§ Order for Second Reading read.
§ 3.29 p.m.
§ The Attorney-General (Sir Hartley Shawcross)
I beg to move, "That the Bill be now read a Second time."
The object of this Bill, which I cannot help thinking has been the subject of some misapprehension in many quarters, is to prevent the further application of a legal device, which, by a complete perversion of an old, equitable, doctrine which was intended to protect married women, now operates, almost invariably to their disadvantage, by preventing them so long—but only so long—as they remain married, from dealing with their property as their own. It is a device which, moreover, 14 years ago was considered so inimical to the public interest that Parliament then forbade recourse being made to it in any deeds, instruments or wills executed after that date.
The Government are satisfied by the experience in the 14 years since that time, by the totally changed circumstances which exist today, that even in the case of instruments executed prior to 1935 the device has become an unjust and anomalous anachronism and they propose by this Bill to put an end to it so that all married women will be on exactly the same basis, in exactly the same position as each other, as spinsters, as widows, and indeed as men, whether single or married.
I am painfully conscious of the fact that I am about to make a long and tedious speech. One of the misfortunes of being a Law Officer is that one is often involved in the explanation of rather technical matters and perhaps led into the delivery of what may seem very like a lecture. It is just as distasteful to me to have to deliver a lecture as I am sure it will be tedious to you, Sir, to have to listen to it. But this is rather a technical matter and it may in the end be for the convenience of the House if before I explain why the Government have thought it expedient at this moment to introduce this legislation and how they propose to deal with the matter, I told the House something 896 about the origin and nature of the restraint upon anticipation itself.
The history of the matter really begins in mediaeval days when under the Common Law of England all the property of the wife belonged to her husband. I do not know whether in those days, as now, the husband on marriage undertook to endow his wife with all his worldly goods. The fact was that the wife got nothing; on the contrary, all her pre-marriage property and all the property which she acquired during her marriage became solely the property of her husband and under his complete control. That was the original and fundamental rule of the Common Law.
The inconvenience and perhaps the injustice of the fact that married women were not able to deal with property which had come to them gradually became manifest, and the Chancery courts sought to mitigate the harshness of the old Common Law rule about the matter. The first inroad which they made upon the husband's position in this respect was by their invention of a device whereby property might be vested in trustees for the separate use of the wife. That prevented property which was dealt with in that way from becoming automatically the property of the husband and it left the wife free to deal with the property in any way she might desire.
In those days it appears that husbands were able to exercise a greater influence over their wife's desires than is the common experience nowadays. Whilst a married woman was by this device of the Chancery courts enabled to dispose of her property as if she had been single, there was the danger that by one means or another—"by kicks or by kisses," the phrase was—the husband might induce her to dispose of the property, to deal with it, to mortgage it or sell it and hand over the proceeds to him. The husband exercised the dominating influence at that time. Consequently, the ingenuity of the Chancery lawyers was then directed to protecting the wife against the importunities of her husband. It is said that in the 18th century Lord Thurlow was the first judge to discover the process and to get it adopted by the Chancery courts in the interests, so the story goes, of a relative of his own whom he thought to be in need of protection from her husband.
897 At all events, by the end of the 18th century it was well established in the Chancery courts that property could be settled upon a woman, whether married at the time or not, subject to a "restraint upon anticipation," as it was called. It operated in this way: when land or other personal property was settled upon a woman, it might be by her father, by some other ancestor or relative, by her prospective husband or by his parents—or it might be and not infrequently was, by the woman herself effecting a settlement of her own property. When such a settlement was made by deed or by will, a clause could be inserted in the instrument effecting the settlement by which the woman was prevented, if she married, and only so long as she remained married, from anticipating it, that is to say from disposing of the property or from charging the corpus, or the income from it in any way before its receipt by her.
The effect of that device, and that is the nature of the device which still continues, is that so long as the marriage continues the woman whose property is subject to that restraint cannot charge it, cannot dispose of it, and can only receive the income from it as and when the income falls due. But as soon as the marriage comes to an end—if she is divorced or if her husband dies—she can dispose then of the property and deal with it as an unmarried woman in any way she chooses, unless indeed she later marries again, when again this restraint suddenly springs up. That was the device and its sole purpose was, not to assure that the married woman would have an income in any circumstances, as I think the Amendment in the names of certain hon. Members suggests.
[That this House, while willing to provide for an extension of the existing relief from restraint on anticipation in cases where such relief in justified, declines to give a Second Reading to a Bill, which would restrospectively nullify in every case a provision deliberately made by a father to secure that his daughter, while married, should have an annual income of her own in all circumstances.]
If that were the purpose, in so far as it operated against creditors, as indeed this device does, it is merely a licence to cheat. The sole purpose of the device, as 898 it was invented by the Chancery courts, was to protect the wife against the importunities of her husband.
That was the device and so the law remained until 1882, when the Married Women's Property Act of that year provided that the property of a married woman should no longer go to her husband but was to form her separate estate. That did away with the need for any trust to the separate use of a married woman. Married women were, I suppose, still not fully emancipated. There was still occasionally a danger that a wife might be unduly influenced by her husband. At all events, and this is the real point of the story about this restraint, by that time the clause providing for restraint against anticipation had got into the lawyers' precedent books and continued to be used as a matter of common form whenever a deed or will was executed settling money or property upon a woman, with or without the interposition of trustees, subject to a limited discretion given to the court to lift the restraint for a particular purpose and in a particular case. I shall say something about that later. Subject to that power the nature of the restraint remained from that time until 1935 very much as it had been originally.
The point that I want to emphasise at this stage is, of course, that this restraint involved a departure from what was, and is, the fundamental rule of our law, namely, that when one gives a person property or an interest in property—a life estate or whatever it may be—one cannot put upon him or her any fetter or clog as to the way in which that property shall be used. It involved a departure from that fundamental rule which arose only, and in a sense perhaps fortuitously, if the owner of the property happened to get married. And it remained only so long as that particular marriage continued. I mention that because the device was something quite different from the practice which existed, and still exists, and will continue to exist, of settling property subject to a discretionary trust. That is something quite different and useful, and which will not be interfered with in any respect by this Bill.
In that case, where a discretionary trust arises, the father or other relative 899 who is proposing to settle money on the son or daughter says to himself as a matter of deliberate consideration "This girl"—or boy—"is not fit to have the sole control of this property." Perhaps she is improvident, perhaps she is intemperate, perhaps she is extravagant, perhaps she is weak and likely to be unduly influenced not only by her husband, but by her aunt or friends or other people. "Therefore because of the particular circumstances relating to this girl, I think it would be better in her case to vest the money or property in trustees and give them the absolute discretion as to how and when they should advance it to her. I will not put it under her sole control, because I do not think she is a person who, for one reason or another, ought to have the full control over it."
That discretionary trust method is something which will remain open to fathers or others who settle money on their sons or daughters, and they will be able to avail themselves of it in appropriate cases. But that is a totally different matter to the so-called restraint on anticipation. In the case of the restraint, however improvident a woman may be, no restriction whatever arises on the way in which she controls and uses her capital while she remains single. If she chooses—and the suggestion is not so preposterous as it sounds—if she chooses because of her financial arrangements and because a restraint exists, to live in sin instead of getting married, she can "blue" the whole lot of her money at any time she wishes. If she is divorced for misconduct she can deal with the property exactly as if no restraint existed. If her husband dies she can employ the property in any way she seeks to. But if, in the wisdom and maturity of later years she decides to marry again, and if any of the property is left, this restraint will again rest upon her.
It may be thought that it is no wonder in those circumstances that in 1934 the Law Revision Committee which was sitting at that time—a very distinguished committee, if I may say so—made this recommendation:We have come to the conclusion that how ever useful the restraint may have been over a century ago … its continuance is no longer consistent with the present position of married women, to whom alone it applies and it should be abolished by legislation as regards all settlements, 900 whether made by deed or will, which take effect after such legislation comes into force.I am going to deal with that point. Of course, that is the purpose of this Bill. In 1935 Parliament proposed legislation with that effect. But that legislation has left the curious result that the older married women whose affairs were regulated by deed or wills taking effect before 1935 are left, in the totally changed circumstances of today, without the possibility of using their property as they themselves think best in their own circumstances; while their younger and perhaps less experienced sisters are left in complete freedom to do what they like.
Circumstances have greatly changed since 1935. I know of a case where money was settled, subject to a restraint, in the early 1920's, but where the income from that money today, owing to changes in taxation, is only one-twentieth of what it was on the date that the settlor imposed the restraint on anticipation of the income. That settlement cannot be altered. The settlor is dead, and the dead hand of the donor consequently remains effective although the circumstances as to the amount of income have wholly changed; although I venture to think that nobody could doubt for a moment that if that settlor were still alive he would be the first person who would wish to see the restraint removed to enable his daughter to meet the circumstances with which she has become faced.
That is not an isolated case. There are a great many other cases where the existence of restraints of this kind are causing hardship and even bitterness against the law, bitterness against the settlor who allowed a clause like this to creep into the deed or will; sometimes even bitterness against the marriage itself, the continuance of which is the sole reason why these women are unable to deal with the money which they need. We think that the time has come to allow living people to regulate their own affairs as they think best, freed from the dead hand imposed on them, almost always as a matter of common form—copied out by the lawyers from the precedent books, without any kind of deliberation by the parent or settlor as to what the effect would be, and without any kind of appreciation or realisation of the change in circumstances which has occurred since 1935.
901 It would be disingenuous on my part if I did not tell the House what led the Government to decide that this moment was opportune for general legislation on this conduct was the introduction in another place of what is called a personal Bill dealing with the estate of Lady Mountbatten; although the case of the Mountbatten estate, as I shall seek to show in a moment or two, is very different from the typical case with which this Bill is concerned. It would not be right or proper for me to say anything at all about the merits of the Mountbatten Bill, but I want to explain to the House the dilemma which arose in consequence of its passage through another place.
Lady Mountbatten desired to remove a restraint on anticipation which arose under a deed executed some 20 or 30 years before. She said that circumstances which had occurred since, the great increase in taxation, reduced an income amounting to, I think, £80,000 net in the early 'twenties to £4,500 in 1948—an illustration of the great change in the distribution of wealth which has taken place in recent years. To that end she introduced a personal Bill into the House of Lords.
Under the rules and traditions of Parliament these personal Bills are quasi-judicial in their nature. They are introduced in the House of Lords. There they are first of all heard before a special committee. In this case, if I may say so with respect, it was a very distinguished special committee which contained, for instance, Lord Hailsham, the late Lord Uthwatt and Lord Simonds, in addition to other distinguished members of another place. Before that special committee the procedure is—and it was followed in this case—that evidence is given and counsel are heard. That was done, and the special committee reported in favour of the Bill.
Subsequently the Bill was unanimously passed by the House of Lords. Then it came to this House, and then this dilemma arose. Certain hon. Members opposite, imbued, if I may say so, with a spirit of egalitarianism which one welcomed very much coming from the source it did, put down a Motion in which they invited this House to refuse a Second Reading to a Bill 902to secure an Amendment of the law which, if justifiable, should be made by public Act for the benefit of all whom it may concern.That resulted in a position of considerable constitutional difficulty. As I said, these personal Bills are quasi-judicial in their nature. In this House we are rarely in a position to hear evidence or Counsel in regard to them, and in the past it has been the invariable rule that personal Bills sent down in that way from another place have been passed in this House. There is no doubt that as a matter of strict law we could in this House have rejected the Bill, but if we had rejected it that would have involved a departure from the established practice and convention by which we have hitherto, dealt with Bills of this kind. There has been one such case only in the past century.
In those circumstances the Government would have felt obliged, if the matter had come to this House, to advise the-House that in accordance with the normal practice that personal Bill ought to be passed. On the other hand, we felt very great sympathy with the view expressed in the Motion standing in the names of hon. Members opposite. We thought that the law ought to be altered generally, and we realised also that if the Mountbatten Bill were passed it would be difficult to refuse the passage of further personal Bills introduced with the same object by people wealthy enough to afford the expense of Parliamentary procedure, while the position of the great majority of those who are adversely affected by these restraints—people who could not by any means afford to bring in personal Bills to get the restraints removed—would be in no way mitigated.
We therefore decided to use the Parliamentary time which would otherwise have been involved by a discussion of the Mountbatten Bill for the introduction of this general Bill which is now before the House. Subsequently, as the House knows, the Mountbatten Bill was, by leave, withdrawn, although I think it right to say that there was no kind of arrangement or bargain or even negotiation about the matter. The Bill was withdrawn, but the Government have introduced this Bill because they believe that this Bill with its general proposal is right.
I should like also in that connection to make this further point. Indeed, I give 903 the point to anybody, if there be anybody, who thinks that this proposal is an appropriate occasion for the exercise of demagogy. There may be a handful of other cases comparable to the case of Lady Mountbatten where wealthy heiresses will have their position affected by the proposal in this Bill, but that is by no means the typical case of those affected under the existing law by these restraints on anticipation, nor was it the Mountbatten Bill which first directed the attention of the Government to the desirability of altering the law in this respect.
§ Mr. Turner-Samuels (Gloucester)
Would the Attorney-General guide the House on this point? The personal Bill was dropped. I should like to know whether there was any request from any body of people—any legal organisation or any body of judges—stating the need for this Bill at this moment?
§ The Attorney-General
That is just the point I was coming to. I was saying that it was not the Mountbatten Bill which directed the attention of the Government to the desirability of having this Bill. I personally first had the matter forcibly drawn to my attention by the National Union of Women Teachers, which is not, I fancy, a body specially concerned with the more wealthy section of our community. I was personally canvassed in the matter by an influential committee—I think at one time the chairman was Mrs. Cazalet Keir though she is not now—the Status of Women Committee. That is a committee which comprises a very large number of women's organisations. The fact was that for many years past a large number of important women's organisations have been pressing for an alteration in the law. It was because Parliamentary time was in any event going to be taken up by discussion of this matter in the personal case of the Mountbatten Bill that we thought it appropriate to use that time in order to bring about a general alteration in the law which we thought was a meritorious alteration. We thought that it was a merritorious alteration because in the typical case great hardship is being caused to quite small people by the existence of this restraint. As the "Law Times" put it:A restraint was practically invariably attached to life interests given to women 904 before 1935.… The device, originally doubtless intended for the wealthy women, was generally adopted by conveyancers …Not by fathers, relatives and not by settlors; but, and this is the truth, because it was a matter of form—… was generally adopted by conveyancers for those in very humble circumstances.I should like to tell the House of one or two instances known to me. This is the common typical case now affected by this restraint. It is the case of the little middle-class woman whose parents had left her their life savings or perhaps their house in a will drawn up by a solicitor in common form containing this clause, the effect of which the parents have not in the least understood, and if they have noticed it and inquired about it, in all probability they have been told, "This is the common form. It is always done."
I know of a case of a married woman who was left a sum of £5,000 by her father on his death. It brought her in, subject to taxation something of the order of £150 a year. She was married to a teacher earning £500. At the time that will came into operation those two people jointly had to pay Income Tax of £45. Today they pay jointly £121. The cost of living has risen and their position is obviously very different from what it was at the time when the father left that money in his will and made it subject to restraint on anticipation. Those people now want to realise some money.
We are seeking to alleviate the position of these ordinary little people. We are seeking to enable them to realise their own money and to spend it as they will. In that case, perhaps they want to give the children a better chance in life. If they have the money, why should not they use it to do that? Perhaps they want to provide some special nourishment or treatment for a husband who is ill. Why should not they use their own money for that purpose?
I know of a case of two young people, a young couple, where the husband is gravely ill with tuberculosis. The wife has money settled on her subject to restraint on anticipation, and that is practically all they have got. The doctors say, rightly or wrongly, that if he was sent to Switzerland he would recover. She cannot get her money because it is subject to the restraint.
§ Mr. Gage (Belfast, South)
Would not that be an appropriate case for application to a judge of the Chancery Court who would grant it?
§ The Attorney-General
Does the hon. Member really think that? This woman cannot afford even to pay for the extra food and nourishment that her husband needs today. What is the hon. Member suggesting? First of all, she would have to go to counsel and get advice on whether she could with success make an application to the Chancery Court and how much it would cost. He would not be able to advise her whether the application would be successful or not, but perhaps he would say that she would have a good case.
What is the next step? If it was an application to the Chancery Court, it would cost anything from £50 to £100. She has not got the money, and it is completely illusory to say that this hard case, which is the typical case, of people who have very little money can be met by application to the court. She will get this money free in a year or two, but it will be too late to deal with it for the particular purpose for which she most wants to use that money, and it must lead to bitterness—biterness against the law, against her father, whom she thinks made a mistake in bequeathing money so that she could not lose. It may lead to unhappiness which might continue for the rest of her life because of the fact that she knows that she has money which, had she been able to use it, would have made such a difference to her life. Who would not say, in a case like that, that the father, had he been alive—and he is not—would not have been the very person to say that she should be able to make use of that money?
That is a typical case, but there are others. There is the case of a fairly old couple where there is money invested, subject to the restraint, belonging to the wife, and bringing in 3½ per cent., and the couple themselves are paying 4½ per cent. on a mortgage and just scraping along. The husband is retired. If they could realise that capital sum, they could pay off the mortgage and buy a joint annuity for the remainder of their lives without the pinching and scraping which is necessary now. These are the typical cases, and, in discussing this matter, let us deal with typical cases and not be misled by 906 talk of wealthy heiresses and of the possible loss of Sur Tax to the Revenue.
In these circumstances, the question is: What is to be done? I believe that everybody agrees that something ought to be done. The only question is what. What are the alternatives that have been suggested? So far as I know, there are two. One is that we should enlarge the powers of the court, and no doubt that would appeal to the hon. Member for South Belfast (Mr. Gage).
Let me say a word about the present position of the court in this matter. The court can, under the existing law, raise the restraint for a particular purpose if it considers that it is in the interests of the married woman so to do. The discretion that the court has has been very narrowly construed, and courts are inclined to isolate married women from the family and to consider the matter from the strictly financial point of view and decide, more or less as a matter of accountancy, whether raising the restraint would result in some benefit, and they are not always able to take account of all the human considerations which arise in connection with a matter of this kind. In addition, the procedure is very expensive. But it is said that we should enlarge the jurisdiction of the court and say that the restraint must be lifted unless it appears to the court that it is not in the interest of the married woman so to do.
That might meet the case of the wealthy heiress, but it would not meet the case of the little teacher whom I mentioned. How could she afford the expense of an application to the court when she can hardly manage to pay her own living expenses? The great Chancery lawyers, if I may, with respect, so describe them, who spoke about this matter in another place were agreed that application to the court was an inadequate remedy for the present situation, and I invite anybody who thinks it is to study the speech made in another place by Lord Simonds about this matter.
Alternatively, it is suggested that we should give the trustees a discretion to advance money in any particular case. Sometimes, it is the wife herself who is the trustee, and that would raise a curious and anomalous situation. Often, trustees are complete strangers, not appointed or even contemplated by the 907 testator. They may be all sorts and conditions of people, and the exercise of their discretion would manifestly be far more capricious than that of Chancery judges. They will have no principles to guide them, and they might, with no possibility of appeal, refuse to raise the restraint for altogether unworthy motives.
The vast majority of women who are affected by this restraint are quite as well able to decide what is for their benefit as the Chancery judge or as a couple of trustees. Why should the vast majority of women be penalised by having to go to the Chancery Court or to seek the consent of trustees simply because of a very small minority who, perhaps, cannot be trusted to exercise so wise a discretion? We urge the House to do away with this anomaly altogether, in order to avoid the expense and the inequality and the uncertainty of a discretionary power, whether vested in the court or trustees, and in order that all married women shall be placed on the same basis, able to plan their arrangements themselves and control and use their own property.
What objections remain to that course? It may be said, and indeed it is said, that this proposal involves retrospective legislation. That sounds substantial, but, really, in the circumstances of this particular matter, it is not. Retrospection exists now in the power to go to the court and get the restraint lifted, and, if anything is to be done—and everybody agrees that something must be done—retrospection would be involved in it. It applies to the alternative proposal to enlarge the jurisdiction of the court. As was said by a noble Lord in another place:You have substituted for the will and resolution of the testator the will and resolution of an old gentleman sitting in the Strand.
§ The Attorney-General
I have done it now, and I must apologise for any breach of the Rules regarding quotations from another place.
We propose to substitute the will and resolution of the testator's own flesh and blood, and we propose to do it in those cases where, nine times out of ten, the restraint was put in by the lawyers as a 908 matter of common form, often in respect of infants and sometimes in respect of a child still unborn, and usually without any contemplation at all of what might happen to the woman upon whom the restraint was imposed, and without any conscious deliberation at all by the donor or testator who was creating the settlement. We propose to remove it because, at least, in nine cases out of ten, the circumstances are so changed from those before 1935 that testators would only too gladly lift the restraint themselves if they could. It is idle to say, as the Amendment rejecting this Bill says, that these restraints have arisen because fathers have deliberately wanted to ensure that their daughters would have an income in all circumstances. If there was any deliberation about it—and in nine cases out of ten, perhaps in 99 cases out of a 100, there was not—the intention was to protect the daughter against the husband, not to create a protection in all circumstances.
As I said—and I wonder if any hon. Member opposite or on this side will contradict it—if the intention was to protect the daughter "in all circumstances," to ensure that "in all circumstances" she would have an income, it would be merely a licence to cheat and defraud creditors who supplied her with goods on the basis of what appeared to be a large income and who when they found she refused to pay could not attach her income for payment. The Law Revision Committee which considered this aspect of the matter pointed out that the restraint was sometimes discreditably used for the purpose of defeating creditors.
§ Sir John Mellor (Sutton Coldfield)
Has the right hon. and learned Gentleman overlooked Section 52 of the Bankruptcy Act, 1914, which says:Where a married woman who has been adjudged bankrupt has separate property the income of which is subject to a restraint on anticipation, the court shall have power, on the application of the trustee, to order that, during such time as the court may order, the whole or some part of such income be paid to the trustee for distribution amongst the creditors.
§ The Attorney-General
That is a provision with which I am not unfamiliar and which is useful only in a small minority of cases especially those in which a married woman has been engaged in trade. It does not greatly affect this position. If the hon. Gentleman has 909 any doubt about it, I would refer him to the report of the committee of 1934 and to the speech made by Lord Simonds in another place the other day in which it was said that this device can be used, and sometimes is used, as a discreditable device for defeating creditors.
§ Mr. Leslie Hale (Oldham)
I think that my right hon. and learned Friend is overlooking Section 125 of the Bankruptcy Act, 1914, which limited bankruptcy to a married woman on carrying an a trade or business. That Section was repealed by the Act of 1935, and, therefore, that particular trouble has been dealt with.
§ The Attorney-General
My hon. and learned Friend will have an opportunity of adding anything he cares when I have finished this already all too long speech.
The point about bankruptcy remains in practice as I stated it, and that was the view of the Committee which considered the matter in 1934, of Lord Simonds, and, I am told, also of Lord Maugham in another place the other day, that this device could be and is used in that way. If it is not used in that way, and if the only purpose of the device is not as the Motion says, to assure income in all circumstances, but to protect the wife against the importunities of her husband, then I say that in the 20th century that is a hopeless anachronism which nobody can properly support.
Finally, it is said—and I must say that this is indeed a most unworthy argument which would be quite improper in a court of law—that if the restraint were lifted, it might enable some married women to avoid part of their previous tax liability. Well, in the case of a wealthy woman, it might—
§ The Attorney-General
No, it might. If she sold some of her interest, her income would be diminished to that extent, and to that extent she would no doubt be relieved of some Surtax liability unless she re-invested the proceeds of sale in some different and more remunerative security. If she mortgaged her income, the interest she had to pay on the mortgage would be deducted for Income Tax purposes, 910 and so she would get some relief in that respect. Whoever received the income would, of course, have to pay tax on it, but it might be that the tax would be on a different basis, and that there would be some net loss to the Revenue. I am quite prepared to concede that in particular cases it might involve some loss to the Revenue. That must depend on the facts of each particular transaction, but the Board of Inland Revenue and my right hon. and learned Friend the Chancellor do not consider that that is a ground on which any objection can properly be made to this Bill.
Indeed, it would be a very novel principle of taxation if people were to be compelled to keep property in order that they should be liable to pay tax on it. This may happen in the case of any taxpayer. Any disposition of his property, mortgaging it, selling it, or whatever it may be, may result in a reduction of his Income Tax liability. But that right to deal with one's property in that way has not hitherto been challenged, and if it is to be challenged now, let us challenge it generally, and not simply in the case of persons who fortuitously, so far as the Revenue are concerned, happen at the time to be restrained from anticipation because they are married. If anybody wants to say that dispositions of capital should be made illegal because they involve a loss to the Revenue, we shall give careful consideration to that view, but let us do it generally and not in relation to this limited class.
If an argument of this kind were raised in a court before which an application for the removal of the restraint were being made, it would most certainly be ruled out of order. If any court acted on such a view and refused to grant the lifting of the restraint because a loss of revenue would be involved, I have no doubt that the decision would be upset on appeal. But I give the point for those who want it both ways that an application were made to the court on the ground that the lifting of the restraint would enable the married woman so to readjust her affairs as to save taxation, then almost certainly that would be something in her interest, and the court would grant the application. That is the position. I venture to ask the House to regard this question of the effect on taxation as an incidental result which, whatever material it may provide for the 911 demagogue, is quite irrelevant to the real problem which this House has to consider and which is simply this.
At this time, in the middle of the 20th century, in circumstances which are so manifestly different from those which existed when these restraints were imposed 20, 30 or 50 years ago, are married women, because of their marriage, to remain grouped in the legal text books along with infants, convicts and lunatics as persons with a special disability? We are not dealing in this Bill with children and not, for the most part, with individuals who have been thought incapable of dealing with their own affairs. We are dealing with grownup people, and we ask the House to say that their happiness and their future should not be allowed to be controlled by dead hands stretching out from the grave. Set them free and leave them free to deal with their own financial affairs in whatever way, rightly or wrongly, seems best to them.
§ Sir Wavell Wakefield (St. Marylebone)
Before the right hon. and learned Gentleman sits down, could he state how many people he thinks would be affected by this proposed Bill? Would it be hundreds, thousands or tens of thousands?
§ The Attorney-General
It is extremely difficult to give an estimate of it, and I can only give what is not much better than a guess. It is not hundreds, but thousands. I should doubt whether it is tens of thousands. That is the best way I can put it.
§ 4.20 p.m.
§ Mr. Oliver Stanley (Bristol, West)
I feel a great temerity as a layman in flinging myself into what seems about to become a typical lawyers' battle. It certainly was so in another place, and there is every sign of it so developing in this House. I am quite confident of the risks I run, and before I start I should like to disarm possible interrupters. If anybody should get up and ask me what Lord Thurlow said in 1800 I should have no idea. If anybody were to ask me about the decision of Lord Cottenham in Milne v. Craig I should not know what he decided or why. If anyone were to refer to the Bankruptcy Act of 1914, I should be quite unable to distinguish between Section 52 and Section 125. 912 But, despite the speech of the Attorney-General which—as he warned us beforehand it would—covered a lot of legal technicalities, I wonder whether the issues are so impossible for the ordinary man to understand or so difficult for him to decide. I have a feeling that the issue in this case is quite simple, although I agree that the decision to be taken between the two conflicting points of view is a very delicate and difficult one to take.
I think all of us in this House recognise that in this Bill no great political principles are involved. There is certainly no party interest on one side or the other, and I think there is neither electoral gain nor electoral loss in any decision that we take upon this Bill. It is a matter in which it is perfectly possible for sincere men, striving to arrive at what they consider the right decision, to take directly opposing views upon this matter, and I am conscious of the fact that certainly among my hon. Friends, and it may be among hon. Members on the opposite benches, those different views are taken. They were taken in another place and they may well be taken here. I think that in a matter of this kind it is right that they should be taken, and that people should be free to put forward the views at which they themselves have arrived. Therefore, so far as my hon. Friends are concerned I want to make it clear that the views I am going to put forward quite shortly, and I hope simply, are nothing more than my own personal views and do not represent in any way a considered party decision.
I would like to begin by making the same appeal to hon. Members as that which the Attorney-General made in one portion of his speech; that is, to decide this matter on the question of principle which is involved and not to be actuated by the circumstances of any particular case. We cannot, of course, ignore the origin of the Bill which the Government now bring forward. It originated, as the Attorney-General said, in the Mountbatten Bill, and although we are assured that under pressure from various societies his mind was already leaning that way, I think we must regard it as rather an extraordinary coincidence that he should arrive at this decision at just the same time as the Mountbatten Bill was dropped.
§ The Attorney-General
I do not want any misunderstanding about that. I do not think I said that. I say quite frankly that I do not think we would have had this legislation had it not been for the Mountbatten Bill, but what I said was that our attention had been drawn to the desirability of this change, and the Mountbatten Bill involved us, in any event, in the use of Parliamentary time. That is why we introduced this Bill.
§ Mr. Stanley
Then there is no disagreement between us at all. This Bill did originate in the Mountbatten Bill. As hon. Members will recollect, that Bill passed through another place under the Personal Bills procedure, and when it came to this House a Motion was put upon the Paper, I think rightly, by certain hon. Friends of mine, who said that this Bill allowed one particular married woman to do certain things, and if it was right in her case it should be right in all cases; they, therefore, urged the Government, without committing themselves as to whether the Bill was right or wrong, to make it of general application.
I think the Government, in view of that Motion, were quite right to take the course they did, and to substitute for the Private Bill the Public Bill which we are now discussing. But even though that is the origin of this Bill, if we are to come to a proper decision we must exclude from our consideration the particular circumstances of the Mountbatten Bill. I thought that the Attorney-General in dealing with this was perhaps a little ingenuous. I think it is much better to face the facts fully. It was the obvious, and indeed the express object of the Mountbatten Bill—I will not say to evade because that has unpleasant connotations, but to avoid the effect of Supertax on some part at any rate of the applicant's income. Some people have expressed surprise that the Government and presumably the Chancellor should, in introducing this Public Bill, be facilitating such a transaction. I feel very strongly myself that that is no real argument against the Bill now being introduced. If it is wrong for people, if they are rich, to use this device for selling part of their income to an institution, which does not have to pay Supertax, and thereby obviously to acquire a much 914 bigger capital sum for the income they are selling, then it ought to be wrong for everyone, and the Treasury—I am not expressing my view as to whether it is right or wrong—should take the necessary steps to stop it.
I cannot feel that it is right for the vast majority of people to be permitted to do it if it suits them, while a small minority are prevented from doing it, not because of anything to do with this particular taxation problem but because of an anachronistic term in the particular settlement under which they live. But even though this may have been the object in the Mountbatten Bill—and I would not even regard the fact of that being the object as a bar to this kind of legislation—that is an exception and not the generality. There must be very many cases in which relief is required and desired not for any purposes of taxation at all but to meet changes in circumstances in a person's life which can only be met in some way such as this. The desire to go into business and have some capital to employ in it, the effect of unexpected and expensive illness, which in the case of a person with small income can only be met out of capital, as the right hon. and learned Gentleman said—
§ Mr. Gallacher
The argument which the right hon. Gentleman is putting forward is a very good argument not for this Bill, but for post-war credits.
§ Mr. Stanley
That may very well be so, but that interruption does not seem quite relevant to the discussion.
It is for that reason that I believe the only safe way is to put individual considerations aside and to regard this purely from the broad principles which are involved. I think those principles are quite simple. On the one hand, we have the supporters of the Bill, who are able to call in aid the Committee of 1934 and to show that, as a result of that Committee, the House of Commons unanimously decided to stop this practice for the future on the grounds that it was out of date and that it was no longer in the national interest.
915 They say, and I think they are entitled to say—"Why, if it is wrong for the future, was it right for the past? If it is admitted by all that it was right in 1935 to put a stop to the practice then, why is it that certain people, whose settlements happen to fall before that date, have to continue under an admitted handicap which more fortunate women, after 1935, no longer have to suffer?" As the years proceed and as our economics become even more fluid, it is quite clear that this practice is even more out of date now, in 1949, than it was adjudged to be in 1935. So much for one side—the supporters of the Bill.
On the other side, the opponents of the Bill argue—and I admit with great force—that, first of all, their objection to this is that it is restrospective legislation. They protest against retrospective legislation as a matter of principle. They regard it as bad in general. But they are able to add, in this case, a particular argument against retrospection in these provisions. They are able to argue that, whereas after 1935 a settlor, who knew that a restraint on anticipation was no longer legal, was able to look round and decide what other protection he might give to his daughter, or to any woman upon whom he intended to make such a settlement, there was no such chance for any one before 1935; the restraint on anticipation disappeared without its being possible to substitute anything in its place.
I do not think I have been unfair in trying to set out, quite simply, the two conflicting views, which can be shorn of a great deal of the technicalities which have surrounded them. As far as we are concerned, we take no party view on this matter at all but, having taken part in this Debate, I should feel it wrong not to express what is my own personal position as between those two alternative issues which I have tried to set before the House. Frankly, my own view is in support of the Bill. I should like briefly to give to the House the two reasons which lead me to that support.
The first reason is, I think, at best not wholly logical, not wholly rational. I happen to have a great suspicion and a very great dislike of the "dead hand" being allowed to intrude and protrude too 916 far into the future in controlling the living. It may well have been that such procedure was not only practicable, but desirable in the old days. I am not only talking of restraint on anticipation but on other tight controls left in wills or imposed in settlements, and it may well have been, in the nineteenth century, that the economic future seemed so clear that a man could foresee not only the events immediately in front of him, but over a range of time and so could take steps to protect, say, his daughter over that period.
It may well have been true in those days that a clever, well-informed man of business could lay down for his daughter rules upon which her finance should be conducted during her lifetime which were practicable and would be to her advantage. But I suggest that those times have long gone by and that it is impossible for any man now, however intelligent he may be, however far-sighted, to try for one moment to lay down not only for his own lifetime—which is difficult—but for the life of another generation how their finances are to be conducted. It is impossible to do that without running the gravest risk of producing exactly the effect one does not want to produce.
There are many instances in my own personal knowledge, not only in these questions of restraint on anticipation, but even more in some of the more archaic trusts—the impossibility in any circumstances of touching any of the capital, for instance—and I know how often they have led to results quite different from what the settlor would himself have desired and have imposed hardships upon those whom he wished to protect.
I feel, therefore, that the whole trend of settlements and testamentary dispositions over the past 20 or 30 years has been in the direction of greater and greater freedom. It is impossible for anyone to look back into the minds of people who made settlements 20 and 30 years ago, but my own conviction is that in almost every case, with the passage of time, with the difficulties which now exist, with the deterioration of economic stability, the probability is not that they would maintain—and certainly not that they would extend—the restrictions which they put in but that they would have followed the modern practice of relaxing them.
917 Turning to the question of retrospection, which I consider is the only valid argument against this Bill, I agree in general with the views sincerely held by many of my hon. Friends about the badness of restrospective legislation. I believe that in most cases it creates great unfairness. People do certain things in the knowledge that they are, in fact, perfectly legal, but restrospective legislation suddenly makes their act illegal, usually very much to their own disadvantage.
In this case, however, I cannot feel that the retrospective character of this legislation will have an injurious effect upon anybody at all. It will certainly not hurt the object of the settlement—the woman who is now under a restraint of anticipation—because this Bill merely legalises anticipation; it does not force anticipation upon her, and no one need take advantage of the opportunities provided by this Bill. Nor, of course, can it impose any material loss whatsoever upon the settlor or the testator. The most we can say is that it ignores the express wishes that the settlor or testator made, perhaps, some years ago in quite different circumstances.
But I would point out to some of my hon. Friends that to ignore the wishes of the settlor is not the unique prerogative of the method proposed in this Bill. The Amendment put forward in another place which would have enabled the courts, after hearing cases, to give this relief, involves thereby the ignoring of the wishes of the settlors. The idea put forward that trustees might be able to vary such a settlement also ignores the wishes of the settlor. No advance of any kind can be made unless it does involve ignoring, at some time and in some circumstances, the wishes of the settlors who made the settlements. Frankly, if that is to be so—and I think that that is the case—I regard this as the best way, really, to achieve that end.
There is one other reason which makes me support this Bill. The Mountbatten Bill went through another place under the Personal Bills procedure. It was examined, as the Attorney-General said, by the Personal Bills Committee, and was passed by them, and went through another place without opposition. Now, of course, it is quite true that the House of Commons has the power, if it so desires, to reverse a decision of the House of Lords Personal Bills Committee. But, 918 in fact, for over 200 years it has never done so. It has become a tradition that that power is not exercised. I happen to be a great believer in tradition. I believe in tradition because it is nearly always found that beyond tradition there is some sound basis either of common sense or of sentiment, which is another reason why tradition—
§ Miss Jennie Lee (Cannock)
May I then, suppose that I shall have the support of the right hon. Gentleman in leaving the House of Lords exactly as it is in composition?
§ Mr. Stanley
I am sure the people in another place will be delighted to hear that the hon. Lady at some time or another intends to lead a campaign to make certain that the House of Lords retains, without any diminution, its existing powers—
§ Mr. Stanley
—and when the hon. Lady leads that campaign she can certainly count on my utmost support. But if I may return for a brief moment to the subject of this Debate, I believe that there is a sound basis for the tradition that the House of Commons has not challenged for so long the decisions of the Personal Bills Committee. It is that the Personal Bills Committee, dealing here not with great national questions, not with great political issues, but with personal issues based on particular circumstances, is acting in a quasi-judicial capacity. It can call witnesses; it can hear counsel; and it can come to a decision on the facts of the case. The House of Commons, having no such procedure in this case, no such opportunity, has been content, in those circumstances, to accept the decisions of the Personal Bills Committee.
At any rate, I am impressed by that tradition, and, so far as I am personally concerned, if the Mountbatten Bill had come to the House of Commons I, for that reason should have felt compelled to vote for it. I ask myself, when this general Bill comes, "Is there any way in which I can distinguish the Mountbatten case from any others? Is there any way? Yes, it is quite 919 true that the Personal Bills Committee, going into the particular circumstances of the Mountbatten case, came to the conclusion, which I should have felt bound to support, that in that case relief was justified; but it does not mean to say for one moment that in other cases less deserving they would have come to the same conclusion."
Frankly, my feeling is that the Mountbatten case is the least deserving of sympathy of any of the cases which are going to come up under this procedure; and that if the Personal Bills Committee felt bound to assent to the Mountbatten case, then all the other cases, which might have come before it if the people could have afforded to bring them before it, would undoubtedly have received its assent. I could not, therefore, put myself into the position that, while knowing I should have assented to the Mountbatten Bill, I, by voting against this Bill, refused similar relief to the numerous other cases whose claim, I am sure, would be more worthy of consideration. I have tried to put, quite simply, and in a personal capacity, what I conceive to be the issues, and I shall support the Bill the Government have introduced.
§ 4.45 p.m.
§ Mr. Gage (Belfast, South)
I beg to move to leave out from "That" to the end of the Question, and to add instead:this House, while willing to provide for an extension of the existing relief from restraint on anticipation in cases where such relief is justified, declines to give a Second Reading to a Bill, which would retrospectively nullify in every case a provision deliberately made by a father to secure that his daughter, while married, should have an annual income of her own in all circumstances.My hon. Friends and I, I confess, find it a little curious, to say the least of it, that only a few short weeks after the Government exhorted us all—and, I think, quite properly—to curtail our personal expenditure and to live more frugally, we should be asked by them today to pass a Measure which, in the main, results in giving increased spending power to a number of people—and a number of people with comparatively useful private incomes.
Though I agree with the Attorney-General that the majority of those people probably are not people with enormous 920 incomes, certainly it is not correct to say that the majority of them are people who are only just above the bare subsistence level. I think the truth lies somewhere between those two extremes; because I think that, generally speaking, the married women who are affected by this Bill are people who could be described as being pretty comfortably off, and there can be no doubt that this Measure will enable them to capitalise to a large extent their incomes, and to spend them, at this particular juncture, in any way which they think right.
The Attorney-General explained the Bill to us with his usual grace and eloquence, but he would have had a very much more difficult task, I think, explaining this Bill to trade unionists asking for an increase in wages. He understands the Bill, but I am doubtful if all right hon. Gentlemen opposite understand it, because I saw in "The Times" on Saturday last that the Secretary of State for War had made a speech in Durham, in which he said:In Labour's next period of office—and, in spite of the snarls of the Tories, a victory for Labour is certain—we must make an organised attempt to iron out the differences in standards of living. Some people still have too much while the majority have too little. Those on the higher level, no matter who they are, must come down. This struggle to narrow the gap between rich and poor will go on as long as the Labour Party is in existence.I suppose it is too much to hope that the right hon. Gentleman will go back to Durham next week and tell the people there that he forgot to mention that the first Measure that the Government of which he is a member were going to pass this week would be one which would increase the standard of living of some people who certainly could not be described as the very poor.
It was not, however, to score those kinds of points off the Government that my hon. Friends and I put down this Amendment. We believe that this Bill is wrong in principle. We think that it is nearly always wrong for a Government to interfere with private dispositions of property which have already been accomplished. That is a good general rule to adopt when examining matters of this kind.
Before the 1935 Act, a man, as we have heard, was entitled when leaving property—usually when leaving property to his 921 daughter—to say that she should have the income from year to year, but that while she was married she should not be able to anticipate any part of her income. The reasons for that were, I think, quite obvious. I do not accept the statement of the right hon. and learned Gentleman that they were invariably put in because some Chancery draftsmen had them in their book of precedents, wrote them down, and nobody noticed them. I, like the right hon. and learned Gentleman, do not practise on that side of the Strand, but, as I understand the position, people who made settlements were usually alive as to how and why they were settling matters.
In a great number of cases the reason why these restraints were put in was in order to protect a daughter to whom perhaps a fairly large fortune was being left, from a possibly predatory husband, although the right hon. and learned Gentleman spoke as though the days of predatory husbands were completely gone. I should not have thought that there was any evidence for that assumption. There might be a further reason. A father might want to prevent the risk of his daughter being completely dependent on her husband during marriage without having a secure income of her own.
I do not think that most of the restraints such as those were particularly disreputable. After 1935, the legislature decided, probably rightly, that the settlors should no longer make dispositions of that nature, but they were very careful not to interfere with settlements that had already been made. When a Labour Lord Chancellor dealt with that matter in another place, he was specifically asked—it is some little time since I looked at the report, but I think I am correct in saying that he was specifically asked: "What about the settlements already made?"—and he then said that they had been carefully considered by the Government and they thought it quite inexpedient to make any alteration in regard to them. I think that he was right because people before 1935 had made their private dispositions in the light of the law as it then was and without any knowledge or idea that the law might be changed.
Now, quite suddenly, 14 years later we are being asked to alter that law altogether. I think that we may well ask 922 why. If it was not right for a Labour Lord Chancellor to do it in 1935, why is it right for a Labour Government to do it now? The answer that has been given by the right hon. and learned Gentleman is that conditions have changed, but the real change in conditions is the increased burden of taxation. Are the Government saying that that burden of taxation has now become insupportable to people dependent on private incomes, no matter how large they may be?
That is really the argument that is being put up. I know that not all incomes are enormous, but there is no doubt that some of them are very large indeed. If that is the case, surely the right method is not to pass a Measure such as this, but to introduce some taxation relief for people who find themselves in this predicament, and not to enable women to capitalise their income so that they can pay arrears of taxation or spend their capital in order to exist.
We have heard of the merits of this Bill, but is it really so very meritorious? If it is, why have we had to wait 14 years for it? During four at least of those years we have had a Labour Government. I accept what the Attorney-General said—that he had been considering these matters beforehand, and that then came the Mountbatten Bill which drew attention to them and its withdrawal gave him time for this Measure. But I am fairly convinced that had that Bill gone through all its stages we would not have heard a word about this Bill, and the unfortunate wife of the schoolmaster, whom the Attorney-General told us about so movingly, would still be in the unfortunate predicament that he described.
We realise that sometimes real hardships attach to those people whose incomes are restrained, but they have always been able to go to the Chancery judges. The right hon. and learned Gentleman spoke as though going to the Chancery judges was in itself a dreadful thing to do. He said that, in the first place, it would cost £50 to £100. I cannot say how much it would cost because barristers, generally speaking, are not so knowledgeable about costs as solicitors, but I confess that I should be amazed if a simple application to a Chancery judge in chambers, supported by an affidavit, cost anything like £50.
923 In any event, I should have thought that in all normal cases the costs would be allowed out of the capital money of the trust and would not in fact fall on the income of the person applying. I understand that although the Chancery judges have a fairly broad discretion, under, I think, Section 169 of the Law and Property Act, they are rather confined by judicial decisions. If that is so, I think, as do many of my friends, that is a very good reason why we should not enlarge their discretion in this way.
I believe that there was an Amendment, which was negatived, in another place and which, had it been added to this Bill, would have made it quite unobjectionable. I take the view that instead of being asked to sweep away all this restraint, the proper way to deal with these matters is to deal with each case on its merits. That is exactly what a Chancery judge can do, provided his discretion is not too restricted. I should have thought that could quite easily have been done.
I understand that it now works as a rule quite fairly, that judges take the view that they will not lift a restraint where it is solely for the benefit of a married woman—because I understand that by judicial authority they have to take that view—and that they will not lift it where they think that a married woman has by her extravagance contracted debts which she ought not to have done. They lift it in proper cases such as that in which women have just sufficient for themselves to live on and whose husbands do not make very much money, and who perhaps want to educate their sons more expensively than they could otherwise afford to do.
In a case like that it would be lifted now, and that seems to me to be very reasonable. There does not seem to be any great hardship in that, or in the way in which married women are dealt with. But if there is, then the proper way to deal with it is to increase the discretion of the judge. I realise, of course, that that could only be done by us, because it would be very expensive for a married woman to go to the House of Lords to have these decisions reversed. I should have thought that the Chancery judges, in the light of present knowledge, even if they were not helped by precedents of 924 judicial decisions, would be able to deal with the matter quite easily. But I can well understand that many people do not want to incur the expense of going to the House of Lords in order to have their discretion widened.
We are really being asked to cancel dispositions of property made by private people over 14 years ago, when they had every reasonable expectation that those provisions would be carried out. If we do that, it seems to me that the right hon. and learned Gentleman is not right in saying that we are putting these married women in precisely the same condition as their sisters or their daughters for whom trusts were made after 1935.
As I understand it, people who were minded to impose a restraint upon anticipation, being unable to do so after 1935, cast about for other means of dealing with the matter. They then made use of the discretionary trust, which of course had always been known to the law, though I quite agree that it was not so rigid, or, as it were, so hard as the restraint upon anticipation; they thought it would in some measure assist them in what they had in mind.
I quite agree that a discretionary trust does not achieve all that the restraint upon anticipation achieves, or anything like it; but those people, finding that they could not use the latter method, used the discretionary trust—which was, after all, a trust in which the trustees were given a discretion to pay to the beneficiary until a certain stated thing might happen. They used that method instead. But now, if we sweep away all these cases in which restraints upon anticipation had been imposed, there is no discretionary trust to be imposed, and all these women will get their money without any form of restraint whatsoever. It seems to me fairly natural that a father who before 1935 would have imposed a restraint of anticipation, after 1935 would have imposed a discretionary trust.
§ The Attorney-General
Perhaps I could assist the hon. Gentleman in his argument here. We have made some inquiries into that, and the position, as I believe it to be, is this: that whereas in settlements and wills prior to 1935 there was almost invariably a restraint upon anticipation, in settlements or wills subsequent to 1935 there was very rarely a discretionary trust.
§ Mr. Gage
I of course have not access to the same information as the right hon. and learned Gentleman. I do not know, I am sure; if he says so no doubt it is perfectly right, but I should not have thought that it made very much difference to the argument. It might assist the right hon. and learned Gentleman on his argument that these provisions were put in rather as a matter of precedent, but I do not think it does any damage to my argument, which is that a father who before 1935 would have been minded to put in a restraint upon anticipation—and probably did—would after 1935 have certainly imposed a discretionary trust. Now we are going to sweep all those away.
It is all very well to say that the settlor would have wanted that done, but anyone who is a lawyer knows that it is difficult enough to get at the mind of the testator in a given set of circumstances; it is difficult enough to understand what he intends; but to say that one can get at the mind of a testator in a wholly hypothetical set of circumstances which were not present when he made the settlement seems to be stretching matters much too far. I do not think for one minute that we can say the settlors would certainly have agreed to do away with these restraints. I think that is carrying the matter much too far.
§ Mr. Henry Strauss (Combined English Universities)
Perhaps my hon. Friend would allow me to point out this, which may greatly strengthen his argument. Before 1935 it was by no means uncommon for a settlor in the case of a daughter to impose a restraint upon anticipation, but in the case of a son to impose a discretionary trust.
§ Mr. Gage
I am glad my hon. and learned Friend has drawn attention to that, because I was going to deal with the different positions of a son and a daughter. I understand it was indeed the case, that restraints upon anticipation were imposed in the cases of daughters but discretionary trusts in the cases of sons. Now, as the right hon. and learned Gentleman said, we are doing nothing about discretionary trusts, so that if we pass this Bill daughters will be in a better position than sons, because the sons will still have the discretionary trusts but the daughters will have no restraints of any 926 sort. It seems to me, therefore, that to that extent this legislation is unfair.
§ Mr. David Renton (Huntingdon)
I am sure that the hon. Gentleman does not want to overstate the position. It is, of course, possible for a discretionary trust to have been imposed in the case of a daughter; and it very frequently has been done.
§ Mr. Gage
Oh, yes, but I do not see that that makes any difference to my argument. Of course, it was done. I am quite certain that before 1935 there were people who did not agree with restraints upon anticipation, who thought they were too hard and too rigid, and who therefore did not impose them but imposed instead discretionary trusts. But there were other people who wished to impose restraints upon anticipation, and who did impose them; and it is with their settlements that we are interfering today.
§ Sir Hugh Lucas-Tooth (Hendon. South)
When the hon. Gentleman speaks of discretionary trusts, does he mean a protective trust under Section 33 of the Trustee Act, or a discretionary trust in the strict sense of the words?
§ Mr. Gage
I cannot say I am glad that my hon. Friend has asked me that, because he is very familiar with trusts, springing uses and other exciting Chancery matters. I had always understood, no doubt quite improperly, that there was very little difference between a discretionary trust and a protective trust. If I am wrong in that, I am happy to say that, on reading the Debates in another place, I find that many noble Lords who know very much more about it, certainly confused the two and spoke of them as if they were very much the same. I am referring to the trust imposed whereby a woman or a man is paid an annual sum until the occurrence of some future event, which is very often the making of an arrangement with creditors, or something of that nature, when the trustees are empowered either to continue to pay or to divert the money to some other source. That is what I have always understood to be a discretionary trust.
I said earlier that I and my hon. Friends take the view that this Measure is wrong. There are many hon. Gentlemen on both sides of the House who have 927 given a great part of their public lives to the betterment of the poor and needy. Now it cannot be said that owing to the burdens the nation has to bear, the people for whom we are today legislating come into that category. How, at this particular juncture in our affairs, can we go back to the needy people, who in most cases unfortunately form the greater part of our constituents, and say that we have been passing a Measure of this nature, designed to increase the spending power of people who are fairly well off, which will enable many women, if they wish, to repair the consequences of their extravagance, and will to some extent diminish the national revenue? The truthful answer is that we cannot justify it to those people and, what is more important, to our own consciences.
§ 5.10 p.m.
§ Captain John Crowder (Finchley)
I beg to second the Amendment.
Although this Debate is somewhat technical in character, I agree with my right hon. Friend the Member for West Bristol (Mr. Stanley) that the substance of it is not very difficult to understand. The real question is whether it is right, by retrospective legislation, to do something that may be justified in particular cases, by a method which may be wrong in a great many other cases. This Bill, as my hon. Friend the Member for South Belfast (Mr. Gage) said, nullifies the restraint clause in all marriage settlements made before 1935. These settlements were made in good faith for a specific purpose, and when they were made the clause we are now asked to strike out was effective. It is now too late to substitute another clause that might have been effective, if the settlor at the time he was making the settlement had thought Parliament would come along today to strike out the clause which he thought was effective when he made the settlement.
Do Members really think it is right and fair, simply because it is felt in some cases relief should be given owing to a change of circumstances, that we should pass a Bill of this nature, taking away the restraint clause in all cases? Is it right to say that in order to help a few deserving cases we should abolish the clause retrospectively in all cases? That is what we are being asked to do today. I am not a 928 lawyer, and no doubt the Attorney-General will correct me if I am wrong, but the position seems to me to be this. A father, prior to 1935, found that his daughter wished to get married. He did not know very much about the young man, and perhaps the young man had no great resources, being the poorer of the two parties. In these circumstances the father went to his lawyer because he wished to make a settlement to ensure that his daughter had an independent income so long as she was married. The money provided for the settlement was, of course, the father's money.
Members have suggested that it is unfair not to allow the married woman to use her own money as she thinks fit, but it is not her money but her father's money which he has given to her on certain conditions—that she shall have the income for life. If the father puts in a clause to the effect that she shall not sell her life interest, the daughter cannot sell or do what she likes with the capital. Whatever might happen in the future, the father wanted his daughter to have something to live on during her married life.
In many cases the husband himself asked for this sort of clause, because he wanted his wife to be independent and have a separate income. Perhaps the father wanted to make certain that his daughter was not over-persuaded by the husband to sell her life interest for a capital sum and give it to him to invest in some speculative venture where he could lose the lot and leave the daughter penniless. I agree with the Attorney-General that few understood what was meant by the words "without power to restrain," but the fact is that many people who wanted their daughter to have a fixed income for life independent of her husband on condition that she could not touch the capital, told their lawyers to put it into the legal jargon necessary to achieve that end.
The recognised way of doing that before 1935 was to insert the clause it is now proposed to nullify, which many of us feel is not just. But the father was doing nothing wrong, selfish or unsocial, and, as I have said, in many cases the father agreed with the husband that this should be done. If the father had suspected that Parliament would sweep away this clause, he would no doubt have employed other means to do what he 929 wanted, either by a protective or some other clause—no doubt my hon. Friend the Member for South Hendon (Sir H. Lucas-Tooth) would have been able to draft something to carry out the settlor's wishes.
It is quite wrong to say that this Bill equalises the law between men and women, because if the father some 15 or 20 years ago was going to provide for his son and daughter and wished in both cases to see that the income was not anticipated, he might have done it in the case of the son by what is called a protective or discretionary trust, and by way of this clause which it is now proposed to nullify in the case of his daughter. The result will be that the restraint on the married woman disappears but remains in the case of the man.
The 1935 Act laid down that the restraint on anticipation clause should not be the effective means after 1935, but if the Committee had thought it was right, proper and desirable to cancel the clause for settlements already made, surely they would have said so. I am told on very good authority that no one suggested or dreamed of putting in such a clause. By the 1935 Act existing contracts were respected, and marriage settlement is a contract. What the previous Parliament thought right was in my view properly limited to future contracts.
These are the reasons why we are opposed to the Bill in the present form. The alternative proposal we have to make is based on the Amendment that was defeated by only five votes in another place, namely, to provide for each case to to be judged on its merits and to give the courts much wider powers to lift a restraint if they think it would benefit not only the married woman but her husband, her children, or collateral relation.
I have been asked what happens to the wishes of the settlor. I have been arguing that something has to be done but that we should not sweep away the clause in every settlement. I presume that no court would allow a wife to anticipate the whole of her income, whereas if this Bill is passed she will be able to sell the whole amount and give the capital to the husband which he can lose in a matter of a few weeks. The alternative proposal is to extend the power of the court 930 to remove restraint altogether, whilst binding the wife's interest for the purposes of a particular transaction or transactions. Other provisions could be added to give more power to the Chancery Judge, taking into account the fact that since the restraint was imposed, there had been a substantial diminution of income. I ask the Government to withdraw this Bill and produce another which would allow a court to consider each case on its merits.
There is one further point—the cost of proceedings. It is said that proceedings would involve a considerable expense, but opinions differed in another place as to their extent. In any case, the Government need not produce this Bill to cheapen legislation in Chancery courts. It is gratifying to see them so intent on saving public money and not spending so much on lawyers. That I appreciate, but I am told on a very good authority that proceedings will not be expensive. It is not a case of litigation with counsel in their wigs and the judge sitting on the bench in full array—
§ Mr. Hale
I can assure the hon. and gallant Member that there is no extra charge for wearing a wig, but I would point out that to people living in Newcastle-upon-Tyne wishing to make an application to a court in London it might mean the employment of two firms of solicitors, one expert counsel, the preparation and submission of affidavits and probably a second application. It can be an expensive business.
§ Captain Crowder
Even if it costs up to £100, I believe that if the trustees agree, the money can be taken out of the capital fund of the trust. At 2½ per cent., less 9s. in the pound Income Tax, that would not hurt the beneficiary very much.
There is too much restrospective legislation these days, and it is about time we called a halt to it. I hope the House will reject this Bill, because I think it will cause injustice and unfairness. Some months ago my hon. Friends and I put an Amendment on the Order Paper for the rejection of the Mountbatten Estates Bill [Lords]. That Amendment said:That this House declines to give a Second Reading to a personal Bill promoted to secure an amendment to the law which, if justifiable, should be made by a public Act for the benefit of all whom it may concern.931 The fact that this Amendment appeared on the Order Paper seems to have influenced the Government to bring in this Bill following the withdrawal of the Private Bill.
Of course, the all-important words are "if justifiable." After reading the speeches made in another place and consulting lawyers—who gave me their opinion for nothing so I value it all the more—and reading the excellent letter in "The Times" of 30th July, which put our case very clearly, my hon. Friends and I do not think it is justifiable to alter the law in the way suggested in this Bill. I have great pleasure, therefore, in supporting the Amendment for its rejection.
§ 5.24 p.m.
§ Mrs. Leah Manning (Epping)
Much of the Debate so far has been very refreshing to me although, like the right hon. Gentleman the Member for West Bristol (Mr. Stanley), I have not a clue to the legal meaning of the arguments which have been advanced. To me this is a simple matter of principle, and I think many of us must feel very grateful to Lady Mountbatten for having acted as a pilot for a Measure which many women outside this House will regard as a simple act of justice. Indeed, I have never heard from the Government Front Bench such passionate pleas for equality of women as I have heard today; I can only wish that they had been on a very much broader basis than the narrow one we are now discussing. If these passionate pleas had been made in connection with equal pay for women, for instance, a case of equality with men which women are constantly putting forward, they would have been even more welcome. Nevertheless, I am glad that we are gaining one of the equalities and freedoms for which women have been asking ever since the 1935 legislation.
I do not know what is so objectionable in the Bill to some members of the Opposition. They have said many things which are not quite in keeping with their general character. I wish I knew what the real reason was, because it would make it much easier for me to argue my case.
§ Mr. Manningham-Buller (Daventry)
Members on this side of the House are expressing their personal views, and they are flat all in agreement in this matter.
§ Mrs. Manning
Yes, I quite understand that: some of the views are very personal.
What I rose to say more than anything else was that—although it may come as a great surprise to many hon. Members to learn it—since the legislation of 1935 nearly every women's organisation in this country has been pressing one Attorney-General or the other to rectify what is, after all, a grave injustice to women. All this talk about predatory husbands and terribly extravagant wives sounds to me very much like an Ouida novel. I cannot help thinking that the minds of some hon. Members, probably on this side of the House as well as on the other, are cast in the mould of the 19th century so far as women are concerned. It makes us realise that these restraints are an anachronism, and that the time has come when we ought to have a new Statute of Mortmain for the benefit of women upon whom restraints have been placed by the dead in these kinds of testaments.
The main objection put forward from the Opposition benches today is not one of principle at all. It is because the opposers of the Bill feel that the testaments which were made before 1935 might have been cast in a different form if the testators had known that this legislation was coming forward. One or two rather odd arguments have been put forward by the opposers of the Bill on this point. To begin with, I should like to point out that no woman is obliged to do away with the restraint even if the Bill is passed; she is not obliged to capitalise her property. If she has a predatory husband, one whom, she thinks, will help her to "blue" her capital in a few years and leave her in poverty, she will be wise enough not to take advantage of this new legislation. Apparently, the hon. and gallant Member for Holderness (Lieut.-Commander Braithwaite) thinks that if he had such a wife he would be able to force her to his will.
Once again, I say that the minds of those hon. Members opposite who oppose the Bill are cast in the mould of the 19th century. They believe that they could force their wives to capitalise her income; and put it at their disposal so that they could "blue" the lot. If this Bill is passed, as it will be, it will not be necessary for any woman to take 933 advantage of it if she feels herself to be in a dangerous position.
I am sure that the majority of women who will be affected by this Bill will not be a handful of wealthy women like Lady Mountbatten, but many who are in the lower middle class. Many of the women concerned are those who belong to the kinds of organisations to which the Parliamentary Secretary to the Ministry of Food and I belong, and of which we are very ardent members, professional and middle class women interested in the rights of women. The kind of things which they want their money for are those very schemes suggested by the Attorney-General in his opening speech. I have known quite a large number of married teachers and women in small businesses who wanted to use money left to them by their fathers either to expand their businesses, or to give their children a better education than they could otherwise get, or to emigrate and start life afresh in a new country. Those are largely the kind of women who will be helped by this legislation.
As I have already said, the Lady Mountbattens of this world are few in number and the number is decreasing rapidly. The kind of people who, we believe, will be greatly helped by this Bill are not people who are going to add enormously to the amount of money that is being spent at the present time. That argument formed a large part of the case of hon. Members opposite. They feel quite rightly that in these times people should not have more money available for spending in their hands. In general, we agree on that point, but I am sure that this Bill will not result in the frivolous spending of fortunes right and left as some people seem to imagine. The money will be spent largely on quite legitimate and necessary expenditure.
There is one other point about the question of sons which has been raised. It seems to be thought that an injustice will be done in regard to the continuance of discretionary trusts which fathers have put into their wills in regard to sons. The people who were unaffected by the 1935 legislation are a rapidly diminishing number—and that applies to the sons for whom a discretionary trust was imposed, as well as for the wives for whom the restraints are 934 removed. The numbers get less and less. Therefore, I do not think that very great hardship will be done, and if I may say so, it is, generally speaking, much more important to have a discretionary trust as far as the son is concerned than it is to have a restraint for the daughter. It may be necessary to look after an improvident son, but in these days wives know very well how to look after themselves, and therefore these restraints are not necessary.
§ 5.33 p.m.
§ Sir Hugh Lucas-Tooth (Hendon, South)
The attention which has been brought to this intrinsically unimportant Bill both inside and outside the House is a recognition of the importance of preserving the integrity of our property law. It would probably be no exaggeration to say that the freedom of our institutions and the prosperity of our commerce has been due in the past, and still is due to a large extent, to our having fundamentally sound property law. Although this may be only a very small part of it, it is still important and we should be certain that we deal fairly and properly with this particular aspect.
My reason for wishing to take part in this Debate is because for a number of years I was practising at the Chancery Bar, and I had something to do with the particular matters with which this Bill deals. It fell to me fairly frequently to give advice to those making wills or settlements as to what they should put into those settlements or wills. Indeed, I was engaged in doing that before the year 1935, when the law was changed by the Act which this Bill seeks to amend.
I should like, first, to offer some general comment on the principles of this Bill. When people make elaborate arrangements for tying up their property they are nearly always wrong. They are wrong from the point of view of the public interest and more often from the point of view of their own private interests. I do not wish to strike a discordant note, but private planning of this sort is rather like public planning. It is a very bad thing when it is done in excess. The results are not usually those which are looked for; anomalies and inequities are created; and, what is even more important, there is a bad psychological effect on those very individuals 935 for whom it is sought to plan. That I believe to be true generally, and it is certainly true in the case or those who try to deal with their property after it has actually passed into the possession of the person to benefit. For that reason, when called upon to give advice in these matters I personally always gave my client advice against imposing any restrictions unless such restrictions were quite necessary for the purposes that they sought.
There is one other point I should like to make in this connection. The Attorney-General, in the course of his remarks, did a little less than justice to the legal profession and particularly to solicitors, in that he suggested—I think it was accidentally—that they did not always fully explain to their clients the effect of the technical language which they were putting into documents, either settlements or wills. I do not think that that is so. I think what happens is this. A lay client asks a question as to what is the meaning of certain words and when he is told they are technical words, which have the result of ensuring that his daughter will get the income for the rest of her married life he does not pursue the matter any further. In other words, solicitors quite often tender advice to lay clients, which is simply not apprehended by those clients.
For that reason I am quite sure that there are many settlements made inter vivos or by will, in force today containing expressions restricting a woman from the use of her heritage which originally the settlor or testator as the case may be never really intended to put into those documents. For these reasons I find myself broadly sympathetic to the purpose of this Bill.
There is another side to the picture. Restrictions are sometimes most necessary. It is entirely wrong for any father or other persons disposing of property to assume against a child or beneficiary that he or she will be improvident, but there are occasions in which the parent knows perfectly well from his experience of the individual child that that child is either improvident herself, or has an improvident husband who is likely to waste the property. There are relatively rare cases where it is perfectly proper for a settler 936 or testator to make special provision for a child of his. As I think was indicated by the hon. Member for Epping (Mrs. Manning), cases of that kind are just as commonly cases involving a son or a male person as cases of a daughter or a woman.
§ Sir H. Lucas-Tooth
I would not go quite so far as that with the hon. Lady, but I would agree that the cases are on both sides and are probably in about equal quantities. As the Attorney-General has explained, it was because the Court of Chancery had invented the restraint upon anticipation to cover the case only of a female that conveyancers invented a different system to cover the case of a male. They invented the protective trust, although not by that name. That name came in only with the introduction of the Trustee Act in 1925. The system by which a man is prevented from anticipating his property was gradually built up by conveyancers.
Having regard to what was said by the hon. Member for South Belfast (Mr. Gage), perhaps I might say that there is a very subsantial difference between the protective trust and the discretionary trust. In the case of a protective trust the beneficiary is entitled to the income until he either tries to anticipate the income or goes bankrupt; until then the trustees are bound to pay over the whole income to him. In the case of the discretionary trust, a discretion rests with the trustees throughout as to how they should dispose of the money. I agree with the Attorney-General that the protective trust is a much harsher and clumsier device for attaining the purpose required, but the intention in both cases is precisely the same.
§ The Attorney-General
I hope the hon. Baronet will forgive me for interrupting him, but surely he is not suggesting any historical connection between the restraint and those two devices, the protective trust and the discretionary trust, which did not arise because of the restraint on anticipation by the Chancery Court but have a totally different purpose. They have nothing to do with marriage at all. They go on for the whole lifetime. The discretionary trust and the restraint upon anticipation are totally 937 different. The trust does not ensure the income until the woman marries. If she is thereafter divorced, it provides no protection.
§ Sir H. Lucas-Tooth
I agree that historically there is no connection between the two. I said that it was the absence of the possibility of restraining a man from anticipation which gave rise to the invention of the alternative form of trust. I would go so far as to say—I hope that the Attorney-General will agree with me—that the protective trust is usually a bad device and that it often works quite as badly and harshly as the restraint upon anticipation. I do not know whether it will be in Order at a later stage of the Bill, but if it should be so, I hope that it will be possible to put down Amendments dealing with the case of the protective trust just as with the case of restraint upon anticipation. I believe that it is quite as desirable to deal with the one as with the other. [HON. MEMBERS: "Hear, hear."] I am glad to note that I have some support from the Government side in this matter.
It is of interest to read the long Title of the Bill, where the Bill is described asAn Act to render inoperative any restriction upon anticipation or alienation attached to the enjoyment of property by a woman.The words "or alienation" have perhaps crept into the Title because of the limitation in the law of property, but the Title as it stands is misleading. If the Bill abolishes all restriction upon alienation in the case of a woman, it would be necessary that it should seek to abolish the protective trust.
This touches the very weakness of the Bill. Where, before 1935, a father had good reason to restrict a daughter's power to anticipate her income when she was marrying a man of whom he disapproved, he might do it perfectly effectively by imposing a restraint upon anticipation. Since 1935, the only means he has had has been the protective trust. It is a serious question whether, in a number of these pre-1935 cases, a father making a marriage settlement—the common case—would not have used the device of the protective trust instead of the restraint upon anticipation if he had known of the impending legislation of 1935 or of this Bill. I believe there are quite a number of cases where he would have used a protective trust.
938 There is a question which I wish to put to the Government. It may not concern a very meritorious type of case but I think it will show the inherent defect of the Bill as drafted. What will happen in the case of a married woman who enjoys an income subject to a restraint upon anticipation if she is an undischarged bankrupt at the date of the passing of the Bill? We must have a clear answer from the Government on that question. At the present time that woman is entitled to the enjoyment of that income without the slightest risk of being shot at by creditors, except under the Act which has been referred to and about which the Attorney-General said there were many cases in which it was quite impracticable to apply it. That was, I think, his argument, and I am disposed to agree with him. If that is so, it will be seen that the passing of the Bill will at once lay that woman open to proceedings by her creditors to seize her income in payment of her debts. If that is so, I would like an answer from the Government.
§ The Attorney-General
I think that is so. I see no reason why a married woman should not pay her debts.
§ Sir H. Lucas-Tooth
Although she may have been for three, four or five years, strictly in accordance with the intentions of the settlor who made the settlement, enjoying her income?
§ The Attorney-General
I cannot accept that. It could be neither the intention of the settlor, nor of the courts which approved this doctrine, that married women should be protected against their creditors. As has been pointed out, they are not fully protected even under the existing law, because an application may be made under bankruptcy law for the income to be attached. I am sure that this device would never have been recognised by any court if it had been one for protecting a woman against her creditors. No one would attempt to justify a device of that kind.
§ Sir H. Lucas-Tooth
I think that is exactly the point which is in issue. Where the married woman has run up debts in defraud of her creditors, relying upon the appearance of being a wealthy woman, I would agree with the Attorney-General. But another kind of case often occurs. A married woman, knowing very little about 939 business, incurs substantial debts on behalf of her husband's business, and it transpires that her husband is a thoroughly bad business man. We shall find that creditors will now be able to come down on the married woman, as her husband's partner, and seize exactly the provision which has been made for her by the settlor and intended to be safe against her husband's follies.
§ Sir H. Lucas-Tooth
I do not think so. At any rate, I do not wish to pursue this matter at great length. It is obviously a matter which can be dealt with more properly in Committee. The point I wish to make is that it indicates some weakness in doing what is proposed to be done by the machinery in the Bill. As has been mentioned in the Debate, the court has already some very substantial measure of power to lift a restraint under Section 169 of the Law of Property Act. All the applications to the High Court to exercise the powers under that section are made in chambers in camera and no one outside knows what occurs in those proceedings. The result is that it is impossible for us to know at all how the courts, generally speaking, have exercised the powers.
Those of us who have practised in the Chancery Division have some measure of knowledge because we have seen a certain number of cases. I asked a learned conveyancing counsel what was his experience of the jurisdiction of the courts under section 169 of the Law of Property Act, and he told me that in the 20 years in which he had seen a great number of these cases dealt with in chambers, he had never known a court turn down a single case unless there was some perfectly good reason which anyone would say was a valid reason why the court should refuse to exercise its power, the kind of case where the evidence clearly discloses that the woman in question is under the influence of her husband and intends to do exactly the thing which the settlor intended to prevent.
I believe that the powers of the court have been exercised on the whole widely and wisely under this section, but, on the other hand, there have undoubtedly been cases where the court has taken a somewhat 940 narrow view. I imagine that the case which gave rise to the Bill in the first place must have been one of those. We have no knowledge of it here and it would be quite wrong for us to discuss it. One can only speculate, and one must assume that. That being so, I would agree that it is necessary to amend the section which enables this restraint to be lifted in past cases. I think it could best be done by the kind of device which has been mentioned this afternoon, namely, by recasting the Section into a negative form and obliging the court to take action unless it is shown that it is not in the interest of the woman to have the restraint lifted. That would be the fairest way.
As to the expense—a sum between £50 and £100 payable out of capital has been suggested; if the application is a proper one, it is payable out of capital—it amounts to a matter of shillings a year at present rates of interest and Income Tax, so it is not really an intolerable burden on those concerned. There is no reason why in the case of small estates—those not exceeding £5,000 or something of that sort, the type of case which the Attorney-General described—jurisdiction should not be given to the county courts. They could quite easily be dealt with at a cost of a pound or two. That would be a sounder way of dealing with this sort of case than by the complete wiping out of all these provisions contrary, in some cases certainly, to the intentions of those who made them in the first place.
I believe that the Bill should be amended in order to give an appropriate power to either the Chancery Division or the county courts to deal similarly with protective life interests where it can be shown to be in the interests of the person enjoying the income from the property to lift that protection also. That is the proper way to deal with the Bill, and I should be perfectly happy to meet the wishes of the hon. Lady the Member for Epping that that form of jurisdiction should be applicable not to women only, but to both women and men. I believe that it is necessary in both classes of case. I believe it is possible to amend the Bill on the sort of lines which I have described, and because I think that is so and because I find myself in full agreement with the general intentions of the Bill, I shall vote for its Second Reading.
§ 5.56 p.m.
§ Mr. Ungoed-Thomas (Llandaff and Barry)
I find the atmosphere of this discussion most unusual in this place but, nevertheless, most congenial. Even the right hon. Gentleman the Member for West Bristol (Mr. Stanley) was quite subdued and so was my hon. Friend the Member for Epping (Mrs. Manning). What we are trying to do is really to catch up with the provision which the Chancery Court made on behalf of women over a hundred years ago. The proposal with which we are dealing, restraint on anticipation, is a complete anomaly in modern conditions, and it is for that reason, and that reason only, that I support the Bill.
It is of vital importance that we should fully appreciate the anomalous nature of the provision. Hon. Members have, quite rightly, talked about Income Tax provisions and the intentions of testators and so on, but those are really not the considerations which are most material to the provision with which we are dealing here. We are dealing only with the restraint on anticipation. Therefore, it is necessary to reinforce what my right hon. and learned Friend brought out so clearly in his opening remarks, and that is the origin and the purpose of the restraint on anticipation. As my right hon. and learned Friend said, originally at Common Law the separate property of a woman passed to her husband and he could do as he liked with it. It was to protect women that the Courts of Chancery—courts which have been so often abused in so many places over so many years—intervened and said that if property were settled on a woman to her separate use, it should be her separate property.
The difficulty then was that under social conditions as they were at that time, women being so much under the domination of their husbands, as now they are not, the women were in danger of transferring their property to their husbands, and therefore this ridiculous position resulted. Equity had intervened in order to say that the separate property of a woman should belong to a woman free from the machinations of a husband, and then the woman was free to give her separate property to her husband. It was in order to deal with that that equity intervened again and said that if the settlor definitely stated that the woman 942 should not be free to anticipate her income, then she should not be free from the restraint, and that is restraint on anticipation. That is the sole purpose of restraint on anticipation—protection against the husband.
The position today is entirely different. There is no more room for the restraint upon anticipation. Because the restraint was imposed merely to protect the woman against her husband and not anybody else, then, as my right hon. and learned Friend said, when a woman was not married—either when she had become a widow or before marriage—she could get rid of the restraint upon anticipation, she need pay no regard to it, and she could deal with her property in exactly the same way as a man or woman who was not married. So it was never the purpose of restraint upon anticipation that it should be a protection against creditors or that it should serve any other purpose except to protect the woman against her husband. Then it got into the precedent books, and it was imposed in settlement after settlement; it was introduced regularly by those who drew up settlements in Lincoln's Inn as a matter of course.
Now the discretionary trust to which it has been likened is an entirely different matter. Above all, the discretionary trust was imposed, not as a matter of course for the protection of a married woman against her husband, but to protect the person to whom the interest was given against all the world, not the husband only. Therefore, the discretionary trust and the protective trust were imposed generally where the beneficiary was of such a kind that he needed protection against all the world as contrasted with the restraint upon anticipation which was introduced for protection against the husband only—a survival from an age when married women required that particular protection.
§ Sir H. Lucas-Tooth
May I interrupt the hon. and learned Gentleman for moment? Is he saying that the protective trust has only been used in the special type of case where the person is a spendthrift? Has it not been used in a much wider range of cases?
§ Mr. Ungoed-Thomas
I was just coming to that point. There may be some difference of experience between us on this, and I allow that at once, but, 943 speaking for myself and those with whom I have discussed this matter, protective trusts are imposed deliberately where required in a certain case, because the character of the beneficiary is such that he needs protection against all the world, and not otherwise. It is perfectly true that nowadays we are in danger of having the same kind of development with protective trusts as we have had with restraint upon anticipation. They are not just in precedent books but they are in the statute and they find their way into common form settlements. The danger we are in is that protective trusts will be adopted as a matter of common form in the same way as restraint upon anticipation. I am in complete agreement with the observations made by the hon. Member for South Hendon (Sir H. Lucas-Tooth) that, if not now, in course of time protective trusts will probably raise a problem which will have to be dealt with if not in the same way, then in some way similar to that in which we are now dealing with restraint upon anticipation.
When the position of women changed—and this is the significant development of the restraint upon anticipation—at the same time measures were taken to deal with the restraint upon anticipation. As long ago as 1881 we have the court given a discretion to deal with the restraint upon anticipation and to bind the interest despite the restraint. Points have been made about retrospective legislation. Really "retrospective legislation" has become a catchword and a fetish in this House. There is no objection to retrospective legislation merely because it is retrospective legislation. I agree completely with the observations made by hon. and right hon. Members in the course of this Debate that we have to be careful, where retrospective legislation is involved, that it does not undermine confidence, whether it is dealing with contracts or whatever it happens to be. Retrospective legislation becomes objectionable when it undermines that confidence and affects the state of mind of the people who are dealing with matters under consideration.
That is the objection to retrospective legislation, but it is not merely enough to say that because this is retrospective legislation, therefore we must not touch 944 it. That is not a conclusive argument. The fact of any legislation being retrospective is merely one of the matters which have to be taken into consideration in considering whether or not the particular legislation is desirable. Actually, as my right hon. and learned Friend pointed out, in this case we have retrospective legislation after retrospective legislation. In 1881 we had the courts being given the power to bind the interest which is subject to the restraint upon anticipation taking effect upon settlements made before 1881, perhaps thwarting the intentions of the testator or settlor who imposed the restraint upon anticipation before that year, so that all the arguments on that score which have been made against this Bill could equally have been made in 1881 against the introduction of Section 39 of the Conveyancing Act.
That provision was incorporated and extended by the Law of Property Act, 1921—a further piece of retrospective legislation—and now one hon. Member opposite has suggested that the extension of the discretion which the courts have should be applied to settlements in operation before 1936. Again, a further piece of retrospective legislation. I fail to follow the logic of those who base their opposition to this Bill on the ground that it is retrospective legislation and then themselves, here and in another place, introduce provisions which involve retrospective legislation.
§ Mr. Ungoed-Thomas
I do not want to be rude to the bon. Member but that observation is utterly irrelevant. The point I was making was that the suggestion made by those who are supporting the Amendment, both here and in another place, equally involves retrospective legislation though I agree with the hon. Gentleman that it is not as severe a case as the case involved in the Bill.
Now I come to the objections to giving the court discretion in a case of this kind. Expense has been mentioned, and I agree with the estimates given. The expense 945 will, of course, vary in different cases. It may involve expert evidence, as doubtless it will in the instance given by my right hon. and learned Friend of the woman whose husband was ill and wanted to provide for going abroad to recover. In that kind of case, and in marginal cases of that nature, obviously expert evidence would be involved, it may be on more than one side. Infants might be involved; even cross-examination might conceivably be required. It is very difficult, therefore, to say it can be provided that in each case the cost would be very restricted. It depends on the case. To my mind, however, there is a greater objection than cost.
§ Mr. Gage
May I interrupt the hon. and learned Member before he leaves the question of cost? A great deal has been said about cost, but the hon. and learned Member will remember that we recently passed the Legal Aid Act, which has been postponed because of the exigencies of the economic situation. When that Act comes into force, surely it could be applied to these needy cases.
§ Mr. Ungoed-Thomas
No, because in these cases a fund exists which might exclude the operation of the Act.
To my mind, an even more important objection than cost is the giving of a discretion to the court in this nature of case. I personally have the utmost admiration for the—
§ Mr. Turner-Samuels
Before my hon. and learned Friend leaves the point about costs, would he make this clear? In what way does that case differ from any other case where a person has to go to court? Is there any special ground why it should be exempted as against any other case?
§ Mr. Ungoed-Thomas
I find some difficulty in following the observations of my hon. and learned Friend.
§ Mr. Turner-Samuels
I have no difficulty in finding the reason why my hon. and learned Friend does not understand my remarks. He is making the point that by going to court on an application of the kind he has described, the applicant is incurring costs. In what way does that differ from any other application to the court on any other matter which always incurs costs? If there is any special reason why this sort of case should be 946 exempted, will the hon. and learned Member say so?
§ Mr. Ungoed-Thomas
I am not suggesting that it should be exempted. All I am saying is that we are dealing with the case where a proposal is made that it should be dealt with by the court. What I should have thought was a perfectly obvious objection to its being dealt with in that way was that it involved costs. I am not suggesting exemption from costs in this case more than in any other.
What I consider the more important objection to this matter being dealt with by the courts is that the court would have a discretion in dealing with it. Chancery judges, in their exercise of discretion, have the most sincere admiration of those who practice before them. It is astonishing how humanly and wisely Chancery judges deal, for instance, with the most difficult and sometimes heartrending cases about infants which come before them. I have nothing except unreserved admiration for their exercise of the discretion which they have in those cases. To my mind, however, it is a function of legislation so far as possible—I know it is not always possible—to avoid giving a discretion.
An instance of where the legislature has given a very wide discretion to judges, including Chancery judges, is the Inheritance Act. That Act has imposed upon Chancery judges a discretion which is so wide as to involve the greatest difficulty in its exercise and which must cause anybody who tries to administer the Act the utmost concern. The legislature should avoid giving discretion so far as it can possibly do so. In the present instance, if discretion is given, it would be discretion of the widest possible kind. The hon. Member for South Hendon said that under the Law of Property Act discretion was exercised on a wide basis and very widely interpreted. On the other hand, he referred to the Mountbatten case and others where he said that the discretion was very narrowly interpreted. It is certainly the experience of some practitioners in the law that it has been narrowly interpreted. What it means is that where a discretion is exercised—and, above all, in chambers, where cases are not reported and, therefore, it is not possible, or at any rate not reasonably practicable, to work out readily a body of principles for its 947 application—indeed, the discretion would be so wide as to make it in any case difficult to work out such a body of principles.
In cases of that kind, the decisions must inevitably, through no fault or shortcomings on the part of anybody involved, be apt to vary; and it is most undesirable that there should be a variation in the decisions given in the cases of this kind, or, indeed, in any cases. Therefore, I personally, if I may say so with respect, share the views which have been expressed elsewhere about the exercise of discretion by judges, however eminent. That, to my mind, is the fundamental objection to the exercise of discretion in these cases.
§ Sir H. Lucas-Tooth
Would it cover the point which the hon. and learned Member is making if, instead of having a discretion to lift the restraint, the Clause of the Bill were so framed that it was mandatory upon the judge to lift the restraint unless evidence were adduced to show that such a course was contrary to the benefit of the woman concerned?
§ Mr. Ungoed-Thomas
That would not do away with the discretion, which, although it would be exercised in a different way, would still remain.
That brings me to my final point. I find some difficulty in understanding the precise grounds upon which those who oppose the Bill base their case. It has been argued from the other side of the House that it is bad because it will enable persons to reduce their Income Tax liability and so on, and for reasons of State. It has been argued, on the very contrary, that what is desired is to extend the reasons for which the court can exercise its discretion in favour of the beneficiary—and, perhaps, collateral relations—in order to benefit the beneficiary.
What is the test? Let me crystallise the matter in this way. Supposing a case arises where it is obviously beneficial to the beneficiary to have the restraint lifted in order to dispose of his property in such a way as would reduce his liability for taxation. Where, then, do those who support the Amendment stand? Would they then say, "We come down in favour of the State," or would they decide in favour of the beneficiary? Unless they answer that question, they expose themselves 948 to the suggestion that their opposition to the Bill is not sufficiently well thought out and not sufficiently well founded.
For those reasons I support the Bill. The questions of Income Tax, the discretion of the court and all the rest are really mere incidental matters. The fundamental point is that restraint on anticipation is a special provision which has long outlived the period and purpose for which it was conceived.
§ 6.20 p.m.
§ Mr. Wilson Harris (Cambridge University)
I suppose it is inevitable that a Debate in this House on this subject should resolve itself into what the late Marquis Curzon of Kedleston would have called a legal "Beano." That eminent man had only seen the abbreviation for "beanfeast" in print and applied his own characteristic pronunciation to it. I desire to intervene in this Debate, not because I am a lawyer, but precisely because I am not a lawyer. I agree with the right hon. Member for West Bristol (Mr. Stanley) and the hon. Member for Epping (Mrs. Manning) that this matter raises a comparatively simple principle, which is not at all fundamentally a legal principle and, at the risk of shocking the Attorney-General, I will enunciate it.
For the sake of brevity, I confine myself to the case of the father who is settling something on a daughter on marriage. It should be remembered that he is under no obligation to settle anything on her at all; he can keep the money in his pocket. But if he does make a settlement I contend that he is fully entitled, knowing his daughter and all the circumstances of the marriage, to make the settlement subject to certain restrictions which he considers are in her own interests. Conditions have changed very much in the last few generations. Three or four generations ago as we have been reminded, a woman had very little say in the matter of choosing her husband. Those matters were arranged then "through the usual channels," with results which were sometimes satisfactory and sometimes not. One result was, of course, that the husband got all the wife's money, that usually being his principal reason for marrying her.
But the situation now, the situation with which we have to deal today, is 949 substantially different. Today a young woman goes to her father and says "Will and I"—or "Hart and I"—or whatever names they like to choose, "have clicked." The father says, "Well, my girl it is your funeral, not mine; I hope you will be happy. I will do what I can for you, but I shall have to tie it up a little; I can't have this young man playing ducks and drakes with it." That seems to me perfectly justifiable. The father may know that the daughter, though she possesses all the other virtues, is not good at handling money, or that his prospective son-in-law is not good at handling money, or does not know whether he is or is not good at handling money. In those cases it is perfectly proper for him to attach certain restrictions on the use of the money if he considers, rightly or wrongly, that it is in the daughter's interests. It is not a question of the rapacious, the predatory husband, but also of the feckless husband. Women rather like feckless husbands; I am very well liked myself. Like Mr. Pecksniff, I am a parent and all the proper paternal emotions are seething in my breast.
Unfortunately I have only one daughter, but quite a good one. When she married, I gave her very little, simply because I had very little to give. Not being ready to incur the expense incidental to any operation involving the legal profession, I transferred to her one or two of my few securities, but I took the precaution of keeping the share certificates in my own hands. I am not certain what the legal effect of that was, but, at any rate, it necessitated argument before action. The arrangement, I ought to add, has now lapsed, because I am satisfied that the necessity for it no longer exists.
Now what is the position today? We have had this committee of 1934 and the Act of 1935 which while laying it down that restraints on anticipation shall not be invalid, leaves existing settlements untouched. But we are dealing now with a comparatively small number, and a rapidly decreasing number of cases, because the number is decreasing not merely at the normal rate, but at double the normal rate, since this instrument is voided not only if the husband dies, but also if the wife dies. The Attorney-General has said that the cases probably run into some thousands and certainly not tens of 950 thousands. In a short time they will be reduced to hundreds and it will not be long before they are reduced to vanishing point. When retrospective legislation is involved, we should make certain that a grievance is so acute and widespread that it is appropriate to adopt this extremely objectionable method of action.
It has been said by the Attorney-General that the circumstances have entirely changed, for example, the cost of living has increased and Income Tax has gone up. If he thinks married women are the only people who suffer from those particular disabilities, I ask him to consult people as old as I am who remember when Income Tax was 1s. 2d. in the £, and there was no Surtax. These are not disabilities suffered only by married women; they oppress every citizen. One way of getting rid of the trouble would be to reduce taxation and I suggest the right hon. Gentleman might convey that to the Chancellor of the Exchequer.
I could not help feeling that, contrary to normal practice, the right hon. and learned Gentleman was rather vulnerable in some parts of his argument. For example, he called attention again and again to the decision of Parliament in 1935 to put an end to this particular kind of restraint, but, although he mentioned that, he did not give equal weight to the obvious fact that Parliament decided inferentially that existing settlements should stand.
Let us take these existing settlements. Either the settlors are alive, or they are dead. If they are alive and take the view which the right hon. and learned Gentleman so eloquently expressed that these restraints ought to be removed, I imagine, layman as I am, that the resources of the law are equal to securing their removal. If, on the other hand, the settlors are dead, what, or who, are we to say that though they made a decision in an individual case, knowing all the circumstances of that individual case, and having particular reasons for wanting the restriction, the restriction shall none the less be removed, even though a short lapse of years will put an end to the whole matter?
The right hon. and learned Gentleman talked of the "dead hand," and I was sorry to hear the right hon. Member for West Bristol also refer to the "dead 951 hand." That is constantly invoked to break a certain prejudice. If we are going to argue against the "dead hand," let us argue against it all the way. After all, it was the dead hand which made the gift in the first place, and if we are going to abolish the "dead hand" we had better abolish the settlement altogether, return the money to the settlor's estate—though no doubt the Chancellor of the Exchequer could find some means of impounding it on the way.
I deprecate, too, the argument based on authority. The Attorney-General quoted Lord Simmonds and Lord Uthwatt and so on in support of his case. If I were free to disclose a private conversation, I could quote the names of two eminent judicial authorities, just as weighty, on the other side. I suggest that appeals to authority should be wiped out. I cannot agree with the light view taken by the hon. and learned Member for Llandaff and Barry (Mr. Ungoed-Thomas) of retrospective legislation. For one thing it indicates a lack of respect for the law.
I see from the papers that there was issued today some statement by the Church of England which deprecates the idea of people going forward hurriedly into marriage with the idea that there is always divorce available to get them out of it. Similarly it would be unfortunate if we in this House passed laws lightly and irresponsibly because we knew that we could repeal them with retrospective effect whenever we chose to. That seems to me to bring the law into disrepute.
It is because I have a profound respect for the law that I dislike retrospective legislation. Think where is might lead us if we extended that principle. I believe it is the case that the Law Officers of the Crown now have to confine themselves to their unsubstantial salaries and not as formerly supplement them by equally substantial earnings. Supposing we had retrospective legislation embodying that principle: it would not affect the present Law Officers in this House—I am afraid—but it would certainly affect the Chancellor of the Exchequer and the present Lord Chancellor. Gratifying though it might be to see the retrospective impoverishment of those right hon. Gentlemen we could hardly defend the principle on that 952 ground. It is open to similar objections in this case.
I was rather sorry to hear the Attorney-General quoting and making his own, the reference in another place to "old gentlemen sitting in the Strand." As the whole legal administration in this country is administered in its higher ranges by "old gentlemen sitting in the Strand," for the Attorney-General to quote that rather disparaging phrase, seems to me seriously detrimental to the respect which we all entertain for the law.
§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)
The quotation came from one of the Chancery judges himself, who spoke of his colleagues—I presume he included himself—as "old gentlemen sitting in the Strand."
§ The Attorney-General
I should be very loth to allow it to be thought that I had said anything in disparagement of "old gentlemen sitting in the Strand," most of whom incidentally are in these days quite young gentlemen. I quoted what was said by one of the most eminent Chancery judges in the country when he pointed out that what we were doing was to substitute for the discretion of the old gentleman who had made the will the "old gentlemen sitting in the Strand," and that was retrospective. I hope that it will not be thought for a moment that anything I said was by way of disparagement.
§ Mr. Wilson Harris
I am not for a moment impugning the Attorney-General's motive, but was merely deprecating the effect which it might have on public opinion for anything to be said in this House in disparagement of the "old gentlemen sitting in the Strand."
It will have been gathered from what I have said, that I am not wholeheartedly in favour of this Bill. I regret that it has been introduced, and since it has been I should like to see the Amendment carried. We spend much time here in passing laws; we give long and anxious consideration to the process, and we ought to give equally long and anxious consideration to any question of repealing the law. We ought to give doubly long and anxious consideration to any question of repealing a law retrospectively. It is only when overwhelming reasons for that can be adduced that we should be willing to assent to such a 953 course. This is a narrow and a narrowing grievance which will shortly disappear, and for that reason it is utterly wrong here to invoke the retrospective process in respect of something which will rapidly cure itself by the efflux of time.
§ 6.35 p.m.
§ Mr. Bowen (Cardigan)
I rise to support the Bill. I do not think that I should be justified in going into detail in respect of the arguments in favour of it. The right hon. Gentleman the Member for West Bristol (Mr. Stanley) expressed my sentiments on this subject. However, I should like to deal with one or two of the arguments which have been advanced by those who are opposed to the Bill—by the junior Burgess for Cambridge University (Mr. Wilson Harris) and by other hon. Gentlemen, including the Mover and Seconder of the Amendment. As I understand it, their opposition to the Bill is based on two grounds, and I think that the junior Burgess for Cambridge University developed the arguments on those lines. The first is that there is virtue in this instrument, which is known as restraint upon anticipation. The second is, in particular, that they object to the retrospective effect of this Measure.
I can see some force in the second arugment, and I hope to make some observations about it. With great respect, however, to those who have advanced it, the first point, namely that there is virtue in the instrument which has always been known as restraint upon anticipation, is, I feel, quite wrong. The Hanworth Committee dealt with this matter very fully and came to the conclusion that it was time to make a clause of this kind in a settlement or will illegal. The legislation to which reference has been made, the Act of 1935, laid down that in future a provision of this kind would be illegal.
§ Mr. Bowen
I do not agree. Both the Hanworth Report and the Debate in this House on the Second Reading of the Act 954 of 1935 dealt with the change in the status of women and the emancipation of women, taking account of the fact that they were now entering into trade and business and that there was now not the same need to protect them.
Now that the hon. Member has raised the matter I would refer to what was said by, if I remember aright, the only Member who spoke against the Act of 1935 on its Second Reading, when he spoke about there still being need to protect women against the optimism, influence and control of their husbands. The arguments advanced by the Attorney-General of that time, and incidentally by one of our present Deputy-Speakers, was on the ground that it was quite inconsistent, quite out of tune with the present position of womenfolk in society that it should be within the power of persons making settlements or wills to introduce a clause with a view to restraint upon anticipation.
I am completely opposed to those who now attempt to justify such a power, by adopting this attitude they attack the recommendations of the Hanworth Committee and are against the provisions of the law as it stands today; that is to say, they think that the provision in the 1935 Act which made a clause in restraint upon anticipation illegal should not have been introduced. My view is that such clauses were originally introduced to protect women against their husbands. The effect was not only to protect them against their husbands but for some time at least to protect them also against creditors and against themselves.
The protection so far as creditors are concerned has been dealt with to some degree, though there is some dispute as to how far, by the provisions of the Bankruptcy Act, 1914. I feel that the case was made out in 1935 that married women were certainly now in such a position as not to require to be placed in a category apart from other members of the community requiring special protection either against their husbands or themselves. To my mind that part of the argument against this Bill has no real force. The other argument, that it is meant to be retrospective, that it will be retrospective in its effect, is a much more substantial one. The learned Attorney-General rather underestimated the significance of this Bill from that point of view.
955 There can be no doubt, though it may be in only a few cases, that the effect of this Bill when it becomes law will be that the intentions of a number of people, some in recent years, will be vitiated. It may well be that there are some cases as late as 1934 where a father has made a settlement, subject to a restraint upon anticipation perhaps after his daughter has married, with all the circumstances within his own personal knowledge and having very good grounds for making provision of that kind. But under this Bill when it becomes law that intention, clearly expressed by a person who fully understood what he was doing, will be rendered void.
That, in my opinion, is the only real and valid attack which can be made upon this Bill. To suggest that that is not being done is quite wrong. The number of cases may be very few, and some of them are due no doubt to the fact that this clause was frequently put in as a matter of common form. But making all allowances in that respect, there will be some cases still where we shall be interfering with the wishes of a testator or settlor clearly expressed for good and adequate reasons.
It was with those cases in mind that I hesitated before deciding that I could support this Bill. I do not share the view of the hon. and learned Member for Llandaff and Barry (Mr. Ungoed-Thomas) with regard to retrospective legislation. I consider that any attempt to interfere in those circumstances is something which should be examined with extreme caution. A sentimental argument has been advanced—I do not use the word "sentimental" in any disparaging sense—by the learned Attorney-General and the hon. Member for Epping (Mrs. Manning). That argument, although it naturally appeals from a sentimental point of view, does not really advance the case, because the same argument could be applied with regard to trusts generally, protective trusts, and for altering testamentary dispositions under any circumstances.
I feel that a case is made out for saying that in the overwhelming majority of cases where this clause operates today it is operating to cause hardship and great inconvenience, in most cases contrary to the wishes of the person who inserted that 956 clause. That is, of course, entirely a matter of opinion, but I am happy in my own mind that in the overwhelming majority of cases that is the state of affairs. The objection to the Bill on the ground that it is retrospective is weakened by the fact that retrospective action in this sphere has already been taken two or three times before—in the Bankruptcy Act, certainly in the Law of Property Act of 1925. That was a retrospective Act which interfered with the discretion and wishes of the testator or settlor.
Hon. Members who are opposed to this Bill undermine their own case when they suggest that the matter should be dealt with by an extention of the provisions of the Law of Property Act. All they are saying is, "We are prepared for the wishes of the settlor or testator to be interfered with, provided they are interfered with by separate applications and by a judge of the High Court." To my mind, once we accept the principle that we are going to interfere with the wishes of a testator or a settlor in this way there is no particular merit in saying that it should be done by the extention of the Law of Property Act.
§ Mr. Bowen
I agree that there is that virtue in it and that he could take into account all the particular circumstances. But to my mind—and this is why I have come down on this side after some hesitation—the position of womenfolk today, their status in society, the experience financially and in business matters which they have gained, is such that in the overwhelming majority of cases the object which the testator or settlor had in mind when placing this restraint has already been achieved by the developments in society itself. The testator wished to protect his daughter against her husband, or against herself but she has now equipped herself sufficiently to protect herself without recourse to legal stipulation. It is for that reason that I support this Bill.
There is another aspect to it expressed by the hon. Member for Epping (Mrs. Manning). It is one of the numerous, but certainly not the most serious, illustrations of the invidious position in which married people still are under the law. An example is to be found in the pro- 957 visions of the Agricultural Holdings Act. Under that Act we were reminded that in regard to property held by women subject to a "restraint" condition, when it came to be dealt with under that Act, the woman had to obtain the consent of her husband. Perhaps as a bachelor I cannot appreciate as well as some hon. Members, but I can appreciate that women on principle object to processes of law which produce those results. Despite my hesitation in regard to the retrospective aspect of this matter I feel that on the whole this Bill is the logical conclusion to the Bankruptcy Act of 1914, the. Law of Property Act, the Act of 1935 and the present position and status of women in society.
§ 6.48 p.m.
§ Mr. Turner-Samuels (Gloucester)
I oppose this Bill, although the grounds of my opposition have nothing to do with the points mentioned by the hon. Member for Cardigan (Mr. Bowen). I oppose the Bill on the ground that it is a piece of class legislation, and that it has been brought to this House in the most undesirable context. It is all very well for the hon. and learned Member for Llandaff and Barry (Mr. Ungoed-Thomas) and the learned Attorney-General to give a disquisition on this very ancient and, I am quite prepared to admit, somewhat outworn doctrine of restraint upon anticipation. But, in my submission, that is not the real issue which we have to consider. The real point which affects this particular matter is the moment at which it is sought to introduce this Bill upon the Statute Book. If it were a question of pure law, a matter that I had to decide in normal times, then I admit that the conclusion to which I should come would be quite different.
Let me tell the House why I oppose this Bill. I wonder what the Civil Service thinks about this sort of legislation. I wonder what the railwaymen think about it. This is an important consideration in deciding whether we ought to support this Measure. We are in a very serious economic situation and the Chancellor of the Exchequer has asked everyone to save and to cut expenses. Recently he made some very important cuts. He has even economised on school meals, and a charge of 1s. for each prescription taken to a chemist is to be imposed. That is the essence of 958 our present economic life. We are asked to spend less and produce more. That is why I ask what the members of the Civil Service, who have just had their claims for increased wages refused, think about this matter when their claims were refused on the grounds that they must not have any more money to spend because of the consequential inflationary effect. The same applies to the railwaymen. In addition, the Trades Union Congress have asked workers in every industry not to apply for more wages; and the Government are doing precisely the same thing.
That is the context of which this Bill comes before the House. Make no mistake about it, that is what we [...] Members of Parliament, particularly my hon. Friends on this side of the House, have to consider. That is the view which we have to uphold. In that light, let me consider the object of this Bill. Can anyone deny that the one main object of this Measure is to release money? There can be no question about that. It is designed to help certain people to spend money which they cannot now touch. That cannot be denied. No case of hardship has been made out. It is all very well for the Attorney-General, whose advocacy is usually most admirable and effective, to say in a sort of general way, "I have had letters from so and so. Certain women's organisations have said so and so." That proves nothing except that there is agitation going on here just as there is in a hundred other directions. It does not prove that there is any specific case of hardship. No attempt has been made to specify any particular case which requires this Bill to be passed.
§ Mr. Turner-Samuels
I say that there has not, and I have listened most carefully. The case of a teacher has been mentioned but that is not an example which could be said to be outside the limitations on income and spending laid down by the Chancellor of the Exchequer.
§ Mr. Turner-Samuels
My hon. Friend must not think that I am as naïve as that. Of course, I will come to that. That is peculiarly a case which should and does 959 come within the legal machinery set up by statute whereby anyone in such a case can go to a court for relief. I will deal with that in due course.
Let me compare that situation with the origin of the Bill. As it affects any question of hardship, the origin of this Measure is somewhat unfortunate. It comes here because of a personal Bill initiated in another place. As a result, the Government were placed in a dilemma. Certain hon. Members thought that the Bill was objectionable. They said that it did not include everybody, and that it was not fair that we should cater for one person and leave out everyone else. That was a good point.
The Government appreciated that here was a deep injustice, and therefore they had to do one of two things. They could either proceed with that Measure or drop it. But in order to achieve what that Bill sought to do it was then necessary to introduce this legislation. There is not the slightest doubt that the personal Bill was designed specifically to get rid of a fetter which prevented the beneficiary from freeing money which under present conditions cannot be touched. That is a proposition which I defy anyone to contradict. The origin, the beginning, the inspiration of this legislation was that case. That is not even denied. The money could not be touched. But for that, I assert that this legislation would not have been before this House today.
In times like these the only possible justification for facilities to increase income or to spend more can be found in specific cases—and I emphasise this—of urgency and hardship. That proposition is exactly the same as the one embodied in the White Paper on Personal Incomes, Costs and Prices. I ask anyone who wants to be fair and just to compare the two principles. They will discover that the two are identically the same. What the White Paper states is exactly the proposition I have made—that no case except where there is the most urgent hardship should be given the exceptional relief which is asked for here.
Let us consider the public generally. I do not think anyone denies that among wage earners there is an urgent need of money. The cost of living is going up. The same point applies to professional people. They are probably more hard 960 up than they have ever been before. The same conditions apply to the middle-class. They are all in the same boat. But, of course, I agree that it is in the national interest that their demands for more money, at the present time, should be deferred until we get out of our economic difficulties. I do not suggest that they should be helped, but I also insist that we ought not to have class legislation in order to help one special class of people as against another.
One exception to that doctrine is conceded by everybody. I refer to the people who earn very low wages. The reason is that there is real hardship. Admittedly, their wages are below the dead-line level. A case like that ought to be conceded. But no example of similar hardship has been given to the House. In any event, the personal Bill which caused this legislation was not a case of that kind. I am certain that many people would find their lives unbelievably brightened and magically transported if they were able to enjoy similar conditions to those enjoyed by the party concerned in that personal Bill.
I should like to consider the point of which so much has been made, about applications to the court. Of course, there are hard cases and it is because there usually are that legislation was introduced in 1881 to make it possible to go to court by way of application and ask the judge to give relief from the restraint upon anticipation either entirely or partially. The judge has power to deal with the whole of the matter or to deal with part of the trust funds. That procedure has been working quite satisfactorily ever since 1881. It is perfectly true that the court has to scrutinise these cases very carefully; but so have the National Arbitration Tribunal and the Industrial court to scrutinise the applications for increase in wages by work-people at the present time. Therefore, the relief in these hard cases that have been referred to is secured in that way.
So far as the costs are concerned, I cannot understand why any point is made about the costs involved. Of course, there are costs involved; there always are. I do not know how anyone, except by some system of legal aid, can make an application or bring an action, whether in breach of contract or breach of trust or for whatever purpose, without costs being 961 involved, but what I want to know is why this particular case for relief should be selected for special treatment. It is special treatment, in the sense that it is suggested that these particular persons ought not to have to incur costs by having to make an application for relief to the court. It is sought to do away with the law altogether and thus get rid of the costs. As a matter of fact, in this particular case the party is better off than in most other cases, because here there is what is called a corpus and if it is a proper application the judge can say that the costs shall come out of the trust fund or income, so that the question whether the applicant is poor or not does not come into it at all. If it is a proper application, then the costs come out of the fund; if it is not a proper application, then it should never have been made.
§ Mr. Ungoed-Thomas
What would happen if, in fact, the income of the person was derived from capital which belonged to somebody else?
§ Mr. Turner-Samuels
My hon. and learned Friend can submit all sorts of legal conundrums. [Interruption.] Well, then, assuming that there is a case of that kind, the position is no worse. There is still income—
§ The Attorney-General
Surely, my hon. and learned Friend appreciates that, in that case, which is the common case, the costs would come out of the income and the income of the married woman would be thereby reduced? It is perfect nonsense, if I may say so with respect, to say that the costs will always come out of the estate and that the married woman would suffer only to the extent of a pound a year. It may well be, and it is often the fact, that she actually pays the whole of the costs.
§ Mr. Turner-Samuels
All I can say is that the Attorney-General is reducing this to an absurdity. It means that the estate would be absolutely worthless. There may be such an estate, but the testator should himself have been under restraint if in such a case he had done that. I do not accept that as a fair illustration at all.
The ordinary average case which we are discussing now is the case where there is a corpus, where there is capital and income and an adequate sum to meet the costs, if necessary. In any case no 962 specific illustration has been given showing why this particular money is needed. I have heard it said that sometimes the money may be wanted for business, but I do not share that view at all, because businesses today are fairly successful. I do not think there is need for the wife to be drawing on her money in order to provide more money for her husband in business. That is not what happens today at all.
Most businesses today are fairly successful, and, if they are not, it is not because they want capital, but because they are not the right sort of businesses to have at the present moment. That is what we find in practice—that money in that sense—money from a wife's trust—is not ordinarily needed today for business purposes. In any case, one cannot go opening up any business that one likes, and that is quite right, because as long as there is the Control of Employment Order and as long as the Ministry of Labour has powers of direction, then it is perfectly right that people should not be able to do what they like so far as the opening up a new business is concerned. If we are going to lay down handicaps for people generally, we cannot cut out one class for special treatment.
§ Mrs. Manning
May I point out to my hon. and learned Friend that his statement about businesses not requiring money today is completely untrue?
§ Mr. Turner-Samuels
I would like to come to my next point, which is the question of tidying up the law. Speaking as a lawyer, I am in favour of that, but I am not in favour of tidying up the law in order to enable a special class of people to spend more money at a time when it is injurious to the national economy. The cases envisaged by this Bill are not an exception to that proposition. One has to consider the financial conditions prevailing today. People's money is tied up everywhere, and, in present conditions, this is quite right. The other day, I saw that the Chancellor of the Exchequer was making it impossible for legacies beyond the sum of £500 to go to hard currency countries, and that is literally going to tie up millions of pounds. Last year, the amount of money connected with legacies of that kind was over £10 million.
963 There are numerous other examples. Let us take the case of bonuses. Firms and companies cannot issue bonuses, and dividends are restricted. Companies are not allowed to pay dividends which, in fact, their earnings would justify. It has been mentioned earlier that people cannot get payment of their post-war credits, and many of us know that business people cannot get payment of their war damage claims. If all that is right, why segregate those subject to the restraint on anticipation for preferential treatment? I should have thought it would have been much more worthy if facilities had been provided for the Married Women (Maintenance) Bill, which seeks to increase the amount of maintenance for women up to £2 from the miserable pittance which it is at present. That would have been a much more worthy thing to do.
Another point which has been put forward for this Bill was made in another place, when it was said that it helps towards the equality of the sexes. Really, that argument will not do.
§ Mr. Turner-Samuels
It is within my recollection, and I am sure within the recollection of the House, that when the question of equal pay arose here, the present Chancellor of the Duchy of Lancaster said: "Oh, yes; we agree with the principle, but it is not the sort of thing that ought to be done at the present moment." That is exactly what I am saying about this particular legislation. It is no use talking about this Bill being intended to attain equality of the sexes. That is not the real reason for this particular legislation at all.
Then there is the question of taxation. It was said in the other place that if it is justifiable legislation, one ought not to allow any question of taxation to stand in its way. That, of course, is not the salient point of substance here at all. The crucial objection to the Bill, in my submission, is that it is committing a glaring inconsistency. It is doing for a particular class of persons precisely what the Chancellor of the Exchequer has asked everybody else not to do, and that is why the Bill has raised resentment.
There is not the slightest doubt that it has raised resentment, as can be seen 964 from the Press and learned from those to whom one talks about it. The reason for this resentment is because it is undoubtedly a piece of class discrimination, and such a thing at the present moment is absolutely deplorable. Why the Government were asked to espouse it seems to me to be absolutely beyond intelligent understanding. It certainly has no links with Labour Party policy, and no one is going to suggest to me that there is any mandate from the country for it.
The significant thing is that no legal organisation—the Law Society, the Bar Council or any body of judges—has asked for this amendment of the law. In fact, a very important legal journal has criticised it very strongly indeed. In those circumstances, are we, at a time when everyone in the country is being asked to save, to retrench, and not to spend more than is absolutely necessary, really going to put upon the Statute Book a piece of legislation which will be the means of allowing a certain limited class of people to increase their spending power in this way? I really cannot think that it is right to do that, and I certainly cannot think it is right for a Labour Government to do it.
It may be all very well for the right hon. Member for West Bristol (Mr. Stanley) to give his support to this Bill, but then he is a Member of the Opposition which wants to "set the people free." That is understandable, because that is precisely what this Bill is going to do. It is going to set a limited class of people free to do what nobody else in the country can do. In those circumstances, I do not think that this Bill should be supported.
§ 7.14 p.m.
§ Mr. Manningham-Buller (Daventry)
I am glad to have the opportunity of following the hon. and learned Member for Gloucester (Mr. Turner-Samuels) after the speech he has just made. I may say that it is not my intention or desire to do anything to bring this Debate to a conclusion, but finding myself unfortunately on this occasion not in complete agreement either with my right hon. Friend the member for West Bristol (Mr. Stanley) or with the mover or seconder of the Amendment, I should like to state my reasons why I am not at present dis- 965 posed to go into the Division Lobby and vote in favour of this Bill.
Before I come to that, I should like to say a word about the very courageous speech made by the hon. and learned Member for Gloucester. He regarded this Bill as a piece of pure class legislation. It is, of course, undoubtedly clear that a number of wealthy women will, in consequence of this Bill, if it becomes an Act, be able to gain control over sums of money which are not at the present time at their disposal. That, I think, is absolutely clear and was conceded by the right hon. and learned Attorney-General in moving the Second Reading of the Bill.
It is also clear that the hon. and learned Member for Gloucester was on a good point when he said that this Bill had not been asked for by any body of judges, any committee, the Law Society or the Bar Council. We have grown accustomed in this House, when any legal Measure of a non-party character is introduced by the right hon. and learned Attorney-General, to hear it said that he has consulted the Law Society, the Bar Council or the judges. But I noticed that in his speech today he was silent on all those matters.
I wonder why this Bill has been introduced without such consultation first taking place. The reasons put forward by the right hon. and learned Gentleman were very interesting, and it was apparently the case that the Government, realising that time would have to be taken up in this House with a Personal Bill and having regard also to the Amendment tabled by my hon. Friends, decided to convert that Personal Bill into a Bill of general application. I do not propose to answer all the questions put by the hon. and learned Member for Gloucester, but I hope that the Financial Secretary, if he is going to take any part in this Debate, will answer the very pertinent economic questions which the hon. and learned Gentleman asked. Apart from those two matters, I must say that I thought the hon. and learned Member's plea as a member of the Common Law Bar for further employment for members of the Chancery Bar was not unattractive.
I was astonished by two arguments put forward by the Attorney-General when moving the Second Reading. He said that this Bill put married women on the same basis as spinsters and men, and no 966 doubt, chiefly on that account, it was welcomed by the hon. Member for Epping (Mrs. Manning) on the grounds that it provided further equality for women. Of course, that is a quite inaccurate ground, and in welcoming the Bill for that reason the hon. Lady was really showing her touching faith in the increasing virtue of man because she is inferring by what she said that the predatory instincts of man have decreased since last century.
Of course, it does not follow at all from this Bill that married women will be put on the same basis as spinsters, and that ought to be made quite clear. It is not the case that since 1935 married women have all been free to deal as they like with money put in trust for them. A great many of them, I have no doubt, are subject to protective or discretionary trusts, and all those who benefit under settlements or wills made before 1935 are, of course, subject to the restraint upon anticipation
§ Mrs. Manning
Am I not right in suggesting that this makes for equality because men have never been subject to restraint, but to a discretionary trust?
§ Mr. Manningham-Buller
The hon. Lady is really not right on that because this Bill only affects settlements made before 1935. The other restraints have already gone. Take the case of the married woman. That is itself inaccurate because a great many of the women who have married since 1935 will be subject to protective or discretionary trusts.
§ The Attorney-General
If the hon. and learned Gentleman will allow me, that is not quite right. They may be subject to protective or discretionary trusts, but those trusts will have no relation to the fact that they are married. They will be subject to such trusts whether married or not. The point of this restraint is that it only relates to the period of marriage.
§ Mr. Manningham-Buller
The trust will be applied whether they are married or not, but I am sure that in a great many cases, if not all, the trust was created in anticipation of marriage.
§ The Attorney-General
That may be so, but it affords no protection against the husband. It affords a general protection, and in that respect widows, spinsters or married women will be on exactly the 967 same basis as men. The position of marriage will have no effect on the protective trust.
§ Mr. Manningham-Buller
I was not suggesting the contrary. Indeed, I was not dealing with the point as to whether the protective trust was wider in its ambit than the restraint upon anticipation, but it is obviously wrong to suggest that the effect of this Bill is to put all married women on the same basis as spinsters and men. It does not. What this Bill does is to destroy any protection given to married women in settlements or wills made before 1935 without giving any power to provide alternative protection to those very same women.
The second proposition which the right hon. and learned Gentleman put forward, and which rather surprised me, was his statement that 99 cases out of 100, had been cases where settlements had been entered into without any proper consideraby the settlor. I would like to know on what basis he arrived at those figures. I am prepared to assume that in a great many cases before 1935 the settlor executed the settlement or his will without full consideration of the effect of the restraint upon anticipation, but I have no grounds for supposing that it was 99 cases out of 100 or any number like that.
What I should like the right hon. and learned Gentleman and the House to direct their minds to is this. In some cases, no doubt, that restraint upon anticipation was imposed without proper consideration, but in other cases—and there may have been a considerable number—it may have been imposed after the most careful consideration, and in some of those cases I would suggest that any reasonable individual looking at the situation now would say that it would be right that some protection should still exist. We are agreed—and I think the hon. Member for Epping would agree—that there are some ladies who still need some protection against their husbands and perhaps against other people as well. The hon. Lady would be taking away all protection from those ladies in respect of whom trusts were created before 1935 without any possibility at all of putting in their place a discretionary trust.
§ Mrs. Manning
Is not the hon. and learned Gentleman aware that the vast majority of those wills were made at a time when a father had no idea whether his daughter would need protection or not, or whether she would even be married, and that they were probably made when she was a baby? There is thus created in marriage bitterness and bad feeling which need never have existed.
§ Mr. Manningham-Buller
I am not prepared to accept that the majority of restraints upon anticipation are contained in wills. Most of them come into marriage settlements in anticipation of marriage. Nor am I prepared to assume that when the wills are made the children are all small babies. I do not accept the view that the mere inclusion of a restraint upon anticipation is something which is bound to evoke bitterness between married parties or between a child and parents.
While the hon. Lady may be right in thinking that the virtue of men has increased, does she still think that all men are so good that there is no need for any protection for these women who are protected under the pre-1935 trusts or wills? There have been cases in this century where restraint upon anticipation has defeated the designs of husbands, and if this Bill goes through, the rogue who wishes to marry a rich widow will be very careful to ask, in addition to proposing marriage, whether the marriage settlement for her first marriage was made before 1935.
§ Mrs. Manning
I meant exactly that. I should like the hon. and learned Gentleman to realise that I do feel that the social conscience, general social behaviour and patterns of behaviour of this century are quite different from those of the 19th century, both in regard to the roguery of men and the innocence of women.
§ Mr. Manningham-Buller
I shall not be led astray by the hon. Lady into discussing those subjects in any detail, but I am sure she will agree that there are some cases where there is need for protection of women against their husbands. I discussed this matter the other day with another lady, a Chancery barrister, and I think she put the point clearly when she said, "It would not be necessary if some men were not such cads." I should have 969 thought that if the hon. Lady thought there was need of protection, she would have voted not for the Bill but against it for the reasons which I am about to put forward.
My objection to this Bill is this. While I agree that, generally speaking, there should be much greater power of giving relief from restraint upon anticipation in regard to pre-1935 settlements, I think that that restraint should not be abolished in all those cases without securing in some way or other, some retention of protection for the few cases, it may be, where protection is really required against the husband and perhaps against other people as well. This Bill as it now stands takes away all the protection which the settlor originally intended his child to have.
§ Mr. Ungoed-Thomas
In the case of protection against other people than the husband, does the hon. and learned Gentlemen think that that should continue after the termination of the marriage or not?
§ Mr. Manningham-Buller
From 1935 onwards there has been no power of putting in a resettlement restraint upon anticipation. This Bill takes away restraint in pre-1935 settlements and wills and leaves people affected by those settlements without the protection which could be given to them after 1935.
That is why I am critical of this Bill. Just as now there may be individual cases where the right hon. and learned Gentleman would think it desirable that there should be a protective trust, I feel sure that if the same case had occurred before 1935 the right hon. and learned Gentleman would then have said that there should be restraint upon anticipation. He is now taking away that restraint upon anticipation and leaving the woman concerned without any protection whatsoever. That is my objection to this Bill. I do not know how many cases would be affected by it, but it may result in great hardship for individual women.
As I have said, I, personally, think that the case for relief against this restraint upon anticipation is overwhelming, but at the same time I should like to see that some of those cases still have some protection. I believe it would be possible to draft a Bill which would meet my two objections satisfactorily, which would allow relief but at the same time secure protection where protection was really 970 desirable. There are two possible ways of securing that protection. One which has already been suggested and dealt with in some detail relates to application to the courts for the removal of restraint.
A lot has been said about the expense of such applications. Of course, if the Legal Aid and Advice Act had not been deferred, perhaps there would not have been such force in those arguments, but I am not wedded to that particular method. I am not at all sure that the better way would not be to say that the trustees should have power to put on one side the restraint and yet have the power of referring the matter to the courts for guidance if they felt in any real difficulty about doing what the beneficiary wanted them to do.
I had hoped that it would be possible for me to vote for the Second Reading of this Bill—so that we could do something about restraint on anticipation, and also explore in the course of the Committee Stage the possibilities of removing restraint, while retaining a certain amount of protection. I understand that under the terms of this Bill it will not be possible to table any Amendments, which are likely to be selected, in order to discuss the possibilities of applications to the courts on consent of the trustees so as to make sure, while meeting the case of "the little teacher" and all those other cases which are very real, that protection is not completely done away with in the 50 or 60 pre-1935 settlement cases where there may still be real need of protection.
It is because I understand that these matters cannot be raised on the Committee Stage that, much as I dislike the present restraint on anticipation, I feel bound to vote against this Bill in the hope and in the belief that if it is not carried, the Government will have to think again, as they did after the Personal Bill dealing with the Mountbatten Estate, and introduce a Bill of a more comprehensive nature which will meet the difficulties about which I feel so strongly.
§ Mrs. Manning
Before the hon. and learned Member sits down may I ask him one question in order to make this point clear? Is it a fact that, because he cannot so amend the Bill as to afford protection to a small number of pre-1935 cases, he will vote against the Bill and so penalise the very large numbers of women who would otherwise be relieved?
§ Mr. Manningham-Buller
The hon. Lady has followed my argument, but she has not quite concluded the argument. After this matter has been ventilated in this way, I do not believe the Government could, if the Bill were defeated, leave the position where it now stands. Just as was the case after the Personal Bill, I believe the Government would have to introduce a Bill; and that they would be compelled to do so as a result of the pressure from both sides of the House. They have given way to pressure before today and it is my hope that we should be able to bring sufficient pressure on them to make them introduce a Bill which will meet the points raised.
§ 7.33 p.m.
§ Mr. Leslie Hale (Oldham)
I am sure the House enjoyed, and was grateful to my right hon. Friend for his opening statement which was lucid, cogent and 99 per cent. accurate. We appreciated it. I thought I detected at one stage that the placid waters of Lake Success had not been ruffled at all by the storms of our own economic crisis and that, in the comfort of the Turkish bath, he had not become more fully acquainted with the efforts of the Treasury to deal with the question of settlements altogether. There have been a great many attempts by the Treasury and by Income Tax authorities, both retrospectively and otherwise, to deal with the question of settlements which may be made with the intention—sometimes successful—of avoiding tax—some made so successfully that now it is only by charging fairly high fees for advising people about avoiding tax that I am able to pay my own.
I think the Debate has been a credit to the House. I want quite humbly to put one point, but still to be somewhat dogmatic about it. This is not a retrospective Bill in any sense of the term and I am really surprised that the hon. Member for Cardigan (Mr. Bowen) talked of it in those terms. There are two objections to retrospective legislation. Of course, the fundamental objection and the one which we always make—and even then we often fail to persuade the House of its importance in the particular circumstances—is in criminal law: making a thing which has happened an offence. That, of course, is very much against one's instincts and conscience, but, nevertheless, in these times, it has sometimes to be done.
972 The second objection, as one hon. Member said, is doing something which will shock public confidence in the stability of affairs and the stability of the law. But if it is really suggested that a Bill which, from the time it becomes law, enables contracts to be varied without the consent of the original settlor or the original vendor or purchaser is retrospective, then the plain answer is that every conveyancing Act which has been passed during the past 700 years has done it.
It was done in the Statute De Donis Conditionalibus, and it was done in the Mortmain, 500 years ago, to which the hon. Member for Cambridge University (Mr. Wilson Harris) made a belated opposition in his speech this afternoon. It was done in absolute detail in the Conveyancing Act of 1881. It was done, root and branch, by the Settled Land Act of 1882, by the whole of the Acts of 1925, the Conveyancing Acts and Trustee Acts which did it fully. We have done it in our Town and Country Planning Acts and we do it in the Rent Restrictions Acts. It is a recognised Parliamentary duty to protect people from the consequence of their own acts and from the effects of economic storms and the economic circumstances, or alterations in the law, or shortages and so on. It is not retrospective legislation.
It is rather a curious thing that the Hanworth Committee did not deal with this point at all. They said, "On the whole, we suggest an Amendment of the law with reference to contracts or settlements made after the Act comes into force." So far as I can remember, there was no other observation about that at all. In the opening speech of the then Solicitor-General, later to become much more famous as Minister for Co-ordination of Production, there was only one reference to it.
§ Mr. Hale
I thank my right hon. and learned Friend. I think I am right in my recollection that there was only one reference to it in one sentence: "we propose to alter these contracts from the date of the Act," or words to that effect. The word "retrospection" was never used in the Debate, although in fact it was restrospective with regard to wills, pre- 973 sumably on the principle that where a testator had not died they could be altered, assuming that the testator had read the Act although probably he had not. There is no valid objection here on the grounds that it is retrospective.
§ Mr. H. Strauss
I think I am right in my recollection, which is confirmed by studying the Lord Chancellor's speech in another place, that the Committee unanimously recommended that in all future instruments a clause retaining the restraint should be void; and that they refrained from recommending the abolition of a restraint in instruments already executed. Does not that really mean that they decided in favour of the one and against the other?
§ Mr. Hale
I think that is a fair point and I think the hon. and learned Member will agree that I made that point clearly. I said they made no comment except to say what should happen in future instruments. I hope I said that quite clearly and I quite accept it; one must, of course, assume that when they put in the word "future" it meant something and that they had resolved on balance not to affect existing contracts. Dealing with the case put to the House in 1935, it is curious to recollect, in view of the time we are taking today at this very busy period in our legislation, that this exceedingly important law reform, which dealt with a wide variety of Measures, which were very welcome—there were many variations of the law relating to joint tortfeasors and married women and, indeed, the bankruptcy of married women—passed its Second Reading in a little over an hour and its Committee stage, Report stage and Third Reading were taken "on the nod." So far as I can recollect the issues that are now being put were not then put at all.
I have listened with sympathetic attention to the proposals of hon. Members—principally hon. Members opposite—who suggest that this problem could be dealt with on the basis of the suggestions put forward in the Amendment tabled on Second Reading, if the Committee stage does permit those Amendments formally to be put down. I do say with reserve but with real sincerity that I am really convinced that hon. Members on both sides of the House do not really appreciate the approach to litigation of any kind of the average person. My hon. 974 and learned Friend the Member for Gloucester (Mr. Turner-Samuels) seems to think that one goes to the Chancery Division much as one goes to Keith Prowse to buy a ticket for the theatre. People do not. They dread it. They dread even going to their solicitor. I get letters in my post-bag, as, I am sure, other hon. Members do, and other lawyers do, from people who are afraid even to go to the county court about compensation or money matters. They are frightened. There is a certain horror about going even to their local solicitor. The solicitor's bill, as though it were something incomputable, may be a burden to them all their lives. They want a great deal of reassuring on these questions.
That is the first point. The second point, on the question of expense, is this. If a person came to me as a solicitor and asked advice as to the procedure to be followed to obtain a relaxation of restraint, and as to the probable result, I could do no more than say that, on the whole, it is the sort of thing that is likely to be granted, but that it might cost £50 or £60 or £70, and that I really could not promise anything, and could not guarantee that the relaxation would be given and that unless the client had money it would be a rather dangerous thing to go on with.
§ Mr. Hale
No, it could not. I shall come to that in a moment. Let me finish this sentence. If people in, for instance, Leicestershire or Nottinghamshire want an application in the Chancery Division, the local solicitor has to send the papers on to his agents, who may take another line and brief counsel in London who is not known to him; and they may have to go personally to hear the case, for the court may want to interview them. All that adds to the expense. Nevertheless, I do not want to exaggerate costs. These things can be done cheaply, and this procedure is one which is, generally speaking, as cheap as possible.
Now, as to the question of the corpus. Here my hon. and learned Friend the Member for Gloucester really made it quite clear that he was not really 975 acquainted with the position with which we are dealing today. We are dealing today with settlements made on marriage, generally speaking, or settlements made by will, by which the money is limited to a married woman during her marriage, and afterwards during her widowhood, and, after death, to somebody else. I would venture to say that this is what happens, in at least nine cases out of ten. It is limited to her with power to appoint or power to nominate, but, in general, she is not entitled to the capital at all, and never will be, whether the marriage ceases or not. All she is entitled to is the income, and all she has the right to under this Bill is the right to mortgage, or to hypothecate the future income to which she is entitled under the settlement during such limited period as can normally be hypothecated. That sort of immediate need is generally the sort of case which allows that question to arise. So, generally speaking, it cannot be paid out of the corpus. That being so, we have to consider, I think, two other matters.
§ Sir H. Lucas-Tooth
The hon. Gentleman says that, generally speaking, it cannot be paid out of the corpus. If the matter goes to the court, the court can order the costs to be paid out of the corpus of the property.
§ Mr. Hale
I accept that, of course; but I venture to suggest that the court normally would not. If a lady enjoying an income asked for a mortgage settlement of the income, the court would not say that the costs of application had to be borne by the children. Normally, it would not—unless the purpose of the mortgage was for the benefit of the children, or something of that kind.
§ Mr. Hale
That argument rather defeats itself, because in the sort of case which the hon. Member is visualising an application can be made now. In the sort of case where the application is for relief for special objects, provision is already there. So it is in the sort of case we are now considering, where a special case does not apply, where the applicant is trying to deal with the principle, not a case of special hardship, that we should 976 not get costs of restraint paid out of the corpus.
§ Captain Crowder
May I ask the hon. Gentleman a question for the sake of information? I understand—I may be wrong—that the court can only give relaxation if it is for the benefit of the married woman. The court cannot give relaxation which is for the benefit of the husband or the children. Therefore, we want to extend it. Is that right?
§ Mr. Hale
With respect, I accept the proposition the hon. and gallant Gentleman makes in his concluding words: that discretion is very limited, and that if we leave it on the basis of discretion it needs extension. I would not agree that the meaning of the words would preclude a judge from saying it is for the benefit of the woman that the children should have education according to their station, and so on.
However, I want to deal with the point my hon. and learned Friend the Member for Gloucester made, and which, I am sure, is in the minds of some of my hon. Friends on these benches. It is said—and it is not said wholly without reason, because there was some Press publicity on this point—that the original Bill presented as a personal Bill in the Lords was primarily to avoid the consequences of high taxation; and it is said from this side that one should not pass legislation to enable people to avoid taxation. Well, now, the answer to that is, that, whoever said it, this Bill does not enable anybody to avoid any taxation—except, of course, in so far as anyone may avoid taxation by throwing £100,000 down the drain to reduce interest. It is perfectly clear that the woman would be fully liable for taxation on the settlement funds if she made a hypothecation of future income. It is clear that under the Act of 1946 the Revenue authorities have full power to deal with settlements made for the purpose of avoiding taxation if the instruments were primarily for that purpose. Then it is equally true that there are other safeguards so far as taxation is concerned.
The matter on which I should like my right hon. and learned Friend to give the House some guidance is this. We should like to be assured that these provisions will be strictly enforced, and that, if discretion has been exercised, the atten- 977 tion of the Revenue authorities will be drawn to it under the existing law, and to the fact that the existing law must be carried out in detail, and that there must not be any tendency to exercise discretion in matters of this kind.
I have now to deal with the speech of my hon. and learned Friend the Member for Gloucester, because he put forward some propositions all of which, I think were completely incorrect. I am sorry to make these observations in his absence but I was not aware that he was not to be here. His first proposition was that everybody today was much worse off than he ever was before—which struck me as being very surprising indeed. His second proposition was that private enterprise is so successful that it cannot succeed if capital is not found for it—which is not one to which I entirely subscribe. His third proposition was that one can always get costs paid out of the. corpus, which I have said is wrong. His fourth was that this will save Income Tax, whereas, in point of fact, it does not affect the Income Tax law at all. His fifth point is one I have already dealt with—that people go happily to the Law Courts.
Now I come to the objections to the Bill. I object, first, to its drafting. I always dislike attacking the Parliamentary draftsmen, but I am one of those people who are charged from time to time with finding out what the law is. I have not completely succeeded, but one has to go through the motions of trying to find it out from time to time, and this business of an Act of 1935 which inserts one sentence in an Act of 1925, and of passing another in 1949 which pulls it out and inserts another makes the job of finding out what the law is an extremely complex one, so that we have got to such a state that we need the most elaborate card-index system in the world, or a sort of Scotland Yard fingerprint index system, to enable anyone to discover what the law is at any given moment.
My hon. and learned Friend the Member for Gloucester said there was no Socialist principle in this Bill. The principle in this Bill is that women are to be treated on the same basis of men, and that is a fundamental Socialist principle, and that is why I shall vote for the Second Reading of this Bill without 978 hesitation. It is right it should be done, and whatever may have been the argument in 1935 for the exceptions, there can really be no reason now why we should not say that what I have always regarded as a degrading provision should be abolished completely.
Why are we dealing only with this little bit of it? I would like to refer with reserve and propriety to the able speech made in 1935 on this matter by an hon. Member of this House who now occupies so exalted a position that he would not speak from either side of the House. Reference was there made to the taxation position as an issue of fundamental importance. That is the law which says that a husband can be assessed for his wife's taxes. There used to be a time in our history when an impecunious member of the aristocracy could go to New York, wed a wealthy bride and return with her here. Plainly the position now is that he cannot afford to do that, even if the supply is available. It is impossible for a man of modest income to marry a wealthy woman, because the taxation position becomes hopelessly impossible. The wife cannot maintain her existing position, and the husband cannot run the risk of increasing his financial burden of taxation. It is because of this, I think, quite wicked anomaly, that we have this taxation question arising on settlements of this kind. That is an important issue.
There are in my own constituency many thousands of ladies enjoying an income today with a restraint upon anticipation. That income is normally 16s. or 26s. a week. The restraint on anticipation is created by the fact that the corpus of the fund belongs to His Majesty's Government and the old-age pension is paid out week by week. That income is aggregated with the husband's income for the purposes of taxation, and I think that is monstrous. I could have agreed with the hon. and learned Member for Gloucester if he had made his point in that way, and had said that in dealing with the question of relief from the burden of taxation, we should first consider the greatest hardship on the old-age pensioner having to bear tax on income provided by her own or her husband's industry, on which she has to live and which is being taxed now, contrary, I think, to all our conceptions of ethics.
There was an argument in the days of unemployment that, on the whole, it was 979 not a good thing for a husband or wife to work if it kept an unemployed man out of work. Today when the Government are urging people to work and to go on working up to an advanced age, this anomaly is a very important one, and I hope that we shall have some assurance that it will be considered in the light of this Bill.
In conclusion, I regret that this Bill deals only with one small point. It is remarkable that we should have spent a day on one point of law reform when so many points arise for consideration. Reference has been made to the Inheritance Act, which is virtually a dead letter. It was an Act of great social significance and importance passed to help the married woman and to protect her from an improper settlement, but it has rarely been brought into force because of the limitations on its use. There is the type of case to which I have objection whereby a husband disinherits his wife on second marriage. That is in general a revolting provision, although I can well understand the exceptional case where it could be justified. I wish that we had the opportunity of considering some of these matters. At the same time, I have no hesitation in saying that this Measure is in line with our other Measures of social reform. It is approved by the trend of social advancement and learning. There is no objection to it in principle or in detail, and it is fully entitled on its merits to a Second Reading.
§ 7.55 p.m.
§ Mr. David Renton (Huntingdon)
I am in favour of this Bill for personal reasons. In saying that, I do not mean that I have any personal interest in the effect of it; I mean that I do not in any way commit hon. Members of my party by what I am about to say. The hon. Member for Oldham (Mr. Hale), who is always interesting whether one agrees with him or not, has made a speech with which, in the main, I agree. I was, however, surprised to hear him say that he did not consider this Bill to be retrospective, and I was all the more surprised when he gave his reasons for saying so. I think that even those of us in favour of the Bill must agree that it is retrospective in its effect: but we can justify the retrospective action 980 which it proposes. I shall return to that point later.
The Amendment makes it clear that the opponents of the Bill are willing to apply relief to the cases concerned where such relief is justified. What has puzzled me about the Amendment is that it is very difficult to think of or to find any case in which relief would not be justified. The hon. and learned Member for Daventry (Mr. Manningham-Buller), in his speech in opposition to the Bill, mentioned a number of cases which, I think, he was merely assuming would be cases in which relief could not be given. But even in the kind of case which he had in mind, namely, the case of the woman with the overbearing husband, the court might consider it necessary to give relief; and the fact that the husband was an overbearing person would be taken into consideration by the court. Nevertheless, the court might decide that some kind of relief from the restraint on anticipation was necessary.
If we take the position which I am asking the House to accept that the courts would in fact grant relief in every case, or would not refuse to grant it in any case on a pre-1935 will or settlement, we reach the conclusion that the real and only practical effect of this Bill is to save the delay and expense involved in going to the courts. In other words, by a very simple process we are saving people from delay, expense and uncertainty, besides, as has been rightly said by so many speakers, removing from our law an anomaly, which I would go further and call a piece of nonsense. If it is a fact, that the only real and practical effect of the Bill is to save the trouble of going to the courts to get relief and to grant that relief by legislation instead, then it cannot be said that the Exchequer would lose any money at all.
I was surprised to hear the Attorney-General, in his lucid opening speech today, concede the point that there would be a loss to the Revenue in some cases; for it seems to me, particularly with regard to the kind of case which the Attorney-General had in mind, that the courts would most certainly grant relief and, having granted the relief, arrangements which are envisaged in such cases would have been made with the sanction of the court, instead of with the sanction of this House.
§ The Attorney-General
I agree that in some cases the court might sanction the lifting of the restraint with the result that an arrangement might be made which would affect Income Tax liability. I said that might also happen under this Bill. An interest might be sold for a capital sum and a liability for Surtax might thereby cease. It all depends on the circumstances of each particular case.
§ Mr. Renton
I would suggest that the loss to the Exchequer is much more hypothetical than real and that in practice the Exchequer might lose practically nothing by this Bill. That is a point for consideration.
A point which has been the subject of some conflict of opinion this evening is whether restraints were deliberately inserted before 1935. I must say, having listened to most of the speeches, that I come down in favour of the view—and the weight of expert opinion is very strongly upon that side—that as often as not, restraints were put in merely because they were a matter of precedent. As lawyers know so well, precedents can often obtain a firm stranglehold on the throat of reason; and the addiction to precedents has very often resulted in clauses being inserted in wills and settlements merely because it was "the done thing" at the time. At that time it was the current practice, and people did not think carefully enough about it; that is why they are there.
I was therefore not at all surprised to hear the Attorney-General say that in his opinion, and on the information that he has, in nine cases out of ten the clauses were just inserted as a matter of form. I therefore say that the insertion of a restraint upon anticipation before 1935 was very often due merely to the use of a worn-out custom; and, if I may add without causing any offence,the slaves of custom are the sport of time"—and so they have shown in the course of time, which is largely why we are here this evening discussing this matter.
But assuming that I am wrong about that, assuming that restraints were always deliberately and carefully imposed after taking legal advice and considering all the pros and cons of inserting them, even assuming they were put in because the father was anxious to protect his daughter 982 by providing her with an income in all eventualities, we are still up against this question: would the donor have used the method of restraint upon anticipation to secure that income if before 1935 he had known what the circumstances would be today? To my mind the answer to that is too simple for words. I say without hesitation that no donor before 1935, if he had really been able to see into the future, would have been so unwise from his daughter's point of view as to insert a restraint upon anticipation. I go further and say—and I hope I am not out of Order in saying so—that if deceased donors could be with us in the House tonight, they would be urging us to vote for this Bill.
I know that what is really worrying hon. Members on both sides of the House about the Bill is its retrospective effect. I agree we should be very reluctant indeed—and to this extent I disagree with the hon. Member for Oldham—to pass laws which specifically have a retrospective effect. But—and to this question I have never vet received an answer when discussing the matter with people who disagree with me—are we to assume that circumstances can never change to such an extent as to justify interference with the wishes of somebody who did something a long time ago? Surely there is no absolute bar about this. To use an analogy, it can only be a discretionary bar to our action passing retrospective laws. I suggest we have a discretion in this matter; there is no immutable law about it; and, bearing in mind the circumstances, which I will not go over again, I say that we are perfectly justified in passing retrospective legislation on this occasion, as an exception to the general rule that we should not do so.
The hon. Member for Oldham, in his account of previous retrospective laws, did not mention the doctrine of frustration, which has of course been embodied to some extent in legislation. By means of the doctrine of frustration, which was a doctrine of common law before this House took a hand in it during the war, we have to a very great extent interfered with existing contracts simply on the ground that circumstances have changed. There was a rule of the ancient Roman Law which came down through jurisprudence as the doctrine of rebus sic stantibus—the doctrine that contracts are 983 assumed by the implied intention of the parties to remain binding only so long as the circumstances remain substantially the same as they were at the time when the contract was passed. Now that doctrine has not been accepted in English Common Law; but it is a doctrine which nevertheless has its advantages, and the fact that it has existed for so many thousands of years and been accepted in some countries is surely a factor which we are entitled to bear in mind when using our discretion on an occasion like this.
Let me now turn to the question of the timeliness of this Bill. I think that there are two answers to be made to those who consider that this Bill is untimely. The first is that if a Bill removes an anomaly and drives some sense into the law, then any time is a good time. The second answer I think I have already dealt with, and that is on the question of the cost to the Revenue. If there be a small cost to the Revenue, then I say that our equalitarianism should not go quite so far as to deter us from achieving the main object of this Bill, which is to drive some sense into the law. In any event, for reasons I gave earlier, I would say that the cost to the Revenue would not be very great.
In conclusion, I would remind the House that we are here doing something which is very much overdue. Sir William Blackstone in his "Commentaries" said that husband and wife are one in law, and he added that that one is the husband. Since then, very slowly indeed but resolutely, Parliament has tried to introduce a doctrine of equality. We have not succeeded yet by any means; but we do know that in many ways women are acquiring capabilities which formerly only men could claim. I would go so far as to say that women are responding in an exceedingly sensible way to the moral stresses and strains of modern life, and we owe it to them to treat them with that equality which has for long been considered their due.
In financial matters in particular I dare say it will be within the experience of many hon. Members that women, especially married women, show a very great sense of caution—though husbands sometimes think it to be too extreme a sense of caution. The position we have reached now is, I suggest, even worse than has 984 already been described by the Attorney-General and others, because not only is the woman ruled from the grave by the person who left her the money, but she is in the ridiculous position that she can from her grave decide just what is to be done with the money although she cannot have a say in it during her lifetime. To my mind, that such a situation should continue is just too ridiculous for words, and I am grateful for this opportunity of getting rid of it.
§ 8.10 p.m.
§ Mr. Donovan (Leicester, East)
I confess that I have been sitting on the fence in this matter. I have read the very cogent speech of Lord Simon in another place against the Bill and was convinced by that, and then on reading the equally cogent speech of Lord Simonds I was in turn converted by that. And so I came to the House today in a neutral frame of mind. The arguments for and against the Bill are, I think, very nicely balanced. On the one hand it is asked why should we interfere with the wishes of settlors, there being no general demand for the Bill. I myself, at any rate, have not had anything in my postbag about it. Although the protection is a limited one, why should it be taken away? After all, the committee which sat in 1934 recommended the abolition of this restraint for future years, but left existing settlements alone.
It is however such a curious "in and out" protection. The married woman is protected while she is married, but when she becomes a widow is not protected. The moment she is married again she is protected or restrained again. I have come to the conclusion that most testators adopted this device not after mature and informed consideration, but because it happened to be the precedent which lawyers used when told to draft the settlement.
I have a daughter, and if I were to sit down—that is before 1935—and settle something on her, which is purely hypothetical, it would never occur to me to say that I must protect my girl while she is married, but that I need not protect her while she is unmarried. Probably I should not even know who her husband was to be. But I should know my daughter, and I should know whether she was reliable or unreliable. If I were going to protect her, the last thing I would employ would be a restraint on 985 anticipation because that would not protect her except against her husband. I feel therefore that there is substance in the argument that most of these restraints on anticipation have got into settlements because they are in the precedents of the Chancery Bar.
Then it is said, and I rather agree with this too, that this restraint on anticipation is out of date. It dates from something like 1786 at a time when the moment a woman married, her property, unless settled to her separate use, became that of her husband. This is not the only thing that dates from the seventeen hundreds. We also have the circumstance that the incomes of a husband and wife are aggregated for Income Tax and Surtax purposes. I entirely agree with what my hon. Friend the Member for Oldham (Mr. Hale) said about this, except for one thing. He hoped that the Government would deal with the Income Tax position of married people, but he can take it from me that no Government of any complexion will ever deal with it; because the Inland Revenue has only to go to the Chancellor of the Exchequer of the day and say "Do you know how much it would cost to abolish this aggregation?" And the Chancellor then shrinks from the loss of revenue involved.
I very much doubt, also, whether wives need the protection against their husbands that they needed prior to 1882. The alternative that is proposed is to give a judge the discretion to remove the restraint entirely if he thinks it would be for the benefit of the married woman, her children, her husband or her collaterals. The objection to that seems to me to be that different standards would be applied by different judges which would not lead to justice for everyone. What induces me to come down on the side of the Bill is the fact that Lord Simonds and Lord Maugham, who spent long years in the Chancery Division and speak from their experience, have said that they are convinced the change proposed is beneficial.
But there is one point which troubles me and that is the case where a pre-1935 settlement has been made, and it is known that the moment the daughter can anticipate her income she will go and spend it unwisely. I should like to see some protection in the Bill for that special case. I do not know whether it is practicable or not, but I should like to see 986 some amendment made to the effect that it shall always be open to the trustees of a settlement to go to the court to establish that restraint ought to be retained. In other words, it would mean reversing the different proposal which would make all persons go to the courts to get the restraint removed.
I believe it is thought that if this Bill is passed taxation can be avoided. As regards Income Tax, clearly that is not so because the income will arise to someone and bear tax at the standard rate. As regards Surtax, before 1946 it was possible, by selling the top slice of income to an insurance company to get a capital sum which cost the vendor only 6d. in the £ if he were liable to taxation at 19s. 6d., in the £. The House passed a provision in the Finance Act, 1946, Section 28, whereby if that is done now the income which has been sold is deemed to be the income of the vendor for Surtax purposes, and that applies to any settlement made after the 1946 Budget. "Settlement" is defined in terms which would include any agreement by which income is so sold and as long as that Section is enforced, there is no question now of selling income to a company for a capital sum, and thereby avoiding Surtax. If the income is sold to another individual he would merely have to pay the Surtax which has been avoided by the seller, and the net result to the Treasury would be about the same. My present conclusion is that this Bill should be supported on Second Reading.
§ 8.18 p.m.
§ Mr. Henry Strauss (Combined English Universities)
The hon. and learned Member for East Leicester (Mr. Donovan) has rightly drawn our attention to the excellence of the speeches made in another place and the difficulty of deciding between them. We have had the advantage of hearing from two practitioners in the Chancery Division, the hon. and learned Member for Llandaff and Barry (Mr. Ungoed-Thomas) and my hon. Friend the Member for South Hendon (Sir H. Lucas-Tooth), speeches to which the House listened with great interest, as it always does when Members speak on their own subject. I understood the conclusion of the hon. and learned Member for Llandaff and Barry because he came down wholeheartedly in favour of the Bill, but I confess that 987 I was puzzled by my hon. Friend, because he desired a totally different Bill; instead of total abolition of restraint on anticipation, he desired a greater power of applying to a Chancery judge and other reforms. My hon. Friend said that he proposed therefore to support the Second Reading, but I think he overlooked the fact that, if the Bill is read a Second time, none of the Amendments or reforms he desires will be possible under our Rules of Order on Committee stage.
The reason why I propose to vote against the Bill is because it wholly ignores the wishes of testators and settlors. Many Members have said, and I agree with them, that this is not a thing we should do lightly. I do not wish to argue too long whether the Measure is retrospective, although it has been described as retrospective legislation by great lawyers and the word "retrospective" naturally occurs both to laymen and to lawyers in describing it. The hon. and learned Member for East Leicester mentioned that certain noble Lords with great experience of the practice of the Chancery Division had come down in favour of this Measure. I think he will have noted also that, although he did not speak in the Debate, Lord Radcliffe voted in the minority, and I think he will also have noticed the weighty letter of Mr. John Sparrow in "The Times," dealing with the objections to the Bill as seen by practitioners on the Chancery side. I do not think the hon. and learned Member will find that a predominance of legal knowledge, even on the Chancery side, is in favour of this Measure.
§ Mr. Donovan
If the hon. and learned Member is not careful he will lead me back to that state of uncertainty from which I thought I had escaped.
§ Mr. Strauss
That is my object. I desire to convert the hon. and learned Member, whose intervention, earlier, gave me some hope that he would come down on the same side as myself. I hope that he will at least maintain a neutral state of mind as long as possible, before coming to what I am sure will be an honest conclusion on the facts as he sees them.
I do not think it is disputed that this Bill, in wholly sweeping away the provisions put into settlements and wills by 988 settlors and testators before 1936, quite ignores their intentions. It is very difficult to speculate on what would be their intention now, though, if the Attorney-General had been present, I would have reminded him, because it would not hurt him owing to his being so young, of a speech I once heard from a Chancery judge, now, I am sorry to say, no longer with us. He said he was reaching an age at which he would shortly have to cross the River Styx, and he saw before him a host of indignant testators whose wishes he had misinterpreted and whose charity he had diverted into channels which they never suspected.
I cannot help thinking that a similar result will flow from this Bill, as a result of the wholesale sweeping away of the restraint on anticipation in pre-1936 settlements and wills. I agree entirely with the Attorney-General and, I think, with the hon. and learned Member for Llandaff and Barry that there are obvious differences between this restraint on anticipation and the protective and discretionary trusts or forfeiture clauses which are put into settlements. But what is important is that when, after the 1935 Statute, settlors and testators knew that it would no longer have any effect if they put restraint on anticipation into settlements and wills, a very much greater use was made of these other devices. Although they are quite different they did meet the wishes of testators and settlors who had been deprived of the power to impose a restraint upon anticipation.
The Attorney-General quoted, as has often been quoted, the joinder of infants, lunatics and married women as people enjoying an exceptional status under our law. I am rather surprised that neither the Attorney-General nor anyone else who has spoken in the Debate has quoted what I have always thought perhaps the greatest insult to married women, namely, the title of the Statute of 1935—the Law Reform (Married Women and Tortfeasors) Act, 1935. No one seems to have worried much about that title.
It is, of course, futile to say that some sort of equality is introduced by the Bill. The point has been made repeatedly that a restraint on alienation may be imposed on men, because, if they attempt to alienate, there is a forfeiture clause. On the other hand, women relieved by this 989 Bill will be relieved of restraint on anticipation and will enjoy the property absolutely free from any of these restrictions. I was wholly in favour of the 1935 Act which abolished this doctrine for the future. I agree with everything that has been said by hon. Members on both sides of the House that that is obviously wrong for the future, which was why it was abolished in 1935. I have not heard any arguments put forward why we should wholly disregard all testators and settlors before 1936. The only argument which has been put forward was that this Bill did not differ in kind from what we had already done in one or two statutes, and what some of my hon. Friends were proposing to do as an alternative to the proposal in this present Measure.
If hon. and right hon. Gentlemen will look into the matter a little more deeply they will find that that is not the case. In all the previous cases, which I think are quite wrongly called retrospective legislation, the change made in the law was designed to enable the court to carry out what might be presumed to be the testator's or settlor's wishes. The hon. and learned Gentleman the Member for Llandaff and Barry made a very material contribution to our Debate by citing Section 39 of the Conveyancing and Law of Property Act, 1881. If I might read that Section, I am sure the House will see at once that it makes no such wholesale change, and does not override the wishes of testators and settlors as this Bill does. This is what it says:Notwithstanding that a married woman is restrained from anticipation, the Court may, if it thinks fit, where it appears to the Court to be for her benefit, by judgment or order, with her consent, bind her interest in any property.The thing the court has to look at is the interest of the married woman, and that is also what the testator or settlor had in mind when he inserted restraint on anticipation in the settlement or will. To complete the history, that is a provision which stood until the Conveyancing Act, 1911, which by Section 7 made some addition and repealed Section 39 of the 1881 Act. The provisiog in the 1911 Act is word for word that which we now have in Section 169 of the Law of Property Act, 1925. All settlors and testators who will be affected by this Bill made their settlements and their wills with the full 990 knowledge that those provisions were on the Statute Book. No great outrage would be done if we made a further small Amendment in that provision if we thought fit, but that is utterly different from the proposal to sweep away all restraint and all protection altogether.
Within the last few years this restraint on anticipation has, in fact, saved married women from losing their fortunes. There are no practitioners on either side of the Bar who are not familiar with cases where that has happened. They have also the further knowledge that a testator or settlor since 1935 has been enabled by taking legal advice to secure even better results by other methods than those secured by the restraint on anticipation. That has been done since the 1935 Act was put on the Statute Book.
Therefore, the only people who will be freed from all protection are the beneficiaries of pre-1936 wills and settlements, and we should be freeing them from that protection wholly disregarding, in a way unexampled in our legal history, the wishes of the testators and the settlors. The only other matter to which I would draw attention is, as I said, that I agree with everything that has been said against this doctrine of restraint on anticipation. That is why I was wholly in favour of the abolition for the future in the Act of 1935.
§ Mr. Ungoed-Thomas
Is the hon. and learned Gentleman's purpose in maintaining restraint to protect the woman against her husband or the woman against her creditors, or both?
§ Mr. Strauss
The main thing is to protect her against her husband. The hon. and learned Gentleman made such an interesting speech that I willingly yield to him on any point if he wishes to intervene, but I should explain that I was wholly in favour of that reform of the law.
I should also be in favour of a further reform of the law on the lines of an Amendment which was proposed in another place, or of alternative methods which might be considered in its place. Unfortunately it will not be possible to discuss a single one of those alternatives if we give the Bill a Second Reading.
§ Mr. Ungoed-Thomas
As the hon. and learned Member was insisting so much 991 upon our complying with the wishes of testators, I am sure he fully appreciates that if he supports the Amendment suggested in the other place it would not be for the benefit of the woman the testator had in mind, but of her husband and her collateral relatives.
§ Mr. Strauss
I am not thinking of discussing, nor do I think it would be in order to discuss, the wording of that Amendment. I agree with the suggestion that the courts may have rather narrowly construed the power that they have had since 1881, and still more since 1911. I agree that any change we make in the law enabling the courts to modify the Settlement or Will may go against what the settlor or testator might have wished if he had lived. There is always that possibility, but, if we take sufficient care in our Amendment of the law, such as was taken by the framers of the provisions which I have cited, we shall not go far wrong. Wholly to sweep away a protection which many fathers have, with no unworthy motive at all, put into marriage settlements and wills, is to do something which will inevitably destroy confidence in those who make wills or settlements in the future. It goes against the traditions of our law. It may do far greater damage than those who at present defend the Bill have realised.
§ 8.39 p.m.
§ Lieut.-Commander Gurney Braithwaite (Holderness)
It was inevitable that this Measure should attract hon. and learned Gentlemen on both sides of the House, many of whom have addressed us with their usual ability and eloquence. I am in agreement with the plea of the hon. Member for Oldham (Mr. Hale) against continued legislation by reference, which is very difficult for those who have to refer to old Acts of Parliament. I wish to address myself however not so much to the legal as to the financial aspect of the matter, from the point of view of the Exchequer.
The hon. Member for Epping (Mrs. Manning) comforted herself with two reflections. The first was that this was good feminism and second, that large numbers of married women in small or reduced financial circumstances will benefit. Whatever may be said for the first of those contentions, I dispute the second.
992 Without doubt, the Bill will benefit primarily and almost entirely very large estates. It is almost a Surtax payer's Bill. I say that because where small incomes and small amounts of capital are involved, such as envisaged by the hon. Lady, they are not tied up in this manner; it is not worth while. The object of those wills, bequests and marriage settlements is to provide a considerable income, and one cannot provide a considerable income without considerable capital. I think it unlikely that there are many cases of the kind envisaged either by the hon. Lady or by the right hon. and learned Gentleman, and I shall adduce further evidence in support of that in a moment.
The hon. and learned Member for Gloucester (Mr. Turner-Samuels) reminded us that no one could claim that the Government have any mandate for this Measure. I have searched in vain the pages of "Let us Face the Future," what has now become an almost pre-historical document, and I also searched the Gracious Speech from the Throne delivered at the commencement of this Session. I have read both documents again in vain. There is apparently some urgency about this Measure. It is being introduced just after the official announcement of our economic crisis, and one wonders whether it is the first of the Government's measures for restoring our financial equilibrium. I find it a little difficult to believe because when my hon. Friend the Member for South Belfast (Mr. Gage), in moving the Amendment, gave it as his opinion that had the Mountbatten Estate Bill passed through both Houses this Measure would not have been introduced, I noticed that the right hon. and learned Gentleman nodded, as he does now. I thought it was rather a destructive nod, because, if that is so, what becomes of the claim made by him and the hon. Lady that this is a Measure which will help all married women with small incomes?
§ The Attorney-General
The hon. and gallant Gentleman does not seem to realise that that Bill did not pass through this House because we considered that the Motion put down in the names of certain of his hon. Friends that there should be general legislation was right, and we therefore introduced that general legislation.
§ Lieut.-Commander Braithwaite
That is true, but surely, with the greatest respect to the right hon. and learned Gentleman, that knocks the bottom out of his claim that the Government had this matter under consideration for a very considerable period of time. I repeat that had the Mountbatten Estate Bill passed, it is most unlikely that this Bill would have made its appearance at all. If that is so, with great respect to the hon. Lady, I believe she is mistaken in her view. I see that she is now here.
§ Mrs. Manning
I came into the Chamber because I understood that the hon. and gallant Gentleman would make some reference to me. He very kindly told me that he would do so. I do not think he is knocking the bottom out of my case. The fact that the Attorney-General has said that but for the Mountbatten case we should not have found time for this now does not mean (a) that there are not a large number of women who are not in the Lady Mountbatten class, or (b) that organisations to which I belong have not been approaching the present Attorney-General and his predecessors about it for a long time. The hon. and gallant Gentleman may remember that I said that I wished it could have been on a broader basis, but we have to inch these things out bit by bit from the Government and we are glad to take what they offer us.
§ Lieut.-Commander Braithwaite
The hon. Lady a little anticipated my restraint in giving way, but I am glad to hear her effort to reconcile her conscience. If she reads the Debate she will find a little difficulty in doing so. Anyhow, I do not think we shall quarrel on the basis that this Bill is the heir, or perhaps I should say the heiress apparent of the Mountbatten Estate Bill recently deceased.
Now the right hon. and learned Gentleman seeks to bring within his embrace vast numbers of heiresses. I wonder why? He is, of course, the acknowledged Adonis of the Treasury Bench. It is not so long since a young lady, having spent two hours in the Strangers Gallery, described him to me afterwards as "Heart-throb No. 1." The right hon. and learned Gentleman is perhaps in search of further heart-throbs but I should have thought his time was more fully occupied than that.
994 This is a curious Measure to come at this time following the statement in this House by the Chancellor of the Exchequer on 14th July. May I remind the Financial Secretary, who I think was sitting cheek by jowl with the Chancellor that afternoon, of what his chief said when sketching the gravity of the times. These were the words of the Chancellor of the Exchequer:At the same time, and side by side with our attempt to reduce prices by greater efficiency, we must avoid all countervailing increases in our costs due to rising personal incomes, especially so at a time when each and all of us is called upon to do our utmost and to put forward our best efforts.It is only those with a total disregard for their own future welfare and that of their country—or those who have the active desire to destroy our economy—who will at the present time press for general wage, salary or profit increases. I must again warn the House and the country that unless the maximum restraint is shown in this matter by all sections of the community we shall indubitably find ourselves unable to surmount our difficulties."—[OFFICIAL REPORT, 14th July, 1949; Vol. 467, c. 697.]This is an odd Measure after an appeal like that. Should this Bill become an Act I believe I am right in saying that one estate alone will result in a loss of revenue to the Exchequer of £40,000 per annum.
§ Lieut.-Commander Braithwaite
I want to get on with my speech and I will give way to the hon. Member a little later, but perhaps I may complete this one argument before I do so. The figure may be perhaps not entirely accurate but in an intervention just now the Attorney-General told us that in some cases there would be a loss of revenue under the heading of Surtax should this Bill become an Act.
§ Lieut.-Commander Braithwaite
I shudder to think what your view would be, Mr. Deputy-Speaker, if I endeavoured to debate a capital levy on the Second Reading of this Bill. I think that none would be more restive than hon. Gentlemen opposite.
§ The Attorney-General
Perhaps the hon. and gallant Member will make clear to the House whether he is advocating the retention of this restraint in order to protect the Revenue or in order to protect the married woman?
§ Lieut.-Commander Braithwaite
If the right hon. and learned Gentleman will listen, he will find that it is in order to protect both, but primarily the Revenue. I said that I would devote my speech primarily to the Revenue aspect.
§ Lieut.-Commander Braithwaite indicated dissent.
§ Lieut.-Commander Braithwaite
Nonsense. I listened to the hon. and learned Member for Llandaff and Barry (Mr. Ungoed-Thomas) for a long time without any interruption, much as I was provoked, but I thought he should deliver his speech and I hope that I may be allowed to do the same. Hon. Members opposite cannot say that I am not generally ready to give way.
Surtax payers will get considerable relief under this Measure. I am not opposed to the relief of Surtax payers in certain circumstances which I shall indicate presently. On only two occasions have I crossed that sacred frontier into their midst; only in two financial years. However, I recall that in 1931 when the emergency measures were introduced, the increased Surtax was the only one which was not later restored when the financial circumstances of the country improved.
I am not against Surtax payers as such, but, surely, the point is that this Measure can only be interpreted as a disincentive to thrift. I say that no hon. Member who goes into the Lobby tonight in support of this Bill can ever again decently ascend the platform in connection with the National Savings Movement, and I say that in the plainest possible language. Let us see what it does. Three or four days ago, as we have already been reminded in the Debate tonight, 60,000 civil servants—who are certainly not in the Surtax sphere of taxation—were refused, under arbitration, it is true, an 996 increase in salary. Disability pensioners are not even to have—
§ Mr. Deputy-Speaker (Major Milner)
I really cannot see what connection either of those two items has with the Bill now before the House.
§ Lieut.-Commander Braithwaite
I was merely pointing out that neither—civil servants with pension rights nor disabled pensioners wounded in the war—are in a position to anticipate these capital sums. There is a restraint of anticipation imposed upon them by the Government. However, I use those cases merely as an illustration, and I now pass on to the next point.
Everybody will have to pay more in one way or another in order that these reliefs may be given to these ladies. Every taxpayer, large or small, will have to do something of that kind. When I was talking about Surtax, I thought I saw the Attorney-General smile in a superior manner. I will tell him what I have in mind. I wish to see a general relief of all taxation, direct and indirect, falling upon all sections of taxpayers—Surtax, Income Tax and, particularly, indirect taxpayers. I desire to see the release of post-war credits. It seems extraordinary to me that this particular section of the tax-paying community should be singled out for this special treatment. What would the Chancellor of the Exchequer say if anybody on this side of the House went to him and said, "We cannot live on £3,000 net. We are unable to carry out our public responsibilities, and we really must have some relief"?
I shall go further. What would hon. Members opposite say were a Tory Government to introduce a Bill of this sort at this time? I want to ask that in as unprovocative terms as I can. What would they say? I can imagine the speech which would be made by the hon. Member for Epping. I shudder even to imagine the winding-up speech which might be made from this Box by the Minister of Health in circumstances of that kind.
Are the Socialists really in favour of this Measure? Are they really going to put this through—the "Lucky Ladies Bill"—at a time when their own devaluation of the pound has cut all wages in this country by 10 per cent., and the social services as well. The Financial Secretary, 997 who will be replying shortly, may tell us that no revenue at all is involved in this proposal. But that is not what the Attorney-General said. Even if that were so, I suggest that it is a most unfortunate thing for it to go out to the country from this House tonight.
I do not want to take up to the time of the House any longer, but I would urge some of my hon. Friends who appear to be in support of this Measure, and also hon. Members opposite, to think twice and thrice, before they go into the Lobby tonight in support of this Bill, a Measure which ought to be rejected, and will certainly cost dear at the General Election any hon. Member whose name appears as voting in its support.
§ 8.55 p.m.
§ Lieut.-Colonel Lipton (Brixton)
The new-found zeal of one or two hon. Members opposite in favour of what appear to be Socialist principles will not convince many of us on this side of the House of the validity of the arguments they have put forward. When this Bill was discussed in another place I think it must be generally agreed that the fiscal aspect was regarded as the least important of the considerations with which the other place was called upon to deal. No one in the course of this discussion has argued in favour of the unimpaired continuance of the principle of restraint upon anticipation. Everybody has made it quite clear that to a greater or lesser degree he is prepared to modify the situation as it exists today.
I admit that the House is handicapped by two factors both of which are unknown to us as we deliberate upon this matter. The first unknown factor is that no one can possibly say exactly what was in the minds of testators or settlors when they made the arrangements before 1935 which this Bill seeks to abrogate. Anybody's guess on that subject is as good as mine. It may well be that had they known that in 1949 we were going to abolish the principle of restraint upon anticipation they would have embarked upon some other method. Therefore, I do not see what real value can be attached to the argument that we do not know or that we are going to disregard the wishes of settlors or testators whose arrangements are still operating as far as a limited number of married women in this country are concerned.
998 Even my right hon. and learned Friend the Attorney-General is unable to give the House any firm indication of how many women are involved. He thinks there may be a few thousand. As far as I am able to estimate, the number may very well be less, and it is a diminishing number; so that even if the House does not pass this Bill the problem that this Bill is trying to remove will be solved by mere effluxion of time. As we do not know how many women are involved and how old they are, it is impossible to make any estimate on that basis. It is, therefore, impossible to argue that by passing or not passing this Bill we are going to impose any great degree of hardship.
Then there are other Members who take a half-way position and argue in favour of leaving it to the discretion of the judges on the individual merits of each case. I need add nothing to what was said on that point by my hon. and learned Friend the Member for Llandaff and Barry (Mr. Ungoed-Thomas). The extent to which we should leave matters of this kind, or matters of any kind, to the discretion of judges should be restricted to within the narrowest possible limits. People want to know what their rights are under the law. They do not want to know how their interests may or may not be affected by the mood in which a particular judge may happen to be on the day that he is deciding upon the special circumstances of their case. I do not accept that as a rational solution of the problem with which we are now called upon to deal.
I think it is universally admitted in all quarters of the House that this restraint upon anticipation is an anachronism and an anomaly, and the sooner we get rid of it the better. I can think of larger numbers of people who are interested in much more serious anomalies than the one which we are now discussing and who are not so successful in persuading my right hon. and learned Friend that these other legal reforms, to which it would be out of Order for me now to refer, should take priority over the present proposal. The fact that I may appear a bit upset and more concerned about something which I consider more important than this does not mean that this wretched anomaly should not be blotted out at the earliest possible moment.
§ 9.0 p.m.
§ Mr. Joynson-Hicks (Chichester)
May I, first of all, apologise to you, Sir, and to hon. Members that circumstances have prevented me from hearing the whole of the Debate. I very much wanted to offer some observations to the House, but not without having heard those who spoke earlier. Unfortunately, that was impossible. I want to make certain references to an aspect which does not seem to have gained the same prominence in the speeches I have heard as have the aspects to which my hon. and gallant Friend the Member for Holderness (Lieut.-Commander Braithwaite) referred—the Treasury side and the fiscal side—and the purely legalistic side, to which my hon. and learned Friend the Member for the Combined English Universities (Mr. Strauss) referred. I want to refer to the purely human side of this question.
My hon. and gallant Friend the Member for Holderness was quite wrong in saying that there are practically no settlements of comparatively small sums which will be affected. In my professional experience I do not know of any settlements of a comparatively large sum which will be affected, but I know of a considerable number concerning comparatively small sums—sums producing between £500 and £1,000 a year. They are not very large sums compared with the amounts with which my hon. and gallant Friend was dealing, and certainly they will not create any substantial losses to the Revenue from the Surtax point of view because the beneficiaries are not Surtax payers in any event.
The fact, as I see it, is that it would be far better if it were possible to avoid a complete abolition of the restraint. I was very much attracted by the argument of the hon. and learned Member for East Leicester (Mr. Donovan) who suggested that we should put the present situation into reverse and allow the beneficiaries of these trusts to break the restraint unless the trustees made an application to the court that the restraint should be continued. I had previously tried to visualise something on those lines as a possible way out of the difficulty, because I personally am inherently opposed to contradicting the wishes of any testator or settlor.
There are, however, practical difficulties in the suggestion of the hon. and learned 1000 Member which could never be overcome. I am perfectly certain that in practice not once in a hundred times would the trustees feel themselves able to make such an application. The relationship between the trustees and the beneficiary is an exceedingly close one. They are practically always very good friends, whether the trustees are professional trustees—banks, trustee corporations—or personal trustees.
To go against the wishes of beneficiaries is, in practice, something which trustees will not be prepared to do when they have to come to the point of making an application to the court. They will use all their personal influence, all their persuasive powers and any moral sanctions available to them to persuade the beneficiary to do what they think is right, but rather than go to the courts I believe that in the vast majority of cases they will say, "If you want to do that I shall resign from the trusteeship." When they had resigned from the trusteeship what would happen would be that the beneficiary would look around to find some friend who would take on the trusteeship and would be agreeable to fall in with her wishes. That is what would happen in practice if we adopted that system of enlarging the provisions so that the trustees had a right of stopping the action, so to speak, by making an application to the court.
As to the other line of argument which was advanced in another place, that the courts' existing powers should be considerably increased, that the scope of their discretion should be widened so that they might understand that provided the matter was one for the benefit of the husband or the family or the collaterals, they should be free to break the restraint—how is that to work out in practice? I believe again that the court is going to say, "Parliament has laid down that the principle which we should follow should be to allow the restraint to be broken if it can be established to us that it is for the benefit of any of that pretty wide circle of possible beneficiaries."
On that basis the court is going to say, "Where on earth are we to draw the line? We have been given what is virtually a free hand among all that wide scope of people. It is impossible for us to say that one or another of them is not going to benefit. In practice, we have to give 1001 it to all of them." It would mean, in fact, that, so long as any case could be put up to the court, the court would be practically certain to have to give the benefit of any doubt there might be in its own mind, to the applicant, and the restraint would be broken. So I do not believe there is any safeguard in that line of thought, either.
Therefore, so far as I can see, one comes back to the only possible alternative, and that is that, in order to overcome the very real difficulties which exist at the present time amongst what I believe is a far wider body of people than hon. Members on either side of the House are inclined to suppose it to be, the only possible course is to break, or to give the right to break, this ban on anticipation. After all, it is not an unreasonable thing. Most of the people concerned are now elderly or, at least, middle aged. The circumstances in which they have been living hitherto have been steadily declining.
When these settlements and trusts were first made, they were, generally speaking, made with a strict investment clause which authorised investment in trustee securities alone, regarding which there has been very great depreciation in the yield of the income which is enjoyed by the beneficiaries. In addition to that, the cost of living has steadily risen, and, in the majority of cases with which we are dealing, the beneficiaries have no alternative source of income. Consequently, their standard of living has steadily been falling, and I for one cannot visualise the case in which the testator or settlor, if he could see the circumstances in which his beneficiary—his daughter, or whosoever it may be—is now living would not say to himself, "Why did I put on this ban for the benefit of some other people, in whom I am not nearly so interested as I am in my daughter? Why did I tie her up in such a way that, while her standard of living has been steadily falling, she still cannot touch the capital at all, because it is reserved for someone in whom she is not greatly interested, and in whom I am obviously not so greatly interested because I made the trust primarily in favour of her, and not of the other people?"
Then again, I cannot help thinking that it is not wrong to make this change now. I appreciate the argument that in 1002 1935, when Parliament arrived at its decision, it arrived very sensibly and reasonably at the decision to ban the restraints for the future but to leave the wishes of the testator sacrosanct in so far as they had already been expressed. There again, circumstances have so greatly changed that I believe that we should be more observing the wishes of testators and settlors, were they able to express their wishes today, if we made this change now, than if we did not make it. That is all I have to say, but I feel that this is a matter in which we shall be doing right if we extend the opportunities for these people to gain the benefits which I believe the settlors and testators would have wished them to gain.
§ 9.10 p.m.
§ Mr. Wyatt (Birmingham, Aston)
I want to take up the time of the House for only a few moments. I think that it was on the whole a mistake to introduce this Bill at this particular time because there are more important uses for Parliamentary time But the Bill, having been introduced, should be considered on its merits and without any other considerations being allowed to interfere. It is obviously a common-sense Bill and it removes a rather senseless anomaly directed against married women which cannot be directed against males.
It has been said on the other side of the House that if it were not for the fact that there had been a Private Bill called the Mountbatten Bill, this Bill would not have come before us in this shape today, and we should not have had to waste a Parliamentary day in considering it. That is quite true. If the Bill had been related, for instance, to the Stanley family and not to the Mountbatten family, it would have gone through like a dream and without a murmur. The reason why there is so much opposition to it from the other side of the House has nothing to do with the merits of the Bill at all. It is based entirely upon personal, political animosity against a Member of another place who was a very fine Viceroy of India but who happened to carry through a policy in which be believed and in which hon. Gentlemen on the other side did not believe. This is the way in which they attempting to pay him out.
§ Mr. Manningham-Buller
If the hon. Gentleman had been listening to the 1003 Debate today, he would not have heard that suggestion put forward from anyone on this side of the House. The suggestion about the Stanley family, I should have thought, was entirely unwarranted and completely unjustified.
§ Mr. Wyatt
I would not expect to hear the suggestion made openly; that would have been a rather foolish way of approaching the matter. One hon. Gentleman went so far as he felt was reasonable or advisable in that direction; and this is the truth of the matter. Had it not been for the fact that Lord Mountbatten had been a very successful Viceroy of India, carrying through a policy of which the Opposition did not approve, this day would not have been wasted, and the Bill would have gone through straight away. We have heard all day a process of mealy-mouthed rationalisation of this despicable underhand action directed against a member of their own social class because Members of the Opposition have felt he had in some way betrayed them. This most disgusting, sickening parade of hypocrisy, dressed up in legal terms, has been produced in order to justify something which dead-end kids would be ashamed of doing.
§ Mr. Martin Lindsay (Solihull)
On a point of Order. I wish to ask Mr. Deputy-Speaker, whether the hon. Gentleman is entitled to impute motives of hypocrisy to this side of the House?
§ Mr. Deputy-Speaker
I do not think that the remarks were addressed to any particular individual, and I understand the Ruling to be that if remarks are addressed generally there is no objection to them.
§ 9.14 p.m.
§ Sir John Mellor (Sutton Coldfield)
I agree with the hon. Member for Aston (Mr. Wyatt) that this Bill has been introduced at the wrong time. From the rest of his remarks I differ most definitely. I think it would be well if I read the terms of the Motion which my hon. Friends and I put down when the Mountbatten Bill came before this House, in order that it may be perfectly clear that our objection to that Bill had no regard to persons whatsoever and would have been put down to any Bill which came to this House, whether it came from persons mighty or humble. The terms of our Motion were these: 1004That this House declines to give a Second Reading to a Personal Bill promoted to secure an amendment of the law which, if justified, should be made by Public Act for the benefit of all whom it may concern.This Bill is designed to make retrospective a provision which the 1935 Act deliberately refrained from making retrospective. I was rather surprised to hear the hon. Member for Oldham (Mr. Hale) and others deny that this Bill is retrospective, for that seems entirely absurd. The Law Revision Committee presided over by the then Master of the Rolls, and having a very formidable membership, quite clearly recommended that the Bill which they foreshadowed should not operate retrospectively. They recommended thatrestraint upon anticipation should be abolished by legislation as regards all settlements, whether made by deed or will, which take effect after such legislation comes into force.Following upon that, the then Lord Chancellor, Lord Sankey, in moving the Second Reading of the Bill said—and I think I am entitled to quote what he said, as it was a statement of Government policy:The Committee's recommendation is that the abolition of the restraint should be confined to future settlements. To break in by retrospective legislation upon innumerable existing settlements and wills that are already in operation and cannot be altered by the testator would, it appears to me, be unjust and would produce endless confusion. Power already exists under the Bankruptcy Act whereby the Court can make the income, although subject to the restraint, available for the creditors of the bankrupt married woman, and under the Law of Property Act to lift the restraint when the Court considers that so to do would be to the benefit of the married woman and she consents to the operation. But further than that I am not prepared to recommend your Lordships to go.If to include the pre-1935 settlements would have been retrospective then, it is still more retrospective now; and if it would have been unjust then it would be equally unjust now. The reason why—and I think this is evidenced from the Debates which took place in that year—it was considered that it would have been unjust was because the testators and settlors, if they had realised that their provisions would be rendered inoperative by legislation, could have—whether we call them protective trusts, discretionary trusts, or other provisions for forfeiture, and so on—taken steps or made other dispositions which would have as near as possible secured their intentions.
1005 The Government appear to be trying to take credit this evening for being the emancipators, in a financial sense, of married women. Well, I do not think that any Government—I repeat, any Government—should claim that they are emancipating women financially unless they are prepared to remove the iniquity of joint assessment of husband and wife for taxation. Until that is swept away there will be no true emancipation of married women.
Much has been said about the anachronism of the restraint upon anticipation as it applies to pre-1935 wills and settlements, and a good many people have spoken reproachfully of the dead hand. People seem ready enough to accept benefactions under wills, but whenever those benefactions are in any way restricted by conditions they seem to dislike it very much and to be very ready indeed to bite the hand that has fed them.
Members have said that this Bill is justified because of the change of circumstances, but in most cases settlors and testators have not put in the provision of restraint upon anticipation having regard so much to possible circumstances as to human nature. Although in the past 15 years circumstances have changed, I do not think human nature has changed so very much. The main circumstance which at the moment is creating difficulty is the great burden of taxation, but are we to assume that the present rates of taxation are to remain indefinitely? If the present Government remain in power they may get worse, but with a change of Government we have considerable hope of alleviation.
My hon. Friends on this side of the House have more than once pointed out that there has really been no demand for this Bill. Certainly I have not been aware of any demand, although I have received a certain number of letters, the writers appearing to think that their cases would be remedied by this Bill, although in every case they were mistaken. It is perfectly clear that if the Mountbatten Bill had passed through this House without check, this Bill would not have been introduced, and there we have most clearly its origin.
§ 9.22 p.m.
§ The Financial Secretary to the Treasury (Mr. Glenvil Hall)
We have had a full discussion and a great many 1006 learned arguments from those who are experienced in the law. I have listened to most of the Debate, and I think I carry the House with me when I say that no material point on either side of the case has not been voiced. It is impossible for me to find any new argument to place before the House in winding up this Debate. The speech of the Attorney-General left nothing more to be said, and, having listened to it carefully, I was rather surprised that some Members opposite had the temerity to put the opposite point of view. It seemed to me that the Attorney-General covered the ground completely and answered in advance every criticism that has since been levied against the Bill.
The difference between those who support and those who oppose the Bill is confined to one consideration only. Few, if any, have upheld the doctrine of restraint as a matter of principle. All who have spoken have spoken against the principle as such. The difference that has shown itself between those in favour and those against has been whether we should legislate in retrospection and nullify the desires of those who have made settlements on their dependants.
I unhesitatingly agree with those who take the view that retrospective legislation is undesirable. It is generally undesirable, and particularly is it so when it upsets the wishes of the testator or settlor. If that proposition is sound—and I think it is generally agreed, in spite of what my hon. and learned Friend the Member for Llandaff and Barry (Mr. Ungoed-Thomas) said—it follows that the reasons which now make it necessary to legislate as we propose in this Bill must be of such a character and weight as to over-ride all other considerations.
The only question for us to ask ourselves before voting tonight is whether what we have heard from the Attorney-General, and from Members on both sides who have supported the Bill, is of such over-riding importance and character as to lead us to believe that is our bounden duty to nullify the wishes of those who have died, and to lift this restraint from those upon whom it is imposed at the moment.
The right hon. Member for West Bristol (Mr. Stanley) said he thought this was a non-party matter, and to a very large extent speeches from both sides have 1007 shown that that is so. Two speeches from the Opposition benches in favour of the Bill were excellent, both in argument and persuasiveness—those of the right hon. Member for West Bristol and the hon. Member for Chichester (Mr. Joynson-Hicks). I must, however, correct one point made by the right hon. Member for West Bristol. He said that he thought the reason why the Mountbatten Estates Bill had been promoted was that Lady Mountbatten wanted to avoid paying Surtax. That is not true. We are not dealing with that Bill now, and I do not want to refer to it more than is necessary, but I can assure the House that that Bill was not promoted to enable anyone to dodge paying a fair share of tax. It was promoted because changed circumstances and modern taxation made it absolutely essential for Lady Mountbatten to have greater control over the money which had been left to her.
I should now like to deal with the Inland Revenue point. It has been said, particularly by those opposing the Bill, that if the Bill is passed there will be a diminution of revenue from Income Tax and certainly from Surtax. The speeches made by my hon. and learned Friend the Member for East Leicester (Mr. Donovan) and the hon. Member for Chichester should dispose of that suggestion. In any case, supposing it were true, it is no argument against the Bill. It is not, and never has been, the view of the Inland Revenue that persons should be compelled to retain property so that they would have to pay tax upon it. If hon. Gentlemen opposite desire that policy to be embodied in the law of the land, they can put the proposal forward at the proper time. Up to now, so far as I know, no responsible person has ever suggested or wanted, on that ground, to cripple an individual and take away his freedom to do what he would with his own property in order solely that he should continue to be taxed upon it.
I should like to say a word about the joint assessment of husband and wife. Several hon. Members on both sides have referred to this. It may be that at the proper time some Chancellor of the Exchequer, if he is inclined, will make a change in the way in which husbands and wives are assessed. But husbands and wives can, now, if they are so 1008 minded, have separate assessments. What they cannot do is to take advantage of the fact that they are married and have a joint household. If one income serves them both or two incomes are jointly held, the couple cannot enjoy these advantages and at the same time those of being single. [HON. MEMBERS: "Why?"] A single person is entitled to certain allowances. He gets an allowance of £110. If a man is married, for himself and his wife he gets an allowance of £180, and it would be grossly unfair if they were allowed £110 each although, they were, in fact, living together.
There is another consideration to which I should like to draw the attention of the House. Surtax only begins when a person's income reaches the £2,000 mark, and it would be quite possible if separate assessments allowed a certain manipulation of the husband's income to take place, for a man with an income of £3,900 so to arrange matters that neither he nor his wife paid any Surtax at all. The Inland Revenue for its own protection has to watch these things. That is one of the very sensible reasons why the suggestion made by the hon. Member for Sutton Coldfield (Sir J. Mellor) cannot be acceded to.
My hon. and learned Friend the Member for Gloucester (Mr. Turner-Samuels) struck the only discordant note on this side of the House. He said, amongst other things, the policy behind this Bill ran counter to the White Paper policy on personal incomes, and he committed himself to the assertion that, whilst people are being asked to cut down expenditure, this Bill, in fact, invites them to spend. A short answer to my hon. and learned Friend is that the removal of restraint, which this Bill seeks to carry through, involves no extra charge on industry, as wage increases would undoubtedly do.
§ Mr. Turner-Samuels
That is not my point at all. My point was that this was, making more money available in that particular case for spending if it were wanted, which is against what the Chancellor has said should apply to everybody else in the country.
§ Mr. Glenvil Hall
My hon. and learned Friend is now telling me that he did not say what we think he said. I am delighted 1009 to find that he did not. If my hon. and learned Friend will cast his mind back I think he will remember that he made references to the railwaymen and to other people in industry. To us, there could have been only one implication to place on what he said, and that is the implication I have put upon it.
§ Mr. Manningham-Buller
Are we to take it from what the Financial Secretary has said that the Chancellor of the Exchequer's statement, when he referred to personal incomes, only meant wages?
§ Mr. Derek Walker-Smith (Hertford)
The right hon. Gentleman has been several minutes dealing with the point which his hon. and learned Friend did not make. Will he now deal with the point which his hon. and learned Friend did make?
§ Mr. Glenvil Hall
I think that the hon. Gentleman has only recently come into the House. There may be good reasons for that, but, unless he contradicts me, I am going to assume he did not hear the speech made by my hon. and learned Friend.
§ Mr. Walker-Smith
The hon. and learned Member for Gloucester (Mr. Turner-Samuels) has put, with admirable lucidity and brevity, a point which he now wishes the right hon. Gentleman to deal with. I am asking whether or not the right hon. Gentleman intends to deal with it.
§ Mr. Glenvil Hall
I was saying that I was about to deal with the point which my hon. and learned Friend made in his interjection, but before I had time to do so the hon. Member for Hertford (Mr. Walker-Smith) pressed me to answer it. I assure him that I have no intention of running away from the point. I was about to answer it, and if I may now do so, I will. The answer is that the removal of restraint does not itself invite spending. It enables a woman to deal with her own property, subject to general White Paper policy. We are not, because we lift this restraint from certain married women, inviting them immediately, one and all, to go in for an orgy of spending.
§ Mr. Turner-Samuels
What the right hon. Gentleman has said was not an answer to my point. I did not say that the Bill invites anybody to spend any money. I say that it is increasing the amount of money over which these people are to have power, if they want, to spend it. That is the very antithesis to the proposition which the Chancellor of the Exchequer has put forward.
§ Mr. Glenvil Hall
No one denies that the very act of lifting this restraint will liberate certain sums which, if the owners are so minded, will be spent; but hon. and right hon. Gentlemen opposite, as well as my hon. and learned Friend are jumping straight from that point to the supposition that the money will in fact be spent. My point is that there is no reason why women who suffer under this restraint—it is unjust and that is why we are lifting it—will act as is suggested. We must not conclude that we should not do an act of justice because certain events may possibly follow in certain circumstances.
My hon. Friend the Member for Oldham (Mr. Hale) put a point to me which I did not altogether follow. He asked me if I would give him an assurance that the Inland Revenue does not use its discretion in favour of Surtax payers. If by that he meant, as I think he must have done, that in certain circumstances where a Surtax payer finds a great diminution in his income when he is faced with Surtax, the Inland Revenue out of sympathy lets him off, I have to tell my hon. Friend that the Inland Revenue have no legal right so to do and that they do not do it. Where a man dies and it is quite obvious that his estate cannot bear the Income Tax, the Inland Revenue may eventually write that amount off, but when it does so it has to report the matter to the Comptroller and Auditor-General, and in the end the Public Accounts Committee deals with it. Therefore it is quite impossible for the Inland Revenue to use a discretion in the sense in which I believe my hon. Friend meant it; they have, like other people, to comply with the law.
To sum up, it seems to us who support the Bill that this restraint, as has been said more than once, is an anachronism and a strange anomaly. It applies only to women, only to married women, and only to some married women. It was designed originally for 1011 one purpose and one purpose only, and that was to circumvent the old Common Law rule which gave a husband complete control over his wife's property. This principle has ceased to apply for quite a long time, and under the Married Women's Property Act, 1882, when a married woman's property became her own, it was quite obvious that this old rule of equity, the Chancery rule, ceased or should have ceased to have any validity. Therefore, when in 1935 Parliament in its wisdom decided that for the future this provision should not apply and that it should be void even if it were put into a settlement or will, it was only one further step to the proposals which are now being made, particularly since, in the Conveyancing Act, 1881, Parliament, again in its wisdom, gave those upon whom this restraint was being imposed for certain limited purposes the right to go to the court.
Therefore, although none of us likes retrospective legislation, retrospective
§ legislation in this matter already applies. It seems to us, and it has been said with great force and clarity by more than one speaker during the Debate, that the time has come for us to make a clean job of this and to sweep this anomaly away once and for all. With great confidence I therefore invite the House to vote for the Second Reading of the Bill.
§ 9.44 p.m.
§ Mr. Baldwin (Leominster)
I have no interest in the Bill except on one point. It is interesting to see the sympathy of the Treasury for some of these women who may have an income of £3,000. I am wondering whether the Treasury will now have some sympathy with those women whose fathers or husbands have died and left them post-war credits which they are not entitled to have until they become 65 years of age.
§ Question put, "That the words proposed to be left out stand part of the Question.".
§ The House divided: Ayes, 180 Noes, 47.1013
|Division No. 272.]||AYES||[9.48 p.m.|
|Acland, Sir Richard||Field, Capt. W. J.||Linstead, H. N.|
|Adams, Richard (Balham)||Follick, M.||Lipton, Lt.-Col. M.|
|Allen, A. C. (Bosworth)||Fraser, T. (Hamilton)||Longden, F.|
|Allen, Scholofield (Crewe)||Freeman, J. (Watford)||Lucas-Tooth, Sir H.|
|Alpass, J. H.||Ganley, Mrs. C. S.||McAdam, W.|
|Awbery, S. S.||Gibson, C. W.||McEntee, V. La T.|
|Ayles, W. H.||Glanville, J. E. (Consett)||McGhee, H. G.|
|Ayrton Gould, Mrs. B.||Gordon-Walker, P. C.||McKay, J. (Wallsend)|
|Balfour, A.||Grenfell, D. R.||Mackay, R. W. G. (Hull, N. W.)|
|Barton, C.||Grey, C. F.||Macpherson, T. (Romford)|
|Battley, J. R.||Grierson, E.||Mainwaring, W. H.|
|Bechervaise, A. E.||Griffiths, D. (Rother Valley)||Mallalieu, E. L. (Brigg)|
|Be[...], H.||Guy, W. H.||Manning, Mrs. L. (Epping)|
|Beswick, F.||Hale, Leslie||Mathers, Rt. Hon. George|
|Blackburn, A. R.||Hall, Rt. Hon. Glenvil||Mellish, R. J.|
|Blenkinsop, A.||Hamilton, Lieut.-Col. R.||Middleton, Mrs. L.|
|Bowden, H. W.||Hannan, W. (Maryhill)||Mitchison, G. R.|
|Bowen, R.||Hannon, sir P. (Moseley)||Moody, A. S.|
|Bramall, E. A.||Hardy, E. A.||Morgan, Dr. H. B.|
|Brook, D. (Halifax)||Hare, Hon J. H. (Woodbridge)||Morley, R.|
|Broughton, Dr. A. D. D.||Harrison, J.||Morrison, Rt. Hon. H. (Lewisham, E.)|
|Brown, T. J. (Ince)||Hastings, Dr. Somerville.||Moyle, A.|
|Burden, T. W.||Henderson, Joseph (Ardwick)||Neal, H. (Claycross)|
|Champion, A. J.||Herbison, Miss M.||Oliver, G. H.|
|Chetwynd, G. R.||Holman, P.||Orbach, M.|
|Cocks, F. S.||Holmes, H. E. (Hemsworth)||Paling, Rt. Hon. Wilfred (Wentworth)|
|Coldrick, W.||Horabin, T. L.||Paling, Will T. (Dewsbury)|
|Collindridge, F.||Houghton, Douglas||Palmer, A. M. F.|
|Collins, V. J.||Hudson, J. H. (Ealing, W.)||Pannell, T. C.|
|Colman, Miss G. M.||Hughes, Hector (Aberdeen, N.)||Parker, J.|
|Cooper, G.||Hynd, H. (Hackney, C.)||Parkin, B. T.|
|Corlett, Dr. J.||Hynd, J. B. (Attercliffe)||Paton, Mrs. F. (Rushcliffe)|
|Dalton, Rt. Hon. H.||Irving, W. J. (Tottenham, N.)||Paton, J. (Norwich)|
|Deer, G.||Isaacs, Rt. Hon. G. A.||Pearson, A.|
|Digby, S. Wingfield||Jeger, G. (Winchester)||Popplewell, E.|
|Dodds, N. N.||Jenkins, R. H.||Porter, E. (Warrington)|
|Donovan, T.||Jones, J. H. (Bolton)||Porter, G. (Leeds)|
|Duthie, W. S.||Joynson-Hicks, Hon. L. W.||Proctor, W. T.|
|Ede, Rt. Hon. J. C.||Kenyon, C.||Pursey, Comdr. H.|
|Edelman, M.||Kinley, J.||Randall, H. E.|
|Edwards, W. J. (Whitechapel)||Lawson, Rt. Hon. J. J.||Ranger, J.|
|Ewart, R.||Lee, Miss J. (Cannock)||Reeves, J.|
|Farthing, W. J.||Lindsay, M. (Solihull)||Renton, D.|
|Ridealgh, Mrs. M.||Studholme, H. G.||Wells, W. T. (Walsall)|
|Roberts, Goronwy (Caernarvonshire)||Summerskill, Rt. Hon. Edith||Wheatley, Rt. Hn. John (Edinb'gh, E.)|
|Rogers, G. H. R.||Swingler, S.||Whiteley, Rt. Hon. W.|
|Royle, C.||Sylvester, G. O.||Wigg, George|
|Scott-Elliot, W.||Taylor, H. B. (Mansfield)||Wilkins, W. A.|
|Segal, Dr. S.||Taylor, R. J. (Morpeth)||Willey, O. G. (Cleveland)|
|Shackleton, E. A. A.||Thomas, D. E. (Aberdare)||Williams, Ronald (Wigan)|
|Shawcross, Rt. Hon. Sir H. (St. Helens)||Thomas, Ivor Owen (Wrekin)||Williams, W. R. (Heston)|
|Silverman, J. (Erdington)||Thomas, John R. (Dover)||Wills, Mrs. E. A.|
|Smith, C. (Colchester)||Thorneycroft, Harry (Clayton)||Woodburn, Rt. Hon. A.|
|Smith, Ellis (Stoke)||Thurtle, Ernest||Woods, G. S.|
|Smith, S. H. (Hull, S. W.)||Tolley, L.||Wyatt, W.|
|Soskice, Rt. Hon. Sir Frank||Tomlinson, Rt. Hon. G.||Yates, V. F.|
|Sparks, J. A.||Ungoed-Thomas, L.||Young, Sir R. (Newton)|
|Steele, T.||Usborne, Henry||Younger, Hon. Kenneth|
|Stewart, Michael (Fulham, E.)||Wallace, H. W. (Walthamstow, E.)|
|Stokes, R. R.||Watkins, T. E.||TELLERS FOR THE AYES:|
|Stubbs, A. E.||Weitzman, D.||Mr. Snow and Mr. George Wallace.|
|Agnew, Cmdr. P. G.||Granville, E. (Eye)||Pickthorn, K.|
|Baldwin, A. E.||Harris, H. Wilson (Cambridge Univ.)||Pitman, I. J.|
|Barlow, Sir J.||Harvey, Air-Comdre. A. V.||Robertson, Sir D. (Streatham)|
|Bossom, A. C.||Hollis, M. C.||Ropner, Col. L.|
|Boyd-Carpenter, J. A.||Hurd, A.||Sanderson, Sir F.|
|Braithwaite, Lt.-Cmdr. J. G.||Keeling, E. H.||Shepherd, W. S. (Bucklow)|
|Bromley-Davenport, Lt.-Col. W.||Lambert, Hon. G.||Strauss, Henry (English Universities)|
|Challen, C.||Lancaster, Col. C. G.||Thorp, Brigadier R. A. F.|
|Conant, Maj. R. J. E.||Legge-Bourke, Maj. E. A. H.||Turner-Samuels, M.|
|Crosthwaite-Eyre, Col. O. E.||Lennox-Boyd, A. T.||Wakefield, Sir W. W.|
|Crowder, Capt. John E.||Lucas, Major Sir J.||Walker-Smith, D.|
|Darling, Sir W. Y.||Manningham-Buller, R. E.||Wheatley, Colonel M. J. (Dorset, E.)|
|Dower, Col. A. V. G. (Penrith)||Marshall, D. (Bodmin)||Williams, Gerald (Tonbridge)|
|Fox, Sir G.||Morrison, Maj. J. G. (Salisbury)|
|Fraser, H. C. P. (Stone)||Neven-Spence, Sir B.||TELLERS FOR THE NOES:|
|Gates, Maj. E. E.||Nicholson, G.||Mr. Gage and Sir John Mellor.|
|Gomme-Duncan, Col. A.||Peto, Brig. C. H. M.|
Bill read a second time, and committed to a Committee of the Whole House for Tomorrow.