Clause 4.—(PROBATE PROCEEDINGS.) (Hansard, 5 July 1955)

§ Mr. Hale
The position at present is that although, in 1925, an alteration was made so that county courts were allowed 1037 jurisdiction in probate matters, a jurisdiction in general after the entry of a caveat for testing the validity of testamentary documents, there is a limit that the estate must not exceed £200 gross. I do not recall a single case taken in a county court under the relevant Section of the Act of 1925, and I should be very surprised indeed if anyone here says that there has been very much litigation in the county courts over this question.
I suggest that if there is one sort of action which, in the public interest, should be transferred to a county court it is action over a very small estate. It is a tragedy of the law that estates are whittled away in litigation. It is a responsibility for a professional man to be involved in such a case, for he does not like to find himself in a situation in which the beneficiaries, in trying to establish their claim, are deprived by legal expenses of the money they are seeking to obtain. That, however, is very often what happens.
The suggestion in the Bill is that the jurisdiction of the county court shall be substantially increased to £1,000 gross. I concede at once that that is a substantial increase. However, in this sort of litigation the man concerned is nearly always one who owned his own house, nearly always a man who saved to buy the first thing that anyone who saves buys, his own house. Then there is a disputed will, or there is a dispute about relationship. The assets have to be considered. What are the assets? The assets are a house which cost £750 to build before the war. Such a house is valued now at £2,000.
I know, of course, that there is provision now for reducing the value in a case in which the testator lives in his own home and leaves it to someone living in the home. We got that through the House a few years ago. If the house is mortgaged the case goes to the High Court. The mortgage cannot be taken into account in estimating the value of the estate. For this purpose the mortgage is a debt. So if the house is worth £2,000 and is mortgaged for £1,500, and there is only £500 left, the case has to go to the High Court because, by this Clause, one is not allowed to take into account any deduction on account of debts. It is really fantastic. Suppose the house is worth £1,100 and the deceased owed his 1038 doctor £50, and his funeral expenses were £50, and there is a mortgage for £750, then there is only £250 left. Yet that is still an exceedingly important amount for the people concerned in the case. Yet it has to go to the High Court. Litigation starts there.
The hon. and learned Member for Middlesbrough, West (Mr. Simon) seems a little mystified. I refer him to subsection (2) of the Clause, which says: … the reference to the value of the deceased's estate refers to the value of his estate at the time of his death … but without any reduction on account of his debts. This repeats, though not quite in the same form, the provisions of the Acts of 1925 and 1934.

§ Mr. Simon
Is not the effect of the last half sentence sought to be left out to say that what we are dealing with is the gross estate and not the net estate?

§ Mr. Hale
Yes.

§ Mr. Simon
That is the opposite to what the hon. Gentleman is saying.

§ Mr. Hale
The words of the subsection are: In the foregoing subsection the reference to the value of the deceased's estate refers to the value of his estate at the time of his death, exclusive of what he was possessed of or entitled to as a trustee, and not beneficially, but without any deduction on account of his debts. Now that the hon. and learned Member puts the point, it seems to me that it may mean that. If the Solicitor-General tells me that it does mean that I shall most happily withdraw my Amendment. However, I did not read the subsection as meaning that.

§ Mr. E. Fletcher
Nor did I.

§ Mr. Hale
Nor did my hon. Friends with whom I discussed it. It means the value of the estate at the date of death, but without any reductions on account of debts. I am still not sure. In the circumstances, if the Solicitor-General will clear up the matter, I shall sit down at once.

§ The Solicitor-General
I was rising in the hope of clarifying it. The phrase, I think, has been hallowed since 1858. The Statute of 1858 has always been taken hitherto to mean the distinction between the gross and the net estate.

§ Mr. Hale
With what final result? That is the question we are asking. Can the Solicitor-General answer it straight away? Presumably there is an answer to it, since it has been going on since 1858. Does he take the words to mean that the test of county court jurisdiction is that if the net estate after deduction of debts is less than £200 it can go to the county court, or is it the gross estate which is the test for county court jurisdiction?

§ The Deputy-Chairman (Sir Rhys Hopkin Morris)
It might be convenient to have the Amendment moved before we start discussing it.

§ Mr. Hale
The problem which you put to me, Sir Rhys, is this. If I move my Amendment I am finished, and I was proposing to make some observations when the Solicitor-General rose for the convenience of the Committee.

§ The Deputy-Chairman
The hon. Member is not finished. We are in Committee and he can speak again, but we should not discuss an Amendment until it has been moved.

§ Mr. Hale
I appreciate that, but I was anxious not to thrust myself on the Committee a second time.

§ Mr. E. Fletcher
On a point of order. You have raised an interesting point, Sir Rhys, and I should like to put a further matter to you. If the hon. Member who has an Amendment finds, in the course of his speech, and as a result of an interjection from the other side of the Committee, that he wishes information from the Minister in charge about the effect of the proposed Amendment and of the Clauses, surely it is possible to elicit that information for the benefit of the hon. Member before he decides whether he wishes to pursue his speech or not in moving the Amendment.

§ The Deputy-Chairman
If an hon. Member wants to elicit information, the proper course is for him to move the Amendment and have the information on the Amendment.

§ Mr. Hale
I will conclude my remarks, Sir Rhys.
The hon. and learned Member for Middlesbrough, West (Mr. Simon) has put the point to me and the Solicitor-General 1040 has offered no other elucidation. Suppose that we inserted in the Clause the word "with" to make the Clause read: In the foregoing subsection the reference to the value of the deceased's estate refers to the value of his estate at the time of his death, exclusive of what he was possessed of or entitled to as a trustee and not beneficially, but with any deduction on account of his debt. The Clause then must be a negative and must say that one cannot have a deduction on account of debts. Therefore, this is a gross estate, therefore I am right, and, therefore, with increased confidence, I beg to move, in page 4, line 19, to leave out from "beneficially" to the end of line 20.

§ Mr. Simon
I came to the Committee with the intention of supporting the hon. Member for Oldham, West (Mr. Hale), having understood his Amendment in exactly the opposite sense to that in which he evidently understood it.
It is and always has been taken to be the gross estate which determines the jurisdiction of the county court in probate, though my experience is the same as that of the hon. Member. I have never known probate proceedings litigated in the county court and I entirely agree that, essentially, they are the type of proceedings which, in the case of small estates, should be litigated in the county court. Of all types of litigation of which I have had experience, these cases are the ones which arouse the worst feelings. They are generally litigated in a family, and family feelings of great virulence are aroused. The parties are not prepared, generally speaking, for compromise and they are prepared to litigate until the whole estate has been frittered away.
It is most important, in the public interest and in the interest of the litigants themselves and particularly other parties who may be concerned in the estate, that the matter should be litigated as cheaply as possible, but I cannot see any logical reason for making the test of jurisdiction the gross estate. It 'seems to me from every point of view that it ought to be the net estate which should determine the jurisdiction, otherwise, whether the county court can be seized of the matter or not depends upon the extent of the person's debt and not upon the estate which is ultimately available for distribution.
I hope, therefore, that the hon. Member for Oldham, West will proceed with 1041 the Amendment and that my hon. and learned Friend the Solicitor-General will see his way to accept it, notwithstanding the fact that these words have appeared in Acts since the middle of the last century and that, for a reason which I have never understood, it has always been the gross estate that has been considered.

§ The Solicitor-General
Listening to my hon. and learned Friend the Member for Middlesbrough, West (Mr. Simon), I wondered whether the reason for this provision had not been perhaps that it is the gross estate in respect of which the administrator has to give a bond and which has to be administered by him, and that it is the size of the gross estate which very probably governs the degree of complication and difficulty which is attached to the job which has to be done. Even the most insolvent estate may involve a degree of complication as a result merely of its size. I do not know, but I wonder whether that is the reason for providing that it is the gross estate which has to be considered.
It is certainly our reason for continuing in the Clause to adopt the gross estate as the measure because, as far as I know now, there has never been until this day any complaint about that method of gauging this jurisdiction, under a form of words which has existed since 1858. I hope that in these words I have answered the question which I was in the middle of answering when something happened a little earlier.
The difficulty about the Amendment is that, if it were adopted, it would leave the county court jurisdiction extended to a gross estate whatever its size, because if the estate were solvent to the tune of only one penny it would come within county court jurisdiction even if the rest of the estate amounted to £1 million. We felt that to be undesirable, because, in the case of large estates, problems would arise under the bond which would involve complication and difficulty and would distort county court business if the matter had to be dealt with in the county court. That is why we have adopted this method.
Although I cannot hold out any hope, I will undertake to consider with great care what has been said by the hon. Member for Oldham, West (Mr. Hale) and my hon. and learned Friend the Member for Middlesbrough, West, but I could not 1042 advise the Committee at this stage to accept the Amendment.

§ Mr. Mitchison
I confess to the Committee that on the only occasion when I appeared professionally in the probate court the testator was, after all, found to be competent and my knowledge of these things is limited. I hope that the Solicitor-General will enlighten me on a matter which puzzled me when my hon. Friend the Member for Oldham, West (Mr. Hale) spoke about a mortgaged house. Is it in that case treated as an equity of redemption, which has a certain value, or as a house subject to a debt—and there is, of course, a personal debt—and, therefore, the value of the house is taken rather than the value of the equity of redemption?
I should like to say a few words also on what was said by the hon. and learned Member for Middlesbrough, West (Mr. Simon). I entirely agree with him, and I expect my hon. Friends agree, also. If we could have a rather wider reference of small estates to the county courts we on this side of the Committee would certainly welcome it. I hope that the Solicitor-General will bear that consideration in mind, coming as it does from both sides of the Committee.

§ Mr. E. Fletcher
I appreciate that the Solicitor-General has undertaken to consider this matter between now and the Report stage, but I think that we on this side of the Committee feel that the real test for determining the county court jurisdiction in matters of probate should be the net value of the estate and not the gross value because there must be many thousands of cases in which the gross estate is over any reasonable limit—put it at £1,000 or any other figure—whereas in reality the sum about which the intending beneficiaries are litigating is under £1,000. Therefore, it is desirable that such disputes should be determined in the county court.
The Solicitor-General said that one of the reasons why he thought the test should be the gross estate and not the net estate was because there might be some quite exceptional estate with gross assets of £1 million and it was a corresponding figure of liabilities which would then bring the net estate to a very low level or perhaps to a minus quantity. But that is not a realistic argument. 1043 Surely those cases must have been very few and far between. If there are such cases they could reasonably be excluded from the ambit of county court jurisdiction by an appropriate form of words. But surely it would not be right, because of that hypothetical and certainly exceptional case, to deprive the majority of small people, who would want to litigate in probate matters, the right of going to the county court when the assets are under £1,000. I hope that, as a result of reconsideration that the Government are to give this matter, they will agree with the point of view that we have been expressing.

§ The Solicitor-General
I should like briefly to reply to the hon. and learned Member for Kettering (Mr. Mitchison) and the hon. Member for Islington, East (Mr. E. Fletcher). The hon. Member for Islington, East will understand that I was merely illustrating the effect of the Amendment on the Order Paper. I was deliberately taking the extreme case to show why we could not accept the Amendment in this form.
In reply to the hon. and learned Gentleman the Member for Kettering, I should like to say that we all share the view that the more small estates we can have dealt with in the county court the better. Indeed, the appeal provisions of this Bill are designed to help in that field, but the problem is what, in this context, is meant by small estates. We will pay attention to what has been said here, but I cannot hold out any hope that we shall find it right to alter the gauge of gross estates which has been adopted for so long.
There is the question of mortgages on houses. I am told, knowing nothing about the matter myself—and I do not pretend to —that the answer to the hon. and learned Gentleman's question is that it depends on how it is set out in the affidavit for this purpose, and that what is put into the affidavit governs the jurisdiction. I am told that the value of the house is put in and that in that context one ignores the amount of the mortgage in doing so.

§ Mr. Simon
I only want to add that while I am most grateful to my hon. and learned Friend for saying that he will look again at this Clause, I want to 1044 emphasise the manner in which debts come into a probate action. What we in the Committee want to do is clear—to ensure that the litigation over small estates takes place in the county court. The extent of the debts does not affect that at all. Where the question of debts affects the probate of a will is where the creditors seek a grant. That is done on motions, and I do not imagine that it is desired to remove that from the High Court. I would ask my hon. and learned Friend to look into that aspect of the matter. What I want to see is that the action itself, which is almost always a question of fact as to whether the will has been properly made or not, is tried in the county court in the case of smaller estates.
Similarly, the expense of the bond has no effect on that matter at all, because the bond is not given in either the county court or the High Court, but in the Probate Registry. I do not imagine that that will be altered either. I would ask my hon. and learned Friend very seriously to look again at this matter. There seems to be an overwhelming argument for dealing with the net estate rather than the gross estate.

§ Mr. Scholefield Allen
When the Solicitor-General is looking at this form of words I wonder whether he will face the real problem we are discussing in relation to small estates, and that is the mortgage on a house owned by someone who is actually living in that house. That is the real problem. General debts are one thing, but the matter which brings most of these small estates into the High Court rather than into the county court is the mortgage on a house. Perhaps if the Clause could be so drafted that that could be excluded from the gross estate, and that only in ascertaining the amount, it might possibly meet ninety-nine cases out of a hundred.

§ Sir Eric Errington (Aldershot)
I want to say a word about this matter, because it seems to me to be a rather important issue. The position, as I understand it now, is that probate proceedings may take place in the county court where the personal estate does not exceed £200 and the real estate does not exceed £300. Of course, the result, as has been said, is that there is practically no probate litigation in the county court.
1045 What really worries me is the figure. It seems that a £1,000 is completely inadequate in these days. There has been considerable discussion as to whether a mortgage on a house should or should not be considered, but whether it be considered or not it seems to me that £1,000 is quite inadequate. If it is the declared object of my hon. and learned Friend the Solicitor-General to have these smaller estates dealt with in the county court rather than in the High Court, then the sum mentioned in the Clause is inadequate.

§ The Deputy-Chairman
It seems to me that the speech of the hon. Gentleman is more directed to the Question, "That the Clause stand part of the Bill" rather than to this Amendment.

§ Sir E. Errington
I have said what I have said, and possibly it will be noted in the appropriate place.

§ Mr. Hale
In view of what the hon. and learned Gentleman the Solicitor-General said, I do not want to ask my hon. Friends to press the Amendment to a Division. I think there is no question whatever that mortgages are looked on as debts today. There is no question whatever that as the Clause stands the house with a mortgage on it will have to be valued at its gross and not net value for the purpose of the Clause, which means that almost every estate will be kept out of its purview.

§ Mr. Mitchison
The purpose of my question was to elicit the absurdity of what I thought the practice was, because the real point is the equity of redemption.

§ Mr. Hale
That was the point I was trying to make clear in opening the discussion, and that is the difficulty now.
In pursuing his inquiries, I hope that the right hon. and learned Gentleman will bear in mind that the estate has to be sworn and that every item of furniture has to be given a value. Technically speaking, the beneficiary should swear even the value of the clothing left by the deceased. It is clear that the Estate Duty people take a reasonable view and rarely press an inquiry, but someone must put a value on it of at least a reasonable figure. The result is that most estates are likely to go over £1,000 gross even if they are considerably less net. I hope, there- 1046 fore, that the right hon. and learned Gentleman will consider this matter seriously. Subject to that, I beg to ask leave to withdraw the Amendment.

§ The Solicitor-General
As a matter of courtesy, and keeping within the rules of order, may I, Sir Rhys, answer my hon. Friend the Member for Aldershot (Sir E. Errington)? The Government may be blamed for the £1,000 but it was the figure in the context recommended by the Evershed Committee.