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House of Lords

Friday, 23rd June 2000.

The House met at eleven of the clock: The LORD CHANCELLOR on the Woolsack.

Prayers--Read by the Lord Bishop of Oxford.

Postal Services Bill

Lord Carter: My Lords, on behalf of my noble friend Lord Sainsbury of Turville, I beg to move the Motion standing in his name on the Order Paper.

Moved, That the amendments for the Report stage be marshalled and considered in the following order:

Clause 1, Schedule 1, Clause 2, Schedule 2, Clauses 3 to 62, Schedule 3, Clauses 63 to 81, Schedule 4, Clauses 82 to 95, Schedules 5 and 6, Clauses 96 to 118, Schedule 7, Clauses 119 to 126, Schedules 8 and 9, Clauses 127 to 130.--(Lord Carter.)

On Question, Motion agreed to.

Trustee Bill [H.L.]

11.6 a.m.

Report received.

The Chairman of Committees (Lord Boston of Faversham): My Lords, in calling Amendment No. 1, I hope that your Lordships will not think me too far out of order if, in view of today's unusual circumstances and because it is Friday, I were to say to the noble and learned Lord on behalf of the whole House, many happy returns of the day.

Noble Lords: Hear, hear!

Clause 28 [Trustee's entitlement to payment under trust instrument]:

The Lord Chancellor (Lord Irvine of Lairg) moved Amendment No. 1:

    Page 9, line 37, leave out ("and") and insert ("to").

The noble and learned Lord said: My Lords, in moving this amendment, I shall speak also to Amendment No. 2. I move them in substitution for Amendment No. 16 on the Marshalled List in Committee, which I did not move on that occasion

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having concluded that it was defective. With your Lordships' permission, I shall deal with the amendments in reverse order.

Clause 28 establishes a trustee's entitlement to remuneration under the terms of a trust instrument in certain circumstances and introduces new rules of construction of express professional charging clauses. It also reverses the common law rule which requires a charging clause to be strictly interpreted against the professional trustee who could previously be remunerated only for work which could not have been done by a lay trustee.

The noble Lord, Lord Phillips of Sudbury, who is unable to be here today because he is abroad, raised with me a proposal that charitable trustees ought to be treated more strictly than other trustees in these circumstances because of the nature of their responsibilities and I was pleased to agree with him. Thus, the amendment will provide that where a charitable trustee who is not a trust corporation fulfils the other requirements which would entitle him to payment under the trust instrument, he must surmount further hurdles in that he may not be a sole trustee and must have the agreement of the majority of the other trustees. The first amendment merely tidies up the drafting to take into account the addition of another subsection.

Before I sit down, perhaps I may put your Lordships on notice of one matter. I fear that I intend to introduce further amendments to Schedule 2 to the Bill at Third Reading. Only the other day, my officials received a letter from the legal office of the Church of England asking that we make certain amendments to take into account the coming into operation of the Cathedrals Measure 1999, which was not in being when the Bill was first published. We shall, of course, seek to do so. I beg to move.

Lord Goodhart: My Lords, I am happy to support the amendments moved by the noble and learned Lord the Lord Chancellor. Furthermore, we are more than likely to support any amendments necessitated by the coming into force of the Cathedrals Measure. My noble friend Lord Phillips of Sudbury, who is in Kosovo today, was concerned about the general principle applying to Amendment No. 2; it is whether trustees can take a majority decision by correspondence between them or can do so only in a meeting at which they are present.

While that is not a matter to be cleared up in this Bill, will the noble and learned Lord consider adding it to the subjects to be referred to the Law Commission for examination?

The Lord Chancellor: My Lords, I shall respond to that question so that the answer is on the record. My officials have written on this point to the noble Lord, Lord Phillips, but as he is out of the country he may not have seen the letter. We have consulted both the Law Commission and the Charity Commission. Neither of them reports any difficulty arising from the fact that some charitable trusts carry out much of their business other than by meeting. No doubt there are

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charitable trusts whose trust documents specify a particular way of carrying out business and whatever the trust document says will prevail. However, where they do not, trustees in practice have arrived at a pragmatic way of doing their business. I do not believe--and I appreciate that the noble Lord is not making the suggestion--that it is the place of this Bill, without consultation, to insist that this class of decision should be reached in any way other than that in which they generally do business--and do business satisfactorily.

There are two sets of reasons for that. First, action by majority has not caused the Charity Commission any significant difficulty. Neither have the courts been troubled by disputes arising from pragmatic decisions about how the business of particular trusts or classes of trust should carry out any or any particular business.

The second reason is purely practical and turns on the possibility of disenfranchising certain classes of trustee. If, for example, we were to require charitable trusts to take a decision such as the one under discussion here only at meetings, trustees who lived at a considerable distance from the venue for the meeting, or perhaps out of the jurisdiction altogether, might be put to significant expense in terms of time and travel if they wished their views to be taken into account; or they would in effect find that they were unable to carry out their personal duties if literally unable to attend. I am sure that the noble Lord, Lord Goodhart, can think of other problems, too.

Therefore, I am satisfied that the amendment, as now drafted, allows trustees of charitable trusts to make an appropriate decision on remuneration for one of their number, using whatever system of decision-making they generally apply, and that that is the appropriate way to deal with the matter. However, I am certainly willing to consider the reply which the noble Lord, Lord Phillips of Sudbury, will no doubt send me in due course.

Lord Kingsland: My Lords, I wish to associate the Opposition with the views expressed by the noble Lord, Lord Goodhart, with regard to the amendment tabled by the noble Lord, Lord Phillips. In the circumstances, I believe that the noble Lord, Lord Phillips, can be well satisfied with the response of the noble and learned Lord the Lord Chancellor. I also foresee no circumstances in which the Opposition are likely to oppose amendments tabled at Third Reading by the noble and learned Lord the Lord Chancellor as a result of the coming into force of the Cathedrals Measure.

Lord Wilberforce: My Lords, I wish to raise a niggling point which reflects on nothing other than my stupidity in the face of amendments. The first amendment proposed by the noble and learned Lord causes the initial words of Clause 28 to conclude with the words "subsections (2) to (3)". My question is whether the figure "3" applies to the existing subsection (3) or to the new subsection introduced by Amendment No. 2, which I understand may be

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renumbered "(3)". If that is so, the words "subsections (2) to (3)" may have to read "subsections (2) to (4)". I am sorry to raise this point; it reflects my inability to deal with amendments proposed with brackets.

The Lord Chancellor: My Lords, I shall not opt for either possibility. I rather suspect that renumbering is required, but we shall revert to that.

On Question, amendment agreed to.

The Lord Chancellor moved Amendment No. 2:

    Page 10, line 5, at end insert--

("( ) Subsection (2) applies to a trustee of a charitable trust who is not a trust corporation only--
(a) if he is not a sole trustee, and
(b) to the extent that a majority of the other trustees have agreed that it should apply to him.").

On Question, amendment agreed to.

European Union (Implications of Withdrawal) Bill [H.L]

Report received.

Suspension of Hospital Medical Practitioners Bill [H.L.]

Read a third time, and passed, and sent to the Commons.

Sea Fishing Grants (Charges) Bill

11.16 a.m.

Lord Burlison: My Lords, on behalf of my noble friend Lady Hayman, I beg to move that this Bill be now read a second time. The Bill fulfils a government commitment to introduce legislation as soon as the legislative programme permits in order to give statutory authority to charges made by the Sea Fish Industry Authority for handling applications for fishing vessel grants. Those charges were discontinued in May 1996. The Bill is short and straightforward but, as with many legal issues, the background is complex. Therefore, I hope that noble Lords will find helpful my introduction to the issues which required the Bill to be introduced.

First, I should make it clear that the Bill is not a vehicle for introducing financial assistance to the fisheries industry. It is intended solely to deal with charges levied in the past. The Bill's purpose is to ensure the validity of charges levied by the Sea Fish Industry Authority between 1st October 1981 and 3rd May 1996 in connection with its administration of grant schemes made under the Fisheries Act 1981. It also ensures the validity of charges made by the Sea Fish Industry Authority's predecessor, the Herring Industry Board, between March 1972 and October 1981. The Herring Industry Board was abolished in 1981 but its liabilities were transferred to the SFIA.

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The first charges which the Bill intends to validate are those known as "technical charges". They were levied by the Sea Fish Industry Authority to cover the costs of various checks and inspections during the period from 1st October 1981 to 3rd May 1996 under five different fishing vessel grant schemes.

Under a succession of schemes made under Section 15 of the Fisheries Act 1981, grants have been made available to fishermen in the UK for the construction, improvement and safety of vessels. They have all been administered by the Sea Fish Industry Authority on behalf of Ministers, as provided for by Section 16 of the Fisheries Act 1981. The SFIA is a non-departmental public body established under the Fisheries Act 1981 to promote the interests of the fishing industry.

The SFIA's technical charge covered the costs incurred by SFIA marine surveyors in inspecting a vessel at the application stage to check on what work was needed, including the examination of technical specifications and plans, and an inspection on the completion of the work so that the surveyor could satisfy himself that it had been carried out properly. The charge was calculated on a sliding scale, but was roughly 4 per cent. of the work, although a maximum ceiling was set to limit the charge applied to larger applications. The charge was eligible for grant aid and the SFIA deducted the total charge from the amount of grant paid to the beneficiary.

When material that the SFIA produced to implement a fishing vessel grant scheme in 1995 was examined, questions were raised within the Ministry of Agriculture, Fisheries and Food about whether the charging powers given to the authority under Section 3(2) of the Fisheries Act were sufficient to cover the technical charges. A key consideration was that the SFIA was administering the schemes under Section 16 of the 1981 Act as the agent of Ministers. In that role, the authority could have no powers which the Ministers themselves lacked. Ministers did not have the statutory power to levy the technical charges if they had administered the schemes themselves, so it was considered most unlikely that the authority had that power. However, I must make it absolutely clear that at all times the SFIA acted in good faith, believing that it had the power to levy the charges.

This was an extremely complex legal issue to unravel. To help noble Lords who are interested in these legal arguments, we have placed a note on the legal background to the Bill in the Library of the House. As soon as lawyers concluded that, in all probability, the technical charge did not have a statutory basis, the SFIA was told and stopped. MAFF wrote to the SFIA on 3rd May 1996 confirming the instruction given over the telephone that day to cease levying the charge immediately.

It was subsequently decided that the charge should not be reintroduced, as the nature of the grant scheme had changed and much less technical work was involved in processing applications. The Bill does not give authority to any charges made after 3rd May 1996, so it gives no authority for their reintroduction.

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Noble Lords may also be concerned about whether the Bill has human rights implications. That has been looked at very carefully. It is considered that, if challenged, the provisions of the Bill would be likely to be held compatible with Article 1 of Protocol 1 of the European Convention on Human Rights, which relates to the protection of property, in particular by virtue of the public interest defence in that article.

The charges concerned were reasonable and were never challenged or questioned by those making the payments. The cost of repaying them would be disproportionate to the benefits that such repayment would confer on those to whom it was made. On those grounds, the usual statement has been made that the provisions of the Bill are compatible with the convention rights. That is why the Government always made it clear that they did not intend to meet any claims that were brought before the legislation was in place.

There are precedents for the provision of retrospective statutory authority for similar charges. The Birds (Registration Charges) Act 1997 validated charges levied under Sections 6 and 7 of the Wildlife and Countryside Act 1981 for the registration of the selling of certain dead wild birds. Similar legislation was also agreed for fees that the Department of the Environment levied in respect of local planning authorities and the Wireless Telegraphy Act 1954 gave authority to past payments made to the Postmaster General for wireless transmission and receiving licences.

Background work for the introduction of the Bill raised the possibility that similar charges levied by a predecessor body of the SFIA--the Herring Industry Board--in connection with the schemes of financial assistance made under the Sea Fish Industry Act 1970 and earlier legislation consolidated in that Act might also have been ultra vires. After careful consideration, it was concluded that the HIB also had no power to levy those charges. Consistent with the treatment of the SFIA charges, it was decided to extend the coverage of the Bill to the HIB.

A total of £7.3 million in charges covering 13,000 cases was levied over a period of about 30 years. That amounts to an average of no more than £560 per case. A small part of many of the charges was levied for technical advice--such as assisting applicants to choose the appropriate equipment--that was not directly connected with handling the grant application. The SFIA has powers under the Fisheries Act 1981 to charge for such advice, but it would be extremely difficult to separate that now from charges for the work that has necessitated the Bill.

Because of the time delay, it is difficult to be more precise about the exact amount of the charge. Many of the boats that were subject to the charge in the early days of its application may no longer exist and their owners may, sadly, have passed away. Boats will also have changed hands, and because they may have had multiple owners it would be extremely difficult to follow up each case. The Government carefully considered all those factors before deciding to legislate.

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The Bill's first main operative provision in Clause 1(1) is to ensure the validity of the charges levied by the Sea Fish Industry Authority between 1st October 1981 and 3rd May 1996 in connection with its administration of the five fishing vessel grant schemes made under Section 15 of the Fisheries Act 1981 and specified in subsection (2)(a) to (e).

Clause 2(1) makes provision to ensure the validity of the same technical charges levied by the Herring Industry Board between March 1972 and October 1981 in connection with its administration of the two fishing vessel grant schemes specified in subsection (2)(a) and (b).

Clause 3(1) cites the full name of the Bill. On legal advice, the SFIA ceased to levy charges for this administration work from 3rd May 1996 onwards. Clause 3(2) is necessary to make it clear that the Bill does not facilitate their reintroduction after that date. Clause 3(3) is necessary to establish that the Bill extends to the whole of the United Kingdom, including Northern Ireland.

Moved, That the Bill be now read a second time.--(Lord Burlison.)

11.27 a.m.

Baroness Miller of Chilthorne Domer: My Lords, given the Minister's full explanation of this retrospective and technical Bill and given that there was no opposition from the industry to it, we have no points to make.

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