PUBLIC TRUSTEE (MRS. SCANLAN) (Hansard, 1 July 1968)

§ Mr. Humphrey Atkins (Merton and Morden)

The Public Trustee is an official appointed by and reporting to the Lord Chancellor. It is not very often that the activities of the Public Trustee are debated in the House, even though he has a substantial department and, I understand, employs about 35 professionally qualified staff and about 530 other staff. The last occasion on which the affairs of the Public Trustee were raised substantially in the House was about 4½ years ago when the then Member for Solihull, Sir Martin Lindsay, raised a number of questions affecting the Public Trustee's Department and made a number of allegations about the way in which that officer handled various estates.

The matter which I wish to raise today is considerably smaller than that raised by Sir Martin Lindsay four years ago, but I suggest that it is no less important because it is smaller. It might even be said that it is more important because, in answer to my hon. Friend the Member for Petersfield (Miss Quennell) on 24th January, the Attorney-General made it clear that of all the estates handled by the Public Trustee, over half are estates valued at £5,000 or less. It therefore seems that the great bulk of the Public Trustee's work is done in handling the smaller estates, which are no less important to the people concerned than are estates running into figures many times exceeding that. The particulr matter to 1268 which I wish to refer could be classed as one of the smaller matters that the Public Trustee handles, but to the people concerned it is of the greatest importance.

Briefly, I will relate to the House the facts which form the subject of the important questions which later I shall put to the Solicitor-General. Mrs. Scanlan was one of my constituents who some years ago made a will under which, after two bequests, she left her house, which was virtually the whole of her property, in trust for her son's use during his lifetime, and thereafter absolutely to charity. One of the executors for her will was her son but, understandably, Mrs. Scanlan looked for the other executor and trustee to some person or body who might reasonably be expected to outlive her son. It is not altogether surprising that she chose the Public Trustee, who was appointed under the terms of the will as the other executor and trustee.

However, before Mrs. Scanlan died the circumstances somewhat changed. Her son married and Mrs. Scanlan decided to change the main provision of her will and leave her property outright to her son. I appreciate that she could have done this by scrapping her original will and making a new one, but she decided not to do that. She wanted the two bequests to stand and therefore, instead of re-writing her will, she made a codicil by which she left her property, apart from these two bequests, outright to her son.

Subsequently she died. It is clear, therefore, that her testamentary instructions consisted of three bequests, two very small and the great bulk to her son, who was also one of the executors. Her son, my constituent Mr. Scanlan, asked the Public Trustee if he would renounce probate. After all, there were two executors, it was a simple will and it seemed to him that there was no particular need why he should not be the sole executor. The Public Trustee refused to do this. I am not quarrelling with his right so to refuse, but I should like to know why he refused in this case.

As the hon. and learned Gentleman knows, I took the matter up with the Lord Chancellor who, in a letter to me, said that the Public Trustee was … reluctant to … renounce probate … unless there are exceptional circumstances … 1269 It would be interesting to know what sort of exceptional circumstances would cause him to renounce. This was a clear case in which he might reasonably have been expected to do so. It was a simple will, there was another executor and I see no reason why the Public Trustee insisted on acting.

However, in this case he did, and the settlement of Mrs. Scanlan's estate proceeded. The bulk of the work of settlement was done by the son's—that is, the other executor's—solicitors. But when the estate had been settled, the Public Trustee then sent the estate a bill. Leaving aside the petty expenses, the Public Trustee's account was for £78. This may not seem a large sum, but when I say that that figure amounted to more than the total of two of the three bequests, it will be realised that in an estate of this size it was a substantial amount.

This sum was challenged by the other executor. A certain amount of correspondence ensued, and after a time the Public Trustee agreed to revise his charge from £78 to £52. This gives rise to certain questions. How was it that the Public Trustee did not calculate his charges in the first place if he regarded the final figure of £52 as proper?

This raises a serious matter. If my constituent had not challenged the Public Trustee the estate would have had to pay the first and higher charge, and it was only after that challenge that the Public Trustee agreed to reduce it. But in how many cases have people who have placed their affairs confidently in the hands of the Public Trustee, expecting to be treated reasonably, been asked to pay, and have paid, a higher charge than the Public Trustee, on reflection, agrees to be necessary? The Public Trustee owes a duty to estates to calculate his charge accurately from the beginning, and not to wait until he is challenged before he does so.

The second point is that even the reduced charge of £52 was higher, by 25 per cent., than the bill sent in by the solicitors of the other executor. As I have said, the other executor's own solicitors did the bulk of the work, and their account was substantially lower than even the reduced charge of the Public Trustee.

1270 The Lord Chancellor, in his letter to me to which I have referred, says that the Public Trustee's charges are fixed by the Treasury with his approval. I therefore hope that as a result of this short debate the Solicitor-General will use this authority to look into the whole question of the Public Trustee's fees; and that he will be able to give me an answer, to the specific questions I have asked.

I hope, however, that he will go further. It is popularly supposed that the Public Trustee will act to preserve the value of the estates, and will make reasonable charges for his work. In this case, it appears to me that his action has diminished this estate by an unreasonable amount, and that the work he is doing is not what people suppose it to be. I hope, therefore, that the hon. and learned Gentleman will be able to use this opportunity to clear up the doubts that have arisen in my mind and, I fear, in the minds of many other people.

§ The Solicitor-General (Sir Arthur Irvine)

I welcome the opportunity afforded by the hon. Member for Merton and Morden (Mr. Humphrey Atkins) to consider the action taken by the Public Trustee in a particular case. If I may say so, the hon. Member stated the facts of the matter accurately, and I will not take up the time of the House in recapitulating them.

It was on 16th August, 1966, that the Public Trustee was informed of Mrs. Scanlan's death, and was asked whether he would renounce his executorship. He declined to do so. The hon. Gentleman, quite understandably, did not give the details of the estate with which we are here concerned, but it is perhaps useful to have it on the record that the total of the estate was £3,949 11s. 11d. It comprised, as the hon. Gentleman indicated, in the main the freehold of a house in Church Lane, Merton Park, and for the rest, some £629 worth of National Savings Certificates, four fully-paid policies with an insurance company, and an element of household goods. Save for two legacies of £50 each, the whole estate was bequeathed to her son absolutely.

From 16th August, 1966, to March, 1967, the Public Trustee. Mr. Scanlan, as executor, and his solicitors were 1271 engaged in getting probate, collecting the assets and distributing the estate, and in May of that year the Public Trustee presented Mr. Scanlan with his account, including his charges in accordance with the scale of fees, totalling £78 6s. 2d. and petty expenses, £6 9s., making a total of £84 15s. 2d. Thereafter Mr. Scanlan asked if the fees could be reduced and the Public Trustee agreed to waive one-third of the acceptance and withdrawal fees, which reduced his charges to £52 4s. 10d.

It was in February, 1968, that the hon. Member drew the matter to our attention and said—I hope that I paraphrase fairly the position as he put it to us—that although there was no necessity for the Public Trustee to act as executor, he declined to withdraw and as a result this small estate incurred his charges additional to those of the solicitors acting and those charges were in excess of the solicitors' even after the agreed reduction. The question whether the Public Trustee is prepared to renounce probate is always dealt with personally by the Public Trustee. That occurred in the present case. He looked at the matter himself.

There were two reasons why he refused to do so in this instance. Mrs. Scanlan had appointed the Public Trustee executor to her will. She did not see fit to revoke the appointment in her codicil made only a short time before her death, and she had put on his shoulders the responsibility for paying the two legacies and distributing the residue to his co-trustee. In the circumstances Mrs. Scanlan must have wished the Public Trustee to act and he therefore had a clear duty to do so. If the Public Trustee just renounces probate when invited to do so, it would undermine public confidence in him.

Before doing so he has to satisfy himself that there are exceptional circumstances justifying that course. He found none in this case. The only guidance given to him by the Public Trustee Act is contained in Section 2(3) which states that: The Public Trustee may decline, either absolutely or except on the prescribed conditions, to accept any trust, but he shall not decline… I ask the House to note this— 1272 to accept any trust, on the ground only of the small value of the trust property. When the papers in this case were drawn to my attention, I wish the hon. Member to know, I at once addressed my mind to the point that the testatrix had first provided that her house was to be held in trust and later, in the codicil, left the house unconditionally to her son. I asked the question, was it reasonable to draw the inference in those circumstances that when she made this change in her disposition the testatrix, if she had thought about it, would have revoked the appointment of the Public Trustee as executor? That question occurred to me and I gave it thought. It has to be remembered that the Public Trustee is very often executor where there is no trust. In the case of Mrs. Scanlan the appointment of the Public Trustee as co-executor with her son was made in a will dated 27th December, 1960. By a codicil dated 1st June, 1963, she gave two pecuniary legacies and otherwise confirmed the will. By a codicil made on 16th April, 1966, she revoked the life interest in the house, which was given to her son and gave him the fee simple of the house absolutely, but she left the appointment—this is what I ask the House to observe—of executors in her original will undisturbed.

It is not unimportant on analysis that the second codicil was a typed document in which the date was typed as "—date of— 1964" and then the date was inserted in manuscript and the year altered to 1966 and initialled. If the codicil had in fact been originally prepared in 1964, the testatrix had had two years to consider whether she should modify it before she finally executed it in 1966 in the presence of her medical adviser and a neighbour.

There were, in those circumstances, I suggest, good grounds for thinking that there was no oversight here on the part of the deceased when the matter is analysed. It was certainly no last-minute change of provision on her part. There was reason to think that there was no desire on her part that the Public Trustee should, contrary to her original intention, not act. In those circumstances, the Public Trustee, in my view of the matter, owed her a duty to act.

That is what I have to say upon the first limb of the argument put to the 1273 House by the hon. Gentleman. I turn now to the matter of the charges. The Public Trustee is required by Statute to be self-supporting, his income from fees meeting the salary and other expenses of his office. But, unlike banks and other institutional trustees, he is not required to make a profit. The fees are fixed so as to achieve this balance. Naturally, like other organisations, his office has been affected by rising costs generally. He is liable for S.E.T., and work connected with the Capital Gains Tax has increased his expenditure. But the fees have remained unchanged over the last five years.

I have mentioned, as did the hon. Gentleman, that the Public Trustee in this instance reduced the acceptance and withdrawal fees by one-third, a reduction of £26 1s. 4d. I am asked why this reduction was not applied in the first place. The level of fees to be applied by the Public Trustee is determined by the Public Trustee Fees Order, 1957, Statutory Instrument No. 485 of the year. We are dealing here, therefore, with a statutorily supported scale of fees. I suggest that it is appropriate and right, therefore, in determining what fees should be applied, to begin at that base. This is what is invariably done. From that point, if inquiries are made and there are thought to be grounds for reducing the charges, consideration is given to the circumstances. I am sure that the hon. Gentleman will not want to get dialectically into the position where he is raising any kind of protest at the reduction which was applied in the case of this estate.

It is said that the solicitors' charges were less than the Public Trustee's. There, is no basis for the comparison between the two. I want to face the point as 1274 fairly and squarely as I can. In this case we are not dealing with the instance of a solicitor acting as a solicitor-executor. The fees of a solicitor-executor acting as such would, one supposes, have been substantially higher. Knowing what the scales are, we can say that they would have been higher.

The amount of work which the solicitor had to do in this instance was diminished by the Public Trustee's activity. It was the Public Trustee who communicated direct with the Revenue to obtain clearance from tax liability. It was the Public Trustee who corresponded with regard to the valuation, who examined the draft probate papers, who opened the banking account, who applied for encashment of the National Savings Certificates. All that was work done by the Public Trustee.

Although I simply set out in this debate the headings of what was done, there was a considerable amount of work involved. It is a fair point to make that the work done by the Public Trustee had the consequence of diminishing the work which the solicitor was called upon to do.

The whole matter has been studied carefully by us, and we have come, not complacently or superficially but after analysis, to the conclusion that on the decision not to renounce and in the matter of the charges applied we are satisfied that, as we would expect, the Public Trustee acted with correctness and efficiency in the performance of his public duty.