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

Lord Hunt of Wirral Excerpts

Friday 13th May 2011 Lords Chamber

Moved By

[Lord Hunt of Wirral]

[Lord Hunt of Wirral]

My Lords, I declare an interest as a partner in the international commercial law firm Beachcroft LLP and the other interests recorded in the register.

First, I pay tribute to the Law Commission. The Law Commission was, in fact, created by the Law Commissions Act 1965, which was the year that I joined my present firm. It is a body, under the sponsorship of the Ministry of Justice, whose task is to keep the law under review and to recommend reform where needed. This Bill originated with the Law Commission. Secondly, I congratulate my right honourable friend Greg Knight, Member of the other place. He became a Member in 1983—I recall his introduction well—since when he has had a long and distinguished parliamentary and ministerial career. However, my links with him go back even further than that because we were both involved, in a very belligerent way, in the political youth movements of our parties. I commend him for his decision to introduce this Bill. He has dedicated much of his parliamentary life to the interests of people—consumers, clients, customers.

This Bill results from the law of unintended consequences. I am not going to go into a long explanation of Adam Smith, where the phrase apparently originated, although he called it “the invisible hand”. But let me explain. This Bill is made necessary by the interaction of the common law forfeiture rule and the intestacy rules, or the terms of a will, which combine to stop the children, the grandchildren, the great-grandchildren and further descendants inheriting their murdered relative’s estate. It is easy to explain in that way because that was the way in which my right honourable friend introduced the Bill.

Why are there these problems? The concerns arise from the decision of the Court of Appeal in the case of Re DWS (deceased) in 1995. In that case, the son murdered his parents, neither of whom had a will. He was an only child, and he had only one child—a son aged two at the time of the murder who, by the way, the evidence shows, was really close to his grandparents. Because the son had murdered his parents, that grandson was prohibited by the forfeiture rule from benefiting from the estate of either his grandmother or his grandfather. The court was asked to determine the correct distribution of the estate of the grandfather under the intestacy rules. In the High Court, Mr Justice Blackburne, sitting as Vice-Chancellor of the County Palatine of Lancaster, held that the estate did not pass to the grandson, who was the only grandchild, but instead passed to the sister of the murdered person. By the time of the hearing the sister had herself died and the estate therefore passed, rather remotely, to her estate. The Court of Appeal, by a two-to-one majority, confirmed that decision.

I must share with the House a fascinating exposé of what can, from time to time, be the deficiencies of this wonderful House and the other place. I have only to refer to the speech of Lord Justice Sedley, who, at page 592 of the report, referred to,

“sections 46 and 47 of the Administration of Estates Act 1925”—

which, by the way, was only a consolidating statute. But why did no one question the interaction? Mr Justice Sedley said:

“Had that useful analogue of the officious bystander, the alert backbencher, intervened in the debate to ask, the minister would have had to undertake to consider the matter and return with proposals”.

Sadly, no one did. Therefore, he concluded that it was a casus omissus. Speaking as chairman of the English-Speaking Union, I do not know why on earth the judiciary have to keep referring to Latin. But I think that we can all guess what that means—it is a gap in the Act.

The Law Commission then intervened; and as a result of the then Department for Constitutional Affairs asking the Law Commission to review the relationship between the forfeiture rule and the law of succession, in October 2003 it published a consultation paper that considered the problem which had arisen in that case and discussed whether a similar problem could arise in other contexts. Its consultation paper was then widely circulated and there was quite a series of submissions. It then published a report which discussed the responses to the consultation and set out recommendations together with a draft Bill. Its solution was a deemed predeceased rule whereby a beneficiary who had forfeited or disclaimed an inheritance would be deemed for these purposes only to have died before the person who had actually died. This would permit the killer’s children, grandchildren, great-grandchildren or remoter descendants to inherit. Of course this rule would be subject to any contrary intention expressed in a will, in line with the general policy of respecting testamentary wishes expressed in a valid will.

So we have the Estates of Deceased Persons (Forfeiture Rule and Law of Succession) Bill. This Bill will in certain circumstances protect the inheritance rights of the descendants of people who have forfeited their inheritance by engaging in an act which kills the deceased or who have decided not to accept their own inheritance. That is where we are with this Bill.

I hope that I have been able to explain the legislation, but I see that subsequent speakers are highly expert in this area of the law. Just before I entered the Chamber I was approached by a colleague who said, “Can you explain the Bill in simple terms?”. I have done my best, but I am sure that others will do it even better. I also look forward to hearing the speech of my noble friend Lord McNally, the Minister responsible for justice. I would like to say to him, to his colleagues and to the Law Commission that I pay tribute to them for initiating this reform, on which there has already been a great deal of consultation. As I have sought to explain, Consultation Paper 172, published in 2003, set out a draft Bill which was then included in the draft Civil Law Reform Bill. Now, thanks to my right honourable friend, we have this Bill which has taken out of the draft Civil Law Reform Bill the necessary provisions to deal with this injustice, in accordance with the Law Commission’s aim of ensuring that the law is as fair, modern, simple and cost-effective as possible.

With some trepidation, I understand that it is normal for the mover of a Bill to take everyone through the clauses in detail. I will do my best to do just that, but as briefly as possible. The Bill is accompanied by Explanatory Notes which explain its content in much more detail than I will attempt here.

Clause 1 inserts new Section 46A into Part 4 of the Administration of Estates Act 1925, where the intestacy rules are primarily to be found. This new section will operate whenever a person disclaims an inheritance arising under an intestacy or is disqualified from inheriting on intestacy because of the forfeiture rule. For the purpose of deciding who should inherit the interest in the deceased’s estate in these situations, the person disclaiming should be deemed to have died immediately before the intestate. This overcomes the requirement in the present law of intestacy that children cannot inherit if their parents are still alive, as set out in Section 47(1) of the 1925 Act.

Clause 2 makes analogous provision for disclaimers or forfeitures of gifts under wills. It inserts new Section 33A after Section 33 of the Wills Act 1837. The existing Section 33 provides that where a gift to a testator’s child or other direct descendant fails because the child has predeceased the testator, the gift should pass instead to any children, grandchildren and other direct descendants of the intended recipient of the gift, and they will benefit in place of the child. New Section 33A applies where a person either disclaims a gift under a will or is precluded from taking it by the forfeiture rule. In both of these situations, under Clause 2 the will is to be interpreted as if the person disclaiming or forfeiting had died immediately before the testator. The general rule does, however, give way to a contrary intention in the will.

Clause 3 inserts new subsections (4B), (4C) and (4D) into Section 47 of the Administration of Estates Act 1925 to address the situation in which a child of an intestate dies under the age of 18 without having married or formed a civil partnership, but leaves children. At present, on the child’s death, the child’s children will not inherit their father or mother’s estate—the intestate’s estate—because their parent did not attain a vested interest in the estate by reaching the age of 18 or by marrying or entering into a civil partnership. The subsections inserted by Clause 3 provide that the intestate’s estate is to be distributed as if the child had died immediately before the intestate. The children of that child who were therefore living at the death of the intestate will be able to inherit. Clause 4 sets out the short title, commencement, application and extent of the Bill.

I hope that I have been able to explain an admittedly technical Bill that, thanks to my right honourable friend, puts right an injustice. I commend the Bill to the House.

--- Later in debate ---

[Lord Hunt of Wirral]

My Lords, I thank everyone who has contributed to this debate, which has greatly enhanced the reputation of this House as the Chamber in which we can hear from experts in their field. Certainly, my noble friend Lord Marks of Henley on Thames is widely respected outside this House for the depth and width of his expertise in this area. I thank him the points that he made today, and I was pleased that he referred to the reform as sensible and sympathetic. I welcome that tribute.

My noble friend Lord Flight raised a series of important points, which Mr Knight raised and answered in some detail in the debates in the other place. First, I assure my noble friend that in those debates a whole series of points were raised about whether this Bill might open a loophole in inheritance tax. Other points were raised as to the cost. All those points were satisfactorily answered, but the point about mercy killings is a very important one.

In 1971, Lord Justice Salmon spoke in the case of Gray and Barr about what really lies behind all this, which is that,

“it would, in general, shock the public conscience if a man could use the courts to enforce a money claim either under a contract or a will by reason of his having committed”,

such an act—referring to murder. But there are some cases, as my right honourable friend in the other place, Mr Knight, said, where the public conscience would not want the full forfeiture provisions to apply. He specifically referred to mercy killings, but he pointed out that under the Forfeiture Act 1982, there is provision,

“for discretion to be applied by the courts in cases of manslaughter—I emphasise … manslaughter, because there is no discretion in cases of murder”.—[Official Report, Commons, 21/1/2011; col. 1128.]

That follows very much the views expressed by Lord Justice Salmon, which echo the public conscience in cases like this. It is very important that we keep this whole situation under review.

I was taken aback by the appearance of the noble and learned Lord, Lord Scott of Foscote, and the thought that he was sitting there listening to my pontificating, as I have spent most of my professional life reading his judgments. We even enacted one of his judgments word for word in Section 1 of the Compensation Act, so I pay particular attention to his learned words. We have to think of the consequences of causing death by dangerous driving. Perhaps he will permit me to reflect further on that point, because it is a very important one and covers this area that we have spent some time talking about it.

The noble Lord, Lord Bach, and I have worked together on many Law Commission Bills. It is right that we remind people all the time of what is set out at paragraph 8.44 of the Companion about the way in which we can deal with Law Commission Bills. I refer in particular to the second report of Session 2010-11 from the Procedure Committee, published on 27 July last year, which makes it clear that we are going to follow that procedure. It will do much to meet the point made by my noble friend Lord Marks of Henley on Thames. I participated in the previous Bill that went through the procedure, the Third Party (Rights Against Insurers) Act 2010. It is very important that the new procedure for scrutinising Law Commission Bills—undertaken on a trial basis—has, thanks to the noble Lord, Lord Bach, and other colleagues, come through its trial and is now to be adopted permanently.

I hope that the sort of problems instanced by my noble friend Lord Marks will now be historic. Once again, I pay tribute, as the noble Lord, Lord Bach, did, to the officials in the Law Commission and in the ministry who spend a tremendous amount of time and effort getting this legislation right. It is now an improvement on the first draft, and my noble friend Lord McNally comprehensively set out the areas in which it differs from that original Bill. It is now generally accepted that, thanks to the efforts of my right honourable friend Greg Knight, we now have a Bill that can move swiftly into legislation. I think it will work. It deals with the problem through a simple device thought up by the Law Commission.

There are other quirks that will need addressing. Several of us will go away from this debate determined to do something in that direction. However, with this Bill we can at least make an important start. That is why I have much pleasure in commending the Bill to the House.

Bill read a second time and committed to a Committee of the Whole House.