Adoption and Children Bill

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Mr. Brazier: It is on record that my wife and I had IVF treatment, although our children are direct blood descendants of both of us. My hon. Friend raises an important issue, because the courts have ruled, for example in the case of Lord Ampthill, that no one can be forced against their will to undergo procedures such as DNA testing to ascertain who is genuinely blood offspring. Ludicrously, the current law is unenforceable.

Mr. Bellingham: My hon. Friend illustrates the current state of affairs very well. Surely the time has come to get a grip on the matter. It would indeed be ironic if the Labour party emerged as the backwoodsmen, the supporters of something quite outmoded, outdated, archaic and divisive to society, who proved unwilling to take a highly symbolic step forward. I see some Labour Members who agree with me and would very much like to support the amendment.

Ms Winterton: Does the hon. Gentleman accept that his amendments do not deal with the issues? They deal only with adopted sons.

Mr. Bellingham: The Parliamentary Secretary makes a very good point and has explained that the two amendments would lead to difficulties. Although I put quite a lot of effort into the drafting, I obviously have not got it quite right. I thought that it was simpler and neater to leave out the word ''not'' and, as the Parliamentary Secretary knows, I am a great believer in keeping things simple and straightforward. However, she has argued convincingly that the amendments would not achieve what I intended. I accept her technical point that they would solve only part of the problem.

In the hope that following discussion with fellow Ministers and perhaps with members of the Cabinet, including the Lord Chancellor, the Parliamentary Secretary will table an amendment on Report that would change the law as many of us want, or that her counterpart in another place will examine the matter and table new amendments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 68 ordered to stand part of the Bill.

Clause 69

Protection of trustees and personal representatives

Question proposed, That the clause stand part of the Bill.

Tim Loughton: Now that we have departed from the choppy waters of aristocratic sperm, it will be interesting to see how the Lords deal with those clauses. We are now on the safer—as far as the Hansard reporters are concerned—territory of trustees.

I would like the Parliamentary Secretary to elucidate the clause. I speak with a vested, but non-pecuniary interest as someone who acts as a trustee for various funds. Subsection (1) exempts trustees from inquiring in the course of their duties, which would normally be to distribute the assets of a trust fund or administer the distribution of income, about the adoptive state of—I presume—a potential beneficiary of the trust.

I would like the Parliamentary Secretary to explain that. A trust may be set up with the explicit intention that its assets should be passed on only to blood relatives. For example, grandparents may set up a trust for their grandchildren, but they may want only the natural-born children of their children to inherit from it. If, after the grandparents' death, an additional child was adopted by the second generation and the trustees were unaware of that, could that adopted child be a beneficiary of the distribution of the trust's assets in the same way as the blood relatives? If it were later discovered by the trustees that they had effectively breached the terms of the trust because an adopted child had become a beneficiary, would there be no comeback on that? It would be useful to clarify that for trustees. I admit that it would be unusual for there to be exclusions or exemptions for adopted children in a trust's documents, but it is not inconceivable.

Ms Winterton: Let me go back a bit. The idea of the clause, which replicates section 45 of the Adoption Act 1976, is to provide protection for trustees or personal representatives who might distribute property in ignorance of the making or revocation of an adoption order. It is not the same as the hon. Gentleman's example, but imagine that a will is made to distribute property among grandchildren, where the person who made the will dies and an adopted child then comes into the equation. If that will simply stated, ''All my grandchildren shall inherit a portion of my estate,'' the adopted grandchild would acquire the same rights as the other children. However, the trustees of the estate might distribute the money to the natural children and the adopted child without realising that the adoption order had been revoked because a mistake had been made or fraud had been committed in the documents. The clause covers such a situation. The hon. Gentleman would be protected if he were a trustee of an estate and mistakenly distributed money to the wrong children because he did not realise that the order had been revoked.

Tim Loughton: I think I see where the Parliamentary Secretary is coming from. However, will adoption law or trust law prevail? The trustees will not be guilty of wrongdoing because breaching a trust is not a criminal offence, although disaffected beneficiaries could bring a civil action. There is no comeback on the beneficiaries in trust law as regards the terms of a trust that specifies that non-adopted children can be the only beneficiaries.

The previous clause dealt with inheriting property and the equal treatment of the children. After the trust is distributed among the children, it may transpire that one of them is adopted and should not, therefore, qualify under trust law. Which body of law takes precedence in such a case? The issue is slightly complicated, and the circumstances are highly hypothetical. Can natural-born beneficiaries sue so that the share of the trust that is erroneously paid out to the adopted child is handed back? I hope that the Parliamentary Secretary gets my point.

Ms Winterton: I think that I get the hon. Gentleman's point, but I am not an expert on trust law, although I might become one—as if by magic. It is important to return to the terms of the trust and of any instrument that is drawn up.

Mr. Llwyd: I hope that I can assist the Parliamentary Secretary. Subsection (2) gives the trustee immunity in civil and criminal law. Subsection (3) allows any disaffected person the right to the equitable remedy of tracing. That is the issue in a nutshell.

Ms Winterton: I am extremely grateful to the hon. Gentleman. That was almost what I was about to say. Any money that was incorrectly distributed would have to be handed back. The clause protects trustees who may distribute the estate in ignorance, although it would be an entirely different matter if they participated in an attempt to commit fraud. The clause is aimed at trustees who distribute money without realising that the adoption order has changed.

The terms of any trustee document would prevail in terms of the inheritance. If a document stated that that the beneficiaries should be a specific number of children—perhaps named children—and left out the adopted children, that would be a different matter.

11.15 am

Mr. Bellingham: I understand that the clause is intended to cover every eventuality, but surely a trustee or personal representative would know that a potential beneficiary had been adopted. Trustees have wide-ranging fiduciary duties. I should declare an interest, as I am one of several trustees of a trust with four or five beneficiaries. It is our job to ensure that the professional people investing in the funds and the solicitors running the trusts do so to a high standard. We are unpaid and act as trustees because we have respect for and like the family in question. It would be extraordinary beyond belief if I did not know all the circumstances affecting beneficiaries as part of my due diligence as a trustee. The clause surprises me.

The clause may indeed cover every eventuality, as the Parliamentary Secretary says, but are there any other circumstances in which trustees or personal representatives would not be under such a duty? As part of trustees' due diligence requirement, it is their duty to be aware of such eventualities. In what circumstances does she imagine that trustees or personal representatives would not know about those unforeseen factors?

Finally, will the Parliamentary Secretary also tell us whether ''follow the property'', in subsection (3), is another legalistic definition of tracing, mentioned by the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd)?

Ms Winterton: The hon. Gentleman is right to say that the clause applies to exceptional circumstances. I accept that he, as a trustee, has a large knowledge of the law, but the clause ensures that trustees do not have to undertake unduly extensive inquiries, which might be quite difficult in cases of fraud, for example, if a relative challenged an adoption. As I said, the provisions have been carried over from the 1976 Act to give trustees some protection, so trustees will not have to make unduly searching inquiries in exceptional cases such as fraud. In the personal case he has described, the hon. Gentleman obviously knows the family and their background well, but in some instances trustees are professionals who do not have intimate knowledge of the family. The answer to his question about tracing is yes.

Mr. Llwyd: May I raise a matter that seems, on reflection, to be slightly odd? I understand subsection (3) with respect to tracing, but if the property is sold

    ''into the hands of another person''

under the clauses in question the disaffected person cannot recover at all. The trustee is immune—full stop. If the property is sold on in good faith, the disaffected person has, it seems to me, no right of action. Perhaps the Minister would reflect on that. I do not expect an immediate answer, but it would be interesting to know.

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Prepared 6 December 2001