§ Order for Second Reading read.
§ 3.45 p.m.
§ The Minster without Portfolio (Sir Eric Fletcher)
I beg to move, That the Bill be now read a Second time.
As the House is aware, it is the policy and intention of Her Majesty's Government to introduce during this Parliament, under the inspiration of my noble Friend the Lord Chancellor, substantial measures of law reform. The foundation of this programme of law reform is contained in the Bill to establish a Law Commission for England and Wales and one for Scotland, which I have just introduced.
I hope that in many cases, perhaps in most, these Measures will not be controversial in the sense of providing conflict between the political parties in the House. I imagine that this will certainly be the case as regards the Bill now before us, if only for the reason that its provisions had very largely been prepared by the previous Administration, to whom a large part of the credit for the Bill quite properly belongs.
Those hon. Members who have had an opportunity to look at the 35 Clauses and 19 pages of Schedules may well be excused for thinking that the Bill deals with highly technical and somewhat forbidding matters. The truth is that the main object of the Bill contained in Part I and the first 18 Clauses is to deal with a very human problem, seeking to rectify the hardships which have been experienced for many years past by large numbers of persons who are entitled to what are normally called funds in court, that is to say, sums of money which have been awarded to litigants, but which are administered by the courts. If it were not for the fact that Part II of the Bill introduces a series of amendments to the existing law, the Bill might more appropriately have been entitled the Funds in Court Bill. It will, perhaps, be convenient if, first, I try to explain to the House the main object of Part I.
For some hundreds of years, it has been the practice of the courts to con- 204 trol and administer money belonging to infants and mental patients. This jurisdiction has derived from the position of the Sovereign as parens patriae and is of great antiquity. In 1925, this function of the courts was extended to deal with sums of money which became payable to widows of deceased persons as a result of claims arising under the Fatal Accidents Acts. The total amount of the funds at present under the control of the courts and administered under the Rules of Court for the benefit of widows and infants is about £20 million. In addition, over £28 million is administered on behalf of mental patients.
The principles which have hitherto governed the policy of investment have been conservative in the extreme and were designed to secure the maximum of security regardless of the erosion of capital due to inflation.
Whereas the vast majority of claims under the Fatal Accidents Acts are brought in the High Court, the funds recovered may be administered either in the High Court or, if the High Court so orders, in the plaintiff's local county court. Funds administered under the county court system were originally placed on deposit earning interest at the rate of 2½ per cent. per annum.
In recent years investment with the National Debt Commissioners has been the normal rule and the interest, which has been fixed from time to time, now stands at a rate of 4¾ per cent. The capital of any individual suitor's funds is guaranteed £ for £ irrespective of any fluctuations in the value of the securities held by the commissioners.
Under the High Court system, investments were limited to gilt-edged securities and the main part were invested in War Loans or other undated stock. Under both systems there have been the most unfortunate results for the beneficiaries. They have been denied any chance of capital appreciation which would have been open to investors in equities and as a result of inflation they have suffered a serious capital depreciation. The continued decline in gilt-edged values since the war, together with the fall in the value of money, has resulted in funds invested in this way losing a very considerable part of their value.
The losses in cash value have been bad enough; in actual value they have, for 205 some suitors, been catastrophic. Take, for example, the case of a boy of 10 who, in 1947, was awarded a sum of £1,000. If that had been invested in ordinary shares, by the time he was 21 it would have brought in a considerable capital appreciation. If invested in gilt-edged stocks, as it had to be, it dwindled to a nominal value of £720 when he became 21 in 1958. OF course, £720 in 1958 was worth very much less than the same amount in 1947. There was the further difficulty that once an investment has been made by the court it is in practice very difficult and cumbersome to get the investment changed, even if, which is unlikely, the widow or infant concerned knows that, theoretically, this is possible.
It was to meet this situation that, in 1958, Lord Kilmuir, then Lord Chancellor, appointed a Committee under the chairmanship of Mr. Justice Pearson, now Lord Justice Pearson, to examine the investment of funds in court. I am sure that the House would wish me to take this opportunity of expressing its gratitude to Lord Justice Pearson and his colleagues for their Report, which was presented in 1959. It is now, after an interval of five years, that I am happy to introduce this Bill which, with some slight modifications in form, implements the substance of the Committee's recommendations.
More often than not reforms in the administration of justice result from public agitation focused by a particularly glaring instance of injustice. It is to the credit of the Lord Chancellor's Department that in this case the initiative came without any public outcry, justified though it would have been. I think that I am entitled to observe that this is but one illustration of the many anomalies and imperfections in our legal system which, I hope, will be corrected when we have set up as a permanent body a Law Commission for England and Wales and one for Scotland, for the purpose of keeping the laws under constant review. That is the purpose of the Bill which I presented this afternoon.
The Pearson Committee accepted the principle that the court, in investing and looking after suitors' funds, should act in the same way as a prudent trustee with access to competent advice. They recommended the setting up of a Central Corporation to which money could be transferred from both the Supreme Court 206 and the county courts for investment, very much on the lines of an ordinary unit trust, in equities, gilt-edged and any other securities. The Pearson Committee appreciated—as will the House—that some suitors, for example, young children, would be more concerned with capital growth than with income, whereas others whose money would normally be withdrawn in a fairly short time would be more concerned to receive a high rate of income consistent with preserving the capital intact.
If the provisions of the Bill are accepted by the House, the future position as set out in Clause 6 will be this: funds administered in the county court will be capable of investment in either of two ways. The first, as at present, will be with the National Debt Commissioners—with the added advantage that the Commissioners will in future be able to pay approximately the market rate on their investments. This form of investment is described in the Bill as "placing to a short-term investment account". Alternatively, the funds may be invested with the Public Trustee in what the Bill calls a Common Investment Fund, which I will explain later. Each corresponds roughly to a unit trust. This is described as "placing to a long-term investment account". It will be possible in future to administer funds in the High Court in any way of three ways: first, as in the case of county court funds, with the National Debt Commissioners; secondly, again like county court funds, in a common investment fund; or, thirdly, in selected investments within a range to be settled by the Rules Committee.
The House should know that it will also be possible under the Bill, for the first time, to invest the money of mental patients under the control of the Court of Protection in one of the new Common Investment Funds authorised by the Bill. The House will, therefore, see that the central feature of the Bill is the provision, in Clause 1, empowering the Lord Chancellor to make schemes establishing common investment funds. There will presumably be at least two and possibly more to meet the varying needs of widows and infants, as they may be differently situated.
The Pearson Committee recommended that the Central Corporation to manage 207 these common investment funds should be independent of Government control and should have experienced staff of the right calibre. They deliberately refrained from making any specific suggestions. The Government feel that the Public Trustee possesses the ideal qualifications contemplated by the Pearson Committee. He is already responsible for investing very large sums belonging to members of the public. He has an expert staff and has advice on investment policy from a very distinguished advisory committee.
Moreover, the Public Trustee has assured the Government that he can absorb this additional responsibility without any appreciable increase in staff and without requiring any new accommodation. The result of making him responsible for the long-term funds will be to save both the suitors' money and the taxpayers' money and will ensure that widows and infants will in future have their funds under the most capable management.
The Public Trustee will be free to invest in any form of property without restriction, and the funds coming into his hands under the Bill will be held by him for one single client, the Accountant General. It will be the duty of the Accountant General to pool the funds he receives from the courts for investment with the Public Trustee and to allocate to each suitor the proper units which represent that suitor's share in the funds. Every widow and infant whose money is invested with the Public Trustee will, therefore, become beneficially entitled to a certain number of units held for them by the Accountant General in the Common Investment Fund controlled and managed by the Public Trustee.
The House will appreciate that, if full advantage is to be taken of this new system, it will be necessary to switch a considerable portion of the funds now invested by the courts on behalf of suitors. Obviously, it is for the court to decide whether any particular fund should be reinvested with the Public Trustee under the new system. That decision must depend on the particular circumstances of the beneficiary.
At the same time, I think that the House will agree that it is essential in the interests of beneficiaries generally 208 that their existing investments should be reviewed. I have, therefore, asked my noble Friend the Lord Chancellor to draw the attention of the masters and registrars, at the appropriate moment, to the advantages of the new system and to the desirability of reviewing funds under their control so that, where they think it suitable, they can indicate to the beneficiaries the advantages for their investments to be switched. At the same time, I have asked my noble Friend to invite the Law Society to urge upon solicitors generally the desirability of their also reviewing their clients' funds in court for this purpose.
Having thus explained the purpose of the Bill, I hope that the House will not think it necessary for me to explain the detailed machinery by which the Bill achieves these objects. Clause 2 makes the necessary amendments to the Act of 1906 which set up the office of the Public Trustee. The substantive changes in the systems of investment introduced by the Bill would, in any event, involve consequential amendments to Part VI of the Judicature Act, 1925, and to those provisions of the County Courts Act, 1959, which govern funds in the county courts. Much of Part VI of the Judicature Act, 1925, is now obsolete. As the House knows, it was, in any event, a consolidation Act. Its language is often inconsistent with the more modern language of the County Courts Act, though intended to have the same meaning.
Moreover, the Bill provides for a number of matters which will be common to both the Supreme Court and the county courts, but for which separate provision is made in the two existing Acts. Part I of the Bill accordingly supersedes nearly all Part VI of the Judicature Act and re-enacts in modern language those provisions which are still required, modified, of course, to allow for the new system of investment. It also makes the necessary modifications to the County Courts Act and provides for those matters, such as accounts and the ultimate liability of the Consolidated Fund, which are common to both.
I turn to Clause 19, which is the first Clause in Part II but which might equally well have been the last Clause in Part I. This is the Clause which will probably give the House the most 209 concern. It raises in an acute form a question on which there are quite legitimate differences of opinion transcending party politics. These were expressed both in the Pearson Committee's Report and in another place. The question in its simple form is this: if a widow recovers damages under the Fatal Accidents Acts, should the court have a discretionary power to retain control of the money and invest it for her benefit or should the widow be entirely free to do as she likes with it? A subsidiary question is whether any distinction should be drawn between the case in which the widow has dependent children and the case in which she has none.
Under the present law there is a discretionary power of control except in the very rare case of proceedings being brought in the county court. Should the existing situation continue? On the one hand, it is argued by those who stress the importance of sex equality that a widow should be given the same freedom to manage her own affairs as a man or as a married woman or as a spinster, or, indeed, as a widow who, for example, obtains damages as a result of an action for injuries done to herself.
Those who support the alternative view stress the fact, as experience has shown, that when a widow obtains a sum of damages in court she is often exposed to the temptation to use her money ill-advisedly, to the detriment of her own interests and the interests of her children.
The House should, I think, appreciate chat the current practice of the courts, where there are dependent children, is to award the bulk of the damages, which may, of course, be £5,000 or £10,000, to the widow and to award only comparatively small sums, of perhaps a few hundred pounds, to the children. This policy, I imagine, has grown up in the knowledge that the widow's damages are often invested and presumably are available for the family as a whole.
If it were decided to remove the court's power of control, it might well be that the court would be more inclined to award less to the widow and more to the children, doing so in the knowledge that the funds of infants must be controlled by the court until their majority. The House should also know that the practice of the courts, where a lump sum is in- 210 vested for the widow, enables her from time to time to draw on the capital for special expenses such as school fees, the purchase of a house or a business or a motor car, or perhaps expenses for the widow's remarriage, or even a special holiday.
The Pearson Committee drew attention to the fact that there is some doubt whether the jurisdiction at present exercised to control widows' damages has ever been validly authorised by Parliament. It is, therefore, clearly necessary that on this occasion Parliament should reach a clear decision about this human problem. The arguments on both sides are fully set out in the Pearson Report, and I need not repeat them here.
The Pearson Committee recommended that statutory sanction should be given to the existing practice for discretionary control and strongly urged that even if their recommendation were not accepted by Parliament, control should be exercisable wherever the widow has any child or children under the age of 21. This is the compromise which is contained in the Bill and which I invite the House to approve. It will be appreciated that the power of the court is a discretionary one. There would be nothing to prevent the court in a suitable case, or indeed in any case, from paying out all or part of the damages to the widow and merely retaining control over the balance.
May I deal briefly with the remaining Clauses, about which I hope a very short word of explanation will suffice. At present, the county court jurisdiction to make an administration order—a simpler form of bankruptcy—is limited to a case in which the debts do not exceed £50. It is proposed to extend this jurisdiction to cases in which the indebtedness does not exceed £250. This is done by Clauses 20 and 21. Clause 22 amends the law relating to execution in the county court against the goods of a defendant.
§ Mr. Emlyn Hooson (Montgomery)
Before the Minister leaves Clauses 20 and 21, would he explain why it is necessary to limit this to £250 instead of the normal county court limit of £400?
§ Sir E. Fletcher
It was thought that in present circumstances £250 was the appropriate limit for an administration order, because an administration order 211 is in itself a simplified form of bankruptcy and only available, and intended only to be available, in a somewhat restricted field. It was thought that to extend the jurisdiction for an administration order beyond the position in which the debt exceeded £250, compared with the present limit of £50, could not be justified at present.
Clause 23 is a highly technical Clause to the extent that it gives the county court some additional power to grant relief to a lessee in an action brought for forfeiture for non-payment of rent. It does so by extending the time within which the arrears can be paid off.
Clause 24 is a very desirable improvement. It will enable a chancery or district registrar to be appointed a chancery master, and a district or county court registrar to be appointed a taxing master. Some inconvenience has been found in the past by the absence of those qualifications.
I hope that the House will not think it necessary for me to comment on the remaining Clauses, any or all of which can be discussed in greater detail, if required, during the Committee stage.
However, perhaps I should say a word about Clause 33. As my noble Friend the Lord Chancellor has on more than one occasion observed, the Statute Book is at present cluttered up with a large number of enactments which, to quote the words of Clause 33, have become obsolete, spent or unnecessary or been superseded by other enactments. This deplorable state of the Statute Book of England produces intolerable inconvenience to say the least, particularly to practitioners and often to the public. From time to time, as the hon. and learned Gentleman opposite is aware, statute law revision Acts are passed to deal with this accumulation of defunct legislation, but it is a piecemeal and slow process. We very much hope that the process will be vastly accelerated when the proposed Law Commissions are set up.
In the meantime, advantage has been taken of the introduction of the Bill to propose the repeal by the operation of Clause 33 and the Second Schedule of no fewer than 49 enactments relating to the administration of justice which have become obsolete, spent or unnecessary 212 or have been superseded. They include the Execution Act, 1664; the Disorderly Houses Act, 1818; the Petty Bag Act, 1849; and the Sale of Spirits Act, 1862. I hope that no one will expect me to explain the significance which any of these obsolete Acts once had, but it may interest the House to know that the two Acts of George III which are being repealed provided for the erection of offices for the then Accountant General and for the six clerks, one of whom was Nell Gwyn.
By the time we reach the Committee stage I very much hope to be in a position to recommend a number of further additions to the Second Schedule.
§ 4.14 p.m.
§ Sir John Hobson (Warwick and Leamington)
The House is grateful for the exposition which the Minister has given of the Bill, though I think that he must have got a little confused in his history if he thought that an Act of the reign of George III had anything to do with Nell Gwyn. Be that as it may, my hon. Friends and I welcome the Bill and do not have any desire to impede it. On the whole, it is a good Bill, particularly as it was almost wholly prepared by the previous Government and by my noble Friend the previous Lord Chancellor, and as its origins are to be traced back to the foresight of a former Lord Chancellor, Lord Kilmuir, and to the work of the Pearson Committee.
We have heard a good deal about a Bill which has been introduced today, but we have not seen and do not know its contents, and, therefore, it is very difficult to comment on it. So I shall endeavour to confine myself to the Bill that we are actually discussing and not embark on general topics of law reform. except just to remind the House that we heard in a speech made to the Association of Labour Lawyers in May last year about how the party now forming the Government would spend its first three months before its major Measures had been prepared in bringing in items of law reform, and that the only two items of law reform brought in are this Bill and an amendment to the Legal Aid Regulations, both of which were wholly prepared and ready for the Government when they took office.
213 I am sure that the House generally would wish to express its thanks—I personally also wish to do so—to Lord Chief Justice Pearson and all the members of his distinguished Committee for the very extensive investigation which they undertook into this difficult and complicated subject and for the excellent Report that they made on the whole question, which affects very numerous litigants and very large numbers of persons. It is a matter which affects deeply the pockets of very many citizens who may find themselves in a position in which they are being looked after by the courts.
I welcome very warmly the fact that the suggestion by the Pearson Committee that there should be something in the nature of a unit trust has now been implemented and that Clause 1 provides for the setting up of a long-term investment account or, in other words, a Common Investment Fund, which is to be under the control of the Public Trustee. I am sure that this will be very beneficial. The Pearson Committee suggested, however, that there should be only two Common Investment Funds, one intended for short-term investment and one intended for long-term investment, which it called the A Fund and the B Fund.
The Bill as drawn and the speech of the hon. Gentleman seemed to indicate that, while short-term investments were to be dealt with by deposits with the National Debt Commissioners, it was still intended to set up more than one investment fund. I am a little mystified why this should be if they are all to be long-term investment funds, because the option which is given by Clause 6 to invest in a common investment fund is only given by Clause 6(1,a,ii), which appears to be on the basis of a long-term investment account.
Therefore, the varying needs of widows and infants, which was the reason given by the hon. Gentleman for setting up more than one investment fund, would not seem to vary if the short-term investments are to go to the National Debt Commissioners and the others to a long-term investment fund. If it is long-term investment, why cannot they all be in a single fund? I should have thought lat there were great advan- 214 tages in having a single fund if it is intended only to provide for the needs of those who require long-term investment.
I was grateful to the hon. Gentleman for the explanation which he gave about what is likely to happen in the event of transfer. As I understand it, every single fund will have to be reconsidered by the court or the official of the court under whose direction it is at present to see whether or not it should be reinvested as a result of the new arrangements brought in by the Bill. But will these officials have expert advice? It is an investment problem, and, though one greatly admires the attention to detail of masters, registrars and judges, not all of them are very expert upon investments.
Also, there is not only the question of the advantage that can be gained by reinvesting under the new arrangements; there is also the loss that will have to be taken on the funds as they stand at present, and there will be the problem of the individual beneficiary on whose behalf the funds are invested, who presumably will also have to be told what the present value of the fund is, what loss he will take if it is switched, and what are the advantages and disadvantages of switching. It is a very technical investment operation, and I wonder to what extent proper advice will be given to the court officials and the beneficaries on all this difficult and complicated question.
Next, what about Scotland? Is Scotland not to have the benefit of funds in court being invested on the basis of unit trusts? As I understand, the Lord Chancellor succeeded, at any rate in this respect, to the duties of the former Lord Chancellor of Scotland, though I think that some of his duties have been taken over by the Lord Advocate. Be that as it may, should not a scheme of this nature be provided for the whole of the United Kingdom? Is anything being done about the provision of such a fund for the advantage of Scottish litigants?
I am glad to note that Clause 15 lays a statutory obligation for the publication of the accounts of any common investment scheme so that, of course, the courts, Parliament, the Lord Chancellor's Office and the public will, in 215 general, be able to see what is happening in relation to each common investment scheme. There is, however, an additional point which remains wholly undisclosed and which never seems to be given away. It is the question of on whose advice investments are made.
We are told that there is a very distinguished body of persons who advise, and who will continue to advise, the Public Trustee and I have no doubt that they are most admirable people who give most excellent advice. But surely their identities should be made public annually in exactly the same way as, when one invests in a public company, one knows who the directors are and those on whom the company relies for investment advice. It may be only a small point, but it is something which should be met.
There is something else to which consideration should be given. Should we not put into the Statute what information is to be given to the beneficial owner of each and every one of these funds? The ordinary unit trust gives a six-monthly account showing the amount of dividend, the number of shares one holds, the amount of investment that is to come, the amount of tax deducted and the net income.
Should we not place upon either the court or the Public Trustee or the Accountant General an obligation to inform each beneficiary who has shares in any of these common investment funds, first of all, the number of shares which they hold on his behalf; secondly, the value of these shares at each half year according to valuation at that date; thirdly, the amount of income credited to his account, together with notification of the deduction of tax, if any; and, finally, the state of account of the fund, so that every six months he can see both the capital and income position up to date?
There is yet another small point which might be considered. As I understand, the income from an investment in a long-term investment fund can only, in accordance with Clause 7(1,h), be reinvested in deposit accounts or short-term investment accounts. It would surely be worth applying to such cases the ordinary provisions of unit trusts whereby one can allow income to accumulate in the long-term-fund. 216 This would be advantageous to the beneficiary who does not want to spend the income. He would need to look at only one fund in which he was allowing his money to build up as a single investment. He would not need to look at both long-term and short-term funds at the same time. Such a provision would be an improvement.
The only other Clause that is, as the hon. Gentleman said, of general interest and which raises something that can be considered as contentious is Clause 19. It is the only one which raises a general question of principle and a matter of interest to the House as a whole. The Lord Chancellor has said that he would be grateful for the advice of this House upon it. It concerns a very short point: whether a widow's damages recovered under the Fatal Accidents Acts should be handed over to the successful plaintiff entirely or whether some power should be reserved to the court to order, in appropriate cases, that it should continue to control either the capital or the income or both on her behalf.
In a sense, such cases are quite different from ordinary cases. They are usually cases in which the claim arises out of the death of the husband either as the result of a motor accident or of industrial injury, and the vast majority of the deceased were earning a weekly wage, either the average industrial wage or near it. Here we get the position that a widow used to managing a weekly sum suddenly ands herself in possession of a very substantial capital sum.
The problem then is whether one should take the broad view that the State and the court should not be paternal and that people should be trusted to manage their own affairs, however stupid they may be about it and whatever the risks may be, or whether there should be discretion for the court to decide, either in all cases or in some, that widows should be protected by some control being exercised.
Personally, I am wholly in favour of continuing the power to give protection to all widows as it exists in the courts at present. I do not mean to say that it should be exercised in all cases—I do not think that it should. I think that many widows are quite plainly capable from the very first of taking control of large sums of money. I think that the 217 majority of widows after a short time, as it were, under tutelage, during which investment is done for them and they learn to realise that a capital sum produces a separate income, are perfectly capable of undertaking the management of the money themselves.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
Does not the same point arise in the case of a widow who, al common law, is awarded damages?
§ Sir J. Hobson
Certainly. But it does not arouse so much concern in that context because usually in such cases the acquisition of a substantial sum is not in replacement of a small weekly sum. What is unusual about fatal accident cases is that, instead of getting a small weekly sum, the widow suddenly finds herself with a very substantial capital sum. I think that this does make a difference.
I am sure that, like me, every hon. Member is contacted by many widows about their problems. There is no doubt that the death of a wage-earner effects a fundamental and radical alteration in the circumstances of his widow and that she has very many problems, anxieties and adjustments to make when that catastrophic event occurs.
§ Mr. Leo Abse (Pontypool)
Is not the right hon. and learned Gentleman talking about things in the last century? Is he not aware that now one-third of married women are working, that the number is growing and that there are millions of them? To regard the family and the household as being under paternalistic and authoritarian rule is out of date. That is the main fallacy of the right hon. and learned Gentleman's argument.
§ Sir J. Hobson
No doubt the hon. Gentleman the Member for Pontypool (Mr. Abse) intends to make a speech in this debate. I am expressing my view, which may be right or wrong. If he will be good enough to listen to me, he may have his turn later.
My view may be paternalistic, but all I am saying is that, after the death of her husband in a fatal accident, there is a period in a widow's life when she needs as much help as possible in coping with the innumerable problems with 218 which she is faced. One of the most difficult of these is that of finding herself in possession of a large sum of capital money which she has never enjoyed before.
I cannot think of anyone, however responsible and intelligent, who has never before had experience of looking after capital sums, who does not need a period of experience, under proper supervision, in order to understand the difference between capital and income and the very difficult problems involved in the management of a capital sum.
Private citizens have shown that they realise that this is a necessity not only for widows and infants and those who are sane, but for people of mature age, whether male or female, married or spinsters, or even ordinary young men who have never before had a capital sum. The common experience is that wise people who are conferring large sums of money on such people provide for a period in trust. In other words, they provide that someone should look after the capital for a time and see to its investment and allow the beneficiaries to have an income. Sensible people usually provide that as soon as the beneficiaries have had some experience of that situation they can take over the management of these affairs themselves.
This is a common feature, which I would have thought sensible, of the way in which ordinary citizens manage their own affairs when they hand over to a person of inexperience very large sums of money, and it is unobjectionable that the court should have power to do so. I am not saying that the court should insist on every occasion on managing it, but there are many cases when it is beneficial that the court should have that power and should exercise it.
The arguments are very well set out in the Report of the Pearson Committee. The argument in relation to the widow who has children is overwhelming. It is set out in paragraph 27 of the Report, which says:In an action under the Fatal Accidents Acts, a widow with dependent children will normally have awarded to her the major part of the total sum of damages. It is assumed that she will use her damages for the maintenance and benefit of the children as well as herself. The assumption is of course in general very well-founded, and indeed there is evidence that a widow will often prefer to use 219 up her own fund first, leaving the children's fund intact, and will need to be persuaded by the Master or Registrar that some contribution towards the family expenditure can fairly be required from the children's funds. There is however the need to ensure the conservation of the fund by safeguarding it against early disappearance in some imprudent investment or undertaking and against too rapid depletion by excessive drawings. Most of the widows have no training or experience in the technique of handling large sums of money and in particular of distinguishing between income and capital. The Court has a duty, in performance of one of its traditional functions, to protect the interests of the children. If the widow's fund were to be uncontrolled, the practice of awarding the major portion of the damages to the widow would have to be reconsidered, and some different practice of awarding the major portion to the children and providing for periodical contributions from their funds to the household expenses might appear necessary, and even then there might be cases in which the widow, having quickly spent all her own fund, would have to be supported by drawings from the children's funds. There would be no balance of advantage in such a change of practice; it is simpler and better to retain the present practice. In our opinion —hellip; the Court's power to control widows' damages in cases where there are dependent children should undoubtedly be continued.That was a unanimous recommendation of the Pearson Committee, which studied the matter with great care.
In paragraph 31 of its Report, the Committee added the reasons why in addition it recommended that the power to order control of the fund for all widows should be incorporated in the Bill. I find the arguments in that paragraph convincing and, if it were thought desirable, I would support an Amendment to extend the power of the court in certain circumstances when it thought it necessary to extend the control for widows.
This view has powerful support from all those who have experience of these matters. The Law Society, the Trades Union Congress, the Master of the High Court and the registrars of county courts all support the view that the existing system ought to continue. From the judicial point of view it is interesting to note that Lord MacDermott, the Lord Chief Justice of Northern Ireland, where this power does not exist, has thought that it ought to exist and would like to have it for the purposes of the administration of justice in Northern Ireland. Lord Justice Pearson himself came down on the side of this view and the present Lord Chancellor takes the same view. In view 220 of that weight of opinion, I am bound to say that I believe that the Pearson Committee was right.
It is not simply that there may be a clever man who is trying to sell a widow a business. There is a whole host of circumstances which one ought to consider. As I have said, the principal reason is that it is an unusual experience suddenly to come into the enjoyment and control of a very large capital sum and that one needs a period of time in which, under tutelage, as it were, one can see the difference between capital and income and have assistance as to the way in which investments ought to be made. It is only after that experience that people realise the difference between having a weekly income and having the control of a capital sum.
It is necessary to protect people without that experience from the feeling of extravagance and the idea that they are very well off when, in fact, they are not at all well off. After all, £5,000 invested today, less tax, does not begin to compare with the earning capacity of a good husband in good employment. People may think that they are well off because there is a large amount of cash at the moment and then all too quickly find that it has disappeared. The evidence before the Pearson Committee was that most of the funds in court have been dispersed and paid out within an average of five years. If such funds are to last for only such a short time, I see no harm in providing protection over that period.
We all know the case of the widow who obtains a very large sum of money in a country area where the whole of the village is drunk for a week celebrating on the proceeds of victory. These are cumulative arguments and not singularly conclusive, but there is also something to be said for protecting the widow immediately she has the money against the importunity of her friends and relations, which a kindhearted woman might find it difficult to resist.
There is something to be said for protecting her against those who are determined to take the money from her—and they exist and we have to recognise that they do—and to some extent we have to protect her against the feeling that matrimonial prospects are brighter than they really are if someone knows that there is 221 a large sum of money—and there are people who look not so much for a wife as for a financial programme.
The problem arises, and the Pearson Committee was right to recognise that it arises, from the fact that, instead of having small weekly sums, what appears to be a very large sum of money suddenly comes into the possession of a person with no experience. It is only for that reason that the power of the court ought to be retained, although I would hope that it would be exercised very liberally and always for a very short period.
That is all I desire to say on what is the only matter of major principle in the Bill. Perhaps I can ask a question about Clause 23, which the hon. Gentleman said was intended to extend the time within which the arrears of rent could be paid off. I am not sure that that is what the Clause does. It deals only with claims for possession of land in actions in the county court where there is an attempt to enforce the right of re-entry or forfeiture, and the County Courts Act already provides that a minimum period of four weeks must be given to allow the paying off of any arrears before a forfeiture or right of re-entry can be enforced. Under the law as it stands, there is no limit, although the county court must give at least four weeks. In its own discretion it can give any longer period which it thinks necessary or desirable.
The Bill does not extend the time within which arrears can be paid off, but gives the court power to give a defaulter a third chance. He has the original chance when he ought to pay. He has a second chance under the County Courts Act for such period in excess of four weeks as the county court may think desirable, proper and fair. The Bill, without any statement of principle or direction about the way in which it is to exercise its discretion, appears to give the county court power to give a third chance to a defaulter in rent who has already had two chances.
How does this tie up with the recent Protection from Eviction Act? Surely under that Act the court already has power to extend by up to a year suspension of the right of the landlord to recover possession. Does it not give ample powers to the county court to 222 suspend the right to obtain possession? If not, and if this is an entirely separate proceeding, why is it necessary and what cases have arisen in which it was desirable that a defaulter should be given not just a second but a third chance? Why are the present powers considered inadequate?
As I say, subject to these few comments, we think that this is an excellent Bill. We certainly do not oppose its Second Reading. It was prepared almost wholly by the previous Government, and for that reason we shall not vote against it.
§ 4.42 p.m.
§ Mr. David Weitzman (Stoke Newington and Hackney, North)
I think that there is a good deal in the criticism made by the right hon. and learned Member for Warwick and Leamington (Sir J. Hobson) about Clause 23 of the Bill. I should like some more information from my hon. Friend the Minister without Portfolio on that matter.
The right hon. and learned Gentleman made a number of criticisms which, no doubt, will receive the attention of my hon. Friend. I am rather concerned, however, about his claim that the Bill was prepared by the previous Government. No doubt he is perfectly right about that, but it is very important to point out that the Pearson Committee was appointed, I understand, early in 1957—eight years ago—and reported in July, 1959—over five years ago. It was appointed to deal with what, in my view, is a very important and serious matter which the Bill deals with, namely, the investment of court funds.
My hon. Friend was good enough to quote an example which was quoted by the Lord Chancellor in another place. It is worth repeating. A boy of 10, in 1947, was awarded £1,000. In 1958, when he was 21 years of age, that £1,000 was worth £720. Having regard to the value of the £, it is worth less now. That is only one example. There must be a considerable number of cases of people who were awarded money, who needed and deserved it and who have lost very considerably as a result of the mode of investment and the fall in the value of money.
As I say, the Pearson Committee reported in July, 1959, and it was not until this Government came to power that the 223 Lord Chancellor, in another place, in November, 1964, introduced this Bill. Yet the right hon. and learned Member for Warwick and Leamington tells us that the Bill was prepared by the former Government. One has only to recite these facts to show that it is absolutely scandalous that in matters of this kind, where serious loss was being suffered by people for many years, and on which a responsible committee reported unanimously about what should be done, time was not found by the last Government to introduce a Measure such as this. The public should be aware of that sort of conduct on the part of the last Government. This is obviously a matter which required the most urgent attention.
Under the Bill, the money paid in will, I understand and hope, be invested for the benefit of infants and widows. No doubt there was a good deal of substance in what the right hon. and learned Member for Warwick and Leamington said on the technical points, but there is one point which I should like to make. I understand that the control and management of the money is to be in the hands of the Public Trustee. The House will remember that some time ago some people were very critical of the conduct of the Public Trustee in the administration of funds. That matter was investigated and reported upon, I understand, by the former Lord Chancellor. The allegations which were made were refuted.
I do not suggest for a moment that the office of the Public Trustee does other than good work, but some of the criticisms which were voiced still linger on. It is absolutely essential that steps should be taken to ensure that the office of the Public Trustee and his staff are thoroughly efficient, that they have expert advice and that they so conduct their affairs that there cannot be any question of anything being done except in the best interests of the parties whose moneys that office administers.
I wish to say a word or two on the point which the right hon. and learned Member for Warwick and Leamington dealt with and which my hon. Friend the Minister without Portfolio referred to in moving the Second Reading, namely, the position of widows. Under the Fatal Accidents Acts, when a widow, or a widow with infants, is awarded money, 224 it is paid into court. If she wants some part of it for some purpose an application must be made to the judge who, in his discretion, awards such sums as he thinks fit or nothing at all.
I listened carefully to what the right hon. and learned Member for Warwick and Leamington said, but the House must recognise that the position in this respect is illogical. In the case of a spinster or a widow, even with children, who suffers in a road accident and is awarded damages at common law, there is no control whatever by the court. What is the reason for the difference? Is a widow who suffers injury in an accident and who is awarded damages less likely to be tempted by some unscrupulous person to part with her money or to give loans to her relatives than the widow who is awarded damages under the Fatal Accidents Acts? I understand that the Pearson Committee recommended the retention of the present system. The Bill puts forward a compromise and would continue that control only in respect of a widow with infant children.
I recognise that this is not an easy question and that a good deal of argument can be advanced on both sides. In another place the view was put forward very strongly that this was the last relic of sex discrimination. Is not it? After all, we have had all these laws for many years which place a woman under a handicap, which put her in the category of an infant or lunatic in law. These restrictions have gradually disappeared. Is this not really a relic of that sex discrimination?
It is easy to say, "We ought to protect this poor widow against a scoundrel inducing her to part with her money or against relatives asking for a loan or an advance, by giving her the excuse of saying, 'I cannot give it to you, the court looks after it.'". Why pick out only the case of the widow with children who has been awarded damages under the Fatal Accidents Act? All the points made by the right hon. and learned Gentleman apply equally to the spinster and, indeed, to the man. Many men are so weak that they can be induced by a scoundrel to part with their money. Why pick out just this case? If this argument is right, there should be a review of the law by which in all cases 225 a right is vested in the court to control these moneys.
That is the logic of the argument. But we do not say that, and nobody seriously suggests that we should. I therefore hope that in Committee this point will be discussed in more detail. The logic is that unless it can be proved by actual instances that it is essential for this power to be preserved, this last remnant of sex discrimination should be removed.
I do not propose to go into other points which have been raised by the right hon. and learned Gentleman, although I recognise that they call for an answer. I welcome the Bill and I congratulate the Government on having acted ex-peditiously in bringing in as quickly as possible a Measure which, I am told, was prepared by the former Government and which was not introduced before, although it implements the Report of the Committee over five years ago.
§ 4.53 p.m.
§ Mr. Geoffrey Howe (Bebington)
I was not intending to make any tendentious points, but I must confess to having been slightly provoked by what the hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) has just said. It seems a little unjust to fail to give credit to the former Government for having appointed the Pearson Committee.
The question whether or not to allow funds to be invested in other than trustee securities is a serious one. It raises a serious question of principle which provoked discussion, rightly, during the period—if one wishes to be historical and archaeological—of the post-war Labour Government, when trustee securities were not conspicuously successful in maintaining their value. We ought to recognise that this is a matter in which issues of principle have to be considered over a period. The former Government took the initiative in appointing the Committee. The present Government, not finding it as easy as they had hoped to introduce far-reaching measures of law reform, have produced a Bill which deserves support on both quarters of the House.
I was interested in what the hon. and learned Gentleman said about the position of widows. I think the right view 226 to take is that the principle must apply equally to widows and to men of full age and capacity. If there is any argument for protection at all, it extends to both these categories. The hon. Member for Pontypool (Mr. Abse), whom I see sitting opposite, must in his experience have come across at least some cases of this sort concerning the working man, in which, had he been able to advise those men, a better course would have been taken to deal with the money involved. The case in principle is the same, and the real judgment to be made is on the degree of paternalism which the State arrogates to itself in controlling these people of full age and capacity. My inclination is to agree to the compromise solution in the Bill which protects infants but does not embark on the wider field.
I should like to turn to a more specific point concerning the operations of the Court of Protection whose activities were marginally considered by the Pearson Committee although that Committee was not concerned with the charges levied by that court on funds under its care and control. That matter, therefore, is not dealt with specifically in this Bill. It could have been dealt with in the Bill and it can still be dealt with either in the Bill or, probably more aptly, by amendment of the Court of Protection rules which are made under the Mental Health Act.
I have had it represented to me from several quarters that the scale of charges levied by the Court of Protection on incomes from estates which are being looked after by the court can in certain circumstances be regarded as too high and too harsh. The House will remember that the estates which are in the control of the Court of Protection are estates of people who are unable, by mental incapacity, to control their own estates. The charges levied by the court are in two halves. First, under Rule 87 of the rules to which I have referred, there is a percentage charge levied on all the income of the estates which are administered by the court. It is true that the percentage is at a low rate, no more than 1½ per cent., on the lowest incomes. On incomes between £100 and £150 it is 4 per cent., and on all remaining incomes it is levied at 5 per cent. That is in addition to the charges made in respect 227 of documents settled by the court under Rules 89 and 90.
All these charges have one feature in common. They are not deductible for tax purposes from the income of the patient whose estate is being administered. The question which one is prompted to ask is: what does the Court of Protection do to deserve the imposition of charges of this kind? It is concerned with the supervision of the accounts, with the consideration and approval of particular steps such as the appointment of new receivers, the change of investments and things of that kind, but for the most part matters are presented to the court by the patient's legal advisers, things are cut and dried and the cases are not extensive in preparation.
The incidence of the 5 per cent. charge in one case which has been mentioned to me can be very substantial. This is a case—admittedly, an exceptional one—where the income of the patient was in the region of £7,000 and during a typical year only three applications for approval of routine transactions had to be made to the court. Nevertheless, the patient's estate had to pay £365 by way of 5 per cent. charges to the court, in addition to the charges made for the preparation of documents, and so on. That is really a massive impost on the net income, not itself being deductible for tax purposes.
There are three complaints. First, for estates that increase in size the 5 per cent. rate is regarded as too high; secondly, there is something unattractive in the notion that these charges which are payable are not deductible for tax purposes; and, thirdly, there is the possibility, so it is believed, that the court might be making a profit out of its handling of these estates.
I tried to investigate the last point, and I found that the income of the Court of Protection for the year ended 31st March, 1963, by way of percentage charges was over £83,000 and its income from the other charges was not separately indentified. On the other hand, I find that the court has a staff of between 140 and 150 people, so that the cost of the court can hardly be less than £200,000. It may well be, therefore, that no profit is being made by the court, and the Minister may well 228 be able to allay any misgivings on that aspect.
But when I turn to the more general consideration of the charges which ought to be levied, it raises a general point of principle. The court is administering a special service for people suffering from particular kinds of disability. It is not an insignificant social service, because in 1964 almost 26,000 estates were being looked after by the court and almost 3,000 new estates were brought into the court's care. This is significant to a number of people.
My own inclination is to suggest that, ex hypothesi, those whose incomes are being handled in this way are those who have incomes and who are, therefore, able to pay to some extent for the social service being rendered for them. But it is a compulsory social service and special considerations may apply. In particular, I find it difficult to see the justification for what I suspect is something in the nature of a swings-and-roundabouts argument—the argument that the large estates to some extent subsidise the small estates.
If those who are better off are to subsidise the cost of administering the small estates of people with small incomes, surely there is no particular reason for taxing for this purpose the better-off who happen to be mental patients and whose estates are being looked after by the court. Rather than that rich people under mental disability should subsidise on the swings the poorer people who do not pay full charges on the roundabouts, we should look, if we must look for any kind of subsidy for these compulsory social services, to the general taxpayer.
If we compare the situation with that followed by the trustee department of any of the major banks, we find that the percentage charges made there, in respect of an acceptance I know, decline rapidly as the income or capital value of an estate being accepted in the trustee department increases. One typical case is that the estate on capital value is charged at 1¼ per cent. on assets under £5,000 and no more than 2s. 6d. per cent. on assets of £75,000. I hope that the Minister has in mind, when the Court of Protection rules come up for revision, the possibility of looking sympathetically at this suggestion that the 5 per cent. rate could be reduced on the upper registers for the reasons which I have given, and 229 the possibility that over the whole board the charges should be regarded as deductible for tax purposes.
May I turn for a moment to one other point of importance within the general ambit of the administration of justice? The hon. Member spoke about some of the difficulties in the county court. I hope that when the Law Reform Commissioners are in action we shall see some improvement here. It is right to say that if an outsider can see any faint glimmer of hope in the Government's programme it is in this direction. Many of us who are practising the law and are concerned with law reform are ready to welcome the appointment of the Law Reform Commissioners, provided that they are able to get on with the job as quickly and as vigorously as we have been led to believe.
One simple matter which I hope they will look at is the fact that judgment summonses in the county court can still be dealt with only by the county court judge and not by the registrar. This point was considered by the Austin James Committee, in the 1940s, and by an inter-departmental committee more recently than that. No recommendation for a change has been made.
It seems absurd that highly paid judicial officers with a capacity for discharging their work in connection with major cases of importance should have an increasingly large percentage of their time taken up in the consideration of judgment summonses. There is one circuit of which I have some knowledge—it is a single-judge circuit—in which the judge, in the last year for which statistics are available, disposed of 25,000 judgment summonses, which is 500 a week or 100 a day. Surely this is a burden which could be shifted away from the judge to the county court registrar so as to set the higher judicial officers free to deal with other and more substantial cases which come to their court.
I hope that all these points will be borne in mind, if not in the later consideration of this Bill then at least in subsequent Bills dealing with matters connected with it.
§ 5.7 p.m.
§ Mr. Charles Mapp (Oldham, East)
It may be that I shall be the only hon. Member without legal knowledge to make a contribution to the debate, but I want 230 to look at Clause 20 in considering social services, and I refer to it because, in particular, I wonder, as one with some knowledge of outside social services, whether a figure of £250 is right or whether it should not be somewhat higher.
In brief, and as my hon. Friend explained, Clause 20 is a mild form of bankruptcy for the poor man. About 1930 there were 1,446 cases of administration orders, and in 1962 there were four. Those were the figures given by the Lord Chancellor's Department in the last Government.
These administration orders deal with families which are in real financial difficulties for many reasons—people whose family lives are seriously disturbed. In 99 cases out of 100 those families in difficult circumstances are facing an accumulation of debt, and the social worker when brought to the case is unable to handle the family's problems until she is able to handle the debt position. The original figure of £50 fixed in 1869 was an attempt in those days to provide a mild form of bankruptcy so that the person involved in such a total accumulated debt would be able to go to the county court and in that way have a quick and effective form of holding up the debtors for the time being, and then of having a rationalised attitude to this debt so that it would be paid in due course and of ensuring that no further debts would arise.
I am speaking with the consent or blessing of the Association of Child Care Officers, which welcomes the Bill, which, it says, will give them an opportunity whenever—and I suppose that it is increasingly so—child care officers have to enter into the problems of difficult families. This is a necessary weapon for them so that, for the time being at least, they can arrest the problem and sort out through the court the way in which the debt can be dealt with rationally. This will put the children's officers in a position to have a strong influence on the family not to incur further debts.
The only point which remains is whether £250 is the right figure. I tested this some months ago in the Lord Chancellor's Department, and apparently at that time there was no dissent from the figure. I subsequently tested it with the 231 Economic Secretary to the Treasury, whose Department said that it was a fair reflection in modern values of the original £50. To that extent I hope that it is non-controversial on both sides of the House.
However, I notice from conversations, and also from a document I have, that even children's officers, whose beneficent work lies behind the proposal, think that it might be something higher than £250 and be a more modern expression of that amount. I have here a copy of a document from the National Citizens' Advice Bureaux Committee, which, of course, is non-political and does a very valuable service. In a letter of 11th December, 1963, it says, dealing with the amount:The difficulty, of course, is that present legislation limits county court jurisdiction to £400 and probably administration Order legislation ought to follow pretty closely that relating to county courts since the sort of people you and I worry about most are unlikely to be helped by legislation which makes it impossible for them to be dealt with in the county courts.I will not mention precisely the figure which is here talked about, but it is a figure even higher than £400. So here we have definite evidence from one field of social service that we ought to have a modern conception of this amount and bring the figure up to date, and have a somewhat higher level. I also know from conversations with other social workers that they would bless a higher figure.
At the same time as I would hope for a higher figure I would not like to wreck the Bill, or cause undue controversy, even over the figure of £250, if I thought that between the two sides of the House, in the light of all the possibilities, there could be agreement. We have only to think of what can be done, for instance, with difficult families, who, I suppose, are immersed in debt because there is a tendency in these days to be in debt because of hire purchase and all the avenues and angles of consumer consumption.
While I hope for a higher figure than £250, in general I welcome the Bill, and that Clause in particular, and I also particularly welcome giving the Minister the right by Clause 20(7), as times change to vary, by Order in Council, even the figure of £250, air whatever it may be we shall ultimately write into the Bill. I think that this is a right and proper authority to give to the Minister, in a 232 matter of this kind, knowing that he would not—any Minister of any Government—normally ask for an Order unless he had for it very solid, substantial argument which would commend itself to both sides of the House.
This is a power he has not had for the last 50 years, and here is a means over the next 50 years of keeping the legislation up to date. The only difficulty about the Clause is that it is trying to overtake history which started about 1869. I hope very much that it will be possible by mutual agreement between the two sides of the House to consider a somewhat higher figure.
§ 5.14 p.m.
§ Mr. Emlyn Hooson (Montgomery)
This is clearly a very necessary Bill and one generally to be welcomed particularly because of the unsatisfactory state for years now of the investment of funds by the courts. It is highly desirable that those who are beneficiaries of funds in court should have an income commensurate with that to be obtained by normal prudent investment without any risk to capital. I think the figures which have been cited—of a child awarded £1,000 in 1947, a sum which 10 years later was worth only something over £700—are illustrative of the decline in the value of awards made to infants by the courts in recent years.
Most of the points which arise are clearly Committee points, but there are one or two of general importance which I should like to mention briefly in welcoming the Bill. First, the idea of a unit trust system is obviously to be welcomed, but I do not share the Government's enthusiasm for the control of investments to be vested in the Public Trustee. Not everyone is by any means satisfied with the investment record of the Public Trustee. I should have thought there was much to be said for the Pearson Committee's recommendation of a body separate from the Government, and advised differently, perhaps, from the Public Trustee. It would seem to me that those who are awarded damages, might benefit more if an entirely independent body was set up for the investment of these funds.
Secondly, I think it would be of some help to know what the taxation position is to be in respect of these funds. At the moment we do not know what the position 233 of unit trusts will be under the new taxation proposals adumbrated by the Chancellor of the Exchequer. For example, will these funds invested for the benefit of infants attract capital gains tax? Will there be corporation tax on unit trust funds? We do not know. It would be very helpful if the Chancellor of the Exchequer could clear up these points.
Another point which occurs to me on reading Clause 1(5) is that the power to invest is there limited tothe purchase of property of any kind, whether real or personal.Is it envisaged by the Government that there should be no power to lend money on security? Clearly, one can purchase debentures and by that indirect way lend money but not apparently lend directly on security.
My recollection is that under the Trustee Act, 1925, a distinction is drawn between purchasing and lending. At the moment it would seem that the powers under this Bill are restricted to purchase only. I wonder if the Government could explain why lending on security—for example, mortgages—is excluded. Or is this merely an oversight which can be dealt with by Amendment later?
I come now to the one point in the Bill which really raises a matter of principle, and that is Clause 19. I listened with great interest to what the right hon. and learned Gentleman the Member for Warwick and Leamington (Sir J. Hobson) said on this. He was followed by the hon. and learned Gentleman the Member for Stoke Newington and Hackney, North (Mr. Weitzman). They took different views. I disagreed with both, as it happened. The right hon. and learned Gentleman advanced the view, put forward without dissent by the Pearson Committee, which represents the traditional viewpoint and that I believe held by the majority of judges in this country and by many other august bodies. The other opposite view advanced was that really this Clause continued sex discrimination and so continued the disability of a widow, when she has children, to control her own funds.
I favour the compromise reached by the Government on this. There appears to me to be here a clash of two principles, firstly, equality of the sexes, and secondly, 234 the principle, with which we are concerned, that the State should have regard to the welfare of the children and that the parents have prime responsibility for children. There is a clash of two principles and clearly the welfare of the children is to prevail.
When I first read Clause 19 I rather favoured the view that a widow should be under no greater handicap than a widower. It is easy to say that people invest money very foolishly. Some people spend money, while others save it. Some people enjoy spending money, while others enjoy saving it. There is no general ground for controlling an adult's money, and I am sure that nobody on either side of the House would like to advance the view that the courts should be so paternalistic with regard to awards of damages that they should invest on behalf of those persons awarded damages, whatever their sex or condition. Whether people want to invest wisely or not is a matter for them.
There is, however, a distinction to be drawn in respect of a widow with dependent children. If a widower with dependent children is awarded damages, and he spends those damages, in law he is still responsible for those children and can be forced to maintain them. He is still the breadwinner. On the other hand, if a widow is awarded damages under the Fatal Accidents Acts, and has complete control of her share of the damages and invests them foolishly in the proverbial bankrupt fish and chip shop and consequently has no money with which to support her children, the responsibility for support nowadays falls on the State. There is, therefore, some distinction to be drawn between the widower and the widow, but the restriction on the widow should be as minimal as possible. But Clause 19 is so widely drawn that it imposes an unnecessary restriction on her.
As drawn, if a widow is the widow of a second marriage and there are no children of the second marriage but there is a child of the first marriage—an infant who was a dependant of the deceased—the widow is affected by the provisions of Clause 19. At the hearing a judge, because there is this child of the first marriage who was dependent on the deceased, would probably award that child a far greater sum than he 235 normally would award the child of a widower. That child will be cared for, therefore, by the higher apportionment made by the judge.
Why should the childless widow of the second marriage be subject to restriction in these circumstances, as she would be—or at least the judge would have a discretion to impose that restriction—on the present wording? I should like the Government to consider whether it would not be wise in these circumstances to introduce a qualification such as the introduction of the words "child of the marriage" which is used in the matrimonial courts at the present time. I have no experience of these words causing difficulty in matrimonial jurisdiction, and they would more truly represent what is intended by the Government in this Bill.
§ Sir Eric Fletcher
The hon. and learned Gentleman will appreciate that it is only a discretionary power which the court will have, and in the kind of case posed by him, where the stepson has been provided for, that will obviously be a relevant factor for the court to take into consideration in deciding whether to exercise its discretion.
§ Mr. Hooson
I accept that, but I suspect that manylearned judges will share the view which has been so forcibly expressed by the right hon. and learned Member for Warwick and Leamington and will impose their own personal view of the situation, because they have the discretion to do so and might think that it will be for the benefit of the widow to do so.
I do not think that this ought to be a discretionary matter. If it is a matter of principle, it should be clearly expressed by the Government, and the restriction on the widow should be drawn so narrowly that it represents only those circumstances in which Parliament thinks there should be this restriction on the widow.
I would be grateful if the Government would consider, too, the point raised by the hon. Member for Oldham, East (Mr. Mapp), which I also raised in an intervention during the speech of the Minister without Portfolio, with regard to the jurisdiction of county courts in administrative matters. There seems no reason why this should not be extended to £400. It would meet today's conditions far better 236 than the restriction of £250. I imagine that the limit has been raised to £250 because this is considered to be the equivalent in today's money of the £50 restriction which obtained before the war. I see no reason why the limit should not correspond with the normal limit of county court jurisdiction.
There are several other matters which I should like to raise, but they are Committee points. I think that the Bill is to be welcomed, and I am sure that there will be no obstruction to its being given a Second Reading.
§ 5.25 p.m.
§ Mr. Gordon Oakes (Bolton, West)
The Bill has rightly been welcomed by both sides of the House, and I, too, would like to congratulate the Government on bringing in this necessary legislation which will provide a high degree of security for infants who have their moneys invested in court, and also give them some capital appreciation, because the delay in implementing some of the proposals of the Pearson Report has lost them some money. I congratulate the Government on putting this matter right at the earliest possible opportunity.
I wish to refer in particular to Clause 19. I agree with the hon. and learned Member for Montgomery (Mr. Hooson) and the hon. Member for Bebington (Mr. Howe) who support the Bill, and with Clause 19 in particular. The hon. and learned Member for Stoke Newington and Hackney, North (Mr. Weitzman) said that in another place this vexed question of damages paid to widows under the Fatal Accidents Acts being paid into court was the last bastion of sex discrimination in this country. I notice that throughout the debate not one hon. Lady has been present to defend her sex while this last-ditch battle was being fought, perhaps appropriately on the day when Parliament is 700 years old. I think that they trust us to defend their rights, and do not consider it necessary to be present at this last-ditch battle.
The Bill deals with administering the funds of minors because minors have not the experience to administer their own affairs. It deals also with administering the funds of those who are mentally ill because such people have not the mental competence to deal with their own affairs. There can be no justification, in 1965, for saying that a widow who has 237 recovered damages under the Fatal Accidents Acts is in the same position as either a minor or a mentally ill person. Clearly a widow is competent to manage her own affairs.
A different situation arises, of course, if children are involved, because if there are children, the judge, in awarding damages, must take that fact into account not only in the damages that he awards to the children, but in the damages that he awards to the widow. Therefore, although that money is awarded to the widow, the court bears in mind the fact that she has a family to look after, and thus the compromise suggested by the Government is the right and proper one.
It would be illogical and quite anachronistic to insist, as the right hon. and learned Member for Warwick and Leamington (Sir J. Hobson) would have us do, that, in 1965, a court should retain the power to control money awarded to a widow without children. Suppose that a widow receives money, not under the Fatal Accidents Acts where she has recovered damages from the other side, as it were, because of its negligence, but under a policy of insurance on the death of her husband, where possibly his own negligence has been responsible for his death. Suppose, for example, that he drives a car and is killed because of his own negligence, and he is insured in the ordinary way through a policy of insurance. In that case the court does not come into the matter at all. The Bill would restrict the power of the court to control the investments only of those widows who have claimed under the Fatal Accidents Acts.
We have had some rather gruesome stories of what may happen. There may be the odd occasion when a widow would choose to waste the money. Such occasions would be very rare—especially such goings-on as have been described, where a whole village gets drunk. In the vast majority of cases the widow is extremely careful about the money that she has obtained, because she knows that her future livelihood depends upon it.
But when the money is held by the court and she has to ask for what is virtually hers she feels slighted, and is hestitant about asking for it. Sometimes, in the matter of buying a business, she knows more than the court. She should, 238 therefore, have the opportunity of obtaining the money in order to buy a business if she so wishes. The views of the House were asked about Clause 19, and the general expression of opinion—apart from that voiced by one hon. Member—was that the Clause is all right as it is and should be accepted without substantial Amendment.
When hon. Members have spoken about widows receiving damages under the Fatal Accidents Acts they have assumed that in practice the widows receive these huge sums of money in cash, and do not know what to do with all the pound notes. Such widows receive advice. Generally they have the advice of the solicitors who have acted for them in their original claims. In the vast majority of cases they receive good advice from such solicitors. They then put the money in a bank and receive the advice and guidance of the bank manager. It is wrong to visualise these widows receiving huge sums of money which they may be done out of by unscrupulous persons.
We should adopt a realistic attitude to the situation. We should agree that in 1965 a widow who claims under the Fatal Accidents Acts should be in the same position as the widow who obtains a capital sum of money in some other way on the death of her husband. In modern conditions she should he trusted to be able to administer that money herself, provided the interests of any children that there may be have not affected the actual amount of damages which the judge has awarded in his discretion, if he has decided what she should have as well as what the children should have.
§ 5.32 p.m.
§ Mr. Leo Abse (Pontypool)
We would all agree that there is a great need for the Bill. I begin by adding to the strictures which my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman) properly made upon the comments of the right hon. and learned Member for Warwick and Leamington (Sir J. Hobson) who had the presumption—one can only call it that—to call attention initially to a speech made at a meeting of the Association of Labour Lawyers, at which it was suggested that the law should be reformed as quickly as possible, at a moment when we have in front of the House a Bill which reveals the extent to which, for 239 decades, widows have suffered severely as a result of the indolence of past Governments, and particularly the last Government who, having received a report which revealed the great difficulties which such widows were experiencing, allowed matters to rest for five years without doing anything about it.
I believe that we are all rightly concerned with the widow, for there is no greater or more grievous loss than the loss of a husband. We are concerned particularly with the amount of supervision which should be given to the damages received by a widow. Before we can approach this problem, however, and test whether the newly proposed supervisory practices are satisfactory, we must examine the whole question of damages which the widow receives and, in particular, the nature and character of the apportionments which are now taking place between a widow and her children. Much of the reasoning behind those who have supported the present supervisory compromise comes from the fact that they are aware of the present apportionments: in my opinion, their erroneous attitudes are prompted by the unsatisfactory manner in which damages are apportioned between a widow and her children.
First, let us consider what the widow is receiving. If we are thinking of taking a step forward to relieve the difficulties which have hitherto befallen the widow, we must feel satisfied that the Bill at least takes into account the present day needs of the widow, and try to make certain that the amount of damages going to a widow whose husband is killed in an accident is such that the community would regard it as a proper amount. The principle behind the measurement of damages, spelt out in the last century, was the idea of restitio in integrio. The intention was to put an injured party in the same position, as far as possible, as he or she would have been in had the wrong not been sustained. This was once the task of juries. It was the jury which worked out the socially acceptable standards of compensation. For the last few decades, however, except in areas of the law such as libel, the judges themselves have had a virtual monopoly of assessment.
In 1925 Lord Justice Atkin stated: 240The law as to damages still awaits a scientific statement.It still awaits such an approach. Our present pragmatic approach, as worked out by the judges, which tends to eschew completely the actuarial guides and the itemisation of various heads of damages and fixed scales, would not now be under heavy fire if it were not for the fact that the damages paid to injured workmen, and, in cases of fatal accidents, the awards made to their widows, were not under the judge's monopoly control. Our present approach would not be under as heavy fire if it were not for the fact that the awards are becoming both uncertain and inadequate in amount in comparison with the awards made in comparable countries, such as Belgium and the United States of America.
Every practising lawyer who is acting for a widow is aware that the problem facing him is not the question how the damages received are to be administered—if and when they are received—but the question whether he should or should not try to settle the matter out of court, because of the individual idiosyncrasies of judges. It is well known that there are plaintiffs' judges and defendants' judges, and the hazard that has to be considered in relation to such awards is not whether the sum awarded will be depreciated because it may be unwisely invested, or whether the investment of the award will be restricted, but whether an adequate award will be made. It has often been said that experienced judges do not believe that they would be assisted by reports of other cases on the matter of the amount to be awarded.
So legal practitioners are faced with the problem that it is not possible to advise with any precision as to the figure likely to be recovered until the name of the judge who is to try the case is known. This uncertainty naturally tends to the disadvantage of widows and injured individuals, and to the advantage of insurance companies. Faced with a modest payment into court, a widow finds that she is often not able to obtain confident advice which will enable her, with prudence, to risk the heavy costs which might fall upon her as a result of an erroneous guess having been made as to what the judge may award her.
An insurance company, on the other hand, can bear a comparable risk, 241 averaged as it is over a number of cases. Since this question of the uncertainty of the amount to be awarded is well known to be the real problem here, I submit that attention should be given to this matter now, when we are considering the whole question of damages awarded to widows and dependants.
I mentioned that the amount of damages awarded in investigated accident cases and in all types of fatal accidents compared badly with amounts awarded in countries such as Belgium. I think that this depends a lot upon what value we place on life. The amount of damages a widow receives in respect of the loss of her husband affords a very interesting reflection on the importance which a community places on life. When we find that this country is lagging so far behind the practices of some other Western European countries, can it be other than that the judges—who now have almost a monopoly control in the awarding of damages in such cases as we have been discussing—estimate the value of life, particularly the life of a working man, in a manner which does not accord or correspond with the general view of the community?
If we make inquiries about what happens in Belgium, for example, where it is the practice for judges to itemise the various elements of damages, the expectation of a working life, the capitalisation of annuities and the like, we find that the wife of a man who was earning the equivalent of a skilled workman in England, before becoming almost totally incapacitated, would receive an award of something in the region of £45,000 to £50,000—far beyond the amount that would have been awarded in this country or what a widow could possibly anticipate that she would obtain in this country.
I have heard, for example, that the claims manager of the overseas branch of an English insurance company has said that each personal injury claim costs about three times as much in Belgium as for comparable injuries in England.
While we are all expressing concern and compassion about what happens to the widow and children of a man injured through the negligence of his employing company, or because of the negligence 242 of a driver on the roads, we should concern ourselves primarily with considering the paucity of the damages which widows receive and upon which the family must depend. The fact is that the rules which operate, particularly in respect of widows, and the practices which have grown up in the courts are particularly unsatisfactory. Widows are shabbily treated long before the money is administered.
Although, in the nineteenth century, the courts consistently made awards which included the loss of prospective pecuniary ad[...]ages now, as is known, the court usually confines its inquiries to capitalising, after appropriate discounts, the weekly contributions which the late husband made to the household. It has been said by Professor Street, of the University of Manchester, that the reason judges take only the amount of the money received for housekeeping by the widow while the husband was still alive is due—to use the words of Professor Street—to the "cynical attitude of the judges to working-class life." In fact, that is what is happening.
If we had the nineteenth century practice where, before assessing damages, people did not look to see what a working-class man might have given to his wife by way of housekeeping money, but looked at all his earnings, we should have a different picture. Today the courts assume that whatever part of his wage a working man does not give to his wife he immediately spends on drink and gambling. That may have been a valid assumption at one time, but how can we account for the vast expansion of National Savings and the unit trust movement if wage-earners spend everything else other than what they give to their wives on their own pleasure?
If the husband who has been killed would have invested part of the remainder of his money, even though it was an investment only in a football pool, the saving would ultimately have benefited his dependants. Is this loss of prospective pecuniary advantage to be put on one side in the assessment of damages by a judge?
§ Sir J. Hobson
Surely the hon. Member is wrong. Any plaintiff widow who is competently advised and represented would put before the court not only the amount of money handed over in cash 243 but all the benefits such as holidays and savings and prospective savings, and this should be taken into consideration.
§ Mr. Abse
Far from that being the position—I have been quoting almost verbtim from what was said by Professor Street—the judge takes into account investment income which follows as a result of the death of the husband and discounts that from the damages which he awards. Any accelerated gain which may come to the widow as a result of the death of her husband, any money which has been brought forward to her, is taken into account when the judge decides what should be awarded to a widow by way of damages.
Apart from the statutory exceptions for certain pensions, the widow finds that deductions can be made even for pensions. A policeman may be killed while he is off duty. He may be knocked down by a motorist while he is walking along the road with his wife. Before damages are awarded to the widow there may be a deduction on account of a police pension. Again, can anyone explain what I think should be explained, why it is that a man who is injured receives compensation in respect of pain and suffering and loss of amenity but a widow receives nothing for her grief or for the loss of the society of her husband?
Does the loss of a limb necessarily occasion more pain than the loss of a husband? The whole practice of awarding damages to widows at present conspires against them. If we are speaking today for women—I must say that I heard it in very muted tones from my hon. Friend—if we are speaking up for widows in the House of Commons today, we should be speaking upon such matters.
I could enumerate many other matters in respect of what is happening regarding damages for widows, but I will make this my last point. Is not it disgraceful that when a widow comes before the court deductions are made by the judge for what he deems to be her attractiveness? Is not it disgraceful that when a widow comes before the court she is examined in a few minutes by a judge and upon his whim and fancy is decided what likelihood there is of her being married again?
244 Having summed up the widow—and tastes vary—having judged her, the judge decides whether she is a likely lass, one who is likely to get married again, and he may make a substantial deduction in damages in order to make certain that the amount paid by the insurance company is not too big, because she will soon find a new husband.
I regard it as degrading for a woman that she should know when she goes into the witness box in such circumstances that she is to be measured in this way as though she were in some slave market. I regard it as quite repugnant that insurance companies have commenced the practice of employing sleuths and snoopers who—as hon. Members who are in the legal profession will know—when a case is pending are sent out as wretched detectives to see whether a widow is associating, or could be deemed to be associating, with a man; so that when the case comes before the court the prurient curiosity of the insurance company can be paraded, and it may be put to the judge, or suggested, that the woman is likely to remarry.
§ Mr. Weitzman
Surely my hon. Friend is taking a very far-fetched view. The awarding of damages in a case of that kind is for the loss which a widow has suffered as the result of the death of her husband. My hon. Friend is surely very far-fetched in the view which he is putting forward.
§ Mr. Abse
I can speak from personal professional experience. I recall, for example, a widow who appeared to me to be extremely attractive and about whom it undoubtedly could be said that there was every likelihood of her remarrying. I have observed this case after a number of years and this woman has not remarried. These matters are too vague to be assessed. I do not believe that it is within the province of any man to be able to decide matters of this kind. Certainly, I believe that no woman—no widow who has, after all, suffered enough—should be placed in this unhappy and unpleasant position.
I will try to suggest ways and means of overcoming the difficulty, but first I turn to the next problem, which is that of apportionment and which, again, 245 is a practice in respect of widows which I regard as most unfortunate in the way it has grown up. For some time during the nineteenth century the position was different from what it is now, where often the apportionment is such that 20 or 30 times more may be given to the widow than to the child. I do not know why this apportionment is made or why this practice has grown up.
Has this practice arisen on the basis that she will maintain the child? But then what is the basis of the award to the children? Is it, in fact, a nebulous cash assessment of the likelihood that the widow will not maintain the child? I do not understand why, unlike what happened for some time after the original Act was passed—when the apportionment was of a different character—this present practice should have grown up, particularly since there are considerable dangers within it.
What if the widow remarries and dies intestate after she has received a large apportionment and a small apportionment for her children? At least the first £5,000 goes to the stepfather of the children, a totally unsatisfactory position, In Canada and in other countries people are more careful and rules have been introduced to protect the children from such a contingency.
Immediately after the passage of the 1846 Act, so research has shown, if the court awarded, say, £1,000 to the widow—and I am quoting an actual case—£1,500 each was awarded to each of eight children. That was the practice at that time. It was wiser. It is time to end this lump sum method.
There are other anomalies of a technical character, although I will not weary the House with them. I merely reiterate that until we get over this problem of apportionment we will almost inevitably be left with the dilemma, in which some hon. Members have found themselves over this question, of whether or not a widow should have free and absolute control over her funds.
If we are to solve the problem of the size of the damages and if we are to get over this question of apportionment it is time that the suggestion contained in the Evershed Report—that the judges should come together so that greater uniformity should take place—was implemented, for this is something that is 246 urgently necessary. I am happy at the initiative which has been displayed over sentencing policy, at the way in which judges are coming together, hearing outside experts and then deciding what sentences should be given to those who have offended against the criminal law. This is a valuable exercise.
Since it is so valuable, it is needed, too, on this question of damages. It is needed so that judges are made aware that they are lagging behind their counterparts in other Western European countries in their assessment of damages. Perhaps they should be as open to sociologists and social workers in their assessment of these matters and as open to the views of comparative lawyers as they now appear to be open to penologists and others when considering the question of uniformity of sentences.
Since this will not require legislation but only initiative, I hope that the Minister without Portfolio will comment on this subject and will not be against an initiative being taken, perhaps from the Lord Chancellor's Office, whereby we may achieve greater uniformity in these matters and give much closer consideration to the question of apportionment. If we deal adequately with the question of apportionment, so that a proper sum is given to the children and to the widow, we will be left with only this question; should a woman, when awarded damages, be placed in a different position from a man, a problem which has exercised the minds of those who, unlike the right hon. and learned Member for Leamington, realising that we are no longer living in the nineteenth century, have been concerned about the question of the children if money is given to the widow?
If a proper apportionment were given, that problem would not exist. Every national woman's organisation wants the widow to have control of her money. I do not understand the notion, which is being presented, that there are predatory males who gather round seeking out widows who have received damages. Are there not predatory females, gold diggers, and so on, who perhaps seek and search out many a widower who may have recovered damages?
The truth of the matter is, as I endeavoured to indicate in an intervention, that one-third of the women in this 247 country are now working. We are, therefore, in a position where the whole concept of the family has changed from being an authoritarian one to an egalitarian one. Moneys are pooled. Houses are bought by the married partners jointly. Mortgages are paid off together, and a law which does not correspond to the realities of the prevailing sociological position is a law that is otiose.
I regret that this miserable compromise should now be coming into existence because it is a backward-looking concept and the women's organisations are right to say that it is an attack on them and on their capacity. I do not accept the view that a widow with children is equivalent to an infant or a person of unsound mind. The protests of the women's organisation should be heeded.
The problem of the children, about which everybody must exercise his mind, could be dealt with if we satisfactorily dealt with the question of apportionment. But, above all, most of us here who have been concerned with this matter and who have seen the unhappy results of paternalistic intervention from the point of view of widows, would only begin to be happy if we felt that less concern was being expressed about what claims would fall on insurance companies if damages increased, and more concern that we were making a proper assessment of the importance and value of life. We must surely realise that widows have the right to expect a reasonable future.
I hope that, while giving a perfunctory blessing to the Bill, the Measure will stir us afresh to reconsider the real problems and serious needs of women with or without children who are deprived of their partners.
§ 5.59 p.m.
§ Sir Eric Fletcher
I can only speak again with the leave of the House. I will deal with some of the points raised during the debate. The House will not expect me to deal with all the detailed questions raised because a great many of them would obviously be more appropriately dealt with in Committee.
The Government welcome the general approval that has been given to the Bill from both sides, although my hon. Friend the Member for Pontypool (Mr. Abse) 248 gave a welcome that was somewhat perfunctory. However, every other hon. Member who has contributed to the debate has unreservedly welcomed the Measure. My hon. Friend the Member for Pontypool made a number of observations which were not strictly germane to the main objects of the Bill. Although some of his observations are not matters which can be conveniently dealt with during the progress of the Bill, I am sure that his remarks about the desirability of having an adequate standard of damages and more certainty about the amount of damages awarded, along with his observations about drawing comparisons with damages awarded in Continental countries, will be brought to the attention of my noble Friend and of those responsible, as we are not in this House, for dealing with particular claims that come before the courts.
On the principal question of controversy which we are considering, to which nearly every hon. Member turned attention, namely, the wisdom or otherwise of the compromise contained in Clause 19, I think that we all expected that that would produce different views from different hon. Members. Whereas the right hon. and learned Member for Warwick and Leamington (Sir J. Hobson) thought that there ought to be more control over widows' damages, and my hon. and learned Friend the Member for Stoke Newington and Hackney, North (Mr. Weitzman) and my hon. Friend the Member for Pontypool thought there ought to be less control, every other hon. Member, including the hon. Member for Bebington (Mr. Howe), the hon. and learned Member for Montgomery (Mr. Hooson) and my hon. Friend the Member for Bolton, West (Mr. Oakes), concurred in thinking that we had acted wisely in adopting the compromise which is contained in Clause 19.
The right hon. and learned Member for Warwick and Leamington asked me a number of questions on some of which I should like to give him my immediate comments. First, he asked whether the Bill applied to Scotland and if not, why not. The answer is that it does not apply to Scotland. The right hon. and learned Member is perfectly well aware that the Pearson Committee was not set up to investigate 249 the law of Scotland on this subject which, according to my information, is rather different from that of England. If it is thought necessary, that will be the subject of a separate investigation by the Law Commission to deal with the law of Scotland. Here we are concerned only with the law of England and Wales.
The right hon. and learned Gentleman also asked me why it was necessary that there should be more than one long-term investment fund. The answer is that it was thought desirable, in giving the Lord Chancellor power to promulgate schemes under Clause 1, that apart from the possibility of having short-term investment funds there should be at least two different long-term investment funds. There may well be some beneficiaries interested in capital appreciation and others more interested in high income. Just as there are various categories of unit trusts which cater for different classes of investors, so there is no reason why widows should be deprived of an equal range of choice. I think possibly that there will be only two schemes but, as I think the hon. and learned Member for Montgomery said, we do not yet know, and I am not yet in a position to tell the House, what the Chancellor will do with regard to corporation tax. It may be that that will introduce another element as a result of which it may be necessary that there should be a third scheme.
The right hon. and learned Member for Warwick and Leamington then drew attention to the desirability, with which I entirely agree—and this was raised by another hon. Member—of giving beneficiaries annual information about the state of the funds administered by the public trustee. The Pearson Committee had something to say about that in paragraph 24 of its Report. It recommended that once a year, not half-yearly as the right hon. and learned Gentleman suggested, after the interest had been added, the widow should be furnished with a statement as to the balance standing to the credit of her fund and the funds of any dependent children. I have no doubt that my right hon. Friend, in giving effect to the machinery which the Bill envisages, will have regard to that recommendation.
I was also asked by the right hon. and learned Member for Warwick and 250 Leamington whether, when income is accumulated, there will be power under Clause 7 for the Public Trustee to reinvest it in a Common Fund or whether he will be confined either to putting it on deposit or investing it with the National Debt Commissioners. In reply I would say that it was certainly my construction of the Clause that it will be open to the Public Trustee, under the rules to be made under Clause 7, for all such income to be added to the long-term investment fund. But if, on further analysis, I find that there is any defect in the provisions of Clause 7 to secure that object I will take steps to see that the matter is further considered.
The right hon. and learned Gentleman then asked me a point on Clause 23. I am not sure that I ought to take up the time of the House in dealing with the matter now except to say that I do not think that his criticisms were well-founded. This does not give, as he thought, a defaulter a third chance. What Clause 23 does is to remove what is thought to be a technical defect in the law as it stands. It arises from a construction of the County Courts Act, 1959, which, as he will know, provides that where a lessor brings an action to enforce a right of forfeiture for non-payment of rent and where the lessee does not pay all the rent in arrear and costs at least five days before the return day, then the court, if satisfied at the hearing that the lessor is entitled to enforce the right of forfeiture, must order possession of the land to be given to him at the expiration of such period, not being less than four weeks from the date of the order, as the court thinks fit, unless within that period the lessee pays into court all the rent in arrear and costs.
In practice, it sometimes happens that the lessee is unable to comply with the order because the costs have not been taxed within the period specified, or for some other reason. In view of the words of the Section there is some doubt whether the court has power to make an order extending the time. It has been argued that, having made its order at the hearing, the court is functus officio. It is therefore desirable to take advantage of the Bill to cure any possible defect in the operation of Section 191.
The right hon. and learned Member for Warwick and Leamington also 251 asked how Clause 23 tied in with the Protection from Eviction Act which the House has just passed. It does not seem to me that there is any conflict at all. The right hon. and learned Member will be aware that the Protection from Eviction Act, 1964, has a purely temporary operation, whereas we are now dealing with a Bill that will be permanent. The Protection from Eviction Act does not contemplate the protection of a tenant who is in continued default as regards payment of rent, whereas the County Courts Act, which we are now amending, is a procedure designed to give relief of forfeiture of a lease for non-payment of rent. I do not think that there is any inconsistency, nor do I think that the 1964 Act makes any less necessary the provisions, in-corporated in Clause 23.
I was asked some questions tending to throw doubt on the wisdom of appointing the Public Trustee to administer these funds. It was suggested that the House ought to have more information about the expert advice upon which the Public Trustee relies in the administration of funds with which he deals at the moment and on which he will rely in connection with the funds which will be entrusted to his administration under the Bill. I can assure the House that this matter was very carefully considered by the Government. We are satisfied that the Public Trustee enjoys, and is entitled to enjoy, the confidence of the public. He is advised by a most distinguished body of experts. The senior member of this body is Lord Bicester, and there are others of great eminence. I hope that the statement will do a good deal to reassure those who are concerned about the Public Trustee's administration of his affairs that he has access to, and avails himself of, very expert advice on all investment matters.
§ Sir J. Hobson
I should like to make clear that I did not criticise either the Public Trustee or his proposed administration of a Common Investment Fund, with the assistance of those who advise him. I should not do that, and I did not recommend—I wish to make this clear, too—that the advice given him or the particular restrictions involved in respect of ordinary funds and ordinary trusts should be made public because, of 252 course, he is acting as a trustee. What I did suggest, however—perhaps the hon. Gentleman will be good enough to deal with this—is that, if one is setting up a Common Investment Fund, a fund not unlike a unit trust, it should be publicly known who are the advisers of such a fund.
§ Sir E. Fletcher
I am much obliged As the right hon. and learned Gentleman has said, he did not criticise the operations of the Public Trustee, but he did say that the public ought to know who are those responsible for advising the Public Trustee on investment policy. It was in response to that observation that I was informing him and the House about the distinguished gentlemen who give advice, Lord Bicester being the senior member at the present time. I shall invite my noble Friend to consider whether it might be useful to the public to have more general information on this matter made available.
The hon. Member for Bebington, who had been kind enough to tell me that he proposed to do so, raised the whole question of the scale charges now being levied by the Court of Protection. This is not strictly a matter coming within the terms of the Bill, nor is it a matter which is affected by its contents, but it is so nearly connected with the purposes of the Bill that it is a relevant question for anyone who has any doubts on the subject to raise in this Second Reading debate.
The hon. Gentleman's criticism was that some people feel that the scale of charges levied by the Court of Protection are too high and too harsh. He gave the instance of a mentally incapacitated person whose affairs administered by the Court of Protection produce an income of about £7,000 a year, which, under the scale of charges now in operation, attracts an annual fee of 5 per cent., that is, £350, and he inquired whether this was reasonable and on what basis the Court of Protection was, in fact, working.
The facts are these. The Court of Protection is responsible for administering the funds, to the extent of about £28 million, of those who, unfortunately, by reason of mental ill-health, are unable to manage their own affairs. It will be appreciated that the individual amounts involved vary considerably. It has always 253 been thought reasonable that the proper way to charge those whose funds are thus administered is by a scale fee. Naturally, this results in those with large incomes paying more by way of fees than those with small incomes, even though the actual expense of administering a fund may be the same whether it be large or small.
Rule 94 as it stands at present gives the court power to remit or postpone payment of the whole or any part of any fee where, in the opinion of the court, hardship might otherwise be caused to the patient or his dependants, or the circumstances are otherwise exceptional. I think the House will agree that that is reasonable. If it is reasonable, the result of the operation of the scale fee charged must be to produce higher fees in some cases than in others.
I think that the hon. Member for Bebington was chiefly concerned to see whether, taking them as a whole, the operations of the Court of Protection have earned a profit. The answer is that there was a time when the revenue from the court's fees just sufficed to cover the costs of the whole department. Today, however, and for some time past, this has not been so, and the revenue from the Court of Protection is not now sufficient and does not cover its administrative work. This means that, to some extent, it is subsidised by the taxpayer, and I think that it would involve an additional and unreasonable burden on the taxpayer if the fees were reduced.
The hon. Gentleman's other point, which, I think, was a valid one to raise, was whether the fees thus charged should be allowable for Income Tax purposes. I am not in a position to comment on that matter at the moment. I shall draw it to the attention of my right hon. Friend the Chancellor of the Exchequer for his consideration generally.
§ Mr. Howe
I am most grateful for the undertaking which the Minister has just given on the latter point. I wonder whether he could, at least, give sympathetic consideration to the first—that is, that the scale charges might be reduce-able in respect of estates in the larger reaches. I appreciate that one does not wish to extend the element of subsidy more than is strictly necessary, but I respectfully suggest that there is something 254 unfair in charging too heavily patients who happen to be well off in preference to charging the general body of taxpayers who are fit and well, not suffering from disability. What I ask for is a reduction, at least to some extent, in respect of the higher figures.
§ Sir E. Fletcher
I appreciate the hon. Gentleman's argument. Obviously, I cannot give him any undertaking about it because my view is that it is not unreasonable that, if a weathly man has his affairs administered by the Court of Protection, he should pay an appropriate scale fee. The work of the Court of Protection provides a social service to the wealthy, to those of moderate means and to those with no means at all, and I should have thought it reasonable for the expense of this social service to be borne in proportion to the ability of people to meet it rather than be subsidised out of public funds.
I apologise to any hon. Member whose questions I have not dealt with or answered.
§ Mr. Abse
I wonder whether the Minister would deal with the second point raised by the hon. Member, who expressed his deep concern about the fact that the county court judgment summonses were all being dealt with by the judge. This is a grievous matter. In this Bill we are placing new duties upon the county court. I am aware, for example, that in my own constituency one week out of four the county court is wholly occupied in dealing with judgment summonses. It really is not good enough that the county court should be made a department of hire-purchase companies. If this is to be done it should be done by the registrar.
§ Sir E. Fletcher
I had made a note of the fact that the hon. Member for Bebington raised this question, and also to say that I noted with great sympathy the point which he has made. I shall bring the matter to the attention of my noble Friend the Lord Chancellor, whose province it is to deal with the matter, and I can assure him that his observations, supported by those of my hon. Friend the Member for Ponty-pool, will be given due and sympathetic attention.
I ought, before concluding, to say one word about the observations made by my hon. Friend the Member for Oldham, 255 East (Mr. Mapp), who raised the very interesting question as to why, in Clause 20, we are merely raising the county court limit for the making of an administration order from £50 to £250. Although I do not think he said so in terms, I gather that he would have preferred to see the figure raised to £400, in order to equate it with the general jurisdiction of the county court.
This is a matter which I think can usefully be pursued further in Committee. I should like to hear what other hon. Members on both sides of the House think about it before committing the Government one way or the other. I was impressed by his arguments that this is a real social service, and I am aware that the arguments for increasing the jurisdiction and the £250 are supported not only, as he said, by the National Citizens' Advice Bureaux Committee, but also have been raised from time to time by county court judges and registrars.
On this subject, I think the House should remember that there are certain considerations of public interest on the other side to be borne in mind. It is very desirable that, in the class of case to which the hon. Member referred, there should be facilities for enabling a family placed in the circumstances described to get their affairs straight and rid themselves of the difficulties and embarrassments with which they are faced. On the other hand, it would not be right for the administration order procedure to be made available for tradesmen who have been running a business, and where bankruptcy proceedings are obviously the appropriate remedy. It may well be that one may come to the conclusion that one could extend the jurisdiction somewhat, and still be able to draw a distinction between the class of case which the hon. Member had in mind and the tradesman whose debts exceeded £250 where bankruptcy would obviously be the appropriate remedy. I can obviously give no commitment.
I repeat my apologies to any hon. Members whose comments I have not dealt with. I hope they can be pursued in Committee. Again I thank the House for the general welcome which it has given this Bill.
§ Question put and agreed to.256
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).