to the Treasury."Sixthly, for the surviving husband or wife of the intrastate absolutely."
I venture to think that the House ought to accept this Amendment. May I—more, perhaps, for the gratification of the hon. and learned Member who moved it—read once more from Mr. Underhill's letter? He says:
That is the kind of thing that happens, and when one bears in mind the hon. and learned Member's observation that the Treasury is very liberal and very careful in distributing any unclaimed funds to relatives or other deserving persons who are found, I think the House might well save what is really an unnecessary waste and accept the Amendment."I am wholeheartedly in favour of the Amendment. I doubt whether one in a hundred persons cares a rap about any relation who is further removed than first cousin, and if he does he has only to make a will. My experience of 50 years at the Chancery Bar is that the costs of inquiries to ascertain remote next-of-kin is out of all proportion to the estate. Some few years ago, in my own experience, a man died intestate without any next-of-kin nearer than the descendants of his paternal great-grandfather and his maternal great-grandmother. He left £10,000 more or less. Of course, the administrator had to go to the Court for nil inquiry. This lasted for years, and advertisements had to be inserted in newspapers all over the world. Hundreds of claimants turned up, and their claims had to be investigated, and in the result, after payment of the costs, each claimant got under £5."
Amendment agreed to.
Further Amendments made: In Subsection (1, vii), leave out the words, "subject to the interests of a surviving husband or wife of the intestate, and."—[ Sir J. Butcher.]
In Sub-section (1, vii), leave out the word "other" ["other person taking an absolute interest"].—[ Sir L. Scott.]
I beg to move, in Sub-section (6), after the word "corporation" ["not being a trust corporation"], to insert the words
I can deal with this Amendment very shortly, and no doubt the Solicitor-General will be glad to be released after a long Sitting. Sub-section (6) of this Clause gives power to apply to the Court for the appointment of an additional trustee if there he only one. The only exception that I would propose to that is that when the one trustee is a sole executor appointed by the testator this power shall not apply. If I make my will and appoint my son executor to hold the property during the lifetime of my wife, and afterwards to divide it amongst himself and his brothers and sisters, why should there be power to add another executor if I am satisfied with the appointment of one? If a testator appoints one, he obviously intends that that one shall have the whole responsibility. He makes the appointment, and he is the best judge of the ability of the executor to manage his affairs. If he wanted to appoint two he would do so. The fact that he has appointed one should surely be the deciding factor, and I do not think it should be open for someone else who has some sort of interest in the property to make an application to the Court, involving expense, when the testator wished for only one sole executor. The proposition seems to me to be a reasonable one. I am glad that the last Amendment was accepted. The Solicitor-General has got practically the whole of his Bill, and, with this small concession at the end, I think we can bring the four or five hours' hard discussion to a very genial close."or an executor originally appointed to be executor to a will by a testator."
I hope the Mover of this Amendment will remember that, as regards his Amendments generally, I have given him "half," and that he will, therefore, forgive me if I refuse to give him this one. The whole scheme of the Bill is that, where individuals are trustees, as distinguished from a corporation, there shall be at least two, and this Amendment is inconsistent with that principle. It is a safeguard that we want to maintain.