HL Deb 22 March 2001 vol 623 cc278-92GC

.—(1) Section 5 of the Leasehold Reform Act 1967 is amended as follows.

(2) In subsection (5), the words "nor shall any right of a tenant arising from a notice under this Act of his desire to have the freehold or to have an extended lease be an overriding interest within the meaning of the Land Registration Act 1925; but any such notice shall be registrable under the Land Charges Act 1925 or may be the subject of a notice or caution under the Land Registration Act 1925, as if it were an estate contract" are omitted.

(3) In section 70(1) of the Land Registration Act 1925, after paragraph (f) there is inserted the following new paragraph— (fa) The right of every tenant of a dwelling held on a long tenancy at a low rent within the meaning of the Leasehold Reform Act 1967, as amended, and the Leasehold Reform, Housing and Urban Development Act 1993, as amended, arising out of a written notice of his desire to have the freehold or an extended lease;".").

The noble Baroness said: This is a shorter matter. The purpose of this amendment is to make a tenant's notice of his wish to have the freehold on an extended lease an over-riding interest within the meaning of Section 71 of the Land Registration Act 1925.

The registration of a caution against the landlord's title is an unnecessary expense and burden on a tenant. As the law now stands, a notice of claim unprotected by a caution is not binding on a purchaser, although such a disposition to a third party will be a breach of contract.

It is not unknown for landlords to try to thwart a leaseholder's claim by transferring the freehold, subject to a claim, to a third party such as an associated company. This amendment serves to protect the tenant's position without the complication of the registration of a caution. I beg to move.

Lord Whitty

This amendment would deal with a situation where in the middle of an enfranchisement process a landlord sold the freehold to a third party. It is obviously desirable in those circumstances to ensure that one does not have to start the process all over again. As the Bill now stands, leaseholders can register with the land registry the fact that they have issued a notice of their intention to enfranchise or to obtain an extended lease. If they do so, anyone who purchases the freehold before the enfranchisement process is complete, or the lease has been extended, is already bound to complete the process.

Moreover, in the case of flats the new owner will often have to offer the freehold to the leaseholders under the right of first refusal. The amendment will therefore simply save the leaseholders the expense of registering their notice. On the other hand, it would have the effect of meaning that a potential purchaser would no longer have anywhere to check whether there was an outstanding enfranchisement process in train when the existing lessees had expressed their wish to the existing owner to buy the freehold or extend their lease. This would encourage non-registration and therefore make it more difficult in a moving property market for a potential third party buyer to establish whether there was a process proceeding or not—unless the vendor of the freehold informed them of the position.

Although I have some sympathy with the amendment, it would have a detrimental effect because it would not allow the process to move smoothly and ensure that everyone knew that an enfranchisement process had started.

Baroness Hanham

I thank the Minister for that reply. The intention behind the amendment was, first, to save tenants some expense and, secondly, to make it compulsory upon the landlord to declare that a caution had been issued. I note the Minister's reply and I thank him for it and for all that sympathy. I am hugely grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clauses 147 and 148 agreed to.

Schedule 11 [Leasehold Valuation Tribunals: Procedure]:

Lord Kingsland moved Amendment No. 252: Page 95, line 40, after ("tribunal") insert ("and to any such other party as the leasehold valuation tribunal may direct").

The noble Lord said: In moving Amendment No. 252, I shall speak also to Amendments Nos. 253 to 255 and to Amendments Nos. 256 to 258. As far as Amendments Nos. 252 to 255 are concerned, at present leasehold valuation tribunals have no power to direct disclosure of documents or information relevant to an application. As the Committee will be aware, this is anomalous in the context of civil litigation and may lead to parties withholding information, or documents harmful to their case, without sanction. In short, leasehold valuation tribunals need to be given teeth and their new powers should be exercisable for the benefit, and on the application of parties to the proceedings before them.

As far as Amendments Nos. 256 to 258 are concerned, the Explanatory Notes to the Bill state that the Bill provides a power to make regulations enabling leasehold valuation tribunals to exclude the whole or parts of cases of parties who fail to comply with directions. However, no such power appears in the Bill, as far as I am aware or, at least as far as I can see.

At present, leasehold valuation tribunals cannot make directions either about the preparation for or about the conduct of an application, and have no sanction except for adjournment—with no power to award costs if a party does not heed its exhortations to produce reports and documents in good time before a hearing. As a result, all too often a party turns up on the day of the hearing with an expert's report which has not been disclosed before thus leaving the other party with a dilemma: whether to go ahead without having a proper opportunity to verify the contents of the report or to prepare a cross-examination on it, or whether to ask for an adjournment, thereby losing the cost of the day. This practice—as some Members of the Committee will no doubt be aware—has gained notoriety among users of leasehold valuation tribunals. It must cease, and it can cease only if the tribunal is given the teeth envisaged by this group of amendments. I beg to move.

Lord McIntosh of Haringey

I accept the implied criticism of some of the aspects of leasehold valuation tribunals in the past, but I hope I can assure the noble Lord, Lord Kingsland, that the provisions we are making in the Bill, although largely by regulation, address the issues that he has raised.

Starting with Amendments Nos. 252 to 255, the power in paragraph 4 of Schedule 11 already enables leasehold valuation tribunals to do all the things that these four amendments would seek to allow them to do. Paragraph 4 is about information, and documents are but one form of information that an LVT might require. It is the normal practice of LVTs to share any information that they receive with all parties involved, as a matter of natural justice. The LVT can exercise the power under its own initiative although, of course, it may equally well decide to do so in response to a request made by one of the parties.

Amendments Nos. 256 to 258 relate to the ability of LVTs to make directions. We share the concern of the noble Lord, Lord Kingsland, that they should be given sufficient teeth to ensure that their directions to parties are obeyed. Again, we think that the measures in the Bill as they stand make adequate provision.

Amendments Nos. 256 and 257 would allow LVTs to issue directions at a directions hearing. However, it is the usual practice of LVTs to use pre-trial review hearings to issue any necessary directions and, if they see a need, they can also use the review to try and find common ground between the parties. We think that it would only confuse matters to create the concept of a directions hearing as something separate from the pretrial review.

Amendment No. 258 provides that the procedure regulations may include provisions enabling LVTs to enforce their directions by dismissing applications and so on if a party fails to comply. We agree that the LVTs need this kind of power. In other words, I accept the case which the noble Lord, Lord Kingsland, is making. He is certainly right that the fact that they have not had these powers until now has been a hindrance to their work and ii has been a major factor in the disappointingly long time it can take for LVT cases to be dealt with.

However, I am advised that, as they stand, the powers in this Bill to make procedure regulations are wide enough to allow us to provide that the LVT may exclude the whole or part of any party's case where that party has failed to comply with directions. I think that would answer the specific point made by the noble Lord, Lord Kingsland; for example, an expert opinion of which no notice had been given. Obviously, where the whole of the applicant's case is excluded, that will amount to dismissing the case.

I turn now to Amendment No. 266. Although the noble Lord, Lord Kingsland, has not spoken to this amendment, it might speed things up if I reply to it because it was spoken to on the second day of the Grand Committee proceedings. The noble Lord, Lord Kingsland, said that he moved the amendment because he wished the LVTs' powers to appoint managers to remain unchanged. I want to reassure him that we have no intention of taking away the existing rights that leaseholders enjoy under Sections 21 to 24 of the 1987 Act.

Amendment No. 266 would retain Section 23(2) of the 1987 Act. This particular subsection merely enables procedure regulations to make provision for certain persons to be notified when the leaseholder seeks the appointment of a manager and for certain persons to be joined in these proceedings. However, paragraphs 2 and 6 of Schedule 11 make equivalent provision for the purpose of any application brought before the leasehold valuation tribunal, including an application for the appointment of a new manager. Therefore, Section 23(2) is obsolete, which is why we think it is safe to repeal it.

6.45 p.m.

Lord Kingsland

I am most grateful to the Minister for his reply. When contemplating what amendments to table to Schedule 11, I considered simply one, which would have provided that the civil procedure rules apply to leasehold valuation tribunals. That would, at a stroke, have provided me with everything I needed and given the noble Lord a very short reply to make to the Committee.

However, if I understand correctly the response of the noble Lord, he is saying that he agrees with the substance of all the amendments that I have tabled so far but that I ought to be happy with what is already in Schedule 11; that is to say, the appropriate national authority may make regulations about the procedure of leasehold valuation tribunals. May I, therefore, take it from his reply that the regulations that will be made under Schedule 11 will afford leasehold valuation tribunals all the powers necessary to achieve the objectives that are implied by my amendment?

Lord McIntosh of Haringey

I can give the noble Lord that assurance, but I cannot say that the regulations will cover all the points in the civil procedure rule, because there are other matters which are not referred to in these amendments. On the points raised in the amendments that we have been debating, yes, the regulations will cover those points.

Lord Kingsland

That is a most satisfactory reply and I thank the noble Lord very much indeed. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 253 to 258 not moved.]

Lord Kingsland moved Amendment No. 259: Page 96, line 26, at end insert ("if all the parties so request").

The noble Lord said: Paragraph 8 of Schedule 11 provides for regulations to include provision for the determination of applications, or transferred proceedings, without an oral hearing and by a single panel member.

It is not clear what kind of applications are envisaged to be appropriate for determination in this way. It would be necessary, in order to satisfy the Human Rights Convention right to a fair and public trial, to require that such regulations should include provision entitling an aggrieved party to a hearing before a full tribunal.

In the circumstances, it is to be doubted whether the regulations foreshadowed by paragraph 8 will have any real use unless all parties agree to dispense with a hearing and to a determination by a single panel member. That is the purpose of the proposed amendment. I beg to move.

Lord McIntosh of Haringey

We certainly do not want to deny either party their right to an oral hearing where they honestly believe that natural justice requires that there should be a hearing. We also do not wish to open the way for machiavellian landlords to prevent leaseholders from using the written representation route merely as a way to push up costs and discourage leaseholders from exercising their rights. That might be the effect of these two amendments.

Perhaps I may explain our reasons for deciding to have a written representations route and the kind of circumstances under which we think it could be used and how we might encourage it. The written route is primarily aimed at simple cases involving small sums. In those cases, the fees payable for challenging unreasonable service charges could be disproportionate to the amount at issue. For example, disputes over insurance premiums or administration charges could involve relatively small sums. It is not worth spending £300 or more to take a case to the leasehold valuation tribunal unless substantially more than that sum is at stake.

We propose to make changes to the fee structure through procedure regulations which would relate the amount payable to the amount in dispute. That would mirror the approach adopted in the county court and reduce the minimum fee payable. However, these are publicly funded bodies and we have to consider the interest of the general taxpayer when deciding on the level of fees. The cost of a full hearing with three members in attendance might not be justified. One purpose of the hearing fee, which does not begin to cover the full cost of a hearing, is to discourage parties from wasting public funds on cases having little merit.

However, some of these small cases could be resolved by making representations to a single member with relevant expertise. For example, a dispute over insurance could be a matter of considering alternative quotations. That would reduce the cost of providing the LVT service and enable more cases to be dealt with in a shorter timescale, which is what we propose to do with the fee structure. All applicants would be required to pay an application fee, which could be as low as £50, but a further fee would be payable only if the matter were dealt with at a full hearing. The written representation route would be a more cost-effective way to deal with disputes over small sums both from the Government's perspective and that of the parties concerned.

We do not want to deny either party the opportunity of a full hearing before a tribunal. In some cases an important principle could be involved, even though the sum was small. However, we do see a danger that some landlords may insist on a full hearing simply to push up the costs to a disproportionate level and discourage the leaseholder from proceeding. Therefore, we intend to provide that where a respondent to a case wants a full hearing, he can have one provided that he pays the hearing fee. That will encourage the use of the written representation route. Amendments Nos. 259 and 260 would discourage its use.

Lord Kingsland

I am most grateful to the Minister for his reply. I am partly reassured by his comments and will look carefully at Hansard to see whether I want to raise these matters again at Report stage. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 260 not moved.]

Lord Kingsland moved Amendment No. 261: Page 97, line 9, after ("pay") insert ("the whole or part or).

The noble Lord said: In moving Amendment No. 261, I wish to speak also to Amendments Nos. 262 to 264. Paragraph 10 of Schedule 11 would, for the first time, provide leasehold valuation tribunals with powers to award costs; but only where an application is dismissed on the ground that it is frivolous, vexatious or an abuse of process, or where the party in question has acted frivolously, vexatiously, abusively, disruptively or otherwise unreasonably in connection with the proceedings. Even then the amount payable cannot exceed £500.

It would perhaps be wrong, bearing in mind the perception of the leasehold valuation tribunal as an informal, inexpensive tribunal, to empower such tribunals to award costs following the event in all cases. However, there must be a greater power to impose sanctions where a party has failed to comply with directions—thereby occasioning an adjournment—or where, although a party's conduct of the proceedings themselves might not have been unreasonable, that party, nevertheless, acted unreasonably in bringing the proceedings at all or in pursuing them after a reasonable offer is made by the other party; or where a party has been forced to take proceedings because of the unreasonable conduct or stance of the other party. Examples of unreasonable action might be: specifying a ridiculously high or low enfranchisement price; or, in the case of a landlord, by shocking mismanagement, or by a tenant, in refusing to pay service charges without any justification, thereby throwing the costs of recovery onto his fellow tenants through the service charge provisions. Only when the leasehold valuation tribunal has the powers envisaged by the amendment will there be a proper deterrent from "playing the system", as it is often called.

Furthermore, a costs limit of £500 is both arbitrary and too low to operate as a sanction in the case of wealthy parties. Tribunals should be empowered to award costs at such level as they think fit up to the full amount incurred by the innocent party, subject only to an obligation to have regard to the paying party's needs.

Finally, under Clause 85 of the Bill an RTM would be liable for a landlord's costs before the tribunal if the tribunal dismissed its application for a determination that it was entitled to the right-to-manage premises. As things stand, such a power would be anomalous in the context of the tribunal's limited powers as to costs, and paragraph 10(4) of Schedule 11 would appear to be inconsistent with Clause 85. This group of amendments would reduce the anomaly and remove the inconsistency. I beg to move.

Lord McIntosh of Haringey

These amendments take me back to my days as a borough councillor in the 1960s. They were the great days of Rachmanism. I hope that we do not follow this route because it would take us back, not to the 1960s, but to some of the problems that we experience under the existing legislation. The noble Lord, Lord Kingsland, has correctly described the function of paragraph 10 of Schedule 11. The present position is that leasehold valuation tribunals sometimes find it difficult to deal with parties who refuse to comply with directions or who act abusively at a hearing. The power in paragraph 10 would enable them to control the parties more effectively. If the noble Lord is worried about the £500 limit, the maximum sum payable could be increased through legislation. However, that could be done only with the approval of both Houses.

The grounds on which costs might be awarded are deliberately expressed in very broad terms. In Amendment No. 262 the noble Lord, Lord Kingsland, tries to particularise them and be more explicit. The danger of that approach—I am not allowed to use lawyers' Latin since lawyers themselves cannot use it— is that the inclusion of one implies the exclusion of others. These are good examples of the kinds of behaviour that we believe should be subject to a cost penalty, but we believe that the provisions as they stand encompass all the specific grounds that the amendment seeks to introduce. If we accepted Amendment No. 262 we might encourage the courts to interpret paragraph 10 more narrowly and exclusively than we would wish. We cannot accept this amendment.

I referred to the issue of the maximum amount because the noble Lord, Lord Kingsland, wishes to empower LVTs to award costs without limits. Even allowing for the precaution in Amendment No. 263 that the tribunal should have regard to the financial resources of the party who is to pay the costs, it would still disadvantage leaseholders. When service charge disputes were still a matter for the county courts, landlords would intimidate leaseholders with the threat of large bills for costs since they could afford the best legal advice. Leaseholders were concerned about their ability to win their case even when they felt that they were clearly justified, and they often decided not to take their case to court. That is why we provided a cap. If we did not, they might fear that even an innocent mistake in interpreting directions or a failure to meet a deadline could lead to a very large bill for costs. Those fears would be exaggerated if they were not familiar with the LVT proceedings. Unscrupulous landlords could encourage those fears and use them to discourage leaseholders from exercising their rights.

When it comes to the suggestion of considering the financial resources of the offending party, we do not consider it right to fetter the discretion of the tribunals in this way. We would not want tribunals to feel inhibited from punishing unreasonable behaviour merely because that could cause a little hardship.

I can be more accommodating with Amendment No. 264—indeed, much more accommodating— because it addresses the conflict between Clause 85 and paragraph 10 of the schedule. It may be that when we look at it more closely, the conflict will be more apparent than real, but we are willing to consider this matter further.

7 p.m.

The Earl of Caithness

I found the Minister's reply to my noble friend's Amendment No. 263 very disappointing, in particular his comment that legislation through both Houses could change the £500. Members of the Committee know how difficult it is to get legislation at any time, let alone get it through both Houses.

Lord McIntosh of Haringey

I did not say legislation; I said regulation.

The Earl of Caithness

I stand corrected, but regulation is equally difficult to get, and it is impossible to amend unless one prays against it and it is thrown out.

I am concerned about this, as is my noble friend Lord Kingsland. Some of the Minister's replies seem totally to ignore subsection (b) of Section 2. Given some of the points that the noble Lord mentioned in defence of tenants and against an unscrupulous landlord, I would have thought that the leasehold valuation tribunal would have seen fit to put many of those into the category of Section 2(b). I hope that my noble friend Lord Kingsland does not go away and forget about this; I hope he will come back with renewed vigour at another stage, when I shall certainly support him.

Lord Kingsland

I am grateful to my noble friend Lord Caithness for the support he has given me. I thank the Minister for agreeing to look at Amendment No. 264, but I must confess to being extremely disappointed at his reaction to Amendment No. 263.

It is my impression, standing back and trying to look objectively at my own amendments, that far from being pro-landlord, these amendments discriminate strongly against the landlord—because it is the landlord's financial power that enable him to spin things out at a tribunal in a way that quickly exhausts the resources available to the leaseholder.

Amendment No. 263, by taking into account ability to pay, will assist the leaseholder in resisting that kind of conduct from the landlord. That is a crucial part of the framework I am trying to put in place here.

I hope that the Minister will reflect on this between Committee and the Report tage, because I assure him that I shall return to this matter again when we get there. Meanwhile, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 262 to 264 not moved.]

Schedule 11 agreed to.

Clause 149 [Appeals]:

Lord Hodgson of Astley Abbotts moved Amendment No. 264A: Page 68, line 22, at end insert— ("( ) Leave to appeal under subsection (2) shall only be given if—

  1. (a) the appeal would substantially affect the rights of one or more of the parties, and
  2. (b) the decision is at least open to serious doubt.").

The noble Lord said: I have the feeling that the Committee is rounding the final bend and approaching the finishing post, so I will be brief.

The amendment is concerned with potentially capricious appeals to the Lands Tribunal against decisions of the leasehold valuation tribunals. We should be seeking wherever possible to reach a speedy resolution to disputes, particularly where they concern such sensitive matters as exist between landlords and tenants. The bitterness of disputes can increase in direct proportion to the length of time that they last.

I am told that a practice has grown up whereby when landlords receive unwelcome decisions from the LVT there is a knee-jerk reaction to reach for the lands tribunal and to appeal. Apart from the delay that this causes, there must also be potential inequality between the parties as to both financial resources and readiness to take risks involving further professional fees and further costs. The landlords may have nothing to lose; the tenants may be concerned about increasing their financial liabilities and their exposure.

The amendment seeks to restrict appeals to bona fide cases as laid out in the amendment and the wording broadly follows Section 69(3) of the Arbitration Act 1996, which does not seem to be a bad precedent for us to follow. I beg to move.

Lord Kingsland

My Amendment No. 265 is grouped with Amendment No. 264A in the name of my noble friend Lord Hodgson of Astley Abbotts. It seeks to limit the nature of the appeal to the lands tribunal as being by way of a review rather than a full hearing.

The success of the amendment will in part depend upon the success of the noble Lord's regulations under Schedule 11. One of the reasons why review has not been as successful a way of dealing with matters that have come from the tribunals, is because of the varying quality both of the evidence and of decisions that have emerged from the LVTs. The reason why that quality has varied has had nothing to do with the ability of the individuals sitting on those tribunals, which has been mercifully very high, but because the rules have been so broadly based that they have allowed a wide variety of approaches by panel members.

While I urge this amendment upon your Lordships, at the same time it has to be coupled with appropriate amendments to Schedule 11 to which I have already spoken.

Lord Whitty

I shall deal with the amendments in reverse order. The amendment to which the noble Lord, Lord Kingsland, has spoken seeks to limit the circumstances in which an appeal, if granted, should involve a full hearing of the lands tribunal.

As with one or two of the earlier groups, one of the difficulties is that it strays into realms that are operated in this area, stemming from the procedures of tribunals in general, and we already have an independent review under Sir Andrew Leggatt which is still going through the process of conducting a strategic determination of the tribunal system. That includes the LVTs and the lands tribunal and the whole question of appeal. It would therefore seem probable that that review will have a bearing both directly and indirectly on whether appeals should involve a full rehearing and the circumstances in which new evidence should be admitted in the appeals proceedings. Our view is, therefore, that it would be premature to write into the Bill something in advance of receiving a further report from Sir Andrew Leggatt.

Amendment No. 264A from the noble Lord, Lord Hodgson, again gets into this territory. It seeks to clarify the circumstances in which a party to an LVT decision should be given leave to appeal against it. It is our view that an appeal to the lands tribunal is justified where a case raises important or novel issues of principle or where there are grounds for arguing that the LVT itself has erred in law or erred in fact. However, there is a widespread concern that in the past some landlords have abused the unfettered right of appeal and enfranchisement in lease renewal cases with a view to persuading leaseholders to settle at a higher price. It is that abuse that we wish to bring to an end in this section of the Bill.

In service charge cases, the right to appeal is already subject to a leave filter; that is, the need to obtain the leave of the LVT or the Lands Tribunal. The relevant statute does not set out the circumstances in which leave should be granted, but rather gives the tribunal wide discretion to decide whether an appeal would serve the interests of justice. We feel that in that area it has worked well. We therefore wish to apply similar arrangements extending the right to appeal against any LVT decision. For the sake of consistency, we wish to do that in the way provided in the Bill.

I repeat that it would be premature to consider any move—especially in relation to the grounds on which appeals maybe granted—in advance of the general review of this process for tribunals by Sir Andrew Leggatt. We will await his report before enacting legislation on that basis. In the light of that explanation, I hope that the noble Lord will withdraw his amendment.

Lord Hodgson of Astley Abbotts

I am grateful to the Minister. I have listened carefully to what he said. I understand his desire to include this matter in a wider review. I see the force of the argument and, in those circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 265 not moved.]

Clause 149 agreed to.

Clause 150 agreed to.

Schedule 12 agreed to.

Clauses 151 to 154 agreed to.

Schedule 13 [Repeals]:

[Amendment No. 266 not moved.]

The Earl of Caithness moved Amendment No. 267: Page 100, leave Out line 53.

The noble Earl said: We now come to the last amendment on which we shall speak. Having put my name to the first amendment, perhaps it is appropriate that I should speak to the last one. It seems a long, long time ago that we discussed Amendment No. 1 with the noble Lord, Lord Bach.

This is a technical amendment, but an important one. Clause 115 provides for the removal of the requirement for two-thirds of the qualifying tenants to participate in enfranchisement. Clause 123 fixes the freeholder's share of the marriage value at 50 per cent in all cases. The effect of reducing the qualifying number for enfranchisement and the repeal of Section 18 of the Leasehold Reform, Housing and Urban Development Act 1993 simply compounds the issue. The result will be to ensure that only the minimum number for eligibility rather than all tenants who wish to participate in enfranchisement will apply in the first instance.

With the marriage value fixed at 50 per cent. it effectively means that the landlord's value falls to 25 per cent. That, I believe, is unfair to the landlord. It also indicates that Clause 123 is misleading when it mentions 50 per cent. It is for that reason that I believe that Section 18 of the 1993 Act should be retained. That is the purpose of my amendment. I beg to move.

Lord McIntosh of Haringey

We certainly agree with the noble Earl, Lord Caithness, that it would be unfair to the landlord if a group of qualifying tenants conspired together so that only the bare minimum number participated in the enfranchisement—thus keeping the price down—and then all the others climbed aboard afterwards. I think that that is the fear he expressed.

It is true that Section 18 of the 1993 Act was intended to address the problem. Unfortunately, it is unlikely to be effective. It would be very difficult for landlords to prove that agreements with nonparticipating leaseholders existed at the relevant time and, as a result, the provision would be unenforceable. Therefore, we decided to repeal it. Apart from that, we believed that the existence of Section 18, combined with its unenforceability, could serve as an advertisement for the very malpractice at which it was aimed. 'We do not have any evidence that abuse of this kind is perpetrated on any scale. That possibility will arise only in cases where the unexpired terms of the lease are relatively short, since the potential abuse relates only to the marriage value component of the purchase price.

Although in theory there might be a temptation for people to conspire in the way that the noble Earl, Lord Caithness, and I described, surely that would be restricted by the fact that a conspiracy would require the others not to participate in the enfranchisement in order to join in afterwards to keep down the marriage value. They might be reluctant to do that, and they might believe that there were risks in not participating. Therefore, at the moment we are not convinced that there is any reality in this threat. However, if it can be shown that there is a real risk—so much so that it would be better to keep Section 18—we are open to any representations that may be made between now and a later stage.

7.15 p.m.

The Earl of Caithness

I am grateful for the way in which the Minister answered the point and for the courtesy with which he and all the Ministers have responded throughout the proceedings on the Bill. I am a little surprised by the noble Lord's answer. When we debated Amendment No. 263 moved by my noble friend Lord Kingsland, the Minister put forward an argument about landlords being oppressive, threatening and beastly to tenants. Yet here we have a situation where the Government open a Pandora's box and tenants behave in an extremely nasty way to a landlord. I can visualise some of the tenants with whom I have dealt ganging up against a landlord and having a side agreement that some of them will not participate in order to reduce the marriage value and settle the matter later. That would not be beyond the wit of a good number of tenants, and there must be some way to stop that happening. By the time we get legislation to correct it, it will be too late: many landlords will have had their interests and assets taken away from them without compensation, which I believe to be totally wrong.

There must be a method by which the landlord is entitled to hope value, or those who do not subscribe in the first instance cannot receive enfranchisement without payment. The Minister might even consider that the landlord could take an overriding lease of the non-participating flats, which would solve the problem. We can get round the problems of the service charge, because the landlord would be obliged to pay the service charge for the non-participating flats, whether or not he had received the money from the occupying lessee.

I believe that this problem needs to be addressed by the Government before the Bill is enacted, because if we do not deal with it now it will be too late. The Government open a Pandora's box by the removal of Section 18. I take the point that it may be unenforceable and difficult to implement. If that is the case, let us find another way to tackle it.

Lord McIntosh of Haringey

Before the noble Earl decides whether this matter should be pursued, I thought that I made conciliatory noises at the end when I said that if evidence could be produced that this problem was widespread we would think about it again. I should also say a word about hope value. The landlord is entitled to hope value in relation to sales of lease extensions to participants as well as non-participants.

The Earl of Caithness

I do not dispute that the noble Lord, Lord McIntosh, made some conciliatory noises towards the end of what he said. I hope that I thanked him for that. If I did not make it clear to begin with, let me do so now. I thank him. I was just re-emphasising the point. This is a matter on which I should like to test the opinion of the Committee, but I cannot. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 13 agreed to.

Clause 155 [Commencement etc.]:

[Amendments Nos. 268 and 269 not moved.]

Clause 155 agreed to.

Remaining clauses agreed to.

Title agreed to.

The Deputy Chairman of Committees (Lord Lyell)

The Question is that I report the Bill to the House with amendments.

Lord Goodhart

Before that happens, perhaps I may expand a little on a point made earlier by my noble friend Lady Hamwee. If, as is still more likely than not, this Parliament is dissolved in approximately two weeks' time, it is surely clear that the Bill will not be rushed through in the last few days and will therefore fall. I can also see the attraction to the Government—in the event of their being re-elected—of bringing back the Bill early in the next Parliament on the grounds that your Lordships' House may have a certain amount of time on its hands at that stage. I ask the Government seriously to re-consider this matter. A great number of points have been made. A number of issues have been raised today at which the Government have said they will look again. It would be unfortunate if those could not be looked at because of lack of time.

Many other points have been made, of which the most important is the question of the 100 per cent requirement for the introduction of commonhold. It is no doubt possible to devise a system that would enable commonhold to be introduced with something short of 100 per cent agreement, though it would undoubtedly require substantial agreement. It is also clear that there is a large demand among leaseholders— certainly among leasehold organisations—for that to happen. That would require fairly substantial amendment to the Bill and a number of additional provisions. Therefore, I seriously ask that the Government consider taking the Bill away for a period of a few months and not bring it back until after the Summer Recess.

Lord Lea of Crondall

Some of us noticed the implication that there would be a reasonably substantial delay. I do not know the order of these matters coming back. However, as we are debating the issue, I would put the emphasis slightly differently. We should look at the matters that need to be considered if we are to make some structural improvements to the Bill. Some of those have been highlighted. The order of the day should be to keep up the momentum. That is the message I leave with noble Lords.

The Parliamentary Secretary, Lord Chancellor's Department (Lord Bach)

I am grateful to Members of the Committee who have spoken at this rather unusual stage of proceedings. I listened carefully to what the noble Lord, Lord Goodhart, said and we will consider it in the reasonable way in which he mentioned it. What has struck me is the degree of consensus on the Bill and on the broad topics covered by it. By that I mean the introduction of commonhold as a form of land tenure. I listened hard but there seemed to be no disagreement at all about the concept. That is hardly surprising: our predecessors in their own turn proposed commonhold, just as we have done. For the life of me, although there are details—perhaps even important ones—that divide some of us, they have come down to very little when compared to the principle of commonhold, which is broadly accepted. That also seems to apply to the reform of leasehold. Of course there have been differences and some are important ones. On the whole, however, there has been a consensus that I and all Ministers have noted. In fact, it would be hard not to notice it from wherever one has sat in the Committee.

My noble friend Lord Lea has a serious point when he says that it would be a great shame for the many people outside the House who are looking to us—by "us" I mean the Houses of Parliament—to legislate on these important matters that affect their daily lives if somehow the Bill were to disappear, not to return again for a long time. Therefore, we will think very carefully about what the noble Lord, Lord Goodhart, said. In return, we should be grateful if noble Lords on all sides would consider carefully whether there is very much that divides us at this stage.

Bill reported with amendments.

The Committee adjourned at twenty-five minutes past seven o'clock.