SECOND READING. (Hansard, 9 March 1893)

§ LORD MACNAGHTEN
said, if he were moving the Second Reading of this Bill in an assembly of lawyers, it would not be necessary to say anything by way of apology or introduction; but as their Lordships were, perhaps, not familiar with the mysteries of English law, and the nice distinctions which had grown up between real and personal property, he would shortly explain the object of the measure and the grounds on which he recommended it to the House. 1390 There was one distinction between real and personal property, singular in its application and in its origin, which their Lordships might not be aware of. A man of full age and competent understanding, not under duress or undue influence, but acting of his own free will, might make a gift of personal estate which he could not afterwards revoke or defeat; that was not quite the case with regard to real estate. If a man competent to deal with his property made a gift or settlement by way of gift of real estate he could not indeed revoke it afterwards— that the law did not allow—he could not recall the gift and take back the property, but he might do what was practically the same thing—he might defeat and destroy the gift to any extent he pleased, if he was not ashamed to do so. In parting with the property he might have acted from the highest, the best, and the purest motives; he might have been impelled by the force and pressure of moral obligations which he could not resist; it might have been a provision for a child, a wife, or a parent, but the law paid no regard to such considerations; the law held that those considerations were not valuable; the conveyance was voluntary, and the persons taking under it were mere volunteers; and the author of a voluntary conveyance who had already parted once with his property for nothing might part with it again if he took care to get something for it, and then he might put the price in his own pocket, and disappoint and laugh at the person to whom he had given the property, and from whom he had taken it away, without any amends or recompense. And what was more extraordinary still, he might deal, by way of sale or mortgage, with a person who knew all the circumstances, and who knew that the property was no longer his, and that person might safely take a conveyance of the property, and keep it. The law would hold that he had done nothing wrong in colluding with the author of the voluntary conveyance to defeat his solemn instrument. That was, perhaps, a startling proposition—that one man might honestly sell what was not his, and keep the price, and another, knowing all the circumstances, might honestly help him to rob the owner—a proposition, 1391 he should think, puzzling to a lay mind, and to a legal mind not wholly satisfactory; but it was undoubtedly the law. But how did it come to be the law? It was not drawn from any maxim of the Common Law, nor was it derived from any doctrine of equity (anything more inequitable could not be imagined), nor was it to be found in any Act that was, or ever had been, in the Statute Book; it was Judge-made law, pure and simple. There was, too, this singular feature about it: that whereas as regarded Judge-made law generally we knew who the Judge was that made the law or laid down the principle on which it was founded, all that was known in this case was that some Judge, whose name could not be ascertained, at some time which could not be fixed, had discovered that that was the proper construction and true interpretation of an Act of Parliament now 300 years old, which said nothing of the kind. In the reign of Queen Elizabeth two famous Statutes were passed, one for the protection of creditors and the other for the protection of purchasers. With the former this Bill had nothing to do; it did not affect the rights of creditors, whether enforcible by any process of law or arising in bankruptcy. The Statute referred to in the Bill was the Statute for the Protection of Purchasers, 27 Eliz. cap. 4. Though the language was involved, the meaning of that Statute was clear enough. It dealt only with conveyances "meant and intended by the parties that so make the same to be fraudulent and covenous." and declared all conveyances of land "made for the intent and of purpose to defraud and deceive" such persons as purchased the same lands "to be utterly void, frustrate, and of none effect." In order to show the sort of Acts struck at by the Statute, the 3rd section provided that if anybody had the hardihood to maintain, justify, or defend such conveyances he should forfeit one year's rent of the land so conveyed and suffer imprisonment for six mouths. That was the Act upon which so very singular a construction had been placed. But that construction was not accepted at once. From time to time when cases arose of an honest conveyance followed by a conveyance for value intended to defeat it, some Judges said the first con- 1392 veyance was honest, and the second fraudulent, and there were two lines of authorities. Ultimately, in 1807, the question came before Lord Ellenborough in the Queen's Bench, and after going through the authorities, he came to the conclusion that the preponderance of authority was in favour of declaring the first conveyance fraudulent and the second honest. From that time that had been held to be the law. But for all that, Judges had not thought the result satisfactory altogether, and had said that was not the construction which they would themselves have placed upon the Act of Parliament; but they had also said that the law had become so fixed that the legislature alone could interfere with it. For example, Sir William Grant, one of our greatest lawyers, observed in one case— I have great difficulty to persuade myself that the words of this Statute warrant, or that the purpose of it requires, such a construction, for it is not easy to conceive that a purchaser can be defrauded by a settlement of which he has notice before he makes the purchase. It should be mentioned that in America, where this Statute had been accepted either tacitly or by direct legislation, the construction placed upon it in this country had not been adopted. There it was held that a voluntary conveyance was good against a subsequent conveyance for value when the purchaser had notice of the earlier deed. Enough had been said to explain the purport of this Bill; and, as an instance of the hardship now inflicted by the law, reference might be made to a case before the Privy Council two or three years ago. A lady, possessed of considerable real property, had married, having an illegitimate son by her intended husband. A settlement was made on the wife for life, on the husband for life, and then on the children of the intended marriage, and a fair and reasonable settlement was made by the same instrument upon the illegitimate child and his issue. Some years afterwards, however, the lady changed her mind, and, in collusion with a purchaser, she defeated the interest of her son's children. That case was brought before the Privy Council because there had been decisions in this country which seemed to show that in a case of that kind a fair and honest settlement would be upheld; but, unfortu- 1393 nately, in the result the honest settlement was declared fraudulent, and the appeal was dismissed with costs. All he asked was that their Lordships should restore the real meaning of the Act of Elizabeth, not declaring fraudulent perfectly honest conveyances. It was to be regretted that Judges and, in some instances, even Acts of Parliament, should have created constructive and artificial frauds. Surely the fraud was on the part of those who colluded to defeat an honest and fair settlement. He apologised for having trespassed so far on their Lordships' time, but it seemed a serious thing to ask the House to alter a rule of law which had prevailed so long; and he had, therefore, thought it right to explain the grounds on which he asked them to do so. He begged to move the Second Reading of the Bill.

§ THE LORD CHANCELLOR (Lord HERSCHELL)
My Lords, I certainly do not intend to offer any opposition to the Second Reading of this Bill. I quite concur in the view of my noble and learned Friend that a change in the law is desirable and necessary. My attention, however, has been directed quite recently to the question whether the rights of creditors in a case of bankruptcy would be completely secured, and whether they might not be interfered with by this Bill. I express no opinion upon it. The matter has come to my attention so recently that I have not had time to consider it; but I know that some of the heads of Public Departments and those before whom bankruptcy matters come, desire that some little time should be given by my noble and learned Lord before the Committee stage for the consideration of that question. He will agree with me that in dealing with a law which has so long existed, it is necessary to carefully consider the provisions of the Bill in order to be quite sure that the result obtained will not go beyond what he intends.

§ LORD ASHBOURNE
My Lords, I personally concur with the views which had been so clearly set forth to your Lordships by my noble and learned Friend in presenting this Bill for your acceptance, but I am quite of the opinion which my noble and learned Friend on 1394 the Woolsack has expressed, that some little time should be allowed to elapse before the next stage of the Bill is proceeded with, as I should like to have the opportunity of taking the opinion of the Judges in Ireland as to whether the Bill should deal with the Irish kindred Statute, the 10 Chas. I.

§ LORD MACNAGHTEN
said, he would be most happy to postpone the further consideration of the Bill for such time as the noble and learned Lord on the Woolsack thought right.
Motion agreed to; Bill read second time accordingly, and committed to a Committee of the Whole House.