§ 5.43 p.m.
§ Order of the Davy far the Second Reading read
§ THE LORD CHANCELLORMy Lords, I rise to move that this Bill be read a second time. It is a Bill to carry one step further the process of removing the inequalities between men and women which have survived from the old Common Law of England. It is a Bill to remove a legal restriction upon the right of a woman to do what she likes with her own property, a restriction commonly known among lawyers as a "restraint on anticipation." I will be perfectly frank in telling your Lordships that this Bill was not part of the original programme of the Government. It owes its origin to the implications or a Personal Bill, which was passed by your Lordships' House, called the Mountbatten Estates Bill. That is a Bill to remove the restraint upon anticipation in that one particular case. I am told that, as the result of the introduction of this Bill, that measure has now been withdrawn in another place.
That Bill followed the normal procedure of your Lordships' House with regard to a Personal Estates Bill. It was considered by a highly expert Committee appointed by your Lordships for the purpose, consisting of the Lord Chairman of Committees, Lord Hailsham, Lord Simonds, the late Lord Uthwatt and Lord Kershaw. On this Committee reporting in favour of the Bill, I introduced it into your Lordships' House and it passed through all its stages without opposition. It attracted some public attention in the Press, and there is a Motion on the Paper in another place in the names of certain Conservative Members, criticising the Bill on the ground that it does not go far enough; that while it removes a hardship from one particular woman, the hardship is one that ought to be removed generally from all women who now suffer from it. I confess that that point seemed to me to merit consideration. The more I considered it, the more I became convinced that, in the circumstances of today, the restraint upon anticipation is a hardship in practically every case where it applies, and there is now no reason why it should not be removed generally.
895 The history of the matter goes straight back to the days when, by the Common Law of England, a husband was entitled to all the property of his wife. Any property which she had before marriage and any property which came to her during the marriage fell completely under her husband's control, and he could do what he liked with it. From the sixteenth to the end of the eighteenth century, inroads upon the husband's rights were made by predecessors of mine in this office. That was because the total incapacity of a married woman to own property appeared more and more unsatisfactory and illogical. Property could be given to trustees in trust for the married woman for her separate use. It was found that that involved the proposition that the married woman could dispose of such property as an unmarried woman could. Before the end of the eighteenth century, it had become clear that to give a woman that right was to put her at the mercy of her husband. By one means or another, he could induce his wife to sell or mortgage her future income and hand him the proceeds of the sale or loan.
The Court of Chancery came to the rescue. Lord Thurlow was the first Judge to devise this restriction, and he and Lord Eldon, by their decisions, established it as valid in law. It was established that, by imposing a restraint upon anticipation, a wife could be effectually prevented from disposing of her future income and thereby protected against her husband. It was said at the time that she was protected against both the kicks and the kisses of her husband. Gradually it became the invariable custom of those lawyers who prepared settlements and wills to insert the clause whenever property was to be left in trust for a woman. The restraint did not operate until she married. It operated during her marriage, but ceased the moment her husband died or the marriage became dissolved, and it attached again to any property left when she re-married.
After the Married Women's Property Act, 1882, when all the property of a married woman became her separate property and not that of her husband, the scope of the restraint became very wide indeed, and what had originally been invented as a protection for a married woman against her husband became less and less necessary for that purpose, and 896 came to be regarded by those interested in the emancipation of women as an anachronism which ought to be removed. The matter was referred by my predecessor, Lord Sankey, to the Law Revision Committee, an expert Committee of which four of your Lordships' House were members—Lord Wright, Lord Goddard, Lord Porter, and Lord Schuster. That Committee unanimously recommended that in all future instruments a clause retaining the restraint should be void. The Committee refrained from recommending the abolition of a restraint in instruments already executed.
I should like at this point to refer to what that Committee said, in order to get it on record, because I believe they put the matter as plainly as it can be put. In paragraph 20 of their Report, dated 1934, they say this:
This makes it necessary to examine the institution know as 'restraint upon anticipation' and to make a recommendation upon it. This institution is somewhat technical, and we shall do our best to describe its main features in simple and non-technical language. The 'restraint upon anticipation' means that in the case of a married woman, and only in her case, it is possible, by inserting the appropriate clause in the settlement or will whereby property … is settled upon her as her separate property … to prevent her, during her marriage, from disposing of or charging by way of anticipation the corpus of that property (that is, the fund or capital itself) or the income accruing from it or both. Such a clause is said to impose a 'restraint upon anticipation,' and in practice to-day it is usually confined to preventing her from anticipating the income, that is to say, disposing of it in advance and before it becomes due. The effect of it is not only to protect her property from her husband, which was the original object of settling it upon her for her separate use, but also to protect it from her creditors and from herself, from her own extravagance, generosity, speculations, or natural desire to comply with her husband's suggestions for its use. The way in which it protects her from her creditors is that if they obtain a judgment against her, they cannot enforce it against so much of her property as is subject to a 'restraint,' either by causing the capital to be seized and realised or by attaching the income before it reaches her hands. From one point of view, this may be called protection against creditors; from another it appears to be a not very creditable means of defeating creditors, and a means not open to an unmarried woman or to a man. Moreover, even when such income has come to her hands and is thus freed from the restraint, it cannot be made available to meet her liabilities under a contract entered into by her at a time when that income had not accrued due and was therefore covered by the 'restraint.' Incidentally, now that many married women engage in professions, trades 897 or business the 'restraint' clause may have the effect of preventing a married woman who is enjoying an income from settled property from raising capital, by a charge on that income, of start or help her in her profession, trade or business.Then the Committee call attention to the fact that the law has been somewhat modified by the Bankruptcy Act and by the Law of Property Act. They go on to say:We have considered whether we should recommend either preserving the ' restraint upon anticipation' in its present state or giving the Courts wider power to modify it in proper cases, or abolishing it entirely. We have come to these conclusions: (a) that, however useful it may have been over a century ago when it was invented and received the approval of the Court of Chancery, its continuance is no longer consistent with the present position of married women, to whom alone it applies: (b) that the restraint upon anticipation' should be abolished by legislation as regards all settlements, whether made by deed or will, which take effect after such legislation comes into force or after such later date as may be provided by it.That was the Report, and when that Report was received the drawing of the line between the past and the future incurred a good deal of criticism. Five bodies united to press for the Bill to be made retrospective—the National Union of Women Teachers, the Open Door Council. St. Joan's Social and Political Alliance, the Six Point Group and the Women's Freedom League. If, they said, the Bill were not made retrospective, it would mean postponing the coming into effect of the complete reform of the married women's property law until almost the end of the century. They quoted with approval the view of the Law Revision Committee, that the restraint "provides a not very creditable means of defeating creditors," and also that it is "no longer consistent with the present position of the married woman." They maintained that the restraint is based on the presumed irresponsibility of the married woman, and that this is not in accordance with her dignity as an adult human being.They pointed out some of the results. It meant, they said, that some married women—in general, those already married and therefore older—were to be kept under a ban in relation to the use of their property, which in future it was to be illegal to place on the property of other married women, in general the now unmarried and, therefore, younger. These 898 older women, they said, were to have a lower status. The restriction was to keep them in a position said by the Law Revision Committee itself to be "no longer consistent with the present position of the married woman." Should these women desire to use their restrained property before it came into their hands, they were to be required to incur what they said was the humiliation and expense of applying to the court for an authorisation to deal with their own property. The court was, in their case only, to have power to decide whether or not the particular use a woman wished to make of her own property was or was not in her interest. Other women and men, married or unmarried, they said, were to be considered as responsible human beings, able to decide for themselves what was best for themselves. They said that it meant a continuation of the complication of the law of the married woman's property, which was unfair to all married women and to those who had dealings with them. It meant that those injustices, as they so regarded them, should continue so long as settlements which had already become effective were in force—that is to say for another fifty of sixty years from that time.
My Lords, I must say that I think those objections have great force. Although, of course, it is true that a fool and his money are easily parted, my experience is that that applies as much to fools in trousers as to fools in skirts. But it was decided—and I have no doubt decided on what then seemed good grounds—to carry out the recommendation of the Committee. The result is that an Act was passed—the Law Reform (Married Women and Tortfeasors) Act of 1935. I think that that was a very intelligent decision at that time. The reforms recommended by the Committee were exceedingly bold, and fourteen years ago it was possible to say that such a restraint might have been in the interests of some married women.
Since that date, of course, taxation has increased and the whole position has been radically altered. A clause which had been put in as a matter of routine by settlors and testators, as a protection of a married woman against her husband, has now become nothing less than a frustration of the settlors' desire to benefit the married woman. Compare the 899 case of a married woman who has property under a settlement executed before 1935 with that of the ordinary married woman of to-day. The ordinary married woman of to-day can, if she thinks fit, raise a little ready money, either by pledging or selling part of her future income or, if her children are of full age, by agreeing with them that some of the trust funds should be sold and divided between them in equitable proportions. The married woman under a pre-1936 settlement can do no such thing—that is to say, so long as she is married, if her husband should die, or if she should divorce him or he divorce her, she immediately regains her freedom to use her money as she likes, and in the interval before she marries again, she may agree with her children, if they are of full age, to dispose of as much of the trust property as she and they think fit.
I believe it to be almost impossible to find a case in the conditions of the day in which the continuance of the restraint can be to the benefit of the married woman. I invite your Lordships to consider the implications of the Mountbatten Estate Bill. If that Bill had been passed (and your Lordships passed it through this House—in my view on good grounds), it might be followed by Personal Estate Bills introduced successively by every married woman who could afford the expense of bringing in such a Bill; and Parliament, if it had passed the Mountbatten Estate Bill, would find there were no grounds on which it could properly refuse to pass the other Bills. The only married women who would not benefit would, broadly speaking, be those who could not afford the expense, unless there were one or two who succeeded in running up debts and were relying on the restraint clause to keep their creditors at bay. I do not think that this would be justice, and in my view the only proper course is to remove all these restraints by means of this Bill.
My Lords, that leads me to one further topic. Some attention has been drawn by the Press to the possible effect on the Exchequer of removing these restraints, and I think I should say something about that. The effect of this Bill on the Exchequer is purely incidental. If a man or a woman, not subject to restraint, spends or gives away half his 900 or her property, there is, of course, less property left to be taxed. The Commissioners of Inland Revenue cannot and do not complain of this; they continue on their way, taxing what they find and not taxing what is not there.
There may be exceptions. If, for instance a man gives away his property to his relatives, hoping to avoid death duties, and dies within five years of making the gift, he fails in his object. The property is liable to estate duty as if it had still been in his possession when he died. That is the effect of a general liability, applicable to men and women alike, whether married or unmarried. To single out one particular class of married women and to restrain them from doing what they wish with their property, for the sole purpose of being able to tax it, would be most unfair. That is not part of the policy of His Majesty's Government, nor, indeed, would such a policy, even if it were just, be effective, because even if the property of a married woman were artificially kept intact until the end of the marriage, it by no means follows that it would remain intact between the end of the marriage and the time when estate duty came to be assessed.
I need say little about the wording of the Bill itself. It has only one substantive clause. Subsection (1) abolishes restraints upon anticipation generally. The wording follows the wording of subsection (1) of Section 2 of the Act of 1935. The greater part of that section consists of provisions for drawing the line between the past and the future. Subsection (2) of Clause 1 of the Bill repeals those provisions. The remaining subsections and the Schedules contain consequential amendments and repeals in other Acts. It is true that none of us favours retrospective legislation, and we are all reluctant to proceed in such a way as to upset what may have been stipulated by settlors. But I justify it without any hesitation in this way. I believe that if any settlor who in pre-1936 days imposed restraint upon anticipation in regard to a woman upon whom he was settling property could have lived to see the circumstances of to-day, and could see the way in which that restraint was operating, he would have said: "Had I known this I would never have imposed this restraint." Therefore, I do not think we shall breach the wishes of these people. Had they been here they would, I am 901 confident, have said we were doing the right thing in carrying this through to provide for and help the married woman. I beg to move that the Bill be now read a second time.
§ Moved, That the Bill be now read 2*.—(The Lord Chancellor.)
§ 6.4 p.m.
§ VISCOUNT SIMONMy Lords, neither the Lord Chancellor nor I is a Chancery lawyer. We have both been brought up in what we like to think is the robust and more comprehensible atmosphere of the Temple. If I say a few words now about this Bill it is certainly not with any claim to speak with exceptional experience of the rather difficult subject matter. The Lord Chancellor is evidently wholeheartedly breast high with the whole business. He cannot imagine that there is anything at all worth saying on the other side, and he presents himself in the agreeable pose of the champion of married women in general. I wish to do all that is right and fair by married women and by everyone else, but I hope I may point out to him that the problem here to he solved is not quite so simple as he evidently thinks. It is not an uncommon thing for a man who has some money to leave or to settle to wish to secure that those who share in his bounty will share in it on terms which will secure that they do not waste it. In the case of a man, the usual way in which it is done is by providing either what is called a "discretionary trust" or by providing that if the beneficiary makes any attempt to dispose of the property or to sell his future interest, there is forfeiture, and the property passes to the next person named.
Any solicitor who is really skilled in his business—and, if I may respectfully say so, I think any lawyer who really has practical experience of the matter—knows that that is the way in which it is customary to secure that property which does not belong out and out to the beneficiary, but which is given to the beneficiary by will or settlement on certain terms, is protected from the individual's recklessness or gambling habits or what you please. I conceive that in such cases the settlor, the testator, is entitled, since he is disposing of his own money, to say: "I dispose of it on these terms." He can do that, of course, whether the beneficiary is a man or a women. No 902 question of sex comes into it and no question of marriage. Therefore, if you take this first clause as it is in the Bill—whether it was meant or not I do not know—you will find that that sort of restriction upon alienation will not be altered by the Bill at 311. No restriction upon alienation is touched by the Bill unless it is the sort of restriction which could not have attached to the enjoyment of that property by a man.
What I have described, which is well known to those concerned with such matters—the ordinary way in which a provision may be made to protect the proper use of, say, a life interest given to a man—is, as I have said, normally, either by a discretionary trust under which a trustee has the duty to give to the individual adequate amounts from time to time or, on the other hand, a provision that the interest will be forfeited altogether if the individual seeks to alienate it or to dispose of it. All that is to remain. There is nothing in this Bill which is going to do justice, if it is justice, to those people. But what happened in the case of married women in the past has been this. I do not differ at all, so far as I understand the history of the subject, from what the Lord Chancellor has said as to its origin. I rather think it was Lord Thurlow who discovered this most ingenious process and got it supported in Chancery, in the interests, I believe, of an individual who was a relation of his.
But, however that may be, this doctrine of restraint upon anticipation is absolutely limited to the case of a woman who is married and living under what the law calls "coverture." The money which is provided for her is not necessarily provided out of her own efforts. It is very likely—indeed, it is very often—provided by her ancestor, her father or someone else. In the case of a marriage settlement it is often provided in the form of quite modest sums by the respective parents, in view of the fact that the girl is going to be married. It provides that she is to have an income of so much, and proceeds to attach to it the condition that it is to be an income which is subject to a restraint upon anticipation. That is the thing, and the only thing, with which this Bill deals. It is a very much more serious change in the law than one would suppose from what the noble and learned Viscount the Lord Chancellor aid. It means that however long ago the marriage settlement 903 was made, whatever good reason there was for the parents to impose a condition which would restrain the married lady from anticipating her income, it is all to be cancelled.
I must call the specific attention of the House to the fact (although the noble and learned Viscount has already referred to it) that when this matter was gone into by the Committee to which the noble and learned Viscount referred, and whose Report he has quoted, and when Parliament, as recently as 1935, carried an Act on the subject, it contained, as one would expect, a provision for preventing retrospective effect. If that is not done, it means that any marriage settlement which was made before 1935, though properly and deliberately made by those who provided the money with this condition attached to the income which the wife is to receive, is to be altered retrospectively. The people who made the provision may be dead. The provision itself may be a most reasonable provision. None the less, from the moment the Lord Chancellor's Bill goes on the Statute Book, the whole of that is to be struck out, though deliberately contracted before 1935.
Contrast that with what Parliament did when they made this change in the law in 1935. I approve of the change they made. I think the idea of introducing for the future this very recondite conception of restraint upon anticipation is a very good thing, but to say that that should apply to everything done before 1935, to all marriage settlements entered into solemnly at that time between the parties, is a different matter. When the 1935 Act was passed, it provided that:
Nothing in this subsection shall interfere with or render inoperative any restriction upon anticipation or alienation attached to the enjoyment of any property by virtue of any provision attaching such a restriction contained in any Act passed before the passing of this Act or in any instrument effective before the first day of January, 1936.Those words in the Statute preserved past marriage settlements and did not seek to look behind what had been done by people who had put their money into a settlement for the purpose of providing for the next generation. It quite deliberately provided that they could not interfere with marriage settlements of people before their time, and the Act, 904 which received the Royal Assent in August, 1935, applied only to marriage settlements made in 1936 and onwards.The Lord Chancellor's Bill may be a Bill which seeks to do, in general terms, what is sought to be done in the Mountbatten Bill. I am not concerned with that. We are not considering the particular interest of anyone in England at all; we are considering whether this is a good change to make in the law as a whole. If it is carried out, two remarkable consequences follow. First, it is the most flagrant example of retrospective legislation of which I have ever heard. It cancels the terms of every single marriage settlement that was made before the beginning of the year 1936, and there are hundreds and thousands of them in existence at this moment. Many people in all parts of the country have been living under these marriage settlements. I think it is a matter which requires very substantial justification. It is evident that neither the Committee which the noble and learned Viscount the Lord Chancellor quoted, nor the Act of Parliament to which he also referred, conceived that such a thing would be right, for both Committee and Act of Parliament confined themselves solely to what should be done in the future.
But it has a second consequence, about which the noble and learned Viscount said nothing at all. I do not claim to be a great expert in this branch of the law, but I have tried to understand it and I am very much astonished about this result. The sons of a family may in ordinary practice be restrained from anticipation of income, not by the doctrine of restraint upon anticipation but by the ordinary methods, which I have described already, of discretionary trusts or by forfeiture if there is an attempt to deal with the interests. All that is to remain. The men are not to be relieved of anything at all; but the married women, in whose case in practice I can assure you any good family solicitor would secure the same result by the process of inserting this provision against anticipation, get their freedom. I do not know why the noble and learned Viscount the Lord Chancellor should say that this Bill is one of those noble Bills which are to equalise the position between men and women.
§ THE LORD CHANCELLORI do not think I said anything of the kind. The noble and learned Viscount has been caricaturing for some time what I said. I would ask him not to try and caricature what I said.
§ VISCOUNT SIMONI am sorry, I thought the noble and learned Viscount said that this was a noble Bill.
§ THE LORD CHANCELLORI do not think the noble and learned Viscount thought I said the word "noble." He knows perfectly well I said nothing of the sort.
§ VISCOUNT SIMONThe noble and learned Viscount seems to be a little annoyed with me. I will content myself with saying that this is not a Bill which makes any contribution to the equalisation of the law between men and women. I understand the noble and learned Viscount would agree with me.
§ THE LORD CHANCELLORI do not. I entirely and fundamentally differ. That is exactly what the Bill does.
§ VISCOUNT SIMONIt must be one thing or the other. The Bill must either do something for the equalisation of the law between men and women or it does not. I am only saying, from such limited knowledge as I have, that it does nothing whatever to relieve the man who finds that his income provided in a settlement or a will is restrained from being used by the methods ordinarily employed, whereas it does, in fact, whether rightly or wrongly, remove that restraint in the methods ordinarily employed in the case of a married lady. I do not think the noble and learned Viscount the Lord Chancellor has followed me.
§ THE LORD CHANCELLORIndeed, I have. In so far as a discretionary trust is concerned, it is not touched at all, either in the case of a man or a woman. So far as restraint upon anticipation is concerned, it applies only to married women during coverture. That it does deal with, and does away with.
§ VISCOUNT SIMONWe are there quite at one. I am sorry the noble and learned Viscount feels so "touchy" about it. The observation I want to make is this—and certainly those engaged in drawing up marriage settlements will confirm it. In the ordinary way, a married woman is 906 restrained from using as she will what she has been given by the method of restraint upon anticipation. That is a method which can be applied only in the case of married women during coverture. On the other hand, the ordinary way to restrain a man given an income which he is not to use as he likes is by methods which are not the same but which produce the same result—namely, discretionary trusts or forfeiture if there is any attempt to dispose of interests. All I am saying—and I do not think there is any doubt about it—is that this is not a case, therefore, which equalises the law between men and women, whether the Lord Chancellor says that or not—and I apologise most sincerely if I am mistaken. I say, in any case, that it does not do so. In fact it releases one kind of person from a restraint which the settlor was disposed to make, even though the settlor made it long ago, but it does not do anything whatever to remove a similar restraint, expressed necessarily in a different form, which is applied, in what are thought to be proper cases, to a man's benefit.
I am not in the least hot about this matter; I am, for my part, concerned only that we should appreciate what we are doing. What we are proposing to do is to enact retrospective legislation applied to the case of married women in connection with restraint upon anticipation, when in practice in the case of men a similar protection of the income is provided by methods which are not the methods of restraint upon anticipation at all. I assume that the Lord Chancellor appreciates that fact, and I should be greatly surprised if anyone who is really acquainted with Chancery practice would not agree that this is a Bill that deals, not with the two cases, but is confined entirely to the one case, and deals with it retrospectively. I respectfully suggest to the noble and learned Viscount on the Woolsack that the matter ought to be looked at from that point of view, and, if it is not, there is a certain danger, in view of his eloquence and enthusiasm, that we may make a bigger change in the law than we really intend.
§ 6.22 p.m.
§ VISCOUNT MAUGHAMMy Lords, it is always a difficult matter to intervene in a case where two eminent gentlemen are not in agreement. Nevertheless, I have to 907 say what I think in this matter, and I must say without hesitation that I agree with the view put forward by the noble and learned Viscount on the Woolsack. I think his description of restraint on anticipation is perfectly correct. Those who wish to read an account of it in different language, but precisely to the same effect, can be referred to the 12th volume of the History of English Law, by the late Professor Holdsworth, at page 324 and the following pages. There is only one thing I would add to what the Lord Chancellor has said on the history of this matter; it is not in the least in opposition to anything he said, although it is important to bear it in mind in dealing with the argument of my noble and learned friend Lord Simon. It is that, according to English law, if you give a man property, or give him interest in property, such as a life estate, you cannot put any fetter on the way he shall use it. The law has always regarded that as repugnant and, therefore, any attempt to do it is void.
If any noble Lord wants an incidental view to that effect, it so happens that my eye has caught page 326 of this 12th volume of Holdsworth, which begins with the words:
In fact, this great exception to the principle that the owner of property cannot be prevented from alienating it freely, can be justified both on technical and on substantial grounds.The great exception is the exception which the author has been expounding in the preceding three pages, which explains how, in the case of women—and, I ought to add, in the case of a married woman, and no other woman—it is possible by a gift, by a settlement or by some instrument or other such as a will, to provide that the property is given to the married woman, or to the woman when married, with a restraint on anticipation. This is not Common Law at all, and common lawyers may not fully understand it, if I may say so with great respect. This was an equity doctrine invented, as has already been said, by Lord Thurlow. For many years it was not certain, and had not been decided beyond doubt, that property to which the woman while married was equitably entitled could be tied up by the restraint on anticipation. Ultimately, after many decisions, it was found that it could be so tied up. If anybody interested in the 908 whole thing cares to study the great decision of Lord Cottenham in Fullett v. Armstrong (Milne and Craig) he will find the authorities dealt with; that great Lord Chancellor explained how it was that this striking exception to the ordinary Common Law had been permitted, and how it had been worked out in the way in which it has been stated by the Lord Chancellor.That being the position, I want to point this out. It is entirely wrong to suppose that the doctrine of discretionary trust, which my noble and learned friend Lord Simon has said is commonly adopted, or a clause which says that a man shall hold property given by a third party until he goes bankrupt, or until he allows somebody to levy execution on his goods and chattels, has any resemblance whatever to this restraint on anticipation. You are not then interfering with a man's enjoyment of the property he is given; you are saying he shall hold the property until something happens: it might be until he goes to Rome; it might be until he gets his hair cut—any possible termination of his estate or his interest can be given. The words in the Bill we have before us,
…no restriction upon anticipation or alienation attached … to the enjoyment of any property by a woman,do not, in my opinion, cover such a case as an equitable trust in favour of a man, his children and his relatives. That is not a restriction on anticipation; it is a diminution of his property. He is given by the trust only that which the trustees in their discretion think fit to hand over.Nor is it a restriction upon anticipation to say that if he goes bankrupt the interest comes to an end. There is no anticipation there. He holds the property until he becomes bankrupt, or other things happen which put an end to his estate. So it is wrong to suppose that the interests which my noble and learned friend Lord Simon has so well explained—subject to the criticism which I make—come within subsection (1) of the Bill before us, which deals simply and solely with the restriction upon anticipation or alienation attached or purported to be attached to that enjoyment of the property by a woman under coverture. It relates not to the termination of the property, but to its enjoyment.
§ VISCOUNT SIMONI am very glad to learn from the noble and learned Viscount, but is it no restriction upon alienation attached to the enjoyment of property to say that a man is to enjoy the property as long as he does not seek to alienate it?
§ VISCOUNT MAUGHAMMy answer is: Certainly not—nothing of the sort. That says the man has a limited property. That is not the enjoyment. It means that his interest in the property comes to an end in a certain event. I have suggested a ridiculous event, but the common one is that he should go bankrupt. That is the restriction of his enjoyment. He governs the property until he goes bankrupt. That is not regarded as the same thing in law at all. The difference is that the restriction that he may enjoy the property until he goes bankrupt is a perfectly good Common Law statement of his interest. That is Common Law, and the other depends upon a view of equity—upon which at one time there was doubt and on which Lord Thurlow chose, with some advantages at that time, to express a view,. There is a difference between this sort of situation and the cases which my noble and learned friend has cited as showing that the proposed subsection (1) goes too far. The words in the Bill refer not to discretionary trusts or terminable trusts, but simply and solely to restriction upon anticipation such as those I have mentioned.
I hope that. I am always frank in dealing with anything, particularly where law is involved. I do not like the drafting of subsection (1), because it puts in words which I think have misled my noble friend and which, at first sight, misled me. After the words:
purported to be attached, to the enjoyment of any property by a womanit says:which could not have been attached to the enjoyment of that property by a man …That is an interesting piece of law, but it is absolutely ridiculous to a lawyer because, of course, the restriction of anticipation during coverture could not possibly affect a man, and, therefore, the words are not good. There is no permanent restriction of alienation on the enjoyment of any property by a woman. The only person who is ever going to enjoy anything under the first part of this 910 clause is the woman, and what is the good of saying that is not to attach to a case where we are talking about the enjoyment of property by a man?The reason why it is put in is a somewhat curious one. Section 2 of the Law Reform (Married Women and Tort-feasers) Act, 1935, shows clearly that the Legislature is going to deal only with this separate property of a married woman or property belonging to the daughter of her marriage, or with property acquired by her or devolving upon her as a married woman. Then there is a proviso which my noble friend read. But that proviso does not, in my opinion, refer to those classes at all. What the proviso is putting in, rather curiously, is a statement as regards restrictions imposed by an Act. I am going to complete the story in a moment, but this is what it is dealing with mainly. I think it is dealing there with restrictions imposed on certain noble gentlemen—I think the Duke of Wellington was one, and one or two of our great admirals were others—mho were given property by an Act of Parliament which they were not to alienate. "This," says the proviso to the 1935 Act," we are not touching at all."
It then goes on to say:
…or in any instrument executed before the first day of January, nineteen hundred and thirty-six.I am in a difficulty at the moment in knowing how that applies to the preceding section, which does not deal with men or the powers of men, but simply with the powers of women while married. My noble friend is making a mistake here, and I must put him right. Subsection (2), which he did not read to the House, says:Any instrument executed on or after the first day of January, nineteen hundred and thirty-six, shall, in so far as it purports to attach to the enjoyment of any property by a woman any restriction upon anticipation or alienation"—and then there is added, for what reason I know not—which could not have been attached to the enjoyment of that property by a man, be void.That is the section which says that no restraints upon anticipations are good if they were imposed after the date of the Act.I must say a word on the vigorous way in which my noble friend attacked this 911 Bill as a flagrant example of retrospective legislation because, he said, it left the boys subject to their difficulties and conferred these advantages on the girls.
§ VISCOUNT SIMONNo—because it referred to past marriage settlements.
§ VISCOUNT MAUGHAMThat is one thing, but surely the noble Viscount also said that it was not fair to the boys. I wanted to point out that in truth the effect of this Bill, if it becomes an Act of Parliament, is to put the girls, or the women, into exactly the same position as that in which the men have been for hundreds of years. They both can be made subject to discretionary trusts. There is nothing to prevent a discretionary trust for a girl. There is nothing to prevent giving to a woman who may or may not marry rights which come to an end if she goes bankrupt. In these days a woman can be made bankrupt, which was not the case originally, with the result that ever since the 1935 Act came into effect women have been made, where it was thought to be necessary, the subjects of discretionary trusts. You can give your money or anything you like to Mary Jane, with trustees to hold it for her and with certain other people—generally relatives, of course—to be employed in a discretionary rôle. There is nothing to prevent that either in the case of a boy or a girl.
I think that this Bill—the reasons for the justice of which have been admirably stated, if I may say so, by the Lord Chancellor—should pass. I do not shirk the point that, with regard to instruments which came into effect before the Law Reform Act of 1935, the position is this: that ever since the beginning of 1936 women who married after that date have been free from restraints on anticipation. The women who were already married in 1935 have been subject to that restraint, and the position now is that the man may say that, if he had known the position earlier, he could have made the girl subject to discretionary trust, but never thought of doing so because there was an easier way of doing it. I confess that I am wholly unable to see any injustice in this measure, for the reasons which have been explained, and I support the Bill.
§ 6.41 p.m.
§ VISCOUNT SWINTONMy Lords, I should like to add a word or two to this extremely interesting discussion—not by way of intervening in the legal argument but merely to show how it strikes the common man. The first thing that has certainly been established is that this is a pretty substantial measure. The second thing is that I was greatly interested in what fell from the noble and learned count on the Woolsack, which echoes what many of us have said: that the weight of taxation which is now imposed necessarily and inevitably leads people into doing things which they would not otherwise have done. The third thing that strikes me is that it is very odd that we did not hear anything about this Bill before.
I am not going to say anything about the merits or demerits of the Private Bill which passed through this House. If I had taken strong exception to it I should no doubt have spoken against it. It went to a Committee here which held that on the whole it was justified, and it then passed to another place. But I do not think I should be either impertinent or irrelevant if I took leave to observe that if that Bill had not gone into rather still water in another place we should not have had this Bill brought here. I am not saying there is not a case for relieving married women in instances in which it is justified and where it is right and reasonable to overrule the declared wishes of the testator. But that is a pretty strong thing to do. After all, if we once get into the habit of general legislation, and of feeling that we can undo all that has been done and settled in the past, we are creating a rather dangerous precedent. The Lord Chancellor admitted that that is true. But at the same time one does find terribly hard cases. Of course, no one can look into the mind of a man who took a certain course twenty or more years ago. It may well be that if a testator had been able to look forward to the world we are living in to-day he would not have done all he did do or he might not have done it in the same way.
I am going for a second to entrench on legal ground. I do so, not to express a legal opinion but merely to give my experience in trusts, not as a lawyer but as a person who has come constantly into contact with trusts. Some discretionary 913 trusts for a son or daughter are, of course, as strict as a restraint on anticipation. On the other hand, my experience has been that a wider discretion is as a rule left to the trustees; they are not just automata. One of the most common forms is that there is a general restriction that the daughter is not to anticipate the income, but discretion may be given to the trustees to anticipate a small part of the capital—perhaps, for example, in a case of a youth, to use in some way for the youth's benefit. That is a discretionary trust. But surely there is a halfway house between this absolute removal of all restraint on anticipation under these past settlements—a thing which the Lord Chancellor very fairly said the Committee were dead against when they reported and Parliament was on the whole against in 1939—and the complete bondage of maintaining the restrictions. Otherwise anybody who had enough money might come and present a Bill, which would be unfair, because the people who had not so much money, and who perhaps needed relief just as much, or even more, would not be able to get it. Is there not a halfway house?
It is very common for trustees to apply to the court if there is jurisdiction. It is a very cheap process as I well know, because it can be done on an originating summons—provided you give the power. Of course, if the trust is absolute there is no right for anybody to go to the court for relief.
§ VISCOUNT SIMONIs that quite so? A section of the Act says that a married lady who had property in restraint of anticipation could none the less apply to the court, and that if the court thought proper they could give relief.
§ VISCOUNT SWINTONIs that so? Then what are we doing with this Bill? I am sorry; I ought to have known about that. But I certainly assumed that there was no way out.
§ THE LORD CHANCELLORFor a particular purpose—for instance if one of the daughters of the marriage is going to get married, or something of that sort—the lady who is restrained from anticipation can go to the court and, for that particular purpose, if the court thinks that the application is in her interest, the court has power to make an order notwithstanding the restraint. That is for a particular purpose, and that is all.
§ VISCOUNT SWINTONMay I carry it further? That is for doing something for the daughter. May I take the case which I think the Lord Chancellor indicated, where a woman wanted to get at some money? She would not be able to get more than she could raise upon her life interest. But could a woman who, under a settlement, is restrained from anticipation, go to the court to-day and say, "I want to raise some money. Therefore, I propose that I should be allowed to anticipate nine-tenths of my income," and upon that sell her life interest to somebody and with it buy an annuity or an insurance policy?
§ THE LORD CHANCELLORThe noble and learned Viscount, Lord Maugham, can say much better than I can, but that would not be granted. I think the practice of the Chancery Judges is to want to see some particular, specific and peculiar cases such as I have mentioned. They would never do it at all in that general way.
§ VISCOUNT SWINTONThen apparently the general provision does not go far enough to satisfy what the Lord Chancellor said he thinks is a reasonable thing to do. On the other hand, I must say I rather boggle at the complete reversion of win at a testator has laid down in his settlement. I should have thought that it might be a wise thing to say: "There should he power to approve the removal or the lightening of this restraint upon anticipation in a case where the court is satisfied that it is in the interests of the woman that that should be done." As I say, Parliament having given that general power, the court would have the general discretion. It would not be an expensive application. As I understand it, could be made on an originating summons, for that is quite a cheap way of doing it. The Chancery Judges in Chambers, who are well accustomed to doing this sort of thing to-day, are very wise and understanding people. If it be said that some of these women have quite small estates and even that is too much to do, I would point out that where an estate is small or at any rate below a certain figure, it has not been uncommon to say: "Very well, you can go to the county court." That is a possible elaboration. I suggest that, if the House gives a Second Reading to 915 this Bill and it goes into Committee, it might very well be worth further consideration whether something on those lines would not be a fair compromise between the complete restriction and the complete removal of it.
LORD CLYDESMUIRI rise only to ask a question. I note that in Clause 2 (2) of the Bill the Act is not to extend to Scotland or Northern Ireland. I am aware that the law of Scotland differs widely from the law of England. It may be that this point has been fully considered, but I shall be grateful if the Lord Chancellor, when he rises to reply, can say what are the Government's intentions regarding Scotland, and whether this matter is fully under consideration.
THE MARQUESS OF READINGMy Lords, this discussion proceeded in the earlier stages on so Olympian a level that I had no intention of intruding into the "closed shop," but, as the result of the intervention of my noble friend, Lord Swinton, I wish to say only a very few words. Had I spoken before the noble and learned Viscount, Lord Maugham, I should have been groping about to express in intelligible English what I felt to be the need for impressing upon the House something which had impressed itself upon my mind—namely, that a very clear distinction is to be drawn between the type of provision in a discretionary trust or a forfeiture, and that in a restraint upon anticipation. Listening respectfully, as I always do, to the noble and learned Viscount, Lord Simon, I was struck by his saying, and repeating on more than one occasion, that these were similar restraints. I find it difficult to persuade myself that that in fact is so. I confess, again with great respect, that when the noble and learned Viscount, Lord Simon, was opening his objection to this Bill I thought he was expressing an objection to some of the provisions of the Act of 1935. Obviously in that I was wrong, because he later gave vent to his entire concurrence with those provisions.
We cannot dismiss entirely from our minds the fact that the Mountbatten Bill passed through this House and that no exception was taken to its provisions, although it was framed, I believe, to achieve the same object in a particular case as this Bill is intended to achieve 916 generally. No exception was taken to it, and it proceeded without criticism through the House. Expediency alone can, or at any rate should, never be a reason for altering the law. If expediency conflicts with justice, justice should prevail; but if expediency and justice in any instance go hand in hand, I can see in such a case no reason why the law should not undergo amendment. I believe this to be an example of that situation. Therefore, so far as I am concerned, I desire to support the Bill.
§ 6.57 p.m.
§ THE LORD CHANCELLORMy Lords, may I briefly reply to this discussion which, greatly to my surprise, has engendered neat, although I had thought it was the last type of Bill to do so? Some of the heat was on my part. I must say that I found the speech of the noble and learned Viscount, Lord Simon, wholly lamentable. I still think so. I think so for several reasons. First, I think that to introduce the question of discretionary trust was most unfortunate. It only befogs the whole issue. This Bill has nothing whatever to do with discretionary trust—nothing whatever. It is a wholly different topic and subject matter, and I cannot conceive why that was introduced. Of course, if the noble and learned Viscount is under the impression—and he said so several times and, therefore, perhaps he is—that the restraint imposed by a discretionary trust is similar to a restraint upon anticipation—if he is under that strange illusion, then I can understand some relevance in bringing in discretionary trust. But I hardly think that, on reflection, he would consider the two cases are in the smallest degree in pari materia.
Next, the noble and learned Viscount seemed to suggest that I had almost concealed from the House—or, at any rate, that I had glossed over the fact—that this Bill was retrospective, and that I had referred to it as a "noble Bill" and passed over that matter in silence, The noble and learned Viscount will be good enough to-morrow to see what I did say. He will find that I devoted a large part of my speech to the fact that this was retrospective, and I justified the retrospective element in the Bill by saying that, in the changed circumstances of today, the testators or settlors, if they were 917 aware of the changed circumstances of to-day, might well have said that, in effect, we were carrying out their wishes. At any rate, the suggestion that I had concealed from the House, or at any rate not brought out, the fact that this was a Bill dealing retrospectively with certain matters, certainly was unpleasant to me.
§ VISCOUNT SIMONMay I say that I hope the Lord Chancellor will understand that I had no intention of suggesting that? If I did, I am the first to say that I am sorry. I do not think the Lord Chancellor has quite appreciated the point that I made, perhaps rather obscurely. It may be that settlors and testators in times past would think that some qualification was right, but naturally it was not put into discretionary or other clauses at the time because the restraint upon anticipation did everything they wanted; and perhaps more. My whole point was that in the past that has not been done, which makes it rather strange simply to cancel the whole thing in one sentence.
§ THE LORD CHANCELLORThe noble Viscount in one respect is quite incorrigible. He said that the restraint did all they wanted. But it did not; it applied only to the coverture. If the husband died, or if someone divorced his wife or the wife divorced the husband, it ceased. The point about a discretionary trust is that it attached always, while this applied to a woman only in certain conditions. When I was a young man in the law there still used to be a textbook which was called Persons Under Incapacity, and they were classed together as "infants, lunatics and married women." Upon my word! when I see what married women have sometimes to put up with, I am inclined to think there may have been a grain of truth in that.
Let us consider the position. Are we going to forget the fact that the Mountbatten Bill came up and has been passed by the Committee, over which I think the noble and learned Lord, Lord Simonds presided? We set up a Personal Bills Committee, and if a Bill has been passed by our Personal Bills Committee, it is a quasi-judicial process. We always have eminent Judges presiding, and it has never been opposed by the House of Commons—never in history, as I under- 918 stand. That Bill was passed, and I certainly thought it would go through the House of Commons without any question. But persons on the Conservative side there put down a Motion to the effect, that "If you are going to do it in this case you ought to do it in all cases." That is how the trouble arose.
Therefore, the position simply comes to this. We have got to do it in every Bill in which the person has enough money to go through the process of promoting a Bill. That is a more expensive process than an originating summons in the Chancery Court. When I reflected upon this matter, I could not see that we were justified in not acceding to the form of Amendment which was put down by the Tory members in another place. I do not claim this to be a "noble" Bill, but I claim it to be a good common-sense Bill. I waited throughout the noble and learned Viscount's speech to hear what he was going to say about the problem. I think he rose without knowing whether he was going to vote for or against the Bill, and I think he sat down in the same condition. I do not think he knows.
But what is the answer to this? If you are going to do this in the Mountbatten case, are you going to decline to do it in other cases? If you are going to do it in all cases, why not do it by means of one general Bill, rather than by a series of individual Bills, at considerable cost to the parties? That is the proposition which I put forward. I do not say, and I never did say—and the noble Viscount knows that I never did say—that this was a "noble" Bill. But I do say, that we can strip this matter of all the extraneous and irrelevant circumstances that have been introduced. This is a simple case of a good common-sense Bill which I commend to your Lordships. In regard to the question of Scotland, I do not pose as an expert on the equity law of my own country, still less of Scotland; but I understand that Scotland had no doctrine corresponding to this restraint on anticipation. I will find out whether or not I am right in flirt view, and I will communicate with the noble Lord, Lord Clydesmuir.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.