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The Earl of Northesk: I echo the words of my noble friend Lady Gardner of Parkes. It is an extremely important matter. Bearing in mind the fact that the provision has cross-party agreement so far as concerns the industry, both tenants and landlords are essentially in agreement with the amendment as drafted.

Lord Irvine of Lairg: It is a matter for the noble Earl to follow his own course. However, despite the remarks made by the noble and learned Lord the Lord Chancellor, I am disinclined to agree to something in respect of which such short notice was given—indeed, something of such width and significance—and which, by reason of that short notice, has neither enjoyed the mature consideration that it requires nor had the full debate in Committee that it merits. For all those reasons, I believe that it would be a

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bad precedent just to let a provision go into a Bill on that basis. Therefore, to the extent that my agreement is relevant, I do not agree to that course being followed.

It appears to me that consultation can perfectly well take place on the basis of the Bill not subject to the amendment and on the Bill plus the amendment. I do not think that there is any particular difficulty in consulting on two pieces of paper rather than on one. It would certainly assist me in considering what has come from the noble and learned Lord if we could have a specific indication, to the extent that he is able to give it, of when the Report stage is likely to take place, because that of course relates to the adequacy of the period for consultation.

The Earl of Courtown: I wish to thank all those who have taken part in this short exchange. The noble Lord pointed out that an important concession has been made in the agreement to change the long-standing and venerated Section 19 of the Landlord and Tenant Act 1927. However, this is not a concession made simply to appease the landlord lobby as a price to extract its support for those parts of the package that are of great importance to the tenant. Rather, tenants are acutely conscious that landlords have the right under Section 19 absolutely to withhold consent to assignments. If landlords were left without a satisfactory ability to approve the assignee, they would, it has been said, in many cases just stop the tenant assigning. This would not get anybody anywhere. Neither am I impressed by the argument that this could be an abuse by landlords to which Parliament would turn its attention by changing the law. It has taken since 1988 to get to this stage this evening and I do not think that Parliament would wish to return to this issue if the Bill is passed. I am in somewhat of a quandary, I must admit, over this matter and I take the lead of my noble and learned friend the Lord Chancellor.

The Lord Chancellor: If my noble friend is taking my lead, just before he finally decides what that lead should be, I should say that my understanding is the following. The Committee will know that, this being a Private Member's Bill, if it is to reach the statute book in this Session it has to return to the House of Commons by 14th July. I think that is the date. My understanding is that the Report stage of this Bill is likely to be on 5th or 6th July. As the Committee will know, the amount of business that occupies this Chamber as we get nearer the end of July gets heavier and heavier. Therefore, this is rather a narrow matter. I am anxious not to prejudice the chance of this Bill reaching the statute book. That is why I felt, apart from anything else, that the solution I was putting forward might help us in that direction. On the other hand, I am most unwilling to seek to force anything on those who have been so accommodating to try to reach a conclusion about this.

I had rather hoped that what I had proposed might meet with agreement because the Bill will reach the statute book only by agreement. There is no question about that. I thought that what I had proposed might simplify our procedures. For my part, unless the noble Lords, Lord Irvine of Lairg and Lord Meston, were prepared to agree to the course I am suggesting, I would not indicate to my noble friend that he should press too hard this evening.

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Lord Irvine of Lairg: I should perhaps make it plain that in the observations I was making I was not necessarily expressing hostility to the amendment, and I was certainly not expressing hostility to the Bill being translated promptly on to the statute book. I was merely suggesting to the noble Earl, whose courtesy prior to this Committee sitting I acknowledge, that the better course, and one which would give more encouragement in all quarters, would be to withdraw the amendment tonight and to move it on Report.

The Earl of Courtown: In that case I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendment No. 62:

Before Clause 15, insert the following new clause:

Effects of becoming subject to liability under, or entitled to benefit of, covenant etc

(".—(1) Where as a result of an assignment a person becomes, by virtue of this Act, bound by or entitled to the benefit of a covenant, he shall not by virtue of this Act have any liability or rights under the covenant in relation to any time falling before the assignment.
(2) Subsection (1) does not preclude any such rights being expressly assigned to the person in question.
(3) Where as a result of an assignment a person becomes, by virtue of this Act, entitled to a right of re-entry contained in a tenancy, that right shall be exercisable in relation to any breach of a covenant of the tenancy occurring before the assignment as in relation to one occurring thereafter, unless by reason of any waiver or release it was not so exercisable immediately before the assignment.").

The noble and learned Lord said: The amendment introduces a new clause to provide for another element of the framework for the transmission of covenants on assignment, giving full effect to the Law Commission's recommendations for new tenancies which I outlined when speaking to Amendment No. 1.

Subsection (1) of the new clause makes it clear that an assignee shall have no rights or liabilities under a covenant of the tenancy in relation to anything occurring before the assignment. That is subject to a saving in subsection (2) for cases where the assignor expressly assigns his accrued rights to the assignee to allow for the accrued rights of the assignor to be taken into account as part of the agreement between assignor and assignee as the parties see fit. Subsection (3) preserves the present position in respect of the landlord's right of re-entry, which do not fit in the Law Commission's scheme as landlord and tenant covenants and accordingly require separate provisions, as I mentioned earlier. I beg to move.

On Question, amendment agreed to.

Clause 15 [Effects of release from liability under, or loss of benefit of, covenant]:

The Lord Chancellor moved Amendment No. 63:

Page 8, line 35, at end insert:
("( ) Where a person bound by a landlord or tenant covenant of a tenancy—
(a) assigns the whole or part of his interest in the premises demised by the tenancy, but
(b) is not released by virtue of this Act from the covenant (with the result that subsection (1) does not apply),
the assignment does not affect any liability of his arising from a breach of the covenant occurring before the assignment.").

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The noble and learned Lord said: I spoke to Amendment No. 63 with Amendment No. 29. I beg to move.

On Question, amendment agreed to.

Clause 15, as amended, agreed to.

Clause 16 [Agreement void if it restricts operation of the Act]:

The Lord Chancellor moved Amendment No. 64:

Page 8, line 41, leave out ("or modify") and insert (", modify or otherwise frustrate").

The noble and learned Lord said: Clause 16 is an important clause since it contains anti-avoidance provisions. The principal provision is in subsection (1) and is, as recommended by the Law Commission, in general terms to catch any device aimed at subverting the Act.

Amendments Nos. 64 to 68 refine the anti-avoidance provisions so as to ensure that they are all-embracing but also to prevent arguments to the effect that they outlaw certain other matters which the Act elsewhere envisages being permitted. They are closely linked, and I believe that it would be helpful if I speak to them together.

Amendments Nos. 64 and 65 amend the wording of subsection (1) to ensure that it is sufficiently all-embracing to catch the various devices which might be attempted as ways of circumventing the Act. It has been suggested in some quarters that subsection (1) might affect the operation of covenants which are expressed to be of limited duration on the basis that such limitation would "modify" the operation of the provisions providing for an assignor to be released on assignment. I am strongly advised that this is not the case, since time-limited covenants, once the period has expired, will not be covenants which bind the assignor immediately before assignment, and thus the limited duration cannot be said in any way to fall foul of Clause 16.

Amendment No. 66 deletes the existing subsection (2) of Clause 16, which makes a cross-reference to the provisions for authorised guarantee agreements. The deletion is necessary to make way for revised and refined provision to that effect made by Amendment No. 68, which provides for a new subsection to be inserted after subsection (3). The new subsection makes it clear that the anti-avoidance provision does not outlaw any agreement to the extent that it is an authorised guarantee agreement; but that anything in such an agreement which falls foul of the amended subsection (4) of Clause 12 is void to the extent that it does so.

Amendment No. 67 deletes the existing subsection (3) of Clause 16 and replaces it with a revised and refined version. The existing subsection reflects concern that it might be argued that absolute or qualified covenants against assignment amounted to provisions which would "modify", and so on, the operation of the provisions of the Act covering release on assignment and that they would therefore be held to be void. The new subsection makes it clear that such a covenant against assignment is not void by reason of the anti-avoidance provision, but also makes it clear, which the existing provision perhaps does not do so well, that any conditions which might be attached to consent or required to be fulfilled before consent is given

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would not escape the anti-avoidance provisions if they were such as to subvert the operation of the Act. I beg to move.

On Question, amendment agreed to.

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