§ Mr. James Wallace (Orkney and Shetland)I beg to move amendment No. 1, in page 1, line 19, after `(3)' insert—
'Except as provided for in subsection 3(A) below'.
§ The Chairman of Ways and Means (Mr. Harold Walker)With this it will be convenient to take amendment No. 2, in line 27, add at end—
'3(A) The provisions in subsection (3)(a) above, insofar as they require the presence of and attestation by witnesses, should not apply to the execution of deeds of covenant made in favour of a charity'.
§ Mr. WallaceThe amendment would exempt from the provisions of the Bill, which substantially enacts the recommendations set out in report No. 163 of the Law Commission on deeds and escrows—I hope that I have pronounced that correctly—a provision which would exempt deeds of covenant executed in favour of a charity.
The reason for the amendment is relatively simple. As the Bill stands, it will be necessary for deeds of covenant to be attested by two witnesses or in the presence of a witness who attests the signature of the person who is executing the deed. Several charities have expressed the fear that, as the amounts given by many people are relatively small, if those people had to go through the additional procedural requirement of having the deed attested, they might be discouraged from executing such deeds, thus depriving many charities of sums on which they depend to keep their good works going.
Barnardo's in particular has made representations to my hon. Friends and myself that that could have a considerable impact on their receipts. It has been estimated that the average donation by covenant is £32.95, which the House will recognise is a modest sum, but when that amount is grossed up over many people, it amounts to the lifeblood of many charities.
There are several reasons why people might hesitate to execute such deeds if they had to require the presence of a witness. The witness may be a member of the family or a close friend, and the individual may feel embarrassment. Some people have a natural modesty about giving money to charity because it is the sort of thing that they like to do anonymously and they would not necessarily want their friends or relatives to know. People might be reluctant to make covenants that had to be witnessed, as they might feel that the person who was being asked to witness the deed would feel left out in any testamentary succession.
Whatever the motives, many charities feel fear and apprehension. We have consulted many bodies, including the Charities VAT and Tax Reform Group, which shares the concern that charities could lose a substantial amount of money. I am sure that that is not the Government's intention; I concede that, in a number of successive 1142 Budgets, they have made specific proposals to encourage charitable giving and have done some things to help the fiscal position of charities.
Having looked at the Law Commission's report, I must say that it is not evident that this position has been considered, and I do not believe that to date—perhaps the Solicitor-General will be able to inform the House on this point—that potential problem has been given adequate consideration.
As charities could be seriously affected by this measure, I hope that the Government will give serious consideration to the amendment which, albeit in small amounts, could mean cumulatively hundreds of thousands of pounds for charities. If the Government cannot accept the amendment, I hope that the Solicitor-General will be able to say something positive so that the many charities that genuinely fear the consequences of the measure will have some reassurance.
§ The Solicitor-General (Sir Nicholas Lyell)I am grateful to the hon. Member for Orkney and Shetland (Mr. Wallace) for moving this short amendment and for giving us the chance of a short debate to clarify the Government's position on this matter. There has been an opportunity to consider correspondence with the charities that he mentioned. I am grateful for what he said about the actions of this Government over several years in taking steps greatly to encourage charitable giving. The Bill's objective is to put nothing in the way of that.
If one concentrates for one moment on what the hon. Gentleman's amendment would seek to do and then on what is current practice and on what is sensible, one quickly finds the answer to the point that he has raised. Therefore, I hope that what I say will quickly set minds at rest.
The effect of the amendment is that deeds of covenant in favour of a charity would not need to be witnessed and attested, but they would still have to be signed and delivered, and it would still have to be clear on the face of the instrument that it was intended to be a deed. Even for this amendment, it would be recognised that there must be formalities, which are important because the giver is creating a document which has legal effect and also, through the Revenue, gives rise to tax relief.
What the Bill proposes, and what the Law Commission after much careful thought decided was sensible, was that, whereas in the past, a Bill had to be signed, sealed and delivered, but did not have to be witnessed—the question of sealing frequently gave rise to difficulties and to failure to receive tax relief—in future a deed should make it clear on its face that it was a deed and that it should be witnessed and delivered.
The practicality of witnessing, which the amendment seeks to remove, is well illustrated by the fact that every covenant that hon. Members on both sides of the House have signed already contains lines for witnesses' signatures. It has become almost standard practice for such deeds to be witnessed, although that is not a legal requirement. Therefore, the Law Commission recommended that we should bring the formalities of the Bill into line with contemporary standards—yes, keeping some formality and, yes, providing safeguards, but doing it in a way that people will very well understand.
§ Mr. WallaceI accept that my principal training is in the law of Scotland and I am not over-acquainted with 1143 English provision. Therefore, will the Solicitor-General clarify the position for me, and perhaps for other hon. Members? If a deed—we are talking about deeds which very often involve relatively small amounts—is to be effective, does it need to be sealed, or can it be effective without attestation and sealing?
§ The Solicitor-GeneralA deed, to be effective, so that it could be enforced at law, requires to be signed, sealed and delivered. Although the sealing has now become very much a formality, and tends to have a little circle, or a little circle with the letters "LS" in the middle of it in place of the type of seal which applied in the 16th, 17th and 18th centuries, when people were less familiar with writing and wanted to have some other way of marking their formal approval to a document, it is, nevertheless, a requirement today. However, it has become an outdated formality and it will cease to be a requirement, so that difficulty will be removed.
It is a matter of balance and judgment, but I urge upon the House the argument that the Law Commission has thought about the matter carefully and that we have had the opportunity for further thought in correspondence with a number of charities that the hon. Member for Orkney and Shetland has mentioned. I recommend to the House that the Bill has got it right and that the amendment should not be accepted.
§ Mr. WallaceI have listened carefully to what the Solicitor-General has said, and I accept that some thought has been given to the matter. The amendment was tabled principally as a response to the concern of a number of charities. I hope that, if experience suggests that the system proposed in the Bill, which will no doubt shortly be enacted, will result in any diminution of the amounts being given to charities, the matter will be the subject of further consideration.
Having said that I am a Scotsman, I can tell the House that, in Scotland, if one writes a holograph and signs one's own name, that is quite effective. Perhaps that is something for our English colleagues to learn.
§ Amendment negatived.
§ Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]
§ Motion made, and Question proposed, That the Bill be now read the Third time.
11.48 pm§ Mr. Hugo Summerson (Walthamstow)There is a small matter in the Bill on which I am not altogether clear. Clause 2, begins:
A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each".A little later, the clause says:This section does not apply in relation to",inter alia,a contract made in the course of a public auction".I am not a lawyer, but I am a chartered surveyor, and I have been to many public property auctions. If you went to such a public auction, Mr. Deputy Speaker, you would have a catalogue in which you would find general and special conditions of sale. We all know that, in an auction, at the fall of the hammer, the contract is made. There is 1144 then a memorandum that has to be signed. I believe that it forms part of the contract, in which are incorporated the general and special conditions of sale.I think that I am right in saying that a contract can be void for uncertainty. It occasionally happens in property auctions that someone sticks his hand up, the property is knocked down to him, and he disappears. Here, we have a provision which seems to remove any confirmation of a sale. There seems to be a discrepancy. I do not understand it, and I should be most grateful for some clarification.
§ Mr. John Fraser (Norwood)The Bill has gone through all its stages rapidly, but it is important—more important than was first made out.
The arrangements about sealing change the law from that which was mediaeval to that which is modern. I am not absolutely convinced that witnesses were necessary to sealing, but I understand that the reason is that the incidence of fraud is fairly high, and having a witness is likely to reduce it. We are glad that the other formalities have gone and that we are to follow what is in reality the practice.
The law has always been arcane in respect of the rule that contracts have to be evidenced in writing rather than to be in writing. People have found that they have made contracts by accident, and they have not always been helped by judges who have made decisions about these matters without knowledge of how the world works outside the court.
We also have the repeal of the rule in Bain v. Fothergill. I think that that redeems a Conservative party pledge. What I hope will flow from the passage of the Bill is a change in the nature of conveyancing. The vendor's solicitors will in future spend much longer preparing the contract package and examining their own title, and the purchaser will not have to find a catch in the contract.
I hope that the practice of vendors having to look at the title, which they do not have to do at the moment, will expand, so that when a purchaser receives a contract, it is as complete as it can possibly be. The result is that conveyancing will be simpler and cheaper. This is an important Bill, and I hope that it will not pass unnoticed.
§ The Solicitor-GeneralI am grateful for what the hon. Member for Norwood (Mr. Fraser) has just said. This is an important Bill. It is short, but it modernises the law in extremely sensible and practical ways.
With regard to detailed law, I must refer my hon. Friend the Member for Walthamstow (Mr. Summerson) to his learned societies. It is not for me to give him advice. It must be very clear, as I am sure he will appreciate when he reads the Bill at his leisure, that, at an auction, the sale is completed at the fall of the hammer; the opportunity for writing and signature would not be appropriate, so there is that exclusion.
This is a very sensible little Bill. It has passed quickly, but not without careful thought, and I commend it to the House.
§ Bill read the Third time, and passed, without amendment.