COMMONS AMENDMENT

HL Deb 25 October 1990 vol 522 cc1651-5

178 After Clause 61. insert the following new clause:

Powers of attorney

Effect of mental incapacity on powers of attorney etc

'.—(1) Any rule of law by which a factory and commission or power of attorney ceases to have effect in the event of the mental incapacity of the granter shall not apply to a factory and commission or power of attorney granted on or after the date on which this section comes into force.

(2) In subsection (1) above, "mental incapacity" means, in relation to a person, that he is incapable of managing his property and affairs by reason of mental disorder within the meaning of section 1 of the Mental Health (Scotland) Act 1984.'.

Lord Fraser of Carmyllie

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 178. I shall speak also to Amendments Nos. 178A, 178B and 183. The new clause seeks to overcome a problem faced by an increasing number of families where a relative who has granted a factory and commission or power of attorney subsequently becomes mentally incapacitated. I n Scotland, unlike England and Wales, a power of attorney terminates if the granter becomes mentally incapacitated. While a curator bonis could be appointed, in view of the costs involved a curatory is not normally considered worth while except for fairly large estates.

As our Lordships will recall, the noble and learned Lord, Lord Morton of Shuna, tabled a clause which mirrored for Scotland provisions in the Enduring Powers of Attorney Act 1985 which apply only to England and Wales.

I would suggest that the new clause before us is sufficient to achieve the laudable objectives sought by the noble and learned Lord, Lord Morton. It has deliberately been kept simple in view of the fact that the Scottish Law Commission intends to publish later this year a discussion paper on powers of attorney and other matters relating to guardianship of the adult incapacitated. It may transpire—and I stress may—that on the basis of the commission's consultations, a more wide ranging consideration of the matter and any points referred to it, that a different solution to the problem will emerge.

I should like now to turn to Amendments Nos. 178A and 178B in the name of the noble and learned Lord, Lord McCluskey. These amendments are aimed at the removal of doubt; but it is questionable whether any doubt in fact exists. They aim, through Amendment No. 178B, to permit the Court of Session to hold, on cause shown, that a factory or power of attorney shall cease to have effect from any date after the date of presentation of the petition.

As the petition to the Court of Session is to the court's nobile officium, we consider that the court has sufficient inherent power to ensure that a petition seeking to replace an existing factor or attorney with another could be granted and a suitable date appointed for the substitution to take effect.

Moved, That the House do agree with the Commons in their Amendment No. 178.—(Lord Fraser of Carmyllie.)

"Execution of documents: Scotland

36B.—(1) This section has effect in relation to the execution of any document by a company under the law of Scotland on or after 31 July 1990.

(2) For any purpose other than those mentioned in subsection (3) below, a document is validly executed by a company if it is signed on behalf of the company by a director or the secretary of the company or by a person authorised to sign the document on its behalf.

(3) For the purposes of any enactment or rule of law relating to the authentication of documents under the law of Scotland, a document is validly executed by a company if it is subscribed on behalf of the company by—

1. (a) two of the directors of the company;
2. (b) a director and the secretary of the company; or
3. (c) two persons authorised to subscribe the document on behalf of the company,

notwithstanding that such subscription is not attested by witnesses and the document is not sealed with the company's seal.

(6) For the purposes of any enactment providing for a document to be executed by a company by affixing its common seal or referring (in whatever terms) to a document so executed, a document signed or subscribed on behalf of the company by—

1. (a) two directors of the company;
2. (b) a director and the secretary of the company; or
3. (c) two persons authorised to sign or subscribe the document on behalf of the company,

shall have effect as if executed under the common seal of the company.

(7) In this section "enactment" includes an enactment contained in a statutory instrument.

(8) Subsections (2) and (3) above are—

1. (a) without prejudice to any other method of execution of documents by companies permitted by any enactment or rule of law; and
2. (b) subject to any other enactment making express provision, in relation to companies, as to the execution of a particular type of document."

(2) Where, on or after 31 July 1990 and prior to the coming into force of this section, a document was signed or subscribed, in accordance with section 36B(2) of the Companies Act 1985 (as inserted by section 130(3) of the Companies Act 1989), by—

1. (a) a company; or
2. (b) a body corporate to which section 36B of the 1985 Act (as so inserted) applied by, under or by virtue of any enactment,

that document shall be deemed to have been validly executed by the company or body corporate in accordance with subsection (2) of section 36B of the 1985 Act as substituted by subsection (1) above.

(3) Where, on or after 31 July 1990 and prior to the coming into force of this section, the presumption in section 36B(3) of the Companies Act 1985 (as inserted by section 130(3) of the Companies Act 1989) applied in relation to a document, that document shall be deemed to have been validly executed in accordance with subsection (3) of section 36B of the 1985 Act as substituted by subsection (1) above, and subsection (4) of that section as so substituted shall apply to the document as if it bore to be so executed.

(4) For the avoidance of doubt, in determining, for the purposes of subsection (3) above, whether the presumption in section 36B(3) of the Companies Act 1985 (as inserted by section 130(3) of the Companies Act 1989) applied in relation to a document, the reference in section 36B(2)(b) of the 1985 Act (as so inserted) to the last page shall be construed as a reference to the last page of the document excluding

Lord Fraser of Carmyllie

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 179. I shall speak also to Amendments Nos. 185, 186, 247, 248, 266, 268 and 272. These amendments are all concerned with the execution of documents by companies under Scots law. They were moved formally on Report in another place and it might therefore be helpful if I expand on them more fully now.

The law relating to this subject was changed at the end of July when Section 36B of the Companies Act 1985 came into force. However, doubts have been expressed as to the effect of this section. In particular, it has been argued that, because the new section only provided for one witness, any document so executed was not validly executed for the purposes of the old 17th century Scottish Acts, known as the authentication statutes, which require certain documents such as those relating to land to be executed before two witnesses in order to be valid.

The new clause and the amendments were prepared in close consultation with the Law Society and others and the Government acknowledge, with gratitude, the considerable assistance which has been given by them in the preparation of these amendments.

The new clause and the amendments will be brought into force by Commencement Order. It may be helpful for practitioners and others to know that it is at Present proposed that they should be brought into force on 1st December. It is understood from the Law Society that that would leave sufficient time for practitioners and others to take proper account of the new changes. I beg to move.

Moved, That the House do agree with the Commons in their Amendment No. 179.—(Lord Fraser of Carmyllie.)

On Question, Motion agreed to.

9.45 p.m.

cc1652-3
1. AS AN AMENDMENT TO COMMONS AMENDMENT NO. 178 809 words
cc1653-4
2. COMMONS AMENDMENT 34 words