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Lord Elton: My Lords, I do not know whether I unnecessarily prolong matters. It seems that the anxieties of the noble Lord, Lord Monkswell, are unfounded since the amendment is to ensure that no changes can be made except if they are brought before this House, not merely by negative order, which somebody has to spot, but by affirmative order, where the matter has to be tabled and assented to by your Lordships.

Lord Lucas: My Lords, my noble friend is quite right. I believe that I have today given two assurances. First, we will consult before making any such changes. That is inevitable because it is a consensual process in which we are involved. To bounce people in and out of the Bill at the whim of the Government is not in accord with the way this part of the Bill has to work. I also drew attention to the width of the provision and the scope that it gave us to deal with large or small problems that might arise. They will all be dealt with by consultation and by the will of both Houses of Parliament and not otherwise.

On Question, amendment agreed to.

Clause 104 [Provisions not applicable to contract with residential occupier]:

Baroness Hamwee moved Amendment No. 146:

Page 60, line 2, leave out ("his") and insert ("a").

The noble Baroness said: My Lords, Clause 104 deals with contracts concerning residential properties. At the last stage of the Bill an issue arose as to whether the property in question, in order to fall within the provision, was required to be a person's main residence. The noble Earl, Lord Ferrers, said on the 28th March, at col. 1872, that when the Bill referred to a residence it meant any residence. During that debate I had wondered aloud whether the wording now proposed--which refers to "a residence" rather than "his residence"--might make it clearer that reference was being made to any residence and not a main residence. Since it was a matter that I aired at the last stage, I hope that on this occasion I have not, to use his word, bounced the noble Lord, Lord Lucas. I am glad that he shakes his head. I beg to move.

Lord Lucas: My Lords, we heard in Committee that the noble Baroness, Lady Hamwee, was concerned that the reference to a residence in Clause 104(1) might be

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construed as a reference to a main residence. My noble friend Lord Ferrers reassured her on that occasion that when the Bill referred to a residence it meant any residence. I do not believe that there is any more that I can say or that can be added to the Bill to make that clearer. We also talked about an element of possession being included in the definition. This was a matter brought up by the noble Lord, Lord Williams of Elvel, he having considered the views of the Law Society of Scotland. The use of the possessive adjective "his" conveys that element. That would be lost if the indefinite article were substituted instead. We have considered what the noble Baroness had to say last time and looked at it again in the context of this amendment. We wish to retain the wording as it is. I hope that, with that explanation, the noble Baroness will be content to seek leave to withdraw her amendment.

Baroness Hamwee: My Lords, I moved the amendment on this occasion because I was not sure that the point had been made with any force last time. I am not entirely sure that I follow the explanation, but I certainly shall not pursue it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Deputy Chairman of Committees: My Lords, in calling Amendment No. 147, I advise the House that, if it is agreed to, I cannot call Amendment No. 148.

[Amendment No. 147 not moved.]

Lord Lucas moved Amendment No. 148:

Page 60, line 11, at end insert--
("(4) No such order shall be made unless a draft of it has been laid before and approved by a resolution of each House of Parliament.").

The noble Lord said: My Lords, I spoke to Amendment No. 148 with Amendment No. 145. I beg to move.

On Question, amendment agreed to.

Clause 105 [Provisions applicable only to agreements in writing]:

Lord Howie of Troon moved Amendment No. 149:

Page 60, line 28, after first ("in") insert ("adjudication or").

The noble Lord said: My Lords, Amendment No. 149 is a very simple matter and I need not detain the House over it for any length of time. It is intended to clarify the constant confusion which the construction industry believes the Government are in throughout a large part of the Bill. I refer to the confusion between adjudication and arbitration. The effect of inserting the word "adjudication" is to suggest that certain written submissions will be appropriate in adjudication, arbitral or legal proceedings. It is hoped that the word "adjudication" will indicate that adjudication is a different matter from arbitration and should be distinguished on the face of the Bill. We will probably return to this matter later. I beg to move.

Lord Lucas: My Lords, when the noble Lord, Lord Howie of Troon, moved a similar amendment in Committee, my noble friend Lord Ferrers undertook to

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consider the matter. Our first thought was that the amendment was unnecessary. However, we have since been considering whether, if it is necessary, a more comprehensive formula might be better. We have not yet reached a decision and I hope that the noble Lord, Lord Howie, will allow us another week in which to complete our deliberations on this admittedly minor phraseology. I hope that with that explanation he will withdraw his amendment today.

Lord Howie of Troon: My Lords, I am pleased. I had thought that my small amendment, which adds only one word to the Bill, would have done the job. However, if the Government are to produce a more complicated formula which will take a week to devise I welcome that. With the Minister's warm words, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Williams of Elvel moved Amendment No. 150:

Page 60, line 34, at end insert ("but will not include anything which relates to agreements totalling a sum below £25,000").

The noble Lord said: My Lords, this is an important amendment. It picks up a point made by the noble Viscount, Lord Ullswater, in Committee and is a matter which should concern the House. Clearly, it is not appropriate for the Bill to apply to small contracts. On the other hand, I recognise that it is difficult to prevent a larger contract being split up into smaller contracts so that the de minimis provision, which I put at £25,000, does not apply to a larger contract because it appears in several subcontracts.

Nevertheless, I believe that there is a case, if it can be properly worded, for having a de minimus provision in the Bill. I know that the Government have studied the matter and I hope that they will respond constructively. I beg to move.

Viscount Ullswater: My Lords, it would be churlish of me not to rise to say that I made the suggestion which the noble Lord, Lord Williams of Elvel, has now produced as an amendment. I made the suggestion in Committee and it prompted a considered written reply from my noble friend Lord Lucas. I hope that the noble Lord, Lord Williams, has received a copy of my noble friend's letter.

My noble friend indicated some of the anxiety expressed by the noble Lord, Lord Williams, over the splitting of contracts and the problem of non-payment which bedevils the industry even in relation to small contracts. I understand the problems that we might be putting into the Bill if we insist on the de minimis provision. However, I must stick to my last: I believe that some de minimis provision is required even in the general terms of not trying to wrap the industry in so much red tape that even the smallest contract which happened to be in writing would not be tied up in the scheme. I see the scheme as being a draconian way of dealing with a small problem. Whereas I have some concern about what my noble friend has said, I support some form of de minimis provision, whether or not the figure of £25,000 is the right one.

Lord Lucas: My Lords, this is a somewhat confusing amendment in that it attempts to graft a de minimis

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exemption for smaller contracts onto an inappropriate clause--that concerning agreements in writing. Nevertheless, I am happy to address the principle of an exclusion for smaller contracts without worrying too much about the precise details of how it could be achieved. This revisits the subject of a similar discussion in Committee.

There are several arguments against a de minimis exemption. First, many of those who suffer most in the construction industry are small contractors. Indeed, when one considers that about half the firms in the industry are one-man businesses and two-thirds of the rest employ no more than three staff, it is clear that we would be likely to deny fair contracts provisions to a vast amount of work if this kind of provision were in place.

However, we have done much to ensure that the provisions of Part II would be applied only to contracts where it was appropriate to do so. Clause 104, for example, would exclude a great many smaller contracts where they applied to work for householders. In addition, the right to instalments or periodic payments would apply only to contracts lasting 60 days or more, and this would also reduce the impact on smaller contracts.

Certainly we have not been convinced that fair contracts provisions would leave parties to low-value contracts any worse off. I doubt whether anyone would take a dispute about a broken window to an adjudicator, but if they did we would expect an adjudicator to be able to apportion his costs intelligently. However, I accept that when we came to detailed consideration of the scheme for construction contracts we might need to make sure that the right to adjudication did not obstruct access to the small claims court or other more efficient ways of settling tiny claims.

The main argument against a de minimis exemption is that it would bring with it the danger of unscrupulous contractors simply splitting contracts into smaller packets so that they fell below the threshold. This would be an added complication for all and do nothing to aid on-site relations. We would also need to deal with the problem of contracts whose value fluctuated above and below the threshold as the contract progressed. That is a related complication.

Even if this kind of exclusion were desirable, and we are convinced that it is not, it would by no means be easy to get right. In view of all I have said, I hope that the noble Lord, Lord Williams of Elvel, will feel able to withdraw his amendment.

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