HL Deb 07 May 1906 vol 156 cc920-32

House in Committee (according to Order).

[The Earl of ONSLOW in the Chair].

Clause 1 agreed to.

Clause 2:—;

THE LORD CHANCELLOR (Lord LOREBUBN)

said this Bill dealt with a very difficult subject, and he had received a variety of communications in regard to it. He had endeavoured to adopt those suggestions which seemed desirable in the form of the Amendments which appeared in his name on the Paper. The first Amendment, which he now moved, would have this effect, that the public trustee would not undertake any trust under a deed of arrangement for the benefit of creditors, nor the administration of any insolvent estate.

Amendment moved—; In page 2, line 13, after the word 'Act' to insert the words 'nor any trust under a deed of arrangement for the benefit of creditors, nor the administration of any insolvent estate.'"—;(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 2, as amended, agreed to.

Clause 3:—;

THE LORD CHANCELLOR

said the object of his Amendment was to have some formal record without which the estate was not to vest in the public trustee.

Amendment moved—; In page 2, line 29, after the word 'undertaking' to insert the words 'declaration in writing signed and sealed by him.'"—;(The Lord Chancellor,)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

explained that sub-section (3) provided that for the purposes of the administration of small estates the public trustee might exercise such of the powers and authorities of the High Court as might be conferred on him by rules under this Bill. The object of his Amendment was to authorise the authority who made the rules—;the Lord Chancellor—; to bestow those powers subject to such conditions as he might think right to impose. It was thought that some of the powers and authorities of the High Court which were to be conferred on the public trustee should not be so conferred without safeguards against their abuse.

Amendment moved—; In page 2, line 38, after the word 'Act' to insert the words 'subject to such conditions as may be imposed by the rules.'"—;(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 3, as amended, agreed to.

Clause 4:—;

THE LORD CHANCELLOR

said the object of his next Amendment was to provide that the public trustee might be appointed custodian trustee even though there was no vacancy in the number of original trustees.

Amendment moved—; In page 3, line 15, to leave out the word 'the' and to insert the words 'subject to rules under this Act the'; and after the word 'such' to insert the words 'and whether or not the number of trustees has been reduced below the original number.'"—;(The Lord Chancellor.)

On Question, Amendment agreed to.

* LORD FABER

explained that the object of his Amendment was to enable trustees under a will, who had appointed the official trustee as custodian trustee, to act with him if they thought fit to do so. He hoped the Lord Chancellor would see his way to accept the insertion of the words proposed.

Amendment moved—; In page 3, line 27, after the word 'trustee' to insert the words 'jointly with the other trustees or trustee.'"—;(Lord Faber.)

THE LORD CHANCELLOR

said it was quite obvious that the more interest the old trustees took in the trust the better it would be for everybody concerned. But the noble Lord's Amendment would go further than was anticipated. The sub-section in question provided that where the public trustee was appointed to be custodian trustee of any trust the property subject to the trust, and the right to transfer or call for the transfer of any shares, stock, or securities forming part of the trust property, should by virtue of this Act vest in the custodian trustee. It was now proposed by the noble Lord that if there were any other trustees the property should vest in them jointly. The title and right of the other trustees would depend on something other than this Act, and if the words suggested by the noble Lord were inserted, trustees who might not really be entitled to have the property vested in them at all might have it so vested by virtue of this Act. The danger of accepting the Amendment was that it might have ulterior effects quite beyond what the noble Lord wished. If the noble Lord would confer with him before the next stage of the Bill he would endeavour to meet the substance of his Amendment.

Amendment, by leave of the House, withdrawn.

THE LORD CHANCELLOR moved to amend the proviso that a custodian trustee need not concur in nor perform any act the effect of which might be to vest in him property which might involve a personal liability on him in respect of calls or otherwise. He moved to substitute the word "shall" for "need." It had been pointed out that as the Consolidated Fund was liable to make good all sums required to discharge any liability which the public trustee, if he were a private trustee, would be personally liable to discharge, a custodian trustee should not be allowed to concur in any act the effect of which might expose him to liability.

Amendment moved—; In page 4, line 7, to leave out the word 'reed' and insert the word 'shall.'"—;(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR

said it was not reasonable to require that the custodian trustee should be obliged to inquire into the legality of every matter in which he was requested to concur, and the object of the new proviso which he now moved was to secure that where a request to concur was made in writing, signed by all the managing trustees and accompanied by a certificate from a duly qualified solicitor, not being a trustee, that the action was within the powers of the trust, the custodian trustee should be exonerated from all consequences of his concurrence. This proviso would conduce to business and give every practical safeguard.

Amendment moved—; In page 4, line 10, after the word 'otherwise' to insert as a new proviso the words 'and (b) where a request to concur is made in writing, signed by all the managing trustees, accompanied by a certificate from a duly qualified solicitor not being a trustee that the matter in which the custodian trustee is requested to concur is within the powers of the trust, the custodian trustee shall not be obliged to inquire into the legality of the matter, and shall be exonerated from all consequences of his concurrence if he acts in good faith.'"—;(The Lord Chancellor.)

LORD ASHBOURNE

did not object to the course proposed to be taken by the Lord Chancellor, but was disposed to think that the matter would require close consideration when they saw the Amendment incorporated in the clause. The question at once suggested itself—; What was the good of the custodian trustee if he were bound to consent to all the things he was asked to do by the other trustees, and if he were to be satisfied with the certificate of the solicitor.

THE LORD CHANCELLOR

said he would be pleased if the matter were looked into. In point of fact, the frauds that had taken place had been largely perpetrated when there was only one trustee, and in secret without the knowledge of an independent solicitor. His Amendment gave a very effective safeguard, although he fully admitted that it did not afford absolutely incontrovertible security against peculation.

On Question, Amendment agreed to.

THE LORD CHANCELLOR

said the object of his next Amendment was to provide that the custodian trustee should not be liable if he acted in good faith.

Amendment moved—; In page 4, line 28, after the word 'trustee' to insert the words 'if he acts in good faith.'" —;(The Lord Chancellor.)

On Question, Amendment agreed to.

* LORD FABER,

who had given notice to move the deletion of Sub-section 3 of Clause 4, and the insertion of the following new subsection—; (3) Any banking or insurance company or other body corporate may, if it consents to act as such, be appointed to be custodian trustee of any trust in the same manner as the public trustee may be so appointed, with power for such company or body corporate to charge and retain or pay out of the trust property by way of remuneration such fees as may be agreed, or in default of agreement fees not exceeding those chargeable by the public trustee as custodian trustee, and the provisions of Subsections 1 and 2 of this clause shall mutatis mutandis apply to such company or other body corporate, said that by this Bill those persons who were originally connected with the trust had power to appoint the public trustee as custodian trustee without going through any formality whatever; but, if an original trustee under a will desired to appoint a corporate body or a bank as custodian trustee, it was necessary to go through the formality of applying to the Court. He did not know why a difference should be made between a custodian trustee when he was an official, and a custodian trustee in the shape of a bank or insurance office. Since the Amendment had been put down, however, he had had a conversation with the noble and learned Lord in charge of the Bill. The Lord Chancellor had undertaken to give the matter his attention between this and the Report stage, and in the circumstances he would not move his Amendment.

THE LORD CHANCELLOR moved to leave out Sub-section (4). This subsection provided that the section should apply to trusts whether created before or after the passing of this Act, but should not extend to —;(a) any trust for religious purposes; or (b) any trust which was being administered by or under the Court; or (c) any trust where a judicial trustee had been appointed to be a trustee. The reason for deleting this sub-section was that it was considered preferable that this matter should be settled by Rules. He thought it was clear that where a trust was exclusively for religious or charitable purposes the public trustee ought not to have anything to do with it; but there might well be an estate one-twentieth part of the interest in which was by the will directed to be applied for religious or charitable purposes, and he did not think it would be right to prevent that estate coming under the management of the public trustee. This was a matter which ought to be settled by Rules, which their Lordships would have full opportunity of criticising.

Amendment moved—; In page 5, line 18, to leave out Sub-section (4)."—;(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 4, as amended, agreed to.

Clause 5:—;

THE LORD CHANCELLOR

said that the clause as it stood provided that the public trustee might by that name be appointed to be trustee of any will or settlement or other instrument creating a trust. He wished to avoid any cavilling on the point, and therefore moved to insert, after "the public trustee may by that name," the words "or any other sufficient description."

Amendment moved—; In page 5, line 26, after the word 'name' to insert the words 'or any other sufficient description.'"—;(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR moved to amend Sub-section (4). It was, he said, provided that notice of any proposed appointment of the public trustee should, where practicable, be given to all persons beneficially interested. He proposed to insert the words "In the prescribed manner," so as to render the making of Rules compulsory.

Amendment moved—; In page 6, line 7, after the word 'given' to insert the words 'in the prescribed manner.'" —;(The Lord Chancellor.)

On Question, Amendment agreed to.

THE LORD CHANCELLOR moved a proviso at the end of Sub-section 4, to the effect that a failure to give such notice should not invalidate any appointment made under this section. It was, he said, obvious that disastrous results might happen without some such proviso.

Amendment moved—; In page 7, line 14, after the word 'made' to insert the words 'provided that a failure to give any such notice shall not invalidate any appointment made under this section.'"—;(The Lord Chancellor.)

On Question, Amendment agreed to.

*LORD ELLENBOROUGH moved that a sub-section be inserted to provide that the public trustee should be appointed as additional trustee on the application of any trustee or beneficiary in any trust in which a solicitor was acting or had acted in the double capacity of solicitor and trustee. He would himself have liked to see it made illegal for any person to hold the double position of solicitor and trustee to the same trust. He had, however, been told that the opposition to such a change in the law would be very strong, and that it would be outside the scope of this Bill to bring in a clause to that effect. Therefore, as a layman he appealed to The Lord Chancellor and to the other noble and learned Lords present to give co-trustees and beneficiaries such relief from their anxieties as this Bill might render possible. He asked for their sympathy all the more because they had never been in the position of the unfortunate layman, for even in their younger days no evil-disposed solicitor would have been likely to attempt to deceive a barrister in good practice. An ordinary layman, and by that he meant a man capable of earning his own living in his business or in his profession, might be fairly capable of holding his own against another trustee, or against a solicitor to the trust who could be changed. But whether he was a trustee or a beneficiary he was terribly handicapped when dealing with an irremoveable trustee, who as solicitor to the trust could get possession of documents and accounts.

Ladies were in a still worse position. Most of them knew less of business than the average layman. A lady once told him that she felt like a rabbit in the presence of a rattlesnake when transacting business with her co-trustee solicitor. The superior power conferred on one man by his double position of solicitor and trustee deterred many men from accepting trusteeships. If this one man was capable of misconduct, the trust fund was insufficiently protected, and both beneficiary and co-trustee might at any moment find themselves reduced to a state of bankruptcy. He did not at all wish it to be understood that he was attacking the great majority of solicitors. He was sincerely grateful to several of them, some of whom were still alive, for valuable advice given to him when in doubt and difficulty. But unfortunately there was a small minority among them who had shown themselves unable to withstand the temptations to which they had been exposed by the immense power given to them in their double capacity of solicitor and trustee. If this or some similar clause were accepted and made use of it would, he hoped, have the effect of protecting solicitors of this class against themselves and of giving additional security to trust funds.

Amendment moved—; In page 6, line 14, after the word 'made' to insert as a new sub-section '(5) If any trustee or beneficiary in any existing or future trust in which a solicitor is acting or has acted in the double capacity of solicitor and trustee, shall apply to the Court to have the public trustee appointed as additional trustee, the Court shall make the appointment.'"—; (Lord Ellenborough.)

THE LORD CHANCELLOR

accepted the sub-section with slight amendments, one of which required the consent of the public trustee to his appointment.

On Question, new sub-section, as amended agreed to.

Clause 5, as amended, agreed to.

Clause 6, agreed to.

Clause 7:—;

*LORD FABER moved to delete the latter half of Sub-section (1). The words he proposed to leave out were—; Except where the liability is one to which neither the public trustee nor any of his officers has in any way contributed, and which neither he nor any of his officers could by the exercise of reasonable diligence have averted, and in that case the public trustee shall not, nor shall the Consolidated Fund, be subject to any liability. As amended, the sub-section would read—; The Consolidated Fund of the United Kingdom shall be liable to make good all sums required to discharge any liability which the public trustee, if he were a private trustee, would be personally liable to discharge. The first part of the clause as it stood rightly laid it down that a public trustee should only be liable to the same extent as a private trustee was now liable. Why, therefore, should words be inserted exempting the public trustee from certain liabilities which private trustees had not to incur? He confessed that the words were difficult to understand.

Amendment moved—; In page 7, line 4, to leave out from the word 'discharge' to the end of the subsection."—;(Lord Faber.)

THE LORD CHANCELLOR

thought it was the subject itself which was difficult to understand, and not the wording of the clause. What the clause meant was this. The Consolidated Fund was liable to make good all sums required to discharge any liability which the public trustee, if he were a private trustee, would be personally liable to discharge. This gave protection to all persons interested in trust funds. It was a very great advantage, especially in the case of small properties, if the persons interested could go to sleep feeling quite secure as to the safety of their property. But it was obvious, in the case of properties in regard to which there were other trustees and those trustees committed faults, the public trustee and the Consolidated Fund ought not to be made liable. Therefore the clause provided that the Consolidated Fund should answer for the default, except where the liability was one to which neither the public trustee nor any of his officers had in any way contributed, and which neither he nor any of his officers could by the exercise of reasonable diligence have averted. The clause was quite clear as it stood, and he could not consent to the Amendment.

* LORD FABER

A private trustee under those circumstances would not be liable.

THE LORD CHANCELLOR

Yes, he would, even in cases where he has not been guilty of any negligence at all. That is unfortunately the law.

* LORD FABER

said he took it that a person who employed the public trustee would have to contribute to an insurance fund.

THE LORD CHANCELLOR

replied that under the Bill nothing would be charged beyond what was necessary for making the thing self-supporting.

* LORD FABER

said that if there was only a small fee charged almost everyone would employ the public trustee and a very large Department would be created. People would be induced to take this course because they would have the advantage of being guaranteed by the Consolidated Fund.

Amendment, by leave of the House, withdrawn.

Clause 7 agreed to.

Clauses 8, 9 and 10 agreed to.

Clause 11:—;

THE LORD CHANCELLOR moved to omit from Clause 11, which deals with the mode of action of the public trustee, a proviso which declared that nothing in the Bill or in any rule made under it should confer on any person not otherwise entitled any right to appear before any Court on behalf of the public trustee or do any act which could otherwise only be lawfully done by a barrister or solicitor. He did not think it right that there should be special protection for barristers or solicitors or any other class or profession. The general law should apply, and he therefore proposed to omit the words in question.

Amendment moved—; In page 8, line 39, to leave out from the word 'provided' to the word 'solicitor' on page 9, line 5."—;(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 11, as amended, agreed to.

Clause 12 agreed to.

Clause 13:—;

THE LORD CHANCELLOR

said his Amendment to this clause was of a technical character, and he did not think their Lordships would have any difficulty in accepting it.

Amendment moved—; In page 9, line 35, after the word 'estate' to insert as new sub-sections: (2) The Court may make the appointment of a person as judicial trustee to act as executor or administrator, with the will annexed, temporary, or subject to such conditions as to it may seem fit, and may sanction or direct the transfer of the estate to some other person for administration, and also the release of the person by whom such transfer is made. (3) Where application is made to the Court for the appointment of a judicial trustee, and it appears to the Court that the gross value of the trust property is less than five hundred pounds, the Court shall appoint a judicial trustee, unless sufficient cause is shown to the contrary. (4) This section shall be read as one with the Judicial Trustees Act, 1896."—;(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 13, as amended, agreed to.

Clause 14:—;

THE LORD CHANCELLOR

said that unless the words in his Amendment were inserted there would be an absolute right to have the accounts of all trusts investigated and audited. It was quite right that there should be this power, but it should be subject to Rules, for it would be absurd that money should be wasted where there was no necessity.

Amendment moved—; In page 9, line 36, to leave out the word 'unless' and insert the words 'subject to rules under this Act and unless.'"—;(The Lord Chancellor.)

On Question, Amendment agreed to.

Clause 14, as amended, agreed to.

Clause 15:—;

LORD ASHBOURNE

asked, with regard to Clause 15—;which provides that The Lord Chancellor shall make rules under the Bill for, among other things, the establishment and regulation by the public trustee of any branch office—;what was to be understood by the words "branch office." Was there to be a network of branches all over the country? If so, that would become a serious question for the Treasury.

THE LORD CHANCELLOR

said it was intended primarily to establish the public trustee in London. It was certainly not intended to set up branch offices all over the country; but there were officials connected with the High Court and the County Court in different parts of the country, and the idea was that the services of those already in the public service should be utilised.

Drafting Amendments agreed to.

Clause 15, as amended, agreed to.

Clause 16:—;

Drafting Amendments agreed to.

Clause 16, as amended, agreed to.

Remaining clause agreed to, and Bill re-committed to the Standing Committee; and to be printed as amended. (No. 72.)