Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Bill

Lord McNally Excerpts

Friday 13th May 2011 Lords Chamber

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, from the mild titter that went round the House when the noble Lord, Lord Bach, said that I would not need the expert advice that he had needed, we can all assume that there was a little irony in that statement. I know that there was no truth whatever in it. I share his admiration of the quality of advice that I and other Ministers receive on these matters.

I also pay tribute to Greg Knight for his success in piloting the Bill in the other place. I must admonish those colleagues who referred to the presence of Greg Knight in the Chamber today. That is quite against the code and therefore I would not dream of making that point. However, I am glad that he will have heard what has been said.

[Lord Bach]

I was very careful to say that the honourable gentleman was in the vicinity of the Chamber because I was about to fall into error, I know.

[Lord McNally]

Undoubtedly that is the kind of skill that made the noble Lord such a successful lawyer in Leicester, whether instructed by Mr Knight or any other solicitor.

I also pay tribute to someone who has always been my friend, but in the past year has been my noble friend Lord Hunt. It may not be commonly known that my noble friend and I were once on the executive of what I always thought was a modestly titled organisation called the Atlantic Association of Young Political Leaders. We have remained friends and close colleagues ever since.

I am very pleased to be able to respond to the debate. I am the Minister responsible for the Law Commission, so it gives me particular pleasure to confirm the Government’s support for the Bill, which will implement, albeit with some modifications, the recommendations made by the Law Commission in its 2005 report, The Forfeiture Rule and the Law of Succession. The Government are very grateful to the commission both for its expert work on this subject not only in the formulation of its proposals but in the ongoing support that it has given and continues to give to the Government on the Bill, and for its wider ongoing work. The expertise of the Law Commission and the House of Lords is a productive marriage in helping us to simplify, clarify and modify our law.

Before I turn to the Bill, let me respond to the points made, particularly by my friend Lord Marks and by my noble friend Lord Hunt in his opening remarks, about the Law Commission. The work of the commission has been a major success, but the commission is facing the inevitable difficulties posed by a 33 per cent cut to its budget. There is really no room for manoeuvre, given the scale of cuts needed. The cut of 33 per cent is consistent with what is being applied to administrative budgets generally.

However, we are determined to improve on the 68 per cent implementation rate. I am confident that the new House of Lords procedure for Law Commission Bills, along with the measures included in the Law Commission Act 2009—which my noble friend Lord Marks referred to—will help in that regard. While we must be realistic about priorities at a difficult time such as this, I hope that the protocol on best practices will go some way towards ensuring that delays become a thing of the past.

The Law Commission is currently considering proposals for its 11th programme of work, which will soon be put to the Lord Chancellor for approval, as set out in the Law Commission Act 1965. This programme of work will be the first to be agreed under the terms of the protocol. I am confident that in the future delays, both in responding to the Law Commission and in implementing proposals that are accepted, will be reduced as a result. I hope that that is helpful to colleagues. I frequently say in the department that the Law Commission is highly respected in this House, which is eager to use both the great expertise that it has and the procedures that we have adopted to help in expediting Law Commission recommendations.

On the intervention of my noble friend Lord Flight, I will try to respond but I hope that my noble friend Lord Hunt will fill in any gaps. It is interesting that, although the Bill looks like a very minor piece of law, 200 cases are affected by this anomaly each year, as my noble friend Lord Flight informed us. It is very difficult to say whether I can give him guarantees that there are no other unknown quirks or consequences because, if there are unknown quirks or consequences, I do not know about them.

As always, we will continue to keep a close eye on the consequences. The point about death by dangerous driving that was raised by the noble and learned Lord, Lord Scott, is just one such issue that we will try to be alert to, as indeed is the issue of mercy killing. Those are two points where, clearly, there could be issues. I am not sure that the Code Napoléon is quite as close to being the law of our land as my noble friend Lord Flight in some of his darker moments might imagine, so I would not worry too much. As Fred Peart used to say when he was at this Dispatch Box, “Not next week”.

On the question whether there are unforeseen consequences or issues of the sort that have been raised by the noble and learned Lord, Lord Scott, and by my noble friend Lord Flight, we have made a detailed study with the Law Commission. We also had a very full consultation, and we will continue to keep these matters under study.

As I said, the Government support the Bill. The law of succession in this instance governs who inherits what when a person dies. Where there is a valid will, the general policy of the law is that the deceased person’s last will and testament should determine who is to inherit what from his or her estate. In other cases, where there is no valid will, the statutory intestacy rules prescribe the order of inheritance. In brief, the general policy of the intestacy rules is that a surviving spouse or civil partner has first call on the estate for his or her statutory legacy and that otherwise the property of the deceased should pass to closer blood relatives of the deceased before more distant ones. The children of the deceased, for example, should be preferred to siblings of the deceased.

The Bill does not seek to change these general principles. In fact, despite its technical complexity—I might say that I thought that I understood the Bill clearly until my noble friend Lord Hunt started explaining the technical complexities—this Bill is a very modest measure that addresses three specific problems in the law of succession and proposes clear solutions to all of them.

First, the Bill addresses the question of who should inherit when a person is disqualified from inheriting because he or she has caused the death in question. This disqualification is automatic and is effected by the rule of law known as the forfeiture rule. The operation of this rule is not affected by the Bill. As my noble friend Lord Hunt explained, the problem with the existing law was highlighted in the 2001 Court of Appeal decision. Put simply, the problem is that, where a person forfeits an inheritance on intestacy because he or she has actually killed the person from whom he or she would have inherited, his or her children will also be disinherited because the statutory trusts that apply under the intestacy rules prevent them from doing so. The forfeiture rule thereby seems to disinherit not only the criminal but the innocent grandchildren of the victim.

This problem is not confined to intestacy. For example, if a parent leaves a will giving property to his or her son and the son kills the parent, the son cannot inherit. If the parent’s will also said that the son’s children were to inherit if the son died first, the children would not be able to inherit in place of their father because he did not die before their grandparent. Of course, if the will said that the grandchildren could inherit in place of the son, then, irrespective of the reason why the son could not, the children would be able to inherit, but I doubt that many wills are made with the consideration that the proposed recipient might turn out to be his or her killer. Similarly, if there is a will giving a gift to a child of the testator without any further provision, the law implies a term that the gift will pass to his or her children if he or she predeceases the testator. If the testator’s child forfeits his inheritance, his or her children—the testator’s grandchildren—will not be able to inherit, because their parent did not die before their grandparent.

Secondly, the Bill addresses the very similar issue of what happens when the inheritance is rejected by disclaimer. Here, just as in the case of forfeiture, whether the succession is testate or intestate, anyone claiming through the person who rejected the inheritance, such as his or her children, will not be able to inherit unless the will provides to the contrary.

Finally, there is a rather unusual situation, which I think is extremely rare. It occurs where a person under the age of 18 is prospectively entitled to inherit property under the intestacy rules, perhaps from his or her parent, but dies before reaching the age of majority. If he or she dies without having married or entered a civil partnership and leaves children who were alive, or at least in the womb, at the date of the death of the original intestate, the children, who are the grandchildren of the original intestate and who are necessarily minors themselves, cannot inherit from their grandparent in place of their deceased parent. This is because under the technical rules that apply to the statutory trusts applicable on intestacy, their parent did not attain a vested interest in the property of the original intestate. This anomalous outcome, rare as it might be, discriminates against those children.

In all these three cases, the Bill will solve these problems by deeming the person who loses the inheritance, by forfeiture, by disclaimer or by dying too young, to have died before the person whose estate is being distributed. This means that if the person in question died intestate, the children of the person losing out will be able to inherit under the statutory intestacy rules and, if there is a will, that the actual or deemed wishes of the testator will prevail. This will bring the outcomes in these three situations more into line with the general policy of the law by giving priority to the wishes of the testator as expressed in a valid will or in other cases by preferring closer blood relatives over more distant ones.

Both the noble Lords, Lord Flight and Lord Bach, referred to the fact that the Bill differs in some respects from the draft Law Commission Bill published in 2005. It also differs from the equivalent provisions in the draft Civil Law Reform Bill, published by the previous Government in 2009. The main difference is that those earlier draft Bills contain specific trust provisions that are intended to ensure that in forfeiture cases the criminal was prevented from gaining any benefit from the inheritance that would, under the terms of the draft Bill, pass to his or her children. These special trust provisions attracted a good deal of criticism from witnesses to the Justice Committee in the other place and from people who replied to the consultation from the Ministry of Justice on the draft Civil Law Reform Bill. We have also discussed them in detail with the Chief Chancery Master, Jonathan Winegarten, at the Law Commission. We agree with the Justice Committee that minors who inherit following forfeiture should have their inheritance protected and that all minors should have suitable protection under the Bill. However, from our more detailed consideration of how the special trust provisions originally proposed would work, it is clear to us that they would be problematic and expensive to operate.

In our view, the existing law, which already imposes a trust for the benefit of minor children and gives the court power to supervise the administration of estates, gives effective and adequate protection. The proposed special trust provisions would not in fact increase this protection. The Law Commission, I would add, is content with the Bill in its present form.

The issue raised by the noble and learned Lord, Lord Scott, about dangerous driving and mercy killing will need to be kept under review. The courts will have a discretion to disapply the rule of forfeiture in the case of mercy killings and will consider the individual circumstances of the case in all cases other than murder. That has been a long-standing approach. However, this underlines the benefit of a debate such as this on a measure such as this one, because in addition to enabling us to support the Bill, which I warmly do, it allows us to tease out some of the issues that need to be kept under review as we move forward. It has also given me the opportunity to lay out—I hope clearly—to the House the ongoing support of the Government for the Law Commission and its work.