HL Deb 18 June 1891 vol 354 cc713-22

Order of the Day for the Second Reading, read.

LORD HERSCHELL

My Lords, this Bill proposes to amend the law which I may say came into force in 1736, and which has remained practically unaltered down to the present time. Although there have been on various occasions endeavours to bring about alterations by the introduction of Bills (those endeavours having been at a somewhat distant date) they have never passed into law. The matter was considered by a Select Committee of the other House in 1844, and again in 1852, and the Committee of 1844 particularly urged very large alterations of the then existing law. The Committee of 1852 dealt with matters of somewhat wider scope than the question with which the present Bill proposes to deal, namely, the general question of the extent to which corporations should be empowered to hold land. The present Bill deals only with the question of mortmain so far as it relates to the disposition of property for the benefit of charities. The Act of 1736 appears to have had two objects—one to prevent the accumulation of land in the hands of corporations, and especially religious corporations; and the other to some extent, probably, to prevent the disinheriting of heirs. It is not easy to discover the exact circumstances which led to the Act of 1736. In 1844 the Committee which then considered the matter, the Chairman of which was the present Duke of Rutland, then Lord John Manners, expressed themselves unable to discover the exact purpose and object of the Act of 1736, or, at all events, the circumstances which led to its being passed. In a pamphlet which has been lately written on the subject, in which the writer states the Debates as far as they could be obtained, the endeavours to ascertain the causes which led to the Bill, and the constant references in the speeches of that time to Queen Anne's Bounty seem to suggest that a fear then existed, which has proved to be unfounded, lest Queen Anne's Bounty might absorb enormous gifts and benefactions, and ultimately become possessed of large quantities of land. But, however that may be, the Act was passed, as I have mentioned, in 1736. The Act of 1736 not only dealt with charitable gifts of land, but also with charitable gifts of any interest in land, and that is the first matter to which I propose to call your Lordships' attention, because the first Amendment which the present Bill proposes to make is that, so far as that Act relates to any interests in land, it should cease to have operation. I speak of that Act, because the Act which was passed last year, or the year before, was merely a Consolidating Act, and only, in fact, reproduced the Act of 1736. Now, the introduction of these Acts making an interest in land subject to mortmain has led to an enormous amount of litigation, and to distinctions being drawn which I do not think anybody could call other than absurd, and which often rest on the mere accident of the mode or form which a security takes. For instance, it has been held that a mortgage of poor rates is an interest in land, and therefore would come within the Act, while, on the other hand, a mortgage of police rates, or a charge on a general district rate is not an interest in land; though what difference there is between a poor rate and a general district rate I confess I am unable to see. In later times the distinctions have become still more embarrassing. For example, a testator may give to a charity Bonds of the Corporations of Dewsbury and Wakefield, because they are not interests in land, but he may not give Bonds of the Corporations of Salford and Oldham, because they are interests in land. The securities of one Corporation stand in a position of still greater difficulty—that is Leicester. The Leicester Corporation's Bonds can be given to a charity, but their Three and a Half per Cent. Redeemable Stock cannot, because it is an interest in land. Except to afford food for lawyers, it was difficult to see what advantage there is in retaining distinctions such as these. In truth, none of the reasons, whatever one may determine them to be, which led to the passing of the Act of 1736, can be at all served by keeping up distinctions of that kind, which now apply to what are simply methods of investing money. No useful purpose, it seems to me, can be served by keeping within these Acts under these distinctions as an interest in land a mere investment of money. For example, I may give another illustration. If a testator bequeaths East India Stock to a charity that may be valid, but if he changes the investment of his money and puts it into Metropolitan Board of Works Consolidated Stock that is an interest in land, and his bequest to the charity would be void in consequence. That is a state of things which it seems to me ought not to continue, and that is the first alteration which is proposed to be made by this Bill. But that proposed alteration in the law, of course, leaves open one or two questions, one of them of great importance—namely, whether it is expedient to maintain in any manner the provision which makes void a gift of land to a charity. As I have said, so far as the Act is directed to preventing the accumulation of land in great quantities in the hands of Corporations, I do not propose to meddle with the object of the Act, because that is an object which, I think, many would desire to preserve. Many people at the present day think it inexpedient for charities to become large holders of land, but as regards the power of disposition by a testator, there does not seem now-a-days to be any reason for limiting it as to land any more than as to any other form of property. There is no corresponding provision in our law compelling him to leave it to members of his family; he may leave it to whom he pleases. The way in which the law operates, and had operated in several well-known cases, was brought before the Committee in 1844, and one knows very well that the law, as it stands at present, does not prevent an individual who is desirous of benefitting a charity from leaving his property to some person in whom he has confidence, leaving it to his honour to apply it as he knows the testator intended it to be applied. The law of Mortmain is peculiar to this country. There is no such law in Scotland, and I believe there is none in Ireland. The Act of 1736 applies only to this part of the United Kingdom, and I have heard of no inconvenience or abuse which has arisen from the want of a similar law in Scotland or Ireland to that which was passed for the rest of the United Kingdom in 1736. A number of exceptions have been made from it, however, from time to time, because some charities have obtained private Acts by which they are exempted from the Mortmain provisions and are enabled to hold land, and the consequence is, that there are now, for instance, some London hospitals which could take bequests of land, while such gifts to other hospitals would be absolutely void. I propose by this Bill to provide that a bequest of land to a charity should no longer be void, but that the land must be sold within a year from the time of its vesting in the charity, or within such extended time as the Court may allow; then, if it is not sold within the time limited or extended, I propose it should vest in the official trustee of charities, that it should be his duty to sell it, and then hand over the proceeds, after deducting the costs of sale, to the charity. There is one other case dealt with by the Bill, and that is where money is left to be expended in land. That also has been held void under the Mortmain Acts. Where money is left with that condition annexed, the Bill provides that the condition in such a case should not attach, but that the bequest shall be perfectly valid. Since I introduced the Bill I have felt some doubt upon the matter, and I am not sure whether it would not be advisable to introduce an Amendment of that description, because I think where a testator leaves money to be invested in land for the purpose of the charity, and the charity has power to make that investment—because, as your Lordships are aware, there is already power for them to hold a small amount of land—it is desirable that the condition should not be void to the extent to which the charity have the power, but to give effect to it according to law. I should propose, therefore, later on to make that alteration. Those are substantially the provisions of the Bill. Its details, of course, may well be for the consideration of your Lordships hereafter, but I do not think I need detain your Lordships further now, and I ask your Lordships to read the Bill a second time.

*THE EARL OF SELBORNE

My Lords, I do not propose to detain your Lordships by any long observations upon this Bill. I desire chiefly to thank the noble and learned Lord for having taken this matter up, and to express my concurrence in all he has said. I hope, therefore, your Lordships will give the Bill a Second Reading. There can be no doubt that the law upon the subject places restrictions, which are unreasonable, upon charitable gifts, except in the view of one or other of two purposes. If the object were to discourage charitable gifts generally, the manner in which it is done would certainly be arbitrary and capricious, without any appreciable principle. The other purpose, which I think you Lordships will agree is a good one, is to prevent land accumulating in Mortmain. The noble and learned Lord has fully provided against that second consequence, by the manner in which he has prepared the Bill; and with regard to the first I have no sympathy with the idea. The noble and learned Lord has referred to one particular portion of the subject as to which I should like to suggest to him whether a little more may not be worth doing than he has proposed in the way of qualification, I mean when money is given to be laid out in land. My noble and learned Friend proposes to except certain cases upon grounds in which I concur, but I cannot help thinking that it might be worth his consideration whether there may not be other cases, where the laying out of money on land is so much of the essence of the gift, that it would be more reasonable to make such gifts invalid than to apply them to some different purpose. There is a matter which probably could not be dealt with in this Bill, but it is one as to which I have always felt that our law in regard to charities has sometimes, at all events, been administered in a most unreasonable manner. Where the purpose of a gift to a charity is specific, so that there can be no doubt at all as to the object, whether the gift be money or not, the Courts have sometimes, as in a celebrated case, proceeded in a very arbitrary manner. They have held, that there is a general intention to give to charity, even when the particular object is impossible, and so the family of the testator has been deprived of the property. In the case to which I have referred there was a gift to a charity for Jewish purposes which the Court held could not take effect in point of law, but on the doctrine of approximation applied it to Christian education. I cannot help thinking that if such a case were to occur again, the common sense of everybody would say that the family should have the property if the particular purpose or object could not be fulfilled. So far as that matter can be considered in the present Bill, I hope the noble and learned Lord will consider it. I should not be sorry if the law were that the family, who are the natural heirs, should never lose the property unless the specific purposes for which it is given by the testator can receive effect. Perhaps, also, though I am not sure that it would be easy to carry it out, something might be done to enable the Attorney General or the Charity Commissioners to renounce in the case of bequests to foolish or mischievous charities, for as your Lordships know such things do exist, instead of saying that they shall always take effect.

THE LORD PRESIDENT OF THE COUNCIL (Viscount CRANBROOK)

May I ask the noble and learned Lord one question. It is whether, in the case of a will leaving land for the purpose of a site for a building, it would be necessary to sell it; because, if so, it seems to me that a provision of that kind would do away with the very object which the testator had had in view, and I would point out that there is no exception made here at all?

LORD HERSCHELL

I think there might be an exception in that case similar to that which I say would be required in the case of money to be laid out in land.

*LORD COLCHESTER

My Lords, having been concerned in the administration of charities, I should wish to point out one or two matters in which I think this Bill might operate injuriously unless amended. I should welcome the facilitating gifts to charities, but I think the very probable effect of this Bill would be that land which is now conveyed by deed would be conveyed by the much simpler form of a will, and the consequence would be that the land would be obliged to be sold, whereas now there is no such compulsion. I should look with great apprehension on the latter clauses of this Bill, which would lead to charities being obliged at once to part with land which comes into the it-hands, though it might be of such a description that its value would in the future enormously increase. In the case of agricultural land, which, unfortunately, as your Lordships know, is not always very profitable property to hold, it might be as well, perhaps, that it should he sold as early as possible, but lands and houses might come into the hands of charities which would within the next generation be worth double or treble their present value. Some of your Lordships are, no doubt, familiar with the case of charities which have had land granted to them several hundred years back, land which though worth but a few pounds then is now worth thousands. If land has to be sold at once the future value will be lost, and the charity would only possess a small income in the future from its proceeds, instead of an increasing one from the future increment which would as time went on make it very valuable. One hears a great deal about the unearned increment and to whom it should go, but I think in this case it is better that this unearned increment should pass to the charity and be applied to useful purposes, than that it should be allowed to pass to any chance purchaser to whom the land may have been sold in the first instance if it has under such a provision as this to be sold at once. I think this difficulty might be met if the noble and learned Lord were willing to accept an Amendment, that this provision should only be carried out where the Charity Commissioners are of opinion that it will not be injurious to the charity. I may say in passing that there is one peculiarity which I observe in this Bill. It ignores the present administrative machinery altogether. It makes no allusion to the Charity Commissioners of England and Wales who would be acquainted with the administration of the charity, but puts it in the hands of persons who have no means of being acquainted with any particular charity, while, on the other haud, it imposes a peculiar responsibility upon one of the officers, because it puts him in a totally different position, giving him administrative functions, whereas he now has no such functions whatever. I remember a Bill being introduced some time ago which proposed to vest charitable property in the Official Trustee; and some of those who opposed the Bill did so because they imagined they were going to be deprived of the administration. The fact is that the functions of the Official Trustee are not administrative, and by this Bill, for the first time, you are to give him administrative functions, an innovation for which no reason has been assigned. If the noble and learned Lord would be willing to amend the Bill in respect of sales under the later clause, that they should take place or not, according to whether or not the Charity Commissioners are willing to assent to them, I should welcome the change in the interest of charities. I cannot help thinking that the Bill in its present state might have disastrous consequences, and I would, therefore, propose that it should be amended, as I have pointed out. I really think it is a matter worthy of consideration whether it would not be for the benefit of charities that the Bill should not in its present form pass into law.

*LORD STANLEY OF ALDERLEY

I think your Lordships will generally agree with the object which the noble and learned Lord proposes in this Bill. In the first place, it will prevent litigation. But I think there are some objections to the Bill. In the first instance, I may remind your Lordships that it was only delivered on Tuesday, and I think that is rather a short time to give your Lordships for consultation. I think it would be very desirable, before proceeding with this Bill, if Her Majesty's Government would lay before the House a Return of how many charity farms or land held in charity in Great Britain have been sold under the powers of the Charity Commissioners. This land is constantly changing hands, and charity gains by the large price paid for it, so that the number of charitable trusts is not so great as might be supposed. The noble and learned Lord referred to Queen Anne's Bounty. Queen Anne's Bounty holds a great deal of the land which it possesses in trust only for the benefit of the clergy, and the real owners are the rectors and vicars. If the noble and learned Lord is going to amend the Act of 1888, I think he ought to make another amendment to this effect. The Act of 1888, following the old Acts, lays down that if a landowner makes a gift of land, even for a museum, or for whatever purpose it may be, or for whatever reason, that gift of land shall not take effect if he dies within 12 months of making that bequest. This should be amended by an exception in case of death by accident. A person may die suddenly from an accident, or he may be shot, and there is no reason for invalidating his will made under proper circumstances, when he was of perfectly sound mind, and perhaps in perfect health. This precaution need no longer be taken, though it might have been all very well in the Middle Ages, and might be necessary if we were still under the influence of priests who might be present at deathbeds.

LORD HERSCHELL

My Lords, with reference to what the noble Lord has just said, of course I am quite willing to consider that or any other suggestions that may be made. I think the noble Lord opposite (Lord Colchester) somewhat misapprehends the object of insisting upon these sales. I believe there would be great Opposition to this Bill if that provision were not retained, because there is certainly a general objection in many quarters to any alteration of the law which would be calculated to lead to the accumulation of large quantities of land in the hands of bodies such as those who hold charity lands.

THE PRIME MINISTER AND SECRETARY OF STATE FOR FOREIGN AFFAIRS (The Marquess of) SALISBURY

My Lords, I think it is important in this matter to understand the distinction, which the noble Lord does not retain, between land held for the purpose of investment and land used for the immediate purposes of a charity—such as dwelling houses. Charities must have land of that kind, and it is unreasonable to refuse them that power; but the general principle on which the law has gone, of preventing charities which have money left to them investing it in land seems to be a very sound one.

Bill read 2a accordingly, and committed to a Committee of the Whole House on Friday the 26th instant.