Sue Doughty (Guildford):
New clause 4 was tabled because we want to extend the same rights of self-management given to leaseholders in blocks of flats to enfranchised owners in estate management schemes. Under those antiquated schemes, leaseholders who buy their freehold might find themselves with fewer rights than they had before and face higher charges despite the substantial expenditure and administrative difficulty of enfranchisement.
The annual fee payable to their previous landlord for managing the scheme can be higher than their erstwhile ground rent and landlords frequently impose onerous charges in respect of consents for alterations and supervision of work. That aspect of being forced to pay a landlord's surveyoroften at extremely high ratesto agree and supervise work evolved long before the days of conservation areas and careful planning controls by local authorities. Enfranchised owners subject to such charges and double surveillance are understandably resentful. Now that leaseholders in blocks of flats are being given a no-fault right to manage their own affairs, the anomalous position of freehold owners in the outmoded estate management schemes is even more inequitable than it was.
I appreciate that, since the new clause was tabled, the Government have introduced a new clause that certainly goes some way to dealing with the concerns that I have expressed. However, we want to know how far the new clause will go towards dealing with the problem. I look forward to hearing the Minister's response.
This group of new clauses and amendments, including the Liberal Democrat proposal, deals with an extremely important issue. However, I was slightly surprised by the fact that the Minister hardly provided the type of explanation that one would have expected in relation to new clausesI refer in particular to new clause 12that are not only extremely long but contain very complicated arrangements.
New clause 12(1) says that the new clause applies to schemes under
"(a) section 19 of the 1967 Act (estate management schemes in connection with enfranchisement under that Act),
(b) Chapter 4 of Part 1 of the 1993 Act (estate management schemes in connection with enfranchisement under the 1967 Act or Chapter 1 of Part 1 of the 1993 Act), or
(c) section 94(6) of the 1993 Act (corresponding schemes in relation to areas occupied under leases from Crown)".
Subsection (1) also includes provision for
"imposing on persons occupying or interested in property an obligation to make payments ('estate charges')".
I have described the three types of schemes to which the new clause will apply.
Subsection (2) adds:
"A variable estate charge is payable only to the extent that the amount of the charge is reasonable; and 'variable estate charge' means an estate which is neither
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(a) specified in the scheme, nor
(b) calculated in accordance with a formula specified in the scheme."
Given the size of the Government's majority in the House, we should not imagine that the new clause will not be enacted. Subsection (3) states:
"Any person on whom an obligation to pay an estate charge is imposed by the scheme may apply to a leasehold valuation tribunal for an order varying the scheme in such manner as is specified in the application on the grounds that
(a) any estate charge specified in the scheme is unreasonable, or
(b) any formula specified in the scheme in accordance with which any estate charge is calculated is unreasonable."
We all know that the word "unreasonable" means what a courtor tribunal in this caseregards as unreasonable. The question of whether something is unreasonable is determined by the court. That does not necessarily mean that everything will work out in the way that the Government intend, so I will be interested to hear what the Minister has to say about that. I doubt whether the hon. Lady will be able to say what would be regarded, in given circumstances, as being unreasonable, although had she spent more time on her explanation, she might have been able to make the position clearer.
Subsection (4) states:
"If the grounds on which the application was made are established to the satisfaction of the tribunal, it may make an order varying the scheme in such manner as is specified in the order."
Again, we have no idea as to the manner in which the tribunal would make such an order. The phrase
"varying the scheme is such manner as is specified"
invites the question: what will the tribunal actually do? The Government might know, but they have not told us and the Minister's opening remarks did not tell us what grounds on which the application was made would be likely to satisfy the tribunal. However, the tribunal will be able to vary the scheme in the manner that it determines.
Subsection (5) states:
"The variation specified in the order may be
(a) the variation specified in the application, or
(b) such other variation as the tribunal thinks fit."
We know what "thinks fit" means in these circumstances, because it is a well-established principle of law that where, for example, those wordsor, in analogous circumstances "in the opinion of"are used, they are non-justiciable in the general context of the deliberations. An enormous power is granted to the tribunal. The variation specified in the order is immensely important to those who are assessing the variation in any given scheme.
Subsection (6) provides:
"An application may be made to a leasehold valuation tribunal for a determination whether an estate charge is payable by a person and, if it is, as to
(a) the person by whom it is payable,
(b) the person to whom it is payable,
(c) the amount which is payable,
(d) the date at or by which it is payable, and
(e) the manner in which it is payable."
Clearly, an enormous range of matters go before the tribunal, but the Minister has provided no explanation of the implications lying behind the provision. It may be
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beneficial, but we have had no explanation. The Minister disposed of all the new clauses in about five minutes at most, yet these matters are crucial to those affected.
Subsection (7) goes on to say that the matters to which I referredthe application made to the leasehold tribunal in the respects that I outlined
"applies whether or not any payment has been made."
That moves us into deeper territory because the subsection will apply irrespective of whether a payment has been made, yet, as we saw, subsection (6) makes it clear that the question arises in relation to whether an estate charge is payable. A distinction is being made between what is payable and what is paid, which leaves an enormous amount at large.
Subsection (8) continues:
"The jurisdiction conferred on a leasehold valuation tribunal in respect of any matter by virtue of subsection (6)",
to which I have twice referred,
"is in addition to any jurisdiction of a court in respect of the matter."
Frankly, that is exceedingly wide. It is not just a question of the functions of a tribunal: it extends to a wide arena, which is almost impossible to identify.
Subsection (9) states:
"No application under subsection (6) may be made in respect of a matter which
(a) has been agreed or admitted by the person concerned,
(b) has been, or is to be, referred to arbitration pursuant to a post-dispute arbitration agreement to which that person is a party,
(c) has been the subject of determination by a court, or
(d) has been the subject of determination by an arbitral tribunal pursuant to a post-dispute arbitration agreement."
All those matters are excluded, but the impact on the scheme and the persons concerned remains serious.
Subsection (10) continues:
"But the person is not to be taken to have agreed or admitted any matter by reason only of having made any payment."
The fact that a person has paid up, when the gravamen of the situation depends on payment, means that the person's agreement or admission cannot be assumed to mean anything by reason only of having made a payment. The Minister should have provided a proper explanation of the proposals, but she only skipped through them.
Under subsection (11):
We are dealing with a range of generalities and a series of propositions here. There are some sensible provisions such as assisting people through these schemes, but we have no idea whether they are capable of working effectively or whether people will be prejudiced by these arrangements.
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I acknowledge that Bills need definitions, but a degree of opaqueness is apparent in the wording of subsection (11)particularly where it states that an agreement
"other than a post-dispute arbitration agreement"
is voidwhen in subsection (12), the definition subsection, it states that a
"'post-dispute arbitration agreement', in relation to any matter, means an arbitration agreement made after a dispute about the matter has arisen".
It goes on to provide further definitions with which I would not disagree, according to which
"'arbitration agreement' and 'arbitral tribunal' have the same meanings as in Part I of the Arbitration Act 1996".
For all those reasons, it is difficult to understand how the Minister can make such a brief statement saying what the measure provides. The Government know that they will get their way because they have a majority. Nevertheless, a full and proper explanation is expected.
Let us move on to new clause 4, tabled by the Liberal Democrats. The hon. Member for Guildford (Sue Doughty) provided a brief explanation of what she wanted, but accepted that the Government have produced their own version. With respect to types of dwellings affected, the new clause states:
"This Chapter shall from the commencement of this Act apply to a dwelling within the meaning of the Leasehold Reform Act 1967 as amended, and the Leasehold Reform, Housing and Urban Development Act 1993, as amended, which
(a) has been enfranchised;
(b) is situated within an area ('scheme area') in respect of which a scheme of management has been approved and is in force pursuant to section 19 of the Leasehold Reform Act 1967 or Chapter IV of the Leasehold Reform, Housing and Urban Development Act 1993."
It then goes on to say: