Inheritance and Trustees’ Powers Bill [HL]

Lord Marks of Henley-on-Thames Excerpts

Tuesday 22nd October 2013 Grand Committee

[Lord Marks of Henley-on-Thames (LD)]

My Lords, I, too, welcome this Bill. As my noble friend has explained in his lucid and comprehensive introduction, it implements some of the proposals in the Law Commission’s 2011 report, Intestacy and Family Provision Claims on Death.

Particularly welcome is the improvement of the position of spouses and civil partners as compared with the position of remoter relatives. It is entirely right that where a deceased leaves a spouse or civil partner but no children, the spouse or civil partner should take the entire estate. It is also right that where there are surviving children as well as a surviving spouse or civil partner, then that survivor should take not just the statutory legacy absolutely but also his or her half of the residue absolutely. The complication and the capacity for encouraging disputes that was inherent in the existing arrangement, whereby the survivor’s half interest was held on a life interest only, should be done away with. I believe that these and other changes in the Bill chime with contemporary views of family life. They also accord more readily than do the present arrangements with the economic realities of dependency. These changes will help avoid the difficulty, the expense and the time involved in bringing claims for family provision under the 1975 Act as well.

In the case of family provision, my noble friend has stated that the Government intend to abandon the provisions presently in the Bill to reform the domicile threshold for bringing a family provision claim. Families and family wealth are increasingly international, and not only among the wealthy. I would suggest that there are cases where claims against the estate of non-domiciled deceased persons ought to be capable of being brought. It may be that habitual residence of a potential claimant is not an appropriate test for the reasons of Scots law and practice that my noble friend gave. But in this respect, as he reminded us, the provisions in the Bill differ from the Law Commission’s original proposals. The Law Commission report recommended that the existence of real property in England and Wales, or property to which domestic succession law applied, should be the alternative threshold condition apart from domicile of the deceased, whereas, as my noble friend has said, the Bill in its present form would have established habitual residence of the potential claimant as the alternative threshold condition.

I wonder whether the existence of real property here, or property to which domestic succession law applies, should, as the Law Commission proposed, even in the absence of domicile of the deceased or habitual residence of the claimant, justify a financial provision claim. I hope that the Government, rather than simply abandoning the position by amendment, will consider whether there is an alternative way of effectively widening the present threshold.

In connection with family provision claims, it is plainly right that we should add as an eligible person a child treated by a parent as a child of the family; that change is plainly welcome.

The Bill, however, implements only one part of the recommendations of the Law Commission’s 2011 report. As my noble friend also pointed out in his introduction, the other part comprised its recommendations for provision for cohabitants to take under the intestacy rules after five years’ cohabitation, or two years if the cohabitants had children living with them. Those proposals were incorporated in a separate draft Bill, the Inheritance (Cohabitants) Bill, which was annexed to the Law Commission’s report.

The Government have not sought to implement those provisions either in this Bill or in any other Bill. I differ from my noble friend and the Government in my assessment of the wisdom of this. It was left to my noble friend Lord Lester of Herne Hill to bring in a Private Member’s Bill in the terms of the Law Commission’s draft in the previous Session in an attempt to secure the implementation of these recommendations relating to cohabitation. That Bill fell for lack of time and government support after Second Reading in this House. Its provisions are now included in my Cohabitation Rights Bill, which was introduced in this House earlier this month.

The fate of those provisions is not my only concern in this area. The Law Commission in 2007 produced a lengthy and detailed report entitled, Cohabitation: The Financial Consequences of Relationship Breakdown. In that report, the commission recommended a limited scheme of financial relief to adjust economic disadvantages arising out of cohabiting relationships and to share the benefits derived from such relationships.

Again, my noble friend Lord Lester of Herne Hill introduced a Private Member’s Bill in 2008 which would have introduced reforms which were not the same as but similar to those proposed by the Law Commission. The Labour Government did not support that Private Member’s Bill, the noble and learned Baroness, Lady Scotland, then the Attorney-General, saying that the Government wished to await the outcome of research into how the Scottish legislation to similar effect, passed in 2006, was working.

In September 2011, four years after the Law Commission’s 2007 report, when I asked an Oral Question of the Government on this issue, they announced the same day by Written Ministerial Statement that there would be no action taken by the Government in this Parliament to implement the Law Commission’s proposals. Those proposals on financial relief on relationship breakdown are now the central part of my Cohabitation Rights Bill. However, in the nature of things and despite any optimism on my part, it may be some time before that passes into law.

Meanwhile, more and more cohabiting couples in England and Wales—nearly 6 million people now cohabit in the United Kingdom—go without the legal protections on breakdown or death that the Law Commission has firmly recommended that they should have. This is against the background of widespread public confusion about the position in law of people who choose to cohabit. In a British Social Attitudes survey in 2006, no less than 58% of respondents thought that cohabiting couples who split up were probably or definitely in the same position as married couples. The myth of the common law marriage is widespread, but it is just that, as your Lordships know: a myth without any foundation in law.

Reform of the law relating to cohabitation enjoys widespread judicial support. Scotland has had a cohabitation law similar to that proposed by the Law Commission since 2006. Ireland introduced similar legislation in 2010. This is what the noble and learned Baroness, Lady Hale, our one woman Supreme Court judge—and how regrettable it is that she is the only one—said last July, in a major case on the Scottish Act in the Supreme Court, Gow v Grant:

“The main lesson from this case, as also from the research so far, is that a remedy such as this is both practicable and fair. It does not impose upon unmarried couples the responsibilities of marriage but redresses the gains and losses flowing from their relationship”.

She concluded:

“‘The Act has undoubtedly achieved a lot for Scottish cohabitants and their children’. English and Welsh cohabitants and their children deserve no less”.

This is not good enough. The Law Commission’s proposals on separation were made in 2007 after a long and detailed consultation, and on intestacy in 2011. They were thorough and carefully considered. The Law Commission is the independent body set up by Parliament to recommend to the Government necessary law reforms, with a mission to keep the law fair, simple and modern. Yet in spite of repeated pleas from the professions and the judiciary at all levels to implement the commission’s proposals, no action has been taken.

I am not saying that any proposal of the Law Commission should automatically be implemented without parliamentary scrutiny—far from it. Of course it is for Parliament to determine what proposals it will implement and what it will decline to implement. However, the point of having the Law Commission is to achieve reform of the law, and that central function risks being thwarted by the failure of government at least to bring legislation before Parliament to implement the commission’s proposals. I suggest that the default position at any rate should be that the Government should bring forward legislation for consideration by Parliament when the Law Commission makes detailed proposals for law reform.

As a result of a decision taken by the conference of my party in Glasgow this autumn, the implementation of the Law Commission’s proposals on intestacy and on relationship breakdown is now Liberal Democrat policy. However, that in a sense highlights the problem. Proposals of the Law Commission for law reform should not have to be the stuff of party politics. I do not disagree with my noble friend Lord Henley that this fast-track procedure should not be available for every controversial proposal of the commission, but that does not mean that the proposal should not be brought before Parliament to be debated in the usual way. Governments of all parties should regard it as incumbent upon them to bring legislation before Parliament to implement Law Commission proposals.

Under the protocol set out in the Law Commission Act 2009, agreed between government and the commission, the Lord Chancellor is under a duty to report annually to Parliament on progress in implementing Law Commission reports. The Government must take that protocol seriously and indicate a high duty in this area. The progress on cohabitation reform suggests that such a duty has not been taken sufficiently seriously to date. The Bill is welcome but does not go far enough. One is left with an uncomfortable sense that we are implementing the easy and non-controversial proposals and ducking those that are more controversial. I adapt the words of the noble and learned Baroness, Lady Hale: the Law Commission’s proposals deserve better than that.

--- Later in debate ---

[Lord McNally]

My Lords, we have had a good debate, which I am sure bodes well for very interesting discussions in the Public Bill Committee. I again put on record my thanks to the noble and learned Lord, Lord Lloyd, for taking on the responsibility as chair of that Committee. As noble Lords will have gathered, I am also much reassured by the presence close by of Professor Cooke as I try to give answers to matters raised by noble Lords.

The first of my noble friend Lord Henley’s questions was about the situation where there is no surviving spouse or children. In such a case, the law remains the same. As to how the fixed sum was reached, that came out of a study in 2005, which made me think that it might be ripe for looking at again. On the question of whether this is a surprisingly large sum, one of the factors is housing, which makes it relatively easy for an estate to have quite large sums in it. Nevertheless, I am told that it affects at the moment only 2% of estates, partly because, as was mentioned, people who have a house and realise that its value is rising have the incentive to make a will.

The point that my noble friend raised about chattels is one that we may well explore in Committee. As I think my noble friend Lady Hamwee said, it is in respect not just of jewellery but of paintings and other things where there might be a wavy line between investments and chattels. That is certainly something to look at. For the same reason that I will refer to when I come to the interventions of my noble friend Lord Marks, I assure my noble friend Lord Henley that this procedure will be used only for non-controversial reforms. That is its strength and why Parliament has confidence in it. We should keep to that kind of discipline.

As the noble Lord, Lord Beecham, said, the noble Lord, Lord Wills, took us to interesting areas. However, the noble Lord was right to point out the danger of mischief and of the abuse of elderly and isolated individuals. Much of that is the responsibility of the Office of the Public Guardian, which also comes within my ministerial responsibilities. Allegations of theft or overcharging by any professional are serious and concerning but I do not believe that this Bill is the right place to tackle such misconduct. The Inheritance and Trustees’ Powers Bill does not directly deal with wills but instead focuses largely on situations where no will has been made. Dealing with the concerns raised by the noble Lord would not only expand the content of the Bill to deal with wills but would mean taking it into the territory of professional legal regulation, which would be a very significant step and is already dealt with under the auspices of the Solicitors Regulation Authority and the Law Society. However, the Committee will undoubtedly consider the points made by the noble Lord, Lord Wills, carefully unless the chairman rules that out. Not that I am not suggesting that will happen—we look forward to an interesting debate on any amendment tabled by the noble Lord, Lord Wills.

My noble friend Lord Marks gave us a glimpse of the detail into which Liberal Democrat conferences go in making policy. I cannot quite remember the debate myself, but I am sure there were many speeches from the floor that dealt with our policy on this. I have to say to my noble friend that he used a good deal of his speech to talk about things that we have not done and were not in the Bill. These are very relevant and may well need to be brought before Parliament, but he gave the game away at the end of his peroration when he described the issues that we have left out of the Bill: he will see when he reads Hansard that several times he used the word “controversial”. It is because they were controversial that they fell foul of the request of the noble Lord, Lord Henley, that we stay clear of that.

[Lord Marks of Henley-on-Thames]

My Lords, I draw my noble friend’s attention to a distinction that I hoped I had made between controversial proposals of the Law Commission, which I suggest ought to be brought before Parliament for legislation, and non-controversial proposals, such as are included in the Bill, which are suitable for this procedure. I hope I was making it clear that I do not suggest that this fast-track procedure is suitable for controversial legislation, but I do suggest that the Law Commission should not be frightened or intimidated away from introducing controversial proposals. Indeed, when considering its new, 12th—I think—programme of law reform, it has made it clear that it does not propose to steer clear of controversial proposals. I believe that that is thoroughly laudable.

[Lord McNally]

I could not agree more. I also say that I take very seriously my responsibility to bring the non-controversial parts of the work before the House.

Whether we should take the non-domicile question out of the Bill can be looked at in Committee. It seems to me that what we have done is no more than to recognise the realities we face in our relations with our Scottish colleagues, but I take on board the point made by my noble friend Lord Marks that in an increasingly international world some of this might have cross-border dimensions.

My noble friend Lady Hamwee made the point about housing now being a big part of any inheritance. She also raised the question of inheritance tax implications. We can look at that in Committee if necessary, but on her specific question about the commencement provision, there is no precise timing as yet, but the intention is that commencement will be all at one time.

I was extremely pleased by the contribution of the noble Lord, Lord Shaw, both for his welcome for the Bill and for the personal example that he gave, which was extremely helpful to the Committee. I shall treasure the compliment of the noble and learned Lord, Lord Lloyd; I shall tuck it away. We will have to leave it to the historians to decide whether it is Wills, Ashton, Etherton or one of the joint parentages we were talking about earlier in the debate. Nevertheless, the fact that the noble and learned Lord has been willing to take on the chairmanship has given an impetus and confidence to this procedure.

I was greatly sorry that the noble Lord, Lord Beecham, did not take this opportunity to give us a quote from Bleak House. Surely there is one somewhere here.