Clause 36.—(DISPOSITIONS IN FAVOUR OF RELATIVES.) (Hansard, 19 June 1950)

§ Mr. Joynson-Hicks
I beg to move, in page 32, line 29, at the end, to insert: Provided further that nothing herein contained shall alter or repeal the provisions of subsection (2) of Section fifty-nine of the Finance (1909–1910) Act, 1910. 988 The object of this Amendment is very largely exploratory. Clause 36 in general deals with gifts inter vivos, and in particular with dispositions in favour of relatives. The object of the Clause is to meet a certain narrow point, but whether or not, in its phraseology and intent, it goes beyond that narrow point is a question 989 in which I think the Committee will be interested.
I do not want to lead the Solicitor-General into any terms other than those of art, and certainly not into terms of error, so I will not refer again to a loophole. If, as I understand it, the object and intention of the Clause is simply and solely to deal with the situation which arose as a result of the decision in the Fitzwilliam case, then, in my submission, there is very little objection to the Clause, provided that it does only relate to that particular point. It is in order to test that question that I have moved this Amendment, because it is particularly relevant to that aspect of the matter.
The Solicitor-General in his courtesy has already expressed the view to me that my Amendment is unnecessary, and I appreciate very much the way in which he received my representations, but notwithstanding that I must submit to the Committee that there appears to be considerable doubt whether or not the phraseology of the Clause as a whole goes beyond the Fitzwilliam case so as to do away with the protection which has been granted to relatives under the Section of the 1910 Act to which reference is made in the Amendment.
The situation really is that Clause 36 of this Finance Bill seeks to define what is a gift for the purposes of assessing an estate to Estate Duty. Having defined what is a gift, it then makes those gifts subject to Estate Duty under Section 2 of the Act of 1894, and they are by relation made subject to Estate Duty by the 1894 Act. Section 59 (2) of the 1910 Act, which I am seeking to ensure is not affected by this Clause, deals with these gifts inter vivos, which attract Death Duty under the 1894 Act, by saying that they shall not include gifts made in consideration of marriage.
Superimposed upon that exemption we have this further definition of gifts which does not specifically exclude gifts made in favour of mariage, and re-submits those gifts to the 1894 Act, which imposes Estate Duty. To my mind, therefore, the question is whether or not by this redefinition of gifts—for under the 1910 Act the gifts inter vivos made in consideration of marriage are again defined as gifts—'the whole matter is thrown back to the 1894 Act, and gifts made in consideration 990 of marriage are once more caught. In other words, does Clause 36 by implication and interpretation repeal or otherwise affect Section 59 (2) of the 1910 Act? The sole object of this Amendment is to clear up that point.
I know that the right hon. and learned Gentleman is of opinion that the Clause does not affect the 1910 Act one way or the other. My only submission to the Committee is that, much as we respect the right hon. and learned Gentleman's opinion, it is not finally authoritative in these matters. It is a question which may by one cause or another ultimately have to be decided by a court. There are undoubtedly other opinions—I am not suggesting that they are of such high legal authority as the right hon. and learned Gentleman—held by other legal gentlemen which do not coincide with his views. All I am asking the Committee is that as there is doubt, that doubt should be resolved, for it is a matter of very considerable importance that the structure and system of trusts and resettlements throughout the country, which are of very real importance to the whole of our legal structure, should not be undermined by a question of doubt. Therefore, I hope that the right hon. and learned Gentleman will take steps, either by the adoption of this Amendment or in some other way, to ensure that there can be no question of doubt left in this Clause.

§ The Solicitor-General
The hon. Member for Chichester (Mr. Joynson-Hicks) very kindly gave me notice before this Debate started of the point which troubled him regarding Clause 36. As a result of the letter which he wrote to me, the matter was very carefully considered. I say that in order to make it perfectly clear that the opinion I am about to express, though my own, is also that of others who have given consideration to the matter, particularly in view of what he quite rightly said about the value of my opinion.
I can give a quite unqualified assurance to the hon. Gentleman that his doubt is not well founded. All this Clause does is to say that a disposition by the deceased in favour of a relative, unless it is given for full consideration, is to be a gift for the purpose of the 1894 Act. Then the Clause goes on to say that references to a gift in other enactments relating to Estate Duty shall be 991 construed accordingly. That is how the Clause leaves it. The result of the Clause is that a disposition not for full consideration is a gift for purposes of enactments relating to Estate Duty.
If one turns to Section 59 (2) of the Finance (1909–10) Act, 1910, one finds that a thing which is a gift, if given in consideration of marriage, is exempt from duty. Therefore, once it is laid down as a gift, it seems to me to follow as a matter of inexorable necessity that when we look at the 1910 Act and find it says that gifts in consideration are exempt, it follows that these gifts, if in consideration of marriage, are exempted by the express terms of Section 59 (2) of that Act. I therefore feel that I can without any hesitation give the hon. Gentleman the assurance for which he has asked. If he agrees that my reasoning on the Clause is right, I hope he will also feel constrained to come to the same conclusion.

§ Mr. Joynson-Hicks
In the light of what the right hon. and learned Gentleman has said and the assurance which he has given, not so much to me as to the Committee, I beg to ask leave to withdraw the Amendment.

Mr. Donovan (Leicester, North-East)
I apologise for speaking for a few minutes on this Motion, but I should like to ask one small question, which is this: Is it really necessary to draft Clauses of Acts, of Parliament on the lines of this Clause? I happen to know what it is intended to deal with—the thing we call m Income Tax jargon the Smythe doctrine which was recently exploded in the Fitzwilliam case. But look at subsection (2). It is full of legislation by reference, and nobody can understand it except a lawyer with all his books at his elbow and a wet towel round his head.
I freely admit that in the long-run this sort of drafting does me no harm, but I am thinking of the common, humble person like the hon. Member for Edinburgh, South (Sir W. Darling), and the hon. Member for Croydon, East (Sir H. Williams). They cannot possibly understand such things, and I would seriously ask whether on the Report stage 992 we could have this Clause, with all these references included, inserted in a Schedule to show us, without going into all these researches, exactly what is being done. It is being done with Clause 34. Could it be done with Clause 36?

§ The Solicitor-General
That suggestion seems to me, if I may say so, to be a very helpful one, and we shall certainly see whether effect can be given to it. The only thing is that if one started putting all Clauses which contain legislation by reference—and necessarily contain it—into Schedules, the Schedules would be extended to an inordinate extent, and complaint would undoubtedly arise on the voluminous nature of the effect produced. However, we shall certainly consider the suggestion of my hon. and learned Friend.