§ 3.37 p.m.
§ Order of the Day for the Third Reading read.
§ LORD SHACKLETON
My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Leasehold Reform Bill, has consented to place her interest, so far as it is concerned on behalf of the Crown, at the disposal of Parliament for the purposes of the Bill.
§ THE PARLIAMENTARY SECRETARY, MINISTRY OF HOUSING AND LOCAL GOVERNMENT (LORD KENNET)
My Lords, I beg to move that this Bill be now read a third time.
§ Moved That the Bill be now read 3a.—(Lord Kennet.)
§ On Question, Bill read 3a, with the Amendments.
§ Clause 1:
§ Tenants entitled to enfranchisement or extension
(3) In this Part of this Act references, in relation to any tenancy, to the tenant occupying a house as his residence shall be construed as applying where, but only where, the tenant is, in right of the tenancy, occupying it as his only or main residence (whether or not he uses it also for other purposes); but—
(a) references to a person occupying a house shall apply where he occupies it in part only; and
LORD BROOKE OF CUMNOR moved, in subsection (3), to leave out paragraph (a) and insert:—
(a) where a person so occupies part only of a house, references to his occupying the house shall apply if, and only if, he so occupies a substantial part of it; and".
§ The noble Lord said: My Lords, I beg to move Amendment No. 1. The Bill, as your Lordships will remember, provides that a tenant who for five years has occupied a house as his only or main residence may claim the right of enfranchisement, even if he occupies the house only in part. This provision was queried in Committee by my noble friend Lord Molson, who moved an Amendment which would have had the effect of substituting "the main part" for the word "part". The Government resisted that on the ground that it might be difficult to judge which was the "main part", and on the further ground that if a shop with living accommodation over it had been occupied by a shopkeeper for a number of years, and then he wished to give up the shop business and retire to live in the flat above, he should have the right to enfranchise even though the flat was not the "main part". I think my noble friend agreed that his was not a wholly satisfactory Amendment, and withdrew it. But some of us remain anxious about the matter, and indeed I 1356 think the Government themselves would admit that there is a problem here.
We know, both from advertisements that have appeared in the Press and, as I am aware from having seen copies of letters, from representations made direct to the Ministry, that there are going to be people owning leasehold houses, but not living in them, who intend to see whether they can make a capital profit out of this Bill by going to live for five years in a small part of the house. I do not believe it was the Government's intention that people of that kind should be assisted to make a windfall profit; nor, indeed, can one see any possible advantage to the public interest in that happening. The advantage is solely to the owner of the leasehold who sees that by a "wangle" he can make money. In order to minimise the opportunities for this "wangle" I am moving this Amendment, which would make the paragraph read:
where a person so occupies part only of a house, references to his occupying the house shall apply if, and only if, he so occupies a substantial part of it".
§ I am advised that the courts frequently have to interpret the word "substantial" and that it would cause no serious difficulty at that stage. It would make it impossible for a man to move into one tiny part of a house, it may be at great inconvenience to himself, and live there for five years and then to net a substantial capital profit. We have seen that under this Bill capital profits of £5,000 and more will be able to be made on individual houses, and there are many strange people in the world who would not be averse to netting an untaxed capital profit of £1,000 a year by this curious method of settling themselves into a small part of a leasehold house which they own but which they had not previously lived in.
§ Indeed, there is some virtue in the fact that the word "substantial" has not got the precision of a fraction, because that in itself would be something of a deterrent to the man who thought that he might thus "wangle" a capital profit, in that he could not be absolutely certain whether the little part of the house which he intended to occupy would in fact be regarded by the court at the end of five years as "substantial". It would, of 1357 course, be to his financial advantage to keep the part he occupied as small as possible, because the kind of case where this will arise is where a man owns a house within the rateable value limits and is at present letting off the whole of that house in non-self-contained flatlets; and he then sees that the Bill has provided him with an opening through which he can obtain a substantial capital profit.
§ I have indicated already that I recognise the grounds on which the Government resisted my noble friend's Amendment, but I ask them to take this Amendment of mine seriously, because I do not think there is any difference between us in the purpose which we all seek to achieve. I do not think the Government are anxious to create opportunities for windfall capital profits by people taking unfair advantage of the letter of this clause although clearly infringing its spirit; and it is in order that such people who are thinking solely of their own private gain and not of the public interest shall be discouraged that I am urging the Government to accept an Amendment on the lines which I have explained, requiring that a person cannot take advantage of the enfranchisement provisions unless he occupies at least a substantial part of the house on which he is claiming enfranchisement. I beg to move.
Page 2, line 17, leave out paragraph (a) and insert the said new paragraph.—(Lord Brooke of Cumnor.)
§ LORD KENNET
My Lords, the Government have the greatest sympathy for the purpose of this Amendment, and we have indeed taken it seriously—to use the noble Lord's words. Before we start to discuss the Amendment we must admit that the problem it seeks to remedy is probably not a serious one, for two reasons: first, the rateable value limits of £400 in London and £200 elsewhere rule out any possibility of the curious persons about whom the noble Lord has spoken making a large profit by this means. Secondly, the opportunity of getting this profit, such as it is, is transitional, since the market in leasehold property can be expected to adjust itself in general to the prospect of leasehold enfranchisement.
We know that there are cases where someone has a leasehold interest in sev- 1358 eral houses, for instance a row of houses in a street, and he lives in one of them. I must admit it is possible that there might be people willing to adopt the extraordinary unpleasant way of life outlined by the noble Lord, namely, that they should pop into one room of each of these houses in turn and stay there for five years, and then move to the next, so that they might get such profit as there is on four houses in twenty years. It would be a lifetime's programme, but of course such people might exist. On the other hand, it is not easy for a leaseholder to push his way into a house occupied by other people. It would take a lot of time and money, as the tenants would expect to be well recompensed for moving to suit his advantage. It seems to us that the likely trouble and expense of carrying out these moves would cancel out any conceivable profit he might get.
We should also not forget the fact of the rising market in leasehold property. Theoretically it should be rising already, and it may be expected to continue to do so, to a limited extent, for a short time; and to the extent that that is true it would be possible for the people we are talking about to take that profit without moving in but simply by selling their leasehold interest to someone who already lives in the house.
The remedy proposed in this Amendment appears to us to be extremely uncertain, because there is so little to guide the courts in their interpretation of the word "substantial", and what there is to guide them is somewhat complicated. There is the case of Palser v. Grinling,  Appeal Cases 291, where the question of what is a "substantial portion" of the rent of a dwelling house was decided by the Court of Appeal, who took the view that 20 per cent. of the whole rent is a substantial portion and that less than 15 per cent. is not a substantial portion, while anything between is a borderline case.
This case came to the House of Lords, where Viscount Simon said:'substantial' in this connection is not the same as 'not unsubstantial'; i.e., just enough to avoid the 'de minimis' principle. One of the primary meanings of the word is equivalent to considerable, solid or big. It is in this sense that we speak of 'a substantial fortune', 'a substantial meal', 'a substantial man', 'a substantial argument or ground of defence'. 1359 Applying the word in this sense, it must be left to the discretion of the judge of fact to decide as best he can according to the circumstances in each case…There the courts are faced with two judgments, conflicting in their emphasis: one, that 20 per cent. is substantial and 15 per cent. is not substantial, and the other that the judge of fact must decide, bearing in mind the dictionary definition of "substantial" as "big".
There is also the case, in 1952, of Margate Pier and Harbour Company v. Yorke. This is in rating law and I admit that it is a little outside the field with which we are dealing, but it is still an interpretation. In that case the Lands Tribunal held that, having regard to all the relevant considerations in that case, 11 per cent. of the receipts of a dock undertaking was a substantial proportion of the volume of business concerned with the shipping and unshipping of merchandise within the relevant section of that Act. Twenty per cent., 15 per cent., 11 per cent., "big"—it is a confusing thing to launch on the courts.
Let us suppose that the courts in general adopted the House of Lords decision on this issue that it is equivalent to "big". We still come face to face with the problem which caused me to ask the House to reject the Amendment moved by the noble Lord, Lord Molson, at an earlier stage: that is, that it would lead to a lot of trouble for certain people who did not, and in the view of the Government should not be required to, occupy a large proportion of the house they were going to enfranchise. One can think of a widow who on the death of her husband has let off rooms in her house which come to more than half—perhaps 80 per cent. of the rooms of the house. Particularly one must think of the shopkeeper who lives above his store, maybe a bachelor or a man with a small family, who lives in a couple of rooms and who might have quite a lot of square footage downstairs for the conduct of his business. If the court were to interpret "substantial" in the more substantial sense, it would prevent enfranchisement of people in those positions, and the Government do not think that enfranchisement should be prevented. The situation is a familiar one. As the Bill stands, 1360 I freely admit there is a tiny rough edge in it. If it were amended in this way, I think there would be larger and more unjust rough edges, and so for these reasons I invite the House to reject this Amendment.
§ LORD BROOKE OF CUMNOR
My Lords, I have been trying to help the Government to prevent abuse of the provisions of the Bill, and the noble Lord is seeking to prevent me from helping him in that desirable object, an object agreed by him as well as by me to be desirable. I cannot really accept his argument, though I expected that we should hear it, that the need for some amendment of this provision has been removed by the limitation on the rateable values.
In the course of our discussions on the Bill I have been aware time and time again of the Government's unwillingness or inability to recognise that quite large houses may have rateable values of under £400 in Greater London, or under £200 outside London. The arguments that the noble Lord adduced about the ambiguity of the word "substantial" have to my mind an influence in favour of adopting this Amendment, because what we are all seeking to do is to discourage people from taking unfair advantage of the provisions of this clause, and the very fact that the would-be "wander" cannot be certain in advance that he will win the court against this word "substantial" will be a considerable deterrent to him against trying it on.
Had this been an earlier stage of the Bill I should have asked your Lordships to support the Amendment. In view of what has been said on behalf of the Government, and in view of the fact that there will be no further opportunity to consider the detailed terms of the Bill in this House, I think it would be useless for me to press the Amendment now. But I hope your Lordships will agree that there is an important point here, that the Bill has, as the Government have admitted, a rough edge, or, as I would prefer to say, a loophole, in the existing words, and it is a pity that they could not have agreed to amend them. Having said that, I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.1361
§ Clause 4 [Meaning of "low rent"]
§ 3.56 p.m.
§ LORD KENNET
had given Notice of several Amendments to Clause 4, the first being, in subsection (1), to leave out "one-third" and insert "two-thirds". The noble Lord said: My Lords, I will, with the leave of the House, speak to Amendments Nos. 2, 3, 4, 5, 6 and 14 together, No. 14 being an Amendment to Schedule 3. These Amendments restore the definition of "low rent" in Clause 4(1) of the Bill, but they do so not simply as a tit-for-tat move, because the Government think that the Opposition were wrong to carry the change at an earlier stage, but because Amendment No. 14 to Schedule 3 proposes an alternative solution to this problem which satisfies the Government, and will, I hope, satisfy the movers of the Amendment at an earlier stage.
The Government put forward this set of Amendments as an alternative to the Amendment which was carried in Committee and which defined a "low rent", for the purposes of the Bill, as one less than one-third of the rateable value of the house. We had long debates on that and I do not think I need remind your Lordships of them. From the debates it was clear that the House accepted the proposition that some arbitrary and definite definition of a "low rent" is necessary for the purposes of the Bill. The movers of the Amendment were concerned that the Bill should apply only to leases at genuinely low rents and should not give rights of enfranchisement and extension of the lease to people whose tenancies had at one time been rack-rent tenancies. This is also the view of the Government, but, as I pointed out in Committee stage, the Bill has to provide for rents fixed a century ago, a decade ago, for those being fixed now and those which will be fixed in the future.
It is, of course, quite true to say that many long leases granted 99 years ago are leases at rents which are well below one-third of to-day's rateable values. This probably applies throughout Wales, and in a good many other areas, too. On the other hand, some long leases granted with premiums recently are at genuine 1362 ground rents which exceed one-third of present rateable values. These are the facts, and our difference of opinion should not obscure them. It would not be right to exclude genuine ground rents, and the fraction of one-third allows no safety margin to preclude erosion in the future by further increases of rateable values.
The real substantial difficulty in terms of numbers concerned is the long leases granted during the war and in the postwar years at what were then rack rents which have now become "low rents", measured by the original criterion of two-thirds of current rateable values. The Government have now given further thought to this particular problem, and the group of Amendments I am speaking to now are designed to meet it. They provide, in effect, a means whereby the landlord can defeat a tenant's claim to rights under the Bill if he can show that a tenancy granted between the end of August, 1939, and the date on which the present revaluation took effect was granted at a rent in excess of two-thirds of the letting value of that property at the time having regard to the terms of the lease. The letting value is the full market rent which the property could command in view of the terms of the lease—"the terms of the lease" meaning such things as who does the repairs, all the normal covenants which may go one way or the other.
I commend these Amendments to the House as a compromise which would in my view allow all genuine ground rent leases to qualify for rights of extension and enfranchisement but which would cut out those which can be shown to have been long leases at rack rents when they were created during the quarter of a century beginning with the outbreak of the last war. I hope that this compromise to what has been a difficult situation and a difficult discussion as between one-third and two-thirds will be acceptable to the House, and if it is I will undertake that if the present set of Amendments, 2 to 6, are carried I will move No. 14 in due course when we get to the Schedules which will provide for the new definition of the 25 year period. I beg to move Amendment No. 2.
Page 6, line 21, leave out ("one-third") and insert ("two-thirds").—(Lord Kennet.)
§ LORD BROOKE OF CUMNOR
My Lords, I am grateful to the Government for the further thought that has been given to this matter, arising out of the Amendment which was moved in Committee by my noble friend Lord Molson and carried against the Government. When we were discussing that Amendment I used these words, which appear in column 1015 of the OFFICIAL REPORT for July 11:The real issue, to my mind, is whether there are any leases involving genuine ground rents which are above one-third of the rateable value. Nobody in the proceedings here or in another place has quoted any of those on behalf of the Government. There may be some, but I know of none.During the Recess my attention has been called to two cases of what appear to be genuine ground rents that were above one-third of the rateable value, and I gather from the speech of the noble Lord that the Government are also aware of some such cases. On that ground I am ready to see the matter reopened, and what the Government are proposing to do here is to reopen it.
I hope that we may have the advantage of hearing the noble Lord, Lord Silsoe, on this, because I think that by common consent he is the greatest professional expert on these matters among us. So far as my inquiries have taken me, it seems as if the Government Amendments should be accepted, because I think they will meet the need for providing a margin above the one-third rateable value for a certain number of genuine ground leases, while preventing a number of leases which were originally undoubtedly granted at rack rents rather than at ground rents, created between 1939 and 1963, from qualifying for enfranchisement under the Bill because the rent is under two-thirds of the present rateable value.
These are difficult matters, and I hope that I am doing right in advising my noble friends not to demur to these Government Amendments. I shall be greatly interested to hear what the noble Lord, Lord Silsoe, may have to say; but whatever happens, I feel that this is a justification for the careful work that was done by your Lordships in Committee on this Bill. At that time an Amendment was carried, against the Government's advice, to reduce the limit from two-thirds to one-third, and that has had the satisfactory and salutary result of inducing the Government to examine the whole 1364 issue with fresh eyes and now to bring forward Amendments which, whatever one may think of them, are undoubtedly an improvement on the Bill as it originally came to your Lordships' House.
§ LORD SILSOE
My Lords, I, too, am most grateful to the Government for having taken a fresh look at this matter. I was one of those who had Amendments down on this difficult question of "low rents". I tried to make two points, both of which are met by this Amendment. The first was that there was all the difference in the world between a building lease and the modern idea where the landlord puts up the capital and lets at a rack rent. The second was that rateable value limits in the second class produced a lot of unfairness between the various cases. I do not think that any of us who spoke in opposition to the Government ever said there was much wrong in true building leases, once one accepts the principle at all in this Bill, in the form of language. What we all said was that these other classes of lease, mostly modern, were far too highly rated at two-thirds. I am therefore naturally glad that both points have been covered. I am sure that this will reduce a great deal of the inequity. I am pleased that the rateable value limit has been dropped for my second class and letting value substituted, a plea that I put in as strongly as I could on the last occasion.
If I may be allowed to say this now, I should like to express special gratitude in regard to the readiness with which many senior and other Ministers were good enough to look into this and to see people about it. We had talks and, for myself, I commend this course. Nothing on this point is, I think, perfect; this seems to me to be a good way out, and I hope that everyone will adopt it.
§ LORD KENNET: My Lords, I beg to move Amendment No. 3.
§ Amendment moved—
Page 6, line 23, leave out ("and") and insert—
("Provided that a tenancy granted between the end of August 1939 and the beginning of April 1963 otherwise than by way of building lease (whether or not it is, by virtue of section 3(3) above, to be treated for other purposes as forming a single tenancy with a previous tenancy) shall not be regarded as a
tenancy at a low rent if at the commencement of the tenancy the rent payable under the tenancy exceeded two-thirds of the letting value of the property (on the same terms).").— (Lord Kennet.)
§ LORD KENNET: My Lords, I beg to move Amendment No. 4.
§ Amendment moved—
Page 6, line 40, at end insert—
(d) 'building lease' means a lease granted in pursuance or in consideration of an agreement for the erection or the substantial rebuilding or reconstruction of the whole or part of the house in question or a building comprising it.")—(Lord Kennet.)
§ LORD KENNET: My Lords, I beg to move Amendment No. 5.
Page 7, line 3, at end insert ("; but, in a case where the tenancy derives (in accordance with section 3(6) above) from more than one separate tenancy, the proviso to subsection (1) above shall have effect if, but only if, it applies to one of the separate tenancies which comprises the house or part of it.").—(Lord Kennet.)
§ Amendment moved—
Page 7, line 26, at end insert—
("(5) Where on a claim by the tenant of a house to exercise any right conferred by this Part of this Act a question arises whether a tenancy granted as mentioned in the proviso to subsection (1) above is or was at any time a tenancy at a low rent, it shall be presumed until the contrary is shown that the letting value referred to in that proviso was such that the proviso does not apply.").—(Lord Kennet.)
§ Clause 9 [Purchase price and costs of enfranchisement, and tenant's right to withdraw.]:
§ LORD KENNET
My Lords, this is a drafting Amendment to meet a point raised by the Law Society. I beg to move.
Page 14, line 31, after ("that") insert ("(subject to the landlord's rights under section 17 below)").—(Lord Kennet.)
§ Clause 19 [Retention of management powers for general benefit of neighbourhood]:
§ 4.8 p.m.
§ VISCOUNT COLVILLE OF CULROSS moved, to leave out Clause 19 and insert the following new clause:
§ Retention of management powers for general benefit of neighbourhood
§ " .—(1) In the case of any area which is occupied directly or indirectly under tenancies held from one landlord (apart from property occupied by him or his licensees or for the time being unoccupied), the Minister may—
- (a) on an application made within the two years beginning with the commencement of this part of this Act, grant a certificate that, in order to maintain adequate standards of appearance and amenity and regulate redevelopment in the area in the event of tenants acquiring the landlord's interest in their house and premises under this part of this Act, it is in the Minister's opinion likely to be in the general interest that the landlord should retain powers of management in respect of the house and premises or have rights against the house and premises in respect of the benefits arising from the exercise elsewhere of his powers of management, and
- (b) on an application made within one year of the giving of the certificate, approve, subject to the provisions of subsection (14) and (15) below, a scheme giving the landlord such powers and rights as are contemplated by this subsection.
§ For purposes of this section 'the Minister' means as regards areas within Wales and Monmouthshire the Secretary of State, and as regards other areas the Minister of Housing and Local Government.
§ (2) The Minister in considering whether to grant a certificate authorising a scheme for any area, and in considering whether to approve a scheme shall have regard primarily to the benefit likely to result from the scheme to the area as a whole (including houses likely to be acquired from the landlord under this Part of this Act), and the extent to which it is reasonable to impose, for the benefit of the area, obligations on tenants so acquiring their freeholds; but regard may also be had to the past development and present character of the area and to architectural or historical considerations, to neighbouring areas and to the circumstances generally.
§ (3) If, having regard to the matters mentioned in subsection (2) above, to the provision which it is practicable to make by a scheme, and to any change of circumstances since the giving of the certificate under subsection (1)(a), the Minister thinks it proper to do so, then he may determine—
- (a) to exclude from the scheme any part of the area certified under that paragraph; or
- (b) to declare that no scheme can be approved for the area;
§ (4) The Minister shall not give a certificate or approve a scheme under this section unless he is satisfied that the applicant has, by advertisement or otherwise as may be required by the Minister, given adequate notice to persons interested, informing them of the application for a certificate or scheme and its purpose and inviting them to make representations to the Minister for or against the application within a time which appears to the Minister to be reasonable; and before giving a certificate or approving a scheme the Minister shall consider any representations so made within that time, and if from those representations it appears to him that there is among the persons making them substantial opposition to the application, he shall afford to those opposing the application, and on the same occasion to the applicant and such (if any) as the Minister thinks fit of those in favour of the application, an opportunity to appear and be heard by a person appointed by the Minister for the purpose, and shall consider the report of that person.
§ (5) Subject to subsections (2) and (3) above, on the submission of a scheme to the Minister, he shall approve the scheme either as originally submitted or with any modifications proposed or agreed to by the applicant for the scheme, if the scheme (with those modifications, if any) appears to him to be fair and practicable and not to give the landlord a degree of control out of proportion to that previously exercised by him or to that required for the purposes of the scheme: and the Minister shall not dismiss an application for the approval of a scheme, unless either—
- (a) he makes an order under subsection (3)(b) above; or
- (b) in his opinion the applicant is unwilling to agree to a suitable scheme or is not proceeding in the matter with due despatch.
§ (6) A scheme under this section may make different provision for different parts of the area, and shall include provision for terminating or varying all or any of the provisions of the scheme, or excluding part of the area, if a change of circumstances makes it appropriate, or for enabling it to be done by or with the approval of the Minister.
§ (7) Except as provided by the scheme, the operation of a scheme under this section shall not be affected by any disposition or devolution of the landlord's interest in the property within the area or parts of that property; but the scheme—
- (a) shall include provision for identifying the person who is for the purposes of the scheme to be treated as the landlord for the time being; and
- (b) may include provision for transferring, or allowing the landford for the time being to transfer, all or any of the powers and rights conferred by the scheme on the
1368 landlord for the time being to a local authority or other body, including a body constituted for the purpose.
§ In the following provisions of this section references to the landlord for the time being shall have effect, in relation to powers and rights transferred to a local authority or other body as contemplated by paragraph (b) above, as references to that authority or body.
§ (8) Without prejudice to any other provision of this section, a scheme under it may provide for all or any of the following matters:—
- (a) for regulating the redevelopment, use or appearance of property of which tenants have acquired the landlord's interest under this Part of this Act; and
- (b) for empowering the landlord for the time being to carry out work for the maintenance or repair of any such property or carry out work to remedy a failure in respect of any such property to comply with the scheme, or for making the operation of any provisions of the scheme conditional on his doing so or on the provision or maintenance by him of services, facilities or amenities of any description; and
- (c) for imposing on persons from time to time occuping or interested in any such property obligations in respect of maintenance or repair of the property or of property used or enjoyed by them in common with others, or in respect of cost incurred by the landford for the time being on any matter referred to in this paragraph or in paragraph (b) above;
- (d) for the inspection from time to time of any such property on behalf of the landlord for the time being, and for the recovery by him of sums due to him under the scheme in respect of any such property by means of a charge on the property;
§ (9) A scheme under this section may extend to property in which the landlord's interest is disposed of otherwise than under this Part of this Act (whether residential property or not), so as to make that property, or allow it to be made, subject to any such provision as is or might be made by the scheme for property in which tenants acquire the landlord's interest under this Part of this Act.
- (a) the provisions of the scheme relating to property of any description shall, so far as they respectively affect the persons from time to time occupying or interested in that property, be enforceable by the landlord for the time being against them, as if each of them had covenanted with the landlord for the time being to be bound by the scheme; and
- (b) in relation to a house and premises in the area section 10 above shall have effect subject to the provisions of the scheme, and the price payable under section 9 shall be adjusted accordingly.
§ (11) Subject to subsections (12) and (13) below, a certificate shall not be given nor a scheme approved under this section for any area except on the application of the landlord.
§ (12) Where, on a joint application made by two or more persons as landlords of neighbouring areas, it appears to the Minister—
- (a) that a certificate could in accordance with subsection (1) above be given as regards those areas, treated as a unit, if in the interests of those persons were held by a single person; and
- (b) that the applicants are willing to be bound by any scheme to co-operate in the management of their property in those areas and in the administration of the scheme;
§ (13) Where it appears to the Minister—
- (a) that a certificate could be given under this section for any area or areas on the application of the landlord or landlords; and
- (b) that any body of persons is so constituted as to be capable of representing for purposes of this section the persons occupying or interested in property in the area or areas (other than the landlord or landlords), or such of them as are or may become entitled to acquire their landlord's interest under this Part of this Act, and is otherwise suitable; then on an application made by that body either alone or jointly with the landlord or landlords a certificate may be granted accordingly; and where a certificate is so granted, whether to a representative body alone or to a representative body jointly with the landlord or landlords,—
- (i) an application for a scheme in pursuance of the certificate may be made by the representative body alone or by the landlord or landlords alone or by both jointly and, by leave of the Minister, may be proceeded with by the representative body or by the landlord or landlords though not the applicant or applicants; and
- (ii) without prejudice to subsection (7)(b) above, the scheme may, with the consent of the landlord or landlords or on such terms as to compensation or otherwise as appear to the Minister to be just, confer on the representative body any such rights or powers under the scheme as might be conferred on the landlord or landlords for the time being, or enable the representative body to participate in the administration of the scheme or in the management by the
1370 landlord or landlords of his or their property in the area or areas.
§ (14) Before finally approving any scheme, the Minister shall—
- (a) give notice of his intention so to do to—
- (i) the applicant or applicants;
- (ii) all such persons as were heard by the person appointed by the Minister for the purpose under subsection (4) above; and
- (iii) such other persons as the Minister may think would be affected by the scheme and shall serve upon all such persons a copy of the scheme which he proposes to approve; and
- (b) apply to the High Court for an order approving the form and contents of the proposed scheme.
§ (15)(a) Upon hearing an application made under subsection (14)(b) above, the Court may hear the Minister and any person to whom notice has been given under subsection (14)(a) above, or, where there has been no hearing into the scheme under subsection (4) above, the Minister and such other person as the Court shall think fit.
§ (b) In considering whether or not to approve the form and content of the proposed scheme, the Court shall only have regard whether the proposed scheme is so expressed as to be capable in law of being satisfactorily carried out.
§ (c) Accordingly the Court may by order approve the proposed scheme with or without modification.
§ (d) The scheme which the Minister may finally approve shall be that which has been approved by order of the Court.
§ (16) Where a certificate under this section has been given for an area, or an application for one is pending, then subject to subsection (17) below if (before or after the making of the application or the giving of the certificate) a tenant of a house in the area gives notice of his desire to have the freehold under this Part of this Act,—
- (a) no further proceedings need be taken in relation to the notice beyond those which appear to the landlord to be reasonable in the circumstances; but
- (b) the tenant may at any time withdraw the notice by a further notice in writing given to the landlord, and section 9(4) above shall not apply to require him to make any payment to the landlord in respect of costs incurred by reason of the notice withdrawn.
§ (17) Subsection (16) above shall cease to have effect by virtue of an application for a certificate if the application is withdrawn or the certificate refused, and shall cease to have effect as regards the whole or part of an area to which a certificate relates—
- (a) on the approval of a scheme for the area or that part of it; or
- (b) on the expiration of one year from the giving of the certificate without an application having been made to the Minister for the approval of a scheme for the area or that
1371 part of it, or on the withdrawal of an application so made without a scheme being approved; or
- (c) on a determination made under subsection (3) above with respect to the area or that part of it, or the dismissal of an application for the approval of a scheme for the area or that part of it."
§ The noble Viscount said: My Lords, this Amendment has a truly formidable aspect, but if your Lordships have read it you will realise that a great deal of it is borrowed from Clause 19 of the Bill as it stands: there are really only two matters in it which are different. I will say briefly what they are.
§ As it stands at the moment, this clause deals with the arrangements that are to be made for retention by the landlord of a certain degree of management of the estates which are adjudged by the Minister to be well managed. The powers in the Bill are, first of all, for the landlord to apply to the Minister for a certificate, and if he gets that he then goes to the High Court—I think it would be the Chancery Division—for a scheme which contains a lot of details about how the powers of management are to be carried out by him if any of the houses on these estates are enfranchised.
§ The change made by my Amendment is that both the certificate and the scheme shall be dealt with by the Minister, the only function of the court being to look at it, after it has been sorted out by the Minister, to see whether it makes sense in law. There will be some complicated provisions in some of these schemes, and it will be valuable to have the view of the court on such matters.
§ Before I attempt to justify this change I hope that the noble Lord, Lord Kennet, will be able to help me on a point which was raised at an earlier stage on Clause 19 and about which something was said during the last stage of the Bill, so that I may be certain I understand what the Government have in mind. Your Lordships will see that one of the things the Minister looks at under subsection (1), when he decides whether or not to give a certificate, and one of the things which may be dealt with in the scheme approved under the Bill by the High Court is that of regulating redevelopment, a point about which the noble Lord, Lord Silsoe, was concerned during the Committee stage.1372
§ I understand that the sort of matter which might go in a scheme under the Bill, or indeed under my Amendment, could be twofold: first of all, that even if the tenant enfranchises his house he shall not redevelop it individually except in accordance with the general looks, layout and architecture of the estate; and, further, that if there is subsequently an occasion when the whole estate is to be redeveloped by the landlord, the enfranchising tenant (by that time the owner) shall not himself redevelop except in accordance with that plan, supposing, as is bound to be the case, that that plan had received planning permission. If matters of that sort can be written into the scheme for regulating redevelopment, I feel that goes as far as one could properly go in this Bill, because if it is necessary to buy back some enfranchised houses hitherto owned by the estate and the scheme to redevelop is such that it has had planning permission, then there would be occasions when either the local authority or possibly the Land Commission would assist in buying back the land if an owner was being recalcitrant and might spoil the whole redevelopment scheme. They might not do this, but have powers to do so. If that is the situation, there would be no harm in leaving this vague phrase "regulating redevelopment" exactly as it is in the Bill; but I should be grateful if Lord Kennet could say a word on that.
§ As to the points raised in the Amendment, it would be almost impossible to devise in order to deal with the situation machinery more complex than that which appears in Clause 19. I am particularly concerned about the reality of what would happen if somebody tried to use this clause. I am not only concerned about costs and time spent by the landlord; I am equally concerned about the time, trouble and expense on the part of those who wish to have criticisms of the scheme put forward and adopted. In the first place, the Minister has to grant the certificate, and the Bill provides that, if necessary, he can hold a public inquiry. The inspector who holds such an inquiry and the Minister and Department concerned have some complicated matters to consider, as your Lordship will see from subsections (1) and (3) of the Bill.1373
§ The Minister, having acquired all the information, having heard all the evidence in the case of a dispute, then decides to grant a certificate, and the landlord or one of the groups who are now allowed under the Bill to do this can apply to the High Court for a scheme. This no doubt would be applied for in detail with a draft scheme which would be submitted to the High Court, and again there is provision for this to be opposed; they have to start all over again. It may have been threshed out at the public inquiry held before the certificate was given, but they would then have to start all over again. On that occasion it would not be at a public inquiry, but it would have to be done in accordance with the strict rules of evidence. There may have to be affidavits and the calling of witnesses, whose evidence will have to be heard in regard to all the matters which have to be dealt with under the Bill. When one looks at subsections (3) and (8) one sees what the High Court might have to have regard to.
§ As I understand the matter, all these matters will have to be proved formally between 10.30 a.m. and 4 o'clock in the afternoon, before the Chancery Division and with the usual number of advocates and solicitors involved. I say nothing against going to court—indeed, who am I to do such a thing?—but is this to be the sort of material to go up to the Chancery Division on a disputed application? The Judge would have to consider these matters. One must also remember that the judgment can be appealed against and if necessary taken to your Lordships' House, so that the whole matter has to be gone through, not once but three times.
§ Are these the sort of matters which we should impose on the court? I suggest that decisions of this kind go a long way beyond the type of case the High Court usually deals with, and indeed some touch upon matters of policy and should be dealt with by the Ministry. What I have sought to do is to provide that the Minister, who will be in possession of a great deal of this material as a result of having decided whether or not to give the certificate, should deal with the scheme as well, subject to final vetting by the High Court. Subsections (14) and (15) of my Amendment cover this point.1374
§ I considered the matter of the safeguards provided by the Bill in taking this away from the Ministry at the stage of the scheme. I have no doubt that what the Government have in mind is that there shall be an authority of impeccable character, with no possible political ties one way or the other, who shall decide between landlord and tenant or between groups of tenants. The inspectors who are sent by the Ministry of Housing to conduct cases and inquiries involving points of the greatest difficulty have aquitted themselves admirably, and the decisions which they recommend to the Minister, and his own fairness in the Department in seeing that the decisions are rightly implemented, have now acquired a status which would mean that they would be acceptable to carry out the task which, at the moment, under this Bill, is put upon the Chancery Division. I suggest to your Lordships that my proposal would be a better, quicker and cheaper way to deal with the whole matter.
§ I am sorry that the noble and learned Lord, the Lord Chancellor, is not here but I have no doubt that his Department has been consulted, I have set out the case as one in which the High Court would have a long and laborious job in the case of a dispute. Could the noble Lord tell the House (for I do not believe Parliament has had this explained) exactly how it is envisaged that the High Court should deal with these matters under the Bill? What provision would be made to try to cut down the time, the cost and general complexity of taking such a matter before the High Court? If the noble Lord could explain how this would be done under the Bill, I feel I should be able to make a fairer judgment between what is contained in the Bill and what is set out in my own Amendment.
§ Finally, I hope that when we have heard what the noble Lord has to say about this matter, it will not become apparent that the difficulties of contesting a scheme under the Bill would be so great that it would be an almost insupportable temptation to anybody who would like to dispute such a matter to throw up his hands in despair because he cannot afford to do so. That must be the last thing we should seek to do. If that is the result of the Bill as it stands, I feel that the machinery is wrong and that we 1375 ought to think about it again, as my Amendment gives opportunity to do. I hope the noble Lord, Lord Kennet, will deal with the matter I have outlined. I beg to move.
Leave out Clause 19 and insert the said new clause—(Viscount Colville of Culross).
§ LORD KENNET
My Lords, Ministers are always pleased to hear lawyers ask for the transfer of this or that matter from the jurisdiction of the courts to that of the Executive. It indicates trust. But in this case I must resist the temptation of accepting the proferred gift. Before coming to the answers which I shall be able to give to the noble Viscount about how it is going to work under the clause as it stands, which I hope will satisfy him, let me first of all answer his questions about regulating development under Clause 19. I listened very carefully to what he said, and my impression—although I must say that I cannot lay down what the courts will hold to be the right way to do it—is that everything which he said would happen would happen, with one exception. That is where he slipped in—I do not blame him for slipping it in, and it is a point of great interest—that the landlord might be enabled to buy back an enfranchised property, in order to ensure that the property was redeveloped in accordance with his plans. I do not think that is the case. The local authority or the Land Commission might buy it, and they might then choose to sell it to the landlord. But I do not think they would be under any obligation to do so; nor do I think the landlord would be entitled to ask them or require them to do so. But with that exception everything else that the noble Viscount said is, I think, the case.
To come to the meat of this extremely thoughtful, well thought out and, I believe, constructive Amendment, under the present clause the landlord's first step in obtaining approval for a scheme will be to issue an originating summons. The summons will come—I shall deal with the landlord's side of the matter, but your Lordships can easily read into it what the enfranchising tenants must do—before a Chancery Master who will give directions for adding any necessary parties, and for filing evidence on behalf of the applicant and the respondents. Evidence 1376 will be in the form of affidavits, exhibiting a copy of the scheme proposed by the applicant and any variations proposed by the respondents. When the evidence is complete, there will be a further hearing before the Master who will adjourn the summons to the judge for a decision. The hearing before the judge will be in open court. The judge may approve the scheme, or may refer it back to the Master for further evidence on any point on which he is not satisfied. In that event there will be a further hearing before the Master and a further hearing before the judge.
This is complicated, but I am very much afraid that the alternative proposed in the noble Viscount's Amendment is at least equally complicated and will probably be slower, because his assumption that the Minister is in a position to reach a decision on a proposed scheme any quicker than the High Court is invalid, for the following reasons. First, the proceedings at the ministerial inquiry will be much more protracted than at the High Court, in spite of the hours of 10 a.m. to 4.30 p.m., because the inspector has to hear separately everyone who wishes to be heard and has no power to take decisions or to exclude evidence even if he thinks it utterly irrelevant. So even if we allow that the Minister's inspector is working rather longer hours than the courts, that will be more than offset by his inability to exclude total irrelevancies.
Again, the inspector has to write a report which must include a summary of all the evidence given, which does not have to happen in the courts. In addition, the inspector's report and the accompanying documents then have to be read and considered by the Minister, who has no practical opportunity at that stage of eliciting further information which he may think desirable. There is therefore a great incentive for the inspector to make sure that it is all in, even if it is not strictly relevant and that holds it up up at that stage. Again, under the alternative clause put forward by the noble Viscount, the Minister will then have to give notice to all interested parties of the scheme which he proposes to approve, and apply to the court for approval of the scheme. The Minister's application to the court would have to follow the same procedure as I have already outlined for applications under the present 1377 clause, and might be expected to take the same time for decision, except that the time taken in preparing evidence would be reduced because it would already be in the report.
I do not know whether the noble Viscount has assumed that the waiting list for a Chancery action is longer than that for a ministerial inquiry. I am advised that this is not the case, and that applications set down in the non-witness list are not subject to any particular delay in obtaining a hearing. The Chief Master of the Chancery Division considers that, if the parties file evidence within the time generally allowed on applications, a hearing will take place before the judge within three months of the application. I wish I could say that the same was always true for Ministry inspectors.
In any case, the nature of the decision whether or not to approve a management scheme under Clause 19 is really more suitable for the courts than for a Minister. If there is any question of ministerial policy involved in deciding applications it arises at the first stage of the granting of a certificate, which, as I understand it, the noble Viscount would leave with the Minister. The question whether an estate looks to be of so much benefit to the community as a whole, or to the neighbourhood, as to warrant imposing special obligations on enfranchising leaseholders is well within the Minister's competence, and an inquiry would present no more difficulties than a normal planning inquiry. But once a certificate is granted there is no question of Government policy in settling the content of a scheme. It has simply nothing to do with the Minister.
It is true that some of the matters which are for decision in deciding whether or not a scheme should be approved are not tailor-made for a High Court Judge—and this I must admit—but they are a little bit more tailor-made for him than they are for a Minister. That is why the Government felt, in the first instance, and still feel—while freely admitting the difficulties of reaching the right solution to this problem; and while thanking and, if I may, complimenting the noble Viscount on his constructive work in trying to improve the Bill—that the latter part of the procedure, the actual "yea-ing" and "nay-ing" of the scheme, 1378 to agree or to disagree, is more appropriate for the courts than for ministerial discretion. That being so, I feel that I cannot commend this Amendment to the House.
§ 4.29 p.m.
§ LORD SILSOE
My Lords, I am grateful to the noble Lord for what he has said, but I am very sorry that this last major Amendment which we all want is not approved. However, it is good news indeed to be told that the words "regulating redevelopment" will cover all the normal matters dealt with in redevelopment schemes. That is an important feature, and I am very glad to hear it. The noble Viscount's Amendment contains every single word and comma of the Government's policy, absolutely unaltered in any shape or form. The only thing that has been altered is the question of who is to decide.
A short time ago I was a lay client in the Chancery Division, and therefore, I speak with some knowledge of the matter of landlord and tenant. Time went on, and nothing happened. After six months we were informed that the case might come on about a year and a half later. So tired did we all become that we took the matter to the county court, and away from the Chancery Division. Unfortunately, that cannot be done here, and it is not correct for anybody to say that at the present moment, on a matter between landlord and tenant, the Chancery Division is quick.
Also, as I said before, with great respect, what do the Chancery Judges know about this subject? They know a great deal about trust law and all that sort of thing, but they know nothing about redevelopment, they know nothing about managing estates. They have never done it; it is not their job. The Minister, as the noble Viscount has pointed out, is going through this subject every day. Like the noble Viscount, we have complete confidence—and I speak here as a fairly big estate owner—not only in the inspectors but in the Ministers who decide these matters. We have complete confidence; they are always doing it. Politics never come into it; and we are perfectly happy with the position.
My Lords, apparently the courts are not capable of deciding what is "substantial". We have been told that we cannot have an Amendment on that point 1379 because they are not good enough at understanding it. Heaven knows what they are going to think about this! Surely the whole idea of this Amendment is that the Minister should deal with this matter all the way through, and should do it as he does the rest of it. By the way, the noble Viscount forgot to mention that the Minister has to deal with the planning permission also, which has common features with this. All that has to go to the Minister. Why, therefore, can this not be done? By this very ingenious suggestion that the noble Viscount has submitted, the courts are given their proper function: to decide in the Chancery courts whether a document which has been drafted is capable of operating in law. That is a thing the courts understand and do, and, if I may respectfully say so, do well.
I beg the Government to take one last look at this point. I am confident that if the clause goes through as it is, practically every well-managed estate will have to go through this process. There will be laughter, irritation—all the odd words you can think of—at the way the Act is working; and the present Government, if they are in power, will amend it. They cannot help doing so. I speak as one who deals with this subject pretty well every day of his life. Why cannot what is suggested in this Amendment be done? I think the real reason is that the noble Viscount's Amendment puts some costs on the Minister. I do not think that is at all a bad idea, the Minister having introduced this Bill. But that seems to me the only reason which can be thought of—that he would have to pay a few costs occasionally.
I proposed my original Amendment, and then I withdrew it because I did not get the tremendous praise the noble Viscount has got from the Government. I was told that mine was muddled thinking, and almost unreadable. I do not mind that. I entirely agree that the noble Viscount's Amendment is better than mine—I cannot say fairer than that—and I hope very much that the House will follow it up and will not lead the Government into a measure which is bound to become a failure and a laughing stock.
My Lords, I think the noble Lord speaking for the Govern- 1380 ment might substitute the words "three years" for "three months".
VISCOUNT COLVILLE OF CULROSS
My Lords, I am very grateful to the noble Lord, Lord Silsoe, for his support; and, of course, I very much appreciate what the noble Lord, Lord Kennet, has done by way of explaining the matter. First of all, although nobody will read my speech on this subject, I hope he has made a mistake as to what he thought I said about redevelopment. He will be able to see it in the OFFICIAL REPORT. I had never envisaged that the scheme itself should enable the landlord to buy back any property that has been enfranchised. Nor did I envisage that the landlord would have any rights to go to the local authority or to the Land Commission to ask them to buy it back for him. What I said was that there were powers in the local authority and the Land Commission, who, if they thought it was a good redevelopment, could, if they wanted to, buy the land back so that it could be redeveloped by the common landlord. I do not think there is anything exceptionable in that. It has nothing to do with the scheme under the Bill; and I am probably at fault for not having explained it very well. It gives the landlord no rights. There is an external opportunity—nothing to do with this Bill—if those responsible bodies think fit, to let them get on with the job. I do not think the noble Lord and I have anything between us on this point.
So far as concerns whether it is the courts or the Minister, I can very well see that the argument that the noble Lord has put forward would have some sense if this were going to be a continuing jurisdiction. If there were going to become a corpus of case law and the Chancery Judges were, over a long period of time, going to be used to doing this sort of thing, then the mere fact that perhaps they were not initially very familiar with the subject would not be of great moment. I wish to say nothing whatever against them, nor would I suggest in any way that if they have to do this job they will not do it very well.
If there were going to be this long period of time over which these things would come before them, that would be one thing. But it will not happen like that, as I understand it. If the certificate 1381 is to be given it is to be given within one year (or is it two years?) of the coming into force of this Bill. Then, after that, one applies for the scheme. There will be a wave of these matters, and then it will be over. The Chancery Division will never see these things again, and they will not, therefore, have this continuing experience. I do not believe that every Chancery Division Judge will probably do very many of them on his own; and he may come to a conclusion on the wording to be put into the scheme on facts which have come before one of his brothers in a rather similar way but where the other Judge has come to a different conclusion, probably on a matter which cannot be dealt with on appeal.
I know that in the Ministry the time factor is not as favourable as it might be. I equally know that the Ministry are doing their best to hurry this process up—and I am sure they are succeeding. In the Ministry decision department, or at the ministerial level if these things are looked at by the Minister, there would be the overall conspectus. All the schemes would have been to the same people; they would have seen the whole lot. They could see whether these things were being done in line with each other, or whether the schemes which were being put up had got grave dissimilarities from something put up by another landlord to deal with very similar circumstances.
I fear that I do not believe that from the administrative time and cost point of view there is going to be as much in favour of the courts doing this as the noble Lord made out, particularly in view of the fact that under my Amendment the job of the Chancery Division is a very limited one indeed. I do not believe there will be the necessity to have anything like the process before them that the noble Lord described for the scheme itself, and if the noble Lord looks at the scope of their job under subsections (14) and (15) I think he will come to the same conclusion. I am sorry that the noble Lord cannot accept this Amendment, because I believe that for this short-term but very complicated job the Ministry would have been the right people to do it.
§ On Question, Amendment negatived.1382
§ 4.37 p.m.
§ VISCOUNT COLVILLE OF CULROSS moved, after Clause 19, to insert the following new clause:
§ Covenants transferring landlord's liability for common facilities
§ " .—(1) Without prejudice to the other provisions of this Part of this Act, where a tenant occupies a house in circumstances which fulfil the following conditions—
- (a) that the tenancy is or was one of a number of tenancies of houses in an area; and
- (b) that those tenancies are or were, before the exercise by the holder of any of those tenancies of his rights under section 8 above, held directly or indirectly from one landlord; and
- (c) that the landlord has been responsible for maintaining, or, whether by contract with the tenant or by virtue of any statutory power in that behalf, has undertaken or is required to maintain at his own expense any road, footpath, watercourse, sewer, drain, garden, parkland or other facility (in this section referred to as "the landlord's provision") for the use or benefit of the occupiers of those houses or of those houses together with other houses or premises (in this section referred to as "the other premises"):—
§ (2) A covenant under this section shall have effect so that the tenant (hereafter in this section referred to as "the covenantor") upon his becoming the freeholder of that house, undertakes so much of the liability arising out of the landlord's provision as relates to that house.
§ (3) Any liability upon the covenantor arising from a covenant under this section shall not exceed a liability, calculated according to the next following subsection, to maintain the landlord's provision to the same degree or standard as the landlord had theretofore habitually achieved or, where the maintenance had been undertaken or required by virtue of a contract with the tenant or any statutory power, the landlord was bound to achieve.
§ (4) The extent of the liability so undertaken shall be such as reflects the proportion of the use or benefit which is reasonably derived or to be derived by the occupiers of that house to the use or benefit which is reasonably derived or to be derived by the occupiers of the other premises from the landlord's provision.
§ (5) Where a covenant under this section fulfils the conditions set out in the next following subsection, the covenant shall enure for the benefit of each and every of the other premises and shall be enforceable—
- (a) by the owners and tenants for the time being of the other premises, or any of them; and
- (b) by the landlord or by any person deriving title by, through or under the landlord so long as the landlord or that person retains an interest in land in any of the other premises—
§ (6) The conditions mentioned in the last foregoing subsection are—
- (a) that the covenant is expressed to be for the benefit of each and every of the other premises, which shall be specified; and
- (b) that the covenant is expressed to be in common form with other covenants entered into or to be entered into by the landlord, by his predecessor or predecessors in title, or by any person deriving title by through or under him, with tenants of the other premises for the purpose of any conveyance executed or to be executed to give effect to section 8 of this Act.
§ (7) Where any liability is undertaken by the covenantor by virtue of a covenant under this section which is enforceable under subsections (5) and (6) above then if—
- (a) the covenantor or any person deriving title by, through or under him fails to perform the covenant; or
- (b) the landlord or any person deriving title by, through or under him, upon a requirement in writing by the covenantor or any person deriving title by, through or under him to carry out works to maintain the landlords provision, insofar as the liability to maintain the same has not been undertaken by any other person by virtue of a covenant under this section, to that standard or degree which is referred to in subsection (3) above, fails to comply with that requirement—
- (a) In the case of paragraph (a) of subsection (7) above—
- (i) the owners or tenants of the other premises, if they or their predecessors in title have entered into similar covenants under this section; or
- (ii) the landlord or any person deriving title by, through or under him so long as the landlord or that person retained an interest in land in the other premises or any of them; or
- (b) in the case of paragraph (b) of subsection (7) above, the covenantor or any person deriving title by, through or under him, who has made the requirement—
§ (9) A covenant under this section may be registered under section 10 of the Land Charges Act 1925 as if it were a charge affecting land falling within paragraph (iii) of Class D, and the provisions of section 13 of that Act (which 1384 relates to the effect of non-registration) shall apply as if it were such a land charge:
§ Provided that where the land affected by the burden of the covenant is registered land within the meaning of the Land Registration Act 1925, notice of the covenant may be registered under section 59(2) of that Act as if it were a land charge (other than a local land charge) within the meaning of that Act and the provisions of that Act shall apply accordingly as if it were such a land charge.
§ (10) Where any conveyance of a house, executed to give effect to section 8 above, contains a covenant under this section, the price payable under section 9 above shall be adjusted accordingly."
§ The noble Viscount said: My Lords, this is another hardy annual under this Bill. It may now be such a long time ago that your Lordships have forgotten what the Government said about putting into the Bill a provision to deal with one of the landlord's common services. The problem is this, if I may put it very briefly. Suppose that there are eight houses which are in enjoyment of a road which leads to all of them, that the road is a private road which is kept up by the landlord of all those eight houses, that all eight of them are capable of being enfranchised under this Bill and that one (or more) of the tenants takes the opportunity given to him and enfranchises. What then is to become of the upkeep of the road? At the present moment, the enfranchising tenant can agree with the landlord that he will undertake part of the responsibility; but that undertaking, that covenant, does not run with the land under the law as it stands at the moment, and once either of the parties to that covenant alters then it can no longer be enforced. What I think everybody agrees is required is an arrangement by which the tenant can take over his part of the responsibility, and by which his undertaking to do so will continue to run with his land.
This is what the Government said. It was said by the noble Lord, Lord Hughes, during the Committee stage of the Bill, at column 1229:
The Government would have liked to have been able to do something about this…The desirable thing is that the person who is enfranchised, and who is the one who is going to benefit, should be the one who should carry the responsibility…"—[OFFICIAL REPORT, 12.7.67.]
§ The Government would like to be able to do it. I have put forward—on one occasion my noble friend Lord Aberdare 1385 did it for me, and now I am doing it myself—a method of ensuring that exactly that can be achieved. I do not think I need go through the proposed new clause line by line; but there have been one or two alterations since it was last presented to your Lordships. First of all, I have tried to meet the criticisms made of the drafting last time: that it only covered cases where the landlord was contractually or by some Statute required to keep up for the benefit of the tenants the road I mentioned in my example. I have now extended this so that where the landlord does it voluntarily and without obligation, equally a covenant can be entered into. Of course, there is no force about this; it is a matter of voluntary arrangement between the landlord and the enfranchising tenant. The other thing I have done is, I hope, to improve what was said to have been faulty before; that is, the power of both sides to keep the covenantor and the covenantee, the landlord and the tenant, up to their part of the bargain. This is dealt with by two new subsections.
§ It was said on the Report stage that it is really quite unnecessary to do anything about this because before long we shall have legislation implementing the Wilberforce Committee Report which recommended a positive covenant of a certain sort (including one of this sort) which should run with the land, as a negative covenant does now. The difficulty about that is that the Report also recommends that any Bill to implement it shall not apply to covenants which have been entered into before that Bill becomes law. I can envisage a number of situations arising which raise the problem covered by this Amendment before the Wilberforce Bill becomes law. Then, of course, the provisions will not apply. On the other hand, since I believe that what the Amendment proposes is very much in line with what the Wilberforce Committee Report recommended, there should not be any undue difficulty when the Wilberforce Bill is introduced in scrapping the statutory provision in this proposed new clause and incorporating the provisions which would be necessary to bring these covenants and their enforcibility in line with what is generally being provided under the law as a whole.1386
§ My Lords, the same thing applies to what is a possible criticism of my drafting. Where I have dealt with registration of these covenants in the case of unregistered land, I have used the land charges machinery; but the Wilberforce Committee cast some doubt upon using this machinery for this purpose and suggested that it should be done by notice, as in the old pre-1925 way. The criticism again would really not be relevant to my drafting, because the criticism relates to the difficulty of finding an entry in the Land Charges Register; and, of course, for the period of time that these covenants will run until the Wilberforce Bill came in, I do not believe that difficulty would arise. I do not say that this clause is necessarily word-perfect, but I have offered the Government at least three opportunities to criticise all the drafting except that of one or two subsections which I have put in at the end. I think I have met all the criticisms of which I have been told, and I believe that I have provided a means by which the Government can do what they agree is desirable. Unless the noble Lord now produces some new objections which have never been heard of before—and I think it would be unfair if he were to do so—I would urge your Lordship to put this new clause into the Bill. I beg to move.
After Clause 19 insert the said new clause.—(Viscount Colville of Culross.)
§ LORD KENNET
My Lords, I think the noble Viscount will have heard the objections before, privately. Let me start by conceding that the possible piecemeal enfranchisement of houses in some small estates does create problems, may create problems, will create problems, if there is some common access or garden kept up by the landlord; and also that the noble Viscount has been ingenious in his solution and has been eager to receive and to meet criticism. He has himself outlined the respects in which he has amended an earlier version of this provision, and this time I have no fault to find with his drafting. Having said that, it may seem churlish to insist that the whole conception remains fraught with difficulties. While in themselves the 1387 difficulties would not be grave, they are, by comparison with other advantages (which will soon, I hope, be before the House and available to the people; and the noble Viscount knows what I mean) difficulties that are not worth running into in the meantime.
Under the noble Viscount's new clause, the liability to maintain is transferred; yet the actual maintenance work itself will usually have to be handed over by the single enfranchiser to some single body, and the new freeholder will have to commute his single liability to maintain into a sum of money for this purpose. The arrangement would have to work by agreement—somebody would hire a gardener or a contractor to repair the access, and the rest would pay their share to him or (Heaven help us!) to a company which might be set up. This would have to be so unless that particular collection of new freeholders happen to have precisely the right skills: for example, that one would handle the pneumatic drill, another the tar boiler. But this is unlikely.
The point is that the business, as the noble Viscount has proposed it, is entirely voluntary. The enfranchising leaseholder has to assume liability. Why should he assume any liability unless he is sure that all the others in the same boat will follow suit, and within a reasonable time? If the others do not follow suit, they may still continue to enjoy the services free at the expense partly of the landlord, and partly of those enfranchised leaseholders who have entered into the covenants proposed by the noble Viscount. Likewise, the landlord might hesitate to bind himself to maintain in perpetuity, without payment, a large proportion of his services in return only for the undertaking of perhaps a few enfranchising tenants to maintain the remainder. There is no means of modifying or discharging these convenants. It is clear that the scheme will not be attractive to anybody unless all, or nearly all, the tenants and the landlord agree in advance to enter into these covenants. But this they can do anyhow, without the proposed new clause.
It would be better, I urge the House, to leave it to the parties to enter into some arrangements more flexible than those proposed here, if they wish, until 1388 legislation can be brought forward to give effect to the Wilberforce Report. The noble Viscount said that when that happened the Wilberforce legislation could scrap his provisions which are now put before the House. I do not think it is worth it. I must not go further; but I do not think it is worth it. The objections I have been outlining to the noble Viscount's proposals are, I freely admit, not extremely weighty; but his proposals are extremely complicated, and the gap in cover for this matter will be extremely short. That being so, with great regret I cannot commend this scheme to the House.
VISCOUNT COLVILLE OF CULROSS
My Lords, at least it is a comfort to know that I have got it right this time—whether it is worth it or not! The noble Lord has, of course, put his finger on the important things about this. First, it is voluntary because I believe that the incentive would be for both landlord and enfranchising tenants to enter into something like this. So far as the tenant is concerned, it would obviate the risk of the common facility being left and neglected. So far as the landlord is concerned, it would be of help to him as long as he retains any interest in the rest of the properties. However, be that as it may. I should have thought that what the noble Lord suggested about the method of carrying out the actual incident—in other words, to commute the obligation into a sum of money and let it be done by a single contractor—was precisely the sort of sensible arrangement that anybody ought to enter into in these sort of cases.
About its being a matter where a flexible arrangement can be made between landlord and tenants until such time as Wilberforce comes along, frankly, I do not agree with the noble Lord. This is going to have to be done individually on each conveyance, and these conveyances will not necessarily all come up at the same time. Unless there is a provision in the Bill, nothing can be arranged which will run with the land and last any longer than the parties to that piece of paper. It was just for this bridging reason, so that until such time as the common legislation comes in we have got a situation where there will be lasting obligations, that I should have thought it very worth while entering into this provision. It need not be used, but there 1389 may be occasions where nothing else will do. Here it is. I offer it to your Lordships, and I still think it worth doing.
§ On Question Amendment negatived.
§ Clause 20 [Jurisdiction and special powers of county court]:
Page 38, line 28, after ("10") insert ("or 29(1)").—(Lord Kennet.)
§ Clause 21 [Jurisdiction of Lands Tribunal]:
§ LORD KENNET: I beg to move Amendment No. 11.
Page 40, line 16, leave out ("above") and insert ("or 29(1) of this Act").—(Lord Kennet.)
§ Clause 22 [Validity of tenant's notices, effect on Landlord and Tenant Act 1954 and on notices to quit etc., and procedure generally]:
§ LORD KENNET
My Lords, this and the next Amendment are also drafting Amendments. They meet points arising out of the consideration now being given to the content of the regulations to be made by the Lord Chancellor under Clause 22(2). I beg to move.
Page 41, line 33, after ("premises") insert ("and landlord's costs").—(Lord Kennet.)
§ LORD KENNET: My Lords, I beg to move Amendment No. 13.
Page 41, line 34, after ("agent") insert ("or as stakeholder").—(Lord Kennet.)
§ Schedule 3 [Validity of tenants' notices, effect on Landlord and Tenant Act 1954 etc. and procedure generally]:
§ LORD KENNET
My Lords, this is an Amendment to the Schedule which ties up the six Amendments we passed 1390 earlier on the question of one-third and two-thirds. I beg to move.
Page 83, line 26, after ("that") insert ("(apart from the operation, if any, of the proviso to section 4(1) of this Act)").—(Lord Kennet.)
§ 4.53 p.m.
§ LORD KENNET
My Lords, I beg to move that the Bill do now pass. I think the House will agree that we do not need to enter once again into the merits of arguments which have shaken us—or at any rate, have shaken those among us who know and care for these matters—over recent months. I should like, if I may, as I usually do on these occasions, to say a personal word of thanks and appreciation to my noble adversary, Lord Brooke of Cumnor. We have some good clean fights, and he makes some very constructive suggestions which I am usually, I hope he will agree, instantly willing and able to accept; sometimes willing and able to accept only after a certain amount of consideration; sometimes willing and able to accept in part and never of course willing to reject—those are the other suggestions he made. I will not go over them.
I think that noble Lords on this side of the House, at any rate, will be bound to agree that not all the changes we have made in this Bill are improvements. Some of them go rather close to the heart of the Government's intention and of the White Paper which was endorsed by the electorate. Another place will know what to do about that. But a gratifying number of them do improve the Bill. I believe that our long labours have been, on balance, constructive, and I should like to thank all those noble Lords who have taken part in that constructive side of our work. They have not been numerous, but their knowledge has been great and it has been, I know, a considerable labour to all of them, as it has been to us on the Government Front Bench.
§ Moved, That the Bill do now pass.—(Lord Kennet.)
§ 4.55 p.m.
§ LORD BROOKE OF CUMNOR
My Lords, I, for my part, should like to pay tribute to the unfailing courtesy of the noble Lord, Lord Kennet, throughout the passage of this Bill. He has had 1391 to carry a heavy burden, because these are detailed and difficult matters, and he has addressed himself to them with his usual devotion. The noble Lord made some remarks which I did not quite follow about the categories of suggestions which I had put forward. I certainly remember that he rejected a number of them though he was unable to refute them.
I venture to prophesy that this will go down in history as one of the worst Bills ever presented to Parliament. It was described in the columns of The Times as "a curiously bad Bill." It must be the first Bill in history on this sort of subject which has proved to be utterly friendless among the independent professional institutions which in their work have to concentrate on these matters. In your Lordships' House hardly a good word has been said for it, except by the Front Bench Members opposite. The debates have consisted principally of criticisms of it from all quarters, including notably the Cross-Benches. I cannot remember a single noble Lord who spoke from the Cross-Benches who was not critical of the Bill.
My Lords, this final stage cannot be more than a formality, because I certainly cannot advise my noble friends to throw out a Bill which was in the Election programme upon which the Government won the last Election—even though the people who voted the Government into power then are now obviously regretting that they did so. I must join issue with the noble Lord, Lord Kennet, when he says that some of the Amendments which we pressed go near to the heart of the Bill. That is not so. We have carefully and deliberately refrained from pressing any Amendment that would strike at the principle of the Bill, for the same reason that I have just given. Nevertheless, valuable Amendments have been made to improve the detail of the Bill.
The noble and learned Lord, Lord Shawcross, speaking from the Cross-Benches, found widespread support for his Amendment that charities ought not to be made to suffer under the Bill. Another noble Lord who is not a member of the Party to which I belong, the noble Lord, Lord Lindgren, found noble Lords 1392 in all Parties approving his view that as regards community-owned towns like Letchworth Parliament ought not to legislate to enable individual householders to make untaxed capital profits at the expense of the community.
Your Lordships accepted the Amendment proposed by the noble Lord, Lord Butler of Saffron Walden, who also spoke from the Cross-Benches, that if a lease with more than 25 years unexpired was compulsorily enfranchised under the Bill it would be obviously unfair if the landlord, deprived of the house, received for the next 25 years or more only the original ground rent that had been fixed in very different circumstances, when there was no question of compulsory enfranchisement. Still on points of detail your Lordships approved two minor Amendments of mine: one correcting the definition of a "long lease", and the other providing that in the case of a lease compulsorily extended the ground rent should be brought up to date at more frequent intervals.
Together with what the Government have done to-day on the definition of a ground lease, arising out of an Amendment pressed in Committee by my noble friend Lord Molson, these amount to substantial improvements in the Bill on matters of detail, though leaving untouched its iniquitous central principle: that, in order to deal with unfairness felt by small leaseholders in certain parts of the country, it is just that all leaseholders occupying houses, or parts of houses, below certain rateable values should be given an opportunity of netting substantial capital profits, untaxed and at other people's expense.
This is what the Government say is Socialism, and ordinary people say is legalised stealing. Indeed, if the Government's principle is sound, there clearly ought to be no limits of rateable value in the Bill. But the Government suddenly discovered that if they allowed the Bill to become law with no limitation of rateable value in it the untaxed capital gains which their idea of leasehold reform would confer on some people would be quite enormous. So they restored the rateable value limits, believing apparently that there was no objection to Socialist legislation giving untaxed capital gains of £5,000 or £10,000 to undeserving people, but that pre- 1393 senting more than £10,000 to individuals for no reason except that they happened to have bought leasehold property might cause some of the faithful to wonder what an odd sort of Socialism this was.
What a denial of justice this Bill is! I do not blame the noble Lord, Lord Kennet, who has done his very best in difficult circumstances. A Bill like this is a Cabinet responsibility, and it is the members of the Cabinet, in this House and in another place, who will carry the guilt of a Bill that breaks up well-managed estates and handicaps their future sound redevelopment, a Bill that confers on thousands of leaseholders wholly undeserved capital gains free of tax, and a Bill that steals from other people to achieve these questionable and strange results masquerading as reforms.
§ 5.3 p.m.
§ LORD KENNET
My Lords, the noble Lord, Lord Brooke of Cumnor, has called this one of the worst of Bills, and all the rest of it, and we have come back to the red herring of substantial capital profits up to £10,000 going to thousands of people. I gave some very concrete examples at an earlier stage of what tax-free capital profits could be expected under this Bill. I will not repeat them. I do not think that the House deserves the tedium of the repetition of the boring truth. The truth is far from the glowing simplicities just advanced by the noble Lord. I know that in time the truth will gain wider currency in the country than these glowing simplicities. That is what will happen, we shall see.
The noble Lord said that none of the Amendments carried in this House went near the heart of the Bill. I assure him that some of them did. I can understand why he said that they did not, because he does not know where the heart of the Bill lies. This is a major reform of property law. It is hard for the Party opposite to know where the heart of property lies when it does not lie where they wish it to be. They have been shooting nowhere near where it is, and that is because they have drifted away from the fact that this Bill contains concrete remedies for concrete social evils.
For the last time, though by no means for the first, let me remind your Lord- 1394 ships that there are thousands of leaseholders in Wales—and not only in Wales—who are already disappointed that we did not get this Bill through this summer (some of them have, indeed, been thrown out) and who are waiting for the security of tenure which will be given them under this Bill. I do not claim that the Bill is perfect, but I do claim that to say that it builds in any principle of injustice is a wild distortion of its true nature, a distortion which could be advanced only by those who have failed to understand what that true nature is.
§ On Question, Bill passed, and returned to the Commons.