SECOND READING. (Hansard, 24 February 1890)

§ LORD HERSCHELL
I need detain your Lordships but a few moments in moving the Second Reading of this Bill, because it is, with one exception, in exactly the same terms as those in which it passed this House last Session after careful consideration by the Law Committee. The object of the Bill is to enable Trust Companies to be appointed Trustees of wills or settlements, and its main provisions apply to the voluntary act of those who desire to make Trust Companies their Trustees. I have never been able to see why those who desire to make such appointments should not be at perfect liberty to do so, or why the necessary machinery should not be afforded by the law as regards the appointment of those companies as Trustees of existing Trusts That is a matter which will be left, as has been proposed, carefully guarded by the action of the Courts, so that in no case will a company be appointed Trustees under an existing Trust, unless the Court should be satisfied that that is really a beneficial and desirable course. My Lords, this Bill is not intended to be in any respect antagonistic to that of which my noble and learned Friend has moved the Second Reading. It is quite consistent with the existence of a Public Trustee and the power to create that public official Trustee under a will or settlement that those who desire it should be allowed, if they please, to appoint a Trust Company to the office of Trustee. One cannot conceal from one's-self that there are, perhaps, some people who have, I may say, a suspicion of any official, and who may imagine that there would be delay or rigidity in the proceedings of the office which might be likely to exceed that which would be experienced in the case of a. Trust Company. At all events, I do not understand why there should be any objection to those who wish to appoint a responsible company of this description their Trustee if they please. Security is provided for in the Bill for the solidity of the companies who are allowed to fulfil those 997 functions, and care must be taken that they are so far under public control as to ensure that they are not companies or undertakings which are obviously unfit for such a purpose. It has been thought by some that there is less security in the case of a company of this description than in the case of an individual Trustee appointed by a testator or a person who makes a settlement. I own I am unable to take that view. When a Trustee is appointed, no doubt he is expected and supposed to be a solvent and upright man; but, unfortunately, that expectation is not always realised, and my belief is that Trusts would be safer in the hands of a carefully-selected company, and with the liability of the shareholders in that company to make good any breach of trust, than they would be in cases of appointment of private individuals. At all events, what I have to submit to your Lordships is that where persons desire, in making a settlement, or a will, to repose the Trust in a company, there should be no impediment in the way of their doing so. There is only one provision in the Bill of this year which I need specially mention, but I think I ought not to omit mentioning it. It is, of course, expedient that a Trust Company, which undertakes a variety of Trusts, under which it holds large sums in Consols, should not mix together the funds which it holds under its various Trusts. As the regulations of the Bank of England stand, I believe the Bank will not earmark more than four different sums of Consols held in the same name. If an individual holds four different funds of Consols they will earmark them and keep them distinct. Now, there is a clause in the Bill that a Trust Company shall not be limited to four such funds, and that the Bank shall be required to earmark by letter or number, or in some other way, all funds which these companies may hold for other people. It is not intended that the Bank is to be affected with notice of the Trust or with knowledge of it or to be bound by it in any way; it is simply desirable, as a matter of convenience, that those funds should be kept separate in the books of the Bank. That is the object of this provision in the Bill, which, in the same form with that exception, was 998 passed last Session after careful consideration. I hope, therefore, your Lordships will have no hesitation in giving it a Second Reading.

§ THE LORD CHANCELLOR
My Lords, there are only two observations which I think require to be made. One is with regard to the solvency of these companies which my learned and noble Friend has referred to. When he says there would be, as a guarantee of solvency, the liability of the members of the company, it must not be forgotten that these are limited companies, and, therefore, their shareholders are not like ordinary Trustees liable to the last farthing they are possessed of. The shareholders would only, of course, be liable to the extent of the shares they held. I do not put that forward as an objection in any way. I only say it by way of caution. Then there is another matter, and that is the amount of reserve fund. Considering that a large Trust Company might be carrying on an extensive business in this way, £50,000 would be a very small reserve. In such cases the amount of the estates held in Trust might be enormous; and a breach of the trust might easily destroy the entire company if that breach of trust was to any considerable extent. I cannot help thinking that when the Bill gets into Committee, some principle of this sort should be adopted: care should be taken that some sort of proportion should exist between the amount of reserve fund and the extent of the funds of which the company may have the disposal. It is, I think, very desirable that some enactment should be made that the funds committed to the care of such companies should be proportionately covered by the reserve funds.

LORD TEYNHAM
My Lords, the noble and learned Lord who has presented this Bill remarked that it was perfectly consistent with the Bill which has been brought in by the noble and learned Lord on the Woolsack: but the question which I should like to suggest, for your Lordship's consideration if you should think it of any value is whether the mode of dealing with Trust Funds under this Bill is not preferable to that provided for by the Public Trustee Bill. And I make the suggestion, my Lords, for this reason. Only fancy what might 999 be the consequence if a very large proportion of the settled property of the country were in the hands of a single Public Trustee! I believe, my Lords, that a Roman Emperor—was it Nero?—expressed the wish that all the rich men in Rome had but a single neck that he might decapitate them at one blow. It seems to me that the noble and learned Lord has been so good as to supply that single neck in the person of the Public Trustee. I do think, my Lords, that any legislation is dangerous which proceeds upon the assumption that the institutions of this country are based upon adamantine rock; I say they are not, and I venture to say that the Bill which has been presented by the noble and learned Lord on the Woolsack might very properly be styled a Bill for the purpose of off ring high premium to Socialistic agitation. Take, for instance, the 5th clause. The Bill has been most carefully drawn, and it has been carefully provided that the Public Trustee should have proper protection in the execution of the office committed to his charge; but take the 5th clause and see how his office is constituted: The Treasury, with the concurrence of the Lord Chancellor, shall appoint a fit person—it may be Mr. John Burns—to the office of Public Trustee during pleasure! It appears to me, toy Lords, that such an administration of advanced Liberalsas might possibly preside over the destinies of this country within the next 20 years might make very short work of everything under an Act of this description; and I must say, therefore, that I prefer the Bill of the noble and learned Lord in reference to Trust Companies. I would suggest to your Lordships whether that alternative is not preferable to the system of placing so much in the power of an individual Public Trustee.

§ LORD HERSCHELL
My Lords, I should under ordinary circumstances, if this were a new Bill, propose that it should go to the Law Committee. Of course, if the noble and learned Lord on the Woolsack desires, I will do so; but as the Bill passed through Committee last year, and there is only that one clause in it different, I do not suppose it is necessary.

§ THE LORD CHANCELLOR
I think so.

§ LORD HERSCHELL
Then I move that it be referred to the Law Committee.