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The Lord Chancellor: The noble Lord has explained clearly the position that he suggests that we should adopt. The present scheme of Part II does not go as far as the noble Lord's and it is true that, if one were going to go the whole distance of getting rid of the effects of Brockbank v. Bates, one would go this length. We had taken a rather less radical approach and one of the consequences of that approach is the need for notices to which the noble Lord has referred.

My impression of this is that there is a good deal to be said for the view that if the right to direct appointment or retirement would be exercisable at the beneficiaries' instigation--that is, qualified as a whole--there would be no need for the trustees to serve notice on the beneficiaries of their intention to appoint a new trustee and therefore Clause 19 would become superfluous with certain other advantages as well.

This is a fairly substantial change in the underlying proposals of this part of the Bill. I am sure the noble Lord will not be surprised that I would wish an opportunity to consider these proposals, which are affected not only by this Motion but also by later amendments. In the meantime, I wish to propose the amendments, which have the effect of making our own proposals better than they have been, but reserving to the noble Lord the result of consideration of his more radical proposal, which would have quite considerable effects on the wording of Part II.

Lord Mishcon: In the light of those remarks, it is with considerable pleasure that I say that I have no intention of moving that Clause 19 shall not stand part of the Bill.

Clause 19, as amended, agreed to.

Clause 20 [Appointment of trustee at instance of beneficiaries]:

Lord Mishcon moved Amendment No. 13:

Page 10, leave out lines 13 to 15 and insert--
("(a) there is no person (living and ascertained) nominated for the purpose of appointing new or additional trustees by the instrument, if any, creating the trust, and").

The noble Lord said: This amendment sets out to express, if I may say so respectfully, more clearly than in the existing paragraph (a) the circumstances in which the beneficiaries' power is to exist. I say that with very great deference because I believe that the noble and learned Lord, in view of his general remarks on other occasions, might agree with what I am now going to say. The referential drafting of the paragraph in the Bill is not helpful to the reader, the practitioner or indeed a member of the public who belongs to neither category. One aspect of the existing

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drafting which is not covered by the amendment is the fact that an additional, as opposed to a replacement, trustee may not be appointed where a trust corporation is in office. But that is covered, I suggest, by part of Amendment No. 16. I refer to it at this stage because it may abbreviate the discussion.

As your Lordships will see, instead of the reference as made in the Bill and in the amendments of the noble and learned Lord, we are asking that the matter be clarified, without a reference to another Act, by the clear wording of the clause. I beg to move.

The Lord Chancellor: I am very happy to consider this matter.

Lord Meston: I rise only to say that, in case this becomes an entirely private dialogue, I support the amendment.

The Lord Chancellor: I am sure that that will make my consideration of it even more careful.

Lord Mishcon: I am delighted to have the assistance of the noble and learned Lord the Lord Chancellor and equally--he is, if I may say so, entitled to the description of learned--of the noble Lord, Lord Meston. In the circumstances, I ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 14:

Page 10, leave out line 16 and insert--
("(b) the beneficiaries are of full age and capacity and are absolutely entitled to the property subject to the trust.").

The noble and learned Lord said: I spoke to this amendment with Amendment No. 12. I beg to move.

On Question, amendment agreed to.

Lord Mishcon moved Amendment No. 15:

Page 10, line 17, leave out subsection (2) and insert--
("(2) The beneficiaries may give either or both of the following written directions--
(a) a direction to the person of persons entitled to exercise the power conferred by subsection (1) or (where none of the trustees is a trust corporation) subsection (6) of section 36 of the Trustees Act 1925 to exercise the power by appointing the person or persons specified in the direction;
(b) a direction to one or more of the existing trustees to retire from the trust.").

The noble Lord said: This amendment extends the proposal in Clause 20(2) by giving the beneficiaries not just power to direct the appointment of trustees where circumstances allow but also in the same defined circumstances, and acting unanimously, to require one or more of the existing trustees to resign. Although this is a little more radical than the Bill as drafted would seem to be, it meets the 1948 court decision of Brockbank v. Bates, to which I referred previously, more directly. It is to be remembered that

25 Mar 1996 : Column 1549

the right only arises where the beneficiaries could instead anyway insist on the trust being wound up and distributed at their direction. I beg to move.

The Deputy Chairman of Committees: I should point out that there are two printing errors in the amendment. Line 3 of the amendment should read,

    "a direction to the person or persons",
and line 5 should end,

    "section 36 of the Trustee Act".

8 p.m.

The Lord Chancellor: This is a fundamental amendment of the scheme to which the noble Lord referred in connection with the Question of Clause 19 standing part of the Bill. I have certainly undertaken to consider it. It is more radical than the basic proposals under Part II of the Bill, but it has certain advantages, as the noble Lord explained, in relation to the giving of notice. I would like to have the opportunity of considering that further.

Lord Mishcon: I am grateful to the noble and learned Lord. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mishcon moved Amendment No. 16:

Page 10, line 19, at end insert--
("( ) Subject to sections 22(3) and 22(5), any person to whom the direction is given shall join in executing any necessary deeds to comply with it unless before he has done so one or more of the beneficiaries by whom it is given gives to that person a written retraction of his direction or of his participation in a joint direction.").

The noble Lord said: This amendment allows for a retraction of the direction by any of the beneficiaries who joined in giving it, whereupon, since a direction must be unanimous, it would cease to be effective. The point stems from concern as to the risk of undue influence, which could easily arise if beneficiaries are indeed to be given the right to require trustees to resign. An example could be where there is one dominant beneficiary who, perhaps by misrepresenting the history, induces the others--perhaps his children who have recently come of age--to sign a direction requiring the resignation of a trustee and perhaps the replacement of that trustee by the dominant beneficiary himself, when that trustee has in fact been resolutely standing up for their interests against the unreasonable demands of the dominant beneficiary.

Having given that example, I considered with my colleagues whether one should have a direct reference in this part of the Bill to potential, undue influence. I decided, with my colleagues, against that. That would implicitly put trustees on inquiry on this issue in all cases even where it is not suspected in fact. If a trustee suspects that one or more of the beneficiaries may not be well served by the change to which they had put their signatures, he will wish to explore the matter with them and perhaps encourage them to take fully independent advice on it. A mechanism to allow them to retract is important to avoid claims by other dominant

25 Mar 1996 : Column 1550

beneficiaries that once the direction is given it is binding and the recipient is irrevocably bound to act on it. I beg to move.

The Lord Chancellor: No solution proposed to the problems sought to be addressed in Part II of the Bill is completely free from some degree of concern. The concern that underlies this amendment is something that we would want to consider carefully in considering whether this more radical solution should be adopted. With these perhaps slightly less encouraging words than some I have used earlier, the noble Lord may feel able to leave this matter with us for further consideration.

Lord Mishcon: I have found the words sufficiently encouraging to beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mishcon had given notice of his intention to move Amendment No. 17:

Page 10, line 20, leave out subsections (3) and (4).

The noble Lord said: This amendment follows from what I said about Clause 19. In the circumstances I do not propose to move it.

[Amendment No. 17 not moved.]

Clause 20, as amended, agreed to.

Clause 21 [Appointment of substitute for incapable trustee]:

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