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Lord Mishcon: My Lords, I am grateful for both amendments and support them.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 4:

Page 6, line 3, after ("disposition") insert (", or a trust created after that commencement by reference to such a trust,").

On Question, amendment agreed to.

Clause 19 [Appointment and retirement of trustee at instance of beneficiaries]:

The Lord Chancellor moved Amendment No. 5:

Page 10, line 7, after ("being") insert ("(or, if there are none, to the personal representative of the last person who was a trustee)").

The noble and learned Lord said: My Lords, I am intent on making more rapid progress now. Amendments Nos. 5 to 13 are essentially technical amendments which clear up a number of points on the provisions of Part II of the Bill concerning the appointment and retirement of trustees which were not quite met by the group of amendments to Part II which were accepted on Report. As with that earlier group, I believe that it would, with your Lordships' leave, be appropriate for me to speak to all of the remaining amendments together with Amendment No. 5.

Amendment No. 5 enables the existing subsection (4) to be deleted by moving the essence of that subsection into subsection (2), which now makes it clear that any direction to appoint a trustee or trustees under this clause is to be given to the trustee or trustees for the time being (which will include anyone being directed to retire at the same time) or, where there is no trustee left, to the personal representative of the last trustee on whom the trust will have devolved.

Amendment No. 6 makes a number of changes to the existing provisions of subsection (3) of Clause 19. The first part of the amendment recasts subsection (3) in order to provide more comprehensively both for the protection of a trustee who is directed to retire and for ensuring that sufficient trustees will remain after any such retirement to give receipts and administer the trust properly. The essence of the retiring trustee's protection is that he should not have to comply with the direction to retire by making a deed declaring his retirement until reasonable arrangements have been made, rather than merely offered, for protection of any rights he may have in relation to the

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trust, such as a right to indemnity for expenses personally incurred. This principle is now spelt out in the new subsection (3)(b). In addition, the retirement is not to be effective unless there will thereafter be either a trust corporation or two persons, who may be corporate persons or individuals, to act as trustees, and either the retiring trustee is to be replaced on retirement or the continuing trustees consent to his retirement.

The second part of Amendment No. 6 inserts a new subsection (4) which provides for the necessary action to be taken on a retirement under subsection (3) to vest the trust property in those who will be the trustees after the retirement, whether or not it is accompanied by a replacement appointment.

On Amendment No. 6, I should perhaps say in passing that on the substitution of the words in the amendment in the Bill, it looks as though "(a)" is required at the start of the wording. However, my understanding from Parliamentary Counsel is that it is a matter of the printing and that is the way it should read. So what is left in the existing subsection would remain as the opening phrase in the new provision and then the additions from the amendment will be inserted.

Amendments Nos. 7 to 10 make technical changes to the supplemental provisions of Clause 21. Amendment No. 7 makes it absolutely clear that the ability of a beneficiary to withdraw a direction before it has been complied with extends to both the situations set out in Clause 21(1)(a) and (b). Amendment No. 8 changes the transitional provisions for Part II of the Bill so that trusts created by wills are placed on the same footing as inter vivos trusts. Amendment No. 9 adds the words "by a disposition" to subsection (6) to ensure consistency with subsection (5); and Amendment No. 10 makes it clear that, where the settlor excludes Part II from applying to the trust and a direction has already been made but not complied with, the direction will thereby cease to have effect so that the trustees do not have to comply with it, but may of their own motion do what the direction says if they consider that to be appropriate.

Amendments Nos. 11 to 13 provide for minor technical changes in the Trustee Act 1925 as a result of the changes introduced by Clause 19 as amended. The effect of Amendment No. 11 is to remove the bar in Section 36(6) of the Trustee Act on appointing an additional trustee to serve with a trust corporation; and the effect of Amendment No. 12 is to change the provisions of Sections 37 and 39 of that Act concerning the minimum number of trustees to enable a departing trustee to be discharged, so that the requirement is for a trust corporation or at least two persons to remain, rather than two individuals as at present, so that corporate trustees are covered. These changes ensure consistency with Clause 19 of the Bill, and remove in each case what is at best an inconvenience and at worst a potential trap for the unwary.

Finally, Amendment No. 13 revises the existing consequential amendment to Section 40(2) of the Trustee Act 1925 so that it more clearly takes account of Clause 19 of the Bill as amended.

I beg to move Amendment No. 5.

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Lord Mishcon: My Lords, I wish to pay a tribute to the noble Lord, Lord Meston. Before I entered the Chamber, he pointed out to me that (b) ought to be (a), (c) ought to be (d) and (d) ought to be (c). I thought that I had gone through this Bill with meticulous care. I had not noticed that, and I congratulate the noble Lord on his powers of observation.

I have only one brief comment to make. It relates to the last paragraph of the amendment. I make the remark in exactly the same spirit as I mentioned before and not in any way in opposition to the amendments to which the noble and learned Lord has just spoken. Does the noble and learned Lord the Lord Chancellor consider that third party rights such as those of the landlord with the benefit of a covenant against assignment of leasehold property require protection in the context of the replacement subsection which is the paragraph to which I have just referred? In particular, where he is able to withhold consent to an assignment only on reasonable grounds, is there a risk that it might be held unreasonable to resist an assignment where statute compels the assignor and assignee to enter into it if, apart from that, refusal of consent would be justified by reference to existing case law?

Does the noble and learned Lord consider, hereafter, that provision is needed for intervention by the court at the instance of third parties, such as mortgagees or insurers of trustees, in the event of evidence being available that a direction by beneficiaries under Clause 19 was given as part of a series of transactions involving fraud?

As I said, all my observations this evening have been directed to the prevention of fraud. I made those observations in asking the noble and learned Lord, with his usual courtesy and wisdom, whether he will consider these matters at a later stage.

Lord Meston: My Lords, I thank the noble and learned Lord the Lord Chancellor for clearing up my mystification at Amendment No. 6. Observant I may have been; wrong I certainly was. It is perhaps inevitable that I was going to be, given the care of the noble and learned Lord the Lord Chancellor, his officials and the draftsman in preparing the Bill. The treatment of the Bill seems to have been quite meticulous throughout.

The Lord Chancellor: My Lords, I am grateful to the noble Lord, Lord Meston, and the noble Lord, Lord Mishcon, for their remarks. The point made by the noble Lord, Lord Meston, was perfectly reasonable. It was so reasonable that my official concerned with the Bill had also raised it with the parliamentary draftsman. So it must have been a good point.

The other questions put by the noble Lord, Lord Mishcon, are both quite serious. I am not anxious to put into this Bill any protections that are not necessary. On the other hand there may well be a question as to whether the kinds of protection to which the noble Lord referred are necessary. I am considering the point further with the Law Commission with a view to deciding whether or not some further provision should be made.

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It is perhaps an interesting comment on the area of law with which this Bill is concerned that, although it was framed with very great care by the Law Commission and parliamentary counsel, it is an area in which practitioners have found, as it were, developing points as time has gone on. Obviously, Bills of this kind have to reach the statute book at some point and therefore there must be a cut-off for these observations. It is very much better that we should deal with them before the Bill becomes law rather than afterwards.

I say with all respect that the profession is getting better at doing that than it was some years ago. It underlines the fact that Law Commission Bills are now proceeding to the statute book. In years past, at least from time to time, the profession perhaps tended to treat such matters as rather academic exercises with no practical effect. They now know that there is a pretty good chance that Bills of this kind will reach the statute book, so observations and help have considerably improved.

I am very grateful for all the care that those who commented on the Bill have given to it. I am sure we are all anxious to produce an improvement. Also, anxious as some of us may be to preserve a good living for a certain profession, we wish to be sure that the Bill is as clear as it possibly can be so as to minimise the risk of unnecessary litigation.

On Question, amendment agreed to.

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