HC Deb 14 December 1959 vol 615 cc1179-203

10.4 p.m.

Mr. Charles Fletcher-Cooke (Darwen)

I beg to move, That an humble Address be presented to Her Majesty, praying that the Rules of the Supreme Court (No. 3), 1959 (S.I., 1959, No. 1958), a copy of which was laid before this House on 27th November, be annulled. This is a matter which I cannot pretend will interest every hon. Member of the House, but it affects trustees, a body of citizens worthy of regard, who perform much laborious work, largely unpaid, and to whom very few thanks are given.

Owing to the rules of this House, have to pray against the whole of what is otherwise an admirable Statutory Instrument, with all of which I agree except four words which appear on page 21. Rule 31 (2) on page 21 deals with costs to trustees, who, as I say, get no advantage from their activities as trustees but who may be mulcted in costs if they are brought or have to bring themselves before a court of law. I do not wish them to be damnified if they have not committed any misdeeds.

Rule 31 (2) reads: On any taxation"— that means on any review of the costs incurred— to which this rule applies, no costs shall be disallowed except in so far as those costs or any part of their amount should not, in accordance with the duty of the trustees or personal representative as such, have been incurred or paid"— so far we agree— or should for that or any other reason been borne by him personally". The words with which I quarrel are "or any other reason". It seems to me wrong—and I think that I have a century of authority behind me—to say that, unless he has done something in breach of duty or has misconducted himself as a trustee, a trustee should be obliged to put his hand in his own pocket. That is the short point of this Prayer for the annulment for this Statutory Instrument, and I apologise to the House for keeping it up at this late hour to deal with it.

There is a long history in this matter. For at least a hundred years courts and judges have been trying to protect trustees so that the ordinary rules relating to the taxation of costs should not apply to them. Hon. Members may know that normally, if a person indulges in litigation, even though he wins and costs are awarded in his favour, he has to dip his hand into his own pocket in order to pay the difference between the minimum standard of fees which taxing masters quite rightly allow and the amount by which the litigant is out of pocket. I do not quarrel with that.

I want to deal with the position of trustees, people with no interest in litigation personally who have to go to court because of some obscurity in the law relating to the administration of a trust. Many of them up and down the country are not professional people. For example, they may be the relations of deceased persons. Often, they are quite humble people who have to take what advice they are given. The broad principle for which I stand here tonight is that, if they have not misconducted themselves and have not been culpably negligent, they should not under any circumstances be obliged to dip their own hands into their own pockets.

The first and best illustration is the case of Turner v. Hancock in 1882. If the House will bear with me, I should like to read a short quotation, because the principle was established by a great Lord Chancellor, Lord Selborne. The head-note of that case in the 20th vol. of the Chancery Division for 1882, page 303, gives just one sentence, The right of a trustee to his costs … is a matter of contract, and is not in the discretion of the Judge; although he may be deprived of them for misconduct". Of course, if he has misconducted himself, if he has been culpably negligent or culpably extravagant, he must pay. Short of that, however, we say that he should not pay.

Sir George Jessel, that great Master of the Rolls, had something to say about that case. It is true that it was a case not of trustees, but of mortgagees, but the same principle applies. At page 305, Lord Selborne said: … the contract between the author of a trust"— that is, the man who creates it— and his trustees, entitles the trustees … to receive out of the trust estate all their proper costs incident to the execution of the trust. These rights resting substantially upon contract can only be lost or curtailed by such inequitable conduct on the part of a … trustee as may amount to a violation or culpable neglect of his duty under the contract. Any departure from these principles in the general course of the administration of justice in this Court would tend to destroy, or at least very materially to shake and impair … the safety of trustees. In fact, such a departure instead of being beneficial to those who … repose confidence as to property in their friends or neighbours, would, in the result … deprive the latter class of the assistance of all who cannot afford, who are not inclined, to bestow upon the affairs of other persons their money as well as their trouble and time. I have omitted in that quotation all reference to mortgagees, with whom we are not concerned tonight. This is only as concerns trustees. That was the quotation from Lord Selborne.

Then, Sir George Jessel added these words of his own: It is not the course of the Court in modern times to discourage persons from becoming trustees by inflicting costs upon them if they have done their duty, or even if they have committed an innocent breach of trust. The earlier cases had the effect of frightening wise and honest people from undertaking trusts, and there was a danger of trusts falling into the hands of unscrupulous persons who might undertake them for the sake of getting something by them. Ever since 1882, there has been something of a battle between the judiciary and the taxing masters in trying to secure on the part of the judiciary the purity of the principle that trustees, unless they have committeed a breach of duty, unless they have done something which, in the words of Lord Selborne, amounts to a violation or culpable neglect of his duty should be indemnified.

That battle has been going on a long time. It was at one time thought, quite recently, that it had been won. In 1953, Mr. Justice Vaisey gave a direction which it was thought had won it, namely, in the words of the first limb of the rule that we are discussing, that the trustee should be disallowed his costs only if he had not acted in accordance with the duty of the trustee or his personal representative.

Indeed, in the most recent case in 1958, that of Grimthorpe, which is to be found in 1958 Chancery Division at page 615, Mr. Justice Danckwerts upheld what I regard and have tried to show as the classical view of this matter. At page 623, Mr. Justice Danckwerts stated: It is commonplace that persons, who take the onerous and sometimes difficult duty of being trustees are not expected to do any of the work at their own expense; they are entitled to be indemnified against the costs and expenses which they incur in the course of their office … Of course, that necessarily means that such costs and expenses are properly incurred and not improperly incurred. The general rule is quite plain. They are entitled to be paid back all that they have had to pay out. "Properly and not improperly." That is exactly the phrase of the first limb of this paragraph: no costs shall be disallowed except in so far as those costs or any part of their amount should not, in accordance with the duty of the trustee or personal representative as such, have been incurred or paid … My question tonight is, what is the purpose of the second limb of this paragraph? What is "any other reason" other than incurrence of costs in accordance with the duty of the trustee? Nothing, in my submission, justifies the inclusion of those words as an alternative to the first words which I read out, and I wish to ask the Government, and the Rule Committee through the Government, what they have in mind by expanding the area of liability of trustees in this manner.

There have been many attempts to give taxing masters wider discretions. There have been many attempts to tax down the costs of trustees—that is to say, make them dig in their own pockets even though they are not guilty of "violation or culpable neglect of duty." It may be that the decisions of the judiciary from Lord Selborne and Sir George Jessel and Mr. Justice Danckwerts are too extreme. I think that is a possible view. I do not share it myself, but it is a possible view. But if that is the case, I think it is up to the Government to specify for the guidance of trustees in what way they should in fact conduct themselves, other than that of committing a breach of trust, in order not to come within the mischief of the new rule suggested, because as it stands these words "any other reason" are about as wide as could be found.

They are far too wide. They give the Executive the sort of discretion, if I may say so without attempting to arouse any political prejudice, that we often find in larger questions of Income Tax evasion. There are many people who do not wish to specify what Income Tax avoidance is but still wish to give the Executive a general blanket right to come cracking down on such people without specifying in advance what it is they have done wrong, and that, to my mind, is quite contrary to the rule of law which those of us on this side of the House stand for.

Therefore, in miniature—and it is a very miniature point, but it is an important point of principle—it seems to me that to say that trustees may be mulcted in costs not merely when they have committed a breach of duty but for "any other reason" is what one may call Executive law of the worst possible description. Therefore, I say, if it is the view of the Rule Committee and of the Government that Lord Selborne, Sir George Jessel and Mr. Justice Danckwerts are wrong when they say that trustees should be mulcted in costs only when they have committed a breach of duty, that it is up to them to specify, and specify very directly, exactly where that additional area of liability should be, so that trustees may know where they stand before they start to incur such costs, so that they know what dangers they run into, and so that they will perhaps not accept the onerous responsibilities of trustees which at present they undertake often reluctantly and because they know that they will be indemnified if they do anything wrong.

Personally, I do not think there is anything wrong with the old law. I do not think trustees should ever have to dig into their own pockets unless they have been culpable of neglect or of violating their duty, in the words of Lord Selborne. Maybe that is old-fashioned. It may be that modern conditions require some extension of their liabilities. If that is the view of the Government, all I say is that the situation should be specified very clearly so that trustees, when they undertake the onerous and responsible duty of trustees, should know where they stand. And the guidance should be given to them and the taxing masters in the clearest and most specific terms to show what additional liability they may run into as far as the funds in their command are concerned when they undertake what is a very thankless task.

I regard the present words as vague and wide and totally unsuitable to the task, and I do not believe that the Rule Committee really intended the object which it has achieved. I believe that it intended to follow the learning of Lord Selborne, Sir George Jessel, Mr. Justice Danckwerts and all the other authorities on this subject. It may be said, of course, that this rule not only applies to trustees but also to quasi-trustees, if I may so describe them, because by Rule 28 (5) of this Statutory Instrument it is true to say that some people—next friends and other people, who are not directly in the condition of trustees—are to be treated as trustees, and it may be said that they should have a higher liability than trustees. I do not understand that at all. I think that if they are to be treated as trustees, and they are on the whole people who have no personal interest in the matter, they should have the full protection that trustees have at all material times.

I concede that there could be an argument about that, but there is no possible argument that such people should drag down the proper trustees in their wake. If it be right that the quasi-trustee, the next friend, should have a higher degree of liability and should be obliged to dip into his pocket, even though he has not been guilty of a breach of trust, so be it, but why, on that account, should the full trustee, the man who is a genuine trustee and not merely in the shoes of a trustee, be dragged down in the wake of the quasi-trustee? That seems to me drafting of a slack and unworthy order.

I do not want to labour the point, because I genuinely believe that there has been a mistake here. I do not believe that the Rule Committee, a very worthy and high-powered body, really intended to amend the law which has been laid down in the cases that I have cited—and which is obviously just—and that, unless the trustee had been guilty of a breach of duty which involved either direct violation of his duty or culpable neglect, as Lord Selborne says, the Rule Committee ever intended to make him liable. I believe that the Committee has used an unfortunate and misleading form of words. Therefore, I ask, and I do not think that it is too much to ask in the circumstances, that the Rule Committee look at this again before the next meeting.

May I repeat the rule of which I complain? One has only to read it to see that it is wrong: On any taxation to which this rule applies,"— and that is the rule relating to trustee responsibility for the trust funds— no costs shall be disallowed except in so far as those costs or any part of their amount should not. in accordance with the duty of the trustee or personal representative as such, have been incurred or paid, or should for that or any other reason be borne by him personally. It is inartistic drafting at the best. It takes some time to understand what it means, but I can assure hon. Members that in fact what it means is that trustees are liable to have to dip their hands into their own pockets—after litigation in which they may not have been successful or interested in the very least—not only because they have been guilty of breach of duty, but for any other reason which may presumably appeal to the court.

It is not enough to say that, of course, the intention is benevolent, that the intention is that the trustees shall be liable only if they be naughty. That is not what the words say. And the taxing masters—and those to whom one can appeal now, thank goodness, from the taxing masters—are obliged to observe the words of the Statutory Instrument and nothing else; and the words, "any other reason" are as wide as one could find. For those, among other reasons, I regard Rule 31 (2) as wrong.

10.31 p.m.

Mr. Philip Bell (Bolton, East)

I beg to second the Motion.

I am a Bell and I have a book. It is not likely that I shall want a candle, because I shall not speak for as long as that. I support this Motion for the reasons given by my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke), though it seems rather a technical matter about which to detain hon. Members.

In litigation there is, of course, "A" versus "B", the free-for-all, and if "A" wins the fight and is lucky he may get an order for his own costs. Then he is very happy and everyone is pleased, until it is brought home to "A" that the order he has got for costs will not cover the bill he owes to his own solici- tor. That is a great disappointment to him, but not, of course, to the solicitor. Therefore, he has to meet the costs out of his own pocket and everyone thinks that is rather fun and part of the game.

But if the defendant happens to be a trustee and it is not really his battle at all—perhaps he is protecting an unborn infant or a person who is overseas—he would not think it a good idea to have to pay anything out of his own pocket at all. And the law has wisely provided that, by and large, he shall not do so, but shall look to his own fund. He had better not defend an action unless he has a fund or has an indemnity. Whether one wins, loses or draws, in the happy way we have in the Chancery Court so long as one has a trustee one gets one's costs out of the fund—a matter of considerable ridicule among the more ignorant people of common law, but a sound and wise Chancery practice.

The first thing is to win the case and the next to get an order as to costs, because in some queer way one can sometimes win a case and not even get an order as to costs. But, having got the order, there is a queer thing called the Taxing Office which taxes it. Often people are under the impression that that brings in the Inland Revenue, but it means that the order is taxed to see whether or not it is accurate.

An interesting thing about the Statutory Instrument with which we are concerned is that it is unique. Roughly speaking, it deals with costs and taxing, but nowhere in it do we find those simple, eloquent, ambiguous words, "or any other reason." There are here a great number of rules and we need not go through them all. We could start at Rule 6 (2) where one gets an order as to costs. It is no use bothering about taxation unless one has an order as to costs, and Rule 6 (2) deals with the question of a trustee trying to get an order. If he has acted unreasonably or for his own benefit rather than for the benefit of the fund, he will not get an order as to costs, so that he is not at the starting line. We notice that no one says, "for any other reason" he should not have it; specific reasons are given.

It goes further. For instance, in Rule 7, in deciding whether a party shall get costs, it is said that he shall not get them if something was unreasonably or unnecessarily done. It does not say if it is "for any other reason". We can go a little further and find Rule 8 (1), which is very interesting because it is about solicitors. Solicitors, sometimes, if they are not very quick, may find they have gone out of bounds and have to pay costs themselves. They cannot go to a client; no one says they are to have that responsibility put on to them just "for any other reason". The rules are very careful there. It is only if the costs are incurred improperly or without reasonable cause, wasted by undue delay, or by an order of the court, that the solicitor must then pay the costs personally; but no one thinks of "for any other reason". I have no doubt that members of the other profession would regard with horror the thought that an order could be made against a solicitor "for any other reason".

Those are at least four examples and there is another in Rule 28 (4). Every time an exception is given about costs or any particular power is given, a specific reason is mentioned. It is either that it is not in accordance with duty, or one has been negligent or it is not bona fide. There is always a specific reason. It causes me distress to find that "for any other reason" the costs may be borne by the trustee personally.

These are matters of drafting and I have no doubt that if I were not the twelfth man brought in at the last moment and I had had an opportunity of talking to my hon. and learned Friend the Solicitor-General, he could have persuaded me, but I did not have a chance of discussing it with him. I would put this general ground to him. In these days when by big advertising and great offices one can persuade unfortunate people with moderate-sized estates to pay enormous sums to trustee departments to take over their estates, one has an acceptance fee, a standing-by fee and a good-for-all fee. They do not know that, but they are taken into it. A lot of persons are asked to be trustees. They go to their solicitors and ask, "Am I to be let in for anything?" The solicitor might tell them, "Of course you might have an action and have to construe the will and you might meet a taxing master who does not exactly say, 'You did not perform your duty,' but 'for any other reason' you should not in fact get your costs out of the estate and have to pay them yourself." The person concerned would say, "I want to know. Can you give me any idea of what 'any other reason' means? Does it mean a crime, a misdemeanour, default or forgery?" and the solicitor would say, "No, 'any other reason' means what the taxing master thinks fit." He may say, "I think that counsel is on the way out. You are paying him too much in fees. If you had bargained seriously with his clerk you need not have paid twenty guineas but could have got away with fifteen, or for any other reason."

I am glad that Mr. Justice Danckwerts said that counsels' fees could not be knocked down. I must declare an interest and say I thought that a good thing. In deciding what the costs should be there should not be a carte blanche in an ordinary case. For instance, if one has to decide the meaning of a horse—a difficult thing in Chancery —one should not be allowed to charge twenty guineas for that. There should be a sense of decency. One has to judge the standard of disbursement, that costs should be allowed where the trustee has expended them bona fide, and to say whether that payment was proper or improper.

We may differ on a particular case whether the case was proper or improper, but what are we talking about when we use the words. "for any other reason"?

It reminds me of a friend who made a rather hopeless application to the court to get his costs out of the estate. He had not much right to them, and the taxing master said, "Mr. X, have you any other reason why I should give you your costs?". He replied, in a melancholy and not very convincing way, "I think, Sir, that you might, because it is my birthday".

10.41 p.m.

Mr. J. Enoch Powell (Wolverhampton, South-West)

I will detain the House only for a moment and that for the purpose of suggesting to my hon. and learned Friend the Solicitor-General that the difficulty which my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) has seen is due to a misprint and can, therefore, be removed without the necessity of withdrawing this Statutory Instrument.

The word "or" occurs three times in the line which my hon. and learned Friend quoted. I suggest to my hon. and learned Friend the Solicitor-General that the second "or" of those three is a misprint for "and". Indeed, if the rule be read carefully it will be seen that otherwise it does not make sense. I propose to do that by leaving out, as grammatically as I can, the words to which my hon. and learned Friend particularly took objection. The rule as printed would then run as follows: except in so far as those costs … should not, in accordance with the duty of the trustee …have been incurred or paid, or should for that … reason be borne by him personally. That is manifest nonsense, and clearly the intention of the Rule Committee was to say, except in so far as those costs … should not … have been incurred … and should for that … reason be borne by him personally. That is to say, first it must be established that the costs have not been incurred in accordance with the duty of a trustee and, then, secondly, there is a discretion to decide that for that reason part or the whole of them should be borne by the trustee personally.

Grammar requires that "and" should stand where the second "or" in that line has been accidently printed, and if that typographical correction is made the difficulty which my hon. and learned Friend the Member for Darwen, if I may respectfully say so, rightly brought to the attention of the House largely if not entirely disappears, since the words "or any other reason" come into force only in a case where, anyhow, the costs have not been incurred in accordance with the duty of a trustee. I hope that my hon. and learned Friend the Solicitor-General will be able to meet my hon. and learned Friend's difficulty by a typographical correction.

10.43 p.m.

The Solicitor-General (Sir Jocelyn Simon)

The Evershed Committee—the Committee on Supreme Court Procedure and Practice—reported in 1953, and one of its recommendations was that the rules of the Supreme Court should be redrafted. A Working Party has been working on the revision of the rules of the Supreme Court for a number of years, and they are undertaking a general revision of the rules. As the new rules become ready they are laid before the House. The rules which we are discussing tonight form a self-contained part of the general revision which is being undertaken in accordance with the Evershed Committee's recommendations.

I should like to make one or two general observations about the rules which are at present under consideration before I turn to the particular rule on which my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) and my hon. and learned Friend the Member for Bolton, East (Mr. Philip Bell) have raised a question. The purpose of the rules is twofold. On the one hand, they bring into one document provisions relating to costs which are at present scattered throughout the rules of the Supreme Court, and the various rules of the Probate, Divorce and Admiralty Division. If hon. Members would turn to the First Schedule to the new rules they will see that there are set out the provisions which are to be revoked by them. Part I of the Schedule deals with the rules of the Supreme Court, and shows that there are no less than 49 Orders and two appendices that are affected. Part II of the First Schedule deals with the rules of the Probate, Divorce and Admiralty Division, and there are specified 14 rules, two Schedules and a table of costs which are now revoked. Those relate to the rules of Admiralty, the rules of Probate and the Matrimonial Causes rules.

So, in the first place, this is a substantial consolidation measure. It brings into one document provisions hitherto scattered throughout the rules. But it goes beyond that. It is not merely a consolidation of existing provisions. It also effects substantial reforms of the law relating to costs. I do not propose to take time referring to these reforms in detail. They are set out in the Explanatory Note at the end of the rules. But I thought that it would be of assistance if I made some general observations about them. The rules are an important measure. Besides consolidating existing provisions, they introduce much-needed and long overdue reforms, and, what is more, they are intended to come into effect at the beginning of the next year, as appears from the Note at the head of the rules.

My hon. and learned Friend the Member for Darwen was good enough to call this an admirable Statutory Instrument; and I think that the House will agree that, subject to his observations on the four words in those rules, to which I shall presently come, that was a well justified tribute. I think the House would wish me to pay a tribute to the highly distinguished Rule Committee which drafted them, and to the Working Party which has advised on them.

The rule to which my hon. and learned Friend has drawn attention relates to the functions of the taxing master and before I turn to the rule itself and his criticisms it might be helpful if I said a word in general about the function of the taxing office. My hon. and learned Friend said that the words, which he criticised, gave the Executive a general blanket right. He said that this is Executive law of the worst possible description. Those are fighting words. But with great respect to my hon. and learned Friend they are inaccurate words, because the taxing office is not part of the Executive at all. It is part of the judiciary. And as my hon. and learned Friend pointed out, there is an appeal from the taxing masters to the judges.

As hon. Members will know, generally speaking, the unsuccessful litigant is ordered to pay the costs of the successful litigant, but there are quite a number of exceptions to that rule, and the material exception so far as our discussion tonight is concerned relates to the construction of trust deeds and the like. On such proceedings the ordinary rule is not that the unsuccessful party should pay the costs of the successful party. It is that, in a court of first instance at any rate, the costs of all parties are paid out of the trust fund itself. In both cases—that is to say, the general case where the unsuccessful litigant pays the costs of the successful litigant, and the other case which we are particularly discusssing, the case of trust funds—the payment of costs requires an order of the court.

Quite clearly, in neither case would it be in the public interest that the party whose costs were to be paid by someone other than himself should have a completely free hand in deciding how much he should recover; and it is the function of the taxing masters, acting judicially—and I emphasise "acting judicially" —to assess what would have been reasonable for him to spend and what, therefore, he may recover from the party or fund liable to reimburse him.

Equally clearly, the taxing masters cannot be given an absolutely unfettered discretion to decide what is reasonable. They must have some general guidance and one of the objects of these new costs rules—and even of the old ones they supersede—is to define the sort of considerations to which the taxing master must apply his mind in deciding what costs actually incurred can be allowed.

With that background, perhaps I may turn to a consideration of Rule 31. Before doing so, I should like to say that the new costs rules were the result of very long and careful discussion and consideration. They were discussed and considered, long before they ever came to the Rule Committee, by the Law Society, the Bar Council, the taxing officers and the Lord Chancellor's office. A very wide measure of agreement was reached between the Law Society and the Bar Council, on the one hand, and the taxing officers on the other before the rules were ever submitted to the Rule Committee. But there were some points of principle on which the bodies I have mentioned were unable to reach agreement, and which were, therefore, left to the decision of the Rule Committee. One of these was the rule relating to costs payable to the trustee out of a trust fund.

I can say quite specifically what the intention of this rule is. It is not to overrule the line of authorities to which my hon. and learned Friend referred—the dictum of Lord Selborne, the decision in Grimthorpe, and so on. The intention is that the trustee shall always recover his costs in full except where, in the view of the taxing master, any particular item of costs should not have been incurred, or should not have been incurred to the full amount specified in the bill.

Costs are not to be disallowed except where it appears to the taxing master that the trustee is in breach of his duty as trustee. There are two ways in which that can be ascertained. In the first place, a trustee can be in breach of his duty as a trustee when, on a strict review of all the authorities, it could be said that he was technically in breach of his duty as a trustee. That would, of course, mean that the taxing master would have to review the case in the same way, and with the same consideration, and in the same detail, as any judge does when a case comes before him in an action for breach of trust. But the object of the words "or any other reason" is to enable the taxing master to hold that there has been a failure of duty without the necessity of going into those technicalities of the law relating to breach of trust.

In other words, the object is to give a little flexibility to the taxing master. It is not, as I have said, in any way to go back on Grimthorpe. It is, in fact, to give full effect to the judgment of Mr. Justice Danckwerts in that case. The House will have noticed that, in the quotation from Grimthorpe given by my hon. and learned Friend, the learned judge did not use the words "breach of trust" at all. What he said was that the trustees were entitled to be indemnified against those costs and expenses provided that they were properly incurred, and not improperly incurred. In the view of the Rule Committee, that is precisely the test that this rule, as drafted, applies.

My hon. and learned Friend takes the view that the Rule Committee has failed in that intention. He has, of course, very great practical experience in these matters and obviously his view and the view of my hon. and learned Friend the Member for Bolton, East are entitled to the greatest respect. But I should be less than fair to the Rule Committee if I did not suggest that its views, too, on the construction of a provision of this sort are also entitled to very great weight. After all, it is to some of the members of the Rule Committee themselves that will fall the duty to apply and construe this rule.

Hon. Members will see on page 2 of these Rules the names of the members of the Rule Committee. It consists of the Lord Chancellor, the Lord Chief Justice, the Master of the Rolls, the President of the Probate, Divorce and Admiralty Division, Lord Justice Ormerod, Mr. Justice Vaisey—himself a judge of the Chancery Division, who gave the practice direction to which my hon. and learned Friend referred—Mr. Justice Pearson, Mr. Goff, who is himself a very experienced practi- tioner in the Chancery Division, Mr. Donaldson, and Sir Charles Norton, a former President of the Law Society. Therefore, I say with great respect to my hon. and learned Friend that the views of such a body ought to weigh heavily with the House.

It is the view of the Rule Committee that it has drafted this rule in such a way as to give reasonable flexibility to the taxing master so that he can apply Grimthorpe, but does not have to decide strictly on a review of all the authorities whether it would amount to a technical breach of trust. But the trustee's costs will not be taxed down unless he has acted improperly; in other words, the test in Grimthorpe.

Mr. Graham Page (Crosby)

My hon. and learned Friend has said twice that the taxing master must find that the trustee has acted improperly. How does he read the word "improperly" into those words "or any other reason"?

The Solicitor-General

The rule is in two parts. The first part contains the words … in accordance with the duty of the trustee or personal representative as such, have been incurred or paid …". In the view of the Rule Committee, that deals with the strict case of a breach of trust in the technical sense. The words "any other reason" cover cases where there has been improper conduct such as makes it reasonable for the trustee to bear the cost personally. It is governed by the word "should". They should not … for … any other reason be borne by him personally. Before summing up the matter, may I deal with the point mentioned by my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). As happens so often, he has noticed a point which has escaped the notice of all the lawyers, including my hon. and learned Friends. I think that there is a great deal in that point, and it would be more felicitous that the word "and" should stand for the word "or". What the Rule Committee intends is quite plain, and it is what my hon. Friend indicated. I do not want to take these rules back for the alteration of a single word, when it is our intention that they should come into force at the beginning of next year.

I can say—I know that my hon. and learned Friends will bear me out—that the courts will not hesitate, where necessary and where it makes better sense, to construe the word "or" as "and" or, indeed, the word "and" as "or". I myself think that the words will be construed as my hon. Friend suggested. It was certainly the way in which all of us, I think, did read it.

Mr. Page

I am sorry to interrupt again, but I should like to remind my hon. and learned Friend that that was how the rule was first drafted by the Law Society, with the word "and".

The Solicitor-General

I do not know about that, but, of course, I will accept my hon. Friend's word for it. It is possible that it was a slip.

My hon. and learned Friend the Member for Darwen asked for an undertaking that the Rule Committee would look at the rule again next time it met. I think that that is asking rather a lot of a body of this sort. The Rule Committee has given an enormous amount of consideration already to this provision, and it is satisfied that the rule does give effect to the decision in Grimthorpe's case. I do not myself think that we ought to hold up the introduction of a very much needed reform of a body of rules, to which my hon. and learned Friend paid tribute, in order that the Committee should have yet another look at something with which it has already pronounced itself satisfied.

In view of the points which have been made so cogently by my hon. and learned Friends, I suggest to the House that we should let this Statutory Instrument go ahead and see how it works in practice. If it is found that the taxing masters are not giving effect to the Grimthorpe decision—speaking for myself, I think that they will, and that is the view, also, of the Rule Committee —and if the judges should uphold them in that, then an amendment to the rules will have to be considered and the Rule Committee be asked to consider the matter again. I hope that the House will feel that that is a reasonable course to take and that we do not want to postpone the introduction of these rules on grounds which those who have given very great thought to the matter believe to be without foundation. I hope that the House will allow these rules to go forward.

11.3 p.m.

Mr. T. L. Iremonger (Ilford, North)

I think that what my hon. and learned Friend the Solicitor-General has said to us tonight is, in effect, "Never mind what the rule says. It is what it means that matters". I have a feeling, however, that, when I have to pay the costs, the taxing master will say, "Never mind what it means. It is what it says that matters".

I venture with the utmost diffidence and, indeed, trepidation into this debate. My hon. and learned Friend has paid a tribute to the experience of my hon. and learned Friends the Members for Darwen (Mr. Fletcher-Cooke) and Bolton, East (Mr. Philip Bell). and he could not possibly pay such tribute to me. None the less, I feel that, as a private Member of questionable honour, but absolutely unquestionable unlearnedness, I have a certain standing in the matter because I am a trustee and I intend in the future to ask, and I have in the past asked, others to be trustees for me.

One has to have some regard for the effect that these rules will have upon the innocent citizen who is entirely unversed in their ramifications when he comes to bear the burdens which his friends put upon him. Quite frankly, realising the situation spoken about by my hon. and learned Friend the Member for Bolton, East, one would go to a solicitor and ask what it all meant. The solicitor would explain the rule, and one would ask for the matter to be a little further explained. The solicitor would then say, "Read the debate in the House on 14th December, 1959, and it will be perfectly plain". If he said that to me, I should be scared stiff. I should be convinced that I was sunk before I started and I would say, "You had better get somebody else to administer your trust." The worst disaster that might happen is that he might go to a bank, and then the trust really would be sunk.

So, from the depths of my unlearnedness and my ignorance, which is probably a valuable contribution to make in the interests of the people who are likely to be trustees, I would say this to my hon. and learned Friend the Member for Darwen. I do not know what he proposes to do, but he is asking the House to pray against the rules. My hon. and learned Friend the Solicitor-General said, "Do not let us do this. Many people have taken a lot of trouble about this. They are important people and have an engagement next Monday and we cannot ask them to do it again. Let it go through." He says that we need not mind that it is only I who have to meet the costs; I am a small thing to sacrifice in seeing how it works out. We ought not to put any citizen in jeopardy to that extent.

The Solicitor-General

My hon. Friend must not put that sort of language into my mouth. I was saying that I do not believe, nor do these men of great experience believe, that my hon. Friend is in the smallest jeopardy.

Mr. Iremonger

I apologise to my hon. and learned Friend. He is perfectly sincere, but we have seen the way things work. We have been told what these words mean, and that we need not worry, but when it comes to the practioal test of the law people have a nasty way of standing pat on what it says. I am not in the least moved by accepting my hon. and learned Friend's sincerity.

We shall put possibly only one, possibly only two, small people into the position of having to pay, it may be, several hundred or thousand pounds for having been so foolish as to accept the duty of acting as trustee for their friends. We should not do it. It would be a much smaller thing to do and much more worthy of this House to let the people of enormous experience who have drafted the rules be held up and inconvenienced once more for another day or so to consider the matter again in the light of this debate and see whether they cannot draft something by which innocent and inexperienced people like myself would not be frightened.

If my hon. and learned Friend the Member for Darwen feels, from his experience, that this is likely to have practical deleterious results on the pockets of one or two innocent individuals while we are finding out how the rules are applied in the courts and he feels that he ought to proceed accordingly, for my part I consider that it would ill-become this House to withhold support from him.

11.8 p.m.

Sir Lionel Heald (Chertsey)

In view of what my hon. Friend the Member for Ilford, North (Mr. Iremonger) has just said, we ought to realise that in these matters there is a danger of the public getting the wrong impression. I would like to draw the attention of my hon. and learned Friend the Solicitor-General to the position in which we find ourselves. There is this expression "any other reason" and there is no doubt that it has no limitation.

There is a horrible thing called the ejusdem generis rule, which is sometimes applied, when it suits the court, to limit the words by reference to the preceding words, and so on. My hon. and learned Friend did not suggest that that was to be done here. Therefore, we find ourselves without any limitation. As far as I can see, those words are equivalent to the famous old expression, The length of the Lord Chancellor's foot except that here it may be somebody else's foot as well as the Lord Chancellor's.

My hon. and learned Friend the Solicitor-General rightly said that from the practical view point we would hope that the taxing master would always proceed on the basis that it was not "any other reason", but "any other reason of the same kind" as the one we have just been talking about, but not quite so strict. But the trouble is that that is not what it says.

My hon. and learned Friend also said that the rule had been—he did not say "considered"—approved by a very eminent body of people and, therefore, of course, it must be right. But he does not tell us, and we do not know whether these arguments we have heard today were put to those eminent gentleman. I should be very surprised if they were, because no contrary argument on the point about "any other reason", had it been put to any of those whose names were read out, would, I think, have stood up for very long, judging by one's own experience of them.

It is very important, I think, that we should not let any idea go out that, because very eminent legal personages have made a rule, this House is not en- titled to consider whether they are right or wrong. It would be a very unfortunate thing if that went out to the country, because, unfortunately, we do not discuss these things in camera, but discuss them in public. I am a little disturbed about it. I cannot think that it can ever have been intended that it should be left in that state.

The question is: what are we to do about it? Of course, my hon. and learned Friend is right in saying we do not want to have the whole of these rules taken back. We know that a tremendous job has been done on them, and there have been covered a number of important points about which some of us have been worried for some years past. Therefore, I should have thought it would have been possible for my hon. and learned Friend at least to have accepted the suggestion which has been made that the matter should be looked at again, because if one says, "I cannot give an undertaking that it will be looked at again" it rather implies that, someone in high authority—not my hon. and learned Friend, but a very eminent personage—has said, "This is all nonsense. We are not going to give any undertaking to look at it again."

I should have thought we should wish to avoid being in the dilemma, avoid being between being told by my hon. and learned Friend that he would not look at it again—in other words, he would not do something about it—and the rather awkward alternative in which we should find ourselves. Personally, I was rather moved by what my hon. Friend the Member for Ilford, North was saying, because the ordinary public are extremely ignorant about these things. They are suspicious of lawyers. I speak with some experience. There may be good reason for their suspicion, but do not let us give them any justification for it.

Finally, I want to repeat once more what I said before. I apologise for taking up time over it, but it is a very important matter. Do I really understand my hon. and learned Friend to agree that on its ordinary construction the expression "any other reason" could be taken, and should be taken, to be wider than is necessary for the purpose in view? If that is so, then I feel that we ought not to allow it to be passed into law. We have to remember that this debate cannot be quoted in any court—a fact which my hon. Friend the Member for Ilford, North may not perhaps have appreciated. It is a fact.

Mr. Iremonger

I assure my right hon. and learned Friend that that is just what I did appreciate.

Sir L. Heald

It would be most improper for any reference to be made to it and no judge would allow it to be.

I hope that my hon. and learned Friend will go further than he has, because no one wants to have these things held up. Everybody wants them to come into force, but it is rather difficult if we are told we must allow something to go through which is not quite right because it would be so awkward if anything more had to be done.

11.14 p.m.

Mr. Graham Page (Crosby)

I would, in a few sentences, endorse what has been said by my right hon. and hon. and learned Friends from the more senior profession. I disclose an interest at once, being a practising solicitor who will, of course, benefit by these rules if they go through. The public will also benefit by the rules in that they will reduce the margin between the party and party costs which the successful litigant is entitled to get out of the person he has beaten in the fight and the solicitor and client costs which he has to pay to his solicitor. These rules, because they rationalise and modernise costs, will reduce the margin and, therefore, they will be of benefit to the public. It would be very unfortunate if we were forced tonight to carry this Prayer to its ultimate conclusion, a vote against these rules. But there will always be that margin between party and party costs and solicitor and client costs, and it has always been recognised that the trustee should not have to put his hands in his own pocket for these costs.

The rule, as drafted, leaves the discretion to the taxing master to decide what is right or necessary in the extent of solicitor and client costs. It has surely been recognised previously in trustee taxations that this is more for the trustee's legal advisers to decide in these cases than for the taxing master. And if the trustee has been given his proper advice throughout, it should not be left to the taxing master's complete discretion to say. "You have delayed something, or done something unnecessarily, or given a reason why I should not allow costs. You must pay them personally. They should not come out of the fund."

If the wording "any other reason" means that the rule falls very harshly on the trustees, I cannot see that it is sufficient to say, "We will see how this works out." Somebody has to suffer first in seeing how it works out. Ordinary solicitors in general practice do not run to their Members of Parliament when a case has gone against them in the courts. If, on a taxation, the taxing master says, "I shall disallow this. The trustee must pay out of his own pocket," I cannot imagine the normal practising solicitor saying to his client, "I am going to the Rule Committee on this," or to the Law Society, or to a Member of Parliament. It is not the sort of thing one does in practice, or thinks of doing.

No, the trustee suffers, and the next will come along and suffer, too. It will not be one but a dozen or so before an hon. Member raises the point and we get the rule amended. I ask my hon. and learned Friend the Solicitor-General to give a better assurance than he did in his speech—an undertaking that if we let the rule go through we shall have an amendment at an early date.

11.18 p.m.

Mr. Peter Smithers (Winchester)

I have listened with some anguish to the debate because, like my hon. Friend the Member for Ilford, North (Mr. Iremonger) I am a trustee, and not a professional one, and the trust for which I am trustee is extremely large. I have no beneficial interest whatsoever in it and the infant children who are the beneficiaries are no relations of mine. For many years, I have carried a heavy responsibility. There are innumerable people in Britain in that position.

That is precisely the position which it is extremely difficult to get trustees to fill even in the present state of the law. It is easy enough to get a prospective beneficiary to become a trustee. It is easy enough to get a professional trustee to become a trustee, but the independent trustee is very difficult to obtain, and there are many circumstances in which it is extremely desirable that one should be obtained.

I do not know whether I have rightly understood the position, but I should be grateful if the Solicitor-General would confirm that it is that up to the present I have been liable only to pay costs if I have been technically in breach of trust. But I see that my hon. and learned Friend appears to be indicating dissent. I understand that I shall now be liable to pay costs in some other circumstances, in which I would not formerly have been liable; and that I cannot be quite sure until test cases have been brought what those circumstances will be. I think that is a point of the very greatest importance, and I, and thousands like me in the country will look upon our duties, already onerous and worrying, with greatly increased anxiety unless the position can be cleared up to our satisfaction.

11.20 p.m.

The Solicitor-General

Perhaps the House will allow me to speak again. Quite obvious anxieties have been expressed and I should not like them to be unresolved if it be within my power to resolve them.

My right hon. and learned Friend the Member for Chertsey (Sir L. Heald) rightly points out that this House has an overriding responsibility over any body given the power to draw up subordinate legislation, and I entirely agree with him that that applies equally when it is a technical matter of law and the body drawing up the legislation is composed exclusively of very distinguished lawyers. The only point I venture to make is that we are here not really capable of acting as a court of construction.

My hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) and other of my hon. Friends obviously take one view of this rule as drafted. That was not the view taken of the construction taken by the Rule Committee, consisting of those very eminent gentlemen. My hon. Friend the Member for Winchester (Mr. Smithers) said that his understanding was that up to now a trustee was liable for costs only in circumstances where there is a technical breach of trust. That is not my understanding of the law and I do not believe that was laid down by Grimthorpe. It is a fact that Grimthorpe says that a trustee's costs are not to be taxed down if he has acted properly and not improperly. That is a slightly different test and it is that test which this Rule is designed to enshrine. So I can say to my hon. Friend that it is not the intention to make his position or the position of any other trustee any worse.

The purpose of the drafting of this rule in this way, in the view of the Rule Committee, is to give effect to Grimthorpe without, at the same time, its being drawn so narrowly as to give real difficulty in its operation in practice for the reasons I gave. I recognise, however, that there is real disquiet on the part of a number of my hon. Friends, whose views weigh with the House and rightly so. As my hon. and learned Friend the Member for Chertsey said, this is an important reform and it would be a great pity if it were held up now on a difference of construction of four words in the Statutory Instrument. But the Rule Committee meets currently. It is working on other parts of the rules and is quite capable of having another look at this rule. If, after further consideration, the Committee felt that, in the light of what has been said, it is incorrectly drawn, it would not be a difficult matter for an amending Statutory Instrument to be laid before the House. I undertake to draw to the attention of my noble Friend the Lord Chancellor what has been said today, so that if he thinks proper he can again lay the matter before the Rule Committee. I hope that my hon. and learned Friends will feel that I have met in that way the spirit of what they have been urging, and will allow this Statutory Instrument to go forward.

Mr. Fletcher-Cooke

In view of the very generous attitude of my hon. and learned Friend in his second speech, I beg to ask leave to withdraw the Motion.

Motion, by leave, withdrawn.