Trustee Delegation Bill [Lords] (Hansard, 14 July 1999)

§ The Parliamentary Secretary, Lord Chancellor's Department (Mr. Keith Vaz)
I beg to move, That the Bill be now read the Third time.
I am pleased to bring before the House for its final appearance this short Bill, which sets out to clarify the law relating to the delegation by individual trustees of their trust responsibilities and to improve the protection of beneficiaries. It is the consequence of a report by the Law Commission and it met with support on all sides in another place.
The noble Lord Goodhart said: I welcome the Bill wholeheartedly…I am sure that it will do considerable good and no harm. The noble Lord Kingsland said: I believe the Opposition have absolutely no quarrel with it whatsoever. The noble Lord Falconer of Thoroton said: It is unusual to encounter such relative complexity in so short a Bill, but I genuinely believe that this is a worthwhile Bill."—[Official Report, House of Lords, 11 January 1999; Vol. 596, c. 17–18.] In Standing Committee, the hon. Member for Surrey Heath (Mr. Hawkins) said: The Bill will provide a helpful simplification of the law of trusts, and will correct one or two anomalies in decided cases. The Bill is uncontroversial and the official Opposition welcome it. I thank the Law Commission for all its work on this measure. On the same occasion, the hon. Member for Torridge and West Devon (Mr. Burnett) said: We welcome the Bill…I congratulate the Law commission on its work. We hope that the Bill has a speedy passage through the…House."—[Official Report, Standing Committee F, 22 June 1999; c. 3–4.] I was grateful to the hon. Gentlemen for their constructive and helpful approach to the Bill. It mirrored the approach taken in the Second Reading Committee.
Though short and technical, the Bill will be of some benefit, particularly to joint owners of real property, and I commend it to the House.

§ Mr. Nick Hawkins (Surrey Heath)
At this fairly advanced hour I can be relatively brief. As the Minister has made clear, the Bill is a simplification of the law. I am sure that my right hon. and hon. Friends will be pleased to see a group of lawyers speaking for all the major parties welcoming simplification.
I should mention that after our Second Reading Committee a couple of small points were raised with me by some trusts experts. Although it is too late for any substantive amendment, in fairness to Macfarlanes, a major City firm which has partners specialising in trust law, I should mention a couple of points. Even after the Bill receives Royal Assent and becomes law, the Government may be able to consider those points and perhaps issue some guidance for clarification.
535 Clause 1 provides for the delegation of trustee functions where the trustee has a beneficial interest in the trust assets in certain circumstances and, as the Minister pointed out in Committee, this replaces the delegation of trustee functions under section 3(3) of the Enduring Powers of Attorney Act 1985, which is repealed by clause 4 of the Bill.
The explanatory notes covering the Bill state on page 3 that the provision will enable a co-owner of land to make effective provision for the disposal of the…land if he or she becomes mentally incapable. However, it is not entirely clear how this result might be achieved as the power of attorney provided for in clause 1 is not an enduring one. Macfarlanes was concerned whether, on the face of it, the power would lapse on the donor becoming, in some sad cases, mentally incapable.
Macfarlanes other query related to the power of attorney under section 25 of the Trustee Act 1925, which is an enduring power. It felt that clarification was required. It wonders whether such a power, even if a donor becomes mentally incapable and the power—

§ Mr. David Maclean (Penrith and The Border)
I am listening carefully to my hon. Friend. It seems that he has found a serious lacuna in the Bill at this late stage. Surely my hon. Friend should be advising us to vote against the Bill to enable the Government to reintroduce it at an early stage when they have dealt with the lacuna.

§ Mr. Hawkins
I am grateful to my right hon. Friend for his intervention. I should tell him that although Macfarlanes is raising some points of clarification, it states that it welcomes the Bill. It feels that it is a measure that will help to simplify the law of trusts. From his experience of the law, I am sure that my right hon. Friend will agree that any simplification of such a complex area of the law is greatly to be welcomed.
I shall complete the point that I was making. The query was whether, if a donor becomes mentally incapable and the power of attorney is registered within the year, the power will cease to be exercisable after the year has elapsed. Clause 8 authorises an attorney under a registered power to exercise certain powers of appointment of new trustees. Macfarlanes was concerned that it might not be entirely clear how this would extend beyond the initial one-year term of the power of attorney. It may be that the Minister can deal with these points when he replies—

§ Mr. Eric Forth (Bromley and Chislehurst)
My hon. Friend is obviously trying to be helpful to the House, but he is in danger of having the opposite effect. He seems to be saying at one and the same time that the Bill will help to clarify the law, while going to great pains to explain how those whom he says are experts are telling us that there are points of difficulty. How can it be that if a firm called Macfarlanes believes that there are points that require clarification, the Bill still simplifies the law? This sounds to me like a lawyers' ramp to ensure that we think that the Bill will simplify matters when in fact it requires clarification, with additional legal advice being provided at great expense.

§ Mr. Hawkins
I think that I can reassure my right hon. Friend. I understand his concern, but I should tell him 536 that Macfarlanes prefaces its helpful comments in seeking small points of clarification by saying that the policy behind the Bill is "greatly to be welcomed." The Law Commission recognised one or two difficulties in decided cases and the Bill certainly removes some of the difficulties that arose in the Michael Norton case of 1985. I can echo what my noble Friend Lord Kingsland said in another place: that Her Majesty's loyal Opposition welcome the Bill.

§ Mr. John Burnett (Torridge and West Devon)
We welcome the Bill. I shall be interested in what the Minister says in response to the points made by my hon. Friend the Member for Surrey Heath (Mr. Hawkins) on the mental incapacity of a person who is the donor of a power of attorney or who has had powers delegated by trustees to him. However, tonight is not the night to be prolix, nor is it the night to be verbose.
We discussed the Bill at great length on 17 March—[Interruption.] Well, at fairly great length. That was on Second Reading. I made a number of points to the then Minister of State and I received a lengthy letter of 29 March dealing with them. We also discussed the Bill at not such great length in Committee on 22 June.
We welcome the Bill. I pay tribute to the Law Commission for its excellent work. This is a Law Commission Bill which will simplify the law. Nevertheless, I look forward to hearing from the Minister in response to the points made by Macfarlanes, a noted firm of trust lawyers.