|Previous Section||Back to Table of Contents||Lords Hansard Home Page|
Lord Quirk: My Lords, I am grateful to the Minister for that explanatory reply. As special educational needs may arise from a complex array of psycho-physical conditions, many of them ambiguous, there is obviously scope for disagreement and inconsistency about assessment. But does that explain the quite staggering variation in the percentage of SEN pupils throughout the country? How can it be that in the single London borough of Tower Hamlets and among children from strictly similar social and ethnic backgrounds, 5 per cent. of pupils are classified as having special educational needs in one school--the Kobi Nazrul School--while between 60 per cent. and 70 per cent. of pupils are classified as SEN in neighbouring schools? Can it possibly be that, in some instances at least, we face not children with learning disabilities but staff with teaching disabilities?
Baroness Blackstone: My Lords, the Government would be concerned to see variations such as those cited by the noble Lord, Lord Quirk, unless there were good reasons for them. It is open to schools to seek the advice of local education authority educational psychologists, who have the expertise, to support school assessments.
Lord Rix: My Lords, is the Minister satisfied that children with special educational needs, particularly those with profound and multiple disabilities, are being properly assessed and their parents fully consulted before such children are excluded?
Baroness Blackstone: My Lords, it is extremely important that parents are consulted when children with special educational needs are being assessed--and certainly before a child is excluded from a mainstream school. As the noble Lord knows, the Government have relatively recently issued a Green Paper on special educational needs and have responded with an action programme for improving provision for such children. As a result of the Comprehensive Spending Review the Government have also invested considerable additional sums in supporting such children in mainstream schools as well as in continuing to provide good facilities in special schools for the small numbers who need to be separately supported in such schools.
Lord Taylor of Blackburn: My Lords, is my noble friend continuing the previous government's practice of adhering to the principles of the Warnock Report? Furthermore, will the Government build on those principles?
Baroness Blackstone: My Lords, since coming into office in May 1997, the Government have issued a Green Paper and have consulted on special educational needs. Tomorrow we are publishing a consultation document to review the SEN code of practice. I am sure that that will lead to revisions to the previous provisions in the light of further consultation on the code of practice.
Lord Tope: My Lords, are the Government now satisfied that there is general recognition in all maintained schools of the special needs of dyslexic pupils and that appropriate methods are being used to help such pupils to overcome their problems? How many teachers in England and Wales have successfully completed approved courses in helping dyslexic pupils?
Baroness Blackstone: My Lords, I cannot give a specific answer on the number of teachers who have received special training for dealing with dyslexic pupils. However, it is certainly the case that over many years teachers insufficiently recognised that some children have that problem. Indeed, the existence of that problem was sometimes denied. I believe that the new requirements for initial teaching training courses, introduced in 1996, will ensure that newly qualified teachers understand their particular responsibilities for identifying the problem. The Government will continue to monitor the progress that is being made.
Baroness Blackstone: No, my Lords, the Government do not accept that proposition. We are anxious to ensure that as many children with moderate learning difficulties as possible can be integrated into mainstream schools. The Government believe that many teachers are committed to supporting such children in ordinary schools. Moreover, the Government take the view that it is beneficial to children who do not have such needs to mix with those who do and to help to encourage such children rather than separating and segregating them for their entire school careers.
Baroness David: My Lords, can my noble friend tell me whether local authorities are coping with the number of children coming forward for statements? I believe that at one time they had to wait for quite a long time before they could be provided with the statements they had requested.
Baroness Blackstone; My Lords, approximately 3 per cent. of children are given statements. That is a small proportion of the total number of school pupils. However, the Government are anxious to try to reduce the number who have statements and to deal with their needs without going through what is a complex, time-consuming, and, to some extent, bureaucratic process involving a lot of paperwork. It is sensible to try to respond to the needs of such children without using the statementing process and by carrying out that work in schools. I believe that that is the right approach. If we go down that route we shall not have large numbers of parents waiting for statements for many months.
Lord Quirk: My Lords, although the 1994 code of practice which the Minister says is currently being reviewed and revised rightly stresses the earliest possible intervention for the assessment of special educational needs, does not the Minister agree that over-assessment of SEN--that is, so assessing too many children--is likely to produce a double jeopardy: on the one hand, lowering the self-esteem of otherwise perfectly normal children and, on the other hand, diluting resources which should be devoted to those who are genuinely and severely in need?
Baroness Blackstone: My Lords, the Government accept that this is a difficult balance to strike. It would be wrong to fail to support those children who have special educational needs. They must be identified. Moreover, they should be identified early. The Government are attempting to do that through their early assessment of children before they reach the age of five. On the other hand, we must avoid too many children
Lord Carter: My Lords, at a convenient moment after 3.30 p.m., my noble friend Lady Hayman will, with the leave of the House, repeat a Statement that is to be made in another place on the National Health Service. It has been agreed through the usual channels that a convenient time to take the Statement will be after the debate on the Second Reading of the Contracts (Rights of Third Parties) Bill.
This is the first of two short but important Bills coming before your Lordships for Second Reading today which stem from the work of the Law Commission. This first Bill sets out to clarify the law relating to the delegation by individual trustees of their trust responsibilities and to improve the protection of beneficiaries.
Before I go on to explain the Bill in detail, perhaps your Lordships will allow me to remind you of how it is that such Bills come to be introduced. The Law Commission, founded by the Law Commissions Act 1965, has as its chief aim the review and updating of the law of England and Wales. It prepares programmes of work which are presented to the Lord Chancellor for approval from time to time. Each item of the programme will generally result in a report which will make recommendations for reform, often accompanied by a draft Bill.
In order to arrive at that stage, the Law Commission will review the state of the law in an area and produce a consultation paper setting out the perceived problem, the current state of the law and a range of potential solutions. To achieve the widest possible circulation, the consultation document will be circulated among experts in the relevant field and will also be available to the
The rigorous working methods of the commissioners and their staff result in products of high quality, and having been through the commission's painstaking processes this Bill comes before your Lordships today very little changed from the form in which it appeared in the report to which it was appended. Your Lordships will also be pleased to know, I am sure, that a well-informed response to the consultation paper overwhelmingly supported the Law Commission's provisional recommendations, which were those upon which the Bill is based.
Perhaps I should say at this stage that my noble and learned friend the Lord Chancellor has signed a certificate under Section 19 of the Human Rights Act 1998 saying that, in his view, the provisions of the Bill are compatible with convention rights.
To turn now to the Bill itself, I am afraid to say that, though it is short, it deals with matters of some complexity. I hope that what I shall say now, taken together with the new style explanatory notes published with the Bill, will make things sufficiently clear. The primary responsibility of trustees has traditionally been to hold property on behalf of the beneficiaries under the trust. A trustee must safeguard the property and deal with it in the best interests of the beneficiaries. It is a general rule of trust law that a trustee, having voluntarily agreed to act, cannot delegate the exercise of his or her powers and duties. That rule is subject to the following exceptions: first, if the instrument establishing the trust specifically authorises delegation; secondly, if delegation is permitted by all the beneficiaries, though for this exception to apply all the beneficiaries must be both mentally capable and at least 18 years old; or, thirdly, if delegation is permitted under Section 25 of the Trustee Act 1925 or Section 3(3) of the Enduring Powers of Attorney Act 1985.
The Bill that I am introducing is not concerned with the third exception so far as it relates to Section 25 of the Trustee Act. That section has stood the test of time and needs only minor improvement. However, Section 3(3), of the Enduring Powers of Attorney Act has been criticised since its enactment for failing to protect the interests of beneficiaries. It was for this reason that the Law Commission was asked to consider the operation of the present law. It issued a consultation paper in 1991.
The 1925 Act restricts an individual trustee's power to delegate by including some safeguards for beneficiaries. Under Section 25, a trustee may only delegate if, first, the delegation is limited to twelve months; secondly, the attorney is not the trustee's only co-trustee, unless that co-trustee is a trust corporation; thirdly, the trustee tells any co-trustee or anyone who has power to appoint new trustees what he is doing; and, fourthly, the trustee remains liable for the attorney's acts and defaults. Those are the limitations under the 1925 Act.
The response to the Law Commission's consultation paper supported the commission's provisional conclusion that Section 3(3) was inappropriate for delegation by trustees in general, but that special provision should nonetheless be made for co-owners of land. In 1994 the commission published its report The Law of Trusts: Delegation by Individual Trustees.
The commission concluded that the conditions imposed by Section 25 of the Trustee Act 1925 were appropriate for the delegation of trustee powers and duties, subject to certain minor changes, but that Section 3(3), with its very wide scope and lack of safeguards, was not. It also concluded that some relaxation of the rules designed to address the needs of beneficial co-owners of land was justified. The Bill gives effect to these recommendations.
I shall now turn to the detail of the Bill. Clause 1 creates a new statutory exception to the general rule that a trustee must exercise in person the functions vested in him or her as a trustee. The effect is that a person authorised by a power of attorney to act in relation to property of the relevant kind will not be prevented from acting by the rule that the trustee must exercise trustee functions in person.
The provision will be of particular benefit to co-owners of land. First, it will enable those co-owners, who are essentially trustees for themselves, to delegate without having to comply with the restrictions which apply where trustees hold land only for third parties. The need for this special rule for co-owners of land arises because the 1925 property legislation requires land owned by more than one person to be held on trust. The result is that co-owners of land are, whether they appreciate it or not, trustees of a freehold or leasehold estate in land, irrespective of whether they hold the land for themselves or other people. Secondly, the provision will enable a co-owner to make effective provision for the disposal of the co-owned land if he or she becomes mentally incapable. This is necessary because Section 3(3) of the Enduring Powers of Attorney Act 1985 is to be repealed by Clause 4. Finally, the provision will ensure that a person acting under a power of attorney is able to deal with the proceeds of sale and income from the land as well as the land itself.
Clause 2 supports Clause 1. The problem to be solved is that a person dealing with a donee of a power of attorney under Clause 1 has to know whether the donor of the power has a beneficial interest in the relevant property. This could be left to investigation. However, investigation of title to beneficial interests is notoriously complicated. Clause 2 simplifies the transaction by providing a mechanism by which a purchaser can rely on a written statement by the donee that, at the time that he or she exercised the trustee function, the donor had a beneficial interest in the relevant property.
Clause 3 extends the benefit of Clause 1 to the popular form of power of attorney prescribed by Section 10 of the Power of Attorney Act 1971. Noble Lords who wish to see the effect of this Bill on the 1971 Act will find the relevant extracts showing the amendments set out in Annex A of the published explanatory notes.
Clause 4 repeals Section 3(3) of the Enduring Powers of Attorney Act 1985 subject to various transitional provisions. As I said earlier, Section 3(3) was intended to preserve the efficacy of the enduring powers of attorney scheme, by allowing an attorney under an enduring power to dispose of any of the donor's property held on trust. As I also said, it may have gone further than was necessary to achieve the desired result and may have the much wider and undesirable effect of automatically delegating all the donor's functions as a trustee whether or not he or she owns the trust property in question.
Clause 5 amends Section 25 of the Trustee Act 1925 in relation to powers of attorney granted after the Bill comes into force. Section 25 allows a trustee to delegate the exercise of the trusts, powers and discretions vested in him or her as trustee, for a period of up to 12 months, by power of attorney. This power to delegate is, however, subject to various safeguards intended to protect the interests of beneficiaries from excessive delegation. These are that the trustee may not delegate to a sole co-trustee unless it is a trust corporation; he or she must give notice of each appointment to specified persons; and, importantly, he or she remains liable for the acts and omissions of the attorney.
If the trust is created by a document, then the document may exclude or restrict the Section 25 powers. The text of Section 25 showing the changes that would be effected by the Bill is set out at Annex B to the explanatory notes as published.
Clause 6 repeals Section 2(8) of the Enduring Powers of Attorney Act 1985, which provided that a power of attorney granted under Section 25 could not be an enduring power. The repeal allows an enduring power of attorney to be used to delegate trustee functions under Section 25 of the Trustee Act 1925 after the Bill comes into force. Importantly, the requirements and protections of Section 25 of the Trustee Act will apply.
I now turn to some clauses of sufficient complexity that I trust your Lordships will allow me to give examples which smack rather of algebraic equations by way of explanation--that is, those who were interested in what has gone before. The examples are repeated in the explanatory notes for those of your Lordships who would wish to essay them with pen and paper.
Clause 7 specifies the circumstances when a person acting alone cannot satisfy a statutory requirement that two trustees are to receive trust money. I shall refer to that rule as the "two trustee rule" when I come to deal with it later. These requirements are that, first, capital moneys arising from land must be paid to, or at the direction of, at least two trustees; secondly, that a valid receipt for such capital moneys must be given otherwise than by a sole trustee; and, thirdly, that a conveyance or deed must be made by at least two trustees to overreach any powers or interests affecting a legal estate in land.
The clause is intended to strengthen and clarify the operation of the general rule of trust law which requires two trustees to receive trust money. The new provision will make it clear that, so long as there are at least two trustees, the rules could be satisfied either by two people acting in different capacities or by two people acting jointly in the same capacity but not by one person acting in two capacities. For example, where A and B are the only trustees: if A and B each appoint X as attorney,
Clause 8 inserts four new subsections in Section 36 of the Trustee Act 1925, which contains a statutory power for the appointment of new or additional trustees. The new subsections give the donee of an enduring power of attorney created after the commencement of the Act a new but limited power of appointment of new trustees in certain circumstances. The new power is necessary to prevent the strengthened "two-trustee rule" set up by Clause 7 from frustrating the new power for an attorney under an enduring power to exercise the trustee functions of the donor set up by Clause 1. For example, A holds land for himself and B. A appoints X as his attorney under an enduring power. A loses mental capacity and the power is registered. X wants to sell the land but cannot satisfy the two-trustee rule unless a new trustee is appointed.
Clause 9 inserts a new subsection into Section 22 of the Law of Property Act 1925, which provides that if land which is subject to a trust of land is vested, solely or jointly, in a trustee who is incapable by reason of mental disorder of exercising his or her functions as a trustee, the trustee shall be discharged before the legal estate is dealt with. This provision might prevent an attorney for an incapable trustee, who is acting under a registered enduring power, from dealing with the legal estate and so defeat the policy underlying the Enduring Powers of Attorney Act 1985 and Clause 1 of this Bill. The new Section 22(3) inserted by this clause provides that no discharge is necessary if there is an attorney under an enduring power entitled to act for the incapable trustee.
Clause 10 creates a general rule of interpretation in relation to the extent of the authority conferred by a power of attorney, in relation to land. The new rule will provide that, unless the document specifies to the contrary, in powers of attorney created after the commencement of the Bill a reference to land will include a reference to all the interests of the donor of the power of attorney in the land at the time that the donee acts. This new provision will prevent the technical distinctions between legal and equitable interests in land frustrating the intentions of donors of powers of attorney who may not appreciate the legal niceties. Perhaps I may give your Lordships an example. Here, again, I turn to algebra for clarity. A and B are a married couple who own their own house. As I said earlier, whether or not they appreciate it, joint owners are in fact trustees for themselves. In creating a power of attorney, A may refer to "my house" even though it is jointly owned, but even if he says "our house" he is unlikely to make it clear whether he is referring to his legal interest, which he holds as trustee, or his equitable interest of which he is the beneficial owner.
Clause 11 defines the terms "land" and "enduring power" for the purposes of the Bill, and specifies that references to the creation of a power of attorney are to be taken to refer to the execution of the instrument
It is unusual to encounter such relative complexity in so short a Bill. I apologise for the complexity of the explanation, but I genuinely believe that this is a worthwhile Bill. I commend it to your Lordships' House.
Lord Goodhart: My Lords, I congratulate the noble and learned Lord, Lord Falconer of Thoroton, on his most interesting lecture. I hope that all of us are now qualified to sit the examination paper on the Trustee Delegation Bill which I assume he will set us!
I welcome this Bill wholeheartedly. It is an example of the kind of minor but useful reform which can be achieved by the Law Commission. As a practitioner with a good deal of experience in trust law, I am sure that it will do considerable good and no harm. I have no criticisms at all of the substance of the Bill. I have one minor comment on the drafting of it which I fear will be of interest only to enthusiasts of the minutiae of parliamentary draftsmanship such as myself, the noble Lord, Lord Renton, and the noble and learned Lord, Lord Brightman, who I am glad to see present today.
My comment is that this Bill contains a number of what might be called "explanatory parentheses". A good example is in Clause 3 of the Bill where more than half the clause is taken up by a parenthesis which explains the effect of Section 10(2) of the Powers of Attorney Act. This has no substantive effect on the Bill whatsoever and is simply a guide to the reader of it. The practice of including parentheses of this kind has become common in recent years. However, we now have full Explanatory Notes which is a considerable improvement on previous practice. Those notes explain exactly what is being amended and why it is being amended. Surely it is not now necessary to include the explanatory parentheses which, as I said, have no substantive effect on the Bill itself.
I have one more important general comment. The Law Commission itself is a tribute to that most distinguished Labour Lord Chancellor, Lord Gardiner. The Law Commission is a successful tribute to him. It has achieved a great deal in recent years. However, the work of the Law Commission is valueless if its reports do not get onto the statute book. We had no Law Commission Bills at all in the long Session which ran from May 1997 until November 1998. The result of that was that the backlog in enacting Law Commission Bills, which was already substantial, has become worse. Apart from this Bill and the Bill which will be debated next, there are 20 further reports from the Law Commission which await action by the Government.
Therefore, while I welcome these two Bills I believe that if we are to keep up with the work of the Law Commission we need a target of four to five Law Commission Bills every year. Some of those Bills are certainly meatier than others and may take up more time, which may of course reduce the time available for other Bills. However, this Bill, and the contracts Bill which we are to debate next, will not need long debates. I certainly hope that there will be time for further Bills in this Session. If, as now seems at least possible, your Lordships' House will not have to spend the whole of the time from April to the Summer Recess in debating its own future, that might perhaps leave more time for further Bills, such as the two I have mentioned, and enable useful and practical reforms to the law to be achieved. Having said that, I repeat once again that I believe this is an admirable Bill to which I give full support.
Lord Kingsland: My Lords, I am somewhat daunted in having to speak after the noble Lord, Lord Goodhart, who is a truly eminent Chancery Silk. I, too, wish to congratulate the noble and learned Lord, Lord Falconer of Thoroton, on the remarkable exposition that he has given of the Bill. I am pleased that despite his new responsibilities, he still has time to come to your Lordships' House to practise his old trade.
In a minute I shall see whether I pass the test set by the noble and learned Lord in understanding the purpose of the Bill. I believe the Opposition have absolutely no quarrel with it whatsoever. As I understand it, its main objective is to repeal Section 3(3) of the Enduring Powers of Attorney Act 1995--that is achieved by Clause 4 of the Bill--in order to deal with a decision which I believe is called Walia v. Michael Naughton Ltd. and to protect Section 25 of the Trustee Act 1925.
I think the noble and learned Lord's starting point was the Powers of Attorney Act 1971, which sets out a statutory procedure under Section 10 to delegate powers of attorney. The limitation of the 1971 Act is that it does not deal with the question posed by the automatic revocation of a power of attorney on the onset of mental incapacity. It was with that matter that the 1985 Act set out to deal. Section 1 of that Act provides power to establish an enduring power of attorney, anticipating circumstances in which someone unfortunately suffers from mental incapacity.
I think I am also right in saying that the 1985 Act did not seek to change the rules set out in Section 25 of the 1925 Trustee Act, as amended by Section 9 of the 1971 Act. That must be right because where a trustee is dealing with other people's property, strict rules should apply as to the delegation of the trustee's powers.
While the 1985 Act was under consideration, the case of Walia was decided. I think it involved three co-owners of property who were, by virtue of the 1925 Law of Property Act, also trustees. Under Section 10 of the 1971 Act, one of the co-owners sought to delegate to another a power of attorney. However, the learned judge held that this could be done only under Section 25 of the 1925 Trustee Act. This would have proved a
Unfortunately, it appears that the words of Section 3(3) have gone too far. This Bill simply deals with that problem by limiting the section's effect to correcting the consequences of Walia and, at the same time, protecting Section 25. If that is essentially what the Bill sets out to do, it seems to me an admirable objective and one with which the Opposition are entirely in tune.
It is to the great credit of the Law Commission that the Government have accepted almost in its entirety the draft that the commission set out. It is with some hesitation that I say that Her Majesty's Government have got it right in view of the fate of Section 3(3); but I hope for all our sakes that they have.
Lord Falconer of Thoroton: My Lords, I am grateful for both speeches. I say genuinely that the support given to the Bill by the noble Lord, Lord Goodhart, is the most eloquent indication that it is worth while. The noble Lord is an eminent Chancery practitioner.
Perhaps I may deal with two points made by the noble Lord. The first relates to the brackets in various sections of the Bill. I agree that they are necessary for the purpose of giving effect to the purport of the Bill. They seem useful. If, for example, one is in a solicitor's office trying to deal with a question of the delegation of power that might arise in relation to a property, it would be of some value to know what subsection (3) of Section 3 of the Enduring Powers of Attorney Act 1985 said in summary without having to go to the explanatory notes, which might not be available. Therefore, although I take the noble Lord's point that they make the Bill longer, they have some value.
Secondly, the noble Lord made the point that the Law Commission's efficacy depends upon the Government giving effect to its Bills. I agree with the principle. Nevertheless, there are questions of priorities. There is a full legislative programme this year, as there was last year, and will probably be the case next year. I hesitate to say it, but I believe that other Bills will fill the gaps in time that are left as a result of the saving of time in relation to the House of Lords Bill, and I fear that they will not be Law Commission Bills.
I give the noble Lord, Lord Kingsland, 100 per cent. in regard to his exposition of the Bill's intention. After a sticky start in getting the subsection wrong, he then showed that he completely understood the substance. I am grateful for his support. I therefore urge the House to give the Bill a second reading.
Back to Table of Contents
Lords Hansard Home Page