§ 12.28 a.m.
§ The Minister of State, Northern Ireland Office (Mr. Hugh Rossi)
I beg to move,That the draft Inheritance (Provision for Family and Dependants) (Northern Ireland) Order 1979, which was laid before this House on 22 March 1979 in the last Parliament, be approved.
Mr. Deputy Speaker (Mr. Bryant God-man Irvine)
I understand that it will be convenient to consider at the same time the following motion,That the draft Capital Transfer Tax (Northern Ireland Consequential Amendment) Order 1979, which was laid before this House on 22 March 1979 in the last Parliament, be approved.
§ Mr. Rossi
That is so, Mr. Deputy Speaker. The capital transfer tax order is a minor order, consequential upon the inheritance order.
The inheritance order will change the law relating to claims on a person's property after death and will extend to Northern Ireland provisions similar in most respects to those contained in the Inheritance (Provision for Family and Dependants) Act 1975. The law on inheritance is at present contained in the Inheritance (Family Provision) Act (Northern Ireland) 1960, as amended by the Family Provision Act (Northern Ireland) 1969.
Experience has demonstrated that the present law needs to be changed in a number of respects. There are, in particular, two important areas in which it is unsatisfactory. First, the existing legislation does not permit applications by a number of persons who might have been dependent on a deceased person prior to his death; for example, a son over 21 years of age receiving full-time education, or a person who, whilst not related to the deceased, was nevertheless maintained by him or her. Secondly, under the new Northern Ireland divorce law, the Matrimonial Causes (Northern Ireland) Order 1978, a spouse who obtains a divorce could, as things stand, be better off than one who survived his or her marriage partner and was not adequately provided for in that partner's will.
In 1974, in its " Second Report on Family Property: Family Provision on 1488 Death ", the Law Commission recommended legislation for England and Wales to remedy these and other deficiencies, and as a result the Inheritance (Provision for Family and Dependants) Act was passed. This has apparently worked well in England and Wales. The order contains similar provisions for Northern Ireland but incorporates some additional points, a number of which result from the very helpful suggestions received by the Officer of Law Reform during the consultative period on the original proposal—for which we are most grateful—and others of which are designed to harmonise the new legislation with other related Northern Ireland enactments.
The most important provisions of the order are contained in articles 2 and 3. They deal with the two areas of difficulty requiring correction, to which I have just referred. I hope that the House, again, will not ask me to go separately through all the remaining, generally highly technical legal articles. I should draw attention specifically to article 4, since it gives greater powers and more flexibility to the court in making orders when it is satisfied that reasonable provision has not been made for an applicant, and thus, in effect, altering the distribution of the deceased's estate from what would otherwise have taken place. The court may order periodic payments, lump-sum payments, the transfer of specific property to an applicant, the settlement of specific property for the benefit of an applicant, the purchase of property for an applicant and the variation of certain settlements for the benefit of an applicant.
Article 5 sets out the matters that the court must take into account in deciding whether an applicant is entitled to an order and, if so, what type of order is appropriate. Amongst these are the present and future needs and resources of the applicant, the needs and resources of other persons who would be likely to be affected by the making of an order and, generally, any other relevant matter, including the conduct of the applicant.
I turn now to the Capital Transfer Tax (Northern Ireland Consequential Amendment) Order 1979. This minor consequential order, which will be made under section 38(2) of the Northern Ireland Constitution Act 1973, will ensure that the Finance Act 1974 will operate in relation to Northern Ireland court orders 1489 in the same way as it does in relation to court orders in England and Wales. Section 122 of the Finance Act 1976 ensures that the effect of a court order made under the Inheritance (Provision for Family and Dependants) Act 1975 is followed for capital transfer tax purposes. Thus, for example, where the court orders that provision should be made out of the deceased's estate for his surviving spouse the effect of section 122 is that the capital transfer tax exemption applies.
The inheritance order, we believe, will help to relieve hardship and injustice. I have pleasure in commending both orders to the House.
§ 12.35 a.m.
§ Mr. J. Enoch Powell (Down, South)
As the Minister of State has indicated, this order reproduces, in effect, for Northern Ireland the Act of 1975 in England and Wales. The hon. Gentleman referred to there being some differences between the two. I shall mention one of those differences, but, broadly speaking, when one compares the order with the 1975 enactment, they are very similar and run on closely parallel lines, even to details of drafting.
The 1975 Act carried further a process that had already been in operation of modifying the effect of the intestacy laws or the force of disposition by will so as to accord with a view to what was public policy as seen by the Legislature. The extent to which this legislation overrides the intentions of a testator is far-reaching. It would not be right for us to be unaware to what extent statute law now renders of no effect the wishes of the deceased as laid down in a testament. For example, under article 4(2), it is possible for a court order to provide for payments equal to the whole of the income of the net estate of the deceased, so that an order can divert the entire estate to different purposes from that which, either under the law of intestacy or under the will of the deceased, it would have been devoted.
Again—I refer almost at random—article 14 says that the court, in deciding whether to make an order, has to take into account the intention of the testator in making dispositions which an order would override. It says that the court needs to be of the opinionthat, on a balance of probabilities the intention of the deceased (though not necessarily 1490 his sole intention) in making the disposition or contract was to prevent an order for financial provision being made under this Order or to reduce the amount of the provision which might otherwise be granted by an order thereunder.Those two examples illustrate the extent to which we are now using statutes to lay down what one might almost describe as the social obligation of testators and to set aside their wishes as expressed by their will and testament or alternatively to set aside what would otherwise be the destination of an estate under the intestacy law.
I believe this supersession of testamentary disposition by public interest legislation accords with a change in social habits and reflects a modern, as opposed to an earlier point of view on the rights of property. This being so, Northern Ireland should be covered by the provisions of the 1975 Act for England and Wales. Scotland has a different system of law: we are talking in this instance of accommodation to England and Wales law, not to Great Britain law.
Three-and-a-half years have passed in which relatives and widows in England and Wales have had the advantages which this House thought right to confer upon them by the 1975 legislation, while widows in identical circumstances in Northern Ireland have not. There is a considerable backlog which this order helps to clear, of legislation passed by this House in the earlier years of this decade which self-evidently should have been United Kingdom, or England, Wales and Northern Ireland legislation, but which was passed as England and Wales legislation and lacked a corresponding provision for Northern Ireland in the view, not unnaturally held in the flux of 1974 and 1975, that it was premature to foresee how the corresponding legislative provision should be made for Northern Ireland.
However, now at last the Government have got around to using the machinery of Order in Council virtually to duplicate the England and Wales provisions and to apply them to Northern Ireland. So we are entitled to inquire whether anything has been learnt from the working of the 1975 Act in England and Wales which could be turned to advantage in the application of that legislation to Northern Ireland. In making that query I have very 1491 much in mind the Matrimonial Causes Order of 1978 which was referred to just now by the hon. Member for Down, North (Mr. Kilfedder), who was apparently under the impression that it had been opposed by my hon. Friends and myself.
The fact, which should be on the record, is that we supported that order but that in the course of the proposal stage through which it passed we were able to persuade the Government to make a considerable number of improvements which brought it more closely into line with opinion in Northern Ireland on the matter of matrimonial law. So that was a case in point of the use of the " proposals procedure " in handling these draft orders. It was undoubtedly an instance where legislation for Northern Ireland was the better for the experience which had been gained of the working of the corresponding provisions in England and Wales and for the scrutiny to which the draft order was subjected before it came before this House.
There is one respect—perhaps it is one of the points which the Minister of State had in mind—in which the Northern Ireland order differs from the 1978 Act. That is in the powers given to the county courts, which we very much welcome, to deal with cases in which the total sums involved are relatively small. At the time of the 1974 Act, the upper limit of the sum which could be fixed for that purpose as invoking the jurisdiction of the county courts was £5,000. Four years later, in the Northern Ireland order, the figure is £15,000, having accommodated itself, no doubt, to the inflation of the intervening years, and perhaps making some allowance for inflation in the years to come. So in that respect we have the advantage in Northern Ireland that the county courts, which are undoubtedly a convenient recourse for persons needing such orders, and will be widely used, I would imagine, in Northern Ireland in these circumstances, can operate over a wider field than at present they can do in England and Wales.
The fact remains that it is far from ideal that in matters of this sort, where there is really a negligible difference in the existing law on both sides of the Irish Sea, legislation should take place in two parts, separated by a period of several years.
1492 I want to refer finally, as did the Minister of State, to the consequential order, the capital transfer tax order, which introduces a reference to this order into the modification of section 122 of the Finance Act 1976. The necessity of the capital transfer tax order is a reminder of the far-reaching consequences of the court orders that can be made under this legislation. Orders made under this legislation can divert the sums passing from an estate into an entirely different pattern from that which was contemplated in the will of the deceased.
One effect of that different pattern, as this consequential order reminds us, is that the incidence of capital transfer tax could be completely altered, because the position as between the testator and the beneficiary for the purposes of capital transfer tax could well be quite different in the case envisaged by the testator from the result produced by the court order made under the main order before the House. I think that it would probably be helpful to those who may be involved in these matters if, in winding up the debate, or in any explanatory matter that accompanies this order, the Minister of State could arrange for reference to be made to the way in which these difficulties will work out in practice.
One appreciates that the powers in the substantive order cannot be invoked after the lapse of six months, not from the decease but from the taking out of representation for the purposes of administration of the estate. That to some extent limits the confusion that could occur, but anyone who as a trustee or as an executor has had to deal with an estate where the application of the capital gains tax legislation is apparently of the most simple will readily imagine the difficulties that will arise if the provisions of the will are altered by court order—they can be altered by a series of successive orders—under the enactment which the House is considering.
This is no small matter which is discovered by the minor consequential order which the Minister has brought forward. Those concerned with the administration of estates will have to face additional difficulties as a result of this relieving legislation; and if their way can be smoothed or assisted, it would be worth doing.
§ 12.48 a.m.
§ Mr. Rossi
I think that I ought to make one point in answer to the right hon. Member for Down, South (Mr. Powell) in case a mistaken impression is taken outside the House.
It would be wrong to present the order as nullifying wills and rendering them of no effect. That would be a bad and misleading impression to create. The court has power under this order to make alterations to the dispositions in a will where there has patently been some kind of injustice because somebody dependent for a long time upon the testator has been excluded, inadvertently or because of some perverse whim, from the protection that he should, in justice, have from the testator.
This is not a novel proposition, not even for Northern Ireland, because the 1960 Act provided for maintenance for spouses who were excluded from testators' wills and the 1969 Act provided that lump sum payments could be made. This has been a feature of Northern Ireland law for some considerable time, and the main purpose of the order is to ensure that the spouse of a deceased person shall not be put in a worse position than the divorced wife of a deceased person under the matrimonial law because of the general provisions as to alimony, even after death, that can be made under the divorce laws.
It is really an operation to tidy up and to extend the classes of dependants who would otherwise be excluded, because the law has shown itself not to be adequate to protect these people.
The right hon. Member for Down, South asked about the experience in England and Wales. The Lord Chancellor is content with the operation of this legislation in England and Wales since 1975. We hope that there will be a similar happy experience in Northern Ireland.
I must emphasise that simply because a claim is made it does not follow that an order will ensue to alter the effects of a will. The legislation gives the court a wide discretion to examine all the circumstances in which the will was made, the attitude of the testator, the relationship of the claimants, the life they lead together, and the conduct of the appli- 1494 cant—who may deserve to be excluded from the will. All those matters will be taken into account. We hope that a just and impartial decision will result. I hope that the order will be accepted.
The right hon. Member for Down, South said that there could be unfortunate consequences involving capital transfer tax. Perhaps an original will is drawn up carefully by astute lawyers in order to minimise the effects of captial transfer tax. The right hon. Gentleman can be assured that the judges will be well seized of the point. My experience is that the judges are not anxious to deny beneficiaries or to advantage the Inland Revenue or the Chancellor of the Exchequer at the expense of beneficiaries.
I hope that my words will be heard beyond the Chamber. I am confident that judges, when exercising their discretion, will bear in mind the interests of the people who benefit from a will or from the alterations made in a will.
§ Mr. J. Enoch Powell
The Minister could have been understood to say that the tax effects of a proposed order would be one of the considerations taken into account by the court in deciding whether to make that order. I do not know whether he intended to say that, but it is an important statement.
§ Question put and agreed to.
That the draft Inheritance (Provision for Family and Dependants) (Northern Ireland) Order 1979, which was laid before this House on 22 March 1979 in the last Parliament; be approved.