HC Deb 05 May 1976 vol 910 cc1353-65 'None of the provisions of this Part (II ) of this Act shall adversely affect any person's rights already accrued or which may accrue in future under the Inheritance (Provision for Family and Dependants) Act 1975, and in the event of a conflict between an Order of the Court made under that Act and a grant or refusal of a tenancy by a landlord, or the failure of an eligible person to claim or to accept a tenancy, or a direction of the Tribunal under this part of this Act, the Order of the Court shall prevail'.—[Sir David Renton.]

Brought up, and read the First time.

6.15 p.m.

Sir David Renton

I beg to move, That the clause be read a Second time.

The Inheritance (Provision for Family and Dependants) Act 1975 was passed as the replacement of the Inheritance (Family Provisions) Act 1936. It allows the widow or children and certain other dependants to apply to the High Court or the county court for an order that the estate of a deceased person should be distributed not in accordance with his or her will but so as to secure reasonable financial provision for the dependants. This is one of those cases in which the courts are given discretion by Parliament. It is a branch of the law in which the trust given by Parliament to the courts has been fully justified. They have done good work in securing that the widows, children, and so on. have been provided for even where the testator had turned "bloody-minded", to use an expression which was used in Standing Committee.

. There could easily be a conflict, in spite of what the Minister of State said in Committee, between the provisions of the will, or the action taken or not taken under the Bill, and an order made by the court under the 1975 Act. In order to convince the Minister I will deal with that point a little more fully, but meanwhile I point out that, if there were such a conflict, confusion, and indeed hardship, could arise which would most probably have to be resolved by litigation or further litigation between members of the same family. That is the situation which we ought to try to avoid if we can possibly do so. Indeed, we have a duty to try.

The simplest way of avoiding it is to say that, where there is such a conflict, the order of the court made under the 1975 Act shall prevail. I am not a trained legislative draftsman; I do not claim to have the drafting of the new clause right in detail; but I suggest that the principle is clear enough, in the way I have expressed it, and I hope that the Government will not dare to reject the new clause merely because it is technically defective in drafting. If the principle is accepted, the drafting can be improved in another place.

In Committee my hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) proposed a similar clause, but he was told by the Minister of State that there is no conflict between the 1975 Act and the provisions of the Bill because the Act applies only to the deceased's estate and the tenancy of a farm is not part of the deceased's estate. That point of view is maintained by the hon. Gentleman in spite of the provisions of Clause 19, especially subsection (4), which is very important in relation to this matter. It says: If the applicants under this section include a person validly designated by the deceased in his will as the person he wished to succeed him as tenant of the holding, the Tribunal shall first make a determination under subsection (2) above as regards that person,"— that is merely the determination that the person is an eligible person— and shall do so as regards the other applicant or each of the other applicants only if the Tribunal determine that the person so designated is not in their opinion a suitable person to become the tenant of the holding"— We reach this simple position, therefore. There is no question of what is "fair and reasonable", as there was in the case of the Government's clause earlier. If the person designated in the will is eligible and suitable, under Clause 19(5) the tribunal must make a direction in his favour.

Mr. Mark Hughes (Durham)

As I understood it, the tribunal must make a direction in his favour vis-à-vis alternative claimants to the tenancy to be considered by it at a later stage. It is not that the tribunal must make a decision in his favour vis-à-vis the tenancy itself. Can the right hon. and learned Gentleman clarify my mind about that?

Sir David Renton

It is the Bill that will clarify the hon. Gentleman's mind. In Clause 19(5), we find these words: If under the preceding provisions of this section only one applicant is determined by the Tribunal to be in their opinion a suitable person to become the tenant of the holding"— and one must add, and that applicant has been designated by will— the Tribunal shall …subject to section 20 of this Act, give a direction entitling that applicant to a tenancy of the holding". I must also point out the contents of subsections (11) and (12), because they endorse the position that I am describing. Subsection (11) says: For the purposes of subsection (10)"— that is the one which mentions the making of a will or codicil— a statement which is framed so as to designate as mentioned in paragraph (b )of that subsection different persons in different circumstances"— this is the point which the hon. Member for Durham (Mr. Hughes) was making— shall be taken to satisfy that paragraph if, in the events which have happened, the statement exclusively designates a particular person. Subsection (12) reads: A direction under this section given in favour of a person by reason of his being a person validly designated by the deceased as mentioned in subsection (4) above shall be valid"— here is where a conflict can arise with the 1975 Act— even if the probate or administration by virtue of which he was such a person at the giving of the direction is subsequently revoked or varied What is more, it can only be subsequently revoked or varied by an order of the court, and that order of the court is likely to be made under the 1975 Act rather than under any other legislation.

It means that when the Minister was advised, as apparently he was in Committee, and when he wrote afterwards to my hon. Friend the Member for Sudbury and Woodbridge that there was no conflict, that point appears to have been overlooked. Whether it is overlooked or not, I suggest that the opportunity to farm, say, 500 acres is a much more valuable asset for a tenant to bequeath than an estate of even £20,000 or £30,000.

By this part of the Bill Parliament is being asked to create an entirely new right. It has never come into our law before. I am not challenging that right, whatever may be my views about the creation of a new inherited right of this kind, but the Government, having created that new right, should consider more carefully than they have the consequences of doing so. They should either amend the 1975 Act so as to treat the inheritance of a tenancy as part of the deceased's estate or acknowledge that a conflict can arise in the way that I have mentioned. Surely, one or other of those steps should be taken, and conceivably both.

There is an obvious disadvantage, which I concede at once, in providing that inherited tenancies should be regarded as assets in the ordinary way. They might then attract capital transfer tax, which, we have been assured, the provisions of Part II of the Bill would not do. I do not wish to walk into that trap or to invite anyone else to do so.

I have, therefore, opted for the easier of the two solutions to deal with this conflict. Where there is a conflict, the order of the court, made under the 1975 Act shall prevail, and it shall prevail over the grant or refusal of a tenancy by a landlord under Part II or the failure of an eligible person to claim or to accept a tenancy or a direction of the tribunal under Part II That seems to be a simple, sensible and easy way out of the dilemma from the legislative point of view which gives no rise to trouble and which avoids the doubts that could arise and might have to be resolved by litigation within the family if we did nothing about it.

My hon. Friend the Member for Sudbury and Woodbridge pointed out that a widow or other dependant of the deceased might suffer. I think that he had in mind an example which the Minister gave of the eldest son who might be the only eligible person within the family and who failed to take advantage of the opportunity which Part II gave him and the opportunity which he was given by being designated by his father's will as the person to succeed under the tenancy: My hon. Friend's expression was "let go" his rights under the Bill. I appreciate what my hon. Friend had in mind, but I think that there is a difficulty about solving it. I am prepared to concede that we could not very well write into the Bill mandatory provisions requiring the son to take up the tenancy if he did not wish to, even though that would mean that a valuable right within the family would be rejected. That would be an unnecessary interference with freedom. We cannot force people into occupations that they do not wish to have, or make them suffer if they will not enter into those occupations.

With respect to my hon. Friend the Member for Sudbury and Woodbridge, therefore, I do not make part of my case the point which he advanced in Committee. I base my case on the fact that the Government are creating an important and valuable new right which is of tremendous value.

There is no question of the tribunal having to decide what is fair and reasonable. The tribunal must give a decision if the simple conditions under Clause 19 are satisfied. That could leave the widow in a difficult position. It could cause trouble within the family. It could cause conflicts between the decision of the tribunal and that of the court. I think that it is far better for all concerned to try to anticipate that and to resolve it by saying that in such circumstances the order of the court shall prevail.

6.30 p.m.

Mr. Mark Hughes

I listened with great interest to what the right hon. and learned Member for Huntingdonshire (Sir D. Renton) has just said. Perhaps the Minister of State, not this evening but, if necessary, by correspondence, could address his mind to the possibility of what in the tax law became known as the "Franco System" of avoiding capital transfer tax.

Under this new clause, if I were a tenant of a holding, and I made out a will, in a moment of mental aberration, leaving the holding to the Chief Whip of the Labour Party, I should like to feel my natural heirs could, under the terms of the 1975 Act, go to the High Court and claim a prior right over the Chief Whip of my party.

What worries me is that the new clause as drafted, would immediately negate the whole of Part II of the Bill, because it would be open to any tenant, in collusion with his landlord, to overturn the whole intention of these provisions. He could make a foolish will, and it could then be overturned in the certain knowledge that the heir designated, in time, by the court would not care to take up the inheritance. This is the area in which there is a risk of a very complex legal loophole which would enable collusive action to be taken by a landlord and testator to prevent alternative heirs from having a reasonable case considered by the tribunal, for if he made a will which was subject to the family provisions of the 1975 Act, and it was overturned in favour of a single individual, my suspicion is that any alternative heirs, under the provisions as currently drafted in the Bill, could find themselves ruled out of the provisions in the new clause, not just as drafted but as intended. I think a coach and horses could potentially be driven through the whole of Part II of the Bill. I might be totally misinformed and misadvised, but I would be grateful to have the Minister's views on this.

Sir David Renton

I have listened to the hon. Gentleman with great interest. My intention was exactly the opposite to what he stated.

Mr. Pym

This shows what unexpected and complicated possibilities can emerge if one starts legislating in a matter of this kind, which is certainly, in intention, seeking to alleviate hardships which were thought, on both sides of the House, to exist in a very few cases where sons or relations of the tenant were not given the tenancy of the farm. Dabbling with such complicated legislation as this automatically creates other hardships. The speech of the hon. Member for Durham (Mr. Hughes) indicated an area where we could get into considerable difficulties. My right hon. and learned Friend the Member for Huntingdonshire (Sir D. Renton) was on a substantive point.

I speak very much as a layman in legal matters, but the House will remember that during Second Reading I expressed, rather strongly, some grave doubts about whether the Agricultural Land Tribunal was, in all the circumstances, wholly and fitly the appropriate body to take such difficult decisions. It will be dealing with real family problems, and having to make judgments between different people, possibly as to who should succeed, as well as taking into account the relative hardship of the tenant's family and the relation's family, although the latter, unfortunately, in a rather circumscribed way.

I expressed the view, as the Minister will remember, that I thought it might possibly be right for the courts of the land to be involved in taking the decisions rather than the Agricultural Land Tribunal.

In subsequent discussions among the interested bodies outside this House, and my hon. Friends and other hon. Members, the general consensus of view was that in all the circumstances it was right for the Agricultural Land Tirbunal to be responsible for these decisions. That is why it was not challenged to any degree in Committee.

Here, however, we come to a difficulty which might arise, and which was described in detail by my right hon. and learned Friend the Member for Huntingdonshire. That was the possibility of a conflict between members of the same family, and that it might result as a consequence of how a tenant drew his will. That is a perfectly possible situation. A tenant might say, under this Bill, that he wished his son—it could be his daughter —to be his eligible and rightful successor. It might well be that his widow would rather have carried on the holding herself. There would, therefore, be conflict. This is a tragic situation which could happen in a very few cases. As this Bill is designed to try to iron out hardship, even if in a very few cases, it is entirely right that this matter should be thoroughly considered at this stage.

One can visualise that such situations will happen in a few cases if only because the value of the right of succession is considerable these days. It is not an absolutely automatic right. We know that certain conditions have to be fulfilled, but we also know, from the way the Bill has been presented by the Government and from what has been said about it, that there will be cases where, one can see clearly beforehand, some member of the tenant's family will be able to enjoy these rights when there will not be any hardship on the other side. One can imagine all sorts of situations, but it will be fairly certain that some members of the tenant's family will be able to take over the holding when he dies and, one can imagine that, however unfortunate the circumstances, there could be a conflict in the family.

Mr. Jerry Wiggin (Weston-superMare)

I entirely accept my right hon. Friend's use of the word "value" but would he also take the point that this is a value of desire, rather than of money, for the simple reason that once the incoming person becomes a tenant he is paying a current market rent, or at least will be, within three years. The prospect of the value of a tenancy being eligible for taxation would possibly be damaged under the concept of this Bill, not to mention all the damage it will do to a tenant's family.

Mr. Pym

I take my hon. Friend's point and I am grateful to him. The value is that some member of the family will enjoy being able to farm the holding for the rest of his life. This is where the value lies. It is not a money value, but involves the earning capability on the value of assets belonging to somebody else.

In these circumstances, if there is some kind of conflict within a family, I feel strongly that it would be right for a court to be involved in this matter. As worthy as are the members of agricultural land tribunals, I hope that the decision of the court will be overriding. Therefore, I support all my right hon. and learned Friend said.

Mr. Bishop

The House is indebted to the right hon. and learned Member for Huntingdonshire (Sir D. Renton) for the constructive way in which he dealt with the clause. We are dealing with a possible conflict between the succession provisions of the present Bill and the provisions of the Inheritance (Provision for Family and Dependants) Act 1975. This matter was raised in Committee by the hon. Member for Sudbury and Woodbridge (Mr. Stain-ton) and it is now, in a somewhat different form, being raised again. I shall in a moment refer to a letter which I sent to the hon. Member for Sudbury and Woodbridge on this topic.

I wish to emphasise that this matter has been carefully considered, and I must reiterate that the Government feel that no such conflict need be feared. The rights of a person to whom the Inheritance Act applies are basically to apply for an order of the court for further provision from the estate of a deceased person and to receive payments or property out of the estate of the deceased should the court so order. I wish to stress the words "estate of the deceased" The new tenancy which a successful applicant may obtain under the succession provision does not derive from the estate of the deceased. I think that answers the point made by my hon. Friend the Member for Durham (Mr. Hughes), who asked whether a relative could overturn a tenancy through the provisions of the 1975 Act. The point is that the tenancy is not part of the deceased person's estate.

The grant or refusal of a tenancy by a landlord cannot conflict with an order of the court under the Inheritance Act in relation to this part of this Bill, any more than the action of a landlord in voluntarily granting a new tenancy outside the provisions of the Bill can conflict with such an order. That is the position that would apply at present. This is an action of a third party outside the scope of the order.

It is true to say that the failure of an eligible person to claim or accept a tenancy cannot conflict with an Inheritance Act order. Such action naturally is open to an eligible person. Nobody can be compelled to take up a farming tenancy if he does not wish to do so and no court order will require this.

I wish to refer briefly to the points I made to the hon. Member for Sudbury and Woodbridge in Standing Committee on 8th April. I said: The aim of the Act is to enable a close relative of a deceased person who considers that he or she has not been reasonably provided for in the deceased's will to enter a claim through the county court or the High Court against the deceased person's estate. I stress the word 'estate'. I said a little later: An applicant for a deceased person's tenancy, on the other hand, is applying to take over the tenancy when the deceased person's lease expires, by which time the estate ought in normal circumstances to have been wound up. The two sets of legislation therefore carry on regardless of each other."—[Official Report, Standing Committee C, 8th April 1976; c. 1144.] 6.45 p.m.

Finally, I wish to stress that a direction of the tribunal will not cause a conflict since the subject matter of that direction does not derive from the estate of the deceased and is not subject to any order of the court under the Inheritance Act.

It is valid to make the point that the succession of a beneficiary to a farming tenancy, either under this Bill or by the voluntary act of a landlord, is a circumstance which could be considered by the court in deciding whether an order should be made under the Inheritance Act, and the extent of that order. This is as it should be, but this is not a circumstance which will be affected or obstructed by the operation of the succession provisions.

I understand the concern expressed by the right hon. and learned Member for Huntingdonshire and also by the right hon. Member for Cambridgeshire (Mr. Pym). I would inform them that I wrote a letter to the hon. Member for Sudbury and Woodbridge in which I sought to clarify some of these points. I hope that the assurance contained in that letter will be acceptable to the House. I said in the letter: You may find some reassurance in the fact that the family succession clauses were prepared in close consultation with officials from the Lord Chancellor's Department who were responsible for the promotion of the 1975 Act. There is no question of the 1975 Act provisions having been overlooked when our scheme was drawn up. Quite the contrary. Any positive area of potential conflict no doubt would have come to light in our consultations I hope that that assurance will prove acceptable and I hope that the right hon. and learned Gentleman's proposal will not be pressed.

Sir David Renton

I am exceedingly disappointed by the negative character of the Minister's reply. I do not doubt that careful consideration has been given to the matter by those advising the Minister, and indeed by those advising the Lord Chancellor. However, I do not agreee with the conclusions reached. I am not being arrogant when I say that 1 am as entitled to my opinion as are those eminent people who advise the Government, and I am not entirely without legal and legislative experience.

What is so strange about the situation is the conclusion which has been reached—namely, that the two sets of legislation "carry on regardless of each other". In my opinion that is just what they should not be allowed to do. I agree that under the present definition of "the estate of the deceased" the designation by will of a tenancy is not part of that estate. That point is clear. But we can-not get away from the fact that some-thing which is often much more valuable than the estate of deceased farmers is being created, as my right hon. Friend the Member for Cambridgeshire (Mr. Pym) has so vividly pointed out, by the provisions of Part II. It is not good enough for the Government merely to fall back on the law as it was before the Government introduced this new concept and ask Parliament to accept it.

Clause 19(12) gives away the Government's case. It provides that: A direction. given in favour of a person … validly designated by the deceased … —that is, by will— shall be valid even if the probate or administration by virtue of which he was such a person at the giving of the direction is subsequently revoked or varied.

Division No. 124.] AYES 6.53 p.m.
Atkins, Rt Hon H. (Spelthorne) Fletcher-Cooke, Charles Lawrence, Ivan
Bell, Ronald Forman, Nigel Le Merchant Spencer
Benyon, W. Fowler, Norman (Sutton C'f'd) Lester. Jim (Beeston)
Biggs-Davison, John Gow, Ian (Eastbourne) McAdden, Sir Stephen
Body, Richard Gower, Sir Raymond (Barry) Macfarlane, Nell
Boscawen, Hon Robert Grist, Ian Maxwell-Hyslop, Robin
Boyson, Dr Rhodes (Brent) Hall, Sir John Mayhew, Patriot
Braine,Sir Bernard Hamilton, Michael (Salisbury) Miller, Hal (Bromsgrove)
Bryan, Sir Paul Hampson, Dr. Keith Moate, Roger
Buchanan-Smith, Alick Harvie Anderson, Rt Hon Miss Neave, Airey
Budgen, Nick Hayhoe, Barney Nelson, Anthony
Bulmer, Esmond Hicks, Robert Onslow, Cranley
Chalker, Mrs Lynda Higgins, Terence L. Page, Rt Hon R. Graham (Crosby)
Clark, Alan (Plymouth, Sutton) Howe, Rt Hon Sir Geoffrey Parkinson, Cecil
Clark, William (Croydon S) Hurd, Douglas Peyton, Rt Hon John
Clegg, Walter Hutchison, Michael Clark Pym, Rt Hon Francis
Cooke, Robert (Bristol W) Jenkin, Rt Hon P. (Wanst'd & W'df'd) Rathbone, Tim
Cope, John Jopling, Michael Rees, Peter (Dover & Deal)
Crowder, F. P. Kaberry, Sir Donald Renton, Rt Hon Sir D. (Hunts)
Douglas-Hamilton, Lord James Kimball, Marcus Roberts, Michael (Cardiff NW)
Durant, Tony King, Evelyn (South Dorset) Rossi, Hugh (Hornsey)
Edwards, Nicholas (Pembroke) Knight, Mrs Jill Sainsbury, Tim
Fisher, Sir Nigel Langford-Holt, Sir John Shepherd, Colin

The Government should welcome the clarity which the new clause would give. The matter is left in some doubt in my mind as the result of subsection (12) alone. We cannot deny that there is conflict of interest. There may not be a conflict of legislative expression, but there could be a conflict of interest resulting from the legislative expression. Where there is such a conflict of interest we have a duty to consider it and to try to resolve it. The easy way to resolve it is by saying that an order of the court under the 1975 Act shall prevail.

I feel so strongly about this matter that I must ask my right hon. and hon. Friends to join me in the Division Lobby. If the Government had shown any sign of taking the point I should naturally have agreed to its being considered further in another place, but there is no sign that the Government have taken the point. They seem to be prepared to allow con-fusion to prevail, which is regrettable. As my right hon. Friend the Member for Cambridgeshire said, the Bill in any event can apply only to relatively few cases, and the number of cases of possible conflict between the decision of the court under the 1975 Act and the position under the Bill will be fewer still.

I am very disappointed. If, even now, the Minister of State says that he will consider the point further I shall not press for a Division but, failing that, I must.

Question put, That the clause be read a Second time:—

The House divided: Ayes 81, Noes 127.

Stanbrook, Ivor Vaughan, Dr Gerard Young, Sir G. (Ealling, Acton)
Stewart, Ian (Hitchin) Welder, David (Clitheroe)
Stradling Thomas, J. Weatherill, Bernard TFELLERS FOR THE AYES
Tebbit, Norman Wiggin, Jerry Mr. Carol Mather and
Temple-Morris, Peter Winterton, Nicholas Mr. Anthony Berry.
Townsend, Cyril D.
Anderson, Donald Ellis, John (Bragg & Scun) Orbach, Maurice
Armstrong, Ernest Evans, Fred (Caerphl)ly) Orme, Rt Hon Stanley
Atkins, Ronald (Preston N) Evans, loan (Aberdare) Ovenden, John
Atkinson, Norman Ewing, Harry (Stirling) Pardoe, John
Barnett, Rt Hon Joel (Heywood) Fletcher, Ted (Darlington) Parker, John
Bates, Alf Fraser, John (Lambeth, N'w'd) Pavitt, Laurie
Beath, A. J. Freeson, Reginald Peart, Rt Hon Fred
Bidwell, Sydney Freud, Clement Pendry, Tom
Bishop, E. S. Golding, John Penhaligon, David
Blenkinsop, Arthur Gourlay, Harry Perry, Ernest
Boardman, H. Graham, Ted Robinson, Geoffrey
Booth, Rt Hon Albert Grant, George (Morpeth) Roderick, Caerwyn
Bray, Dr Jeremy Grant, John (Islington C) Rodgers, George (Chorley)
Brown, Hugh D. (Provan) Grimond, Rt Hon J. Rooker, J. W.
Buchan, Norman Harper, Joseph Ross, Stephen (Isle of Wight)
Buchanan, Richard Harrison, Walter (Wakefield) Ross, Rt Hon W. (Kilmarnock)
Callaghan, Jim (Middleton & P) Hefter, Eric S. Sandelson, Neville
Campbell, Ian Hooson, Emyln Selby, Harry
Carmichael, Neil Howells, Geraint (Cardigan) Short, Rt Hon E. (Newcastle C)
Carson, John Hoyle, Doug (Nelson) Short, Mrs Renée (Wolv NE)
Carter-Jones, Lewis Hughes, Rt Hon C. (Anglesey) Silverman, Julius
Cartwright, John Hunter, Adam Skinner, Dennis
Clemitson, Ivor Irving, Rt Hon S. (Dartford) Small, William
Cocks, Michael (Bristol S) Jackson, Miss Margaret (Lincoln) Smith, John (N Lanarkshire)
Cohen, Stanley Johnston, Russell (Inverness) Snape, Peter
Coleman, Donald Jones, Barry (East Flint) Spearing, Nigel
Concannon, J. D. Kerr, Russell Stallard, A. W.
Conlan, Bernard Lamble, David Stoddart, David
Cook, Robin F. (Edin C) Lamond, James Strang, Gavin
Corbett, Robin Latham, Arthur (Paddington) Tinn, James
Crawshaw, Richard Leadbitter, Ted Tomney, Frank
Cryer,Bob Lipton, Marcus Walker, Terry (Kingswood)
Cunningham, G. (Islington S) Litterick, Tom Ward, Michael
Cunningham, Dr J. (Whiteh) McElhone, Frank Weitzman, David
Davies, Denzil (Llanelli) Mackenzie, Gregor White, James (Pollok)
Deakins, Eric McMillan, Tom (Glasgow C) Willey, Rt Hon Frederick
Dempsey, James Millan, Bruce Williams, Rt Hon Shirley (Hertford)
Doig, Peter Miller, Dr M. S. (E Kilbride) Wise, Mrs Audrey
Dormand, J. D. Molloy, William Woodall, Alec
Douglas-Mann, Bruce Moonman, Eric Woof, Robert
Dunn, James A. Moyle, Roland
Dunnett, Jack Murray, Rt Hon Ronald King TELLERS FOR THE NOES:
Eadie, Alex Noble, Mike Mr. James Hamilton and
Edwards, Robert (Wolv SE) O'Halloran, Michael Mr. Frank R. White.

Question accordingly negatived.

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