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Baroness Turner of Camden: My Lords, as this is a timed debate, there is not sufficient time for me to reply to all noble Lords who have contributed, much as I would have liked the opportunity to reply to many of the points made, especially by the Minister. I am sure that the noble Lord will not be surprised to know that we on this side of the House do not agree with many of the claims that he has made for his Government's policy. However, there is not sufficient time for me to do that, and no doubt there will be other opportunities to deal with the subject in a great deal more depth.

It therefore remains for me simply to say to all those who have participated in the debate, "Thank you very much for your contributions". I am glad to note that there is some degree of consensus between us. We accept that there is a problem and that solutions to it will have to be found, although we may differ among ourselves about

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those solutions. Having said that, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.

Landlord and Tenant (Covenants) Bill

8.33 p.m.

The Earl of Courtown: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(The Earl of Courtown.)

On Question, Motion agreed to.

House in Committee accordingly.

[The DEPUTY CHAIRMAN OF COMMITTEES (Baroness Nicol) in the Chair.]

Clause 1 [Tenancies to which the Act applies]:

The Lord Chancellor (Lord Mackay of Clashfern) moved Amendment No. 1:

Page 1, line 6, after ("Sections") insert ("(Transmission of benefit and burden of covenants), (Transmission of rights of re-entry),").

The noble and learned Lord said: In moving Amendment No. 1, I should like to speak also to Amendments Nos. 10, 13 and 88. Apart from apologising for the fact that I kept your Lordships waiting a little time, perhaps I may begin by asking your forbearance in the face of the large number of amendments which stand in my name, and also to put on record my gratitude, which I am sure your Lordships will share, to the Law Commission and parliamentary counsel for their full and unstinting assistance in the preparation of these amendments. The amendments standing in my name are aimed at ensuring that the Bill gives full and proper effect to the Law Commission's scheme which, notwithstanding the amendments which my noble friend Lord Courtown is to move, forms the backbone of the reforms. The Law Commission's recommendations which the Government accepted for new leases are very full and detailed, and the amendments themselves have also had to be very full and detailed.

Amendment No. 1 has the effect of paving the way for Amendments Nos. 10, 13 and 88, and with your Lordships' leave I should like to speak to those later amendments now. I believe that it would also assist your Lordships if I were at this point to give an outline of the scheme of which these amendments form part. The essence of the scheme recommended by the Law Commission is that all covenants and obligations between lessor and lessee should be enforceable between the landlord and tenant for the time being, with no distinction being drawn between covenants which "touch and concern" the land and other covenants. When the landlord's or tenant's interest is assigned, the assignee should become bound from the assignment by the whole package of rights and obligations as it bound his predecessor (and so including any variations), but should not take on any rights or liabilities in respect of any breach of covenant occurring prior to the assignment.

Concomitantly, the assignor should cease to have any rights and obligations as from the assignment, but should

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not lose any accrued rights in respect of a breach by the other party prior to the assignment, and should likewise remain liable for any breach on his own part occurring prior to the assignment. This is subject to slightly different provision for landlords, requiring them to go through a notice procedure which gives the tenant the right to object to their ceasing to be bound if that would be unreasonable in the circumstances. This difference was recommended by the Law Commission because, unlike landlords, tenants have no way of vetting the landlord's assignee and preventing the assignment, and the assignee's ability to perform the landlord's obligations might in some cases be very important.

In the case of assignments of part of the landlord's or tenant's interest, the assignee should become bound by the package of rights and obligations only to the extent that it relates to the part assigned, and should not take on any rights or liabilities in respect of any breach of covenant occurring prior to the assignment. The assignor should similarly cease to have prospective rights and obligations in respect of the part assigned, but should retain any accrued rights to the extent that it related to that part, and should also remain liable for any pre-assignment breach of his own in relation to that part. The assignee should remain bound by the package of rights and obligations to the extent that they relate to the part retained by him. Where there are covenants which do not clearly operate separately in respect of separate parts of the interest there is to be special provision for apportionment of the rights and obligations.

The group of amendments to which I am now speaking is necessary in order to avoid potential problems arising from the interface of the new regime with the existing law governing the transmission of the benefit and burden of covenants and their enforcement under privity of estate, which the existing text of the Bill does not do effectively. The existing law is contained in a mixture of statutory provisions and common law rules which are not always consistent, clear or certain. The approach of the amendments is to provide a complete and self-contained framework for new tenancies giving full effect to the principles of the Law Commission's recommendations and simply to disapply the existing law for new tenancies, rather than to attempt the extremely difficult task of amending the existing law consequentially.

Amendment No. 1 is needed as a consequence of Amendment Nos. 10 and 13 because Clause 1 sets out which provisions of the Bill are to apply only to new tenancies and which are to apply to both new and existing tenancies.

Amendment No. 10 inserts a new clause after Clause 2 of the Bill. This is at the heart of the scheme recommended by the Law Commission to ensure that the changes to the rules on privity of contract can be properly integrated into the law on covenants. The amendment is intended to restate and clarify, for new tenancies, the present rules for the transmission of the benefit and burden of leasehold covenants (some of which date back to the 14th century) with a simple statutory code, the basic

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principle of which is that the benefit and burden of all landlord and tenant covenants of a new tenancy are annexed to the whole and each and every part of the lease and reversion as appropriate, irrespective of whether they "touch and concern" the land.

At the risk of over-extending my speech at this stage, I believe that it might be helpful for me, in the light of the amendments tabled by my noble friend Lord Jenkin of Roding, to give a simple example of how the provisions which my noble friend would amend will work in practice. The provisions in question are purely aimed at assignments of part. In such a case, the basic rule is that the assignee will be bound by all the covenants which bound his assignor, except to the extent that the covenant falls to be compiled with in relation to the part not assigned. Sometimes a covenant may fall to be complied with in relation to one part of the property that has been let, but not in relation to another. For example, there may be a lease of both a house and an adjacent field. Under the lease the tenant covenants to repair the house. If the tenant assigns the lease in so far as it relates to the field, the burden of the repairing covenant will not pass to the assignee because it falls to be complied with in relation to

    "demised premises not comprised in the assignment"
in the words of subsection (2) (a) (ii); that is to say, premises which are part of the demise to which the part assigned belongs but which are not themselves being assigned in this particular transaction.

The new clause includes provision presently contained in Clause 7 of the Bill and your Lordships will note that, as a consequence of this, I shall in due course be opposing the Question that Clause 7 stand part of the Bill. The clause also embodies those parts of Sections 78 and 79 of the Law of Property Act 1925 as are to be preserved for tenancies. Together with the clause to be introduced under the next amendment, it replaces Sections 141 and 142 of the 1925 Act, which will not apply to new leases. Amendment No. 88 accordingly carries through the approach by providing for those statutory provisions not to apply to new leases.

Amendment No. 13 introduces a second new clause after Clause 2, corresponding to subsection (1) of the first new clause. This will ensure that, in the same way as the benefit and burden of covenants in new tenancies are to pass on the assignment in whole or part of a lease or reversion, the benefit of any right of re-entry which may be reversed by the landlord will pass on an assignment of the whole or any part of the reversion. I beg to move Amendment No. 1.

8.45 p.m.

Lord Meston: I did not seek to oppose the Question that the House should resolve itself into a Committee, but I think it should be recorded that we are embarking on consideration of amendments to this Bill in frankly less than satisfactory circumstances. This Bill has passed through another place and arrives here as a Bill with some 12 pages of print. At Committee stage we are presented with amendments running to some 20 pages. Most of those amendments were printed in the latter part of last week. They are substantial and complex and, frankly, not easy to digest even if more time had been allowed.

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The main body of the amendments, those to be moved by the noble Earl, are described as a package of additional changes agreed between the British Property Federation and the British Retail Corporation. The original Bill had the benefit of being the result of widespread consultation by the Law Commission. We understood at Second Reading from the noble and learned Lord the Lord Chancellor that there has been, very properly, further consultation by his department, and furthermore that the Bill passed through another place in the knowledge that there would be alterations and additions in your Lordships' House. But this House cannot do its job properly and those outside the House who can assist its Members, and the Members of this Committee in particular, cannot give that assistance unless they have the ability and the time to consider what the noble and learned Lord has described as full and detailed amendments. I would hope that certainly before Report stage there will indeed be more time allowed for those of your Lordships who are interested in this Bill to take a properly informed view about these very detailed amendments.

Having said that, in the brief time available to me, at any rate, to consider these amendments I thank the noble and learned Lord for his explanation. I have only one specific point to make on one of the amendments he has spoken to; that is, Amendment No. 10, which is to be found on pages 2 and 3 of the Marshalled List. After Amendment No. 10 has been printed, page 3 of the Marshalled List appears to refer to Amendments Nos. 16 and 27. I think those two numbers have to be disregarded. Most of what appears on page 3 is in fact all part of Amendment No. 10.

The question I have concerns the drafting of the proposed new subsection (4) which refers to:

    "any waiver or release of the covenant which (in whatever terms) is expressed to be personal to the assignor".
I wonder what that means and whether it is really meant to say that it is simply a personal waiver or release. Surely it could be expressed in that way. A waiver or release is presumably personal, or can be construed as such, and does not need to be described in that somewhat convoluted manner.

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