§ The Attorney-General
I beg to move Amendment No. 5, in page 13, line 6, at end insert:(7) There is hereby abolished, as respects dispositions made after the coming into force of this section, any rule of law that a disposition in favour of illegitimate children not in being when the disposition takes effect is void as contrary to public policy.The Amendment abrogates, if it still exists—and here again the law is in a state of some uncertainty, I am afraid—the rule of law that a disposition in favour of "future bastards" is void on grounds of public policy. During the debate on this part of the Bill the Committee used the old English expression "bastards" 1424 without apology, in place of "illegitimate children ", "bastards" being both the old English and the true legal description.
The Amendment makes good an undertaking which I gave in Committee. The matter was raised by the noble Baronet the Member for Hendon, South (Sir H. Lucas-Tooth). I expressed the view that, although the existence and scope of the rule was a matter of doubt, the Government's intention was that no such rule should operate after the commencement of Clause 15, and I undertook to put down an appropriate Amendment, which I have now done.
I gave in Committee the reasons for doubting the survival of this old rule. It has certainly been castigated by some of our judges, and the House may care to be reminded of the comments of the Master of the Rolls in the case of Sydall v. Castings Ltd. on this subject, when he said:I think that we should throw over those harsh rules of the past. They are not rules of law. They are only guides to the construction of documents. They are quite out of date. We no longer penalise the illegitimate child. We should replace those old rules by a more rational approach. If they are wide enough to include an illegitimate child, we should so interpret them. Just as Mackinnon, J., did in Morris v. Britannic Assurance Co. Ltd., when he held that, in a statute concerning industrial assurance benefits, the word 'child' included an illegitimate child. So here, the words relations 'and descendants' in a group assurance scheme are wide enough to include illegitimate children and we should so interpret them.6.45 p.m.
Other judges, Mr. Justice Harman, for instance, have questioned the extent of the survival of the rule which this Amendment abrogates. It is because of the doubt whether there is any such rule that the Amendment refers to "any rule of law" and not to "the rule of law". The Amendment does not, therefore, prejudice an argument seeking to show that the alleged rule does not anyhow apply to a particular disposition made before the commencement of Clause 15.
The noble Baronet did not commit himself to approving the solution to this problem which is contained in the Amendment, but it is diffiult to see what other solution could be accepted. The basis of Clause 15 is that a disposition in favour of relations, whether children, remoter issue or collaterals, is prima facie to be taken as being intended to benefit 1425 those related through illegitimate as well as legitimate links. In the nature of things, many of those capable of benefiting on this basis will be unborn at the time the disposition is made, and it would be absurd if Parliament were to provide, on the one hand, that such a disposition should be construed as intended to benefit those persons, but, on the other hand, that public policy required this intention to be frustrated.
If, contrary to the philosophy underlying Clause 15, "future bastards" ought not to benefit, then Clause 15 is fundamentally wrong. If, however, Clause 15 is right, as I submit it is, it follows that future bastards should not be excluded on grounds of public policy.
§ Sir Hugh Lucas-Tooth (Hendon, South)
I should be churlish if I did not express pleasure that the Government have seen fit to put down an Amendment on this point, because I insisted in Committee that something was necessary. To that extent I am grateful to the learned Attorney-General for the Amendment and also for his explanation.
The Attorney-General expressed doubt about the validity of the rule which the Amendment seeks to abolish. I am inclined to agree that there is such a doubt, but we must look at this and ask why there is a doubt. The answer is that there has been no need to test this rule for a very long time, and the matter is now important because of the insertion of Clause 15 in the Bill.
The right hon. and learned Attorney-General's argument comes to this: that, if Clause 15 is to be inserted in the Bill, it is necessary to make an Amendment in this connection also. If the Government had attempted to insert an Amendment the other way round, they may well have found themselves in still more of a difficulty.
This matter was carefully considered by the Russell Committee, a Committee composed of a number of distinguished lawyers and experts in the law. Having considered the matter, that Committee unanimously agreed that there should be no change of the law in this connection and that a provision on the lines of the present Clause 15 should not be put in the Bill. They decided that any change would be bound to lead to a number of difficulties and complications. It will 1426 not be helpful to anybody, least of all to the bastard himself; it can lead only to doubt, litigation and trouble.
I do not agree with the sense in which the Government now propose to alter the law. I gave my reasons at some length on Committee and, in view of this Amendment, I shall repeat them quite shortly. The situation may arise where a person makes a trust in favour of a young person, giving that young person a life interest in certain property and then after providing that after his or her death the property should go to one or more of that person's children. At present, taking the ordinary meaning of the word "children", that is to say, legitimate children, no question arises in connection with the problem which is proposed to be dealt with by the Amendment. But if one changes the meaning of the word "children" so as to include bastards, the effect is that the gift is to a person who may be unmarried at the time of the gift for life only and then over to his or her illegitimate children.
In certain circumstances this is a direct invitation to the life tenant of the property to beget an illegitimate child so as to be able to secure the succession and to prevent it going away from his own family. It could give rise to cases where a person, either male or female, seeks to obtain an illegitimate child from another person on condition of some money payment. Where a substantial settlement involves £100,000, the kind of offer that could be made could be very tempting—perhaps even as much as £50,000.
§ The Attorney-General
Would the hon. Member say what possible benefit that would give to this remarkable character who is being described hypothetically? I do not know how he could benefit. He could have the dog-in-the-manger satisfaction of denying a relative something that he might otherwise get, but this course of profligate intercourse in order to deny a relative seems an unusual sequence of events.
§ Sir H. Lucas-Tooth
I do not wish to go at length into the discussions which took place in Committee. I there cited the case of a married couple who were unable to have children of their own, who went overseas and came back with a child who was a child of one of them 1427 but not the other, in order that that child should be able to inherit and keep the funds within the family. That is the kind of thing that actually happens. I have little doubt that it could easily happen under the law as envisaged in this provision.
The provision will lead to the kinds of complications which were aptly illustrated in an excellent speech made by the right hon. and learned Gentleman the Attorney-General in Committee. I not unfairly described the speech as requiring a computer to work it out. Indeed, the Attorney-General paid very close attention to his script and I am sure would be incapable of repeating his exposition of the meaning of the Clause in the House today. This is only one example of the kind of difficulty which will arise as a result of the Clause. I object to the direction in which the Amendment has gone, I object to the Clause as it stands, and I should be willing to go into the Lobby to vote against the Amendment.
§ Sir P. Rawlinson
I share the views put to the House by my hon. Friend the Member for Hendon, South (Sir H. Lucas-Tooth). In considering these matters we must try to draw the law in such a way as to provide for these strange circumstances which, as those of us who practise in the courts know, arise from time to time. The case cited by my hon. Friend, odd as it may seem, strange as it must have appeared to those who listened to it, was a real case. We must try to ensure that the law is properly drawn to cover the whole of the area.
I share my hon. Friend's attitude to Clause 15. It is quite true that the Russell Committee unanimously decided that no such provision should be included in any legislation. The Amendment to the Clause takes us into an area in which it is sought to be said that it is no longer contrary to public policy to do something which has been the law. It has not been tested, but it has always been thought to be public policy that there should not be a disposition in favour of illegitimate children not in being. The Bill will now introduce the presumption that where property is being disposed of children and relatives should include bastard children and therefore the relatives of those bastard children. This 1428 means that the disposer, if he so wishes, can include bastards as coming within the word "children". Because of the complexities, the inconvenience, and ultimately the litigation and cost which may well arise from these provisions, we should be most careful before seeking to change what in the past has been a rule of law.
It has been pointed out during proceedings on the Bill that a problem will exist where a claim is made through the father's line. The position of illegitimate children claiming through the mother presents no real difficulty in practice. The pregnancy of the mother is easily proven, and there is little dispute about the birth. But the bastard child conceived many years previously and not acknowledged by the father throughout the whole of his life presents the possibility of the bastard or the bastard's relatives suddenly appearing to make a claim on an estate. In the case of small estates such an event would give rise to very grave difficulties. A large estate with its resources will be able to beat off a spurious claim, but a claim on a small estate could be extremely serious. With Clause 15 as it appears in the Bill and no protection given to the possibility of spurious claims through the father's line, in my view we should not abolish the rule of law.
Under Clause 15 we make a disposition in favour of bastards. The difficulty arises in the case of a bastard not in being. If a testator makes his will in favour of "my son and his children", that does not exclude bastard children which that son might have in the future. As my hon. Friend the Member for Hendon, South has pointed out, if we abolish illegitimacy we also abolish legitimacy. If we make a disposition for children including all children that a man may have in the course of his life, we shall abolish a law which has served the public policy of society and of the State.
§ Mr. John Lee
It is true that the controversial Divorce Reform Bill may make a difference, but where the parties have cohabited over a long period of time surely it would be reasonable for a testator to make provision not only for children in existence but those who are not in being.
§ Sir P. Rawlinson
Could not he do that? He could make provision "for the children of my son X and Jane X", by name. All that he has to do is to take that amount of care. If he says "the children of my son", 25 years earlier when a young man serving in the Army the son may have had a child by some woman. What if that child then makes a claim? Surely the onus should be upon the person making the disposition in the circumstances which the hon. Gentleman has described. It is for the testator to make it clear that he is making the disposition in favour of the children of his son by his common law wife with whom he has been living.
It would be a mistake to abolish this rule of law. The learned Attorney-General quoted the ringing tones and the words of the Master of the Rolls in his judgment in Sydall v. Castings Ltd. However, I do not think that they are wholly apposite to the problem that we are discussing. What the learned Master of the Rolls said in that case does not fit what we are looking at now. We are discussing whether we should remove from the general principles of English law the idea that bastards not in being should not be included in a general disposition. It is my personal instinct, therefore, to reject the Amendment, and I am coloured in my attitude to Clause 15 by the reasons which my hon. Friend has given.
By the Private Member's Bill procedure, in recent times this House has
|Division No. 315.]
|Allaun, Frank (Salford, E.)
|Butler, Herbert (Hackney, C.)
|Cant, R. B.
|Evans, Albert (Islington, S.W.)
|Evans, Fred (Caerphilly)
|Evans, Ioan L. (Birm'h'm, Yardley)
|Craddock, George (Bradford, S.)
|Atkins, Ronald (Preston, N.)
|Fitch, Alan (Wigan)
|Atkinson, Norman (Tottenham)
|Crossman, Rt. Hn. Richard
|Fletcher, Raymond (Ilkeston)
|Darling, Rt. Hn. George
|Benn, Rt. Hn. Anthony Wedgwood
|Davidson, Arthur (Accrington)
|Davidson, James (Aberdeenshire, W.)
|Fraser, John (Norwood)
|Bishop, E. S.
|Davies, Dr. Ernest (Stretford)
|Davies, Rt. Hn. Harold (Leek)
|Boardman, H. (Leigh)
|Davies, Ifor (Gower)
|Garrett, W. E.
|Gordon Walker, Rt. Hn. P. C.
|Gray, Dr. Hugh (Yarmouth)
|Bray, Dr. Jeremy
|Diamond, Rt. Hn. John
|Grey, Charles (Durham)
|Griffiths, Eddie (Brightside)
|Broughton, Sir Alfred
|Griffiths, Will (Exchange)
|Brown, Hugh D. (G'gow, Provan)
|Dunn, James A.
|Hamilton, James (Bothwell)
|Brown, R. W. (Shoreditch & F'bury)
|Hamilton, William (Fife, W.)
|Buchanan, Richard (G'gow, Sp'burn)
§ made great changes in the law. It may be that the attitude of some persons has not wholly caught up with the progressive attitude of the Houses of Parliament. But I do not think that we should abrogate this rule of law as an act of policy in a Government Bill. Therefore, as I share my hon. Friend's attitude and as my attitude to Clause 15 is coloured by what he has said, I shall join him in voting against the Amendment.
§ The Attorney-General
If I may reply to the debate briefly, the Amendment and Clause 15 are in keeping with the principles and approach of Part II of the Bill dealing with the property rights of illegitimate children. I would be the last to deny that the implementation of the new rule will not in all cases be easy. But as a rule it has the benefit of being simple and universal and, as a result of these proceedings, it will become immediately known to all legal advisers.
We are dealing with a sphere of property where the dispositions with which we are concerned are in favour of remote relatives, usually of a complicated nature and made on the basis of legal advice. I feel confident that lawyers will be able to cope with any difficult problems that may arise. As for spurious claims by remote bastards, I have confidence in the ability of the courts to smell out the rogue.
§ Question put, That the Amendment be made:—
§ The House divided: Ayes 192, Noes 119.
|Harrison, Walter (Wakefield)
|Mackenzie, Gregor (Rutherglen)
|Rodgers, William (Stockton)
|Mackintosh, John P.
|Rogers, George (Kensington, N.)
|Heffer, Eric S.
|Ross, Rt. Hn. William
|McNamara, J. Kevin
|Hilton, W. S.
|Mahon, Peter (Preston, S.)
|Mallalieu, E. L. (Brigg)
|Shaw, Arnold (Ilford, S.)
|Hoy, Rt. Hn. James
|Shinwell, Rt. Hn. E.
|Hughes, Hector (Aberdeen, N.)
|Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
|Hughes, Roy (Newport)
|Short, Mrs. Renée (W'hampton, N.E.)
|Silkin, Hn. S. C. (Dulwich)
|Irvine, Sir Arthur (Edge Hill)
|Janner, Sir Barnett
|Mason, Rt. Hn. Roy
|Jay, Rt. Hn. Douglas
|Mellish, Rt. Hn. Robert
|Johnson, James (K'ston-on-Hull, W.)
|Jones, Dan (Burnley)
|Steel, David (Roxburgh)
|Jones, Rt. Hn. Sir Elwyn (W.Ham, S.)
|Milne, Edward (Blyth)
|Steele, Thomas (Dunbartonshire, W.)
|Jones, J. Idwal (Wrexham)
|Mitchell, R. C. (S'th'pton, Test)
|Symonds, J. B.
|Jones, T. Alec (Rhondda, West)
|Thomas, Rt. Hn. George
|Morris, Alfred (Wythenshawe)
|Morris, Charles R. (Openshaw)
|Kerr, Mrs. Anne (R'ter & Chatham)
|Urwin, T. W.
|Varley, Eric G.
|Wainwright, Edwin (Dearne Valley)
|Walker, Harold (Doncaster)
|Lee, Rt. Hn. Frederick (Newton)
|Lee, John (Reading)
|Watkins, David (Consett)
|Lestor, Miss Joan
|Watkins, Tudor (Brecon & Radnor)
|Lever, Rt. Hn. Harold (Cheetham)
|Lewis, Ron (Carlisle)
|Parker, John (Dagenham)
|White, Mrs. Eirene
|Pearson, Arthur (Pontypridd)
|Wilkins, W. A.
|Willey, Rt. Hn. Frederick
|Lyon, Alexander W. (York)
|Perry, Ernest G. (Battersea, S.)
|Williams, W. T. (Warrington)
|Lyons, Edward (Bradford, E.)
|Perry, George H. (Nottingham, S.)
|Winstanley, Dr. M. P.
|Mabon, Dr. J. Dickson
|Price, Thomas (Westhoughton)
|Price, William (Rugby)
|TELLERS FOR THE AYES:
|Macdonald, A. H.
|Mr. J. D. Concannon and
|Roberts, Albert (Normanton)
|Mr. Neil McBride.
|McKay, Mrs. Margaret
|Robertson, John (Paisley)
|Alison, Michael (Barkston Ash)
|Glover, Sir Douglas
|Maxwell-Hyslop, R. J.
|Atkins, Humphrey (M't'n & M'd'n)
|Godber, Rt. Hn. J. B.
|Baker, W. H. K. (Banff)
|Gresham Cooke, R.
|Morrison, Charles (Devizes)
|Bennett, Dr. Reginald (Gos. & Fhm)
|Griffiths, Eldon (Bury St. Edmunds)
|Munro-Lucas-Tooth, Sir Hugh
|Hall, John (Wycombe)
|Hall-Davis, A. G. F.
|Nabarro, Sir Gerald
|Black, Sir Cyril
|Harris, Reader (Heston)
|Boardman, Tom (Leicester, S.W.)
|Harrison, Brian (Maldon)
|Orr-Ewing, Sir Ian
|Heald, Rt. Hn. Sir Lionel
|Osborn, John (Hallam)
|Brinton, Sir Tatton
|Page, Graham (Crosby)
|Bromley-Davenport, Lt.-Col. Sir Walter
|Howell, David (Guildford)
|Brown, Sir Edward (Bath)
|Pike, Miss Mervyn
|Bullus, Sir Eric
|Hutchison, Michael Clark
|Burden, F. A.
|Iremonger, T. L.
|Campbell, B. (Oldham, W.)
|Jenkin, Patrick (Woodford)
|Rawlinson, Rt. Hn. Sir Peter
|Jennings, J. C. (Burton)
|Rees-Davits, W. R.
|Johnson Smith, G. (E. Grinstead)
|Renton, Rt. Hn. Sir David
|Kaberry, Sir Donald
|Rhys Williams, Sir Brandon
|Ridley, Hn. Nicholas
|Cooper-Key, Sir Neill
|King, Evelyn (Dorset, S.)
|Rodgers, Sir John (Sevenoaks)
|Corfield, F. V.
|Rossi, Hugh (Hornsey)
|Knight, Mrs. Jill
|Russell, Sir Ronald
|Deedes, Rt. Hn. W. F. (Ashford)
|Langford-Holt, Sir John
|Drayson, G. B.
|Lewis, Kenneth (Rutland)
|Shaw, Michael (Sc'b'gh & Whitby)
|Eden, Sir John
|McAdden, Sir Stephen
|Sinclair, Sir George
|Elliot, Capt. Walter (Carshalton)
|Smith, Dudley (W'wick & L'mington)
|Errington, Sir Eric
|Taylor, Sir Charles (Eastbourne)
|McNair-Wilson, Patrick (New Forest)
|Taylor, Edward M. (G'gow, Cathcart)
|Taylor, Frank (Moss Side)
|Maginnis, John E.
|Turton, Rt. Hn. R. H.
|Fraser, Rt. Hn. Hugh (St'fford & Stone)
|Marples, Rt. Hn. Ernest
|van Straubenzee, W. R.
|Gilmour, Ian (Norfolk, C.)
|Vickers, Dame Joan
|Wilson, Geoffrey (Truro)
|Walker-Smith, Rt. Hn. Sir Derek
|TELLERS FOR THE NOES:
|Mr. Anthony Grant and
|Whitelaw, Rt. Hn. William
|Mr. R. W. Elliott.
|Williams, Donald (Dudley)
|Younger, Hn. George
§ Sir P. Rawlinson
I beg to move Amendment No. 6, in page 13, line 14, at end insert:(8) No trust for such members of a given class of objects as the trustees may select shall be void by reason only of uncertainty due to the impossibility of ascertaining at any given time the illegitimate children or illegitimate relatives, if any, of any person.
§ Mr. Speaker
I have had a word with both Front Benches, and we all seem to be agreed that with this Amendment we can take the following Amendments:
Amendment No. 7, in line 34 [Clause 17], after '17', insert '(1)'.
Amendment No. 8, in page 14, line 4 [Clause 17], at end, insert:(2) The provisions of subsection (1) of this section shall apply to an insurer who pays monies due under a policy of life insurance to persons entitled thereto either directly or on a distribution of the estate of a deceased, in like manner as they apply to a trustee or personal representative as therein provided.
§ Sir P. Rawlinson
I am much obliged, Mr. Speaker. I think that it will be for the convenience of the House if we do as you suggest.
Clause 15 provides the presumption that in dispositions of property, references to a child and its relatives shall include bastards and the bastards' relatives. Clause 17 provides an indemnity in respect of dispositions of property made in ignorance of the existence of a bastard, but it is an indemnity which is given only to trustees and personal representatives. Difficulty arises not only in respect of a claim possibly being made very many years after the conception of a bastard. A difficulty which could arise in this circumstance is such that one has to take into account the position of those people who make disposition of property but who are not trustees, and may dispose in ignorance of the existence of a bastard.
The practice of certain life offices in small cases is, on the death of the policy holder, to make payment to the widow or to the next of kin without the production of the grant of representation. They do so in the smaller estates in order to avoid hardship and to give immediate assistance to the next of kin of the policy holder who has just died. What they do 1434 in that respect is, I understand, an extension, by agreement, of certain provisions of the Administration of Estates (Small Payments) Act, 1965. The life offices obtain a statement of who the deceased's children are, and make payment without any risk of or fear of any risk of any other person intervening.
The life offices believe that where there is no widow they may be at risk if they do not satisfy themselves that there is no illegitimate child.
The deceased himself might not have known of the existence of the illegitimate child. The life offices therefore have been concerned and have been making representations as to the position which arises under this Bill. Will they be at risk and able to continue what I should have thought all hon. Members would consider an important and very useful practice, that of paying out before legal grant of administration? Many policies provide that on the death there should be payment out at the trustees' discretion. It may be payment out to a very wide class, including relatives and children. If, as the Bill will now provide, those children include illegitimate children and the relatives include relatives of illegitimate children, the trustees cannot be expected to review the whole class of beneficiaries.
The life offices fear that such a trust would be void for uncertainty under the rule of the Revenue case, Inland Revenue Commissioners versus Broadway Cottages Trust. They have sought, and would like to see in the Bill, some provision to prevent that rule vitiating a trust for illegitimate children by reason of uncertainty as to who are beneficiaries. Does it include the illegitimate children and, if it is for relatives, the relatives of illegitimate children? They have posed this question during the passage of the Bill through the House.
I can see that on the other side of the fence it can be said that there is no possibility of such a trust being held void under the rule in the Broadway Cottages case, but it is an opinion which can be expressed only and cannot be made sure until there is a decision or unless there is provision made in the Statute. It would not be difficult to imagine that the life 1435 offices might discontinue small payments without asking for a grant, because of the fear and risk. If that were so they would demand first that a grant of administration should be obtained, which would mean the postponement of these payments out.
I can see the view which has been indicated that their fears are exaggerated and that they need not be so apprehensive. Clause 15 expresses an intention of presumption. It says that in dispositions of property reference to children and their relatives include references to persons related through illegitimate children. Therefore, it can be said that on one interpretation of the law Clause 15 is a rule of construction and a prima facie rule only. One can see that that is a submission and interpretation of the law which may be correct. However, can it be said with certainty that the entry of a new member into a trust does not affect the meaning of the words creating the trust? The life offices are not satisfied. They fear that they are being put at some risk. It would not be right for us to allow this Bill to pass into law without ensuring that there is not any such risk, and the purpose of these Amendments is to try to ensure that no risk arises.
It may be demonstrated that there are enormous drafting snags in these Amendments, particularly in a matter as complex as this. That may well be the case and, if so, it will be too late for this House to do anything about it. On the other hand, the Attorney-General may be able to satisfy the House that these fears of the life offices are unfounded. It would be highly inconvenient if grants of administration had to be taken out before the cash was made available. That would undoubtedly affect others not covered by the terms of the Amendment I have moved. It would affect banks, but they have not been included and it is too late to include them. In a small estate the bank is not usually concerned; it is usually the insurer.
Usually the widower or the son, wishes to draw from the life offices the not very considerable sum of perhaps a few hundred pounds to which he is entitled as the next of kin. But who is to say that he is the only next of kin? We come back to the difficulty inherent in this piece of legis- 1436 lation that, without seeking to do something which most people think is a compassionate and sensible thing to do, to relate the laws of succession and to introduce the illegitimate child in certain circumstances we are nevertheless perhaps creating very considerable problems.
If the Attorney-General says that these Amendments do not do what I seek to do because of defective drafting or because it is not necessary, I hope that he will make a statement acceptable not only for its clarity and authority making certain that the Inland Revenue and the Estate Duty Office will be able to take note of it and appreciate that it has been said here with the authority of the Attorney-General. This seems an important practical point. We should not allow this Bill to become law without satisfying ourselves that the matter has been covered by legislation.
§ The Attorney-General
We have been giving careful thought since the Committee stage to the matters which have given rise to these Amendments. The conclusion I have arrived at is that Amendment No. 6 is based on excessive fears about problems which Clause 15 might create. My conclusion is that the proposed Amendment would create fresh problems rather than eliminating existing ones.
As the right hon. and learned Gentleman pointed out, the Amendment is designed to meet a point concerning the Life Offices' Association. The life offices have expressed fear that trusts for pensions schemes under which trustees are empowered to make payments to a specified class of relative of members of a trust will as a result of Clause 15 be caught by the rule in the Broadway Cottages Trust case. The Association has made clear that its members are not so much concerned with trust deeds drawn up in future, because they can always be drafted if required to exclude such classes of illegitimate relatives as may be desired, as with existing trusts. The fear of the Association is that, as it can be argued for some purposes that the entry of a new member into a pension scheme constitutes a fresh "disposition", the new rule of construction could apply notwithstanding that the trust deed had been executed before the commencement of the operation of the Clause. That fear is ill-founded.
1437 The Clause is a rule of construction only, and subsequent events cannot alter the meaning of the words used in the original trust deed. For example, if the original trust deed specifies children as benificiaries and is drawn up before the Clause comes into force, "children" means legitimate children. Unless and until the trust deed is amended, "children" will continue to mean legitimate children, even though the trust continues in being after the commencement of the Bill.
I have informed the Inland Revenue of my view that the subsequent entry of a new member into a scheme established under a trust deed executed before the commencement of the operation of the Clause cannot affect the construction of that deed, and I have no reason to suppose that the Revenue will disagree with that view.
One of the difficulties about the Amendment is that it is not confined to existing trusts. It appears to be so worded as to apply equally to existing and to future trusts. In so far as it applies to any trust, it is objectionable. In so far it applies to existing trusts, it is open to the objection that it consitutes retrospective legislation capable of upsetting existing rights.
The conclusion that I have arrived at on these difficult problems has received strengthening support from the observations of Lord Justice Harman in a case reported last week—re Baden's Deed Trust—where the learned Lord Justice dismissed, it is true obiter, the scope of the Broadway Cottages rule. In his view, the rule may not apply to ordinary family settlements, at any rate where the beneficiaries are close relatives of the settlor. Since, in practice, the only settlements likely to be drawn up without professional advice are those resulting from a "home-made will", it is, if Lord Justice Harman's doubts are well-founded, most unlikely that the Clause will ever cause such uncertainty as will invalidate a trust. Therefore, it would seem that the danger against which the Amendment seeks to guard may well be exaggerated.
It is the case that one of the consequences of the Clause is that those making settlements hereafter will have to be careful to ensure that in using expressions 1438 denoting relationships without qualification they do not extend the possible range of objects too widely. However, in practice these settlements are invariably drafted with professional assistance from solicitors and others who will have the Clause well in mind.
Amendments Nos. 7 and 8, as the right hon. and learned Gentleman said, are designed to give life assurance companies the same protection as is given by Clause 17 to trustees and personal representatives, and their object is to enable the company to pay out the policy money to the relatives of the deceased without worrying about the possibility of there being illegitimate children with an equal, or possibly better, claim.
I agree that the practice of the Association in paying out promptly to the widow or other close relative of the deceased without waiting for representation to be taken out is obviously a sensible one. I appreciate the Association's worry that Clause 14 will make it difficult for life offices to continue that useful practice, because they will be at risk should a latent bastard, as we have come to know him in these discussions, subsequently make a successful claim to the estate.
There are, however, problems in what the Association proposes. Insurers are not the only people affected by this problem. Bankers also in practice allow close relatives to draw cheques on the deceased's current account on the manager's being satisfied that they are entitled to succeed. The problem facing the life companies is one which faces any debtor of the estate who is prepared to take a chance on paying the right person. One of the inevitable consequences of accepting the policy in Clause 14 is that the risk of making a mistake is greater.
Trustees and personal representatives, however, are in a different position from that of insurers, bankers, and other debtors. They are obliged to pay out to the persons entitled, whereas insurers and bankers are not; and they can, in a doubtful case, insist on representation being taken out. If Clause 17 were extended beyond the class of persons obliged to pay out, it is difficult to see where to draw the line.
In practice, the Association's problem is not likely to be as great as it fears. 1439 The need for ready cash usually occurs where the assured is a man who dies leaving a widow. But if he dies intestate she is absolutely entitled to the first £8,750 of his estate. So in the case of an estate worth less than that sum the insurance company is safe in paying the widow. If the estate is worth more, she will certainly have to take our representation and, even in this case, the underwriters are safe if they pay her and take out an indemnity.
It must also be borne in mind that the greater the protection given to those paying out the greater the risk that the person entitled in law will be deprived of his rights. A balance has to be struck between attempting, on the one hand, to help the underwriters and the legitimate family, and, on the other hand, protecting the interests of the illegitimate child.
I regret that in the circumstances I cannot commend any of these Amendments to the House, but I am happy to have given the assurance that I have given to insurers in respect of Clause 15, and I hope that they will accept my view that their anxieties about lack of protection which they say they will suffer from are exaggerated.
§ Sir P. Rawlinson
I am grateful to the Attorney-General foe giving that assurance, as will be the Life Offices Association. However, there is no doubt that the Bill will create problems. I see the force of the Attorney-General's statement that in practice the problems may not be as great as the Association fears. Nevertheless, we have put the Association to a certain amount of risk and we shall pass the Bill into law with life offices and bankers, to a certain extent, having some degree of risk. This is unfortunate, but I do not think that we can do anything about it now.
I am grateful to the Attorney-General for having made his view clear and for having conveyed it to the Inland Revenue. I beg to ask leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.