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The Lord Chancellor: I say at once that I wish to consider carefully all the matters that the noble Lord mentioned. Perhaps I may very briefly give my initial reactions to some of the points he made.

The first question was: what happens where the delegation is a several one? In that case I should have said that the first part of subsection (3) means that the beneficiary in question is no longer subject to the power of attorney in subsection (1). It is revoked if he ceases

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to be beneficially entitled to an interest in possession in land subject to the trust. That is his position. So far as the others are concerned, they are not affected.

On the other hand, in so far as it is a joint provision, the second part of subsection (3) operates to affect it. On rather a brief examination, I believe that the point the noble Lord made is met in that way. But my officials will look further at the question with those who are interested in these matters.

Turning to the noble Lord's second question, my impression is that the clause as drafted would have the effect that retirement or death of a trustee should not revoke automatically the delegation that the trustee has made. That would seem to be the right answer. Again, I will take advice on whether that desirable objective is attained by the present drafting.

Thirdly, the question is raised as to whether subsection (7) gives the desirable test. It was thought wise to have some possibility of the trustees being called to account if they were to exercise the power to delegate in a way that might cause damage to the subject matter of the trust; for example, by delegating to a beneficiary who was weak or feckless. The idea was that the test in Speight v. Gaunt, that trustees should exercise the care expected of a reasonably prudent man of business, should apply to this. We will certainly consider carefully what the noble Lord said, and see whether further provision is required. In the meantime, perhaps in the light of that explanation the noble Lord will feel able to withdraw his amendment.

Lord Mishcon: I am most grateful to the noble and learned Lord. In the circumstances he mentions, I certainly beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

New Clause 9 agreed to.

Clause 10 agreed to.

Clause 11 [Consultation with beneficiaries]:

The Lord Chancellor moved Amendment No. 4:

Page 5, line 22, leave out ("if provision to the effect that it is not") and insert ("unless provision to the effect that it is").

The noble and learned Lord said: In moving this amendment, I speak also to Amendments Nos. 5, 6 and 8, which are relevant to it.

Amendment No. 4 is the first of a group of amendments affecting the transitional provisions of Clause 11. Clause 11 presently provides for trustees of land so far as possible to consult the beneficiaries of full age and capacity and beneficially entitled to an interest in possession in land subject to the trust, and so far as consistent with the general interest of the trust to give effect to the wishes of those beneficiaries or the majority of them. This carries through the present effect of Section 26(3) of the Law of Property Act 1925, with the difference that the new provision applies unless a contrary intention is expressed, whereas Section 26(3) does not apply to an express trust for sale unless specific provision to that effect is made in the disposition. The original draft Bill made no transitional provision, but subsections (3)and (4) of Clause 11 allow for the person or persons who created the trust, or such of them as are

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alive and of full capacity, to "opt out" by a deed during the transitional period of one year beginning with the date of commencement, and for beneficiaries who do not want to be consulted to opt themselves out (and bind their successors) in the same way.

These provisions have been reconsidered in the light of representations from the legal profession, pointing out that a trust cannot be "opted out" if there is at commencement no settlor living and of full capacity. A settlor who has died or lost capacity might well have set up the trust in the knowledge that beneficiaries would not have the opportunity to control trustees' decisions in this way unless he spelt out the intention that they should have it; and it is therefore argued that the present transitional provisions will have the effect of changing the terms of some trusts but not others on a capricious basis. There has also been criticism of the provision for opting out for beneficiaries on the basis that it adds complication for little benefit. No one would wish to do that. These arguments were echoed to an extent by the noble Lord, Lord Mishcon, at Second Reading, and in my view they have considerable force.

This group of amendments accordingly replaces the provisions for opting out for existing express trusts of land, offering instead the possibility to opt in, on the same conditions as are already provided for in subsection (3), so that the consultation requirement of subsection (1) does not apply to an existing express trust of land unless provision to the effect that it is to apply is made by a deed executed during the transitional period by the person or persons who created the trust or such as are still alive and of full capacity. This will reduce to the minimum the number of cases in which the provision could be said to be changing the terms of any trust. As a consequence, the provision for beneficiaries to opt out in subsection (4) will become superfluous, and so it is deleted. I beg to move Amendment No. 4.

Lord Mishcon: I appreciate very much the noble and learned Lord's courteous reference to what I said at Second Reading. I say at once that I agree with the amendments.

On Question, amendment agreed to.

7.30 p.m.

The Lord Chancellor moved Amendments Nos. 5 and 6:

Page 5, line 30, leave out subsection (4).
Page 5, line 39, leave out ("subsections (3) and (4)") and insert ("subsection (3)").

The noble and learned Lord said: With leave of the Committee, I shall move Amendments Nos. 5 and 6 together. I have already spoken to them with Amendment No. 4. I beg to move.

On Question, amendments agreed to.

The Deputy Chairman of Committees (Baroness Lockwood): I should point out that there is a printing error in Amendment No. 7, which should read:

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    "Page 5, leave out line 41, and insert".

Lord Mishcon moved Amendment No. 7:

Page 5, leave out line 41, and insert--
("(i) before the commencement of this Act by disposition, or
(ii) by a will made before the commencement of this Act even if the testator dies after the commencement of this Act (unless the will is republished by a codicil made after such commencement which expressly provides that subsection (1) shall apply) or by an assent under such a will; and").

The noble Lord said: I move the amendment as amended. The effect of the clause, as amended by the Government, is that the new rule in subsection (1) (which extends Section 26(3) of the Law of Property Act 1925) applies to trusts of land created by a disposition after commencement of the Act, subject to a right for the settlor to opt out for the trust; to "existing express trusts of land" created by a disposition before commencement of the Act only if the settlor is living and of full capacity and opts in for his trust during a one-year transitional period; and automatically to all trusts not created by a disposition, whether they arise before or after commencement of the Act.

The suggested amendment is concerned with the definition of what is an "existing express trust of land" in the context of trusts created by someone's will. Because wills are frequently made long before the testator's death, the amendment proposes that a trust created by a will of a person dying after commencement of the Act should count for this purpose as an existing trust unless the will itself was made after commencement or republished after commencement by a codicil which expressly adopts the new rules. This avoids an inadvertent application of the rules simply because, for example, a testator has made a short codicil altering the amount of one legacy. I beg to move.

The Lord Chancellor: This amendment obviously requires careful consideration. I undertake to give it that consideration between now and Report stage.

Lord Mishcon: I appreciate what the noble and learned Lord said. In view of his remarks, I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 8:

Page 5, line 44, leave out ("or (4)").

The noble and learned Lord said: I spoke to this amendment with Amendment No. 4. I beg to move.

On Question, amendment agreed to.

Clause 11, as amended, agreed to.

Clauses 12 and 13 agreed to.

Clause 14 [Applications for order]:

The Lord Chancellor moved Amendment No. 9:

Page 7, line 8, leave out ("a beneficiary under") and insert ("has an interest in property subject to").

The noble and learned Lord said: In moving this amendment I shall speak also to Amendments Nos. 10 and 11.

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Amendment No. 9 is the first of a small group which together correct a problem with the description in Clause 14(1) of persons who may apply for an order. The problem that these amendments address is that the wording of Clause 14(1) presently appears to exclude a secured creditor of a beneficiary (notwithstanding the express reference to such persons in Clause 15(1)(d)) since such a person's interest does not arise "under the trust" as required by the definition of "beneficiary" in Clause 23(1).

The present provision of Section 30 of the Law of Property Act which Clauses 14 and 15 replace and which refers to "any person interested" certainly covers persons with charging orders, and it seems the apparent narrowing of the range of applicants came about because of the desire to ensure a wider range by including those interested in personalty under a mixed trust changing the reference to an interest in land to a reference to an interest under the trust.

Amendments Nos. 9 and 10 accordingly substitute for the references in Clause 14 to a beneficiary or a beneficiary's interest under the trust references to a person interested in the property subject to the trust and a person's interest in property subject to the trust.

Amendment No. 17 does the same for the reference to a beneficiary in Clause 17(2) which deals with the application of Clause 14 to trusts of the proceeds of sale of land. I beg to move.

On Question, amendment agreed to.

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