HC Deb 05 December 1946 vol 431 cc630-5
Mr. H. Strauss

I beg to move, in page 20, line 45, to leave out from "territories," to the end of the Subsection.

That is to say, I am moving to omit the prohibition of the exercise of any power of appointment. At this late hour I do not want to argue all the cases where this Clause will work absurdities. I think that it will be sufficient if I give one example of what is possible under the Clause as it stands, which I cannot help thinking will make the Government think that the words I am seeking to delete are far too wide. The prohibition applies to every person resident in the United Kingdom. Of course, a non-British subject can be resident in the United Kingdom. An American citizen can be resident here. The example I wish to put to the Solicitor-General, if he is to reply, is the case of an American citizen resident here, who has a power of appointment under an American settlement dealing with property in the United States, and the power of appointment can be exercised as between two American citizens both resident in the United States. Why on earth do the Government wish to prohibit him from exercising his power of appointment, and what does the Solicitor-General think will be the effect on the American public when they understand that our Government are introducing a provision making such an action illegal. As I wish to give the Government every opportunity to reply, I will content myself with that example, though many others could be given.

The Solicitor-General

The first comment I have to make is that the hon. and learned Gentleman has only complained about the exercise of a power of appoint- ment. If, and in so far as his argument is valid, it would also apply to the creation of any settlement other than a settlement under a will. If, in these circumstances, a power of appointment is objectionable, so equally would be the creation of a settlement by an American citizen resident in the United Kingdom. The two stand on the same footing.

Mr. H. Strauss

The exercise of a power of appointment is not a matter of which I am complaining. It is the Government who are saying that they intend to make it a criminal offence under this Clause.

The Solicitor-General

I do not want to split hairs. The Amendment seeks to deal with that part of the Clause which relates to the power of appointment. It was in that sense I used the expression which I did. I said that the Amendment deals with one part of the Clause, and that if the argument which supports it is valid, it should equally result in the deletion of the whole Clause. What is struck at is the settlement of property in favour of persons resident outside the United Kingdom by persons resident here. The object of that is easy to discern. Otherwise, one could, by creating a settlement, or by exercising powers of appointment, transfer abroad large capital assets from this country. As hon. Members will have noticed, here again the Treasury, in an appropriate case, have power to permit what is a reasonable and proper settlement. That power, as in all other cases in the provisions of this Bill, will be exercised reasonably. A case where obviously an American citizen should be entitled to exercise a power of appointment in respect of property not in this country, would be a case which the Treasury would consider very carefully.

Mr. H. Strauss

I feel sure that the Solicitor-General can scarcely have overlooked this. Without committing ourselves to approve even that part of the Clause of which we are not suggesting the deletion at this stage, I would point out that what that part prohibits is the making of a settlement after the coming into force of this Statute, but in the words that I am proposing to delete the Government are prohibiting the exercise of a power of appointment under a settlement that may be already in existence. There is all the difference in the world between the two cases. This Clause purports to legislate about American citizens and how they are to exercise powers of appointment over trusts in their own country, and to say that the Treasury would not refuse to allow them to do what obviously they ought to be allowed to do seems to be a most extraordinary defence of the Government's action.

Mr. Stanley

I am afraid I am very dense upon this particular Clause, but I really cannot see whether either the power of settlement or the power of appointment makes any difference to the foreign exchange. Assuming that I settled part of my property on an American, the mere fact of settling it would not transfer the money across the Atlantic. There are many other provisions in this Bill already which would prevent that money being transferred to America. What is the actual result on the exchange position between ourselves and America of my settling a part of my estate on an American, even although, through other parts of the Bill it is quite impossible for me to transfer it?

The Solicitor-General

The answer is that property under this Clause is not confined to currency or money. In the case mentioned by the hon. and learned Member for the Combined English Universities (Mr. H. Strauss) in fact permission would always be given. With regard to the other point, that is dealt with under Clauses 1 and 2. whereas this deals with property.

Mr. Hogg

I am not sure that this point has been cleared up satisfactorily and it occurs to me that possibly the learned Solicitor-General might undertake to look at the matter again, as he has done in respect of other matters. In his original answer to my hon. and learned Friend the Member for the Combined English Universities (Mr. H. Strauss) I understood him to say that what he was seeking to get at was the transfer of property out of this country elsewhere. He has not dealt with the situation either in relation to settlements or to powers of appointment of property which is already elsewhere, but over which, for some reason or another, a person resident in this country may have certain powers of disposition. It is not, in my submission—and I think probably the learned Solicitor-General, if he is in an agreeable mood, will agree— it is not enough to say that the Treasury, if they are asked will in fact permit American citizens to dispose of property in the United States over which they may have power of disposal. It really is not enough to say that.

We ought not, by legislation, to deprive them of such a right unless some very evident principle of public policy requires us so to do, and I must say the learned Solicitor-General has not persuaded me that any such evident principle of public policy so requires us. On the contrary, what he has persuaded me on is that, seeking to prevent a fairly definite and restricted evil, he has cast his net so wide that he necessarily restricts, apart from the permissive Clause, a number of things which are by no means evils but are self-evident rights of foreigners and others whom we permit to be in our midst. Obviously, all I ask is that he should look at this matter again in the light of the criticism which has been made and, asking that, I hope that I may receive a favourable reply.

Sir Hugh Lucas-Tooth (Hendon, South)

Although I was not present when the hon. and learned Solicitor-General first spoke, there is a point which I understand has not been raised and on which I should like to have a reply. As the Committee is aware, there are two kinds of powers of appointment. There are a general power of appointment and a special power of appointment. A general power of appointment, of course, enables the person who is able to exercise that power to deal with the property pretty well as though it were his own. But a special power of appointment is of quite a different characer. When a person has a special power of appointment, he can only exercise it in favour of the objects named in the settlement. Usually, it will be exercised in the favour of children or of remoter issue of some person named, but it may be exercised in favour of a number of classes of people. In the case of a general power it may well be that the arguments which the hon. and learned Solicitor-General has put forward are valid because there we are dealing with the property of the person exercising the power.

But where there is a special power, very different considerations arise. It may be that the person concerned can only exercise it in favour of two or three people and, under this Clause as it now stands, it may well be that the only person in whose favour he does not wish to exercise it is a person resident in this country. Therefore, I submit that if he is properly to exercise a special power, and such power is, of course, of a fiduciary character, he must not be cramped by anything in this Clause. I do not know whether the Government have given consideration to this point, but I think we should ask them what their intention is, whether they intend to distinguish between these two classes of power, and whether they propose to deal specially with the special powers so as to enable all those who can exercise them to do so in favour of any particular person.

The Solicitor-General

The Government have certainly considered the distinction of a power of appointment between a limited class and a general power of appointment. Whether they would exercise their permission depends upon the circumstances. In the case mentioned by the hon. Member for the Combined English Universities (Mr. H. Strauss) the permission would certainly be granted. With regard to what was said by the hon. Member for Oxford (Mr. Hogg), in reference to the American, in respect of whom power is taken, I would point out that power is only taken in respect of an American, or, indeed, of any other foreigner, who is resident in this country. The policy is based upon the view that a person who is resident in this country and accepts hospitality from this country accepts, by so doing, correlative responsibilities and obligations. It is for that reason that it should be assumed, in theory, that per-mission, may not be given. In practice, permission will be given in the case of an American resident here who seeks to dispose, whether by power of appointment or settlement, or in any other way, of property situated in the United States.

Mr. J. Foster

Would the hon. and learned Solicitor-General say whether a release of the power is included in the exercise of the power? I should like an answer from the hon. and learned Gentleman.

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

The Committee divided: Ayes, 261; Noes, 84.

Division No. 28.] AYES. 9.58 p.m.
Adams, Richard (Balham) Greenwood, A. W. J. (Heywood) Nally, W.
Adams, W. T. (Hammersmith, South) Grey, C. F. Nichol, Mrs. M. E. (Bradford, N.)
Allen, Scholefield (Crewe) Grierson, E. Nicholls, H. R. (Stratford)
Attewell, H. C. Griffiths, Rt. Hon. J. (Llanelly) Noel-Baker, Capt. F. E. (Brentford)
Austin, H. L. Griffiths, W. D. (Moss Side) Noel-Buxton, Lady
Awbery, S. S. Gunter, R. J. O'Brien, T.
Ayles, W. H. Guy, W. H. Oldfield, W. H
Ayrton Gould, Mrs. B Haire, John E. (Wycombe) Oliver, G. H.
Bacon, Miss A. Hall, W. G Paling, Rt. Hon. Wilfred (Wentworth)
Baird, J. Hamilton, Lieut.-Col. R Parkin, B. T.
Barton, C. Hannan, W. (Maryhill) Paton, Mrs. F. (Rushcliffe)
Bechervaise, A E. Hardman, D. R. Paton, J. (Norwich)
Benson, G. Hardy, E. A. Pearson, A.
Berry, H. Harrison, J. Peart, Capt T F
Bing, G. H. C. Hastings, Dr. Somerville Perrins, W
Blackburn, A. R. Haworth, J. Piratin, P.
Blenkinsop, A. Henderson, A. (Kingswinford) Poole, Major Cecil (Lichfield)
Blyton, W. R. Henderson, Joseph (Ardwick) Porter, G. (Leeds)
Boardman, H. Herbison, Miss M. Pritt, D. N.
Bowden, Flg.-Offr. H. W. Hewitson, Capt. M. Proctor, W. T.
Bowles, F. G. (Nuneaton) Hobson, G. R. Pursey, Cmdr. H
Braddock, Mrs. E. M. (L'pl, Exch'ge) Holman, P. Randall, H. E.
Braddock, T. (Mitcham) Holmes, H. E. (Hemsworth) Ranger, J.
Bramall, Major E. A. Horabin, T. L. Rankin, J.
Brook, D. (Halifax) House, G. Rees-Williams, D. R.
Brooks, T. J. (Rothwell) Hoy, J. Reid, T. (Swindon)
Brown, T. J. (Ince) Hudson, J. H. (Ealing, W.) Rhodes, H.
Bruce Maj. D. W. T. Hughes, Hector (Aberdeen, N.) Ridealgh, Mrs. M.
Burden, T. W. Hughes, H. D. (W'lverh'pton, W.) Robens, A.
Burke, W. A. Hynd, H. (Hackney, C.) Roberts, Emrys (Merioneth)
Butler, H. W (Hackney, S.) Irving, W. J. Roberts, Goronwy (Caernarvonshire)
Callaghan, James Isaacs, Rt. Hon G. A. Rogers, G. H. R.
Castle, Mrs. B. A. Jay, D. P. T. Royle, C.
Champion, A. J. Jeger, G. (Winchester) Sargood, R.
Chater, D. Jeger, Dr. S. W. (St. Pancras, S.E.) Scollan, T.
Chetwynd G. R. Jones, Rt. Hon. A. C. (Shipley) Scott-Elliot, W.
Clitherow, Dr. R. Jones, D. T. (Hartlepools) Segal, Dr. S.
Cocks, F. S. Jones, Elwyn (Plaistow) Shackleton, Wing-Cdr. E. A. A.
Coldrick, W. Jones, J. H. (Bolton) Sharp, Granville
Collick, P. Jones, P. Asterley (Hitchin) Shawcross, C. N. (Widnes)
Collindridge, F. Keenan, W. Silverman, S. S (Netson)
Collins, V. J. Kenyon, C. Simmons, C. J.
Colman, Miss G. M. Key, C. W. Skeffington-Lodge, T. C.
Comyns, Dr. L. Kinghorn, Sqn.-Ldr. E Smith, Ellis (Stoke)
Corbet, Mrs. F. K. (Camb'well, N.W) Kinley, J. Smith, S. H. (Hull, S.W.)
Corlett, Dr. J. Kirby, B. V. Snow, Capt J. W.
Crawley, A. Lawson, Rt. Hon. J. J Sorensen, R. W.
Grossman, R. H. S. Lee, F. (Hulme) Soskice, Maj. Sir F
Daggar, G. Leonard, W. Sparks, J. A.
Daines, P. Leslie, J. R. Stamford, W
Dalton, Rt. Hon. H. Levy, B. W Steele, T.
Davies, Edward (Burslem) Lewis, A. W J. (Upton) Stephen, C.
Davies, Ernest (Enfield) Lewis, T. (Southampton) Stross, Dr. B.
Davies, Hadyn (St. Pancras, S.W.) Lindgren, G. S. Swingler, S.
Davies, Harold (Leek) Lindsay, K. M. (Comb'd Eng. Univ.) Symonds A. L.
Davies, S. O. (Merthyr) Lipton, Lt.-Col. M Taylor, H. B. (Mansfield)
Deer, G. Longden, F. Taylor, R. J. (Morpeth)
Delargy, Captain H. J Lyne, A. W. Taylor, Dr. S. (Barnet)
Diamond, J. McAdam, W. Thomas, I. O (Wrekin)
Dodds, N. N McAllister, G. Thomas, John R. (Dover)
Donovan, T. McEntee, V. La T Thomson, Rt. Hn. G. R. (Ed'b'gh, E.)
Driberg, T. E. N. McGhee, H. G. Thorneycroft, Harry (Clayton)
Dumpleton, C. W. Mack, J. D. Thurtle, E.
Edelman, M. McKay, J. (Wallsend) Tiffany, S
Edwards, A. (Middlesbrough, E.) Mackay, R. W. G. (Hull, N.W.) Tolley, L.
Edwards, John (Blackburn) McLeavy, F. Tomlinson, Rt. Hon. G.
Edwards, W. J. (Whitechapel) MacMillan, M. K. (Western Isles) Turner-Samuels, M.
Evans, S. N. (Wednesbury) Macpherson, T. (Romford) Ungoed-Thomas, L.
Ewart, R Mallalieu, J. P. W. Usborne, Henry
Fairhurst, F. Mann, Mrs. J. Vernon, Maj. W. F
Farthing, W. J. Manning, C. (Camberwell, N.) Viant, S. P
Fletcher, E. G. M. (Islington, E.) Manning, Mrs. L. (Epping) Wadsworth, G.
Follick, M. Mathers, G. Walkden, E.
Foot, M. M. Medland, H. M Walker, G. H.
Fraser, T. (Hamilton) Mellish, R. J Wallace, G. D. (Chislehurst)
Ganley, Mrs. C. S. Messer, F. Wallace, H. W. (Walthamstow, E.)
George, Lady M Lloyd (Anglesey) Middleton, Mrs. L. Warbey, W. N.
Gibbins, J. Mikardo, Ian Weitzman, D.
Gibson, C. W. Mitchison Maj. G. R Wells, W. T. (Walsall)
Gilzean, A. Morgan, Dr. H. B. Westwood, Rt. Hon. J.
Glanville, J. E. (Consett) Morley, R. White, H. (Derbyshire, N.E.)
Goodrich H E. Morris, P. (Swansea, W.) Whiteley, Rt Hon. W.
Gordon-Walker P. C Murray, J. D. Wigg, Col. G E.
Wilkins, W. A. Williams, W. R. (Heston) Young, Sir R. (Newton)
Willey, F. T. (Sunderland) Willis, E. Zilliacus, K.
Willey, O. G. (Cleveland) Woods, G. S.
Williams, D. J. (Neath) Wyatt, W. TELLERS FOR THE AYES:
Williams, J. L. (Kelvingrove) Yates, V. F. Mr. Michael Stewart and
Mr. Popplewell.
Agnew, Cmdr. P. G. Grant, Lady Mellor, Sir J.
Aitken, Hon. Max Gridley, Sir A. Morrison, Maj. J. G. (Salisbury)
Assheton, Rt. Hon. R. Grimston, R. V. Neven-Spence, Sir B.
Astor, Hon. M. Hannon, Sir P. (Moseley) Noble, Comdr. A. H. P.
Baldwin, A. E. Hare, Hon. J. H. (Woodbridge) Ponsonby, Col. C. E.
Beamish, Maj. T. V. H. Hinchingbrooke, Viscount Prior-Palmer, Brig. O.
Bennett, Sir P. Hogg, Hon. Q. Rayner, Brig. R.
Birch, Nigel Hollis, M. C. Ross, Sir R.
Bossom, A. C. Hope, Lord J. Shepherd, W. S. (Bucklow)
Bower, N. Howard, Hon. A. Smith, E. P. (Ashford)
Braithwaite, Lt.-Comdr. J. G. Hudson, Rt. Hon. R. S. (Southport) Smithers, Sir W.
Bromley-Davenport, Lt.-Col. W. Hurd, A. Stanley, Rt. Hon. O.
Buchan-Hepburn, P. G. T. Keeling, E. H. Stoddart-Scott, Col. M.
Bullock, Capt. M. Lambert, Hon. G. Strauss, H. G. (English Universities)
Butler, Rt. Hon. R. A. (S'ffr'n W'ld'n) Lancaster, Col. C. G. Stuart, Rt. Hon. J. (Moray)
Carson, E. Legge-Bourke, Maj. E. A. H. Taylor, C. S. (Eastbourne)
Clarke, Col. R. S. Lennox-Boyd, A. T. Turton, R. H.
Clifton-Brown, Lt.-Col. G. Lindsay, M. (Solihull) Vane, W. M. F.
Conant, Maj. R. J. E. Linstead, H. N. Walker-Smith, D.
Crosthwaite-Eyre, Col. O. E. Lloyd, Selwyn (Wirral) Ward, Hon. G. R.
Cuthbert, W. N. Lucas-Tooth, Sir H. Watt, Sir G. S. Harvie
Dodds-Parker, A. D. McCallum, Maj. D. Wheatley, Colonel M. J.
Drayson, G. B. Macdonald, Sir P. (Is. of Wight) Williams, C. (Torquay)
Drewe, C. McKie, J. H. (Galloway) Williams, Gerald (Tonbridge)
Eccles, D. M. Maclean, Brig. F. H. R. (Lancaster) Willoughby de Eresby, Lord
Erroll, F. J. Maitland, Comdr. J. W. York, C.
Foster, J. G. (Northwich) Manningham-Buller, R. E.
Fraser, Sir I. (Lonsdale) Marlowe, A. A. H. TELLERS FOR THE NOES:
Gage, C. Marples, A. E. Sir Arthur Young and
Major Ramsay.
The Solicitor-General

I beg to move, in page 21, line 8, at the end, to insert: (3) Subsections (2) and (3) of Section eighteen of this Act shall apply in relation to a settlement or the exercise of a power of appointment prohibited by this Section as they apply in relation to a transfer prohibited by this Act of a security. The Amendment seeks to introduce into this Clause a similar protection to that which was introduced into Clause 28 in the case of life assurance companies. The protection will in this case inure in favour of a settlement which will create a settlement of property.

Mr. C. Williams


It being after Ten o'Clock, and objection being taken to further Proceeding, The CHAIRMAN left the Chair to make his Report to the House.

Committee report Progress; to sit again upon Monday next.