§ Madam Deputy SpeakerWith this it will be convenient to discuss the following amendments: No. 27, in page 6, line 14, at end insert "and occupied by".
No. 23, in schedule 1, page 15, line 25, at end insert "and occupied by".
No. 25, in schedule 3, page 38, line 19, after second "to", insert "and occupied by".
No. 24, in page 38, line 37, after second "to", insert "and occupied by".
§ Mr. PageUnusually, I start by paying a small tribute to the Government and the Minister for at long last recognising the current legal difficulties affecting landlords and companies. The position was anomalous; it was and is quite illogical for a landlord to be prevented from taking proceedings against a company in possession of premises rented from that landlord when, at the same time, the landlord is allowed to re-enter such premises peaceably. Unfortunately, the Department's proposal is still confusing.
It appears on the basis of the legal advice I have received—not from the good justice Neuberger, but from another source—that under the amendment tabled by the Minister in Committee, it would be possible for a landlord to be forbidden from peaceably re-entering premises that are not occupied by the company that has sought and obtained a moratorium. I find the reasoning behind that rather difficult to detect.
The amendments are of a probing nature; I am a seeker after truth. Looking the hon. Member for Great Grimsby (Mr. Mitchell) in the eye, I say that this is a query from a vested interest. It is important that this matter is clarified. I am delighted that the hon. Gentleman was in the Lobby, voting for the new clause. I commend him on his courage at this particular moment in his political career.
The purpose of the new moratorium procedure is to protect companies that have a reasonable prospect of becoming viable during a limited period. We all say amen to that and we all hope that they will be viable not only for that limited period, but will successfully trade out of their difficulties. I agree with the Minister that it would be quite perverse for such companies to be deprived by a landlord of the premises that they legitimately occupy: 1146 however peaceably that landlord regained possession, the business would collapse and the purpose of the moratorium would be negated.
Surely there should be no bar on a landlord reoccupying premises that the company in question is not using. It cannot be carrying on businesses vital to the success of the moratorium in premises that are unoccupied. I believe that the amendments would deal with the odd situation that the Bill will create. They will ensure that the landlord's legitimate interests in unoccupied premises are protected, while ensuring that companies under the protection of the new moratorium procedures do not suffer.
As long ago as 15 June my noble Friend Baroness Buscombe pointed out in another place the problems that arose from the Bill in its previous form. I will not go through all the difficulties and problems that would emerge, but I can understand that it is a natural instinct for a company in difficulty to keep as many options open as possible.
Would a fairer balance be struck if, as part of that application for a statutory moratorium, the tenant was required to specify those tenancies which were essential to the rescue effort? These would be protected by the moratorium, while the landlord's rights in relation to the remainder would be unaffected. This exception to the general rule could be achieved as part of the revision of the insolvency rules.
Nothing brings home the value of an amendment more than examples from the real world, and I have one. Three months after an administrator was appointed, a debtor who had leased three properties from a large landlord produced a list of properties that the debtor wished to retain and take forward to see his company survive. One month's rent had been paid on one property, but nothing had been paid on the others. One unit had been sold with full payment of arrears, although it took some time for the landlord to receive confirmation that the arrears would be made good. The second unit had been closed, and the administrator wished to retain the third. As matters stand, the landlord would be forbidden from doing anything with the premises that were not required.
As I said, my noble Friend Baroness Buscombe spoke about the matter some time ago, but it has taken six months for Government amendments to be introduced. Why on earth did it take so long to introduce those relatively simple amendments? That sort of delay is unacceptable. Furthermore, the lateness of the arrival of the Government amendments means that it has been difficult for the Opposition to consult all the interested parties, take advice and reach a satisfactory overall position. My amendments would address the problem, and I shall be interested to hear what the Minister has to say about the points that I have made.
§ Sir Sydney ChapmanI support the amendments tabled by my hon. Friend the Member for South-West Hertfordshire (Mr. Page) and my right hon. Friend the Member for Wells (Mr. Heathcoat-Amory). As the Minister will know, I generally support the Bill, although, in Committee, I argued for ways in which it could be improved. However, at the basis of the Bill is the fact that it is fair legislation. The Government's intention in establishing moratorium arrangements in insolvency legislation is to enable businesses to trade out of their difficulties if possible. I fully support the Minister in trying to achieve that.
1147 The British Property Federation has brought a certain matter to my attention. It states that the issue in question is the Government's
proposal to reverse the Razzaq vs Pala court decision so that a landlord may not exercise the right of peaceable re-entry of a property while a voluntary moratorium agreement is in place without the permission of a court.I agree with the general principle of that proposal, as does the British Property Federation. However, the federation is concerned to ensure that the fair balance between the interests of landlords and tenants is not disturbed, and that both should feel that their interests are properly safeguarded under the legislation. I should tell the House, and the hon. Member for Great Grimsby (Mr. Mitchell) in particular, that I am not a landlord or a tenant, so I do not have a vested interest in advancing that case. However, the British Property Federation makes a fair point.
§ Mr. BurnettDoes the hon. Gentleman agree that property might be empty at the time of a moratorium because there is no stock and no money to pay for it? However, the moratorium would result in restructuring of finances and there could be cash and stock, and the property might have to be used again.
§ Sir Sydney ChapmanI think that I am at one with the hon. Gentleman. However I shall choose my words carefully and say that the balance of fairness would be preserved if, as an exception to the general rule, a tenant applying for a statutory moratorium was required to specify those tenancies that were essential to the rescue effort. Those would be protected by the moratorium, while landlords' rights in relation to the remainder would be unaffected. Our amendments would achieve that and ensure fairness. Will the Minister look at them sympathetically, as they would make the Bill fairer?
§ Dr. HowellsI have a great deal of sympathy with the approach of the hon. Member for Chipping Barnet (Sir S. Chapman). It is an issue that we have to look at carefully. We undertook a short consultation and, not surprisingly, views were polarised. It could prove to be a bone of contention.
The amendments tabled by the hon. Member for South-West Hertfordshire (Mr. Page) would permit a landlord to exercise the right of forfeiture by means of peaceful re-entry where the premises concerned were unoccupied without first having to go to court. As the hon. Member for Torridge and West Devon (Mr. Burnett) said, just because premises are unoccupied does not necessarily mean that they are essential to the rescue attempt, and that is why we do not consider the amendments to be appropriate.
After consulting and listening to the arguments, we concluded that the best way to approach the issue was to give the landlord the right to apply to the court for leave to re-enter any premises leased by the company or debtor to see whether or not they were necessary to the rescue attempt. The court can decide whether it is appropriate for the landlord to exercise the right of forfeiture.
The amendments could possibly mean that in order to ensure that a landlord could not exercise a right peaceably to re-enter premises, the company would have to ensure that the premises in question were physically occupied at all times. That seems unnecessary.
1148 There is also the point that the company may have sub-let its premises. In those circumstances, the premises clearly would not be occupied by the company, hence the landlord would presumably be free to exercise any right to peaceably re-enter despite the fact that the premises might be essential to the rescue attempt.
If premises are no longer needed by a tenant, he is unlikely to defend any application by a landlord to forfeit the lease permitted by the court. Further, peaceable re-entry is not a frequently used right and also applies almost exclusively to business premises. In addition, the moratorium is very short, so the impact of the provision on a landlord would be limited in terms of time. I hope that the hon. Gentleman will accept that explanation of where we stand and why we think that the amendments are not entirely appropriate.
§ Mr. PageIn view of the Minister's explanation and the point that I had not fully considered regarding premises being sub-let, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.