HC Deb 03 April 1979 vol 965 cc1269-75
Mr. Graham Page (Crosby)

I beg to move amendment No. 1, in page 1, line 8, after 'favourable', insert 'to that tenant'.

I am obliged to you, Mr. Godman Irvine, for the acceptance of my manuscript amenedments to a later part of the Bill.

Amendment No. 1 is a drafting amendment to make the clause a little clearer. The phrase in clause 1 the price payable on a conveyance for giving effect to that section cannot be made less favourable obviously means less favourable to the tenant. In order to clear up that point, my amendment proposes insertion of the words "to that tenant".

The Under-Secretary of State for the Environment (Mr. Ernest Armstrong)

I am advised that the opening words of the clause As against a tenant in possession make clear that the purpose of the Bill is to protect the tenant in possession rather than to protect the landlord and that no amendment is therefore needed. The insertion of the words proposed by the right hon. Gentleman would mean that the clause said the same thing twice.

Mr. Page

I notice that in a later amendment in the name of the Secretary of State the words that I propose, namely, less favourable to the tenant are used. I do not think that the first line of the clause makes clear whether"less favourable"refers to the tenant or the landlord. I ask the Minister to look at the matter again. I am endeavouring to put the matter beyond doubt.

Mr. Armstrong

I appreciate the spirit in which the right hon. Member approaches this matter, but I assure him that all the advice that I have received is that the amendment is not necessary and that the purpose that he seeks is covered.

Mr. Page

In the light of that assurance, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Graham Page

I beg to move amendment No. 2, in page 1, line 8. leave out ' 18th February 1966' and insert ' 15th February 1979'.

The Second Deputy Chairman

With this we may take the following amendments:

No. 3, in page 2, line 1, leave out subsection (4) and insert— '(4) If the tenant has claimed before the commencement date and the claim has been withdrawn either—

  1. (a) following a determination of price not subject to subsection (1) and therefore less favourable to the tenant; or
  2. (b) without any determination, in circumstances where the determination would have been less favourable because not so subject,
section 9(3)(b) of the 1967 Act does not apply to avoid a further claim on or after the commencement date, though made within five years.'

No. 4, in page 2, line 1, leave out subsection (4).

A manuscript amendment, in page 1, leave out lines 14 to 16.

A manuscript amendment, in page 2, leave out subsection (5).

No. 8, in page 2, line 17, at end add— '(6) In the case of a property where the freehold is owned by a registered charity, the reference to 18th February 1966 contained in Clause 1, subsection (1), shall be read as 15th February 1979.'.

No. 9, in page 2, line 17, at end add— '(6) Where the freehold is owned by a registered charity, this Act shall not apply.'.

Mr. Page

If amendment No. 2 is accepted, the last three lines of subsection (2) will be inappropriate. The manuscript amendment to leave out lines 14 to 16 therefore goes together with amendment No. 2.

Amendment No. 4 would leave out subsection (4) and, if that is agreed to, we shall need the consequential manuscript amendment leaving out subsection (5). If subsection (5) is left out, my amendments Nos. 5 to 7 will be unnecessary.

Amendment No. 2 alters the date included in clause 1. The courts have decided that if a ground landlord inserts into the title of a long leasehold dwelling house, between his title and that of the ground tenant, an intermediate lease of a certain sort and under a certain formula, he can force up the price payable by the tenant to enfranchise the house.

I raise no objection to that transaction being made ineffective for the future in order to prevent the price of enfranchisement for the tenant being increased, but I object to such a transaction being invalidated retrospectively.

The Committee is being asked to act, in the course of that invalidation, as a court of appeal and to set aside a judgment. The Bill is short and it looks insignificant, but it breaches two major constitutional principles: first, that legislation should not be retrospective, and, secondly, that Parliament should not interfere with judicial decisions.

That could be put right by looking merely to the future and saying that the sort of intermediate lease used in the case decided by the court should not affect the price if it is entered into after the public knew the intentions of the Government, that is, after a date following the publication of the Bill.

When we have retrospective legislation in tax law, the public have been warned by a Government statement that they intend to amend the law. There has been no such statement in this case and the courts decided the case only recently. The first that anyone knew, for certain, of legislation to alter the position under the Leasehold Reform Act 1967 was when the Bill was published.

In order not to breach those constitutional principles that there should be no retrospective legislation and that Parliament should not interfere with court deci- sions, I propose to insert the date 15 February 1979 in place of 18 February 1966.

If that amendment is accepted, the last three lines of subsection (2) would be inappropriate. If the House accepts the principle that we should not interfere, by legislation, with a decided case, although we may wish to reform the law for the future, subsections (4) and (5), which give the right of the litigant who lost that case to recover from this House as a court of appeal, should also go.

Mr. Armstrong

We are conducting the Committee proceedings in unusual circumstances in this Parliament.

I appreciate the problems and also the co-operation of the right hon. Member for Crosby (Mr. Page), but as this is such an important issue, and the amendment involves the date, I should put on record the Government's view. The effect of the amendment would be to exempt from the beneficial provisions of this Bill any transaction of the kind involved in the Jones v. Wentworth case—the cause of the Bill being presented—which took place before the date of the First Reading of the Bill.

8.30 p.m.

The amendment would remove from the proper protection of the Leasehold Reform Act 1967 those who are most in need of the protection of this Bill—Mrs. Jones, the appellant in the case, her neighbours, who are in a similar position, and anyone else whose landlord has indulged in transactions of this kind. It would enable the landlords involved to demand far more than was envisaged as the price for the freehold—£4,000 rather than £300, in Mrs. Jones's case, at present-day prices, though the discrepancy will increase over time, thus effectively excluding the proper operation of the 1967 Act. Such leaseholders would thus be prevented from acquiring the freeholds of their houses at a fair and reasonable price, and landlords would be able to retain the considerable advantages accruing to them as a result.

In the Government view, the Bill, thus amended, would be much weaker. We do not accept that the Bill, as it stands, is retrospective in the sense in which that word is commonly used of legislation. It is no more retrospective than the 1967 Act or any of the amendments made to it in 1969 and 1974, all of which applied to leases regardless of when they were created.

The Bill, as drafted, changes one of the expected effects of past transactions but does not reopen them. In doing so, it follows the line taken in much of the legislation relating to housing and property, not only the Leasehold Reform Act itself but the Rent Acts and Housing Acts as well. All these measures can be described as retrospective in that they alter an existing state of affairs. But it is our contention they do not set any dangerous precedents.

The Bill follows the principle which is even employed for taxation legislation by stopping someone from enjoying an advantage for the future of a dubious transaction but allowing that person to retain any advantage already achieved. An example occurs in section 48 of the Finance Act 1977, which made certain annual payments non-deductible for purposes of assessing tax. In relation to future events, it takes away the benefit of a past transaction. Subsection (5) specifically applies the provision to future payments irrespective of when the liability to make the payment was incurred.

If the amendment is carried, it will effectively create at least one area where the leasehold reform legislation operates differently from the rest of the country and where leaseholders are prejudiced more than anyone else by the absence of a provision in the 1967 Act which the Law Lords themselves agreed would have been there if anyone had foreseen the type of transaction that has been employed in this case.

In putting on record the Government view that the Bill is not retrospective in the general sense applied to legislation, I ask the right hon. Gentleman, even at this stage, to consider carefully what he has said and to see whether he can withdraw the amendment.

Mr. Ian Percival (Southport)

My right hon. Friend the Member for Crosby (Mr. Page) and I have listened to what the Minister has said. There is a difference of approach here. We do not accept what he said about the merits, but, apart from the merits, on the element of retrospection we take the view that what the Government intend here—this is clear from the Second Reading speech of the Minister for Housing and Construction—is to reverse a decision of the highest court in the land. That is the worst kind of retrospection in our view—depriving a litigant, whatever the merits may be, of a decision obtained in the courts of the land.

There is a question of constitutional principle here and for that reason my right hon. Friend and I feel that we should advise our right hon. and hon. Friends to stick to this amendment and to press for its acceptance by the Committee.

Mr. Armstrong

I have listened with some care to the hon. and learned Member for Southport (Mr. Percival). It is clear that if the Bill is to be enacted in order to block a loophole for the future, I must, reluctantly, accept the amendment. However, I give this pledge—that, when we are returned to office we shall take steps to include this provision in the Housing Bill which we shall present.

The Second Deputy Chairman

Do I take it that the Minister is not pressing amendment No. 2?

Mr. Armstrong

Perhaps I could go on to the other amendments which are being discussed at the same time.

Amendment No. 3 was drafted so as to widen the category of leaseholder who would have been able to reapply for his freehold within the customary five years. As a consequence, however, of the decision to accept amendment No. 2, the circumstances envisaged in subsections (4) and (5) will not now arise. It therefore becomes necessary to delete them. The words at the end of subsection (2)? referred to in one of the manuscript amendments, also become redundant. I therefore propose not to move amendment No. 3 and not to resist amendment No. 4 or the two manuscript amendments.

Amendment agreed to.

Manuscript amendment made: in page 1, leave out lines 14 to 16.

Amendment made: No. 4, in page 2, line 1, leave out subsection (4).

Manuscript amendment made: in page 2, leave out subsection (5).—[Mr. Graham Page.]

Clause 1, as amended, ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill reported, with amendments; as amended, considered.

Motion made and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.

Bill accordingly read the Third time and passed.

Back to