Grand Committee Report of 7 June 2000

Official Report of the Grand Committee on the Trustee Bill [H.L.]
Wednesday, 7th June 2000.
The Committee met at half-past three of the clock.
[The Deputy Chairman of Committees (Lord Ampthill) in the Chair.]
The Deputy Chairman of Committees (Lord Ampthill): Before I put the Question that the Title be postponed, it may be helpful to remind your Lordships of the procedure for today's Committee stage. Except in one important respect, our proceedings will be exactly as in a normal Committee of the Whole House. We shall go through the Bill clause by clause; noble Lords will speak standing; all noble Lords are free to attend and participate; and the proceedings will be recorded in Hansard.
The one difference is that the House has agreed that there shall be no Divisions in the Grand Committee. Any issue on which agreement cannot be reached should be considered again at the Report stage when, if necessary, a Division may be called. Unless, therefore, an amendment is likely to be agreed to, it should be withdrawn.
I should explain what will happen if there is a Division in the Chamber while we are sitting, although that is an unlikely event today. The Committee will adjourn as soon as the Division Bells are rung and will then resume after 10 minutes.
Title postponed.
Clauses 1 to 6 agreed to.
Clause 7 [Existing trusts]:
The Lord Chancellor (Lord Irvine of Lairg)moved Amendment No. 1:
Page 3, line 3, leave out from beginning to ("this") in line 15.
The noble and learned Lord said: The purpose of this amendment is to give the new powers of investment to all existing trustees, subject to Clause 6(1)(b) which makes the new general power of investment subject to any restriction or exclusion imposed by the trust instrument or by legislation. Without this amendment there are some in the charity sector, in particular, who would be excluded from the new regime. These include those whose current powers are granted by what the published Bill called "special statutory powers of investment". That might be particular charities or non-charitable trusts governed by an enactment or by subordinate legislation, or those who belong to a class whose powers derive from legislation or who have been granted additional statutory powers. Certain classes of religious and educational charities may have such powers; and charities which are subject to schemes or orders made by the Charity Commission or the Home Secretary
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under the Charities Act 1993. We believe that, if the restriction in the published Bill is to be dropped for charitable trusts, it should be dropped for non-charitable trusts as well.
In providing charities and other trusts with wider powers it will not be possible to predict whether or not they will be used appropriately in every case in which they will apply. But there are four factors which, we believe, make the risk acceptable; first, that trustees should have the wider powers that are proposed in the Bill; secondly, the exercise of these powers will be subject to safeguards, including the duty of care; thirdly, the application of the new powers will be subject to any restriction or exclusion in the trust instrument or any enactment; and fourthly, even where the new regime applies, it is for the trustees to determine in the particular circumstances the extent to which it is appropriate to exercise the powers conferred.
The Charity Commission would welcome the introduction of this amendment. I beg to move.
Lord Goodhart: This is a somewhat unusual Marshalled List in view of the fact that there are 49 amendments down in the name of the noble and learned Lord the Lord Chancellor and none by anyone else. Speaking for my noble friends and myself, the Committee stage is likely to have a very easy passage today. However, I welcome the continued interest that has been taken in the Bill. I believe that we are happy to support this and all the other amendments tabled on the Marshalled List. I am tempted to suggest that the noble and learned Lord should move them en bloc but I shall not go quite as far as that.
Lord Wilberforce: Perhaps I may acid to what the noble Lord, Lord Goodhart, said. The fact that other amendments have not been put down by other Members of the Committee does not reflect any sentiment that the Bill is trivial or not to be carefully considered. I am very grateful for the consultation that we have had from the noble and learned Lord the Lord Chancellor to which I have given very careful thought. Although I am unhappy about some of the provisions in the Bill, on the whole I feel it best that the Bill should go forward and one should not try to delay it by making changes which would, if made at all, have to be somewhat radical. I entirely go along with the noble Lord, Lord Goodhart, in wishing the best of progress to the Committee.
Lord Kingsland: I wholly concur with the remarks made by noble and learned Lords who have already spoken.
The Lord Chancellor: I am grateful to both noble Lords and to the noble and learned Lord. There is all-party agreement. There is also support around the House more broadly, as the noble and learned Lord, Lord Wilberforce, indicated, to deliver a beneficial Law Commission Bill of this character with all deliberate speed.
On Question, amendment agreed to.
Clause 7, as amended, agreed to.
Clause 8 [Power to acquire freehold and leasehold land]:
On Question, Whether Clause 8 shall stand part of the Bill?
The Lord Chancellor: Perhaps I may trespass on the patience of the Committee simply to say one thing. Although the clause has not been amended, concern has been expressed about whether the words "for any other reason" in Clause 8(1)(c) are wide enough to include the purchase of functional land by charitable trusts for carrying out the purposes of the charity, rather than as an investment; for example, a school buying land to serve as a playing field. For the avoidance of doubt—I do not believe that there is doubt—let me confirm that we intend the words in the clause to comprehend that meaning.
Clause 8 agreed to.
Clause 9 agreed to.
Clause 10 [Existing trusts]:
The Lord Chancellormoved Amendment No. 2:
Page 4, line 10, leave out subsections (1) to (3) and insert—
("(1) This Part does not apply in relation to—

(a) a trust of property which consists of or includes land which (despite section 2 of the Trusts of Land and Appointment of Trustees Act 1996) is settled land, or

(b) a trust to which the Universities and College Estates Act 1925 applies.").

The noble and learned Lord said: The purpose of this amendment, as was the last, is to expand the numbers of trusts that can benefit from the new regimes being set up by the Bill, in this case by giving new powers of land acquisition to all existing trustees, subject to Clause 9(b). I shall not weary the Committee by repeating the argument in detail but will repeat that the Charity Commission would welcome the introduction of the amendment.
Settled land and the bodies subject to the Universities and College Estates Act 1925 are subject to their own specific regimes in relation to the matters covered by Part III of the Bill—the purchase of land. The remainder of the amendment allows those well-understood regimes to continue to operate as they now do. I beg to move.
On Question, amendment agreed to.
Clause 10, as amended, agreed to.
Clause 11 [Power to employ agents]:
The Lord Chancellormoved Amendment No. 3:
Page 5, line 5, leave out ("acquired") and insert ("held").
The noble and learned Lord said: The purpose of the amendment is the avoidance of doubt. It ensures that, however a charitable trust comes by land, if it is held as an investment, the trustees may delegate their power of managing, or creating or disposing of an interest in it. This will ensure that in cases where land has been bequeathed to a charity, for example, and is then regarded as an investment, it will not be excluded from the scheme because it was not strictly "acquired" as an investment.
On Question, amendment agreed to.
Clause 11, as amended, agreed to.
Clause 12 [Persons who may act as agents]:
The Lord Chancellormoved Amendment No. 4:
Page 5, line 29, at end insert ("(even if the beneficiary is also a trustee)").
The noble and learned Lord said: This amendment answers concerns raised from a number of quarters about Clause 12 of the Bill as published. Although as published subsection (1) read with subsection (3) was thought to cover the point, the amendment to subsection (3) makes it abundantly clear that a beneficiary may not be appointed as an agent even if he or she were to be a trustee.
It is possible for trustees to delegate any of their trusts, powers or discretions to a beneficiary under the trust, but not under the power conferred by Clause 11 of the Bill. It can be done only under Section 25 of the Trustee Act 1925, as substituted by the Trustee Delegation Act 1999, but the safeguards are very much greater. The delegation has to be made by each trustee by power of attorney. It is restricted to a maximum period of one year and the trustees are strictly liable for the faults of the delegate. I beg to move.
On Question, amendment agreed to.
Clause 12, as amended, agreed to.
Clauses 13 to 15 agreed to.
Clause 16 [Power to appoint nominees]:
The Lord Chancellormoved Amendment No. 5:
Page 7, line 2, after ("determine") insert ("(other than settled land)").
The noble and learned Lord said: By Section 4(2) of the Settled Land Act 1925, the legal estate in settled land is to be held by the tenant for life or the statutory owner. Thus the legal estate can never properly be held by the trustees of the settlement qua trustees and although it seems that there are good reasons why it should be possible for land, held on a trust of land, to be vested in a nominee, there are no obvious reasons why a nominee would be needed in relation to settled land.
This amendment, therefore, will provide that the power to appoint nominees does not apply to settled land. However, it should still be possible for the proceeds of sale of settled land to be vested in a nominee, as this may be advantageous for the purposes of investment. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 6:
Page 7, line 6, at end insert ("or in relation to any assets vested in the official custodian for charities").
The noble and learned Lord said: In moving Amendment No. 6, I shall speak also to Amendments Nos. 7 and 9. I take them together because they each have the same effect in their respective clauses.
Presently, Clauses 16(3), 17(4)and 18(4) disapply the power to appoint nominees in the case of any trust having a custodian trustee, because the power conferred by the clauses is incompatible with the statutory duties of a custodian trustee under the Public

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Trustee Act 1906. The Charity Commission has made the point that trustees should also be deprived of the powers under Clauses 16 and 17 in relation to property which is for the time being vested in the official custodian for charities. This is because Section 22 of the Charities Act 1993 provides that where property is vested in the official custodian in trust for a charity he shall have the same powers, duties and liabilities as a corporation-appointed custodian trustee under Section 4 of the Public Trustee Act 1906. It would, therefore, be inappropriate for a nominee or custodian to be appointed under the Bill in respect of the relevant property. In addition, where bearer securities are held by the official custodian, there should be no duty to appoint a custodian under Clause 18 of the Bill. I beg to move.
On Question, amendment agreed to.
Clause 16, as amended, agreed to.
3.45 p.m.
Clause 17 [Power to appoint custodians]:
The Lord Chancellormoved Amendment No. 7:
Page 7, line 14, at end insert ("or in relation to any assets vested in the official custodian for charities").
On Question, amendment agreed to.
Clause 17, as amended, agreed to.
Clause 18 [Investment in bearer securities]:
The Lord Chancellormoved Amendment No. 8:
Page 7, line 17, after ("instrument") insert ("or any enactment or provision of subordinate legislation").
The noble and learned Lord said: With your Lordships' leave I shall speak also to Amendments 11, 12, 23, 26 and 27, with which Amendment No. 8 is grouped. Each of these six amendments has a similar effect in its respective clause.
The amendment to Clause 18(2) ensures that the exception to the requirement in Clause 18(1) to appoint a custodian of bearer securities applies where there is a legislative provision for the trustees to hold or invest in bearer securities without the need to so appoint, as well as applying where there is such a provision in a trust instrument which applies also where the provision is in legislation.
Clause 21 refers to the requirement to review the appointment of agents, nominees and custodians and the extent of the trustees' liability for such appointments under Clause 22 and 23. The amendment to Clause 21(2) ensures that the duty under Clause 21(1) which applies, as the clause is presently drafted, to appointments made under a power granted by a trust instrument, applies also to powers granted in legislation. The amendment to Clause 21(3) ensures that, where the exception to the application of Clauses 22 and 23 arises from inconsistency with a trust instrument, inconsistency with legislation would attract the same exception.
Clause 30 refers to the remuneration of charitable trustees and the amendment to Clause 30(2) adds to the classes of those who may benefit from orders made by the Secretary of State under Clause 30(1), those
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who have been authorised to exercise functions as agent, nominee or custodian by a trust instrument, those so authorised by legislation. The clause already makes provision for those so authorised by legislation, by the Bill or by the trust instrument.
Clause 31 deals with trustees' expenses, and the amendment will ensure that it will apply to those who derive their powers to act as agents, nominee or custodian from legislation as well as those who derive their power from the Bill or the trust instrument.
Clause 32 deals with remuneration of agents, nominees and custodians, and the amendment has the same effect as does that affecting Clause 31. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 9:
Page 7, line 21, at end insert ("or in relation to any securities vested in the official custodian for charities").
On Question, amendment agreed to.
Clause 18, as amended, agreed to.
Clause 19 [Persons who may be appointed as nominees or custodians]:
The Lord Chancellormoved Amendment No. 10
Page 7, line 27, at end insert—
("( ) the person is a body corporate recognised under section 9 of the Administration of Justice Act 1985").
The noble and learned Lord said: This is another amendment for the avoidance of doubt. It should be possible to be appointed as a nominee or custodian under the Bill only if the proposed appointee is in the business of providing nominee or custodianship services. Subsection (2)(b) is included in the draft in order to cater for the possibility that trustees might wish to set up special purpose vehicles in order to act as their nominees.
However, concern was expressed as to whether the clause as drafted was sufficiently wide to enable trustees to utilise the services of solicitors' nominee companies, which are recognised under rules prepared by the Law Society under Section 9 of the Administration or Justice Act 1985. Where such companies in England and Wales are owned by solicitors, they can only function as recognised bodies within the Solicitors' Incorporated Practice Rules. Therefore we believe that solicitors' nominee companies should be suitable for appointment as nominees or custodians under the Bill and that the clause should be wide enough to allow for this. I beg to move.
On Question, amendment agreed to.
Clause 19, as amended, agreed to.
Clause 20 agreed to.
Clause 21 [Application of sections 22 and 23]:
The Lord Chancellormoved Amendments Nos. 11 and 12:
Page 8, line 28, at end insert ("or by any enactment or any provision of subordinate legislation").
Page 8, line 32, after ("instrument") insert ("or the enactment o r provision of subordinate legislation").
On Question, amendments agreed to.
Clause 21, as amended, agreed to.
Clauses 22 to 27 agreed to.
Clause 28 [Trustee's entitlement to payment under trust instrument]:
The Lord Chancellormoved Amendment No. 13:
Page 10, line 8, leave out ("Subsections (2) and") and insert ("Except to the extent (if any) to which the trust instrument makes inconsistent provision, subsections (2) to").
The noble and learned Lord said: I shall speak also to Amendment No. 15, with which it has been grouped. These two amendments are designed to tidy up a small drafting point which might otherwise have led to ambiguity. In effect, Clause 28(1)(c) from the published Bill has been moved to the head of the clause to make it clear that the various parts of Clause 28 should apply unless and to the extent, but only to the extent, that the trust instrument provides to the contrary. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 14:
Page 10, line 10, at end insert ("to or").
The noble and learned Lord said: I shall also speak to Amendments Nos. 18, 19, 20, 28 and 29, with which Amendment No. 14 is grouped. I propose to take these amendments together as each acts on its clause in a similar way. In each case the amendment contemplates the provision of services by trustees inwards as well as outwards in relation to a trust. Thus, it is possible to imagine, for instance, a group of financial trusts, one of which might be a trust whose function it was to provide services to connected trusts. The trustee would be the person through whom the service was provided "to" the trust.
Clause 28 relates to trustees' entitlements to be paid under the terms of a trust instrument. Clause 29 relates to entitlement to remuneration. Clause 32 relates to the remuneration of agents, nominees and custodians and Clause 33 relates to the application of the clauses I have previously mentioned. In each case, the amendment has the same result. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 15:
Page 10, line 13, leave out from ("capacity") to end of line 15.
On Question, amendment agreed to.
The Lord Chancellorhad given notice of his intention to move Amendment No. 16:
Page 10, line 18, at end insert—
("(2A) Subsection (2) applies to a trustee of a charitable trust who is not a trust corporation only—

(a) if he is not a sole trustee, and

(b) to the extent that each other trustee has agreed that it should apply to him.").

The noble and learned Lord said: I make a change and do not move the amendment. The amendment appears to be defective to the extent that it applies more stringent rules of conduct to charitable trustees than apply in the remainder of trust law. That was an unintended consequence of attempting to arrive at a suitable amendment following discussions with the
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noble Lord, Lord Phillips of Sudbury, and with the Charity Commission. Good as well as evil comes out of discussions with the noble Lord, but mea culpa, I shall provide noble Lords with what I expect to be the right amendment at Report stage.
[Amendment No. 16 not moved.]
The Lord Chancellormoved Amendment No. 17:
Page 10, line 32, at end insert—
("and the services he provides to or on behalf of the trust fall within that description.").
The noble and learned Lord said: The amendment clarifies the purpose of this clause of the Bill. The clause makes provision for the payment of trustees under the terms of the trust's instruments, among other things, if they are acting in a professional capacity. Clause 28(4) defines what is a professional capacity for this purpose and that definition is in terms of the provision of types of services. The amendment makes it clear that the trustee will be entitled to remuneration only for the provision of services which are of the type described. I beg to move.
Lord Phillips of Sudbury: I express gratitude to the noble and learned Lord the Lord Chancellor for this and other amendments to Clause 28. I understood the noble and learned Lord the Lord Chancellor to say that Amendment No. 16, which he did not move, will be brought back when reviewed. I believe that I am correct in saying that.
The Lord Chancellor: Having failed in the first instance, I shall endeavour to bring back an amendment at Report stage which will command your Lordships' assent because it gets the matter right.
On Question, amendment agreed to.
Clause 28, as amended, agreed to.
Clause 29 [Remuneration of certain trustees]:
The Lord Chancellormoved Amendments Nos. 18 to 20:
Page 10, line 40, after ("provides") insert ("to or").
Page 11, line 4, after ("provides") insert ("to or").
Page 11, line 8, after ("services") insert ("to or").
On Question, amendments agreed to.
The Lord Chancellormoved Amendment No. 21:
Page 11, line 8, at end insert ("and for the purposes of subsection (1) includes, in relation to the provision of services by a trustee who is an authorised institution under the Banking Act 1987 and provides the services in that capacity, the institution's reasonable charges for the provision of such services").
The noble and learned Lord said: If a bank providing trust services as a trust corporation within the Trustee Act 1925 also provides banking services, it will need express authority to charge for doing so, as otherwise there would be a technical breach of trust. Without that authority, the bank would have to use a competitor to provide the banking services, which would be a little odd. Of course, where a bank is appointed as a trustee in the trust instrument, that authority will be provided. Otherwise, this amendment now makes it clear that a trust corporation which is a recognised provider of banking services may make any

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reasonable charges for the provision of such services in the course of, or incidental to, the performance of its functions as a trustee. I beg to move.
Lord Phillips of Sudbury: I hesitate to raise what is a technical drafting point but hope that it will be helpful. The subsection to be amended by Amendment No. 21, starts, "'Reasonable remuneration' means".
The amendment reads,
"and for the purposes of subsection (1) includes".
It could read,
"reasonable remuneration for the purposes of subsection (1) includes, in relation to"
and so on.
It is not a question to which I could reasonably expect the Lord Chancellor to respond today, but I want to raise with him the question whether the word "includes" is meant to be different from the word means" as used at the start of the subsection. If so, what is the difference intended to be? I am sure that it is an issue to be discussed outside this room, but it seems to me a germane point.
The Lord Chancellor: I shall write to the noble Lord with regard to his question whether the word "includes" implies a broader extension than the word "means".
On Question, amendment agreed to.
Clause 29, as amended, agreed to.
4 p.m.
Clause 30 [Remuneration of trustees of charitable trusts]:
The Lord Chancellormoved Amendment No. 22:
Page 11, line 21, at end insert ("who are trust corporations or act in a professional capacity").
The noble and learned Lord said: This amendment has been made at the suggestion of the Delegated Powers and Deregulation Committee. It was concerned that the clause as published seemed not to restrict the remuneration of charitable trustees, should it become possible in due course, to trust corporations and those acting in a professional capacity, in line with the policy in Clause 29.
It was thought that the clause as drafted restricted the application of the remuneration of charitable trustees to corporations and professionals, but the committee saw an ambiguity and I was content for the amendment to be made to make the restriction fair. I beg to move.
Lord Goodhart: As a member of the Delegated Powers and Deregulation Committee, I welcome the agreement of the noble and learned Lord to amend the clause in this way.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 23:
Page 11, line 24, after ("or") insert ("any other enactment or any provision of subordinate legislation, or by").
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 24:
Page 11, line 32, leave out from ("instrument") to end of line 33 and insert (",but no such instrument shall be made unless a draft of it has been laid before Parliament and approved by a resolution of each House of Parliament").
The noble and learned Lord said: This amendment arose from discussions with the noble Lord, Lord Phillips of Sudbury, who was concerned that as significant a proposal as to allow the remuneration of charitable trustees should have the widest possible public airing. He was of the view that we should allow Clause 30 to remain in the Bill, rather than take it out and have to wait for a future legislative opportunity should opinion in due course be behind such a move. I agree with him, and the appropriate method of dealing in future with so significant a potential change should be by the affirmative resolution process. This amendment achieves that. I beg to move.
Lord Phillips of Sudbury: I am grateful for the noble and learned Lord's acceptance of that point.
On Question, amendment agreed to.
Clause 30, as amended, agreed to.
Clause 31 [Trustees 'expenses]:
The Lord Chancellormoved Amendment No. 25:
Page 11, line 34, leave out subsection (1) and insert—
("(1) A trustee—

(a) is entitled to be reimbursed from the trust funds, or

(b) may pay out of the trust funds,

expenses properly incurred by him when acting on behalf of the trust.").
The noble and learned Lord said: This amendment tidies up the drafting of Clause 31 and makes provision for a trustee to be reimbursed or paid directly from the trust's funds expenses properly incurred by him when acting on behalf of the trust. It also adds the provision to pay out of the funds and makes it clear that such transactions apply only to expenses incurred personally. I believe that meets the point raised by the noble Lord, Lord Goodhart, at Second Reading. On that basis, I beg to move.
Lord Goodhart: I am again grateful to the noble and learned Lord the Lord Chancellor. This point was originally brought to my attention by a colleague at the Chancery Bar, Mr Lynton Tucker. It seemed to me that there was something in the point he raised, and I am very grateful to the noble and learned Lord for having taken it on board.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 26:
Page 11, line 37, after ("or") insert ("any other enactment or any provision of subordinate legislation, or by").
On Question, amendment agreed to.
Clause 31, as amended, agreed to.
Clause 32 [Remuneration and expenses of agents, nominees and custodians]:
The Lord Chancellormoved Amendment No. 27:
Page 12, line 1, after ("or") insert ("any other enactment or any provision of subordinate legislation, or by").
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 28:
Page 12, line 10, after ("him") insert ("to or").
On Question, amendment agreed to.
Clause 32, as amended, agreed to.
Clause 33 [Application]:
The Lord Chancellormoved Amendment No. 29:
Page 12, line 16, after ("provided") insert ("to or on behalf of,").
On Question, amendment agreed to.
Clause 33, as amended, agreed to.
Clauses 34 to 37 agreed to.
Clause 38 [Common investment schemes for charities etc.]:
The Lord Chancellormoved Amendment No. 30:
Page 14, line 28, at end insert (", or having effect as if made,").
The noble and learned Lord said: With Amendment No. 30 I shall speak also to Amendment No. 32. These amendments make it clear that common investment schemes made before the relevant sections of the Charities Act 1993 came into force are also exempted from the operation of this Bill. These are schemes set up under Sections 22 and 22A of the Charities Act 1960. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 31:
Page 14, line 29, after ("1993,") insert ("other than such a fund the trusts of which provide that property is not to be transferred to the fund except by or on behalf of a charity the trustees of which arc the trustees appointed to manage the fund,").
The noble and learned Lord said: This amendment brings within the ambit of the Bill those schemes set up under Section 24 of the Charities Act 1993 known as pooling schemes, by which groups of small charities may consolidate their investments. These schemes often have no explicit powers of investment and thus the Charity Commission was of the view that there would be an advantage to bringing them within the new scheme. The words added by this amendment achieve this. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 32:
Page 14, line 30, at end insert (", or having effect as if made,").
On Question, amendment agreed to.
Clause 38, as amended, agreed to.
Clause 39 [Interpretation]:
The Lord Chancellormoved Amendment No. 33:
Page 15, line 5, at end insert—
(""settled land" has the same meaning as in the Settled Land Act 1925;").
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The noble and learned Lord said: This amendment merely adds the definition of settled land to Clause 39, which is the interpretation clause. I beg to move.
On Question, amendment agreed to.
Clause 39, as amended, agreed to.
Clauses 40 to 43 agreed to.
Schedule 1 [Application of duty of care]:
The Lord Chancellormoved Amendment No. 34:
Page 17, line 6, leave out from ("or") to end of line 7 and insert ("any other power of investment, however conferred:").
The noble and learned Lord said: In moving Amendment No. 34, I shall speak also to Amendments Nos. 35, 36, 38 and 40, which have been grouped together. Each has the same effect in its place in Schedule 1. In each case, it ensures that the duty of care provided for in Clauses 1 and 2 of the Bill applies to the exercise of the trustees' powers regardless of the origin of the powers. As published, the schedule referred only to powers derived from the trust instrument. However, that overlooked the fact that trustees may derive relevant powers from other sources such as orders of the court, orders and schemes made by the Charity Commission and from legislation. That being so and the policy that the duty of care should apply to the exercise of all relevant powers, unless specifically excluded by a trust instrument, the amended wording so applies. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendments Nos. 35 and 36:
Page 17, line 14, leave out from ("any") to end of line 15 and insert ("other power to acquire land, however conferred:").
Page 17, line 26, leave out ("power conferred by the trust instrument") and insert ("other power, however conferred").
On Question, amendments agreed to.
The Lord Chancellormoved Amendment No. 37:
Page 17, line 37, at end insert—
("Compounding of liabilities
The duty of care applies to a trustee—

(a) when exercising the power under section 15 of the Trustee Act 1925 to do any of the things referred to in that section;

(b) when exercising any corresponding power, however conferred.").

The noble and learned Lord said: This amendment is made for the sake of consistency. As the Bill repeals Section 23 of the Trustee Act 1925, with its concept of good faith, and replaces it with the powers in the Bill to appoint agents, nominees and custodians, to which, of course, the duty of care applies, we have thought it sensible, for the sake of consistency, to apply the duty to Section 15 of the Act which also gives a power to trustees but, at present, relies on a test of good faith. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 38:
Page 17, line 42, leave out ("conferred on him by the trust instrument") and insert (", however conferred").
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 39:
Page 17, line 43, at end insert
("Reversionary interests, valuations and audit
The duty of care applies to a trustee—

(a) when exercising the power under section 22(1) or (3) of the Trustee Act 192.5 to do any of the things referred to there;

(b) when exercising any corresponding power, however conferred.").

The noble and learned Lord said: As with Amendment No. 37, this amendment is also made for the sake of consistency. As I said in speaking to the previous amendment, as the Bill repeals Section 23 of the Trustee Act, with its concept of good faith, this amendment applies the duty of care in an analogous way to Section 22(1) and (3) of the Act, which also gives a power to trustees but, at present, relies on a test of good faith. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 40:
Page 18, line 2, leave out ("to powers conferred by a trust instrument").
On Question, amendment agreed to.
On Question, Whether Schedule 1, as amended, shall be agreed to?
Lord Goodhart: I should like to make a brief intervention. As the noble and learned Lord the Lord Chancellor will, of course, recall, I was very concerned with one of the provisions of Schedule 1; namely, paragraph 5 which allows the possibility of excluding the duty of care that is proposed in Part I of the Bill. At Second Reading on 14th April the noble and learned Lord gave an undertaking that he would shortly make a formal reference to the commission asking it to carry out an appropriate study with its customary thoroughness. That was, of course, in reference to the question of objection clauses.
I am not making any complaint that no reference has yet been made. I realise that this is not the most urgent and important matter on the Lord Chancellor's desk, but I should be grateful for some indication of what "shortly" means in this case, because I would be somewhat concerned if we were to find this matter dragging on past the Summer Recess.
4.15 p.m.
The Lord Chancellor: I can give the noble Lord, Lord Goodhart, the assurance that he seeks. The last thing I would desire to do is to have this matter drag on. In fact, we thought that the appropriate course—I apologise for not drawing this to the attention of the noble Lord—was to await the outcome of the Lords status of the Bill before inviting noble Lords, including the noble Lord, Lord Goodhart, to whom I specifically address these undertakings, to express their views on
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the precise form of the references to be made. We will take their views fully into account in ma king the references.
The Law Commission also is aware informally of what is intended, and is awaiting formal references. My ambition is to achieve this comfortably before the Summer Recess.
Schedule 1, as amended, agreed to.
Schedule 2 [Minor and consequential amendments]:
The Lord Chancellormoved Amendment No. 41:
Page 19, line 3, at end insert—
("The Duchy of Cornwall Management Act 1893 (c. 20)
The 1893 Act is hereby repealed.").
The noble and learned Lord said: With your Lordships' leave, I shall speak also to Amendments Nos. 42, 46 and 49.
I begin with an apology. I am very aware that on Second Reading I undertook to give seven days' notice of government amendments. That, of course, was in the spirit in which we have conducted this Bill, and in fact the bulk of those before your Lordships this afternoon were tabled on 24th May. However, these four amendments appear starred on the Marshalled List and were tabled only on Monday last, so I am formally in breach of the undertaking and I trust your Lordships will forgive me.
These amendments insert back into Schedules 2 and 4 the four items which were removed from the Law Commission draft of the Bill when it was printed and introduced into the House at First Reading. The reason was that it had not been possible at the time to obtain both the consents required from Her Majesty and from the Prince of Wales in their rights of their Duchies of Lancaster and Cornwall respectively. These consents are now to hand and these amendments, therefore, replace the removed items. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 42:
Page 19, line 3, at end insert—
("The Duchy of Lancaster Act 1920 (c. 51)
In section 1 (extension of powers of investment of funds of Duchy of Lancaster) for "in any of the investments specified in paragraph (a) of section one of the Trustees Act 1893 and any enactment amending or extending that paragraph" substitute "under the general power of investment in section 3 of the Trustee Act 2000 (as restricted by sections 4 and 5 of that Act)".").
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 43:
Page 21, line 12, at end insert—
(" . In section 15 (power to compound liabilities), for "in good faith" substitute "if he has or they have discharged the duty of care set out in section 1( ) of the Trustee Act 2000".").

CWH 15
The noble and learned Lord said: This amendment achieves the purpose I mentioned when moving Amendment No. 37, in order to replace the concept of good faith in Section 15 of the Trustee Act 1925 with the duty of care imposed by this Bill. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 44:
Page 21, line 13, at end insert—
In section 22 (reversionary interests, valuations, and audit)—

(a) in subsection (1), for "in good faith" substitute "if they have discharged the duty of care set out in section 1(1) of the Trustee Act 2000". and

(b) in subsection (3), omit "in good faith" and at the end insert "if the trustees have discharged the duty of care set out in section 1(1) of the Trustee Act 2000".").

The noble and learned Lord said: This amendment achieves a purpose very similar to the previous amendment. This time it achieves the purpose I mentioned when moving Amendment No. 39, in order to replace the concept in Section 22 of the Trustee Act 1925 of good faith with the duty of care imposed by this Bill. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 45:
Page 21, line 18, at end insert—
("The Land Registration Act 1925 (c. 21)
In section 94(1) (registered land subject to a trust to be registered in the names of the trustees), at the end insert "or in the name of a nominee appointed under section 16 of the Trustee Act 2000".").
The noble and learned Lord said: Clause 16 of the Bill gives powers to trustees to appoint nominees to act in relation to such trust property as they determine, and requires, at Clause 16(1)(b), that such assets are vested in the person so appointed. This does not sit well with Section 94(1) of the Land Registration Act 1925 which requires land which is subject to a trust of land to be registered in the name of the trustees. This amendment makes it possible for such land to be registered in the name of a nominee appointed under Clause 16. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 46:
Page 23, line 38, at end insert—
("The Duchy of Cornwall Management Act 1982 (c. 47)
For section 1 (powers of investment of Duchy property) substitute—
"Powers of investment of Duchy property.
1. The power of investment conferred by the Duchy of Cornwall Management Act 1863 includes power to invest in any investments in which trustees may invest under the general power of investment in section 3 of the Trustee Act 2000 (as restricted by sections 4 and 5 of that Act)."
In—

(a) section 6(3) (Duchy of Cornwall Management Acts extended in relation to banking), and

(b) section 11(2) (collective citation of Duchy of Cornwall Management Acts),

for "Duchy of Cornwall Management Acts 1868 to 1893" substitute "Duchy of Cornwall Management Acts 1863 to 1868".").
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 47:
Page 24, line 5, at end insert ("of that section").
The noble and learned Lord said: This amendment simply tidies up drafting. I beg to move.
On Question, amendment agreed to.
The Lord Chancellormoved Amendment No. 48:
Page 24, line 6, after ("(8)") insert ("of that section").
The noble and learned Lord said: I beg to move the amendment on the same basis. This amendment, too, simply tidies up drafting.
On Question, amendment agreed to.
Schedule 2, as amended, agreed to.
Schedule 3 agreed to.
Schedule 4 [Repeals]:
The Lord Chancellormoved Amendment No. 49:
Page 27, line 37, at beginning insert—

("1893 c. 20.

The Duchy of Cornwall Management Act 1893.

The whole Act.")

On Question, amendment agreed to.
Schedule 4, as amended, agreed to.
Title agreed to.
Bill reported with amendments.
The Committee adjourned at twenty-four minutes past four o'clock.