HL Deb 25 February 1971 vol 315 cc1203-17

5.15 p.m.


My Lords, I beg to move that this Bill be now read a second time. I am sure that your Lordships will share my deep regret at the circumstances which have made it necessary for me to move the Second Reading of this Bill in place of my noble and learned friend Lord Hodson. For my part, I should have wished that the first occasion on which I addressed your Lordships had been in a less responsible role, but I feel confident that I can still expect your Lordships' traditional indulgence if my explanations of the Bill should be too short or, what is more likely, too long and yet too obscure.

The Bill is short, technical and I think wholly uncontroversial; so much so that it passed through all its stages in another place formally, without any exposition or discussion. I am told that that makes it desirable that in this House there should be at least a brief explanation of what it is intended to achieve. It carries out the recommendations of the Law Commission which are designed to clarify and simplify that relatively minor branch of the law which deals with powers of attorney. As your Lordships will be aware, those are the formal instruments by which one person, the donor, delegates to another, the donee, the power to act in his place in legal transactions. Although it is a minor branch of the law, it is one which may well affect each one of us at some time in the course of our activities.

The requirement that such a document should be under seal is imposed in some cases by Statute but more often results from the Common Law rule that one can delegate a power to execute a document under seal only by a power of attorney which is itself under seal. Thus the power of attorney forms an important part of documents of title to land and plays a part in other business transactions. The Law Commission made extensive inquiries lasting over nearly three years, as a result of which they found that there was wide agreement, not only on the defects of the present law, but also as to the necessary cure. To their Report last September they annexed a copy of a proposed Bill, which is substantially that which I am now submitting to your Lordships' House. The Bill applies only to England and Wales, except for one provision, Clause 3 (which I shall mention in a moment), which applies to the rest of the United Kingdom; that is, to Scotland and to Northern Ireland.

Coming now to the substantive provisions of the Bill, I would point out that there are three clauses which deal with what I may call the "mechanics" of the power of attorney. They are Clauses 1, 2 and 3. Clause 1 provides, naturally, that a power of attorney shall be signed and sealed. What there is new in it is the provision that a power of attorney may be made by direction and in the presence of the donor of the power. That is to meet the case where, because of physical handicap, the person desiring to give a power of attorney is unable to sign it by himself; and the Bill provides that in those circumstances it can be done in his presence and in the presence of two witnesses.

Clauses 2 and 3 deal with two related matters. As the law stands at present, there are some statutory provisions which require powers of attorney to be filed in the Central Office or in the Land Registry; and, apart from that, there is a general permissive power for such filing. The practical purpose of that is to enable office copies—official copies—to be provided, because it frequently occurs that the power of attorney is a necessary part of the documents of title of a number of different transactions which are all done under the same power of attorney.

What the Law Commission recommend in this respect is to take advantage of modern scientific advances and provide that a power of attorney may be proved by a photocopy or other facsimile copy, certified either by the donor of the power or by a responsible person, such as a solicitor or a stockbroker. The existence now of these methods of facsimile reproduction makes the possibility of errors in copying impossible, and accordingly it is proposed that the present requirement, where there is a requirement of filing, and the present practice of filing shall be abolished so far as future documents are concerned, the necessary documents for the purposes of proof being obtained by photocopying and certification by witnesses.

There is one other clause which deals with what I may call the mechanics of the thing and that is Clause 9, which, with the Schedule, provides that there shall be a simple statutory form in which powers of attorney may be granted. I think your Lordships may welcome the new trend in which the incantations and the runes are no longer necessary and simple words understood by every person are substituted in their place. It is very brief and very simple, and Clause 9 provides that the effect of doing it in that form will be to give to the donee all the powers of the donor.

The next matter with which the Bill deals is with the protection of donees and third parties, and these are to be found in Clauses 4, 5 and 6. There are existing statutory provisions in the Law of Property Act and in the Trustee Act but the Law Commission found—and indeed I think all lawyers can agree with them on this—that those clauses were obscure and, it may well be in some cases, illusory. Therefore, the Bill proposes to repeal those clauses and to substitute something which it is hoped is clearer. Clause 4 deals with a special case on which I need not linger, where the power of attorney is granted for the protection of the donee.

Clause 5 deals with the general protection of dortecs, which in effect provides that they shall be protected by what they have done so long as they have no knowledge that the power of attorney had been revoked. Clause 6 removes some minor obscurities as to how instruments executed by attorneys can be executed. Clause 7 repeals a provision which is now spent and which resulted from the disabilities which at the time, in 1925, affected the status of married women. Those disabilities having disappeared, the necessity for this clause also disappears.

Finally, Clause 8 deals with the special position of trustees. The existing law on this subject is unsatisfactory in this respect. It enables a trustee to delegate his powers when he intends to go outside the United Kingdom for more than a month, but there is automatic revocation upon his return; and if he only returns for a day and then goes back again the power of attorney has gone and a fresh one has to be executed. The solution proposed in Clause 8 of the Bill is to grant to trustees a power to delegate for a period not exceeding 12 months. They remain liable to beneficiaries for anything done by the donee under the power of attorney; the power of attorney requires to be witnessed, and there are provisions that notice of it shall be given to the other trustees and to those persons who are entitled to appoint fresh trustees. This power is not dependent upon going outside the United Kingdom. It is simple and workable and the protection of the beneficiaries, I venture to submit, is sufficiently ensured by the fact that the trustee remains liable for anything that has been done by the donee acting under the power of attorney. There is also a clause which adapts these powers to trustees in a special position under Statute.

My Lords, those are the substantive provisions of the Bill. There is, however, one recommendation of the Law Commission to which I should draw attention.

One of the problems in connection with powers of attorney arises in those cases where the donor of the power is in a state of increasing mental incapacity. As the law stands at present, the power is revoked at the moment at which the mental incapacity reaches a stage recognised by the law as rendering him incapable of managing his affairs. Those are the circumstances in which in real life it is very convenient and very useful and very practical that a power of attorney should be used, but it is subject to this great difficulty under the existing law. This the Law Commission drew attention to, but their recommendation was: The question of the granting and continued validity of a power of attorney by persons suffering from diminishing mental capacity should be considered as part of a wider review of the administration of the property of persons of unsound mind. This aspect of the matter is clearly one which could not be dealt with in a Bill the purpose of which is to deal primarily, and indeed solely, with powers of attorney, and it is for others to consider whether that inquiry which the Law Commission have recommended should proceed or not.

My Lords, I will not pretend that this Bill will effect a major reform in the law. It will clear out, however, one of those cubby holes in the law which ought to be cleared out in this part of the twentieth century. It will. I believe, be beneficial to lawyers and to those engaged in commerce. I beg to move.

Moved, That the Bill be now read 2a.—(Lord Diplock.)

5.32 p.m.


My Lords, the whole House will regret very much the reason why the noble and learned Lord, Lord Hodson, cannot be present to move the Second Reading of this Bill this afternoon, and I am sure that the whole House will wish him a very speedy recovery. It has, however, given us the pleasure of a maiden speech by the noble and learned Lord, Lord Diplock. It is not, I imagine, often that the subject of a maiden speech is the Motion for a Bill to be read a second time, but there can certainly be no Member of your Lordships' House more qualified to do so than the noble and learned Lord, Lord Diplock, and I am sure that after hearing him do so your Lordships will agree that we shall all look forward to hearing him in the future.

This Bill is only another example of the patient and careful work which the Law Commission do. Finding that some branch of our law is not in a satisfactory state, and after consulting fully all those who are most expert in the field in question, they provide us with a remedy. It is not merely that part of our law in this field is anomalous or unsatisfactory. Some of it is unsatisfactory merely because we live in a changing world, and perhaps a good example is the old provision that if a trustee intended to be out of the United Kingdom for at least a month there was a power of attorney which ceased on his return; and as the Law Commission say in their Report this requirement appears to have more relevance to the past when going abroad was an adventure undertaken seldom and then usually for an extended period. To-day, a large proportion of the population, and a still larger proportion of those who are likely to be trustees, go abroad at frequent intervals, often for periods of less than one month". Similarly, after commenting on the wisdom of restricting the right, as now, to delegate in cases where a trustee was out of the United Kingdom, they pointed out that, a person holidaying in a remote part of Scotland was probably more inaccessible than someone … in New York where he could be reached by airmail in under 48 hours. And, at present, a person may delegate if he intends to go to Dublin, but not if he intends to go to Belfast. In another field to which the noble and learned Lord has referred, namely, recent inventions in the reproduction of documents, I have no doubt that your Lordships will agree that the provisions made by the Bill for the recognition of photo copies and photo copies of photo copies are sound. There is one point on which I am not quite clear. In this well-reasoned Report, which is followed by a draft Bill and explanatory notes on the draft Bill, the explanatory note on Clause 3 says, in referring to the photo copy: This expression, as subsection (1)(a) says, includes any reproduction made by a device for reproducing documents in facsimile whether or not the process is photographic in the technical sense"— the clause does not in fact include the words, "Whether or not the process is photographic in the technical sense". The note goes on: … many of the modern devices are not". It may be that some noble Lords are as ignorant as I am, and perhaps in replying the noble and learned Lord could tell us what are the devices referred to which are so common the substance of which is not photographic at all.

The question of incapacity from infirmity of mind or old age or illness is, of course, of great importance, and I entirely agree with the noble and learned Lord, Lord Diplock, that the Commission were right in coming to the conclusion that it was part of a larger subject which they ought not to deal with in this Report. They refer to the Memorandum of the Law Society, in paragraph 27 of their Report, in which the Law Society say: It seems anomalous … that whereas so complete and exhaustive a study of the law regarding mental health has been made and the conclusions of this study given statutory effect, the law relating to the care of the property of all mentally ill has never been examined at all". And the Law Commission further say: We agree with these observations and strongly support the Council's recommendation that this branch of the law should be reviewed. A wide-ranging examination could not appropriately be undertaken as part of the present exercise, and accordingly we make no further recommendation on this matter. In paragraph 1 of their Report, on the same subject, they say: We hope, therefore, that this aspect of the matter will receive further consideration as part of that wider review by a Departmental Committee, or similar body, suggested by the Council of the Law Society in their recent Memorandum". I cannot ask the noble and learned Lord, Lord Diplock, but I apprehend that I can ask the noble and learned Lord the Lord Chancellor what the Government's intentions are in this regard, and whether, and if so when, it is their intention to set up such a Departmental Committee or similar body in order to undertake that larger review.

I was not perhaps as clear as I should have been from what the noble and learned Lord, Lord Diplock, said as to why, although the draft Bill was not intended to apply to Scotland, Clause 3 now applies to Scotland, or whether the alteration in the definition of the word "stockbroker" is related to the change in making Clause 3 apply to Scotland. I welcome the abolition in the repeal Schedule of any distinction between married and single women, and agree with the Law Commission that this is now clearly an anachronism.

Subject to those observations, I would welcome this Bill. It is, of course, as the noble and learned Lord indicated, entirely non-Party political, and I would hope that when it reaches another place my noble friends here and those concerned on the other side in another place may think it right to agree to this being taken there by a Second Reading committee, which of course, avoids a loss of time on the Floor of the House, because it is, after all, entirely non-political. It is, of course, not unknown for Lord Chancellors—and maybe other members of the Government—when Government legislative time is rather full, to invite some private Member to introduce a Bill which would otherwise have been introduced by the Government. This is a Law Commission Bill. I certainly take it that the fact that the Government are not introducing it themselves casts no reflection by them on the Report. For those reasons I welcome the Bill from this side of the House, and hope that it will soon obtain a speedy Second Reading.

5.40 p.m.


My Lords, I intervene in this debate only to indicate the attitude of the Government towards this piece of legislation and to say one or two simple things about it, because the content and purpose of the legislation has been so admirably set out by my noble and learned friend Lord Diplock, and the noble and learned Lord who sits on the Front Opposition Bench has added whatever footnotes might have been necessary. I should like to associate myself with what both noble and learned Lords said about Lord Hodson and my hope for his speedy recovery. It was a very sad event, and I hope that Lord Hodson will soon be back with us. The news I have of him is relatively good. I should also like to congratulate my noble and learned friend Lord Diplock on his maiden speech. It is a great pleasure to hear Law Lords playing a part in our political activities without the smallest impropriety. I have known the noble and learned Lord for many years. I have known him since he was Secretary of the Oxford Union, which is quite a long time ago. I know as a matter of fact that politics lost a formidable debater when he embarked upon a sedulously austere legal career. He is also known in many other fields—as an intrepid horseman, where I do not follow him; nor can many horses be found of sufficient strength to bear my weight.

If I may deal with the few points which I can deal with out of the speech of the noble and learned Lord, Lord Gardiner, may I say at once that the Government welcome this Bill. As the noble and learned Lord, Lord Gardiner, indicated, in getting on with the business of law reform in a rational way the limiting factor is of course Parliamentary time in another place; and the Lord Chancellor has to adopt various devices in order to get that time. One method of doing so is to induce willing Members of the Back Benches in another place to sponsor Private Member's Bills. Quite a number of Law Commission Bills have been so sponsored in the present Session by Members of both Parties. I think the noble and learned Lord, Lord Gardiner, overlooked for the moment that the Bill has come up from another place and has not to go down to it.

I should like to thank not only my noble and learned friend on the Cross-Benches for introducing the Bill here, in which he did a notable public service of a rather difficult and onerous kind in the middle of a busy and distinguished life as a Law Lord, but also the Member of another place, Mr. Martin McLaren, who, with great public spirit, introduced a Bill which cannot, I think, affect many votes at a General Election but which none the less will slightly improve our law. I should like to thank them both for what they have done. The noble and learned Lord, Lord Gardiner, bowled a very fast ball at me about photocopies. But I had a long stop, and I can now tell him that the Xerox process is not a photographic copy but a thermographic copy; and as this is one of the commonest forms of reproduction of documents available, I think that partly answers his question.

The question of incapacity is a very real one in this connection. I am not sure myself that a wide review of the way in which the property of the mentally afflicted is administered will be necessary. It may be in the end. The Court of Protection exists for this very purpose, and the more I hear of the Court of Protection, for which I am departmentally responsible, the more I feel I ought to seek its advice in my own affairs at the earliest possible moment. It seems to be the most ideal way in which one can arrange one's affairs in the latter part of one's life.

But many people use powers of attorney, for the very intelligible reason that they want their affairs to be administered by close relatives. Often a father uses his son for this purpose. When I went abroad in the war I certainly executed a power of attorney in favour of my father. Had I been shot in the head instead of the leg, that power of attorney would have lapsed, I think, because I should then have become mentally incapacitated for a time. That is very inconvenient, because one of the main purposes for which the power of attorney is used is when you feel that for some reason or another you may become incapable of managing your own affairs; and even in the case of a young man like myself going off to fight, this may very well happen in the ordinary course of battle experience. So this is not by any means a purely academic subject. In practice, the donee of the power of attorney goes on using it. There is no question but that had I been shot in the head my father would have gone on acting under the power of attorney that I had signed, but it would have been totally illegal. I feel that this is a serious matter, and one which deserves fairly urgent consideration. That, I know, is the view of the Law Society and of the Law Commission.

I can only tell the noble and learned Lord now that I have the matter very I much in mind. There is a limit to the number of inquiries that I can set on foot simultaneously, and I hope to find a solution to this particular problem fairly shortly without a wide-ranging inquiry. But if I do not, then I suppose a wide-ranging inquiry will be the only solution, I and sooner or later I shall have to set one up. But I am not in a position this afternoon to make any announcement. As the noble and learned Lord who proposed the Second Reading rightly said, it is not really part of this particular exercise.

My Lords, I think that covers all the points except one, the variation in the language of Clause 3 about stockbrokers. That I cannot answer ex improviso. Perhaps my noble and learned friend on the Cross-Benches can; otherwise I shall have to write to the noble and learned Lord who raised the question and tell him the answer. I am much obliged to both noble and learned Lords who have taken part in this debate.

5.47 p.m.


My Lords, I should like first to add my congratulations to my noble and learned friend Lord Diplock upon introducing this Bill and to express my gratitude to the Law Commission. At this stage, I have only two points to which I should like to refer. The first reflects the feeling I often have about the Law Commission's proposals: I welcome what they have done but regret a little that they have not gone a little further along the path of modernising the law. The path that I wish they had taken (and it may yet not be too late to take it) is to get rid of this medieval doctrine of the seal. It really is time that we got rid of executing documents under seal. This is still provided for in the Bill. Even the nice little form at the end, which is an excellent document and which I thoroughly welcome, still provides for sealing of the document.

My Lords, everybody knows that sealing is now a completely fictitious matter. There may be some noble Dukes, or some old-fashioned people, who get a seal off their watch chain and put down a piece of wax, but normally the sealing consists of either placing a ruler on the piece of paper, or doing nothing at all, or taking a look at a rather scrubby red mark which the Solicitors' Law Stationery Office has put on the document. I would have hoped that we might have got rid of that mumbo-jumbo and aligned ourselves with most other civilised countries. Of course I know that there is a doubt (to which the Law Commission refer at the end of their Paper) as to whether a document which has to be under seal can be executed by a power of attorney which is not under seal. I do not know whether or not that is so. But if it is so, it should not be difficult to get round it by inserting a simple clause to the effect that anyone who is in possession of a valid power of attorney may execute any document which the donor could have executed whether under seal or not. If that were done, we should have taken one more step towards modernising the law. Perhaps the noble and learned Lord will consider whether that can be done at a later stage. The power of attorney of course, under Clause 1, still has to be witnessed by one or, in some cases, two persons, so the necessary precautions are there, and the sealing is, as I said, just a bit of mediæval ritual.

The other point is rather more difficult, and it relates to delegations by trustees in Clause 8, where a number of suggestions are made for replacing certain provisions in Section 25 of the Trustee Act 1925. There is a long passage in the Law Commission's Report which deals with this matter: they have certainly given it very through treatment. It is easy to criticise the existing state of the law. I quite agree that it seems absurd that a trustee may appoint an attorney trustee if he is going to Dublin but cannot do so if he is going to Belfast; that if he is going up into the wilds of Scotland, miles from any telephone, he cannot appoint an attorney, but if he is flying to Paris, where he can be dialled within 30 seconds, he can. As I say, I agree that that does not seem very sensible.

On the other hand, the point which was referred to by the noble and learned Lord, Lord Gardiner, does not, with respect, seem to me to be a good reason for changing the law. It may be true, and it probably is, that nowadays people tend to go abroad frequently for short periods without thinking anything about it, whereas previously, when the Trustee Act was drafted, journeys abroad tended to be longer and more elaborate. I should have thought that that was a reason for not changing the law, because nowadays most people can, in practice, get by without executing powers of attorney. They fly to New York and back in a couple of days. They will soon he able to do the same with Australia. It does not seem so urgent as it might have been to change it.

The proposals made in Clause 8, on the other hand, are rather drastic. I must say that they filled me with a little alarm. The new subsection (1), referred to in subsection (2), gives an absolutely general power, to delegate for up to twelve months, and the Law Commission's Paper makes it plain that there is nothing to stop a trustee, after he has given one twelve months power of attorney, doing the same thing again for another period of twelve months. It seems to me that that is going rather far in breach of the principle that a trustee is supposed to exercise his powers personally. That is why he was nominated: because he is a person of trust; and he should not delegate to someone else.

I know of course that there are safeguards in the clause. Notice has to be given to persons who have the power to appoint new trustees and to the co-trustees, but there may not be any person who has the power and who is nominated to appoint co-trustees. In any event, in the case of an executor that would not apply because nobody could appoint a fresh executor. I would think that a testator might be rather alarmed if he were to reflect that a person whom he had selected carefully to be his executor could execute a power of attorney which would enable some other person to execute all the powers in the estate for a period of twelve months.

I know, too, that there is in Clause 8(2) the proposed new subsection (5), which says that the donor is liable for any acts or defaults of the donee. But, with respect, that does not really meet the case, because what goes wrong with trusts nowadays is not so much breaches of trust, which are comparatively rare, but errors of judgment or wrong exercises of discretion. It is very much to be feared, I should have thought, that under this provision trustees would nominate a solicitor, or perhaps an accountant, to exercise the power for twelve months who might, in the course of acting perfectly within the powers of the trust, nevertheless commit the trust to some very unfortunate line of policy or decision.

I have read the Law Commission's paragraphs with some care, and I see that they put out working papers on this subject and invited comments. However, it would very much help me if the noble and learned Lord, in replying, or perhaps at a later stage, could let us know to what extent this change really reflects demand from solicitors, accountants, people who manage trusts, or even from the members of the Chancery Bar who are accustomed to seeing how trusts are in fact administered. I am not saying at the moment that this is undesirable, but I suspect that it goes too far.

I would like to see some further safeguard, for example, which required notice to be given to some of the beneficiaries. I can see objections to that, too, and the Law Commission considered them. But I have a feeling that the existing safeguards against this very wide power are not entirely adequate, and I should be glad to be reassured that professionals think otherwise. If that is not so, I should like to reflect on this, perhaps in consultation with the noble and learned Lord, before the Committee stage in order to see whether some further tightening up of the precautions in relation to this matter may be necessary. My Lords, I am sorry to have said more than a few words on this subject, but it is perhaps the most important innovation in this Bill, and I rather think that noble Lords ought to give it a little consideration before they just pass it on the nod. Otherwise, I entirely welcome the Bill.

5.56 p.m.


My Lords, I apprehend that the points which have been raised by my noble and learned friend Lord Wilberforce are probably better dealt with at the Committee stage. Obviously they require a considerable deal of reflection. There was one point I omitted—my noble and learned friend Lord Gardiner raised it—and it was to explain why Clause 3 of the Bill is applicable to the United Kingdom and not merely to Scotland. It deals with the proof of powers of attorney executed in the English form. It is obviously desirable that they should be proved throughout the United Kingdom in the same way as in England and Wales. This alteration in what the Law Commission recommended has had the approval of the relevant authorities both in Scotland and in Northern Ireland. I think that all that remains for me is to thank your Lordships for the welcome which has been given to the Bill, and in particular for the kindness and indulgence which has been shown to me personally in my very inefficient manner of moving its Second Reading.

On Question, Bill read 2a, and committed to a Committee of the Whole House.