HC Deb 20 December 1906 vol 167 cc1806-18

As amended, considered.

Drafting Amendment agreed to.

Amendments proposed to the Bill—

"In page 2, line 24, to leave out the words 'an order of the Court' and insert the words 'apply to the Court for an order."—(Sir John Walton.)

"In page 2, line 29, to leave out the words 'other than creditors."

"In page 2, line 37, to leave out the word 'shares."

"In page 2, line 27, to leave out the words 'or securities"—(MR. Micklem.)

"In page 2, line 5, at end of sub-section (2), to insert the words 'Provided that (a) the public trustee shall not exercise the right of himself transferring the stock without the leave of the Court; and (d) This sub-section shall not apply to any copyhold land forming part of the estate, but the public trustee shall, as respects such land, have the like powers as if he had been appointed by the Court under Section 33 of the Trustee Act, 1893, to convey the land, and Section 34 of that Act shall apply accordingly."—(Sir John Walton.)

Amendments agreed to.

MR. MICKLEM (Hertfordshire, Watford)

moved an Amendment to provide that the transfer of a trust to the public trustee should not occur unless the powers so to transfer were given in the instrument creating the trust. It would be necessary to omit from Clause 4 the words "(c) by the person having power to appoint new trustees." The immediate effect of this proposal would be to introduce an exceedingly important public official with an enormous business, and under it half the trusts of the kingdom might be taken out the hands of the present trustees and handed over to the custodian trustee. The object of this Bill was to introduce the public trustee for certain purposes, and the Government never contemplated the creation of an official with greater powers than any other official in the country. They would not get any beneficiaries who understood the question to accept what was now being proposed. The Bill had been rendered necessary because of various frauds perpetrated by solicitors, but in order to guard against that danger in the future it was not necesary that they should be able to take the whole of the trust property in the country and hand it over to the public trustee whether the ordinary beneficiaries desired it or not. There were many persons deeply interested in this question. A very common case was that the tenant for life came to the trustees and said, "The investments are realising only 3 per cent. and that is not enough. Will you change the investments and produce 4 per cent." Very often the trustees were satisfied with the invsetments and refused to change them. Under the clause as it stood the great majority of trusts could be taken at once out of the hands of the trustees and transferred to the public trustee at the mere caprice of some beneficiary. If that were done, the private trustee in nine cases out of ten would decline to act. He ventured to think that it was only common equity that there should be put in the Bill a provision such as he had indicated. He moved an Amendment in regard to this last night, and it was not appreciated by the House [An Hon. Member: Hear hear.] When he said "appreciated" he meant that it was not understood by the House. It was a point of the utmost importance. He begged to move.

MR. HERBERT, (Buckinghamshire, Wycombe)

in seconding the Amendment, said that one of the important questions here was who should be entitled to appoint new trustees. For example, if the creditor of a trust appointed three trustees, two of whom died after a time, the remaining trustee would have it in his power to appoint a custodian trustee, and if he died, then his executor would be entitled to appoint a new trustee. It was unlikely that this arrangement could be contemplated by the original creation of the trust. He thought that the Amendment was of importance.

Amendment proposed to the Bill—

"In page 3, line 34, to leave out the words 'having power to appoint new trustees' and insert the words 'authorised in that behalf by any instrument creating a trust."—(MR. Micklem.)

Question proposed, "That the words proposed to be left out stand part of the Bill."

The ATTORNEY-GENERAL (Sir JOHN WALTON, Leeds, S.)

said his hon. and learned friend had revived a discussion which took place last night, and it was the only discussion in the course of the evening which was followed by a division. The Committee expressed their opinion on the Amendment. He did not think his hon. and learned friend had done justice to the intelligence of the House when he suggested that the proposal was not fully appreciated by those who were present and took part in the debate. There was no intention to force the public trustee as an ordinary trustee upon his co-trustees or upon the beneficiaries. He would merely be the custodian of the property, and he would not meddle with the administration of the trust. The object in view was to ensure the safe custody of the trust fund.

MR. R. PEARCE

asked the Attorney-General whether his view was that the clause only applied when there was an actual vacancy existing at the moment.

*MR. RADFORD (Islington, E.)

add the Attorney-General had argued against the Amendment on the ground that the public trustee would only be appointed to this office of custodian if there was a vacancy. He submitted that it was clear from the words of sub-section (1), notwithstanding what the hon. and learned learned Gentleman had said, that the public trustee might be appointed custodian trustee, although the full number of trustees remained at the moment.

Amendment negatived.

Amendment proposed to the Bill—

"In page 3, line 30, to leave out sub-section (a), and insert '(a) the trust property shall be transferred to the custodian trustee as if he were sole trustee, and for that purpose vesting orders may, where nceessary, be made under The Trustee Act, 1893."—(Sir John Walton.)

Amendment agreed to.

Drafting Amendment agreed to.

Sir JOHN WALTON

said that the public trustee might be committed to investments under a very wide clause in a will, as for instance in a case in which the trustees originally appointed were entitled to invest in any limited liability company. As a safeguard he proposed to insert in Clause 4, after the word "trust," the words "or in any view that involves personal liability, or otherwise."

Amendment proposed to the Bill—

"In page 4, line 21, after the word 'trust' to insert 'or in any view that involves personal liability or otherwise."—(Sir John Walton.)

Question, "That those words be there inserted," put, and agreed to.

MR. J. M. HENDERSON (Aberdeenshire, W.)

moved to omit the words "income or" from sub-section (e), Clause 4. The object of the custodian trustee was to safeguard the securities of the trust. It was not suggested that he should keep a large system of accounts. It was very much better that all the income should be received and disposed of by the managing trustees, who in the case, for instance, of fifteen or twenty houses would have to deal with all the rates and taxes, and if the income were paid over to the custodian trustee, trouble and expense would be involved. All that was wanted was to prevent fraud, and they all recognised that income had been pretty safe.

MR. HARMOOD-BANNER

seconded the Amendment. All that was required here was to allow the income to be paid to the managing trustee. If they went further they would compel the custodian trustee not only to receive all dividends but to distribute them amongst perhaps eight or ten beneficiaries, which was more than the clause proposed.

Amendment proposed to the Bill—

"In page 4, line 25, to leave out the words 'income or."—(MR. J. M. Henderson.)

Question proposed, "That the words proposed to be left out stand part of the Bill."

Sir JOHN WALTON

said he did not think the state of things contemplated by the mover and seconder of this Amendment would arise. The object of the clause was that primarily the custodian trustee should receive the income and take care of the capital of the estate. But he might sanction an arrangement under which the income could be received by the managing trustee. In the case of a business which had to be carried on he would have nothing to do with the management, and he could sanction an arrangement with the managing trustee who under that arrangement might receive the income and make the distribution and be responsible for the management of the trust. If this Amendment were accepted it would be necessary to recast the clause, which he thought had better be left as it was

*MR. BERTEAM

said the clause now under consideration dealt with the custodian trustee as distinct from the administrative trustee, and directly they brought in the word "income" they dealt with a function of administration instead of a preservation of the trust fund. He would respectfully suggest that the difficulty of the learned Attorney-General as to the recasting of the clause would be got over if the words "income or" were omitted and lower down in the clause the words "there to" were inserted.

Amendment negatived.

MR. MICKLEM

said the object of the clause he proposed to move was to protect purchasers, mortgagees, and beneficiaries, and to put them in the same position in regard to the custodian trustee as they would be in regard to funds in Court. He contended that the clause did not sufficiently consider outsiders, persons claiming through beneficiaries. He thought it would be manifest to all who understood the subject that it was right that they should be able to put on the funds of the custodian trustee what in effect was a stop order, so that the funds should not be dealt with by the custodian trustee until notice had been given. He moved.

Amendment proposed to the Bill—

"In page 5, line 18, at the end, to insert the words 'subject to rules under this Act any person claiming as beneficiary purchaser or mortgagee to be interested in any trust property held by the public trustee either alone or jointly shall be entitled to give a notice to the public trustee to operate as regards the trust property in the same manner as a stop order operates upon funds in Court."—(Mr. Micklem.)

Question proposed, "That those words be there inserted in the Bill."

Sir JOHN WALTON

was understood to say that this Amendment was not necessary because it was obvious that what was desired could already be done under the clause.

Question put, and negatived.

Amendment proposed to the Bill—

"In page 5, line 19, after the word 'apply' to insert the words 'in like manner as to the public trustee in the provision of this sub-section shall apply."—(Mr. Micklem.)

Question proposed, "That those words be there inserted in the Bill."

Sir JOHN WALTON

agreed that some words were necessary, and said he had in fact prepared words, but he was not jealous of his own words and would accept the Amendment.

Question put, and agreed to.

*MR. CAVE

moved to leave out sub-section (5) of Clause 5. He said that this clause provided that in the case of a trust in which one of the trustees was a person engaged in any profession with power to charge for his services, any one of the beneficiaries under the trust could go to the Court and insist upon having the public trustee joined to that trust. Professional trustees were almost always solicitors, and the main effect of the clause would be that in every case where there was a solicitor trustee with power to charge, any one of the beneficiaries could insist upon having the public trustee appointed as a co-trustee with him. There were several reasons why he objected to this provision. In the first place it conveyed a slur, which ought not to be cast on a great profession because one or two members of it had betrayed their trust.

Sir JOHN WALTON (interrupting)

If the hon. Member move the omission I shall accept it.

Amendment proposed to the Bill—

"In page 6,line 21, to leave out sub-section 5."—(M Cave.)

Amendment agreed to.

Drafting Amendments agreed to.

*MR. RADFORD

thought that in many places in the country the bank manager would be the natural person to undertake the investigation and audit of trust accounts. The banks of the country were willing to undertake this business, and if the Attorney-General would accept this Amendment, it might make the working of the clause easier. He moved the insertion of the words "bank manager."

MR. MICKLEM

seconded.

Amendment proposed to the Bill—

"In page 10, line 17, after the word 'solicitor,' to insert the words' bank manager."—(MR. Radford.)

Question proposed, "That those words be there inserted in the Bill."

Sir JOHN WALTON

said he could not accept this Amendment. They were appointing an official, and he must be a man in whom they had the fullest confidence.

Amendment negatived.

MR. MICKLEM

moved an Amendment to Clause 14, leaving out all the words of sub-section (5) after the word "shall." Anyone reading the sub-section would see at once that it did not make either a reasonable or a proper provision; in fact, it did not deal with the points raised in the section. He felt sure the Attorney-General would agree that the alteration was made somewhat hastily. His contention was that the Bill as drafted in another place was right. The audit was quite independent of the public trustee and was provided for between the parties. Obviously the usual rule was that the cost of the application should be paid by the estate, but they had to remember that this was an audit which might be made every twelve months, and it would be unfair to throw upon the estate the cost of an annual audit which ought to be borne by the tenant for life or by those who insisted upon the audit.

MR. BERTRAM

formally seconded.

Amendment proposed to the Bill—

"In page 11, line 11, to leave out from the word 'shall,' to the end of line 15, and insert the words 'in default of agreement between the parties be paid by the applicant unless the Court otherwise direct."—(Mr. Micklem.)

Question proposed, "That the words proposed to be left out stand part of the Bill."

Sir JOHN WALTON

thought that, as a rule, the cost of the audit should come out of the estate, although he agreed that there might be exceptional cases. Beneficiaries might consider that in some instances the cost ought to fall upon others, but there was power under which the public trustee could deal with the matter. He could not accept the Amendment.

Amendment negatived.

*MR. RADFORD

said he understood that by the word "estate" the Attorney-General meant the capital of the estate. It had already been decided that the word "estate" included the income of the estate. He begged to move the insertion of the words "capital of the."

Amendment proposed to the Bill—

"In page 11, line 12, after the first word 'the' to insert the words 'capital of the."—(Mr. Radford.)

Question, "That those words be there inserted," put and negatived.

Amendment proposed to the Bill—

"In page 11, line 37, to leave out the word "regulating' and insert the word 'prescribing.'—(Sir John Walton.)

Amendment agreed to.

The Report stage of the Bill was concluded.

Motion made, and Question proposed, "That the Bill be now read the third time."

MR. MICKLEM

said he wanted the House to understand that the various Amendments he had moved had been proposed, not so much in his personal capacity, as because there were very large interests outside the House who, while desiring to see a public trustee appointed, were anxious that the Bill should work satisfactorily and well for all parties. He complimented the Attorney-General upon having conducted the Bill through the House with the utmost skill and discretion. There were, however, one or two points in the Bill to which attention should be drawn when it went up to the House of Lords. In the Bill as it stood now there was, for instance, an omission of the gravest moment in regard to Clause 7. The public must be satisfied that there was a Government guarantee for all acts of the public trustee. The clause ought to make provision for the guarantee of the Consolidated Fund in every case in which the public trustee acted. There was another point which was quite alien to the general scope of the Bill, and it seemed to him that it would be monstrous if at the end of the session, when the Bill had just been reprinted, they should introduce a sub-section which provided that any interest, possibly a mere executor, could divert a trust estate from the trustees and hand it over to the custodian trustee. That was inconsistent with the other provisions of the Bill, and it would upset the common practice of the country. The Attorney-General had suggested that that could only be done if a vacancy occurred, but he maintained that if the Bill passed as it now stood it would be possible for the whole of the trust funds of the country to be handed over to the custodian trustee. He hoped that the Attorney-General would take care that these two matters were remedied when the Bill went to another place.

Sir HOWARD VINCENT (Sheffield, Central)

thought that the Bill would do a great deal of good, but he would remind hon. Members that it was a purely voluntary Act. No one need employ the public trustee unless he liked. He wished to express his great acknowledgment to the Government and the hon. and learned Attorney-General for the great pains they had taken to pass the Bill, which was in no sense a Party measure.

MR. R. PEARCE

said he wanted to protest against the Third Reading of the Bill on the ground that it was inopportune to set up a public department which would cost a considerable amount of money in order to manage private property. He did not think the right remedy had been provided in the Bill. He agreed that there were frauds by trustees, but these could be punished by the criminal law. In his opinion the proper remedies for dealing with suspected trustees were contained in the Amendments which he had put on the Paper, but which been defeated.

Sir JOHN WALTON

said he wished to acknowledge the kind references made to himself. He congratulated the House upon the good humour and fair-minded spirit in which the discussion upon a highly technical subject had been conducted. The result was that the Bill had been put into a business-like shape. He ought also to say that the House was indebted to the hon. and gallant Member for Sheffield for the attention he had drawn to the subject in previous years, and he hoped that the hon. and gallant Gentleman's expectations would be realised, and the forebodings of the hon. Member for Leek falsified.

Question' put and agreed to.

Bill read the third time, and passed, with Amendments.