§ 6.41 p.m.
§ Lord Mishcon rose to ask Her Majesty's Government what action they intend to take in the light of the recommendations in the Law Commission report on intestacy (House of Commons Paper 60, Session 1989–90).
§ The noble Lord said: My Lords, I trust that your Lordships will consider that this Unstarred Question relating to a report of the Law Commission laid before Parliament by the noble and learned Lord the Lord Chancellor and published sonic two and a half years ago deals with a matter of common interest and public importance. It is all about our laws of intestacy and about who benefits from the estate of a person who dies without having made a valid will and what principles should apply in this day and age, having regard to today's social conditions and mores, to the distribution of an intestate's estate.
§ The last such review was carried out by the Morton Committee in 1951 and there has been much social change over the intervening 40 years. Most usefully, the commission published a working paper in July 1988 and consulted widely on it, and even more sensibly—if I may say so in a matter of this kind—the commission saw there was a survey of public opinion. That was undertaken in December 1988.
§ Rather than dealing with all the contingencies that can occur with surviving members of what can loosely be called the family, I propose to deal solely with the present law of intestacy where there is a surviving spouse and especially where there are also surviving children of the intestate. That is often the most worrying situation as the law now stands. I remind your Lordships that the current law states that in that event the surviving spouse will receive what is called a statutory legacy of £75,000, the deceased's personal chattels—that broadly means furniture and effects in the home, items of jewellery and items of that kind —and a life interest in half the remainder of the estate. The other half of that residue is shared among the issue. I use the word "issue" because grandchildren take the share of a child who had predeceased the intestate.
§ Where there are no issue but there are parents or siblings of the whole blood (or their issue) who survive, the spouse will receive a statutory legacy of £125,000, the personal chattels to which I have previously referred and one half of the remainder absolutely, the other half going to the parents of the deceased, or if no parents survive, to the siblings of the whole blood or their issue. If there are no issue, parents or siblings of the whole blood (or their issue), the spouse takes all.
§ The statutory legacy going to the widow or widower is updated from time to time by statutory instrument and the revised figures apply to deaths taking place after the statutory instrument comes into force. These statutory legacies have been uprated in 1972, 1977, 1981 and 1987. Possibly the first thing your Lordships will have noticed is that in all this 171 there is no provision whatsoever for the matrimonial home as such to go to the surviving spouse even when minor children are involved.
§ The statutory legacy to the widow of £75,000 may be quite insufficient of itself to acquire the matrimonial home, quite apart from there being no sum left over to maintain it and the family. If the property happens to be held on a joint tenancy, which means that the survivor automatically inherits the property, or on a tenancy in common, where the surviving spouse has an interest in equity, the position of the surviving spouse is of course much more advantageous, but people who are old today may not have realised all this when the matrimonial home was purchased possibly very many years ago and when the custom was to have the home in the sole name of the husband. So we start off with one unfairness, but in these days, even with the current depreciation of property values, the value of a home is incalculably greater than when these rules were first thought of in the early 1920s. Also, one can of course have vastly different values of exactly the same type of house in different areas of the same county, let alone different areas of the same country.
§ All this has meant that with such reasoning, and furthermore after reflecting upon the unsatisfactory procedure of having to deal with increases spasmodically made by statutory instrument as well as having to take the value of the house not at the date of that instrument but at the date of actual appropriation of the house, which is another unsatisfactory ingredient, the commission has arrived at a recommendation that, in all instances where there is a surviving spouse, and irrespective of whether or not there is issue, the whole estate of the intestate should go to the surviving spouse.
§ I do not propose in the time at my disposal, if I limit it to civilised standards, to go into the recommendations that the hotchpotch of statutory rules affecting issue and affecting issue and spouses upon partial intestacy should be repealed, except to say that in my humble opinion those recommendations are correct. I am, however, unhappy, as are many members of the legal profession and those familiar with family problems, about the commission's unqualified recommendation that a surviving spouse gets all even where there are children of the intestate surviving. I appreciate to the full the desire of the commission that intestacy rules should be certain, clear and simple both to understand and to operate. But if that is liable to produce too many hard cases, it makes bad law. As a practising solicitor, I do not accept the suggestion which the report contains to the effect that there is a ready remedy where children are dependants of the deceased, in that they can, either themselves or someone can do so on their behalf, make an application under the Inheritance (Provision for Family and Dependants) Act 1975, under which a dependant may apply to the court for an award out of an estate.
§ Of course such an application can be made but that presupposes the ability and willingness to litigate and does not take into account the detriment to family 172 relationships which can so often result from any such application to the court. I am particularly worried about the effect of those recommendations of the commission—the difficulties are frankly recognised in the report—where there are second or subsequent marriages, the previous ones having been determined by death or, much more likely these days, by divorce, and there are children of the deceased by a prior marriage. Indeed, we learn from the report that the majority of the respondents in the public opinion survey took the view that in such cases the spouses should be treated differently. However, the commission felt that the intestacy rules should not give issue of former marriages any rights upon intestacy other than those which might be established by an application to the court under the 1975 Act, to which I referred.
§ I repeat that I am very unhappy about this matter and so, among others, is the appropriate committee of the Law Society and the Bar's Law Reform Committee. In its view and, if I may say so, in my own, better justice would be done by recommending that, where the deceased left a spouse but no children, the surviving spouse should get the whole estate; but where there are children, different considerations should apply. For example, the well-known organisation Justice has made a recommendation which certainly deserves close consideration. It is that the surviving spouse should, where there are also surviving issue, be entitled for his or her life to the intestate's interest in the matrimonial home, the income from any proceeds of sale, a statutory index-linked legacy and one half of the residue. The other half of the residue should go to all surviving children of the intestate in equal shares, wherever there has been a previous marriage.
§ As the noble Lord, Lord Meston, may well say—perhaps I may so prophecy—the Bar's Law Reform Committee goes further than that in its recommendation. It suggests that if the estate is large enough, the rights of the children of the intestate to benefit should not depend on some of the children being children of a previous marriage. Furthermore, that committee supports Justice's proposal that a surviving spouse should have the right at any stage to apply, under the Inheritance (Provision for Family and Dependants) Act 1975, for payment to him or her of capital out of the proceeds of sale of the matrimonial home.
§ The need to provide for children of past marriages may not have been much of a problem in 1922 among the sections of our society which are perhaps particularly vulnerable on an intestacy. The number of divorces in all sections of society some 70 years on makes a very different situation. The same considerations of social change, whether we like it or not, pertain to cohabitants, people who have lived together as husband and wife without entering into the formal marriage state. What of them upon intestacy?
§ At present the intestacy rules only provide for Current spouses and blood relations. Cohabitants can only make a claim against an intestate's estate under the Inheritance (Provision for Family and Dependants) Act 1975, where they can satisfy the court that they were dependent on the deceased. That 173 often produces great hardship in that a cohabitant could have made a very meaningful contribution to family life but has not in fact been a dependant. In such a case there is no provision for that survivor either under the intestacy rules or the 1975 Act. I do not have to tell your Lordships of the very significant number of such households which now exist in our society.
§ For its part the Law Commission recommends that cohabitants should be provided for outside the intestacy rules and under the 1975 Act. They should be able to apply under that Act for reasonable provision without having to show dependence. The definition of "cohabitant" obviously poses some problems when contained in a statute; but we managed in Parliament to draw up a definition, in the Fatal Accidents Act 1976, which is as good as we are likely to get. The commission recommends that that definition should be adopted in the suggested extension of the provisions of the 1975 Act.
§ I note that the Wills and Equity Committee of the Law Society agreed with those proposals, provided that they only applied on an intestacy, but it still expressed concern that the interests of the deceased's children should be protected. The Family Law Committee of the society is, however, reviewing the entire legal position of cohabitants with a view to producing recommendations for law reform in that context. I am sure that when they are made, the noble and learned Lord the Lord Chancellor, as he always does, will give them his very careful consideration.
§ Finally, I deal with what happens under the present law when there is no surviving spouse, no issue and no eligible relatives. In those circumstances the intestate's estate is dignified by the term "bona vacantia" and goes to the Crown. The public opinion survey produced a majority view that it should instead go to charity. Indeed, 60 per cent. were in favour of charity receiving the property and only 17 per cent. supported the existing position. However, the commission, together with many of those whom they consulted, found difficulties in so altering the law, because of the problem of choosing the charity or charities to benefit, and because the Crown is able to make ex gratia payments in deserving cases whereas a charity would not be equipped to do that or indeed to administer the estate or satisfactorily meet a situation in which a relative entitled to benefit was eventually found.
§ Those problems might have applied and indeed did apply when the commission prepared its report. But that was before the Millennium Fund and the national lottery arose upon our national horizon. I ask for due consideration to be given by the noble and learned Lord the Lord Chancellor and his colleagues in the Government to the idea that bona vacantia in future should vest in those who will administer the national funds for charity and the arts pursuant to the Conservative manifesto placed before the electorate at the general election. I suggest that the same procedures and discretion, and the ability to create a reserve fund, could be dealt with in the same way as it is at present by the Treasury Solicitor. National good 174 causes could be the ultimate beneficiary of bona vacantia, to the delight, I am sure, of a certain new and ebullient Secretary of State.
§ 7 p.m.
§ Lord Meston
My Lords, we are most grateful to the noble Lord, Lord Mishcon, for bringing this question to the attention of the House. I look forward to learning the Government's response to the Law Commission's Report which is now two-and-a-half years old. I look forward to learning whether the Government disagree with any or all of the recommendations of the report and whether any future changes can be expected.
The Law Commission identified areas for reform. Those were most helpfully summarised by the noble Lord, Lord Mishcon. In particular it identified the unsatisfactory features of the present law. It analysed the need for reform and produced a variety of possible solutions. For the most part, the reasoning of the report is compelling. It gives first consideration to the need for intestacy rules to be clear and simple, both to understand and to operate. The report also recognised that any fixed intestacy rules are likely to be described as arbitrary, applying as they must to a multitude of different situations.
The fact is that just as people make wills for many reasons, a large number of others fail to make wills for many reasons including ignorance, indolence, superstition and an optimism that they will live forever. Bentham called the power of making a will,an instrument placed in the hands of individuals for the prevention of private calamity".It must be said that good intestacy rules will mitigate private calamities. Those are described in paragraph 5 of the report as,a safety-net for those who have, or think they have, little to leave, or who have not thought about it, or who die prematurely".However, as the noble Lord, Lord Mishcon, observed, the safety net is not there for the reluctant testator who does not get round to it. It is a safety net for those he leaves behind.
On balance I welcome the main change proposed by the report, away from the complexity of life interests and statutory trusts and in favour of surviving spouses. My observation in practice is that the present rules can unduly restrict the widowed mother of young children who generally can be expected to act reasonably and responsibly in the interests of her children. If she wishes to adjust the position produced by a will or by intestacy to give her more flexibility under the present law, she has to resort to litigation. Legal costs inevitably reduce the size of the estate, and the children have to be separately represented in a potentially adversarial situation as against their own mother.
My only misgiving—it was referred to by the noble Lord, Lord Mishcon—is that there is no mechanism to protect for the children any part of the estate leaving the control of an irresponsible or vulnerable mother. I say "mother"; it could just as well be "father". The report offers no solution to that.
175 Solutions are not easy to find although I am pleased to hear that the Law Reform Committee of the Bar Council suggested some solution, as did Justice.
The noble Lord, Lord Mishcon, touched on another problem with which I have become familiar in practice, in particular under Inheritance Act claims. It is the difficult balance that has to be struck between the elderly widow after a second marriage who may well have given up her home and a pension to marry relatively late in life against the reasonable expectations of the adult children of the deceased's former marriage who can also expect to receive something from the estate which will probably have been built up in the lifetime of their parents. It is a difficult balance to strike. Whereas in those situations the Inheritance Act can come into play to correct the situation, the Inheritance Act does not come into play to correct the position where there are young children, as the noble Lord, Lord Mishcon, said. If the surviving parent recovers everything, who will protect the interests of the young children and advance their claim under the Inheritance Act—a claim that has to be made prima facie within six months of death? It is a difficult situation. I wonder whether the Law Commission may have gone too far in that respect.
The report recognises that surviving spouses may always be said to deserve rather more or less depending on the length and happiness of the marriage. Paragraph 39 of the report deals with the estranged husband or wife who might receive an undeserved windfall. It states:If separated spouses have chosen to leave their marriages intact then the intestacy rules should treat their marriages in a similar fashion to any other marriage".It states that the answer is either to make a will or to obtain a decree of judicial separation. That rather begs the question of whether in this situation the intestacy rules provide an appropriate safety net.
Lawyers are well used to picking up the pieces. But it can be extremely irritating to be told, in support of some complicated re-arrangement of an estate, "It is what he would have wanted", or, "It is not what he would have wanted". One is always tempted to respond, "Why on earth, and while on earth, did he not arrange what he wanted when he could?" I suppose that if people were so sensible we would be out of a job.
It is important to consider in the context of the report whether our present intestacy rules provide an appropriate modern safety net. As the noble Lord, Lord Mishcon, observed, there is the further safety net of the 1975 Act.
That takes me finally to the second main recommendation: the addition of cohabitants to the list of claimants under that Act. That is welcome. The present Section 1(1) (e) of the 1975 Act can include the undeserving and exclude the deserving; that is, people who have been left behind who made considerable sacrifices without falling within the somewhat convoluted provisions of Section 1(1) (e). The litigation thrown up by that section has not been very satisfactory. It involves a complicated analysis of evidence based on one side of the story.
It is pleasing that in that respect the Law 176 Commission has developed its thinking since the 1975 Act. During its consideration as a Bill amendments were put forward in another place along the lines of the proposals by the Law Commission. Those amendments were rejected by the government of the day as outside the Long Title of the Bill. One of the leading textbooks described that process as follows:The survival of the Law Commission's draft Section 1(1) (e) into enacted statute is due to excessive subservience paid by the Bill's promoters in Parliament to the Law Commission".I hope that the Government will bring some of those changes before Parliament before too long and that we shall not be excessively subservient, although respectful as always, to anything produced by the Law Commission.
I wish to raise one final point. If legislation is to be brought before Parliament within the foreseeable future, is it expected that it will cover Scotland as well as England and Wales? I am unable to find out how the Scottish Law Commission's consideration has progressed although I know that it has been considering the same topics.
§ 7.9 p.m.
§ The Lord Chancellor
My Lords, I wish to thank the noble Lord, Lord Mishcon, very warmly for the opportunity to discuss this Question.
I believe prima facie that when the Law Commission has considered an issue with the great care that it has brought to this issue, unless there is some good reason against it, the policy which it recommends—since it is in an area for which I have responsibility—should prevail.
In other departmental areas there are other possible policies which the Law Commission might not have had in mind. However, in this case there is no overriding policy that would not be apparent to the Law Commission. Therefore, I approach the matter with the feeling that, first, the Law Commission has identified a problem. Most people are agreed that the law of intestacy has not kept up with the demands being made upon it as a result of the changes in social conditions and so forth, referred to by the noble Lord, Lord Mishcon, and the Law Commission.
That would be my normal approach to the matter. However, there are some problems with the Law Commission's proposals, particularly in relation to issue of the intestate by an earlier marriage or by a marriage still subsisting at his death. It is not easy to see how to provide for such issue without some machinery such as a continuing trust in respect of, in particular, the matrimonial home. The other difficulty is to be fair as between the different types of arrangement.
I am grateful for your Lordships' views because as yet I have not been able to reach a concluded view as to the wisest course to pursue. The courses suggested by Justice and brought a little further by the Law Reform Committee of the Bar would require the preparation of a fairly detailed scheme to be put into legislation. I am not sure whether I should try to embark on such a course in the department without help.
177 I am also well aware of the fact that the Law Commission considered such difficulties. It thought, "You can't legislate for everything—that is impossible. The best thing to do is to give the whole estate to the widow. That will be clear and everyone will know that if they do nothing and die without making a will that is what will happen. Therefore, perhaps there will be a spur on them—assuming that they have notice of their mortality—to do something about the situation if they wish." That is an attractive line to take: I wonder where the balance lies.
I wish to mention the subsidiary matters referred to by the Law Commission. Like the noble Lord, Lord Mishcon, I do not believe that it is necessary to comment upon them, except that which relates to those who cohabit. The other matters are technical and whatever the legislation was the rules could be included without difficulty. As regards the cohabitants, the proposals do not appear to be controversial to any substantial extent. Although some people might regard them as controversial I do not believe that any substantial amount has yet been generated. The main proposal lies in a different category.
There is also a statutory power to raise the legacy; the Lord Chancellor has the power to do that. In a sense one goes a certain distance towards the Law Commission's approach by raising the statutory legacy fairly substantially so that it will affect many people in such a way as to carry all the estate. However, I have been reluctant to do so until I can reach a firm conclusion about what is a wise course to take in relation to the Law Commission. I take the sense of what your Lordships have said as being against legislating the Law Commission's scheme and in favour of a more elaborate proposal. If that is so we shall have to leave the matter over. A wise course might be to take an interim measure raising the statutory legacy.
I wish to take further time to consider your Lordships' views. I had hoped that we might have generated interest in the subject from the distinguished legal talent which was present at an earlier stage this afternoon. In my mind the two subjects appeared to be closely allied but apparently that was not so in the minds of everyone. I am grateful to the noble Lord, Lord Mishcon, for tabling the Question. I am left with 178 a certain amount of indecision. I shall read carefully what has been said to see whether your Lordships' comments prompt some of those who have been consulted to come forward more definitely than they have hitherto with a view on the whole matter—
§ Lord Mishcon
My Lords, before the noble and learned Lord sits down I wish, first, to thank him for dealing in detail with the discussion. Secondly, I wish to ask whether he has any preliminary views on my suggestion about bona vacantia?
§ The Lord Chancellor
My Lords, I have considered speaking about the matter briefly in relation to the recent television programme which appeared to suggest that a special law of intestacy applied in the Duchy of Lancaster. That would have surprised most people who thought that they understood the existing law of intestacy. The truth is that bona vacantia in the Duchy of Lancaster goes to the Duchy rather than to the Crown. Apart from some minor matters of procedure I do not believe that the differences between the two are of general interest.
The only exception as regards the County Palatine is that the property of those who die intestate goes to the Duchy but the matter is handled in a similar way. Any balance in England and Wales is paid directly into the Exchequer. In the County Palatine any such balance goes towards certain administrative costs incurred by the Duchy of Lancaster in the County Palatine, to the upkeep of certain historic monuments and to a benevolent fund whose income is distributed to causes primarily within the county.
The noble Lord's suggestion may be a good subject for further consideration. Such a proposal overcomes the difficulty of identifying a particular charity to which bona vacantia could go. I should not he surprised if there were difficulties of administration but I am sure that the noble Lord's suggestion—like all his suggestions—is worthy of further consideration. Perhaps I am unduly committing myself in respect of the outcome of that consideration.