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Lord Northbourne: My Lords, as a chartered surveyor with some modest experience of these matters, but as a retired chartered surveyor who does not need to declare an interest, I wish to support Amendment No. 139A. These matters must be decided on the facts and could more easily be decided by a single arbitrator at much less cost.

Lord Lucas: My Lords, I have listened with great interest to the noble and learned Lord, Lord Archer of Sandwell, and to all noble Lords who have spoken. I have some sympathy with what they have said. We all want to keep the fee down to the lowest level possible. The Government's objective in giving this new jurisdiction to the tribunals is to establish a procedure for settling disputes which is cost-effective. We believe that tribunals can achieve that as they will be able to bring specialised knowledge to the disputes. We also

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believe that the less formal proceedings of the tribunal will mean that the cost of providing the service can be kept within reasonable bounds and will mean that leaseholders do have access to affordable justice.

The Government believe strongly, however, that the new system which we are seeking to establish should be self-financing. We have to bear in mind the constant pressures on public spending and have regard to the fact that there is no overwhelming case for a disputes procedure of this kind between landlord and tenant to be a burden on taxpayers. By "costs" we mean all costs, down to the milk for the office cat.

We have not yet worked out the detail of the fee scales, but I indicated in Committee that in order to be self-financing the fee might have to be about £500 for straightforward cases and possibly £2,000 a day for the more complicated ones. I believe that fees of this order will still represent good value for money for leaseholders, bearing in mind that in most cases it will be shared among the leaseholders in a block of flats or converted house. I cannot therefore agree that we should amend the current wording in the way envisaged by these various amendments which would seek to constrain the level of fees, in some cases to below the level of full cost recovery.

The noble and learned Lord, Lord Archer, also raised his concern that legal aid will not be available for anyone appearing before a leasehold valuation tribunal and seeks a reassurance that there will be an automatic waiver of fees for anyone who would qualify for legal aid before a court. Currently, the Bill provides that the order setting the fees may allow for them to be reduced or waived by reference to the financial resources of the applicant but is not specific about how this should be done.

I am afraid that I have some difficulty in giving such an assurance. The problem is that the arrangements for applying for civil legal aid are quite complex and it would greatly add to administrative costs if tribunal staff had to undertake a similar form of means-testing. As I said in Committee, in order to keep matters as simple as possible we would much prefer that exemption from the LVT fee should be passported on the back of some other benefit. We have not yet decided which regime to use and when we consult in the autumn on the fee levels and structures we will consider views on how the exemptions should work in detail.

My noble friend Lord Kinnoull has joined his Amendment No. 139A to this group. We certainly agree that arbitration can provide a very satisfactory means of resolving service charge disputes. Indeed, some leases make explicit provision for cases to be referred to arbitration.

Nothing in the Bill prevents landlords and tenants going to arbitration. Indeed, Clause 81(1)(b) explicitly recognises arbitration as a means of settling service charge disputes. We would certainly encourage landlords and tenants to consider using arbitration. However, we do not believe that it would be right for the court or the LVT to have the power to compel the parties to adopt this route. Therefore, we would not wish to accept my noble friend's amendment.

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I am aware that in the course of giving that answer I have left every noble Lord unsatisfied. As I have sat in my place I have felt the blows land on my body. I shall undertake to show my bruises to my right honourable friend the Minister and to discuss with him what has been said today. However, I do so with no commitment.

6.15 p.m.

Viscount Bledisloe: My Lords, before the Minister sits down, will he explain what is so peculiar about the nature of these disputes in that they and they alone merit full fee paying charges, whereas commercial disputes in the commercial court between two multi-million pound companies do not begin to try to make the books balance?

Lord Lucas: My Lords, at this exact moment I do not have an answer to that question. I shall discuss it with my right honourable friend.

Baroness Gardner of Parkes: My Lords, before my noble friend sits down, I hope that I speak for other Members of the House when I say that it is difficult to ask him to respond to such extremely detailed legal points. I hope that in seeking advice the matter will be raised again. I am hoping that the noble and learned Lord, Lord Archer, will do so. Will my noble friend understand that we appreciate that a Housing Bill is not the appropriate place to be changing the whole system of justice?

The Earl of Kinnoull: My Lords, before my noble friend sits down, in approaching his right honourable friend will he recall that professional bodies consider that charges of £2,000 a day are prohibitive for those involved in service charge disputes?

Lord Lucas: My Lords, I and my right honourable friend, I am sure, will pay careful attention to what my noble friends have said.

Lord Archer of Sandwell: My Lords, I am thinking on my feet. Earlier today your Lordships held a discussion about the location of the heart of the noble Earl, Lord Ferrers. I am sure that the noble Lord, Lord Lucas, knows the location of his heart better than I do. However, I think better of him than to believe that his heart was in what he was saying today.

Lord Lucas: My Lords, I believe that currently it is in my boots!

Lord Archer of Sandwell: My Lords, the noble Lord is irresistible. How could I press on in the face of that? I say only that the brief to which the noble Lord spoke was couched in terms as though the idea of a judicial service being self-financing was self-evidently right. Apparently, whoever drafted the brief was totally insensitive to the fact that for generations the people of this country have expected the community to provide a judicial service. Perhaps at least the noble Lord could

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explain that to them. If they would open the most elementary of history books we might begin the debate again. The noble Lord, Lord Gisborough, and my noble friend Lord Dubs reminded us of some of the alarming figures which the noble Lord mentioned in Committee, from which I do not think he resiled today. The figures we are dealing with are very alarming figures--astronomical figures--to some of those who will be involved.

My noble friend reminded us of the views of the Bar Council, and the noble Earl, Lord Kinnoull, reminded us of the views of many of the people who have occasion to use these tribunals. I was very tempted to say that in those circumstances I would test the opinion of the House, but who could resist what the noble Lord said to us a few moments ago? I think that possibly we may have an abler advocate in him than any of us could be, at least through the pages of Hansard. In hope, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 137 to 139A not moved.]

Clause 85 [Appointment of manager by the court]:

Earl Ferrers moved Amendment No. 140:

Page 59, line 42, at end insert--
("( ) After subsection (9) insert--
"(9A) The court shall not vary or discharge an order under subsection (9) on a landlord's application unless it is satisfied--
(a) that the variation or discharge of the order will not result in a recurrence of the circumstances which led to the order being made, and
(b) that it is just and convenient in all the circumstances of the case to vary or discharge the order.".").

The noble Earl said: My Lords, I beg to move Amendment No. 140. This concerns the proposal which is currently contained in the Bill that leasehold valuation tribunals shall deal with applications from leaseholders in blocks of flats for the appointment of a manager in cases of unsatisfactory management performance by their landlord. The new grounds which the tribunal must consider are set out in Clause 85 of the Bill and modify the provisions already contained in Part II of the Landlord and Tenant Act 1987.

The existing legislation also provides that where a manager has been appointed the court is required to consider, at any time, an application from any person to vary or discharge the order appointing that manager. The noble Lord, Lord Dubs, proposed an amendment in Committee to tighten up the procedures for the discharge of a management order, as he felt that the current rules could allow the landlord to come back to the tribunal with possibly some cosmetic changes to his management arrangements and ask to be given another chance. Quite obviously, there is some scope for abuse of these procedures.

My noble friend Lord Lucas agreed that the current provision was unsatisfactory and undertook to look at it further. This amendment is therefore designed to secure that tightening up. It would clarify that before a tribunal could vary or discharge a management order following an application from a landlord it would have to be satisfied that the new management arrangements would

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not result in a recurrence of the circumstances which led to the order being made in the first place. It would also need to be satisfied that it would be just and convenient to vary or discharge the order. The onus of proof that the landlord's management will in future be up to a satisfactory standard will lie with the landlord. We do not wish to prevent landlords from seeking a discharge of the order in all circumstances. Clearly there may be cases where the landlord has made a genuine effort to impose sensible management arrangements. At the end of the day, it must be the duty of the tribunal to decide, and they would have to decide whether in these situations a convincing case had been laid out which would be fair to all the parties concerned.

That is what this amendment seeks to achieve and I hope that the noble Lord, Lord Dubs, will feel happy that once again the Government have listened to what he and other noble Lords have said and have come forward with an amendment to meet the problems stated. I beg to move.

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