HC Deb 22 November 1954 vol 533 cc803-11

Lords Amendment: In line 15, leave out "entitled in the same capacity" and insert "beneficially entitled."

Mr. Deedes

I beg to move, "That this House doth agree with the Lords in the said Amendment."

This is a drafting Amendment. The words "in the same capacity," which are defined in Clause 68 (1), may be misleading in the present context, because payments under Clause 7 are limited to cases where the claim holder parted with the whole of his beneficial interest in the land, which is referred to in line 19. Therefore, it seems better to make it clear from the start that the applicant for a payment must have been beneficially entitled at the time of the gift both to the claim holding and to the related interest in the land. This Amendment uses the word "beneficial" in both cases.

Mr. Turner-Samuels

I very much agree with this Amendment, because the words "entitled in the same capacity" are obviously obscure words, and I have found very great difficulty in following them at all. Now, the matter is perfectly clear. It is the person who is beneficially entitled to whom this provision is directed.

Sir L. Ungoed-Thomas

I have felt a slight difficulty about this, and I am rather puzzled about it. As an illustration of the complexity of the Bill, my hon. and learned Friend the Member for Gloucester (Mr. Turner-Samuels) and I take rather different views about it.

Mr. Turner-Samuels

I was not saying that I took a different view from my hon. and learned Friend; I am not sure that I do. I was saying that the words "entitled in the same capacity" are absolutely meaningless, but that the matter is now clear.

4.30 p.m.

Sir L. Ungoed-Thomas

I can well understand a lawyer's preference for the word "beneficial" to the words in the Bill, but the phrase "entitled in the same capacity" is a perfectly well-authenticated and accepted term. The Parliamentary Secretary referred to the definition Clause, but I have not yet been able to see it. I gather that it is there, though I have not been able to trace it. If it is defined in the definition Clause, and if the Parliamentary Secretary says that it is there then I will accept it.

This is an instance that puzzles me. Suppose there is a trustee who holds property with absolute powers of disposition given under the trust, as trustees so often do. He holds a claim holding and interest in land, holding both in the same capacity as trustee. As I understand the proposed Amendment, he would not be entitled to put in a claim. Who, then, would be entitled, in those circumstances and in regard to that trust, to put in the claim? Is it contemplated that those with a beneficial interest, even if an infant, might be so entitled to put in a claim?

In spite of the explanation so courteously given by the Parliamentary Secretary, I cannot see what the advantage is if the alteration which he proposes is made. One of my hon. Friends has now handed me the definition Clause, which is Clause 68 (1), where the words to which the Parliamentary Secretary referred appear. They say that "in the same capacity" means: entitled in one only of the following capacities, that is to say, beneficially, or as trustee of one particular trust, or as personal representative of one particular person. I should have thought that was the obvious definition of "in the same capacity." I cannot understand the object of changing these words. As I am advised, I should have thought that the change was not an improvement. This is a drafting point. There is no question of principle between us, but I would prefer to have a fuller explanation than we have had.

Mr. Derek Walker-Smith (Hertford)

It may be that there is rather more force in the argument of the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) than might at first appear. Clause 68 (1) applies "except where the context otherwise requires." To put the proposed Amendment into the Bill may lead to complicated arguments as to whether the context otherwise requires or not in Clause 7. If I followed the argument of the hon. and learned Gentleman correctly, his expert view is that the existing words are clear in themselves and would not lead to such a complication. I would therefore ask my hon. Friends who are in charge of the Bill to consider the point which has just been made.

Mr. MacColl

The hon. Member for Hertford (Mr. Walker-Smith) must not be fussy. He was not upstairs with us when we discussed the Bill or he would know that the kind of difficulty created by the words "except where the context otherwise requires" is found everywhere in the Bill. It is late in the life of the Bill to get excited about a little difficulty of that sort. The Government must realise that one of the great difficulties is that we have lost the support of those whom we revered and from whom we derived strength and guidance.

Now there is a difference of opinion between a great common lawyer, my hon. and learned Friend the Member for Gloucester (Mr. Turner-Samuels), and a great equity lawyer, my hon. and learned Friend the Member for Leicester, North-East (Sir L. Ungoed-Thomas). It is one of those historic conflicts that arise in the courts and may have far-reaching ramifications. I would not know what the ultimate resolution of it might be. It clearly indicates the problems that will arise under the Bill. The simplest little alteration, which to most of us seems to be only word-splitting, can precipitate us into the most profound conflicts, problems and difficulties which can only be resolved by higher judicial authority.

Mr. Deedes

I am anxious to reassure the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas): He will agree that no fewer than three hon. Gentlemen with considerable legal experience differ whether this is a good Amendment or not. I hardly like to intervene. The intention of the Amendment is to remove doubts that might arise about the meaning of the words "entitled in the same capacity." In view of the fact that the words "beneficially entitled" are used elsewhere, and of the feeling that those two expressions do not mean the same thing, we were proposing, in order to remove any element of doubt, that the words "beneficially entitled" be substituted.

Sir L. Ungoed-Thomas

May I test the hon. Gentleman by asking a very simple question? Would a trustee who holds a claim holding and an interest in land on trust be entitled to any claim under the words "beneficially entitled"?

The Solicitor-General

Yes, if he were beneficially entitled at the time both to the claim holding and to the interest in land. When the hon. and learned Member for Leicester, North-East (Sir L. Ungoed-Thomas) was reading the definition of "in the same capacity" he left out the words: in relation to entitlement both to a claim holding and to an interest in land. They show the need for clarity in this case. The only object of the Amendment is to make it clear that the applicant for payment must have been beneficially entitled at the time of the gift both to the claim holding and to the interest in land.

Mr. Turner-Samuels

Would the Solicitor-General kindly add to what he has said by saying what, in his view, is the interest that a trustee holds in these circumstances, and whether it is beneficial or otherwise? This is vital to our understanding of the matter. This is something on which the Solicitor-General ought to clarify the Bill in order that the House may know what it is doing. By the question which has been put to the Solicitor-General, this reading of the Clause clinches the matter by putting it where it belongs. If we can get an explanation and a definition of the position I have referred to, we shall be able to judge whether the right words are "beneficially entitled" or "entitled in the same capacity."

It is the bounden duty of the Front Bench and of the Solicitor-General to give an answer to this question. The hon. and learned Gentleman should define explicitly the interest that an interested trustee has in a situation of this kind, and whether it is beneficial or otherwise. I hope that my hon. Friends will insist upon an answer. If we know that, we shall have information that we need so that we can come to a decision. We cannot come to a decision without it, because we are without a crucial test. If the Minister will answer, we can decide whether or not to support the Amendment; but if we do not get an answer, I strongly advise my Friends on this side of the House to take the matter to issue.

Mr. Lindgren

My hon. and learned Friend and I are concerned whether a trustee, having a claim holding, would have an entitlement under the definition. That is a very important question, covering a wide range of transactions, and it is important to have an answer before we pass from this Amendment.

The Solicitor-General

Perhaps I may, with the leave of the House, speak again and say that the ordinary contrast prevails between the beneficial owner and the owner as trustee. I am confirmed in that belief by the definition in Clause 68 (1), where a contrast is drawn between owning as beneficiary or as trustee. I think that that contrast covers the point.

Sir L. Ungoed-Thomas

I am very much obliged to the hon. and learned Solicitor-General, who is continuing to give us some very clear explanations, but if, under Clause 7 (1), a trustee is not entitled to put in a claim—for that is what the hon. and learned Gentleman is now saying—then we are in the astonishing position that where a trustee is holding a claim holding and an interest in land upon trust for persons in succession, some of whom may be infants, and some even yet unborn, it is not contemplated that that trustee should be the person to put in the claim, but, apparently, that all those persons in succession, including infants and even unborn persons, should put in the claim, because they are the persons beneficially interested.

One has only to consider that position to realise the complete absurdity of it, and that is why I asked the question. It seems extraordinary to contemplate that beneficiaries under a trust should be the persons to put in the claim. Surely it must be the trustee. That being so, it is merely leading to the kind of difficulties which we have been considering to describe the trustee as a person beneficially entitled, because, as the Solicitor-General has just pointed out with great force, "beneficially entitled" means the opposite to the definition of a person in the same capacity in Clause 68.

If the explanation is really to stand on the record as being the official view of the effect of this Clause, then it is a view the adoption of which is a most extraordinary course for the Government to pursue. I really cannot believe that that is the Government's intention. We do not want to take this matter to a Division, because it is a pure technicality. All that we are trying to do is to help to reach a sensible conclusion concerning a provision in the Clause. I think it would be lamentable if it were left on the record that persons beneficially interested and not trustees are the persons to make the claim. I do not think that that can be the intention.

The Solicitor-General

I think that the hon. and learned Gentleman is under a misapprehension for which I am at fault for not clearing up. Clause 7 deals with the question of payment where the land has been disposed of by gift. It is Case C. A trustee was never qualified under the Clause, because a trustee cannot give away trust property. That is the difficulty about what the hon. and learned Gentleman is saying. If we look at line 18 of the Clause, we see that it involves a disposition by virtue of which the person in question—this is, ex-hypothesi, the trustee— parted absolutely with the whole of his beneficial interest in that land. That is something that a trustee could not do, and that, I hope, clears up the ambiguity.

Sir L. Ungoed-Thomas

If that really is the intention, then it does not follow at all. There may well be circumstances in which the trustee has power to give away land without receiving any payment in return. There are all kinds of circumstances in which that might arise. For instance, the testator may, upon giving land to a trustee, say that the trustee may in certain circumstances give away the land to this, that or the other person if he thinks fit. That is the simplest case of all. If this Clause is devised on the assumption that in no circumstances can a trustee ever give away anything except for valuable consideration, then it seems that the Clause is very ill-founded.

4.45 p.m.

Mr. Turner-Samuels

With the leave of the House, may I put this to the hon. and learned Gentleman? Supposing that in a trust or in a will there is a provision to sell or to convert, and supposing that the trustee is invested with that power either to sell or to convert the land, in other words, to deal with the land, what, in those circumstances—as my hon. and learned Friend has very properly pointed out—is to be the situation?

It seems that if those words are now substituted, the trustee will be unable, so far as this Bill is concerned, to deal with the land, whereas in law and so far as the conferment of powers by way of trust from a donor or a testator are concerned, he will be prevented from dealing with the land in the way desired by the donor or testator. If that were so, the greatest prejudice could arise to the estate, because there would be a complete hold up and a complete disability to deal with this problem.

To take another case, let us suppose, as my hon. and learned Friend pointed out, that children were involved or a prospective beneficiary who was not then in a position to deal with the property in the way necessary to effect the purpose of this provision. What would then be the position? It seems to me—and, having reconsidered the matter carefully, I quite agree that my hon. and learned Friend is right—that not only is this creating a difficulty, but that we shall multiply the difficulties, because there must be many illustrations where we should be depriving the person who now has the power from exercising that power in the way he should.

Dr. H. Morgan

Never mind, the judges will tear it up.

The Solicitor-General

If, with the leave of the House, I may try yet again, I shall hope to assist the House and the hon. and learned Gentleman by inviting hon. Members to take the view that this is nothing but a drafting Amendment and does not alter the substance of what the House has already approved. The hon. and learned Gentleman understands this. The Clause was always limited to a case where the person entitled, in the same capacity both to claim holding and to the interest in land, made a disposition by virtue of which he parted absolutely with the whole of his beneficial interest in that land.

The point which I was endeavouring to make plain was that that does not arise in connection with a trustee, because a trustee could never be a person entitled to part absolutely with the whole of the beneficial interest in the land owing to the fact that, as a trustee, he does not have the beneficial interest in it. I hope that I have satisfied the hon. and learned Gentleman that this is a drafting Amendment, pure and simple.

Mr. Lindgren

With the leave of the House, I would point out that the Solicitor-General has said that this is purely a drafting Amendment. As a non-legal person, I must say that this discussion has not exactly clarified the position to the ordinary person. I accept on behalf of my hon. and learned Friend that this is not a question of policy, and that, therefore, we shall not divide the House on it. But it serves to show how ill-considered this Bill has been right the way through. Even at this late stage, an Amendment is proposed which, even if it does not make for confusion, equally does not make for clarity. We propose to let it go in this instance while being far from satisfied that it improves the Bill.

Question put, and agreed to.

Lords Amendment: In page 13, line 16, after "related" insert: or another interest in which that interest had merged".

The Solicitor-General

I beg to move, "That this House doth agree with the Lords in the said Amendment."

This is the same point about merging interests; in this case, relating to Case C.

Question put, and agreed to.—[Special Entry.]

Lords Amendment: In page 13, line 43, at end, insert: Provided that where the whole or part of any liability or prospective liability which was or, as the case may be, would have been taken into account in calculating that restricted value had ceased to exist before the date of the disposition in question, the Board or, as the case may be, the Lands Tribunal may, if they think it just and proper so to do, waive in whole or in part, as may appear to them appropriate, any reduction otherwise falling to be made under this subsection.

The Solicitor-General

I beg to move, "That this House doth agree with the Lords in the said Amendment."

As, I think, the hon. Member for Northampton and the Soke of Peter borough himself has anticipated——

Mr. Lindgren

Wellingborough.

The Solicitor-General

I beg the hon. Member's pardon—this Amendment deals with the case of the valuation working out at a minus quantity, when the factor giving rise to the minus quantity is reduced, or has ceased to exist, before the event.

Question put, and agreed to.—[Special Entry.]